What changed in this filing

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Item 1. Financial Statements

2023-04-26 compared with 2022-10-26 · 142 added, 273 removed, 475 unchanged (47% of the section changed)

4 unchanged sentences

(in thousands)

September 30,

Current assets:

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Operating lease right-of-use assets

Deferred recertification and dry dock costs, net

Other assets, net

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Three Months Ended

Nine Months Ended

September 30,

Cost of sales

Gain (loss) on disposition of assets, net

Gross profit (loss)

Gain on disposition of assets, net

Acquisition and integration costs

1 unchanged sentence

Selling, general and administrative expenses

Income (loss) from operations

Equity in earnings of investment

Loss from operations

Net interest expense

Loss on extinguishment of long-term debt

Other expense, net

Other income (expense), net

Royalty income and other

1 unchanged sentence

Income tax provision (benefit)

Net loss attributable to redeemable noncontrolling interests

Net loss attributable to common shareholders

Loss per share of common stock:

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Three Months Ended

Nine Months Ended

September 30,

Other comprehensive loss, net of tax:

Foreign currency translation loss

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss)

Other comprehensive income (loss), net of tax

Comprehensive loss

Less comprehensive loss attributable to redeemable noncontrolling interests:

Foreign currency translation gain

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive loss attributable to common shareholders

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Shareholders’

Noncontrolling

Balance, June 30, 2022

Foreign currency translation adjustments

Activity in company stock plans, net and other

Share-based compensation

Balance, September 30, 2022

Comprehensive

Shareholders’

Noncontrolling

Balance, June 30, 2021

Foreign currency translation adjustments

Activity in company stock plans, net and other

Share-based compensation

Balance, September 30, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

HELIX ENERGY SOLUTIONS GROUP, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

Comprehensive

Shareholders’

Noncontrolling

Balance, December 31, 2022

Foreign currency translation adjustments

Repurchases of common stock

Activity in company stock plans, net and other

Share-based compensation

Balance, September 30, 2022

Balance, March 31, 2023

Comprehensive

Shareholders’

Noncontrolling

Balance, December 31, 2021

Cumulative-effect adjustments upon adoption of ASU No.

Foreign currency translation adjustments

Accretion of redeemable noncontrolling interests

Acquisition of redeemable noncontrolling interests

Activity in company stock plans, net and other

Share-based compensation

Balance, September 30, 2021

Balance, March 31, 2022

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

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Deferred income taxes

Equity in earnings of investment

Loss on disposition of assets, net

Loss on extinguishment of long-term debt

Unrealized foreign currency loss

Gain on disposition of assets, net

Unrealized foreign currency (gain) loss

Change in fair value of contingent consideration

1 unchanged sentence

Accounts receivable, net

Income tax receivable, net of income tax payable

Other current assets

Income tax payable, net of income tax receivable

Accounts payable and accrued liabilities

Net cash provided by operating activities

Deferred recertification and dry dock costs, net

Net cash used in operating activities

Cash flows from investing activities:

Alliance acquisition, net of cash acquired

Capital expenditures

Distribution from equity investment, net

Proceeds from sale of assets

1 unchanged sentence

Cash flows from financing activities:

Repayment of convertible senior notes

Repayment of Term Loan

Repayment of Nordea Q5000 Loan

Repayment of MARAD Debt

Debt issuance costs

Acquisition of redeemable noncontrolling interests

Repurchases of common stock

Payments related to tax withholding for share-based compensation

2 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash:

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generally accepted accounting principles (“GAAP”).

On July 1, 2022, we completed our acquisition of all of the equity interests of the Alliance group of companies (collectively “Alliance”).

The condensed consolidated financial statements prior to July 1, 2022 reflect only the historical results of Helix.

The condensed consolidated financial statements since the completion of the Alliance acquisition have included the results of Helix Alliance using the acquisition method of accounting.

See Note 3 for additional information regarding the Alliance acquisition.

The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements and the related disclosures.

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We have made all adjustments, which, unless otherwise disclosed, are of normal recurring nature, that we believe are necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive loss, statements of shareholders’ equity and statements of cash flows, as applicable.

The operating results for the three- and nine-month periods ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The operating results for the three-month period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Our balance sheet as of December 31, 2022 included herein has been derived from the audited balance sheet as of December 31, 2022 included in our 2022 Annual Report on Form 10-K (our “2022 Form 10-K”).

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Note 2 — Company Overview

We are an international offshore energy services company that provides specialty services to the offshore energy industry, with a focus on well intervention and robotics operations.

Our services are centered on a three-legged business model:

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.

Our services are centered on a three-legged business model well positioned for a global energy transition:

● Production maximization — our assets and methodologies are specifically designed to efficiently enhance and extend the lives of existing oil and gas reserves;

we also offer an alternative to take over end-of-life reserves in preparation for their abandonment;

● Decommissioning — we have historical success as a full-field abandonment contractor and believe that regulatory push for plug and abandonment (“P&A”) and transition to renewable energy will facilitate the continued growth of abandonment backlog;

● Renewable energy support — we are an established global leader in jet trenching and continue to seek to provide specialty support services to offshore wind farm developments, including boulder removal and unexploded ordnance clearance;

We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions.

We have expanded our service capabilities to shallow waters in the Gulf of Mexico with the Alliance acquisition on July 1, 2022 (Note 3).

Our North Sea operations and our Gulf of Mexico shelf operations related to our Alliance acquisition are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months.

We provide services primarily in the Gulf of Mexico, U.S.

East Coast, Brazil, North Sea, Asia Pacific and West Africa regions.

We have expanded our service capabilities to the Gulf of Mexico shelf with the acquisition of Alliance group of companies (collectively “Alliance”) on July 1, 2022 (Note 3), which we have re-branded as Helix Alliance.

Our North Sea operations and our Gulf of Mexico shelf operations related to Helix Alliance are usually subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months.

Our services are segregated into four reportable business segments:

Well Intervention, Robotics, Production Facilities and our new reporting segment, Shallow Water Abandonment, which was formed in the third quarter 2022 comprising the Helix Alliance business (Note 11).

Well Intervention, Robotics, Shallow Water Abandonment, which was formed in the third quarter 2022 comprising the Helix Alliance business (Note 12), and Production Facilities.

Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations, thereby avoiding drilling new wells by extending the useful lives of existing wells and preserving the environment by preventing uncontrolled releases of oil and gas.

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Our well intervention equipment includes intervention systems such as intervention riser systems (“IRSs”), subsea intervention lubricators (“SILs”) and the Riserless Open-water Abandonment Module, some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, trenching, seabed clearance, and inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets globally, thereby assisting the delivery of affordable and reliable energy and supporting the responsible transition away from a carbon-based economy.

Our Robotics segment provides trenching, seabed clearance, offshore construction and inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets globally, thereby assisting the delivery of affordable and reliable energy and supporting the responsible transition away from a carbon-based economy.

Additionally, our robotics services are used in and complement our well intervention services.

Our Robotics segment mainly includes remotely operated vehicles (“ROVs”), trenchers and robotics support vessels under term charters as well as spot vessels as needed.

Our Production Facilities segment includes the Helix Producer I (the “ HP I ”), a ship-shaped dynamically positioned floating production vessel, the Helix Fast Response System (the “HFRS”), which combines the HP I , the Q4000 and the Q5000 with certain well control equipment that can be deployed to respond to a well control incident, and our ownership of Droshky oil and gas properties.

We also have a 20 % ownership interest in Independence Hub, LLC (“Independence Hub”) that we account for using the equity method of accounting.

In May 2022, we received a net cash distribution of $ 7.8 million from the sale of the “Independence Hub” platform owned by Independence Hub.

In August 2022, we acquired from MP Gulf of Mexico, LLC (“MP GOM”), a joint venture controlled by Murphy Exploration & Production Company – USA, all of MP GOM’s 62.5 % interest in Mississippi Canyon Block 734, comprised of three wells and related subsea infrastructure (collectively known as the Thunder Hawk Field), in exchange for the assumption of MP GOM’s abandonment obligations (Note 12).

Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers, the IROV boulder grab and robotics support vessels under term charters as well as spot vessels as needed.

Our Shallow Water Abandonment segment provides services in support of the upstream and midstream ‎industries predominantly in the Gulf of Mexico shelf, including offshore oilfield decommissioning and ‎reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services.

Our Shallow Water Abandonment segment includes a diversified fleet of marine assets including liftboats, offshore supply vessels (“OSVs”), dive support vessels (“DSVs”), a heavy lift derrick barge, a crew boat, P&A systems and coiled tubing systems.

All of our current Production Facilities activities are located in the Gulf of Mexico.

Our Shallow Water Abandonment segment provides services in support of the upstream and midstream ‎industries in the Gulf of Mexico shelf, including offshore oil field decommissioning and ‎reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services.

Note 3 — Alliance Acquisition

On July 1, 2022, we completed our acquisition of all of the equity interests of Alliance.

On July 1, 2022, we completed our acquisition of Alliance.

The Alliance acquisition extends our energy transition strategy by adding shallow water capabilities into what we expect to be a growing offshore decommissioning market.

The aggregate preliminary purchase price of the Alliance acquisition was $ 145.7 million, consisting of $ 119.0 million with cash on hand and the estimated fair value of $ 26.7 million of contingent consideration related to the post-closing earn-out consideration.

The earn-out is payable in 2024 to the seller in the Alliance transaction in either cash or shares of our common stock pursuant to the terms of the Equity Purchase Agreement (the “Equity Purchase Agreement”) dated May 16, 2022 by and among Helix Alliance Decom, LLC, the seller and Helix.

The earn-out is payable in 2024 to the seller in the Alliance transaction in either cash or shares of our common stock pursuant to the terms of an Equity Purchase Agreement (the “Equity Purchase Agreement”) dated May 16, 2022.

The earn-out is not capped and is calculated based on certain financial metrics of the Helix Alliance business for 2022 and 2023 relative to amounts as set forth in the Equity Purchase Agreement.

The Alliance acquisition has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

The purchase price consideration has been allocated to the assets acquired and liabilities assumed of Alliance based upon preliminary estimate of their fair values as of the acquisition date.

Fair values of the assets acquired and liabilities assumed are measured in accordance with ASC Topic 820, Fair Value Measurement, using discounted cash flows and other applicable valuation techniques.

For certain assets and liabilities, those fair values are consistent with historical carrying values.

The following table summarizes the purchase consideration and the preliminary purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands):

We had finalized the purchase price allocation as of March 31, 2023 and there were no changes as compared to the amounts recorded at December 31, 2022.

The following table summarizes the final purchase consideration and the final purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands):

Cash consideration

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Net assets acquired

(1) The gross contractual accounts receivable totaled $ 44.2 million .

The fair value of accounts receivable reflects our best estimate at the acquisition date of contractual cash flows not expected to be collected.

The purchase price allocation is subject to revision as acquisition-date fair value analyses are completed and if additional information about facts and circumstances that existed at the acquisition date becomes available.

The purchase price consideration, as well as the estimated fair values of the assets acquired and liabilities assumed, will be finalized as soon as practicable, but no later than one year from the closing of the Alliance acquisition.

Acquisition and integration costs consist of legal and professional fees as well as costs incurred to integrate Alliance’s operations and systems and to align its financial processes and procedures with those of Helix.

Those costs are expensed as incurred and are presented separately from “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of operations.

Also presented separately are the changes in fair value of the contingent earn-out consideration (Note 16).

The pro forma summary below presents the results of operations as if the Alliance acquisition had occurred on January 1, 2021 and includes transaction accounting adjustments such as incremental depreciation and amortization expense from acquired tangible and intangible assets, elimination of interest expense on Alliance’s long-term debt that was paid off, acquisition and integration cost accruals, and tax-related effects.

The pro forma summary below presents the results of operations as if the Alliance acquisition had occurred on January 1, 2022 and includes transaction accounting adjustments such as incremental depreciation and amortization expense from acquired tangible and intangible assets, elimination of interest expense on Alliance’s long-term debt that was paid off in conjunction with the acquisition, and tax-related effects.

The pro forma summary uses estimates and assumptions based on information available at the time.

Management believes the estimates and assumptions to be reasonable;

however, actual results may have differed significantly from this pro forma financial information.

however, actual results may differ significantly from this pro forma financial information.

The pro forma information does not reflect any cost savings, operating synergies or revenue enhancements that might have been achieved from combining the operations.

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Three Months Ended

Nine Months Ended

September 30,

Note 4 — Details of Certain Accounts

Other current assets consist of the following (in thousands):

September 30,

Income tax receivable

Contract assets (Note 9)

Deferred costs (Note 9)

Income tax receivable

Other receivable (Note 12)

Total other current assets

Other assets, net consist of the following (in thousands):

September 30,

Deferred recertification and dry dock costs, net

Deferred costs (Note 8)

Prepaid charter (1)

Deferred costs (Note 9)

Other receivable (2)

Intangible assets with finite lives, net

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(1) Represents prepayments to the owner of the Siem Helix 1 and the Siem Helix 2 to offset certain payment obligations associated with the vessels at the end of their respective charter term.

(2) Represents agreed-upon amounts that we are entitled to receive from Marathon Oil Corporation (“Marathon Oil”) for remaining P&A work to be performed by us on Droshky oil and gas properties we acquired from Marathon Oil in 2019.

Accrued liabilities consist of the following (in thousands):

September 30,

Accrued payroll and related benefits

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Deferred revenue (Note 9)

Asset retirement obligations (Note 12)

Total accrued liabilities

Other non-current liabilities consist of the following (in thousands):

September 30,

Deferred revenue (Note 8)

Asset retirement obligations (Note 13)

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We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031.

The majority of the increases in our operating leases during the nine-month period ended September 30, 2022 are related to the vessel charter extensions for the Siem Helix 1 , the Siem Helix 2 , the Grand Canyon II , the Grand Canyon III and the Shelia Bordelon (Note 13).

Our operating lease additions during the three-month period ended March 31, 2023 are primarily related to the vessel charter for the Glomar Wave (Note 14).

Our operating lease additions during the three-month period ended March 31, 2022 are primarily related to the charter extensions for the Siem Helix 1 and the Siem Helix 2 .

We also sublease some of our facilities under non-cancelable sublease agreements.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Operating lease cost

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Net lease cost

Maturities of our operating lease liabilities as of September 30, 2022 are as follows (in thousands):

Maturities of our operating lease liabilities as of March 31, 2023 are as follows (in thousands):

Facilities and

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The following table presents the weighted average remaining lease term and discount rate:

September 30,

Weighted average remaining lease term

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The following table presents other information related to our operating leases (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Cash paid for operating lease liabilities

Right-of-use assets obtained in exchange for new operating lease obligations

Right-of-use assets obtained in exchange for new operating lease liabilities

Note 6 — Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of September 30, 2022 are as follows (in thousands):

Scheduled maturities of our long-term debt outstanding as of March 31, 2023 are as follows (in thousands):

Less than one year

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Three to four years

Four to five years

Unamortized debt issuance costs (1)

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and Zions Bancorporation and on July 1, 2022 we entered into a first amendment to the credit agreement (collectively, the “Amended ABL Facility”).

The Amended ABL Facility provides for an $ 100 million asset-based revolving credit facility, which matures on September 30, 2026 , with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 50 million.

The Amended ABL Facility provides for a $ 100 million asset-based revolving credit facility, which matures on September 30, 2026 , with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $ 50 million.

The Amended ABL Facility also permits us to request an increase of the facility by up to $ 50 million, subject to certain conditions.

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customer accounts receivable and cash, and provides for a $ 10 million sub-limit for the issuance of letters of credit.

As of September 30, 2022, we had no borrowings under the Amended ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 81.8 million, net of $ 2.2 million of letters of credit issued under that facility.

As of March 31, 2023, we had no borrowings under the Amended ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $ 80.0 million, net of $ 6.9 million of letters of credit issued under that facility.

We and certain of our U.S.

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The Amended ABL Facility requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 if availability is less than the greater of 10 % of the borrowing base or $ 10 million.

The Amended ABL Facility also requires us to maintain a pro forma minimum excess availability of $ 20 million for the 91 days prior to the maturity of each of our outstanding convertible senior notes.

The Amended ABL Facility also (i) limits the amount of permitted debt for the deferred purchase price of property not to exceed $ 50 million, (ii) establishes an excess availability requirement for the portion of any post-closing earn-out consideration related to our acquisition of Alliance that will be paid in cash (Note 3), and (iii) provides for potential pricing adjustments based on specific metrics and performance targets determined by us and Bank of America, as agent with respect to the Amended ABL Facility, related to environmental, social and governance (“ESG”) changes implemented by us in our business.

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The effective interest rate for the 2022 Notes was 4.8 %.

For the nine month periods ended September 30, 2022, total interest expense related to the 2022 Notes was $ 0.6 million, primarily from coupon interest expense.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2022 Notes was $ 0.4 million and $ 1.3 million, respectively, with coupon interest expense of $ 0.4 million and $ 1.1 million, respectively, and the amortization of issuance costs of $ 0.2 million for the nine-month period ended September 30, 2021.

For the three-month period ended March 31, 2022, total interest expense related to the 2022 Notes was $ 0.4 million, primarily from coupon interest expense.

Convertible Senior Notes Due 2023 (“2023 Notes”)

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Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

Prior to March 15, 2023, holders of the 2023 Notes may convert their notes if the closing price of our common stock exceeds 130 % of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2023 Notes is equal to or less than 97 % of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition).

Holders of the 2023 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 47.5260 shares of our common stock per $1,000 principal amount.

Prior to March 15, 2021, the 2023 Notes were not redeemable.

On or after March 15, 2021, we may redeem all or any portion of the 2023 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice.

Any redemption would be payable in cash equal to 100 % of the principal amount to be redeemed plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments.

Holders of the 2023 Notes may convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 47.5260 shares of our common stock per $1,000 principal amount.

We may redeem all or any portion of the 2023 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice.

Holders of the 2023 Notes may convert any of their notes if we call the notes for redemption.

Holders of the 2023 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2023 Notes).

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The effective interest rate for the 2023 Notes is 4.8 %.

For the three- and nine-month periods ended September 30, 2022, total interest expense related to the 2023 Notes was $ 0.4 million and $ 1.1 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.9 million, respectively, and the amortization of debt issuance costs of $ 0.1 million for the nine-month period ended September 30, 2022.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2023 Notes was $ 0.3 million and $ 1.0 million, respectively, with coupon interest expense of $ 0.3 million and $ 0.9 million, respectively, and the amortization of issuance costs of $ 0.1 million for the nine-month period ended September 30, 2021.

For each of the three-month periods ended March 31, 2023 and 2022, total interest expense related to the 2023 Notes was $ 0.4 million, with coupon interest expense of $ 0.3 million and the amortization of debt issuance costs of $ 0.1 million.

Convertible Senior Notes Due 2026 (“2026 Notes”)

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On or after August 15, 2023, we may redeem all or any portion of the 2026 Notes if the price of our common stock has been at least 130 % of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding our redemption notice.

Any redemption would be payable in cash equal to 100 % of the principal amount plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments.

Holders of the 2026 Notes may convert any of their notes if we call the notes for redemption.

Holders of the 2026 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (as defined in the indenture governing the 2026 Notes).

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The effective interest rate for the 2026 Notes is 7.6 %.

For the three- and nine-month periods ended September 30, 2022, total interest expense related to the 2026 Notes was $ 3.7 million and $ 11.1 million, respectively, with coupon interest expense of $ 3.4 million and $ 10.1 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 1.0 million, respectively.

For the three- and nine-month periods ended September 30, 2021, total interest expense related to the 2026 Notes was $ 3.7 million and $ 11.0 million, respectively, with coupon interest expense of $ 3.4 million and $ 10.1 million, respectively, and the amortization of debt issuance costs of $ 0.3 million and $ 0.9 million, respectively.

For each of the three-month periods ended March 31, 2023 and 2022, total interest expense related to the 2026 Notes was $ 3.7 million, with coupon interest expense of $ 3.4 million and the amortization of debt issuance costs of $ 0.3 million.

2026 Capped Calls

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In accordance with the Amended ABL Facility, the 2023 Notes, the 2026 Notes and the MARAD Debt, we are required to comply with certain covenants, including minimum liquidity and a springing fixed charge coverage ratio (applicable under certain conditions that are currently not applicable) with respect to the Amended ABL Facility and the maintenance of net worth, working capital and debt-to-equity requirements with respect to the MARAD Debt.

As of September 30, 2022, we were in compliance with these covenants.

We previously had a credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America.

The Credit Agreement was comprised of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”) with a maximum availability of $ 175 million and had a maturity date of December 31, 2021.

Concurrent with our entering into the ABL Facility on September 30, 2021, the Credit Agreement was terminated, the $ 28 million remaining balance of the Term Loan was repaid in full and the letters of credit issued under the Revolving Credit Facility were transferred to the ABL Facility.

We had no borrowings under the Revolving Credit Facility.

We previously had a credit agreement with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) to finance the construction of the Q5000 .

The loan was secured by the Q5000 and its charter earnings.

In January 2021, we repaid the remaining principal amount of $ 53.6 million.

As of March 31, 2023, we were in compliance with these covenants.

The following table details the components of our net interest expense (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Interest expense

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We believe that our application of such laws and the tax impact thereof are reasonable and fairly presented in our condensed consolidated financial statements.

For the three- and nine-month periods ended September 30, 2022, we recognized income tax expense of $ 6.5 million and $ 10.1 million, respectively, resulting in effective tax rates of ( 53.0 )% and ( 12.5 )%, respectively.

For these periods our aggregate tax expense was greater than the aggregate tax benefit of our losses primarily due to non-creditable foreign income and deemed profit taxes as well as unbenefited tax losses, resulting in negative effective tax rates.

Furthermore, our mix of earnings was impacted by the acquisition of Alliance, resulting in increased U.S.

earnings and tax expense as compared to the same periods in 2021.

For the three- and nine-month periods ended September 30, 2021, we recognized income tax benefit of $ 1.1 million and $ 2.9 million, respectively, resulting in effective tax rates of 5.3 % and 7.5 %, respectively.

For the three-month periods ended March 31, 2023 and 2022, we recognized income tax (benefit) expense of $( 2.0 ) million and $ 2.1 million, respectively, resulting in effective tax rates of 28.1 % and ( 5.4 )%, respectively.

These variances were primarily attributable to the earnings mix between our higher and lower tax rate jurisdictions as well as losses for which no financial statement benefits have been recognized.

The effective tax rate for the three-month period ended March 31, 2023 was higher than the U.S.

statutory rate primarily due to certain non-deductible expenses and non-creditable foreign income taxes.

For the three-month period ended March 31, 2022, our aggregate tax expense was greater than the aggregate tax benefit of our losses, resulting in negative effective tax rates.

The effective tax rate for the three-month period ended March 31, 2022 was significantly lower than the U.S.

statutory rate primarily due to non-creditable foreign income and deemed profit taxes, as well as losses without tax benefits.

Note 8 — Share Repurchase Programs

On February 20, 2023, we announced that our Board of Directors (our “Board”) authorized a new share repurchase program (the “2023 Repurchase Program”) under which we are authorized to repurchase up to $ 200 million issued and outstanding shares of our common stock.

Concurrent with the authorization of the 2023 Repurchase Program, our Board revoked the prior authorization to repurchase shares of our common stock in an amount equal to any equity issued to our employees, officers and directors under our share-based compensation plans, including share-based awards under our existing long-term incentive plans and shares issued to our employees under our Employee Stock Purchase Plan (Note 11).

The 2023 Repurchase Program has no set expiration date.

Repurchases under the 2023 Repurchase Program are expected to be made through open market purchases in compliance with Rule 10b-18 under the Exchange Act, privately negotiated transactions or plans, instructions or contracts established under Rule 10b5-1 under the Exchange Act.

The manner, timing and amount of any purchase will be determined by management based on an evaluation of market conditions, stock price, liquidity and other factors.

The 2023 Repurchase Program does not obligate us to acquire any particular amount of common stock and may be modified or superseded at any time at our discretion.

The purchase of shares by us under the 2023 Repurchase Program is at our discretion and subject to prevailing financial and market conditions.

Any repurchased shares are expected to be cancelled.

During the three-month period ended March 31, 2023, we repurchased a total of 660,000 shares of our common stock for approximately $ 5.0 million or an average of $ 7.55 per share pursuant to the 2023 Repurchase Program.

Note 9 — Revenue from Contracts with Customers

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Shallow Water

Three months ended September 30, 2022

Three months ended September 30, 2021

Nine months ended September 30, 2022

Nine months ended September 30, 2021

Three months ended March 31, 2023

Three months ended March 31, 2022

Contract Balances

Accounts receivable are recognized when our right to consideration becomes unconditional.

Contract assets are rights to consideration in exchange for services that we have provided to a customer when those rights are conditioned on our future performance.

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Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 4).

Contract assets were $ 0.7 million at September 30, 2022 and $ 0.6 million at December 31, 2021.

We had no credit losses on our contract assets for the three- and nine-month periods ended September 30, 2022 and 2021.

Contract assets were $ 0.7 million as of March 31, 2023 and $ 6.3 million as of December 31, 2022.

We had no credit losses on our contract assets for the three-month periods ended March 31, 2023 and 2022.

Contract liabilities are obligations to provide future services to a customer for which we have already received, or have the unconditional right to receive, the consideration for those services from the customer.

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Contract liabilities are reflected as “Deferred revenue,” a component of “Accrued liabilities” and “Other non-current liabilities” in the accompanying condensed consolidated balance sheets (Note 4).

Contract liabilities totaled $ 20.8 million at September 30, 2022 and $ 8.7 million at December 31, 2021.

Revenue recognized for the three- and nine-month periods ended September 30, 2022 included $ 2.7 million and $ 7.0 million, respectively, that were included in the contract liability balance at the beginning of each period.

Revenue recognized for the three- and nine-month periods ended September 30, 2021 included $ 4.0 million and $ 6.7 million, respectively, that were included in the contract liability balance at the beginning of each period.

Contract liabilities totaled $ 11.6 million as of March 31, 2023 and $ 10.0 million as of December 31, 2022.

Revenue recognized for the three-month periods ended March 31, 2023 and 2022 included $ 3.9 million and $ 4.3 million, respectively, that were included in the contract liability balance at the beginning of each period.

We report the net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period.

Performance Obligations

As of September 30, 2022, $ 758.4 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 162.0 million, $ 426.4 million and $ 170.0 million in 2022 , 2023 and 2024 , respectively.

As of March 31, 2023, $ 920.4 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with $ 554.3 million, $ 363.6 million and $ 2.5 million in 2023 , 2024 and 2025 , respectively.

These amounts include fixed consideration and estimated variable consideration for both wholly and partially unsatisfied performance obligations, including mobilization and demobilization fees.

These amounts are derived from the specific terms of our contracts, and the expected timing for revenue recognition is based on the estimated start date and duration of each contract according to the information known at September 30, 2022.

For the three- and nine-month periods ended September 30, 2022 and 2021, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

For the three-month periods ended March 31, 2023 and 2022, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

Contract Fulfillment Costs

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Deferred contract costs are reflected as “Deferred costs,” a component of “Other current assets” and “Other assets, net” in the accompanying condensed consolidated balance sheets (Note 4).

Our deferred contract costs totaled $ 18.5 million at September 30, 2022 and $ 3.3 million at December 31, 2021.

For the three- and nine-month periods ended September 30, 2022, we recorded $ 8.5 million and $ 19.7 million, respectively, related to amortization of these deferred contract costs.

For the three- and nine-month periods ended September 30, 2021, we recorded $ 11.7 million and $ 31.6 million, respectively, related to amortization of these deferred contract costs.

Our deferred contract costs totaled $ 32.0 million as of March 31, 2023 and $ 20.4 million as of December 31, 2022.

For the three-month periods ended March 31, 2023 and 2022, we recorded $ 4.7 million and $ 4.6 million, respectively, related to amortization of these deferred contract costs.

There were no associated impairment losses for any period presented.

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Three Months Ended

September 30, 2022

September 30, 2021

Basic and Diluted:

Net loss attributable to common shareholders

Net loss available to common shareholders

Nine Months Ended

September 30, 2022

September 30, 2021

March 31, 2023

March 31, 2022

Basic and Diluted:

Net loss attributable to common shareholders

Accretion of redeemable noncontrolling interests

Net loss available to common shareholders

We had net losses for the three- and nine-month periods ended September 30, 2022 and 2021.

We had net losses for the three-month periods ended March 31, 2023 and 2022.

Accordingly, our diluted EPS calculation for these periods excluded any assumed exercise or conversion of common stock equivalents.

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Three Months Ended

Nine Months Ended

September 30,

Diluted shares (as reported)

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Three Months Ended

Nine Months Ended

September 30,

Note 11 — Employee Benefit Plans

Long-Term Incentive Plan

As of September 30, 2022, there were 4.1 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).

During the nine-month period ended September 30, 2022, the following grants of share-based awards were made under the 2005 Incentive Plan:

As of March 31, 2023, there were 3.5 million shares of our common stock available for issuance under our 2005 Long-Term Incentive Plan, as amended and restated (the “2005 Incentive Plan”).

During the three-month period ended March 31, 2023, the following grants of share-based awards were made under the 2005 Incentive Plan:

Date of Grant

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January 3, 2023 (1)

100 % on January 4, 2025

100 % on December 31, 2025

January 1, 2023 (2)

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100 % on January 1, 2025

April 1, 2022 (2)

Restricted stock

100 % on January 1, 2024

July 1, 2022 (2)

Restricted stock

100 % on January 1, 2024

September 22, 2022 (3)

Restricted stock

100 % on September 22, 2023

(1) Reflects grants to our executive officers.

(2) Reflects grants to certain independent members of our Board of Directors (our “Board”) who have elected to take their quarterly fees in stock in lieu of cash, of which 8,013 shares granted on January 4, 2022 and 5,230 shares granted on April 1, 2022 vested upon the approval of our Board’s Compensation Committee in connection with the departure of an independent director during the second quarter 2022.

(3) Reflects restricted stock grants made to two new independent members of our Board in connection with their appointment to our Board.

(2) Reflects grants to certain independent members of our Board who have elected to take their quarterly fees in stock in lieu of cash.

Compensation cost for restricted stock is the product of the grant date fair value of each share and the number of shares granted and is recognized over the applicable vesting period on a straight-line basis.

Forfeitures are recognized as they occur.

No restricted stock awards have been granted to our executive officers or other employees in 2022.

For the three- and nine-month periods ended September 30, 2022, $ 0.5 million and $ 1.9 million, respectively, were recognized as share-based compensation related to restricted stock.

For the three- and nine-month periods ended September 30, 2021, $ 0.8 million and $ 2.5 million, respectively, were recognized as share-based compensation related to restricted stock.

No restricted stock awards have been granted to our executive officers or other employees since 2020.

For the three-month periods ended March 31, 2023 and 2022, $ 0.3 million and $ 0.6 million, respectively, were recognized as share-based compensation related to restricted stock.

Our performance share units (“PSUs”) that were granted prior to 2021 are to be settled solely in shares of our common stock and are accounted for as equity awards.

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Our PSUs cliff vest at the end of a three-year period with the maximum amount of the award being 200 % of the original PSU awards and the minimum amount being zero .

For PSUs that have a service and a market condition and are accounted for as equity awards, compensation cost is measured based on the grant date estimated fair value determined using a Monte Carlo simulation model and subsequently recognized over the vesting period on a straight-line basis.

For PSUs that have a service and a performance condition and are accounted for as equity awards, compensation cost is initially measured based on the grant date fair value.

For PSUs with a service and a market condition that are accounted for as equity awards, compensation cost is measured based on the grant date estimated fair value determined using a Monte Carlo simulation model and subsequently recognized over the vesting period on a straight-line basis.

For PSUs with a service and a performance condition that are accounted for as equity awards, compensation cost is initially measured based on the grant date fair value.

Cumulative compensation cost is subsequently adjusted at the end of each reporting period to reflect the current estimation of achieving the performance condition.

For the three- and nine-month periods ended September 30, 2022, $ 1.5 million and $ 3.6 million, respectively, were recognized as share-based compensation related to equity PSUs.

For the three- and nine-month periods ended September 30, 2021, $ 1.0 million and $ 3.1 million, respectively, were recognized as share-based compensation related to equity PSUs.

In January 2022, based on the performance of our common stock price as compared to our performance peer group over a three-year period, 559,150 equity PSUs granted in 2019 vested at 157 %, representing 876,469 shares of our common stock with a total market value of $ 3.2 million.

Our restricted stock units (“RSUs”) may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee and have been accounted for as liability awards.

Liability RSUs are measured at their estimated fair value at each balance sheet date, and subsequent changes in the fair value of the awards are recognized in earnings for the portion of the award for which the requisite service period has elapsed.

For the three-month periods ended March 31, 2023 and 2022, $ 1.2 million and $ 1.1 million, respectively, were recognized as share-based compensation related to PSUs.

In January 2023, based on the performance of our common stock price as compared to our performance peer group over a three-year period, 369,938 PSUs granted in 2020 vested at 77 %, representing 285,778 shares of our common stock with a total market value of $ 3.6 million.

Our restricted stock units (“RSUs”) granted beginning 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee and have been accounted for as liability awards.

Liability RSUs are measured at their estimated fair value based on the closing share price of our common stock as of each balance sheet date, and subsequent changes in the fair value of the awards are recognized in earnings for the portion of the award for which the requisite service period has elapsed.

Cumulative compensation cost for vested liability RSUs equals the actual payout value upon vesting.

For the three- and nine-month periods ended September 30, 2022, $ 0.7 million and $ 1.5 million, respectively, were recognized as compensation cost.

Compensation cost recognized for the three-month period ended September 30, 2021 was minimal.

For the nine-month period ended September 30, 2021, $ 0.4 million was recognized as compensation cost.

For the three-month periods ended March 31, 2023 and 2022, $ 1.2 million and $ 0.6 million, respectively, were recognized as compensation cost.

In 2023 and 2022, we granted fixed-value cash awards of $ 6.0 million and $ 5.5 million, respectively, to select management employees under the 2005 Incentive Plan.

The value of these cash awards is recognized on a straight-line basis over a vesting period of three years .

For the three- and nine-month periods ended September 30, 2022, $ 1.1 million and $ 3.2 million, respectively, were recognized as compensation cost.

For the three- and nine-month periods ended September 30, 2021, $ 1.0 million and $ 3.0 million, respectively, were recognized as compensation cost.

For the three-month periods ended March 31, 2023 and 2022, $ 1.2 million and $ 1.0 million, respectively, were recognized as compensation cost.

Defined Contribution Plan

We sponsor a defined contribution 401(k) retirement plan.

We sponsor a defined contribution 401(k) retirement plan (the “401(k) Plan”).

Our discretionary contributions are in the form of cash and consist of a 50 % match of each participant’s contribution up to 5 % of the participant’s salary.

Our discretionary contributions were suspended for 2021 and re-activated beginning January 2022.

For the three- and nine-month periods ended September 30, 2022, we made $ 0.4 million and $ 1.1 million, respectively, in contributions to the 401(k) plan.

For the three-month periods ended March 31, 2023 and 2022, we made $ 0.6 million and $ 0.4 million, respectively, in contributions to the 401(k) Plan.

Employee Stock Purchase Plan

We have an employee stock purchase plan (the “ESPP”).

As of September 30, 2022, 1.4 million shares were available for issuance under the ESPP.

As of March 31, 2023, 1.3 million shares were available for issuance under the ESPP.

The ESPP currently has a purchase limit of 260 shares per employee per purchase period.

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Beginning in the third quarter 2022 as a result of the Alliance acquisition (Note 3), we formed a new reportable business segment:

Shallow Water Abandonment.

Shallow Water Abandonment, which includes the assets, liabilities and operating results of Helix Alliance.

All material intercompany transactions between the segments have been eliminated.

Our U.S., U.K.

and Brazil Well Intervention operating segments are aggregated into the Well Intervention segment for financial reporting purposes.

Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa.

Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing production enhancement or decommissioning operations globally.

Our well intervention vessels include the Q4000 , the Q5000 , the Q7000 , the Seawell , the Well Enhancer , and the Siem Helix 1 and Siem Helix 2 chartered vessels.

Our well intervention equipment includes intervention systems, some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, trenching, seabed clearance and IRM services to both the oil and gas and the renewable energy markets globally.

Our Robotics segment provides trenching, seabed clearance, offshore construction and IRM services to both the oil and gas and the renewable energy markets globally.

Additionally, our Robotics services are used in and complement our well intervention services.

Our Robotics segment mainly includes ROVs, trenchers and robotics support vessels under term charters as well as spot vessels as needed.

Our Robotics segment includes ROVs, trenchers, the IROV boulder grab and robotics support vessels under term charters as well as spot vessels as needed.

We offer our ROVs, trenchers and the IROV on a stand-alone basis or on an integrated basis with chartered robotics support vessels.

Our Shallow Water Abandonment segment provides services in support of the upstream and midstream ‎industries in the Gulf of Mexico shelf, including offshore oilfield decommissioning and ‎reclamation, project management, engineered solutions, intervention, maintenance, repair, heavy lift and commercial diving services.

Our Shallow Water Abandonment segment operates a diversified fleet of marine assets including liftboats, OSVs, DSVs, a heavy lift derrick barge, a crew boat and P&A and coiled tubing systems.

Our Production Facilities segment includes the HP I , the HFRS and our ownership of oil and gas properties (Note 13).

Our Shallow Water Abandonment segment operates a diversified fleet of marine assets including liftboats, OSVs, DSVs, a heavy lift derrick barge, a crew boat, P&A systems, coiled tubing systems and other miscellaneous assets.

All material intercompany transactions between the segments have been eliminated.

We evaluate our performance based on operating income of each reportable segment.

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Three Months Ended

Nine Months Ended

September 30,

Net revenues —

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Segment operating income (loss)

Change in fair value of contingent consideration

Corporate, eliminations and other

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Three Months Ended

Nine Months Ended

September 30,

Well Intervention

Shallow Water Abandonment

Segment assets are comprised of all assets attributable to each reportable segment.

Corporate and other includes all assets not directly identifiable with our business segments.

Corporate and other includes all assets not directly identifiable with our business segments, most notably the majority of our cash and cash equivalents.

The following table reflects total assets by reportable segment (in thousands):

September 30,

Well Intervention

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Note 13 — Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure decommissioning and P&A activities associated with our oil and gas properties.

Our asset retirement obligations (“AROs”) relate to mature offshore oil and gas properties that we acquired with the intention to perform decommissioning work at the end of their life cycles.

AROs are recorded initially at fair value and consist of estimated costs for subsea infrastructure decommissioning and P&A activities associated with our oil and gas properties.

The estimated costs are discounted to present value using a credit-adjusted risk-free discount rate.

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An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations.

Our existing AROs relate to our Droshky oil and gas properties that we acquired from Marathon Oil Corporation (“Marathon Oil”) in January 2019.

In connection with assuming the P&A obligations related to those assets, we are entitled to receive agreed-upon amounts from Marathon Oil as the P&A work is completed.

Our ARO additions in the third quarter 2022 and a corresponding asset of $ 23.6 million relate to MP GOM’s 62.5 % interest in the Thunder Hawk Field that we acquired in August 2022 (Note 2).

In August 2022, we made an asset acquisition from MP Gulf of Mexico, LLC (“MP GOM”), a joint venture controlled by Murphy Exploration & Production Company – USA, for all of MP GOM’s 62.5 % interest in the Thunder Hawk Field, in exchange for the assumption of MP GOM’s abandonment obligations (initially estimated at $ 23.6 million).

Our AROs also include P&A costs associated with our Droshky oil and gas properties (Note 4).

The following table describes the changes in our AROs (in thousands):

AROs at January 1,

Liability incurred during the period

Revisions in estimates

Accretion expense

AROs at September 30,

AROs at March 31,

Note 14 — Commitments and Contingencies and Other Matters

We have long-term charter agreements with Siem Offshore AS for the Siem Helix 1 and Siem Helix 2 vessels.

During the first quarter 2022, the charter agreements for the Siem Helix 1 and the Siem Helix 2 were extended to February 2025 and February 2027, respectively, with further options to extend.

We have time charter agreements for the Grand Canyon II and Grand Canyon III vessels, which were extended during the third quarter 2022 to December 2027 and May 2028, respectively, with further options to renew.

During the first quarter 2022, we executed short-term time charter agreements for the Horizon Enabler in the North Sea and the Shelia Bordelon in the Gulf of Mexico.

During the third quarter 2022, the charter agreement for the Shelia Bordelon was extended to June 2024.

In January 2023, we entered into a three-year charter agreement for the Glomar Wave in the North Sea with options to extend.

We have long-term charter agreements with Siem Offshore AS for the Siem Helix 1 and Siem Helix 2 vessels expiring in February 2025 and February 2027, respectively, with options to extend.

We have time charter agreements for the Grand Canyon II and Grand Canyon III vessels expiring in December 2027 and May 2028, respectively, with options to renew.

We also have a time charter agreement for the Shelia Bordelon in the Gulf of Mexico through June 2024 and a short-term time charter agreement for the Horizon Enabler in the North Sea.

Contingencies and Claims

Our contingent consideration liability resulting from the Alliance acquisition is subject to risk as a result of changes in our probability weighted discounted cash flow model, which is based on internal forecasts, and changes in weighted average discount rate, which is derived from market data.

Our contingent consideration liability resulting from the Alliance acquisition is subject to risk, through the remainder of the contingency period, which ends on December 31, 2023, as a result of changes in our probability weighted discounted cash flow model, which is based on internal forecasts, and changes in weighted average discount rate, which is derived from market data.

We believe that there are currently no other contingencies that would have a material adverse effect on our financial position, results of operations or cash flows.

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We are currently involved in several lawsuits filed by current and former offshore employees seeking overtime compensation.

These suits are brought as collective actions and are in various stages of litigation.

In one such lawsuit, during the third quarter 2021 the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) issued a ruling adverse to us that may have implications for some of the other cases in which we are involved, as well as the way offshore personnel are compensated throughout our industry.

We further appealed that matter to the United States Supreme Court, which heard oral arguments in October 2022.

In another such lawsuit, during the third quarter 2022 the Fifth Circuit issued a separate adverse ruling that may also have implications for some of the other cases in which we are involved.

We continue to vigorously defend these lawsuits.

Notwithstanding that we believe we retain valid defenses, we have established a liability in these matters.

These suits are brought as collective actions and are in various stages of litigation in federal district courts.

We appealed one such lawsuit to the United States Supreme Court, which issued a ruling adverse to us in the first quarter 2023 that is likely to have implications for similar lawsuits in which we are involved.

In a separate lawsuit, during the third quarter 2022 the United States Court of Appeals for the Fifth Circuit issued an adverse ruling that may also have implications for other similar lawsuits in which we are involved.

We continue to vigorously defend these lawsuits, and notwithstanding that we believe we retain valid defenses, we have established a liability in each of these matters.

The final outcome of these matters remains uncertain, and the ultimate liability to us could be more or less than the liability established.

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The following table provides supplemental cash flow information (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Interest paid

Income taxes paid (1)

(1) Exclusive of any income tax refunds.

Our capital additions include the acquisition of property and equipment for which payment has not been made.

These non-cash capital additions totaled $ 0.3 million at September 30, 2022 and December 31, 2021.

Non-cash investing activities for the nine-month period ended September 30, 2022 also included $ 26.7 million in estimated fair value of contingent earn-out consideration as of July 1, 2022, the date of the Alliance acquisition (Note 3).

These non-cash capital additions totaled $ 0.2 million at March 31, 2023 and $ 0.3 million at December 31, 2022.

Note 16 — Allowance for Credit Losses

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Additions (reductions) (1)

Write-offs (2)

Balance at September 30,

Balance at March 31,

(1) Additions (reductions) in allowance for credit losses reflect credit loss reserves (releases) during the respective periods.

Additions during the third quarter 2022 primarily reflected adjustments to the allowance for credit losses due to increases in our expected credit losses as a result of the Alliance acquisition.

(2) The write-offs of allowance for credit losses reflect certain receivables related to our Robotics segment that were previously reserved and subsequently deemed to be uncollectible.

Note 17 — Fair Value Measurements

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The following table sets forth our assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Fair Value at September 30, 2022

Fair Value at March 31, 2023

Contingent consideration

Contingent consideration liability related to the Alliance acquisition (Note 3) is measured at fair value using Level 3 unobservable inputs at the end of each reporting period and changes in its estimated fair value are recorded in earnings until the liability is settled.

Contingent consideration liability related to the Alliance acquisition (Note 3) is measured at fair value using Level 3 unobservable inputs at the end of each reporting period.

The fair value of the estimated contingent consideration is determined based on our evaluation of the probability and amount of earnout that may be achieved based on expected future performance of Helix Alliance.

The Monte Carlo simulation model is used to calculate the estimated earnout payment, which is then discounted to present value based on the expected payment date of the contingent consideration.

The weighted-average volatility was 47.5 % and the weighted average discount rate was estimated to be 9.2 % at September 30, 2022.

The changes in the fair value of contingent consideration are as follows:

Balance at July 1,

The changes in the fair value of contingent consideration are as follows (in thousands):

Balance at January 1,

Change in fair value

Balance at September 30,

Balance at March 31,

The principal amount and estimated fair value of our long-term debt are as follows (in thousands):

September 30, 2022

March 31, 2023

December 31, 2022

MARAD Debt (matures February 2027)

2022 Notes (matured May 2022)

2023 Notes (mature September 2023)

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See Note 6 for additional disclosures on our long-term debt.

(2) The estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes was determined using Level 1 fair value inputs under the market approach.

(2) The estimated fair value of the 2023 Notes and the 2026 Notes was determined using Level 1 fair value inputs under the market approach.

The fair value of the MARAD Debt was estimated using Level 2 fair value inputs under the market approach, which was determined using a third-party evaluation of the remaining average life and outstanding principal balance of the indebtedness as compared to other obligations in the marketplace with similar terms.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements