What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-24 compared with 2024-10-24 · 95 added, 177 removed, 193 unchanged (58% of the section changed)

10 unchanged sentences

● statements regarding the spot market, the continuation of our current backlog, visibility and future utilization, our spending and cost management efforts and our ability to manage changes, oil price volatility and its effects and results on the foregoing as well as our protocols and plans;

● statements regarding general economic or political conditions, whether international, national or in the regional or local markets in which we do business;

● statements regarding energy transition and energy security;

6 unchanged sentences

● statements regarding global, market or investor sentiment with respect to fossil fuels;

● statements regarding general economic or political conditions, whether international, national or in the regional or local markets in which we do business;

● statements regarding our existing activities in, and future expansion into, the offshore renewable energy market;

● statements regarding potential developments, industry trends, performance or industry ranking;

● statements regarding our human capital resources, including our ability to retain our senior management and other key employees;

● statements regarding our human capital management, including our ability to retain our senior management and other key employees;

● statements regarding our share repurchase authorization or program;

5 unchanged sentences

● the general impact of oil and natural gas price volatility and the cyclical nature of the oil and gas market;

● the potential impact of geopolitical and domestic policy changes, including tariffs, that may negatively affect oil and gas production and/or pricing or adversely impact offshore renewable energy projects, costs of materials, regulations surrounding safe offshore well intervention, regulations of decommissioning offshore oil and gas wells, and global trade, economic growth and stability;

● the potential effects of regional tensions that have escalated or may escalate, including into conflicts or wars, and their impact on the global economy, the oil and gas market, our operations, international trade, or our ability to do business with certain parties or in certain regions, and any governmental sanctions resulting therefrom;

5 unchanged sentences

● the impact of the imposition by our customers of rate reductions, fines and penalties with respect to our operating assets;

● the impact of current and future laws and governmental regulations and how they will be interpreted or enforced, including related to fossil fuel production, decommissioning, and litigation and similar claims in which we may be involved;

● the future impact of international activity and trade agreements on our business, operations and financial condition;

● the performance of contracts by customers, suppliers and other counterparties;

11 unchanged sentences

● the effectiveness of our sustainability initiatives and disclosures;

● the future impact of international activity and trade agreements on our business, operations and financial condition;

● the effectiveness of any future hedging activities;

● the potential impact of a negative event related to our human capital resources, including a loss of one or more key employees;

● the potential impact of a negative event related to our human capital management, including a loss of one or more key employees;

● the impact of general, market, industry or business conditions;

12 unchanged sentences

Our services are key in supporting a global energy transition by maximizing production of existing oil and gas reserves, decommissioning end-of-life oil and gas fields and supporting renewable energy developments.

Our well intervention fleet includes seven purpose-built well intervention vessels and 12 subsea intervention systems.

Our robotics equipment includes 39 work-class ROVs, six trenchers and two IROV boulder grabs.

We charter robotics support vessels on long-term, short-term, flexible and spot bases to facilitate our ROV and trenching operations.

Our Well Intervention segment includes seven purpose-built well intervention vessels and 12 intervention systems.

Our Robotics segment includes 39 work-class ROVs, six trenchers, two IROV boulder grabs, and robotics support vessels chartered on long-term, short-term, flexible and spot bases to facilitate our ROV and trenching operations.

Our Shallow Water Abandonment segment includes nine liftboats, six OSVs, three DSVs, one heavy lift derrick barge, one crew boat, 20 P&A systems and six CT systems.

Our Production Facilities segment includes the HP I , the HFRS and our ownership of mature oil and gas properties.

Industry Influences and Market Environment

Demand for our services is primarily influenced by the condition of the oil and gas and the renewable energy markets and, in particular, the willingness of offshore energy companies to spend on operational activities and capital projects.

Demand for our services is primarily influenced by the condition of the oil and gas and the renewable energy markets and, in particular, the level of spending of offshore energy companies on operational activities and capital projects.

The performance of our business is largely affected by the prevailing market prices for oil and natural gas, which are impacted by domestic and global economic conditions, hydrocarbon production and capacity, geopolitical issues, weather, global health, and various other factors.

Demand for decommissioning is affected by commodity prices as well as governmental regulations and political forces globally.

Oil prices continue to be volatile but have generally remained robust since 2020.

Global demand for oil continues to experience growth albeit at slower rates, and we expect the current market conditions will maintain continued customer spending for the industry.

However, factors that could threaten the current commodity price environment persist, including regional conflicts, unrest in the Middle East, decisions from members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”), the global economy and the demand for oil and gas in China in particular, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy.

We expect these factors will continue to contribute to commodity price volatility with the potential to temper customer spending for oil and gas projects.

We maximize production of existing oil and gas reserves for our customers primarily in our Well Intervention segment.

2 unchanged sentences

Current volumes of work, rig utilization rates, the day rates quoted by drilling rig contractors and existing rig overhang affect the utilization and/or rates we can achieve for our assets and services.

We are seeing oil and gas companies continue to invest in long-cycle exploration projects in addition to maintaining and/or increasing production from their existing reserves.

As historically production enhancement through well intervention is less expensive per incremental barrel of oil than exploration, we expect oil and gas companies to continue to focus on optimizing production of their existing subsea wells.

Once end-of-life oil and gas wells have depleted their production, we decommission wells and infrastructure in our Well Intervention and Shallow Water Abandonment segments.

Our operations service the life cycle of an oil and gas field and provide P&A and decommissioning services at the end of the life of a field as required by governmental regulations.

We believe that our well intervention vessels have a competitive advantage in performing these services efficiently and with our suite of shallow water assets and capabilities, we are the only provider of full-field decommissioning services in the Gulf of Mexico shelf.

The demand for P&A services should grow over the mid- to long-term as the subsea tree base expands, as government regulations continue to place stronger emphasis on decommissioning aged wells worldwide (including subsea trees as well as mature dry tree wells in the shallow waters of the Gulf of Mexico), as customers look to reduce their decommissioning obligations and as customers shift resources to renewable energy.

We support the energy transition to renewable energy primarily in our Robotics segment through our services in offshore wind farm developments, primarily including subsea cable trenching and burial as well as seabed clearance and preparation services.

Demand for our services in the renewable energy market is affected by various factors, including the pace of consumer shift towards renewable energy sources, global electricity demand, technological advancements that increase the generation and/or reduce the cost of renewable energy, expansion of offshore renewable energy projects to deeper water and other regions, and government subsidies for renewable energy projects.

We expect growth in our renewables services as the energy market transitions to continued offshore renewable energy developments.

We believe that our well intervention vessels have a competitive advantage in performing these services efficiently and with our suite of shallow water assets and capabilities, we are the only provider capable of providing all facets of decommissioning services in the Gulf of America shelf.

We support the energy transition to renewable energy primarily in our Robotics segment through our services in offshore wind farm developments, including subsea cable trenching and burial as well as seabed clearance and preparation services.

Current Market Environment

Commodity prices continued to be volatile during the first quarter 2025.

Oil prices dropped precipitously into the low $60s in early April 2025 following the U.S.

government’s enactment of record tariffs levied globally and the announcement of significant increases in oil production by members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”).

These events follow increasing regulatory actions in the U.K., where the British government has enacted the Energy Profits Levy (windfall tax) and other changes that have significantly increased our customers’ costs in that region.

Furthermore, there have been recent merger announcements of operators in the U.K.

Pending mergers historically result in reductions in spending during the merger process.

The production increases, tariffs and resulting trade wars are expected to result in slower economic growth and substantially increase the risk of a recession, both of which would reduce global demand for oil, putting further pressure on commodity prices, which is likely to result in lower customer spending for the industry.

Additionally, the industry continues to be threatened by decisions from OPEC+, governmental regulations and changes thereto, geopolitical instability and uncertainty, regional conflicts, unrest in the Middle East, various governmental and customer sustainability initiatives and continued shifting of resource allocation to renewable energy.

We expect these factors will continue to contribute to commodity price volatility and may prolong existing lower commodity prices with the potential to temper customer spending for offshore oil and gas projects.

The international wind market continues to be robust, with continued activity and sanctioned work primarily in Europe and Asia Pacific.

windfarm activity is expected to decline following the 2025 Wind Energy Ban, a Presidential Memorandum issued in the U.S.

in January 2025 temporarily withdrawing wind energy leasing in the U.S.

Outer Continental Shelf.

Following the production increases announced by OPEC+ and the tariffs announced by the U.S.

government in early April as described above, we anticipate more uncertainty and expect a more challenging spot market for Well Intervention and Shallow Water Abandonment in 2025, although our performance should be supported by our backlog from new contracting at improved rates and by increasing demand for our decommissioning services internationally, which should grow over mid- to long-term as the subsea tree base expands, as customers reduce their decommissioning obligations, and as customers shift resources to renewable energy.

We expect the demand for shallow water decommissioning services in the Gulf of America to improve over the mid- to long-term as oil and gas properties revert to former owners due to bankruptcies, who are expected to address their decommissioning obligations.

We expect growth in our renewables services as the global demand for energy increases and the international energy market continues offshore renewable energy developments.

Our backlog is represented by signed contracts.

As of September 30, 2024, our consolidated backlog totaled approximately $1.6 billion, of which $261 million is expected to be performed over the remainder of 2024.

Our various contracts with Shell and ExxonMobil globally, our contracts with Trident Energy and Petrobras in Brazil, and our contracts with Talos in the Gulf of Mexico represented approximately 86% of our total backlog as of September 30, 2024.

Backlog is not necessarily a reliable indicator of revenues derived from our contracts as services are often added but may sometimes be subtracted;

contracts may be renegotiated, deferred, canceled and in many cases modified while in progress;

and reduced rates, fines and penalties may be imposed by our customers.

As of March 31, 2025, our consolidated backlog totaled approximately $1.4 billion, of which $592 million is expected to be performed over the remainder of 2025.

Our various contracts with Shell and Subsea 7 globally, our contracts with Trident Energy and Petrobras in Brazil, and our contracts with Talos in the Gulf of America represented approximately 86% of our total backlog as of March 31, 2025.

Backlog is not necessarily a reliable indicator of revenues derived from our contracts as (i) services are often added but may sometimes be subtracted;

(ii) contracts may be renegotiated, deferred, canceled and in many cases modified while in progress;

and (iii) reduced rates, fines and penalties may be imposed by our customers.

Furthermore, our contracts are in certain cases cancelable without penalty.

If there are cancellation fees, the amount of those fees can be substantially less than amounts reflected in backlog.

For the remainder of 2024 going into 2025, we expect to continue our strong performance driven by increasing demand for our decommissioning services internationally and continued growth in the offshore renewables trenching market.

We expect the demand for shallow water decommissioning services in the Gulf of Mexico to remain soft in the near term but should grow over the mid- to long-term.

RESULTS OF OPERATIONS

11 unchanged sentences

Non-cash impairment losses on goodwill and other long-lived assets are also added back if applicable.

To arrive at our measure of Adjusted EBITDA, we exclude gains or losses on disposition of assets, acquisition and integration costs, gains or losses related to convertible senior notes, the change in fair value of contingent consideration and the general provision (release) for current expected credit losses, if any.

To arrive at our measure of Adjusted EBITDA, we exclude gains or losses on disposition of assets, acquisition and integration costs, gains or losses related to convertible senior notes, the change in fair value of contingent consideration and the general provision for (release of) current expected credit losses, if any.

We define Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from asset sales and insurance recoveries (related to property and equipment), if any.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Income tax provision

Net income (loss)

Income tax provision (benefit)

Net interest expense

1 unchanged sentence

Depreciation and amortization

(Gain) loss on disposition of assets, net

Acquisition and integration costs

Change in fair value of contingent consideration

General provision for current expected credit losses

Loss on disposition of assets, net

General release of current expected credit losses

Losses related to convertible senior notes

1 unchanged sentence

The reconciliation of our cash flows from operating activities to Free Cash Flow is as follows (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

2 unchanged sentences

The reconciliation of our long-term debt to Net Debt is as follows (in thousands):

September 30,

Long-term debt including current maturities

Cash and cash equivalents

Comparison of Three Months Ended September 30, 2024 and 2023

Comparison of Three Months Ended March 31, 2025 and 2024

We have four reportable business segments:

3 unchanged sentences

Three Months Ended

September 30,

Net revenues —

21 unchanged sentences

(2) Represents the average utilization rate, which is calculated by dividing the total number of days the vessels, Robotics assets or Shallow Water Abandonment systems generated revenues by the total number of calendar days in the applicable period.

Utilization rates of chartered Robotics vessels during the three-month periods ended September 30, 2024 and 2023 each included 92 spot vessel days at near full utilization.

Utilization rate of chartered Robotics vessels during the three-month period ended March 31, 2024 included 91 spot vessel days at full utilization.

(3) Consists of ROVs, trenchers and IROV boulder grabs.

4 unchanged sentences

Three Months Ended

September 30,

Well Intervention

1 unchanged sentence

Net Revenues.

Our consolidated net revenues for the three-month period ended September 30, 2024 decreased by 13% as compared to the same period in 2023, reflecting lower revenues in our Well Intervention, Shallow Water Abandonment and Production Facilities business segments, offset in part by higher revenues in our Robotics segment.

Our Well Intervention revenues decreased by 19% for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting a higher number of transit and mobilization days, during which period revenues and costs were deferred and not recognized.

The Q4000 incurred approximately 67 days of paid mobilization and transit to West Africa and the Q7000 incurred approximately 38 days of paid mobilization and transit between contracts offshore Australia during the third quarter 2024, whereas both vessels had no transit and mobilization days during the third quarter 2023.

Our Robotics revenues increased by 12% for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting higher vessel, trenching and ROV activities during the third quarter 2024.

Chartered vessel activity increased to 532 days during the third quarter 2024 as compared to 506 days during the third quarter 2023.

Integrated vessel trenching decreased to 249 days during the third quarter 2024 as compared to 276 days during the third quarter 2023, and the third quarter 2024 included 92 days utilization on the i-Plough trencher on a third-party vessel and 92 days utilization on the IROV boulder grab whereas the i-Plough and IROV were idle during the third quarter 2023.

Overall ROV and trencher utilization increased to 77% in the third quarter 2024 from 67% during the third quarter 2023.

Our Shallow Water Abandonment revenues decreased by 18% for the three-month period ended September 30, 2024 as compared to the same period in 2023.

The decrease in revenues was due to lower activity levels and an overall softer Gulf of Mexico shelf market in 2024 coupled with the impact of two hurricanes affecting our operations in September 2024, resulting in lower vessel and system utilization during the third quarter 2024 as compared to the third quarter 2023, offset in part by higher pass-through revenues on the P&A systems.

Overall vessel utilization was 76% during the third quarter 2024 as compared to 89% during the third quarter 2023.

P&A systems and CT systems utilization declined to 607 days of utilization, or 25%, during the third quarter 2024 as compared to 1,531 days of utilization, or 74%, during the third quarter 2023.

Our Production Facilities revenues decreased by 15% for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting lower oil and gas production and prices during the third quarter 2024.

Oil and gas production declined during the third quarter 2024 due to an ongoing unplanned shut-in of the Thunder Hawk wells.

Gross Profit (Loss).

Our consolidated gross profit decreased by $14.9 million for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting a reduction in profit from our Shallow Water Abandonment business segment, offset in part by an increase in profit from our Robotics segment.

Our Well Intervention segment gross profit remained relatively flat despite lower revenues for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting lower revenues, offset by lower costs due in part to the deferral of transit and mobilization costs during the third quarter 2024.

Our Robotics gross profit increased by $4.0 million for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting higher revenues during the third quarter 2024.

Our Shallow Water Abandonment gross profit decreased by $18.4 million for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting lower revenues, in addition to higher costs due to an increase in lower margin pass-through activities during the third quarter 2024.

Our Production Facilities gross profit decreased by $0.9 million for the three-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting lower revenues, offset in part by lower production costs.

Change in Fair Value of Contingent Consideration.

The change in fair value of contingent consideration in the third quarter 2023 reflects an improvement in Helix Alliance’s results during the quarter.

We entered into an agreement and set the final earn-out during the fourth quarter 2023, which was paid on April 3, 2024.

Selling, General and Administrative Expenses.

Our selling, general and administrative expenses were $21.1 million for the three-month period ended September 30, 2024 as compared to $27.8 million for the same period in 2023, primarily reflecting lower employee compensation costs.

Net Interest Expense.

Our net interest expense totaled $5.7 million for the three-month period ended September 30, 2024 as compared to $4.2 million for the same period in 2023, primarily reflecting higher debt levels and rates on our 2029 Notes in 2024 as compared to our 2026 Notes in 2023, offset in part by higher interest income on our invested cash reserves (Note 5).

Other Expense, Net.

Net other expense was minimal for the three-month period ended September 30, 2024 as compared to $8.3 million for the same period in 2023.

Net other expense during the third quarter 2024 primarily reflects a $2.4 million increase in the value of incentive credits granted to the seller of P&A equipment acquired in 2023 (Note 3), offset by foreign currency gains due to the strengthening of the British pound.

Net other expense during the third quarter 2023 primarily reflects foreign currency losses related to U.S.

dollar denominated intercompany debt in our U.K.

Income Tax Provision.

Income tax provision was $9.5 million for the three-month period ended September 30, 2024 as compared to $8.3 million for the same period in 2023.

The effective tax rates for the three-month periods ended September 30, 2024 and 2023 were 24.4% and 34.9%, respectively.

The increase in income tax expense was primarily attributable to higher net income (Note 6).

Comparison of Nine Months Ended September 30, 2024 and 2023

We have four reportable business segments:

Well Intervention, Robotics, Shallow Water Abandonment and Production Facilities.

All material intercompany transactions between the segments have been eliminated in our condensed consolidated financial statements, including our condensed consolidated results of operations.

The following table details various financial and operational highlights for the periods presented (dollars in thousands):

Nine Months Ended

September 30,

Net revenues —

Well Intervention

Shallow Water Abandonment

Production Facilities

Intercompany eliminations

Gross profit (loss) —

Well Intervention

Shallow Water Abandonment

Production Facilities

Corporate, eliminations and other

Gross margin —

Well Intervention

Shallow Water Abandonment

Production Facilities

Total company

Number of vessels, Robotics assets or Shallow Water Abandonment systems (1) / Utilization (2)

Well Intervention vessels

Robotics assets (3)

Chartered Robotics vessels

Shallow Water Abandonment vessels (4)

Shallow Water Abandonment systems (5)

(1) Represents the number of vessels, Robotics assets or Shallow Water Abandonment systems as of the end of the period, including spot vessels and those under term charters, and excluding acquired vessels prior to their in-service dates, vessels managed on behalf of third parties and vessels or assets disposed of and/or taken out of service.

Utilization rates of chartered Robotics vessels during the nine-month periods ended September 30, 2024 and 2023 included 274 and 218 spot vessel days, respectively, at near full utilization.

(3) Consists of ROVs, trenchers and IROV boulder grabs.

(4) Consists of liftboats, OSVs, DSVs, a heavy lift derrick barge and a crew boat.

(5) Consists of P&A and CT systems.

Intercompany segment amounts are derived primarily from equipment and services provided to other business segments.

Intercompany segment revenues are as follows (in thousands):

Nine Months Ended

September 30,

Well Intervention

Shallow Water Abandonment

Net Revenues.

Our consolidated net revenues for the nine-month period ended September 30, 2024 increased by 5% as compared to the same period in 2023, reflecting higher revenues in our Well Intervention, Robotics and Production Facilities business segments, offset in part by lower revenues in our Shallow Water Abandonment segment.

Our Well Intervention revenues increased by 19% for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting higher revenues across our well intervention fleet except for the Well Enhancer .

Utilization increased on the Q4000 and the Q5000 during the nine-month period ended September 30, 2024 as both vessels underwent their regulatory dry docks in 2023.

The Q7000 had higher utilization during the nine-month period ended September 30, 2024 as compared to 2023.

The Seawell ‘s contract in the western Mediterranean, which completed in June 2024, has provided higher rates and utilization during the nine-month period ended September 30, 2024 as compared to the nine-month period ended September 30, 2023.

The Well Enhancer in the North Sea had lower utilization as compared to the prior year period as the vessel underwent a scheduled dry dock during the first quarter 2024.

Our Robotics revenues increased by 11% for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting higher chartered vessel days and trenching and ROV activities.

Chartered vessel activity increased to 1,393 days during the nine-month period ended September 30, 2024 as compared to 1,236 days during the nine-month period ended September 30, 2023, although chartered vessel days in the first quarter 2024 included approximately 64 days of standby utilization at reduced rates.

Overall ROV and trencher utilization increased to 70% in the nine-month period ended September 30, 2024 from 60% during the nine-month period ended September 30, 2023 and included 566 days of integrated vessel trenching in 2024 as compared to 536 days in 2023.

Our Shallow Water Abandonment revenues decreased by 30% for the nine-month period ended September 30, 2024 as compared to the same period in 2023.

The decrease in revenues was due to lower activity levels and an overall softer Gulf of Mexico shelf market in 2024, resulting in lower vessel and system utilization during the nine-month period ended September 30, 2024 as compared to the nine-month period ended September 30, 2023.

Overall vessel utilization was 59% during the nine-month period ended September 30, 2024 as compared to 75% during the same period in 2023.

P&A systems and CT systems achieved 1,865 days of utilization, or 26%, during the nine-month period ended September 30, 2024 as compared to 4,362 days of utilization, or 74%, during the nine-month period ended September 30, 2023.

Our Production Facilities revenues increased by 3% for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting higher oil and gas production and lower number of shut-in days.

Our consolidated net revenues for the three-month period ended March 31, 2025 decreased by 6% as compared to the same period in 2024, reflecting lower revenues in our Well Intervention, Shallow Water Abandonment and Production Facilities business segments, offset in part by higher revenues in our Robotics segment.

Our Well Intervention revenues decreased by 6% for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower utilization on the Seawell and the Q7000 , offset in part by higher rates during the first quarter 2025.

Revenues decreased on the Seawell , which was idle during the first quarter 2025 as compared to being nearly fully utilized operating in the western Mediterranean during the first quarter 2024.

Revenues on the Q7000 were lower due to the vessel recognizing only six days of revenue in Brazil during the first quarter 2025 as compared to being fully utilized in Australia during the first quarter 2024.

The Q7000 completed its mobilization and regulatory docking and commenced its 400-day contract in Brazil at the end of March 2025.

During the first quarter 2025, the Q4000 generated higher integrated project revenues while the Q5000 worked at higher contracted rates as compared to the first quarter 2024.

Additionally during the first quarter 2025, the Siem Helix 1 operated at higher rates on its contract extension with Trident as compared to the first quarter 2024 and the Siem Helix 2 operated at higher rates on its new contract with Petrobras that commenced early January 2025.

Our Robotics revenues increased by 1% for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting increased trenching activities, offset in part by a reduction in other ROV and vessel utilization.

The first quarter 2025 included 135 integrated vessel trenching days and 90 days of trenching on a third-party vessel as compared to 85 integrated vessel trenching days during the first quarter 2024.

Chartered vessel activity decreased to 244 days during the first quarter 2025 as compared to 333 days during the first quarter 2024.

Overall ROV and trencher utilization decreased to 51% during the first quarter 2025 from 58% during the first quarter 2024.

Our Shallow Water Abandonment revenues decreased by 37% for the three-month period ended March 31, 2025 as compared to the same period in 2024 due to lower vessel and system utilization.

Overall vessel utilization was 30% during the first quarter 2025 as compared to 41% during the first quarter 2024.

P&A systems and CT systems utilization decreased to 264 days, or 11%, during the first quarter 2025 as compared to 626 days, or 26%, during the first quarter 2024.

Our Production Facilities revenues decreased by 18% for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower oil and gas production and prices during the first quarter 2025.

Oil and gas production during the first quarter 2025 did not include production from the Thunder Hawk wells, which were active during the first quarter 2024 but have been shut-in since the third quarter 2024.

Gross Profit (Loss).

Our consolidated gross profit increased by $9.6 million for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting increased profits from our Well Intervention and Robotics business segments, offset in part by losses from our Shallow Water Abandonment and Production Facilities segments.

Our Well Intervention segment gross profit increased by $54.6 million for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting higher segment revenues and increased activity levels.

Our Robotics gross profit increased by $16.5 million for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting higher revenues and higher profit margin projects during the nine-month period ended September 30, 2024.

Our Shallow Water Abandonment gross profit decreased by $55.0 million for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting lower segment revenues.

Our Production Facilities gross profit decreased by $6.7 million for the nine-month period ended September 30, 2024 as compared to the same period in 2023, primarily reflecting well workover costs of approximately $8.6 million related to the Thunder Hawk wells during the first quarter 2024, offset in part by higher segment revenues.

Change in Fair Value of Contingent Consideration.

The change in fair value of contingent consideration in the nine-month period ended September 30, 2023 reflects an improvement in Helix Alliance’s results during the first half 2023.

We entered into an agreement and set the final earn-out during the fourth quarter 2023, which was paid on April 3, 2024.

Our consolidated gross profit increased by $8.0 million for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting increased profitability from our Well Intervention and Production Facilities business segments, offset in part by reduced profitability from our Shallow Water Abandonment segment.

Our Well Intervention segment gross profit increased by $1.2 million for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower idle vessel costs in the North Sea and cost deferrals on the Q7000 during its mobilization and regulatory docking, offset in part by lower revenues during the first quarter 2025.

Our Robotics gross profit remained relatively flat for the three-month period ended March 31, 2025 as compared to the same period in 2024.

Our Shallow Water Abandonment gross loss increased by $1.8 million for the three-month period ended March 31, 2025 as compared to the same period in 2024, primarily reflecting lower revenues, offset in part by lower costs during the first quarter 2025.

Our Production Facilities had a gross profit of $7.5 million for the three-month period ended March 31, 2025 as compared to a gross loss of $1.3 million for the same period in 2024 primarily due to the incurrence of well workover costs related to the Thunder Hawk wells during the first quarter 2024.

Selling, General and Administrative Expenses.

Our selling, general and administrative expenses were $64.1 million for the nine-month period ended September 30, 2024 as compared to $71.5 million for the same period in 2023, primarily reflecting lower employee compensation costs.

Our selling, general and administrative expenses were $19.4 million for the three-month period ended March 31, 2025 as compared to $20.7 million for the same period in 2024, primarily reflecting lower employee compensation costs.

Net Interest Expense.

Our net interest expense totaled $17.1 million for the nine-month period ended September 30, 2024 as compared to $12.6 million for the same period in 2023, primarily reflecting higher debt levels and rates on our 2029 Notes in 2024 as compared to our 2026 Notes in 2023, offset in part by higher interest income on our invested cash reserves (Note 5).

Our net interest expense totaled $5.7 million for the three-month period ended March 31, 2025 as compared to $5.5 million for the same period in 2024, primarily reflecting lower interest income on our invested cash (Note 5).

Losses Related to Convertible Senior Notes.

The $20.9 million loss for the nine-month period ended September 30, 2024 was associated with the retirement of our 2026 Notes (Note 5).

The losses during the three-month period ended March 31, 2024 were associated with the redemption of our 2026 Notes (Note 5).

Other Expense, Net.

Net other expense was $2.6 million for the nine-month period ended September 30, 2024 as compared to $10.6 million for the same period in 2023.

Net other expense during the nine-month period ended September 30, 2024 primarily reflects a $2.4 million increase in the value of incentive credits granted to the seller of P&A equipment acquired in 2023 (Note 3).

Net other expense during the nine-month period ended September 30, 2023 primarily reflects foreign currency losses related to the devaluation of the Nigerian naira on our naira cash holdings, offset in part by foreign currency gains related U.S.

Net other expense was $0.4 million for the three-month period ended March 31, 2025 as compared to $2.2 million for the same period in 2024.

Net other expense during the first quarter 2025 primarily reflects foreign currency losses related to the appreciation of the British pound on net cash balances denominated in U.S.

dollar in our U.K.

Net other expense during the first quarter 2024 primarily reflects foreign currency losses related to the depreciation of the British pound primarily on U.S.

dollar denominated intercompany debt in our U.K.

Income Tax Provision.

Income tax provision was $22.5 million for the nine-month period ended September 30, 2024 as compared to $9.6 million for the same period in 2023.

The effective tax rates for the nine-month periods ended September 30, 2024 and 2023 were 38.8% and 35.5%, respectively.

The increase in effective tax rates was primarily attributable to the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event and reported in the first quarter 2024 (Note 6).

Income Tax Provision (Benefit).

Income tax provision was $0.5 million for the three-month period ended March 31, 2025 as compared to income tax benefit of $1.7 million for the same period in 2024.

The effective tax rate for the three-month period ended March 31, 2025 was impacted by a discrete non-U.S.

The effective rate for the three-month period ended March 31, 2024 was impacted by the non-deductibility of certain losses associated with the 2026 Notes Redemptions, which was characterized as a discrete event.

LIQUIDITY AND CAPITAL RESOURCES

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The following table presents certain information useful in the analysis of our financial condition and liquidity (in thousands):

September 30,

Net working capital

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Net working capital measures short-term liquidity and is important for predicting cash flow and debt requirements.

Net working capital at December 31, 2023 included $85.0 million of Alliance earn-out consideration that was paid in cash on April 3, 2024.

Long-Term Debt

Long-term debt in the table above includes our MARAD Debt, the 2026 Notes and the 2029 Notes and excludes current maturities of $9.2 million at September 30, 2024 and $48.3 million at December 31, 2023, and is net of unamortized debt discount and debt issuance costs.

Long-term debt in the table above, presented net of unamortized debt discount and debt issuance costs, includes our MARAD Debt and the 2029 Notes and excludes current maturities of $9.4 million at March 31, 2025 and $9.2 million at December 31, 2024.

See Note 5 for information relating to our long-term debt.

We define liquidity as cash and cash equivalents plus available capacity under our credit facility.

Our liquidity at September 30, 2024 included $324.1 million of cash and cash equivalents and $74.7 million of available borrowing capacity under the Amended ABL Facility (Note 5).

Our liquidity at December 31, 2023 included $332.2 million of cash and cash equivalents and $99.3 million of available borrowing capacity under the Amended ABL Facility.

The reduction in availability on the Amended ABL Facility was attributable to higher letter of credit usage due to the Nigeria project on the Q4000 .

In the current market environment, we expect strong ongoing operating performance and cash flows.

We define liquidity as cash and cash equivalents plus available capacity under our credit facility, but excluding cash pledged as collateral toward the Amended ABL Facility.

Our liquidity at March 31, 2025 included $370.0 million of cash and cash equivalents and $62.7 million of available borrowing capacity under the Amended ABL Facility (Note 5) and excluded $28.0 million of pledged cash.

Our liquidity at December 31, 2024 included $368.0 million of cash and cash equivalents and $66.6 million of available borrowing capacity under the Amended ABL Facility and excluded $5.0 million of pledged cash.

The reduction in availability on the facility was primarily attributable to higher letter of credit usage in order to support the Nigeria project on the Q4000 .

We believe that our cash on hand, internally generated cash flows and availability under the Amended ABL Facility will be sufficient to fund our operations and expected capital spending, service our debt and other obligations, and execute our share repurchase program over at least the next 12 months.

We currently do not anticipate borrowing under the Amended ABL Facility other than for the issuance of letters of credit.

We expect lower levels of availability on the Amended ABL Facility while the Q4000 performs work in Nigeria due to fewer eligible receivables and higher letter of credit usage.

We expect availability on the Amended ABL Facility to increase following the completion of the Q4000 Nigeria campaign.

We currently do not anticipate borrowing under the Amended ABL Facility and expect to only use the facility for the issuance of letters of credit.

A period of weak industry activity may make it difficult to comply with the covenants and other restrictions in our debt agreements.

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The following table provides summary data from our condensed consolidated statements of cash flows (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Cash provided by (used in):

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Operating Activities

The increase in our operating cash flows for the nine-month period ended September 30, 2024 as compared to the same period in 2023 primarily reflects higher operating income, lower regulatory recertification costs for our vessels and systems and lower working capital outflows.

Operating cash outflows during the nine-month period ended September 30, 2024 included $58.3 million of the $85.0 million earn-out payment on April 3, 2024, representing the amount in the excess of the $26.7 million initial fair value of earn-out consideration at the Alliance acquisition date.

Regulatory recertification spend on our vessels and systems were $29.2 million and $59.2 million, respectively, during the comparable year over year periods.

Our operating cash flows for the three-month period ended March 31, 2025 decreased despite higher earnings as compared to the same period in 2024, primarily reflecting higher regulatory recertification costs on our vessels and systems and lower working capital inflows.

Regulatory recertification spending on our vessels and systems was $17.9 million and $9.6 million, respectively, during the comparable year over year periods.

Investing Activities

Cash flows used in investing activities for the nine-month periods ended September 30, 2024 decreased as compared to the same period in 2023 primarily due to lower capital expenditures.

Cash flows used in investing activities for the three-month period ended March 31, 2025 increased slightly as compared to the same period in 2024 primarily due to higher capital expenditures.

Financing Activities

Net cash outflows from financing activities for the nine-month period ended September 30, 2024 primarily reflect the final retirement of our 2026 Notes and the earn-out payment.

Cash outflows in 2024 included $60.7 million related to the 2026 Notes, $26.7 million of the $85.0 million earn-out payment, $10.2 million in repurchases of our common stock under the 2023 Repurchase Program and the principal repayment of $8.7 million related to the MARAD Debt, offset in part by $4.4 million of cash inflows from the proportionate settlement of the 2026 Capped Calls.

Net cash outflows from financing activities for the nine-month period ended September 30, 2023 primarily reflect $12.0 million in repurchases of our common stock under the 2023 Repurchase Program, the principal repayment of $8.3 million related to the MARAD Debt and $30.4 million related to the 2023 Notes (Note 5).

Net cash outflows from financing activities for the three-month period ended March 31, 2025 primarily reflect the principal repayment of $4.5 million related to the MARAD Debt and payments in satisfaction of tax obligations upon vesting of share-based awards.

Net cash outflows from financing activities for the three-month period ended March 31, 2024 primarily reflect cash outflows of $60.7 million related to the 2026 Notes, the principal repayment of $4.3 million related to the MARAD Debt and $4.2 million in repurchases of our common stock under the 2023 Repurchase Program.

These outflows were offset in part by $4.4 million of cash inflows from the proportionate settlement of the 2026 Capped Calls.

Material Cash Requirements

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Long-term debt and other contractual commitments

The following table summarizes (in thousands) the principal amount of our long-term debt and related debt service costs as well as other contractual commitments, which include commitments for property and equipment and operating lease obligations, as of September 30, 2024 and the portions of those amounts that are short-term (due in less than one year) and long-term (due in one year or greater) based on their stated maturities.

Our property and equipment commitments include contractually committed amounts to purchase and service certain property and equipment (inclusive of commitments related to regulatory recertification and dry dock as discussed below) but do not include expected capital spending that is not contractually committed as of September 30, 2024.

The following table summarizes (in thousands) the principal amount of our long-term debt and related debt service costs as well as other contractual commitments, which include commitments for property and equipment and operating lease obligations, as of March 31, 2025 and the portions of those amounts that are short-term (due in less than one year) and long-term (due in one year or greater) based on their stated maturities.

Interest related to debt

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Total cash obligations

(1) Operating leases include vessel charters and facility and equipment leases.

At September 30, 2024, our commitment related to long-term vessel charters totaled approximately $844.4 million, of which $424.1 million was related to the non-lease (services) components that are not included in operating lease liabilities in the condensed consolidated balance sheet as of September 30, 2024.

(1) Operating leases include vessel charters and facility and equipment leases, including commitments related to leases executed but not yet commenced.

At March 31, 2025, our commitment related to long-term vessel charters totaled approximately $804.9 million, of which $409.3 million was related to the non-lease (services) components that are not included in operating lease liabilities in the condensed consolidated balance sheet as of March 31, 2025.

Other material cash requirements

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We have decommissioning obligations associated with our oil and gas properties (Note 12).

Those obligations, which are presented on a discounted basis on the condensed consolidated balance sheets, approximate $80.9 million (undiscounted) for Thunder Hawk Field oil and gas properties and $37.1 million (undiscounted) for Droshky oil and gas properties as of September 30, 2024, none of which is expected to be paid during the next 12 months.

We are entitled to receive $30.0 million (undiscounted) from Marathon Oil as certain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

Those obligations, which are presented on a discounted basis on the condensed consolidated balance sheets, approximate $80.9 million (undiscounted) for Thunder Hawk Field oil and gas properties and $37.1 million (undiscounted) for Droshky oil and gas properties as of March 31, 2025, none of which is expected to be paid during the next 12 months.

We are entitled to receive $30.0 million (undiscounted) from Marathon Oil Corporation as certain decommissioning obligations associated with Droshky oil and gas properties are fulfilled.

Regulatory recertification and dry dock.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis