HELIX ENERGY SOLUTIONS GROUP INC

Previous wording

Once end-of-life oil and gas wells have depleted their production, we decommission wells and infrastructure in our Well Intervention and Shallow Water Abandonment segments. Our operations service the life cycle of an oil and gas field and provide P&A and decommissioning services at the end of the life of a field as required by governmental regulations. We believe that we have a competitive advantage in performing these services efficiently. The demand for P&A services should grow over the mid- to long-term as the subsea tree base expands, as government regulations continue to place stronger emphasis on decommissioning aged wells worldwide (including subsea trees as well as mature dry tree wells in the shallow waters of the Gulf of Mexico), as customers look to reduce their decommissioning obligations and as customers shift resources to renewable energy.

Current wording

Once end-of-life oil and gas wells have depleted their production, we decommission wells and infrastructure in our Well Intervention and Shallow Water Abandonment segments. Our operations service the life cycle of an oil and gas field and provide P&A and decommissioning services at the end of the life of a field as required by governmental regulations. We believe that our well intervention vessels have a competitive advantage in performing these services efficiently and with our suite of shallow water assets and capabilities, we are the only provider of full-field decommissioning services in the Gulf of Mexico shelf. The demand for P&A services should grow over the mid- to long-term as the subsea tree base expands, as government regulations continue to place stronger emphasis on decommissioning aged wells worldwide (including subsea trees as well as mature dry tree wells in the shallow waters of the Gulf of Mexico), as customers look to reduce their decommissioning obligations and as customers shift resources to renewable energy.

Previous wording

In 2024, despite a backdrop of a somewhat uncertain macro environment globally, we expect to experience another strong year of performance driven by increasing demand for our decommissioning services internationally and continued growth in the offshore renewables trenching market. The demand for shallow water decommissioning services in the Gulf of Mexico is expected to soften in the near term but should grow over the mid- to long-term.

Current wording

In 2024, we expect to experience another strong year of performance driven by increasing demand for our decommissioning services internationally and continued growth in the offshore renewables trenching market. We expect the demand for shallow water decommissioning services in the Gulf of Mexico to remain soft in the near term but should grow over the mid- to long-term.

Previous wording

Our backlog is represented by signed contracts. As of March 31, 2024, our consolidated backlog totaled approximately $997 million, of which $663 million is expected to be performed over the remainder of 2024. Our various contracts with Shell globally, our contracts with Trident Energy and Petrobras in Brazil, our contracts with ExxonMobil globally, and our agreement for theHP I in the Gulf of Mexico represented approximately 65% of our total backlog as of March 31, 2024. Backlog is not necessarily a reliable indicator of revenues derived from our contracts as services are often added but may sometimes be subtracted; contracts may be renegotiated, deferred, canceled and in many cases modified while in progress; and reduced rates, fines and penalties may be imposed by our customers. Furthermore, our contracts are in certain cases cancelable without penalty. If there are cancellation fees, the amount of those fees can be substantially less than amounts reflected in backlog.

Current wording

Our backlog is represented by signed contracts. As of June 30, 2024, our consolidated backlog totaled approximately $873 million, of which $443 million is expected to be performed over the remainder of 2024. Our various contracts with Shell, ExxonMobil and Subsea 7 globally, our contracts with Trident Energy and Petrobras in Brazil, and our agreement for theHP I in the Gulf of Mexico represented approximately 73% of our total backlog as of June 30, 2024. Backlog is not necessarily a reliable indicator of revenues derived from our contracts as services are often added but may sometimes be subtracted; contracts may be renegotiated, deferred, canceled and in many cases modified while in progress; and reduced rates, fines and penalties may be imposed by our customers. Furthermore, our contracts are in certain cases cancelable without penalty. If there are cancellation fees, the amount of those fees can be substantially less than amounts reflected in backlog.

Previous wording

Our Robotics revenues increased by 2% for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities during the first quarter 2024. Chartered vessel days increased to 333 days during the first quarter 2024 as compared to 295 days during the first quarter 2023, although chartered vessel days in the first quarter 2024 included approximately 64 days of standby utilization at reduced rates. ROV and trencher utilization increased to 58% in the first quarter 2024 from 56% during the first quarter 2023 and included 85 days of integrated vessel trenching in the first quarter 2024 as compared to 66 days in the first quarter 2023.

Current wording

Our Robotics revenues increased by 16% for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities during the second quarter 2024. Chartered vessel days increased to 528 days during the second quarter 2024 as compared to 435 days during the second quarter 2023. ROV and trencher utilization increased to 76% in the second quarter 2024 from 58% during the second quarter 2023 and included 232 days of integrated vessel trenching in the second quarter 2024 as compared to 194 days in the second quarter 2023.

Previous wording

Our Shallow Water Abandonment revenues decreased by 46% for the three-month period ended March 31, 2024 as compared to the same period in 2023. The decrease in revenues is due to lower activity levels that are reflective of the variable nature of operator spending as well as higher customer concentrations in the Gulf of Mexico shelf market, resulting in lower vessel and system utilization during the first quarter 2024 as compared to the first quarter 2023. Overall vessel utilization was 41% during the first quarter 2024 as compared to 58% during the first quarter 2023. P&A systems and CT systems achieved 626 days of utilization, or 26% on 26 systems, during the first quarter 2024 as compared to 1,277 days of utilization, or 68% on 21 systems, during the first quarter 2023.

Current wording

Our Shallow Water Abandonment revenues decreased by 33% for the three-month period ended June 30, 2024 as compared to the same period in 2023. The decrease in revenues was due to lower activity levels and an overall softer Gulf of Mexico shelf market in 2024, resulting in lower vessel and system utilization during the second quarter 2024 as compared to the second quarter 2023. Overall vessel utilization was 58% during the second quarter 2024 as compared to 78% during the second quarter 2023. P&A systems and CT systems achieved 632 days of utilization, or 27% on 26 systems, during the second quarter 2024 as compared to 1,554 days of utilization, or 81% on 21 systems, during the second quarter 2023.

Previous wording

Our Robotics gross profit increased by $1.2 million for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher revenues due to increased activities.

Current wording

Our Production Facilities gross profit increased by $1.2 million for the three-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher segment revenues.

Previous wording

Change in Fair Value of Contingent Consideration. The change in fair value of contingent consideration in the first quarter 2023 reflected an improvement in Helix Alliance’s results during the first quarter. We entered into an agreement and set the final earn-out during the fourth quarter 2023, which was paid on April 3, 2024.

Current wording

Change in Fair Value of Contingent Consideration. The change in fair value of contingent consideration in the second quarter 2023 reflected an improvement in Helix Alliance’s results during the quarter. We entered into an agreement and set the final earn-out during the fourth quarter 2023, which was paid on April 3, 2024.

Previous wording

Selling, General and Administrative Expenses. Our selling, general and administrative expenses were $21.0 million for the three-month period ended March 31, 2024 as compared to $19.6 million for the same period in 2023, primarily reflecting an increase in professional fees, third party services and office-related costs.

Current wording

Selling, General and Administrative Expenses. Our selling, general and administrative expenses were $22.3 million for the three-month period ended June 30, 2024 as compared to $24.0 million for the same period in 2023, primarily reflecting lower employee compensation costs.

Previous wording

Net Interest Expense. Our net interest expense totaled $5.5 million for the three-month period ended March 31, 2024 as compared to $4.2 million for the same period in 2023, primarily reflecting interest expense on our 2029 Notes, offset in part by higher interest income on our invested cash reserves (Note 5).

Current wording

Net Interest Expense. Our net interest expense totaled $5.9 million for the three-month period ended June 30, 2024 as compared to $4.2 million for the same period in 2023, primarily reflecting interest expense on our 2029 Notes, offset in part by higher interest income on our invested cash reserves (Note 5).

Previous wording

Other Income (Expense), Net. Net other expense was $2.2 million for the three-month period ended March 31, 2024 as compared to net other income of $3.4 million for the same period in 2023, primarily reflecting foreign currency losses related to the depreciation of the British pound primarily on U.S. dollar denominated intercompany debt in our U.K. entities.

Current wording

Other Expense, Net. Net other expense was $0.4 million for the three-month period ended June 30, 2024 as compared to net other expense of $5.7 million for the same period in 2023. Net other expense during the second quarter 2023 primarily reflected an $11.7 million foreign currency loss related to the devaluation of the Nigerian naira on our naira cash holdings, offset in part by foreign currency gains due to the strengthening of the British pound primarily on U.S. dollar denominated intercompany debt in our U.K. entities.

Previous wording

Our Well Intervention revenues increased by 52% for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher revenues on theQ7000 and theQ5000 and higher rates and utilization on theSeawell, offset in part by lower utilization on theWell Enhancer. TheQ7000 had full utilization during the first quarter 2024 whereas the vessel was transiting from West Africa to Asia Pacific and undergoing regulatory and project related dockings during the first quarter 2023, and utilization increased on theQ5000 during the first quarter 2024 as the vessel underwent a regulatory docking during the first quarter 2023. TheSeawell benefitted from being on contract during the entire first quarter 2024 in the western Mediterranean as compared to having had lower seasonal utilization and rates in the North Sea during the first quarter 2023. TheWell Enhancer in the North Sea had lower utilization as compared to the prior year period as the vessel underwent a 54-day scheduled dry dock during the first quarter 2024.

Current wording

Our Well Intervention revenues increased by 49% for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher revenues on theQ7000 and higher rates and utilization on theSeawell, theQ4000 and theQ5000, offset in part by lower utilization on theWell Enhancer. TheQ7000 had full utilization during the six-month period ended June 30, 2024 whereas the vessel spent most of the six-month period ended June 30, 2023 on regulatory and project-related dockings and paid transit and mobilization to Asia Pacific. TheSeawell benefitted from being contracted in the western Mediterranean at higher rates during most of the six-month period ended June 30, 2024 as compared to having had lower utilization and rates during the same period in 2023. Utilization increased on theQ4000 and theQ5000 during the six-month period ended June 30, 2024 as both vessels underwent their regulatory dry docks during the six-month period ended June 30, 2023. Gulf of Mexico day rates also improved during the year over year periods. TheWell Enhancer in the North Sea had lower utilization as compared to the prior year period as the vessel underwent a scheduled dry dock during the first quarter 2024.

Previous wording

Our Production Facilities revenues increased by 16% for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting higher oil and gas production as the Thunder Hawk wells were shut in for planned maintenance during the first quarter 2023.

Current wording

Our Production Facilities revenues increased by 13% for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting higher oil and gas production as both the Droshky and Thunder Hawk wells were shut in for planned maintenance during portions of the six-month period ended June 30, 2023.

Previous wording

Gross Profit (Loss). Our consolidated gross profit increased by $4.4 million for the three-month period ended March 31, 2024 as compared to the same period in 2023, primarily reflecting increased profits from our Well Intervention and Robotics business segments, offset in part by losses from our Shallow Water Abandonment and Production Facilities segments.

Current wording

Gross Profit (Loss). Our consolidated gross profit increased by $24.5 million for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting increased profits from our Well Intervention and Robotics business segments, offset in part by losses from our Shallow Water Abandonment and Production Facilities segments.

Previous wording

Our Shallow Water Abandonment segment had a gross loss of $9.8 million for the three-month period ended March 31, 2024 as compared to a gross profit of $7.5 million for the same period in 2023, primarily reflecting lower segment revenues.

Current wording

Our Shallow Water Abandonment segment had a gross loss of $8.1 million for the six-month period ended June 30, 2024 as compared to a gross profit of $28.5 million for the same period in 2023, primarily reflecting lower segment revenues.

Previous wording

Our Production Facilities segment had a gross loss of $1.3 million for the three-month period ended March 31, 2024 as compared to a gross profit of $5.8 million for the same period in 2023, primarily reflecting well workover costs of approximately $8.6 million related to the Thunder Hawk wells during the first quarter 2024.

Current wording

Our Production Facilities gross profit decreased by $5.9 million for the six-month period ended June 30, 2024 as compared to the same period in 2023, primarily reflecting well workover costs of approximately $8.6 million related to the Thunder Hawk wells during the first quarter 2024, offset in part by higher segment revenues.

Previous wording

Losses Related to Convertible Senior Notes. The $20.9 million loss for the three-month period ended March 31, 2024 was associated with the retirement of our 2026 Notes (Note 5).

Current wording

Losses Related to Convertible Senior Notes. The $20.9 million loss for the six-month period ended June 30, 2024 was associated with the retirement of our 2026 Notes (Note 5).

Previous wording

Income Tax Benefit. Income tax benefit was $1.7 million for the three-month period ended March 31, 2024 as compared to $2.0 million for the same period in 2023. The effective tax rates for the three-month periods ended March 31, 2024 and 2023 were 6.1% and 28.1%, respectively. The decrease in effective tax rates was primarily attributable to the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event and reported in the current quarter (Note 6).

Current wording

Income Tax Provision. Income tax provision was $13.0 million for the six-month period ended June 30, 2024 as compared to $1.3 million for the same period in 2023. The effective tax rates for the six-month periods ended June 30, 2024 and 2023 were 68.5% and 40.1%, respectively. The increase in effective tax rates was primarily attributable to the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event and reported in the first quarter 2024 (Note 6).

Previous wording

Net working capital is equal to current assets minus current liabilities and includes cash and cash equivalents, current maturities of long-term debt and current operating lease liabilities. Net working capital measures short-term liquidity and is important for predicting cash flow and debt requirements. Net working capital at March 31, 2024 and December 31, 2023 includes $85.0 million of Alliance earn-out consideration that was paid in cash on April 3, 2024.

Current wording

Net working capital is equal to current assets minus current liabilities and includes cash and cash equivalents, current maturities of long-term debt and current operating lease liabilities. Net working capital measures short-term liquidity and is important for predicting cash flow and debt requirements. Net working capital at December 31, 2023 included $85.0 million of Alliance earn-out consideration that was paid in cash on April 3, 2024.

Previous wording

Long-term debt in the table above includes our MARAD Debt, the 2023 Notes, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.0 million at March 31, 2024 and $48.3 million at December 31, 2023, and is net of unamortized debt discount and debt issuance costs. See Note 5 for information relating to our long-term debt.

Current wording

Long-term debt in the table above includes our MARAD Debt, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.0 million at June 30, 2024 and $48.3 million at December 31, 2023, and is net of unamortized debt discount and debt issuance costs. See Note 5 for information relating to our long-term debt.

Previous wording

We define liquidity as cash and cash equivalents plus available capacity under our credit facility. Our liquidity at March 31, 2024 included $323.8 million of cash and cash equivalents and $95.6 million of available borrowing capacity under the Amended ABL Facility (Note 5). In March 2024, we settled the remaining $40.2 million aggregate principal amount of the 2026 Notes for $60.5 million in cash (excluding costs), offset in part by $4.4 million from the settlement of the remaining 2026 Capped Calls. Our liquidity at December 31, 2023 included $332.2 million of cash and cash equivalents and $99.3 million of available borrowing capacity under the Amended ABL Facility. In December 2023, we used $229.7 million of the cash proceeds from the 2029 Notes, as well as 1.5 million shares of our common stock, to repurchase $159.8 million aggregate principal amount of the 2026 Notes, offset in part by $15.6 million from the associated 2026 Capped Calls. On April 3, 2024, we paid $85.0 million of earn-out consideration in cash to the seller in the Alliance transaction.

Current wording

We define liquidity as cash and cash equivalents plus available capacity under our credit facility. Our liquidity at June 30, 2024 included $275.1 million of cash and cash equivalents and $95.1 million of available borrowing capacity under the Amended ABL Facility (Note 5). Our liquidity at December 31, 2023 included $332.2 million of cash and cash equivalents and $99.3 million of available borrowing capacity under the Amended ABL Facility. In March 2024, we settled the remaining $40.2 million aggregate principal amount of the 2026 Notes for $60.5 million in cash (excluding costs), offset in part by $4.4 million from the settlement of the remaining 2026 Capped Calls. On April 3, 2024, we paid $85.0 million of earn-out consideration in cash to the seller in the Alliance transaction.

Previous wording

In the current market environment, following the settlement of the Alliance earn-out we expect strong ongoing operating performance and cash flows, continued availability on the Amended ABL Facility and reductions in Net Debt (See “Results of Operations — Non-GAAP Financial Measures” for the definition of Net Debt). We believe that our cash on hand, internally generated cash flows and availability under the Amended ABL Facility will be sufficient to fund our operations and service our debt and other obligations over at least the next 12 months.

Current wording

In the current market environment, following the settlement of the Alliance earn-out we expect strong ongoing operating performance and cash flows and continued availability on the Amended ABL Facility. We believe that our cash on hand, internally generated cash flows and availability under the Amended ABL Facility will be sufficient to fund our operations and expected capital spending, service our debt and other obligations, and execute our share repurchase program over at least the next 12 months. We currently do not anticipate borrowing under the Amended ABL Facility other than for the issuance of letters of credit.

Previous wording

A period of weak industry activity may make it difficult to comply with the covenants and other restrictions in our debt agreements. Our failure to comply with the covenants and other restrictions could lead to an event of default. Decreases in our borrowing base may limit our ability to fully access the Amended ABL Facility. We currently do not anticipate borrowing under the Amended ABL Facility other than for the issuance of letters of credit.

Current wording

A period of weak industry activity may make it difficult to comply with the covenants and other restrictions in our debt agreements. Our failure to comply with the covenants and other restrictions could lead to an event of default. Decreases in our borrowing base may limit our ability to fully access the Amended ABL Facility.

Previous wording

The increase in our operating cash flows for the three-month period ended March 31, 2024 as compared to the same period in 2023 primarily reflects lower operating losses, higher working capital inflows and lower regulatory recertification costs for our vessels and systems. Regulatory recertification spend on our vessels and systems amounted to $9.6 million and $17.2 million, respectively, during the comparable year over year periods.

Current wording

The increase in our operating cash flows for the six-month period ended June 30, 2024 as compared to the same period in 2023 primarily reflects higher operating income, and lower regulatory recertification costs for our vessels and systems, offset in part by higher working capital outflows. Operating cash outflows during the six-month period ended June 30, 2024 included $58.3 million of the $85.0 million earn-out payment on April 3, 2024, representing the amount in the excess of the $26.7 million fair value of earn-out consideration at the Alliance acquisition date. Regulatory recertification spend on our vessels and systems amounted to $20.3 million and $41.3 million, respectively, during the comparable year over year periods.

Previous wording

Cash flows used in investing activities for the three-month periods ended March 31, 2024 and 2023 reflect lower capital expenditures during the first quarter 2024.

Current wording

Cash flows used in investing activities for the six-month periods ended June 30, 2024 and 2023 reflect comparable capital expenditure levels during the year over year periods.

Previous wording

Net cash outflows from financing activities for the three-month period ended March 31, 2024 primarily reflect cash outflows of $60.7 million related to the 2026 Notes, $4.2 million in repurchases of our common stock under the 2023 Repurchase Program and the principal repayment of $4.3 million related to the MARAD Debt, offset in part by $4.4 million from the proportionate settlement of the 2026 Capped Calls. Net cash outflows from financing activities for the three-month period ended March 31, 2023 primarily reflect $5.0 million in repurchases of our common stock under the 2023 Repurchase Program and the repayment of $4.1 million related to the MARAD Debt.

Current wording

Net cash outflows from financing activities for the six-month period ended June 30, 2024 primarily reflect cash outflows of $60.7 million related to the 2026 Notes, $26.7 million of the $85.0 million earn-out payment, $10.2 million in repurchases of our common stock under the 2023 Repurchase Program and the principal repayment of $4.3 million related to the MARAD Debt, offset in part by $4.4 million from the proportionate settlement of the 2026 Capped Calls. Net cash outflows from financing activities for the six-month period ended June 30, 2023 primarily reflect $10.1 million in repurchases of our common stock under the 2023 Repurchase Program and the repayment of $4.1 million related to the MARAD Debt.

Previous wording

The following table summarizes (in thousands) the principal amount of our long-term debt and related debt service costs as well as other contractual commitments, which include commitments for property and equipment, operating lease obligations and Alliance earn-out consideration, as of March 31, 2024 and the portions of those amounts that are short-term (due in less than one year) and long-term (due in one year or greater) based on their stated maturities. Our property and equipment commitments include contractually committed amounts to purchase and service certain property and equipment (inclusive of commitments related to regulatory recertification and dry dock as discussed below) but do not include expected capital spending that is not contractually committed as of March 31, 2024.

Current wording

The following table summarizes (in thousands) the principal amount of our long-term debt and related debt service costs as well as other contractual commitments, which include commitments for property and equipment and operating lease obligations, as of June 30, 2024 and the portions of those amounts that are short-term (due in less than one year) and long-term (due in one year or greater) based on their stated maturities. Our property and equipment commitments include contractually committed amounts to purchase and service certain property and equipment (inclusive of commitments related to regulatory recertification and dry dock as discussed below) but do not include expected capital spending that is not contractually committed as of June 30, 2024.