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HELIX ENERGY SOLUTIONS GROUP INC (HLX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered $355.1M revenue, $0.13 diluted EPS, and $71.6M Adjusted EBITDA; sequentially, revenue rose 3.7% while EPS and EBITDA declined on lower seasonal utilization and demobilization costs; YoY revenue grew 6% and swung to profit versus Q4’23 loss .
  • Well Intervention drove the quarter on higher dayrates and a ~$14M North Sea cancellation fee; Robotics remained strong; Shallow Water Abandonment (SWA) seasonally weakened; Production Facilities fell on Droshky shut-ins and no Thunder Hawk production .
  • 2025 outlook introduced: revenue $1.36–$1.50B, Adjusted EBITDA $320–$380M, FCF $175–$225M, capital additions $70–$90M; company targets repurchasing at least 25% of FCF (~$50M at mid-point), with vessel-specific catalysts (Q7000 start in Brazil mid-March, Q4000 returning to GoM in H2) .
  • No S&P Global consensus available at retrieval; narrative catalysts: multi‑year contract coverage at higher rates, 2025 EBITDA/FCF step‑up, and a more assertive buyback plan; risks: UK North Sea softness/taxes, SWA spot demand, and Production Facilities variability .

What Went Well and What Went Wrong

  • What Went Well

    • Contracting/pricing: Signed multi‑year awards covering over half of the well intervention fleet at improved rates; CEO: “highest EBITDA since 2014…negative net debt…strong contract coverage…expect to increase repurchases in 2025” .
    • Execution in core segments: Well Intervention rates improved (Q4000 Nigeria, Q7000 strong) and Robotics remained robust (high trenching activity); EBITDA benefitted from an ~$11M cancellation benefit .
    • Balance sheet/FCF: Year-end cash $368M, negative net debt $53M; 2024 FCF $163M despite $58M earnout; liquidity $430M .

  • What Went Wrong

    • Seasonal/SWA weakness: SWA revenue down 47% QoQ/39% YoY on lower vessel/system utilization; Epic Hedron utilization fell to 41% .
    • Production Facilities: Droshky unplanned October shut-in and Thunder Hawk shut-ins reduced revenue and operating income QoQ .
    • SG&A/FX: SG&A rose to $27.6M (7.8% of revenue) on higher compensation; other expense swung to $(1.3)M on GBP depreciation .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Thousands)$364,797 $342,419 $355,133
Gross Profit ($USD Thousands)$75,486 $65,665 $58,859
Gross Margin (%)21% 19% 17%
Net Income ($USD Thousands)$32,289 $29,514 $20,121
Diluted EPS ($)$0.21 $0.19 $0.13
Adjusted EBITDA ($USD Thousands)$96,895 $87,621 $71,641
Cash from Operations ($USD Thousands)$(12,164) $55,731 $77,977
Free Cash Flow ($USD Thousands)$(16,153) $52,645 $65,454
Cash & Cash Equivalents ($USD Thousands)$275,066 $324,120 $368,030
Net Debt ($USD Thousands)$43,563 $(9,447) $(52,873)

Segment revenues

Segment Revenue ($USD Thousands)Q4 2023Q3 2024Q4 2024
Well Intervention$203,866 $174,613 $226,188
Robotics$62,957 $84,526 $81,594
Shallow Water Abandonment$61,995 $71,595 $37,690
Production Facilities$19,383 $20,695 $18,462
Intercompany Eliminations$(13,044) $(9,010) $(8,801)
Total Revenue$335,157 $342,419 $355,133

Segment operating income

Segment Op Income ($USD Thousands)Q4 2023Q3 2024Q4 2024
Well Intervention$21,041 $16,109 $29,118
Robotics$9,224 $24,158 $19,335
Shallow Water Abandonment$12,032 $8,808 $(5,422)
Production Facilities$(985) $8,288 $5,498
Corp/Other/Elims$(15,005) $(12,723) $(17,651)
Total$15,380 $44,640 $30,878

KPIs and operating stats

KPIQ4 2023Q3 2024Q4 2024
Well Intervention vessel utilization95% 97% 79%
Robotics chartered vessel activity (days; utilization)463; 97% 532; 96% 508; 98%
ROV & trencher utilization68% 77% 64%
Integrated vessel trenching (days)271 249 269
SWA vessel utilization (ex-heavy lift)71% 76% 65%
SWA P&A + CT systems activity1,386 days (58%) 607 days (25%) 416 days (17%)
Epic Hedron heavy lift utilization76% 88% 41%
Production Facilities noteThunder Hawk shut-in Thunder Hawk shut-in Droshky unplanned Oct shut‑in; Thunder Hawk shut‑in

Estimate comparison

  • S&P Global consensus estimates were unavailable at time of retrieval; as a result, we cannot quantify beat/miss versus Street for revenue/EPS/EBITDA this quarter (Wall Street consensus via S&P Global not available).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025N/A (initial 2025 outlook)$1.36B – $1.50B New
Adjusted EBITDAFY 2025N/A$320M – $380M New
Free Cash FlowFY 2025N/A$175M – $225M New
Capital Additions (incl. recertifications)FY 2025N/A$70M – $90M New
Cash interestFY 2025N/A~$30M New
Cash taxesFY 2025N/A$40M – $50M New
Segment revenue: Well InterventionFY 2025N/A$850M – $890M New
Segment revenue: RoboticsFY 2025N/A$290M – $340M New
Segment revenue: SWAFY 2025N/A$190M – $230M New
Segment revenue: Production FacilitiesFY 2025N/A$70M – $80M New
EliminationsFY 2025N/A$(40)M New
Share repurchasesFY 2025N/ATarget ≥25% of FCF (~$50M) New
Thunder Hawk productionFY 2025N/AExpected shut‑in throughout 2025 Lowered
Droshky productionFY 2025N/AOngoing production expected Maintained
Q70002025 startN/ACommence Shell Brazil 400-day project ~mid‑March New
Q40002025N/ANigeria to mid‑2025, then return to GoM New
Siem Helix 12025N/ATrident into H2’25, then 3‑yr Petrobras New
Siem Helix 22025N/ANew 3‑yr Petrobras contract commenced early Jan New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
Well Intervention pricing/coverageLegacy contracts rolling off; 20% (Q5000) and ~40% (Brazil) rate step-ups; 2025 EBITDA +$60–$100M expected .Multi‑year coverage at higher rates; cancellation benefit ~$11M; spot rates still edging higher, albeit slower .Improving
Robotics demand/trenchingExceptional Q2; tight ROV/trenching markets; pipeline extending to 2028 .Strong quarter; tenders out to 2029–2030; awarded ~300‑day Hornsea 3 trenching (2026 start) .Strengthening
SWA (GoM shelf)Later seasonal start; softer 2024; maintaining capacity for rebound .Seasonal slowdown; 2025 expected marginally better; cost base rightsized .Stabilizing (below 2023)
Production FacilitiesQ2 benefitted from prior workover normalization .Droshky unplanned shut‑in Oct; Thunder Hawk shut‑in; 2025: Thunder Hawk expected shut‑in .Negative to flat
Capital allocation2024 buybacks $20–$30M target; free cash flow improving .Minimum 25% of FCF to buybacks; >$150M authorization remaining; M&A optionality .More aggressive
M&A appetiteMonitoring; valuation discipline; potential bolt‑ons .“High probability” of M&A in 2025; focus on geographic and wind markets; vessel prices still high .Rising
UK North Sea/regulatorySeasonal winter slowdowns expected .Weaker 2025 utilization; UK tax headwinds cited .Deteriorating

Management Commentary

  • “Our full-year results for 2024 reflect our third consecutive year of revenue and EBITDA growth, with our highest EBITDA since 2014…we ended the year in a strong financial position, with significant cash levels and negative net debt…we’ve now repurchased over $40 million in our shares and expect to increase repurchases in 2025.” – Owen Kratz, CEO .
  • “Revenue of $1.36 billion to $1.5 billion…EBITDA of $320 million to $380 million…Free cash flow, $175 million to $225 million…capex of $70 million to $90 million…seasonality will skew free cash generation to later in the year.” – Erik Staffeldt, CFO .
  • “We’re a 1.5 vessel short of meeting demand…we plan to take advantage of a tight [WI] market to achieve higher margins…Robotics visibility for trenching extends to 2029; we may need an additional trencher.” – Owen Kratz, CEO .

Q&A Highlights

  • Capital deployment/M&A: Management sees a “high probability” of M&A in 2025, with interest in geographic expansion and wind/robotics; vessel asset prices remain elevated; buybacks set at ≥25% of FCF, potentially more if M&A doesn’t materialize .
  • Well Intervention pricing/spot: Long‑term contracts moved to market rates; spot dayrates still increasing modestly after sharp gains in prior two years; Robotics dayrates also rising .
  • Robotics growth: Considering adding a trencher; new-build trencher could cost ~$25M and take ~18 months; trenching/site‑clearance pipeline out to 2030 with ~$650M potential revenue discussed for high‑probability awards .
  • Fleet coverage: Q5000 effectively tight for next 2–3 years; Q4000 Nigeria through Q2 with options and strong GoM demand thereafter; multiyear opportunities into 2026–2027 discussed .
  • Guidance construct: WI transitions (SH2 Jan, Q7000 late‑Mar start, SH1 H2 transition) and weaker UK North Sea utilization frame the 2025 range; execution/seasonality and mobilization timings are key swing factors .

Estimates Context

  • S&P Global consensus estimates (revenue/EPS/EBITDA) were unavailable at retrieval; consequently, we cannot quantify beat/miss versus Wall Street this quarter. Values would ordinarily be sourced from S&P Global’s consensus library.

  • Implications for estimate revisions: 2025 should see upward revisions to EBITDA/FCF on contracted higher WI rates (Brazil and GoM), Q7000 Brazil start, and disciplined capex; expect cautious Street treatment of SWA and Production Facilities given lingering softness and Thunder Hawk shut‑in guidance .

Key Takeaways for Investors

  • 2025 set up for material EBITDA and FCF expansion (EBITDA $320–$380M; FCF $175–$225M) driven by WI contract upgrades and Q7000 Brazil start; seasonal cadence suggests back‑half cash inflection .
  • Multi‑year contracting at higher rates de‑risks utilization for major WI assets, narrowing downside to UK North Sea seasonality/taxes; Robotics visibility extends to 2029–2030 on trenching/site‑clearance .
  • SWA remains a drag near‑term; cost actions implemented; base case modest improvement in 2025 but below 2023 peak activity .
  • Production Facilities are an earnings swing factor; 2025 assumes Thunder Hawk shut‑in and Droshky decline; limited contribution embedded, offering upside if remediation timelines improve .
  • Capital allocation turns more shareholder‑friendly: ≥25% of FCF to buybacks with negative net debt and significant liquidity; optionality for accretive M&A if valuations normalize .
  • Near‑term trading: watch late‑Q1 milestone for Q7000 commencement in Brazil and clarity on UK North Sea spring utilization; cancellation benefits (Q4’s ~$11M) are non‑recurring, so focus on underlying dayrate/margin traction .

Appendix: Segment Drivers (Q4 detail)

  • Well Intervention: +$51.6M QoQ on fewer transit/mobilization days, higher dayrates, ~$14M North Sea cancellation fee; utilization 79% vs 97% in Q3; operating income +$13M QoQ .
  • Robotics: Revenue −3% QoQ on lower ROV/trenching utilization (64% vs 77%); 508 chartered vessel days at 98%; operating income −$4.8M QoQ due to demobilization costs .
  • SWA: Revenue −47% QoQ on seasonal utilization drop; P&A/CT days down to 416 (17% utilization); Epic Hedron 41% utilization; op income −$14.2M QoQ .
  • Production Facilities: Revenue −11% QoQ on Droshky shut‑in and no Thunder Hawk production; op income −$2.8M QoQ .

Sources: HLX Q4’24 Form 8‑K and press release (Ex‑99.1) ; Q4’24 earnings call transcript ; Q3’24 press release ; Q2’24 Form 8‑K press release ; Robotics Hornsea 3 contract (Feb 5, 2025) .