HELIX ENERGY SOLUTIONS GROUP INC

Previous wording

We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention, robotics and full-field decommissioning operations. We operate through our four business segments: Well Intervention, Robotics, Shallow Water Abandonment and Production Facilities. Our services are key in supporting a global energy transition by maximizing production of existing oil and gas reserves, decommissioning end-of-life oil and gas fields and supporting renewable energy developments.

Current wording

We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention, robotics and decommissioning operations. We operate through our four business segments: Well Intervention, Robotics, Shallow Water Abandonment and Production Facilities. Our services are key in supporting a global energy transition by maximizing production of existing oil and gas reserves, decommissioning end-of-life oil and gas fields and supporting renewable energy developments.

Previous wording

Demand for our services is primarily influenced by the condition of the oil and gas and the renewable energy markets and, in particular, the willingness of offshore energy companies to spend on operational activities and capital projects. The performance of our business is largely affected by the prevailing market prices for oil and natural gas, which are impacted by domestic and global economic conditions, hydrocarbon production and capacity, geopolitical issues, weather, global health, and various other factors. Demand for decommissioning, which has been an area of growth for us in recent years, is affected by commodity prices as well as governmental regulations and political forces globally.

Current wording

Demand for our services is primarily influenced by the condition of the oil and gas and the renewable energy markets and, in particular, the level of spending of offshore energy companies on operational activities and capital projects. The performance of our business is largely affected by the prevailing market prices for oil and natural gas, which are impacted by domestic and global economic conditions, hydrocarbon production and capacity, geopolitical issues, weather, global health, and various other factors. Demand for decommissioning is affected by commodity prices as well as governmental regulations and political forces globally.

Previous wording

Oil prices came down from their highs in 2022 but have remained robust during 2023. Global demand for oil continues to experience growth, and we expect the current market conditions will maintain continued customer spending for the industry. Despite the current commodity price environment, uncertainties to commodity price stability persist, including regional conflicts, unrest in the Middle East, OPEC+ decisions, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy. We expect these factors will continue to contribute to commodity price volatility with the potential to temper customer spending for oil and gas projects.

Current wording

Oil prices continue to be volatile but have generally remained robust during 2024. Global demand for oil continues to experience growth albeit at slower rates, and although we believe the current oil and gas pricing warrants continued customer spending for the industry, higher levels of economic and industry uncertainty may temper such customer spending. Factors that could threaten the current commodity price environment persist, including regional conflicts, governmental regulations, geopolitical instability and uncertainty, unrest in the Middle East, OPEC+ decisions, the global economy and the demand for oil and gas in China in particular, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy. We expect these factors will continue to contribute to commodity price volatility with the potential to temper customer spending for oil and gas projects.

Previous wording

We are seeing oil and gas companies continue to invest in long-cycle exploration projects in addition to maintaining and/or increasing production from their existing reserves. As historically production enhancement through well intervention is less expensive per incremental barrel of oil than exploration, we expect oil and gas companies to continue to focus on optimizing production of their existing subsea wells.

Current wording

In the current market environment, we continue to see oil and gas companies invest in long-cycle offshore exploration projects in addition to maintain and/or increase production from their existing reserves. As production enhancement through well intervention is less expensive per incremental barrel of oil than exploration, we expect oil and gas companies to continue to focus on optimizing production of their existing subsea wells in addition to their exploration activities.

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 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), 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 capable of providing all facets of decommissioning services in the U.S. Gulf Coast 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 U.S. Gulf Coast), as customers look to reduce their decommissioning obligations and as customers shift resources to renewable energy.

Previous wording

We support the energy transition to renewable energy through our services in offshore wind farm developments, primarily including subsea cable trenching and burial as well as seabed clearance and preparation services. Demand for our services in the renewable energy market is affected by various factors, including the pace of consumer shift towards renewable energy sources, global electricity demand, technological advancements that increase the generation and/or reduce the cost of renewable energy, expansion of offshore renewable energy projects to deeper water and other regions, and government subsidies for renewable energy projects. We expect growth in our renewables services as the energy market transitions to continued renewable energy developments.

Current wording

We support the energy transition to renewable energy primarily in our Robotics segment through our services in offshore wind farm developments, primarily including subsea cable trenching and burial as well as seabed clearance and preparation services. Demand for our services in the renewable energy market is affected by various factors, including the pace of consumer shift towards renewable energy sources, global electricity demand, technological advancements that increase the generation and/or reduce the cost of renewable energy, expansion of offshore renewable energy projects to deeper water and other regions, and government subsidies for renewable energy projects and/or other governmental regulations supporting or restricting renewable energy developments, for instance, the 2025 Wind Energy Ban. We expect growth in our renewables services as the global energy market continues offshore renewable energy developments.

Previous wording

We made significant improvements in our balance sheet in 2023, extending the maturity of our debt to 2029, removing the dilution overhang associated with 22.9 million shares underlying the Convertible Senior Notes due 2026 (the “2026 Notes”) repurchased in December 2023, and simplifying our capital structure. We maintain our capital allocation policy of maintaining low levels of Net Debt, investing in targeted acquisitions that complement and further our strategy, and using Free Cash Flow to return cash to shareholders through share repurchases (See “Results of Operations — Non-GAAP Financial Measures” below for definitions of Net Debt and Free Cash Flow).

Current wording

We completed the redemption of the Convertible Senior Notes due 2026 (the “2026 Notes”) during the first quarter 2024. In August 2024, we extended the maturity of the Amended ABL Facility to August 2029 and increased the letter of credit basket size in order to facilitate increased bonding needs on theQ4000 Nigeria campaign and various windfarm projects. We maintain our capital allocation policy of maintaining low levels of Net Debt, maintaining our existing assets, investing in targeted acquisitions that complement and further our strategy, and using Free Cash Flow to return cash to shareholders through share repurchases (See “Results of Operations — Non-GAAP Financial Measures” below for definitions of Net Debt and Free Cash Flow).

Previous wording

Our backlog is represented by signed contracts. As of December 31, 2023, our consolidated backlog totaled $850 million, of which $700 million is expected to be performed in 2024. As of December 31, 2023, our various contracts with Shell globally, our contracts with Trident Energy and Petrobras in Brazil, our contracts with Repsol globally, and our agreement for theHP I in the Gulf of Mexico represented approximately 55% of our total backlog. As of December 31, 2022, our consolidated backlog totaled $847 million. 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 December 31, 2024, our consolidated backlog totaled $1.4 billion, of which $681 million is expected to be performed in 2025. As of December 31, 2024, our various contracts with Shell and ExxonMobil globally, our contracts with Trident Energy and Petrobras in Brazil, our contracts with Talos in the U.S. Gulf Coast represented approximately 90% of our total backlog. As of December 31, 2023, our consolidated backlog totaled $850 million. 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

We define EBITDA as earnings before income taxes, net interest expense, gains and losses on equity investments, net other income or expense, and depreciation and amortization expense. Non-cash impairment losses on goodwill and other long-lived assets are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude gains or losses on disposition of assets, acquisition and integration costs, gains or losses on extinguishment of long-term debt, the change in fair value of contingent consideration and the general provision (release) for current expected credit losses, if any. We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from asset sales and insurance recoveries (related to property and equipment), if any. Net Debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents and restricted cash. In the following reconciliations, we provide amounts as reflected in the consolidated financial statements unless otherwise noted.

Current wording

We define EBITDA as earnings before income taxes, net interest expense, gains and losses on equity investments, net other income or expense, and depreciation and amortization expense. Non-cash impairment losses on goodwill and other long-lived assets are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude gains or losses on disposition of assets, acquisition and integration costs, gains or losses related to convertible senior notes, the change in fair value of contingent consideration and the general provision (release) for current expected credit losses, if any. We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from asset sales and insurance recoveries (related to property and equipment), if any. Net Debt is calculated as long-term debt including current maturities of long-term debt less cash and cash equivalents. In the following reconciliations, we provide amounts as reflected in the consolidated financial statements unless otherwise noted.

Previous wording

The reconciliation of our net loss to EBITDA and Adjusted EBITDA is as follows (in thousands):

Current wording

The reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA is as follows (in thousands):

Previous wording

Net Revenues. Our consolidated net revenues increased by 48% in 2023 as compared to 2022, reflecting the addition of Shallow Water Abandonment segment in the third quarter 2022 and higher revenues from all of our segments.

Current wording

Net Revenues. Our consolidated net revenues increased by 5% in 2024 as compared to 2023, reflecting higher revenues in our Well Intervention, Robotics and Production Facilities business segments, offset in part by lower revenues in our Shallow Water Abandonment segment.

Previous wording

Our Robotics revenues increased by 34% in 2023 as compared to 2022, primarily reflecting higher utilization and rates on vessels, ROVs and trenchers. Chartered vessel days increased to 1,699 days during 2023 as compared to 1,401 days during 2022. Integrated vessel trenching days increased to 807 days in 2023 as compared to 483 days in 2022. ROV and trencher utilization increased to 62% in 2023 from 53% in 2022.

Current wording

Our Robotics revenues increased by 15% in 2024 as compared to 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities. Chartered vessel activity increased to 1,901 days during 2024 as compared to 1,699 days during 2023, although chartered vessel days in 2024 included approximately 64 days of standby utilization at reduced rates. Overall ROV and trencher utilization increased to 69% in 2024 from 62% during 2023 and included 835 days of integrated vessel trenching in 2024 as compared to 807 days in 2023.

Previous wording

Gross Profit (Loss). Our consolidated 2023 gross profit increased by $149.7 million as compared to 2022, primarily reflecting increases in our Well Intervention, Robotics and Shallow Water Abandonment segments in 2023, offset in part by lower profitability in our Production Facilities segment.

Current wording

Gross Profit (Loss). Our consolidated 2024 gross profit increased by $19.2 million as compared to 2023, primarily reflecting increased profits from our Well Intervention, Robotics and Production Facilities business segments, offset in part by losses from our Shallow Water Abandonment segment.

Previous wording

Our Robotics gross profit increased by $23.1 million in 2023 as compared to 2022, primarily reflecting higher revenues in 2023 due to increased activities.

Current wording

Our Robotics gross profit increased by $27.7 million in 2024 as compared to 2023, primarily reflecting higher revenues and higher profit margin projects during 2024.

Previous wording

Selling, General and Administrative Expenses. Our selling, general and administrative expenses were $94.4 million in 2023 as compared to $76.8 million in 2022, primarily reflecting higher employee incentive and share-based compensation costs and the addition of Helix Alliance.

Current wording

Selling, General and Administrative Expenses. Our selling, general and administrative expenses were $91.7 million in 2024 as compared to $94.4 million in 2023, primarily reflecting a net decrease in compensation related costs offset partially by an increase in other facilities and professional fees in 2024.

Previous wording

Net Interest Expense. Our net interest expense totaled $17.3 million in 2023 as compared to $19.0 million in 2022, primarily reflecting higher interest income on our invested cash reserves and the repayment of certain indebtedness, offset in part by interest expense on our $300 million Senior Notes due 2029 (the “2029 Notes”) during the fourth quarter 2023 (Note 7).

Current wording

Net Interest Expense. Our net interest expense totaled $22.6 million in 2024 as compared to $17.3 million in 2023, primarily reflecting higher debt levels and rates on our $300 million Senior Notes due 2029 (the “2029 Notes”) in 2024 as compared to our 2026 Notes in 2023, offset in part by higher interest income on our invested cash (Note 7).

Previous wording

Other Expense, Net. Net other expense was $3.6 million in 2023, primarily reflecting losses from the devaluation of our Nigerian naira holdings and conversion of naira into U.S. dollars during 2023, offset in part by foreign currency gains due to the strengthening of the British pound in 2023. Net other expense was $23.3 million in 2022, primarily reflecting foreign currency losses due to the weakening of the British pound in 2022.

Current wording

Other Expense, Net. Net other expense was $3.9 million in 2024 as compared to $3.6 million in 2023. Net other expense during 2024 primarily reflects a $2.4 million increase in the value of incentive credits granted to the seller of P&A equipment acquired in 2023 (Note 4) and foreign currency losses due to the weakening of the British pound and Brazilian real in 2024. Net other expense during 2023 primarily reflects foreign currency losses 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 in 2023.

Previous wording

Income Tax Provision. Income tax provision was $18.4 million for 2023 as compared to $12.6 million for 2022. The effective tax rates for 2023 and 2022 were 244.2% and (16.8)%, respectively. These variances were primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions, non-deductible losses on the extinguishment of long-term debt as well as losses for which no financial statement benefits have been recognized (Note 8).

Current wording

Income Tax Provision. Income tax provision was $26.4 million for 2024 as compared to $18.4 million for 2023. The effective tax rates for 2024 and 2023 were 32.2% and 244.2%, respectively. These variances were primarily attributable to the increase in income before taxes as well as the earnings mix between our higher and lower tax rate jurisdictions.

Previous wording

Net working capital is equal to current assets minus current liabilities and includes cash and cash equivalents and restricted cash, 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.

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 earnout consideration that was paid in cash on April 3, 2024.

Previous wording

Long-term debt in the table above is net of unamortized debt discount and debt issuance costs and excludes current maturities of $48.3 million and $38.2 million, respectively, at December 31, 2023 and 2022. For information relating to our long-term debt, see Note 7 to our consolidated financial statements included in Item 8*. Financial Statements and Supplementary Data* of this Annual Report.

Current wording

Long-term debt in the table above, presented net of unamortized debt discount and debt issuance costs, includes our MARAD Debt, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.2 million and $48.3 million, respectively, at December 31, 2024 and 2023. For information relating to our long-term debt, see Note 7 to our consolidated financial statements included in Item 8*. Financial Statements and Supplementary Data* of this Annual Report.

Previous wording

We define liquidity as cash and cash equivalents, excluding restricted cash, plus available capacity under our credit facility. 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 ABL Facility (Note 7). In December 2023, we issued $300.0 million of the 2029 Notes with proceeds of approximately $291.1 million, net of debt discount and issuance costs. We used a portion of the proceeds, as well as 1.5 million shares of our common stock, to repurchase $159.8 million aggregate principal amount of the 2026 Notes for approximately $229.7 million, and we unwound a proportionate amount of the associated 2026 Capped Calls for approximately $15.6 million. In January 2024, we issued a redemption notice for the remaining $40.0 million aggregate principal amount of the 2026 Notes to be settled March 20, 2024. Investors are permitted to convert their notes, and we will settle all conversions and/or redemptions in cash at amounts that we expect will exceed the 2026 Notes’ current carrying values. Our liquidity at December 31, 2022 included $186.6 million of cash and cash equivalents and $98.1 million of available borrowing capacity under the ABL Facility and excluded $2.5 million of restricted cash. The increase in cash and cash equivalents, excluding the impact of our debt refinancing activities, was primarily attributable to strong operating cash flows during 2023.

Current wording

We define liquidity as cash and cash equivalents plus available capacity under our credit facility, but excluding cash pledged as collateral toward the Amended ABL Facility. Our liquidity at December 31, 2024 included $368.0 million of cash and cash equivalents and $66.6 million of available borrowing capacity under the Amended ABL Facility (Note 7) and excluded $5.0 million of pledged cash. 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. The reduction in availability on the facility at December 31,2024 was attributable to higher letter of credit usage in order to support the Nigeria project on theQ4000.

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 2023 as compared to 2022 primarily reflects higher earnings, offset in part by higher regulatory recertification costs for our vessels and systems and higher working capital outflows. Regulatory recertification spend on our vessels and systems amounted to $62.5 million and $35.1 million, respectively, during the comparable year over year periods.

Current wording

The increase in our operating cash flows for 2024 as compared to 2023 primarily reflects higher operating income, lower regulatory recertification costs for our vessels and systems and working capital inflows. Operating cash outflows during 2024 included net interest expense and taxes paid of $25.4 million and $14.1 million, respectively. Operating cash outflows during 2024 also included $58.3 million of the $85.0 million earnout payment on April 3, 2024, representing the amount in the excess of the $26.7 million initial fair value of earnout consideration at the Alliance acquisition date. Regulatory recertification spend on our vessels and systems amounted to $35.4 million and $62.5 million, respectively, during the comparable year over year periods.

Previous wording

Net cash inflows from financing activities for 2023 primarily reflect proceeds from the issuance of $300.0 million 2029 Notes and the proportionate settlement of the 2026 Capped Calls, offset in part by cash outflows of $230.7 million related to the 2026 Notes, $30.4 million related to Convertible Senior Notes due 2023, the principal repayment of $8.3 million related to the MARAD Debt and $12.0 million in repurchases of our common stock under the 2023 Repurchase Program. Net cash outflows from financing activities for 2022 primarily reflect the repayment of $7.9 million related to the MARAD Debt and $35.0 million related to Convertible Senior Notes due 2022.

Current wording

Net cash inflows from financing activities for 2023 primarily reflect net proceeds of $292.0 million from the issuance of $300.0 million 2029 Notes and of $15.6 million from the proportionate settlement of the 2026 Capped Calls, offset in part by cash outflows of $230.7 million related to the repurchase of the 2026 Notes, $30.4 million related to the maturity of the Convertible Senior Notes due 2023, the principal repayment of $8.3 million related to the MARAD Debt and $12.0 million in repurchases of our common stock under the 2023 Repurchase Program.

Previous wording

Our material cash requirements include our obligations to repay our long-term debt, including additional funds needed to settle the conversion and/or redemption of the remaining 2026 Notes, satisfy other contractual cash commitments and fund other obligations, including the payment of the earn-out consideration to the seller in the Alliance transaction.

Current wording

Our material cash requirements include our obligations to repay our long-term debt, satisfy other contractual cash commitments and fund other obligations.

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 December 31, 2023 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 December 31, 2023.

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 December 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 December 31, 2024.

Previous wording

Decommissioning. We have decommissioning obligations associated with our oil and gas properties (Note 15). Those obligations, which are presented on a discounted basis on the consolidated balance sheets, approximate $80.9 million (undiscounted) for Thunder Hawk Field oil and gas properties and $37.1 million (undiscounted) for Droshky oil and gas properties as of December 31, 2023, none of which is expected to be paid during the next 12 months. We are entitled to receive $30.0 million (undiscounted) from Marathon Oil as certain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

Current wording

Decommissioning. We have decommissioning obligations associated with our oil and gas properties (Note 15). Those obligations, which are presented on a discounted basis on the consolidated balance sheets, approximate $80.9 million (undiscounted) for Thunder Hawk Field oil and gas properties and $37.1 million (undiscounted) for Droshky oil and gas properties as of December 31, 2024, none of which is expected to be paid during the next 12 months. We are entitled to receive $30.0 million (undiscounted) from Marathon Oil Corporation as certain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

Previous wording

Regulatory certification and dry dock. Our vessels and systems are subject to certain regulatory recertification requirements that must be satisfied in order for the vessels and systems to operate. Recertification may require dry dock and other compliance costs on a periodic basis, usually every 30 months. Although the amount and timing of these costs may vary and are dependent on the timing of the certification renewal period, they generally range between $3.0 million to $15.0 million per Well Intervention vessel and $0.5 million to $5.0 million per system or Helix Alliance asset.

Current wording

Regulatory certification and dry dock. Our vessels and systems are subject to certain regulatory recertification requirements that must be satisfied in order for the vessels and systems to operate. Recertification may require dry dock and other compliance costs on a periodic basis, usually every 30 months. Although the amount and timing of these costs may vary and are dependent on the timing of the certification renewal period, they generally range between $0.2 million to $15.0 million per vessel and $0.5 million to $5.0 million per system.