HLX: Well Intervention Siems to Be Picking Up as Penalties Fade

Helix reported a 2Q17 miss as EBITDA of $29.7M came in below consensus/RJe of $32.1M/$36.2M. Stronger-than-expected Well Intervention utilization and margins mostly offset the substantial miss in Robotics. Though notably, much of the discussion surrounded the financial implications of the two Siem vessels contracted with Petrobras.


The Siem I remains on a reduced dayrate due to penalties implemented by Petrobras, though the company noted improving financial conditions during the quarter. We expect reduced penalties in 3Q (RJe 95% of full dayrate) and full dayrate (or no penalties) beginning in 4Q17. Helix maintains that the Siem II will commence operations late in 4Q17 as the company addresses issues identified during the Siem I acceptance testing. FY17 Well Intervention revenue guidance increased to $400M (vs RJe $405M) from $375M on the back of stronger performance.

Robotics performed seasonally better q/q; however, the market remains weak as the segment posted 2Q17 operating margins of -35% (vs RJe at 2.9%). Based on the Q2 miss and poor demand, we currently model 2017 revenues of $157M vs. guidance $160M. Our 2018 outlook for the segment remains subdued as offshore spending continues weakness.

Helix continues to be aggressive on debt reduction, posting $390M in cash down from 1Q of $538M due to debt payoffs and increased capex.

Estimates: We are revising our 2017 EBITDA estimate to $105M from $113M and our 2018 EBITDA estimate to $175M from $189M.

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