HLX - Earnings call transcript Q2 2024 | Helix Energy Solutions Group, Inc.

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Operator

Thank you for standing by. My name is John, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Second Quarter 2024 Helix Energy Solutions Group, Inc. Earnings Conference Call. [Operator Instructions] Thank you. to Officer. call like Arriaga, to now Accounting Chief would turn over the Brent I ahead. go Please

Brent Arriaga

Good morning, our last COO; the review our our release quarter thank today conference Participating Ken and General everyone, and this night. are call an on Counsel; us on Scotty Sparks, CEO; CFO; for our had Owen today Kratz, our for second call XXXX to our our and release. you earnings slide opportunity released Helix for presentation related Erik Staffeldt, Neikirk, myself. Hopefully, you've joining press

you of the, can presentation can If tab do on The materials, icon. not by Investor accessed accessed the be can copy have our through Release on these on accessed release the at today's Press webcast www.helixesg.com. a press and be slide page clicking website both For be our

remarks, prepared information. will our Ken? begin a forward-looking we Ken statement regarding Neikirk Before make

Kenneth Neikirk

statements statements conference historical results. other Reform Litigation statements presentation, in conference our or include forward-looking estimates making fact or call, XXXX. the statements than may harbor made are financial future certain the projections the All are associated or call During Private and anticipate Securities or today. under business forward-looking trends this and of business in events, expectations as current of projections we forward-looking Such this on industry safe and that of based of statements provisions Act of assumptions

on XX-Q X on our differ in presentation materially those assumptions number XX-K, our including results of reports our and the filings Our a SEC. uncertainties, Slide and and with quarterly Form annual recently statements filed and forth may actual our risks, to in our set other report most and of Form future from projections forward-looking variety due factors,

presentation, call. Also forward-looking made. subject of XX, of any of conference statement. release, statements under our annual we www.helixesg.com. Please of to disclosures our this this at earnings any SEC during regarding may be and on the of written and information Form You not final disclaim will this of For duty non-GAAP presentation available as any the any update a measures. matter may We with on advised GAAP call third-party comparable July website XX-K reliance along this XXXX, the slides this replay certain are oral of reconciliations, made measures certain information These our statements, reconciliations on conference only press of do broadcast section by Scotty? with Investors therefore, financial time-sensitive forward-looking any accordance to the call. speaks accurate In be longer that report provide this remember undertake place financial be the, any undue call, rules, that as should you today, not non-GAAP and replay or no

Scott Sparks

morning, good our week-long for during and and are call is you Houston thank everybody staff efforts Ken, everyone. We Thank we'll provide operations, recovering quarter. well-executed outages. producing view for market update guidance and safely our and our outperformed offshore financial onshore team's our we power doing well, the joining those the another This The review storm. Thanks, our our quarter from their will highlights, hope of recent today. for and second morning again Houston We in performance current XXXX.

highlights high-level Moving for of summary results Slide and the provide on the presentation. a quarter. to X X our key and

and QX quarter, cash the $XX Both $XXX in during compared in XXXX. Adjusted free were million paid and of $XX $XX million loss income $XX profit a in the of a the a the million. $XXX of and million results million XXXX of Revenues million and negative flow resulting year-over-year. net and million million Our include cash in of million $XX million profit quarter profit cash revenue we operating million $XXX gross to of EBITDA for negative net $XX had significantly gross revenue, $X earn-out in million both million. second QX quarter. and improved gross quarter and income with of in out Alliance results in was $XX of net $XX for of flow $XX million, of $XX

revenues Excluding million, the show and flow a million and profit earnouts, impact of net would of year-to-date gross results QX. Likewise, We been million $XX our of free adjusted $XXX million. operating $XX significant $XX EBITDA flow of over cash been XXXX. our with in cash have our the million, of generated $XXX have income $X million improvements would

year-to-date million convertibles XXXX losses quarter. the redemption in income of Our pretax increase during the first remaining to related net $XX our

the second $XXX cash in Australia Robotics, the from including East detailed operations Gulf Module our and Riserless some disruption utilization. facilities. Slide X million Mexico we and Coast. with of million in Africa, Our operations $XXX a strong quarter and with end. Highlights include more QXXXX from In Asia-Pacific, from for XXXX, results of of strong to Intervention regions, equivalents in operational of at cash segment in minimal continue Brazil, cash results and liquidity Europe, quarter the and the globally strong across provides Abandonment deployment trenching the U.S. Well review results initial results of segment production of operate with quarter the strong Open-water and all successful liquidity projects, the remains well-executed

Robotics were our line quarter from overall Well with and markets in core Our expectations, by driven results groups. performance Intervention second strong

to a start timing due operator and Our impacted Shallow were season results Abandonment later the spending. by to of the weather Water

then well and achieved deployment the of for vessel performed XXX% in Well Sea The Intervention with very Moving to XX.X% the Mexico Esso in quarter. QXXXX expected We utilization the both and campaign had with units the X well with minimum to and of continue with of commenced North uptime Gulf Europe, the provides working year due commence further in for Australia, Slide is QX the now Slide the to XX transit well fourth Brazil works commence overall decommissioning Australia of scheduled the We in shelf Australia paid extremely to of this quarter. Mexico, the our Nigeria Brazil to working for performing and utilization The XX. utilization solid X-month in in for the ROAM. Gulf half solid campaign. of efficiency the to to for complete detail strong -- QXXXX then segment. transit successful second due

X Robotics Moving current survey work performed during to between XX business. high business the vessels Slide provides on of projects Robotics The with related vessels XX. working those renewables vessels on All an and had quarter. the projects, in within in and detail of Europe renewables X oil exceptional utilization worked All further strong gas projects operating quarter. and trenching vessels support, Taiwan. X Slide standards, working X at X on trenching site quarter, trenching and our vessels ROV trenching, globally. had renewable

in detail water now utilization year. Slide due season has a expect weather to year high In the Shallow to and QX, trenching Water Abandonment shallow XX of business. of expected provides had our fleet, Shallow anticipate the the will across are into the conditions Mexico. of unexpected another lead the globally later rest than to Water the We for season the Gulf strong start Robotics well team which we

pleased Also other boat, the spreads. In the the recommenced softening and Epic the support with full-field summary, XXXX, less-than-expected overall scheduled on with Hedron as the the P&A along abandonment lift spreads. vessels project QX, after in barge water utilize P&A improvements decommissioning general work This are vessels, results. the in barge market. dive back some year-over-year in and start the lift shelf shallow heavy slow in with than utilization to heavy back to of we project with the winter resulted operations, near-term our the we well dive break larger As for

from Our into increase benefit are in QX activity business the during segments positioned to QX. expected and

of our the would efficient over larger Brent. expect customers' delivering and look some forward market for and in believe established will benefit the contracts operations Intervention us execution, market coming turn we to our to legacy value at our in to off our industry. I as we continue has our and and call thank positioned to safe belief pricing for We we Well assets leader improvements we As benefit to from deliver. I are rates. from their efforts well high XXXX, of customers to employees now a level like

Brent Arriaga

Thanks, Scotty.

as Slide to of XX our June XX. was we million. Moving metrics with had debt million that million of $XX $XXX of outlines credit Funded $XXX at facility and quarter end sheet cash $XXX key the resulting in debt quarter ABL balance instruments end, availability under liquidity of At million.

$XX We quarter at have net million of debt end.

Eric operating $XX settled for cash to million for over we now Alliance XXXX QX, turn the our cash discussion related beyond. the that with paying flowing our During the call on acquisition, to and of $XX outlook million flow. I'll a of earnout through

Erik Staffeldt

the our on energy market, and to Revenue, quarter billion; revenue million key second EBITDA, our million. $X.XX financial year-to-date strength expectations Thanks, forecast. certain is are $XXX and to of our of our performance offshore Based of updating guidance from $X.X Brent. billion guidance our metrics we the $XXX

earnout ] million. guidance quarter our with made $XX million flow, This $XX exists the with $XXX improvement of the segment. April. remaining our season. Free early in our The during Water the in units We have uncertainty includes concentration million core Shallow cash the the to from [ variability maintained in our fourth EBITDA increasing to we're business offsetting in our lower guidance outlook legacy the near-term impact

Excluding accordingly, QX guidance XXXX cash million the $XXX $XX free earnout, flow our been have working our from benefiting free And $XXX impact would flow been of would million the capital cash million. have inflows. range to

million CapEx amounts $XX our reducing to on into are guidance forecast We pushing XXXX. $XX Lower based to approved million. is

to fleet regulatory be renewal the of Robotics. on maintenance of and our Our continues spend mix vessels a

during Well in The in have and of XXXX. HPX a dry The Moving parts Enhancer dry completed QX possibly Slide QX. and in its QX mobilization the maintenance its its dock to completed period spanning QX scheduled QXXXX Brazil, XX. dock will

regulatory $XXX Our funded maintenance, million. to forecast continues CapEx full which our be towards at sheet, balance stands operating falls cash weighted the into our debt primarily flow. Reviewing year

XXXX. significant not next maturity is Our until

repurchases We and XXXX are $XX million program in year-to-date. million still completed QX $X of targeting with $XX $XX million share our to million in

QX Our by follow and active quarters performance in we similar than and of quarters QX, first quarterly cadence and winter transit and impacts the to XXXX most impacted likely the a our QXXXX or first financial the slightly weather. 'XX the with of the on expect par to second is being third in quarters expected transit XXXX Overall, second half. in fourth be QXXXX our results half with as stronger anticipated

$XX year-to-date assumptions the segment by Our and and payment flow have XX. impacted is significantly higher, in of balance Alliance a by some for million if regions the would cash key starting not earn-out million $XX positive Providing free been on April. year, Slide the

estimated West the Africa Well to the paid scheduled continues demo. In Mexico market, Gulf year is supporting on transit be for a into strong of through the Nigeria expect Gulf and have contract sea to The quarter utilization work The contracted utilization white segment. Intervention of to a for The North is in and its of mode mobilization we Well contracted and space XX-day expected has limited our QXXXX, with First, Mexico. QXXXX work Sea, in improving QX most QX. Enhancer vessel work this the schedule. to will rates year. X-month The and fill U.K. good strong QXXXX an the contracted with QXXXX for every minimum

contracted X to XXXX. In possibility X provides its to to contracted, currently operators. late for performing projects winter with utilization Australia are for a in Petrobras. range The Brazil working for QX, scheduled for Brazil well of work Sea. guidance. The utilization in Siem We followed adjusted months seasonally expected QXXXX and is our scheduled Siem The transit contracted are mid-December anticipating expected winter season abandonment projects the of Helix commence QX by The work into Helix to with Trident is into into the continue the support in a mobilization XXXX. early the different return in of upper XXXX of is Brazil, X North

We from at expect XXXX. rates extension benefit Trident contract market to the in

and forecasted wind performing projects is from contracted utilization III benefit providing and Shelia of 'XX. mid-QX TXXXX-X expected strong through QX Green projects for remain competing APAC active into expected to scheduled Sea, North oil to to in market Grand in Coast, market, continues in last II The and Taiwan, U.S., support. and Topaz tight Taiwan the extremely utilization and market, Topaz to XXXX. In Siem segment Canyon both is U.S. East cycler in and Canyon the and the seasonal second renewables performing good Robotics trenching Sea farm Siem to contracted of half has both the The North Wave the operations have QX. into Robotics. to renewables the trencher operations. are QX. enabler Moving gas supporting have the Glomar the Bordelon trenching the has In region assets.

Moving HPX the for to expected production of contract balance is XX changes. no the facilities, on with

with expected Water variability to continues lead. Continuing We production as Droshky have the Abandonment. to field Shallow

activity, We expected in continue business variability believe decommissioning to beyond through for for the properties this time, XXXX the seasonal more in call of our for seeing given but foundation comments. back business, discussion needs QX still be QX market. At call-out currently to I Owen and Shelf closing long will bankruptcies, term, solid Owen? reversion we and and on outlook this a this turn to a than is anticipate operator and with a higher spending. we're continued customers'

Owen Kratz

a Thanks, Eric. for our into of outlook We've lot you Good insight provided morning, XXXX. all.

has delivering our team in segments. performance performed financial solid of well, most Our

begin impacting second we have do some outlook quarter, for third our of half As we 'XX. the noise the

of expecting more requires incur we're these paid XXXX. of First, treatment cost to to EBITDA projects accounting than and the over expected approximately and Brazil. Even it to the mobilization QXXXX us into periods Nigeria of life to we mobilization recognize million is have to $XX and during as QXXXX though fee transit the mobilization project. the deployed and shift days mobilizations, This the defer the XXX

needs free date on and has the year. foundation shelf mentioned, Based the Gulf decommissioning properties, we're in as the customers' believe shallow strength flow market and capital underperformed water of market, of projected the in with long cash existing Second, global to OFS still Mexico. altering our market reversion for of That But soft the other guidance we term. segment the sharpening overall spend. not than our this

off legacy balance that current be rates. the we're secured of into were the rates the begin roll point and for near the downturn replaced ahead to with and during Looking 'XX, 'XX for to market

Once our in we announced, contracts XXXX for customers with previously with meaningful for secure the work rate to EBITDA greater to day transit expect discussions through to transit increase Brazil, XXXX, subject into the generate Brazil actual see a Australia rates of years expect market XX% are multiple ahead. More from Intervention in rates which in to our then to utilized multiple its term QX assets, Well begins Brazil with to we Brazil. than in QXXXX XXXX, expected going and out to options the to to some escalators we XXXX contribution expect for of expectations an several advanced operations, per timing QX. through and beginning EBITDA we XXXX. utilization As utilization of early year-over-year what is achieve $XX,XXX Australia beyond. with it day, a would specifically, The growth on into have forward achieve in Go $XX,XXX

we through expect Nigeria scheduled supply the Gulf The rolling Intervention of the examples year months the in year. starting legacy XXXX, Robotics area know range mutual would currently projects further October. EBITDA Trenching decision as to of transit or significant Mexico, precise, and we're next August, demand on in Well own awards is Africa. expect cables million some starting demand contract be its Mexico XXXX. of QXXXX beginning work for a $XX pipeline we're the work the in in in addition, add on in most see to our and further. of options of are X It's The are an with XXXX. there to we'll There's wind may achievable, the discussions And over already of rate the increase rates with on September, $XXX of extend. tailwinds what is out too on based capacity. These market Gulf make In and growth term in approximate deployment about to good seeing. In depending late early the QXXXX contracts added million of to the each in work with early with off XX% farms for West There's the the otherwise we We've robust for early on XXXX. we the now, to is in visibility as XXXX out year-over-year in XXXX but seeing market contracted business, the with far profitability. tightening driver our general the

of deploy already performance strong site the we of site XXXX. The is second of a certainly last with group UXO seeing XXXX, on for hard excited The support be segment, coming vessel time come. and to about to our clearances potential our a our the Gulf is our available expertise to offering market. strong which for likely farm the from of based trencher, at to to renewables there. that growth market work enhanced shallow the there for third potential awards, expect clearance abandonment a time. the We've work to further wind For for our for to the was preparation. Overall, market during status continued And a add water the XXXX. secured the in idle cyclers the larger Robotics Mexico we'll grab market we're in look in leveraging within market boulder Adding this Robotics all forecast starting we long pace work continue

majority XXXX. of of Fieldwood, the Cox but work work over to a in the delayed XXXX got added pace Producers into settling the delays Following the has forward. The the significantly needs start. rapid the to that back done, pulled the off reassess to of bankruptcies going bankruptcy be the market to have start is bankruptcy

accretive under type we existing continue information adding as to final our repurchase cash share into sheet. properties and and given guidance that the b, note, their free more model with for at consider Work potential over should year fields is Fieldwood both any producers be as likely cash business with an in our we Cox This producer, in a expected the life. bolt-on forecast. On of will more expect by based as likely sustainable be This plan. to acquisition. it year. to As but constant flow $XXX alternative We our XXXX XXXX be on the million beginning X market And our as to a a dry contribution our greater for in a frantic well are XXXX, the compared And units business where could not off to production their are balance additional time cash our the market a our repurchase with such, from in line work slower result, major the if of current generation to a our one pace hold, powder. Barring XXXX market abandonment from of and would first the wells be producers on to XXXX purely at to and opportunistic original a shares come the million we'll and producers XXXX. We drop XXXX, repeated to means think of of remain demand the to a if do we to see with production it's provides each at our of event, the an in expect approved deploying in rebound sustainable; $XXX put level. The consistent liabilities. a even see do in about pace. Compared meaningful approached more backlog acquisitions rates fields. XXXX, the XXXX in dealing approximately on to with don't end the facilities decline in of end behaves EBITDA production for not half may we basis Helix our assumptions dialogue number on upside a

our we'll remain always, opportunities a forward explore all value to As Eric? strong and open looking creation for We're to further XXXX. to shareholders.

Erik Staffeldt

we'll at this questions. time, Operator, take Owen. Thanks,

Operator

the first from question of BTIG. comes from line [Operator Sherif Instructions] The crave

Sherif Elmaghrabi

that rigs bid in drilling dealing rig contracts? Starting their given in start that's operators some some others? more Intervention basins you to on some versus you're something with white Well are Well prevalent schedules, seeing with Intervention, is And space

Scott Sparks

Good that. take I'll morning.

come seeing we've We these on utilization. market years undertake operators we're better at But and rigs the contracts and as for the some are high some we're Intervention. rates their off longer-term high legacy for rates, expecting said coming better Well space using contracts, utilization seeing as to white call, we

operations. the also North It's have we're against white You diver-based remember, in not competing drilling Sea, to space. really all different

Sherif Elmaghrabi

on the in strongest its quarterly XX about And side, years. posted revenue Robotics

of due that difficult changing to Can to And as you that is the Robotics? of seasonality. cycle for work? Some more us you seasonal do start remind related offshore is

Scott Sparks

a business. where wind water the that are be going winter the This basically So with very contracts ROVs we year, Robotics, seasonal. breaks lead working through and winter of work. it's for trenching backlog good works side in shallow XXXX continue farms have and can the generally of it winter we're the trenching seasonality to on Much longer-term and season. can into But the that of on are in

So seasonality. can trenching going this very affected fourth we very mean we out years looking it's to and the the contracts I side to a mainly are of up have quarter, through the numbers contracts. looking be trenching. a season. And short We're for now that winter good expect the well future. at business, strong it be into But some trenching used that pipeline

a have opportunities pipeline very We good trenching for business. the of

Operator

Energy question comes next from from line of the The Josh Partners. Daniel Jayne

Joshua Jayne

into and when some XXXX in not with last announced at continued day improvement look rates. just day contracts some weeks, even First only drillers ask, I XXXX, operators have but question cases, also I willingness the wanted of notable that to to part show today's term out couple on of offshore the rate assets that

have just to discussions on we'll respect talk in and for work expand for and the well Owen calls You've for operators rates contracting million here and curious, could the couple are if million to intervention term Maybe well you going X about bit months 'XX. last as 'XX helpful. out alluded it be about X a just forward your how of for $XX EBITDA. But with your they how higher the that could in little I'm talked see comfortable fleet further with you of $XXX last would on fleet sort accelerated beyond to to increase just

Scott Sparks

Yes.

Owen As some said, negotiations. good we're in

the assets. clients are Well solid at are Those at rates, Intervention of negotiations they some assets much have rates. for larger higher and better contracts. There's We longer-term much

Some in ours of those before good assets said, are with, clients and are like would end years going contracts of up. X X to duration negotiations. We those very good of announcing year the I where end expect the to to be

Joshua Jayne

-- on touch on Shallow business. And the Okay. Abandonment to just Water

You've seems been beyond this there in 'XX be we've business going And this amount significant 'XX, be runway of over year of to from pretty what transparent long-term weak. a yet heard. is in the that to course this

just us today, talk years? to the that couple how next So of turnaround be you're could through in coming you business managing assuming going a there's

Owen Kratz

in balancing a bottleneck of the are that people. now, act -- segment Right it's biggest Yes.

was be going And in this year so XXXX. we far, knew soft rebound a to that potential a with

that's the So trying pace this trying work the been well, softer in has we're negative high to we've that reap and been we to year going of But should coming 'XX. rebound. resources be year that impact anticipated, we that our we order that for But adjusting be capacity our capacity able and to costs 'XX maintain we've respond additional The be benefits into actual as of market it's what than an to maintain the appropriate. beyond. inordinate incurring to been means -- probably assess going that 'XX to to in next probably and to is

Joshua Jayne

last just I then And may. one if Okay. follow-up,

guidance in of of there X you've assets. in be in been why Well where QX close business 'XX, some years, so going for the those little years strong? a those variance and understand, I the But forward the years, the you 'XX have. QX so potential You to those potentially 'XX highlighted could those of structurally the see XXX% I has if going and rest all your it want opportunity Seawell all last EBITDA the the seasonality on the was utilized of for just for bit could surrounding changed is Enhancer seasonality. of what utilization in weather-driven less to to back the seasonality or That's in the and assets? Was normally, is maybe

Scott Sparks

moment, it winter this working their into winter. referring weather. seasonal back with conservative year, good sit because one do to look wells Yes, season. a the that has the to opportunity the in the bit as we're contract This not out vessels downturns looking works. on at just where Last in at and dry months went view year, had unit business a have the we are through had one Clients at we I good always the go see Mediterranean, and next And there. work of for well. to and vessels dock we conservative opportunity. That's the the discussion Intervention But out of a signed go It's want U.K. think of clients where will us little don't the we're winter just being so as in weather. up whole on being for we're very so saying there could work was how there's We're Mediterranean periods be the the in through we weather yet, in historical some of the Well that year, as upside. pay

Owen Kratz

deferred have like that -- the over just XXX time. with is Erik and over of I term do I'd we the And another days amortized something factor variability of mentioned, then to believe the has the contract. QX like transit to in revenue the of add cost and

depends how 'XX right versus that quarter the largely that impact 'XX. see there's way us how fourth long when actually for depends until the begins, is and we to to So contracted many the days in the the continues. of assess what fall And on no on now current mobilization timing work

Operator

are Officer, Chief questions to remarks. back Erik call turn this no over further would like time, to there Financial for Mr. I As Staffeldt, at the closing

Erik Staffeldt

We Thank in much and today. and forward call third us you. you on appreciate having joining to quarter Thanks very XXXX our your for October. participation interest look

Operator

conference Ladies gentlemen, participation. call. today's your concludes and this you for Thank

disconnect. You now may

Helix Energy Solutions (HLX) 25 Jul 242024 Q2 Earnings call transcript