UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to__________

Commission File Number: 001-32936

HELIX ENERGY SOLUTIONS GROUP, INC.

(Exact name of registrant as specified in its charter)


Minnesota		95-3409686
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
3505 West Sam Houston Parkway North
Suite 400
Houston Texas		77043
(Address of principal executive offices)		(Zip Code)

(281) 618–0400

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	HLX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐☑	Accelerated filer ☑☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ☑ No

As of April 22, ~~2021, 150,723,988~~2022, 151,651,384 shares of common stock were outstanding.

Table of Contents

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements:	3
	Condensed Consolidated Balance Sheets – March 31, ~~2021~~2022 (Unaudited) and December 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Operations (Unaudited) – Three months ended March 31, ~~2021~~2022 and ~~2020~~2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) – Three months ended March 31, ~~2021~~2022 and ~~2020~~2021	5

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) – Three months ended March 31, ~~2021~~2022 and ~~2020~~2021	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) – Three months ended March 31, ~~2021~~2022 and ~~2020~~2021	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2623

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3732

Item 4.	Controls and Procedures	3833

PART II.	OTHER INFORMATION	3833

Item 1.	Legal Proceedings	3833

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3833

Item 6.	Exhibits	3934

	Signatures	4035

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


					March 31,		December 31,
	March 31,		December 31,		2022		2021
	2021		2020		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	204,802	$	291,320	$	229,744	$	253,515
Restricted cash		65,579		—		72,934		73,612
Accounts receivable, net of allowance for credit losses of $1,665 and $3,469, respectively		132,314		132,233
Accounts receivable, net of allowance for credit losses of $1,351 and $1,477, respectively						141,778		144,137
Other current assets		86,242		102,092		59,274		58,274
Total current assets		488,937		525,645		503,730		529,538
Property and equipment		2,956,804		2,948,907		2,916,214		2,938,154
Less accumulated depreciation		(1,197,712)		(1,165,943)		(1,306,162)		(1,280,509)
Property and equipment, net		1,759,092		1,782,964		1,610,052		1,657,645
Operating lease right-of-use assets		136,210		149,656		150,894		104,190
Other assets, net		37,510		40,013		42,694		34,655
Total assets	$	2,421,749	$	2,498,278	$	2,307,370	$	2,326,028

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	55,148	$	50,022	$	97,531	$	87,959
Accrued liabilities		76,486		87,035		74,873		91,712
Current maturities of long-term debt		36,478		90,651		43,117		42,873
Current operating lease liabilities		50,321		51,599		41,464		55,739
Total current liabilities		218,433		279,307		256,985		278,283
Long-term debt		299,560		258,912		258,496		262,137
Operating lease liabilities		88,576		101,009		112,507		50,198
Deferred tax liabilities		100,655		110,821		86,244		86,966
Other non-current liabilities		3,105		3,878		392		975
Total liabilities		710,329		753,927		714,624		678,559
Redeemable noncontrolling interests		3,960		3,855
Commitments and contingencies
Shareholders’ equity:
Common stock, 0 par, 240,000 shares authorized, 150,715 and 150,341 shares issued, respectively		1,286,380		1,327,592
Common stock, 0 par, 240,000 shares authorized, 151,637 and 151,124 shares issued, respectively						1,292,935		1,292,479
Retained earnings		468,087		464,524		369,041		411,072
Accumulated other comprehensive loss		(47,007)		(51,620)		(69,230)		(56,082)
Total shareholders’ equity		1,707,460		1,740,496		1,592,746		1,647,469
Total liabilities, redeemable noncontrolling interests and shareholders’ equity	$	2,421,749	$	2,498,278
Total liabilities and shareholders’ equity					$	2,307,370	$	2,326,028

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Net revenues	$	163,415	$	181,021	$	150,125	$	163,415
Cost of sales		148,791		179,011		168,734		148,791
Gross profit		14,624		2,010
Goodwill impairment		—		(6,689)
Gross profit (loss)						(18,609)		14,624
Selling, general and administrative expenses		(15,179)		(16,348)		(14,368)		(15,179)
Loss from operations		(555)		(21,027)		(32,977)		(555)
Net interest expense		(6,053)		(5,746)		(5,174)		(6,053)
Other income (expense), net		1,617		(10,427)		(3,881)		1,617
Royalty income and other		2,057		2,179		2,141		2,057
Loss before income taxes		(2,934)		(35,021)		(39,891)		(2,934)
Income tax provision (benefit)		116		(21,093)
Income tax provision						2,140		116
Net loss		(3,050)		(13,928)		(42,031)		(3,050)
Net loss attributable to redeemable noncontrolling interests		(172)		(1,990)		—		(172)
Net loss attributable to common shareholders	$	(2,878)	$	(11,938)	$	(42,031)	$	(2,878)

Loss per share of common stock:
Basic	$	(0.02)	$	(0.09)	$	(0.28)	$	(0.02)
Diluted	$	(0.02)	$	(0.09)	$	(0.28)	$	(0.02)

Weighted average common shares outstanding:
Basic		149,935		148,863		151,142		149,935
Diluted		149,935		148,863		151,142		149,935

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in thousands)


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Net loss	$	(3,050)	$	(13,928)	$	(42,031)	$	(3,050)
Other comprehensive income (loss), net of tax:
Net unrealized loss on hedges arising during the period		—		(96)
Reclassifications into earnings		—		427
Income taxes on hedges		—		(66)
Net change in hedges, net of tax		—		265
Foreign currency translation gain (loss)		4,613		(33,587)		(13,148)		4,613
Other comprehensive income (loss), net of tax		4,613		(33,322)		(13,148)		4,613
Comprehensive income (loss)		1,563		(47,250)		(55,179)		1,563
Less comprehensive loss attributable to redeemable noncontrolling interests:
Net loss		(172)		(1,990)		—		(172)
Foreign currency translation gain (loss)		36		(228)
Foreign currency translation gain						—		36
Comprehensive loss attributable to redeemable noncontrolling interests		(136)		(2,218)		—		(136)
Comprehensive income (loss) attributable to common shareholders	$	1,699	$	(45,032)	$	(55,179)	$	1,699

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands)


						Accumulated											Accumulated
						Other		Total		Redeemable							Other		Total		Redeemable
	Common Stock			Retained		Comprehensive		Shareholders’		Noncontrolling		Common Stock			Retained		Comprehensive		Shareholders’		Noncontrolling
	Shares	Amount		Earnings		Loss		Equity		Interests		Shares	Amount		Earnings		Loss		Equity		Interests
Balance, December 31, 2020	150,341	$	1,327,592	$	464,524	$	(51,620)	$	1,740,496	$	3,855
Balance, December 31, 2021												151,124	$	1,292,479	$	411,072	$	(56,082)	$	1,647,469	$	—
Net loss	—		—		(2,878)		—		(2,878)		(172)	—		—		(42,031)		—		(42,031)		—
Cumulative-effect adjustments upon adoption of ASU No. 2020-06	—		(41,456)		6,682		—		(34,774)		—
Foreign currency translation adjustments	—		—		—		4,613		4,613		36	—		—		—		(13,148)		(13,148)		—
Accretion of redeemable noncontrolling interests	—		—		(241)		—		(241)		241
Activity in company stock plans, net and other	374		(1,600)		—		—		(1,600)		—	513		(1,178)		—		—		(1,178)		—
Share-based compensation	—		1,844		—		—		1,844		—	—		1,634		—		—		1,634		—
Balance, March 31, 2021	150,715	$	1,286,380	$	468,087	$	(47,007)	$	1,707,460	$	3,960
Balance, March 31, 2022												151,637	$	1,292,935	$	369,041	$	(69,230)	$	1,592,746	$	—


						Accumulated											Accumulated
						Other		Total		Redeemable							Other		Total		Redeemable
	Common Stock			Retained		Comprehensive		Shareholders’		Noncontrolling		Common Stock			Retained		Comprehensive		Shareholders’		Noncontrolling
	Shares	Amount		Earnings		Loss		Equity		Interests		Shares	Amount		Earnings		Loss		Equity		Interests
Balance, December 31, 2019	148,888	$	1,318,961	$	445,370	$	(64,740)	$	1,699,591	$	3,455
Balance, December 31, 2020												150,341	$	1,327,592	$	464,524	$	(51,620)	$	1,740,496	$	3,855
Net loss	—		—		(11,938)		—		(11,938)		(1,990)	—		—		(2,878)		—		(2,878)		(172)
Credit losses recognized in retained earnings upon adoption of ASU No. 2016-13	—		—		(620)		—		(620)		—
Cumulative-effect adjustments upon adoption of ASU No. 2020-06												—		(41,456)		6,682		—		(34,774)		—
Foreign currency translation adjustments	—		—		—		(33,587)		(33,587)		(228)	—		—		—		4,613		4,613		36
Unrealized gain on hedges, net of tax	—		—		—		265		265		—
Accretion of redeemable noncontrolling interests	—		—		(2,086)		—		(2,086)		2,086	—		—		(241)		—		(241)		241
Activity in company stock plans, net and other	1,074		(4,730)		—		—		(4,730)		—	374		(1,600)		—		—		(1,600)		—
Share-based compensation	—		2,170		—		—		2,170		—	—		1,844		—		—		1,844		—
Balance, March 31, 2020	149,962	$	1,316,401	$	430,726	$	(98,062)	$	1,649,065	$	3,323
Balance, March 31, 2021												150,715	$	1,286,380	$	468,087	$	(47,007)	$	1,707,460	$	3,960

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Cash flows from operating activities:
Net loss	$	(3,050)	$	(13,928)	$	(42,031)	$	(3,050)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		34,566		31,598		33,488		34,566
Goodwill impairment		—		6,689
Amortization of debt discounts		—		1,633
Amortization of debt issuance costs		810		833		590		810
Share-based compensation		1,904		2,259		1,672		1,904
Deferred income taxes		(892)		(6,517)		(722)		(892)
Unrealized gain on derivative contracts, net		—		(601)
Unrealized foreign currency (gain) loss		(951)		9,237		2,603		(951)
Changes in operating assets and liabilities:
Accounts receivable, net		(463)		(25,375)		906		(463)
Income tax receivable		6,256		(17,033)		1,230		6,256
Other current assets		9,361		(5,475)		(534)		9,361
Accounts payable and accrued liabilities		(4,881)		15,563		(4,646)		(4,881)
Other, net		(2,791)		(16,105)		(9,969)		(2,791)
Net cash provided by (used in) operating activities		39,869		(17,222)		(17,413)		39,869

Cash flows from investing activities:
Capital expenditures		(1,329)		(12,389)		(623)		(1,329)
Net cash used in investing activities		(1,329)		(12,389)		(623)		(1,329)

Cash flows from financing activities:
Repayment of Term Loan		(875)		(875)		—		(875)
Repayment of Nordea Q5000 Loan		(53,572)		(8,929)		—		(53,572)
Repayment of MARAD Debt		(3,734)		(3,556)		(3,920)		(3,734)
Debt issuance costs		(43)		(212)		(136)		(43)
Payments related to tax withholding for share-based compensation		(1,878)		(5,150)		(1,525)		(1,878)
Proceeds from issuance of ESPP shares		217		331		173		217
Net cash used in financing activities		(59,885)		(18,391)		(5,408)		(59,885)

Effect of exchange rate changes on cash and cash equivalents and restricted cash		406		(2,834)		(1,005)		406
Net decrease in cash and cash equivalents and restricted cash		(20,939)		(50,836)		(24,449)		(20,939)
Cash and cash equivalents and restricted cash:
Balance, beginning of year		291,320		262,561		327,127		291,320
Balance, end of period	$	270,381	$	211,725	$	302,678	$	270,381

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

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HELIX ENERGY SOLUTIONS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 — Basis of Presentation and New Accounting Standards

The accompanying condensed consolidated financial statements include the accounts of Helix Energy Solutions Group, Inc. and its subsidiaries (collectively, “Helix”). Unless the context indicates otherwise, the terms “we,” “us” and “our” in this report refer collectively to Helix and its subsidiaries. All material intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements have been prepared pursuant to instructions for the Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission (the “SEC”) and do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP in U.S. dollars and are consistent in all material respects with those applied in our ~~2020~~2021 Annual Report on Form 10-K (our ~~“2020~~“2021 Form 10-K”) ~~with the exception of the impact of early adopting Accounting Standards Update (“ASU”) No. 2020-06 on a modified retrospective basis beginning January 1, 2021 (see below)~~. 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. Actual results may differ from our estimates. 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 income (loss), statements of shareholders’ equity and statements of cash flows, as applicable. The operating results for the three-month period ended March 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. Our balance sheet as of December 31, ~~2020~~2021 included herein has been derived from the audited balance sheet as of December 31, ~~2020~~2021 included in our ~~2020~~2021 Form 10-K. These unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in our ~~2020~~2021 Form 10-K.

Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes thereto to make them consistent with the current presentation format.

~~New accounting standards~~

In August 2020, the FASB issued ASU No. 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity's Own Equity,” which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, this ASU removes from GAAP the requirement to separate certain convertible instruments, such as our Convertible Senior Notes Due 2022, Convertible Senior Notes Due 2023 and Convertible Senior Notes Due 2026 (Note 5), into liability and equity components. Consequently, those convertible instruments will be accounted for in their entirety as liabilities measured at their amortized cost. We elected to early adopt ASU No. 2020-06 on a modified retrospective basis beginning January 1, 2021. The adoption of this ASU increased our long-term debt and decreased our common stock by $44.1 million and $41.5 million, respectively, as we reclassified the conversion features associated with our various outstanding convertible senior notes from equity to long-term debt. The adoption of this ASU also increased our retained earnings and decreased deferred tax liabilities by $6.7 million and $9.3 million, respectively. Subsequent to its adoption, the ASU is also expected to reduce our interest expense as there will no longer be debt discounts to amortize associated with our outstanding convertible senior notes. Additionally, the ASU no longer permits the treasury stock method for convertible instruments and instead requires the application of the if-converted method to calculate the impact of our convertible senior notes on diluted earnings per share (“EPS”).

We do not expect any ~~other~~ recently issued accounting standards to have a material impact on our financial position, results of operations or cash flows when they become effective.

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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. Traditionally, our services have covered the lifecycle of an offshore oil or gas field. In recent years, we have seen an increasing demand for our services from the offshore renewable energy market. We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions. Our North Sea operations are subject to seasonal changes in demand, which generally peaks in the summer months and declines in the winter months. Our services are segregated into 3 reportable business segments: Well Intervention, Robotics and Production Facilities (Note 10).

Our Well Intervention segment provides services enabling our customers to safely access offshore wells for the purpose of performing ~~well~~production enhancement or decommissioning ~~operations.~~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. Our well intervention vessels include the Q4000, the Q5000, the Q7000, the Seawell, the Well Enhancer, and 2 chartered monohull vessels, the Siem Helix 1 and the Siem Helix 2. Our well intervention equipment includes intervention systems such as intervention riser systems (“IRSs”), subsea intervention lubricators (“SILs”) and the Riserless Open-water Abandonment Module, ~~(“ROAM”),~~ some of which we provide on a stand-alone basis.

Our Robotics segment provides offshore construction, ~~cable~~ trenching, seabed clearance, and inspection, repair and maintenance (“IRM”) services to both the oil and gas and the renewable energy markets ~~globally. Our~~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 ~~also~~are used in and complement our well intervention services. Our Robotics segment includes remotely operated vehicles (“ROVs”), trenchers and ~~a ROVDrill, and 2~~ robotics support vessels under ~~long-term charter, the~~ ~~Grand Canyon II~~ ~~and the~~ ~~Grand Canyon III~~,term charters as well as spot vessels as needed.

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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”) and our ownership of oil and gas properties. All of our current Production Facilities activities are located in the Gulf of Mexico.

Note 3 — Details of Certain Accounts

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


	March 31,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Contract assets (Note 7)	$	360	$	2,446	$	166	$	639
Prepaids		15,289		15,904		16,806		18,228
Deferred costs (Note 7)		18,717		23,522		5,993		2,967
Income tax receivable		13,847		20,787		68		1,116
Other receivable (Note 11)		30,052		29,782		29,522		28,805
Other		7,977		9,651		6,719		6,519
Total other current assets	$	86,242	$	102,092	$	59,274	$	58,274

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


	March 31,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Deferred recertification and dry dock costs, net	$	19,073	$	21,464	$	24,163	$	16,291
Deferred costs (Note 7)		916		861		222		381
Charter deposit ⁽¹⁾		12,544		12,544
Prepaid charter ⁽¹⁾						12,544		12,544
Intangible assets with finite lives, net		3,756		3,809		3,339		3,472
Other		1,221		1,335		2,426		1,967
Total other assets, net	$	37,510	$	40,013	$	42,694	$	34,655

(1)	~~This amount is deposited with~~Represents prepayments to the owner of the Siem Helix1 and the Siem Helix 2 to offset certain payment obligations associated with the ~~vessel~~vessels at the end of ~~the~~their respective charter term.

Accrued liabilities consist of the following (in thousands):


	March 31,		December 31,
	2022		2021
Accrued payroll and related benefits	$	19,661	$	28,657
Accrued interest		2,761		6,746
Deferred revenue (Note 7)		5,559		8,272
Asset retirement obligations (Note 11)		30,399		29,658
Other		16,493		18,379
Total accrued liabilities	$	74,873	$	91,712

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


	March 31,		December 31,
	2022		2021
Deferred revenue (Note 7)	$	191	$	476
Other		201		499
Total other non-current liabilities	$	392	$	975

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~~Accrued liabilities consist of the following (in thousands):~~

March 31,

December 31,

2021

2020
Accrued payroll and related benefits

$
20,327

$
24,768
Accrued interest

3,010

7,098
Deferred revenue (Note 7)

9,614

8,140
Asset retirement obligations (Note 11)

30,961

30,913
Other

12,574

16,116
Total accrued liabilities

$
76,486

$
87,035

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

March 31,

December 31,

2021

2020
Deferred revenue (Note 7)

$
1,333

$
1,869
Other

1,772

2,009
Total other non-current liabilities

$
3,105

$
3,878

Note 4 — Leases

We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031. We also sublease some of our facilities under non-cancelable sublease agreements.

The following table details the components of our lease cost (in thousands):


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Operating lease cost	$	16,216	$	16,323	$	14,462	$	16,216
Variable lease cost		3,484		3,212		4,922		3,484
Short-term lease cost		1,732		7,174		5,438		1,732
Sublease income		(349)		(279)		(249)		(349)
Net lease cost	$	21,083	$	26,430	$	24,573	$	21,083

Maturities of our operating lease liabilities as of March 31, 2022 are as follows (in thousands):


			Facilities and
	Vessels		Equipment		Total
Less than one year	$	42,951	$	5,441	$	48,392
One to two years		37,056		4,752		41,808
Two to three years		38,279		4,297		42,576
Three to four years		17,155		1,712		18,867
Four to five years		21,124		1,044		22,168
Over five years		—		3,812		3,812
Total lease payments	$	156,565	$	21,058	$	177,623
Less: imputed interest		(20,297)		(3,355)		(23,652)
Total operating lease liabilities	$	136,268	$	17,703	$	153,971

Current operating lease liabilities	$	36,843	$	4,621	$	41,464
Non-current operating lease liabilities		99,425		13,082		112,507
Total operating lease liabilities	$	136,268	$	17,703	$	153,971

Maturities of our operating lease liabilities as of December 31, 2021 are as follows (in thousands):


			Facilities and						Facilities and
	Vessels		Equipment		Total		Vessels		Equipment		Total
Less than one year	$	52,620	$	5,825	$	58,445	$	55,573	$	5,601	$	61,174
One to two years		52,105		5,249		57,354		34,580		4,844		39,424
Two to three years		24,203		4,637		28,840		2,470		4,514		6,984
Three to four years		—		4,205		4,205		—		2,462		2,462
Four to five years		—		1,591		1,591		—		1,074		1,074
Over five years		0		3,884		3,884		—		4,193		4,193
Total lease payments	$	128,928	$	25,391	$	154,319	$	92,623	$	22,688	$	115,311
Less: imputed interest		(11,088)		(4,334)		(15,422)		(5,633)		(3,741)		(9,374)
Total operating lease liabilities	$	117,840	$	21,057	$	138,897	$	86,990	$	18,947	$	105,937

Current operating lease liabilities	$	45,598	$	4,723	$	50,321	$	51,035	$	4,704	$	55,739
Non-current operating lease liabilities		72,242		16,334		88,576		35,955		14,243		50,198
Total operating lease liabilities	$	117,840	$	21,057	$	138,897	$	86,990	$	18,947	$	105,937

Table of Contents

~~Maturities of our operating lease liabilities as of December 31, 2020 are as follows (in thousands):~~

Facilities and



Vessels

Equipment

Total
Less than one year

$
54,621

$
6,028

$
60,649
One to two years

52,106

5,435

57,541
Two to three years

34,580

4,649

39,229
Three to four years

2,470

4,374

6,844
Four to five years

—

2,340

2,340
Over five years

—

4,054

4,054
Total lease payments

$
143,777

$
26,880

$
170,657
Less: imputed interest

(13,352)

(4,697)

(18,049)
Total operating lease liabilities

$
130,425

$
22,183

$
152,608

Current operating lease liabilities

$
46,748

$
4,851

$
51,599
Non-current operating lease liabilities

83,677

17,332

101,009
Total operating lease liabilities

$
130,425

$
22,183

$
152,608

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


	March 31,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Weighted average remaining lease term	3.0	years	3.1	years	4.0	years	2.4	years
Weighted average discount rate	7.53	%	7.53	%	6.99	%	7.57	%

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


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Cash paid for operating lease liabilities	$	16,502	$	16,472	$	16,010	$	16,502
ROU assets obtained in exchange for new operating lease obligations		113		—
Right-of-use assets obtained in exchange for new operating lease obligations ⁽¹⁾						60,699		113

(1)	Amount in 2022 primarily relates to the charter extensions for the Siem Helix1 and the Siem Helix2 (Note 12).

Note 5 — Long-Term Debt

Scheduled maturities of our long-term debt outstanding as of March 31, ~~2021~~2022 are as follows (in thousands):


	Term		2022		2023		2026		MARAD				2022		2023		2026		MARAD
	Loan		Notes		Notes		Notes		Debt		Total		Notes		Notes		Notes		Debt		Total
Less than one year	$	28,875	$	—	$	—	$	—	$	7,746	$	36,621	$	35,000	$	—	$	—	$	8,133	$	43,133
One to two years		—		35,000		—		—		8,133		43,133		—		30,000		—		8,539		38,539
Two to three years		—		—		30,000		—		8,539		38,539		—		—		—		8,965		8,965
Three to four years		—		—		—		—		8,965		8,965		—		—		200,000		9,412		209,412
Four to five years		—		—		—		200,000		9,412		209,412		—		—		—		9,881		9,881
Over five years		—		—		—		—		9,881		9,881
Gross debt		28,875		35,000		30,000		200,000		52,676		346,551		35,000		30,000		200,000		44,930		309,930
Unamortized debt issuance costs ⁽¹⁾		(143)		(206)		(445)		(6,792)		(2,927)		(10,513)		(16)		(270)		(5,592)		(2,439)		(8,317)
Total debt		28,732		34,794		29,555		193,208		49,749		336,038		34,984		29,730		194,408		42,491		301,613
Less current maturities		(28,732)		—		—		—		(7,746)		(36,478)		(34,984)		—		—		(8,133)		(43,117)
Long-term debt	$	—	$	34,794	$	29,555	$	193,208	$	42,003	$	299,560	$	—	$	29,730	$	194,408	$	34,358	$	258,496

(1)	Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement. ~~See Note 1 for accounting changes as a result of the adoption of ASU No. 2020-06.~~

~~Table of Contents~~

Below is a summary of certain components of our indebtedness:

Credit Agreement

~~We have a~~On September 30, 2021, we entered into an asset-based credit agreement ~~(and the amendments made thereafter, collectively the “Credit Agreement”~~(the “ABL Facility”) with ~~a group of lenders led by~~ Bank of America, N.A. (“Bank of America”)., Wells Fargo Bank, N.A. and Zions Bancorporation. The ~~Credit Agreement is comprised of a Term Loan~~ABL Facility provides for an $80 million asset-based revolving credit facility, which matures on September 30, 2026, with a ~~remaining balance~~springing maturity 91 days prior to the maturity of ~~$28.9 million as of March 31, 2021 and a Revolving Credit Facility~~any outstanding indebtedness with a ~~maximum availability~~principal amount in excess of ~~$175~~$50 million. The ~~Credit Agreement expires and the Term Loan matures on~~ ~~December 31, 2021. The Revolving Credit~~ABL Facility also permits us to ~~obtain~~request an increase of the facility by up to $70 million, subject to certain conditions.

Commitments under the ABL Facility are comprised of separate U.S. and U.K. revolving credit facility commitments of $45 million and $35 million, respectively. The ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S. and U.K. customer accounts receivable and cash, and provides for a $10 million sub-limit for the issuance of letters of credit up to a sublimit of $25 million. Pursuant to the Credit Agreement, subject to existing lender participation and/or the participation of new lenders, and subject to standard conditions precedent, we may request aggregate commitments of up to $100 million with respect to an increase in the Revolving Credit Facility.credit. As of March 31, ~~2021,~~2022, we had 0 borrowings under the ~~Revolving Credit~~ABL Facility, and our available borrowing capacity under that facility, based on the ~~leverage ratios,~~borrowing base, totaled ~~$172.2~~$41.2 million, net of ~~$2.8~~$2.3 million of letters of credit issued under that facility.

Borrowings under the Credit Agreement bear interest, at our election, at either Bank of America’s base rate, the LIBOR or a comparable successor rate, or a combination thereof. The Term Loan bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin of 2.25%. The Term Loan bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin of 3.25%. The interest rate on the Term Loan was 3.36% as of March 31, 2021. Borrowings under the Revolving Credit Facility bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin ranging from 1.50% to 2.50%. Borrowings under the Revolving Credit Facility bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin ranging from 2.50% to 3.50%. A letter of credit fee is payable by us equal to the applicable margin for LIBOR rate loans multiplied by the daily amount available to be drawn under the applicable letter of credit. Margins on borrowings under the Revolving Credit Facility will vary in relation to the Consolidated Total Leverage Ratio (as defined below) as provided for in the Credit Agreement. We also pay a fixed commitment fee of 0.50% per annum on the unused portion of the Revolving Credit Facility.

The Term Loan principal is required to be repaid in quarterly installments of 2.5% of its aggregate principal amount, with a balloon payment at maturity. Installments are subject to adjustment for any prepayments. We may prepay indebtedness outstanding under the Term Loan without premium or penalty, but may not reborrow any amounts prepaid. We may prepay indebtedness outstanding under the Revolving Credit Facility without premium or penalty, and may reborrow any amounts prepaid up to the amount available under the Revolving Credit Facility.

Our obligations under the Credit Agreement, and those of our subsidiary guarantors under their guarantee, are secured by (i) most of the assets of the parent company, (ii) the shares of our domestic subsidiaries (other than Cal Dive I – Title XI, Inc.) and of Helix Robotics Solutions Limited and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I – Title XI, Inc.) and of Helix Robotics Solutions Limited. In addition, these obligations are secured by pledges of up to 66% of the shares of certain foreign subsidiaries (restricted subsidiaries).

The Credit Agreement and the other documents entered into in connection with the Credit Agreement include terms and conditions, including covenants, that we consider customary for this type of transaction. The covenants include certain restrictions on our and certain of our subsidiaries’ ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, pay dividends and make capital expenditures. In addition, the Credit Agreement obligates us to meet minimum ratio requirements of EBITDA to interest charges (Consolidated Interest Coverage Ratio), funded debt to EBITDA (Consolidated Total Leverage Ratio) and secured funded debt to EBITDA (Consolidated Secured Leverage Ratio).

We may designate one or more of our new foreign subsidiaries as subsidiaries not generally subject to the covenants in the Credit Agreement (the “Unrestricted Subsidiaries”). The Unrestricted Subsidiaries are not pledged as collateral under the Credit Agreement, and the debt and EBITDA of the Unrestricted Subsidiaries, with the exception of Helix Q5000 Holdings, S.à r.l., a wholly owned Luxembourg subsidiary of Helix Vessel Finance S.à r.l., are not included in the calculations of our financial covenants except to the extent of any cash actually distributed by such subsidiary to Helix.

1211

Table of Contents

~~Convertible Senior Notes Due~~ We and certain of our U.S. and U.K. subsidiaries are the initial borrowers under the ABL Facility, whose obligations under the ABL Facility are guaranteed by those borrowers and certain other U.S. and U.K. subsidiaries, excluding Cal Dive I – Title XI, Inc. (“CDI Title XI”), Helix Offshore Services Limited and certain other enumerated subsidiaries. Other subsidiaries may be added as guarantors of the facility in the future. The ABL Facility is secured by all accounts receivable and designated deposit accounts of the U.S. borrowers and guarantors, and by substantially all of the assets of the U.K. borrowers and guarantors.

U.S. borrowings under the ABL Facility initially bear interest at the LIBOR rate plus a margin of 1.50% to 2.00% or at a base rate plus a margin of 0.50% to 1.00%. U.K. borrowings under the ABL Facility denominated in U.S. dollars initially bear interest at the LIBORrate and U.K. borrowings denominated in the British pound initially bear interest at the SONIA daily rate, each plus a margin of 1.50% to 2.00%. We also pay a commitment fee of 0.375% to 0.50% per annum on the unused portion of the facility. Beginning on the earlier of June 30, 2023, cessation of LIBOR or an earlier opt-in election, LIBOR will be replaced by either SOFR or term SOFR plus a margin of 0.114% to 0.428% or an alternate benchmark rate.

The ABL Facility includes certain limitations on our ability to incur additional indebtedness, grant liens on assets, pay dividends and make distributions on equity interests, dispose of assets, make investments, repay certain indebtedness, engage in mergers, and other matters, in each case subject to certain exceptions. The ABL Facility contains customary default provisions which, if triggered, could result in acceleration of all amounts then outstanding. The 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 $8 million. The ABL Facility also requires us to maintain a pro forma minimum excess availability of $16 million for the 91 days prior to the maturity of each of our outstanding convertible senior notes.

2022 ~~(“2022 Notes”)~~Notes

The 2022 Notes bear interest at a coupon interest rate of 4.25% per annum payable semi-annually in arrears on November 1 and May 1 of each year until maturity. The 2022 Notes mature on May 1, 2022 unless earlier converted, redeemed or repurchased by us. The 2022 Notes are convertible by their holders at any time beginning February 1, 2022 at an initial conversion rate of 71.9748 shares of our common stock per $1,000 principal amount, which currently represents 2,519,118 potentially convertible shares at an initial conversion price of approximately $13.89 per share of common stock. ~~Upon conversion,~~On March 28, 2022, we ~~have the right~~elected to satisfy our conversion obligation by delivering ~~cash, shares of our common stock or any combination thereof.~~

Prior to February 1, 2022, holders of the 2022 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 2022 Notes was equal to or less than 97% of the conversion value of the notes during the 5 consecutive business days immediately after any 10 consecutive trading day period (trading price condition). Holders of the 2022 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 30.5887 shares of our common stock per $1,000 principal amount.

Prior to November 1, 2019, the 2022 Notes were not redeemable. On or after November 1, 2019, we may redeem all or any portion of the 2022 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 2022 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2022 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 2022 Notes).

The indenture governing the 2022 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a subsidiary, the principal amount of the 2022 Notes together with any accrued interest will become immediately due and payable.

The 2022 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs. Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2022 Notes. As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2022 Notes totaled $1.5 million. As a result of the adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2022 Notes (Note 1). As of March 31, 2021, unamortized debt issuance costs related to the 2022 Notes were $0.2 million.cash.

The effective interest rate for the 2022 Notes ~~prior to the adoption of ASU No. 2020-06 was 7.3%. The effective interest rate subsequent to the adoption of ASU No. 2020-06 decreased to~~is 4.8%. For each of the three-month ~~period~~periods ended March 31, 2022 and 2021, total interest expense related to the 2022 Notes was $0.4 million primarily from coupon interest ~~expense. For the three-month period ended March 31, 2020, total interest expense related to the 2022~~expense.

2023 Notes ~~was $2.3 million, with coupon interest expense of $1.4 million and the amortization of debt discount and issuance costs of $0.9 million.~~

~~Table of Contents~~

~~Convertible Senior Notes Due 2023 (“2023 Notes”)~~

The 2023 Notes bear interest at a coupon interest rate of 4.125% per annum payable semi-annually in arrears on March 15 and September 15 of each year until maturity. The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased by us. The 2023 Notes are convertible by their holders at any time beginning March 15, 2023 at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount, which currently represents 3,168,399 potentially convertible shares at an initial conversion price of approximately $9.47 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof.

Table of Contents

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 ~~was~~is equal to or less than 97% of the conversion value of the notes during the 5 consecutive business days immediately after any 10 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 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).

The indenture governing the 2023 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2023 Notes together with any accrued interest will become immediately due and payable.

The 2023 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs. Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2023 Notes. As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2023 Notes totaled $3.1 million. As a result of the adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2023 Notes (Note 1). As of March 31, 2021, unamortized debt issuance costs related to the 2023 Notes were $0.4 million.

~~The~~ effective interest rate for the 2023 Notes ~~prior to the adoption of ASU No. 2020-06 was 7.8%. The effective interest rate subsequent to the adoption of ASU No. 2020-06 decreased to~~is 4.8%. For each of the three-month ~~period~~periods ended March 31, 2022 and 2021, 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. ~~For the three-month period ended March 31, 2020, total interest expense related to the 2023~~

2026 Notes ~~was $2.3 million, with coupon interest expense of $1.3 million and the amortization of debt discount and issuance costs of $1.0 million.~~

~~Table of Contents~~

~~Convertible Senior Notes Due 2026 (“2026 Notes”)~~

The 2026 Notes bear interest at a coupon interest rate of 6.75% per annum payable semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2021 until maturity. The 2026 Notes mature on February 15, 2026 unless earlier converted, redeemed or repurchased by us. The 2026 Notes are convertible by their holders at any time beginning November 17, 2025 at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount, which currently represents 28,675,900 potentially convertible shares at an initial conversion price of approximately $6.97 per share of common stock. 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 November 17, 2025, holders of the 2026 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 2026 Notes ~~was~~is equal to or less than 97% of the conversion value of the notes during the 5 consecutive business days immediately after any 10 consecutive trading day period (trading price condition). Holders of the 2026 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 64.5207 shares of our common stock per $1,000 principal amount.

Prior to August 15, 2023, the 2026 Notes are not redeemable. 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).

Table of Contents

The indenture governing the 2026 Notes contains customary terms and covenants, including that upon certain events of default, the entire principal amount of and any accrued interest on the notes may be declared immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a significant subsidiary, the principal amount of the 2026 Notes together with any accrued interest will become immediately due and payable.

The 2026 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which was presented as long-term debt, net of the unamortized debt discount and debt issuance costs. Those unamortized debt discount and debt issuance costs were accreted to interest expense through the maturity date of the 2026 Notes. As of December 31, 2020, unamortized debt discount and debt issuance costs related to the 2026 Notes totaled $47.3 million. As a result of the adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount (or related accretion) associated with the 2026 Notes (Note 1). As of March 31, 2021, unamortized debt issuance costs related to the 2026 Notes were $6.8 million.

~~The~~ effective interest rate for the 2026 Notes ~~prior to the adoption of ASU No. 2020-06 was 12.4%. The effective interest rate subsequent to the adoption of ASU No. 2020-06 decreased to~~is 7.6%. For each of the three-month ~~period~~periods ended March 31, 2022 and 2021, 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

In connection with the 2026 Notes offering, we entered into capped call transactions (the “2026 Capped Calls”) with three separate option counterparties. The 2026 Capped Calls are separate transactions from the 2026 Notes and do not change the holders' rights under the 2026 Notes. Holders of the 2026 Notes do not have any rights with respect to the 2026 Capped Calls.

~~Table of Contents~~

The 2026 Capped Calls are for an aggregate of 28,675,900 shares of our common stock, which corresponds to the shares into which the 2026 Notes are initially convertible. The capped call shares are subject to certain anti-dilution adjustments. Each capped call option has an initial strike price of approximately $6.97 per share, which corresponds to the initial conversion price of the 2026 Notes, and an initial cap price of approximately $8.42 per share. The strike and cap prices are subject to certain adjustments. The 2026 Capped Calls are intended to offset some or all of the potential dilution to Helix common shares caused by any conversion of the 2026 Notes up to the cap price. The 2026 Capped Calls can be settled in either net shares or cash at our option in components commencing December 15, 2025 and ending February 12, 2026, which could be extended under certain circumstances.

The 2026 Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting Helix, including a merger, tender offer, nationalization, insolvency or delisting. In addition, certain events may result in a termination of the 2026 Capped Calls, including changes in law, insolvency filings and hedging disruptions. The 2026 Capped Calls are recorded at their aggregate cost of $10.6 million as a reduction to common stock in the shareholders’ equity section of our condensed consolidated balance ~~sheet.~~sheets.

MARAD Debt

~~This~~In 2005, Helix’s subsidiary CDI – Title XI issued its U.S. ~~government-guaranteed~~Government Guaranteed Ship Financing Bonds, Q4000 Series, to refinance the construction financing originally granted in 2002 of the Q4000 vessel (the “MARAD Debt”),. The MARAD Debt is guaranteed by the U.S. government pursuant to Title XI of the Merchant Marine Act of 1936, administered by the Maritime Administration ~~was used~~(“MARAD”). The obligation of CDI Title XI to ~~finance~~reimburse MARAD in the ~~construction of~~event CDI Title XI fails to repay the~~Q4000. The~~ MARAD Debt is collateralized by the Q4000 and is guaranteed 50% by us. In addition, we have agreed to bareboat charter the Q4000 from CDI Title XI for so long as the MARAD Debt remains outstanding. The MARAD Debt is payable in equal semi-annual installments, matures in February 2027 and bears interest at a rate of 4.93%. The agreements relating to the bonds and the terms and conditions of our obligations to MARAD in respect of the MARAD Debt are typical for U.S. government-guaranteed ship financing transactions, including customary restrictions on incurring additional liens on the Q4000 and trading restrictions with respect to the vessel as well as working capital requirements.

Other

We previously had a credit agreement ~~(the “Nordea 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. ~~As of December 31, 2020,~~In January 2021, we repaid the remaining principal amount of $53.6 million.

We previously had another credit agreement (and the ~~Nordea Q5000~~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, the Credit Agreement was terminated. The $28 million remaining balance of the Term Loan was ~~$53.6 million, reflecting~~repaid in full and the ~~balloon payment on~~letters of credit issued under the ~~final maturity~~Revolving Credit Facility were transferred to the ABL Facility. We had 0 borrowings under the Revolving Credit Facility.

Table of ~~January 31, 2021. We repaid this balance in January 2021.~~Contents

In accordance with the ~~Credit Agreement,~~ABL Facility, the 2022 Notes, the 2023 Notes, the 2026 Notes and the MARAD Debt, ~~agreements,~~ we are required to comply with certain covenants, including a springing fixed charge coverage ratio and minimum liquidity with respect to the ~~Credit Agreement, certain financial ratios such as a consolidated interest coverage ratio, a consolidated total leverage ratio~~ABL Facility and ~~a consolidated secured leverage ratio, as well as~~ the maintenance of ~~minimum cash balance,~~ net worth, working capital and debt-to-equity ~~requirements.~~requirements with respect to the MARAD Debt. As of March 31, ~~2021,~~2022, we were in compliance with these covenants.

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


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Interest expense	$	6,112	$	7,394	$	5,307	$	6,112
Capitalized interest		—		(1,182)
Interest income		(59)		(466)		(133)		(59)
Net interest expense	$	6,053	$	5,746	$	5,174	$	6,053

~~Table of Contents~~

Note 6 — Income Taxes

We ~~believe that our recorded deferred~~operate in multiple jurisdictions with complex tax ~~assets and liabilities are reasonable. However, tax~~ laws ~~and regulations are~~ subject to interpretation and ~~the outcomes of tax disputes are inherently uncertain; therefore,~~judgment. We believe that our ~~assessments can involve a series of complex judgments about future events and rely heavily on estimates and assumptions.~~

For the three-month period ended March 31, 2021, our estimated annual effective tax rate, adjusted for discrete tax items, is applied to our pre-tax loss as we have determined that the use of the annual effective tax rate method is appropriate. We used the discrete effective tax rate method for recording income taxes for the three-month period ended March 31, 2020. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year-to-date period as if it were the annual periodsuch laws and determines the income tax expense or benefit on that basis. For the three-month period ended March 31, 2020, we believed using the discrete method was more appropriate than the annual effective tax rate method because of the high degree of uncertainty in estimating annual pretax earnings created at the time by uncertainty in future market conditions caused by the ongoing COVID-19 pandemic as well as uncertainty in the oil and gas market.

The U.S. Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020, is an economic stimulus package designed to aid in offsetting the economic damage caused by the ongoing COVID-19 pandemic and includes various changes to U.S. income tax regulations. The CARES Act permits the carryback of certain net operating losses, which previously had been required to be carried forward, at the tax ~~rates applicable~~impact thereof are reasonable and fairly presented in the relevant carryback year. As a result of these changes, in the three-month period ended March 31, 2020 we recognized an estimated $5.8 million net tax benefit, consisting of a $15.9 million current tax benefit and a $10.1 million deferred tax expense. This $5.8 million net tax benefit resulted from our ~~deferred tax assets related to our net operating losses in the U.S. being utilized at the previous higher income tax rate applicable to the carryback periods.~~condensed consolidated financial statements.

During the three-month period ended March 31, 2020, we migrated 2 of our foreign subsidiaries into our U.S. consolidated tax group. Subsequent to the migration, these subsidiaries are disregarded and no longer subject to certain branch profits taxes. Consequently, we recognized net deferred tax benefits of $8.3 million due to the reduction in the overall tax rate associated with these subsidiaries.

Income taxes are provided at the U.S. statutory rate and at the local statutory rate for each foreign jurisdiction and adjusted for items that are permanent differences for Federal and foreign income tax reporting purposes, but not for book purposes. The effective tax rates forFor the three-month periods ended March 31, 2022 and 2021, we recognized income tax expense of $2.1 million and ~~2020 were (4.0)~~$0.1 million, respectively, resulting in effective tax rates of (5.4)% and ~~60.2%~~(4.0)%, respectively. ~~The variance was~~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. For both periods, our ~~carrying back certain net operating~~aggregate tax expense was greater than the aggregate tax benefit of our losses, ~~to prior periods with higher income~~resulting in negative effective tax rates. The effective tax rate for the three-month period ended March 31, ~~2021~~2022 was significantly lower than the U.S. statutory rate primarily due to non-creditable foreign income and deemed profit taxes, ~~and offset in part by a significant portion of our current period earnings being generated in certain jurisdictions with a lower~~as well as unbenefited tax rate. The combination of these offsetting factors resulted in an overall tax provision and a negative tax rate for the quarter. The effective tax rate for the three-month period ended March 31, 2020 was significantly higher than the U.S. statutory rate primarily due to our recognition of discrete benefits during the period related to the restructuring of certain foreign subsidiaries and our carrying back certain net operating losses to prior periods with higher income tax rates under tax law changes associated with the CARES Act whereas we had only nominal pre-tax losses.

~~Table of Contents~~

~~The primary differences between the income tax provision (benefit) at the U.S. statutory rate and our actual income tax provision (benefit) are as follows (dollars in thousands):~~

Three Months Ended

March 31,


2021

2020

Taxes at U.S. statutory rate

$
(616)

21.0
%
$
(7,355)

21.0
%

Foreign tax provision

(938)

32.0

1,051

(3.0)

CARES Act

—

—

(5,814)

16.6

Subsidiary restructuring

—

—

(8,333)

23.8

Other

1,670

(57.0)

(642)

1.8

Income tax provision (benefit) ⁽¹⁾

$
116

(4.0)
%
$
(21,093)

60.2
%

~~(1)~~

~~The negative effective tax rate for the three-month period ended March 31, 2021 is due to the tax benefits associated with our nominal pretax loss being smaller than our non-creditable foreign taxes.~~

Note 7 — Revenue from Contracts with Customers

Disaggregation of Revenue

Our revenues are primarily derived from short-term and long-term service contracts with customers. Our service contracts generally contain either provisions for specific time, material and equipment charges that are billed in accordance with the terms of such contracts (dayrate contracts) or lump sum payment provisions (lump sum contracts). We record revenues net of taxes collected from customers and remitted to governmental authorities. Contracts are classified as long-term if all or part of the contract is to be performed over a period extending beyond 12 months from the effective date of the contract. Long-term contracts may include multi-year agreements whereby the commitment for services in any one year may be short in duration. The following table provides information about disaggregated revenue by contract duration (in thousands):


	Well				Production		Intercompany		Total		Well				Production		Intercompany		Total
											Intervention		Robotics		Facilities		Eliminations		Revenue
Three months ended March 31, 2022
Short-term											$	91,346	$	21,137	$	—	$	(635)	$	111,848
Long-term												15,021		16,214		18,294		(11,252)		38,277
Total											$	106,367	$	37,351	$	18,294	$	(11,887)	$	150,125
	Intervention		Robotics		Facilities		Eliminations ⁽¹⁾		Revenue
Three months ended March 31, 2021
Short-term	$	49,217	$	9,407	$	0	$	0	$	58,624	$	49,217	$	9,407	$	—	$	—	$	58,624
Long-term		84,551		12,749		16,447		(8,956)		104,791		84,551		12,749		16,447		(8,956)		104,791
Total	$	133,768	$	22,156	$	16,447	$	(8,956)	$	163,415	$	133,768	$	22,156	$	16,447	$	(8,956)	$	163,415

Three months ended March 31, 2020
Short-term	$	82,324	$	22,441	$	0	$	0	$	104,765
Long-term		58,328		12,817		15,541		(10,430)		76,256
Total	$	140,652	$	35,258	$	15,541	$	(10,430)	$	181,021

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~~(1)~~

~~Intercompany revenues among our business segments are under agreements that are considered long-term.~~

Contract Balances

Accounts receivable are recognized when our right to consideration becomes unconditional. Accounts receivable that have been billed to customers are recorded as trade accounts receivable while accounts receivable that have not been billed to customers are recorded as unbilled accounts receivable.

~~Table of Contents~~

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. Contract assets generally consist of (i) demobilization fees recognized ratably over the contract term but invoiced upon completion of the demobilization activities and (ii) revenue recognized in excess of the amount billed to the customer for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. Contract assets are reflected in “Other current assets” in the accompanying condensed consolidated balance sheets (Note 3). Contract assets were ~~$0.4~~$0.2 million at March 31, ~~2021~~2022 and ~~$2.4~~$0.6 million at December 31, ~~2020.~~2021. We had 0 credit losses on our contract assets for the three-month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021.

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. Contract liabilities may consist of (i) advance payments received from customers, including upfront mobilization fees allocated to a single performance obligation and recognized ratably over the contract term and/or (ii) amounts billed to the customer in excess of revenue recognized for lump sum contracts when the cost-to-cost method of revenue recognition is utilized. 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 3). Contract liabilities totaled ~~$10.9~~$5.7 million at March 31, ~~2021~~2022 and ~~$10.0~~$8.7 million at December 31, ~~2020.~~2021. Revenue recognized for the three-month periods ended March 31, 2022 and 2021 ~~and 2020~~ included ~~$2.5~~$4.3 million and ~~$3.4~~$2.5 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 March 31, ~~2021, $358.4~~2022, $548.1 million related to unsatisfied performance obligations was expected to be recognized as revenue in the future, with ~~$238.7~~$263.4 million, $203.4 million and $81.3 million in ~~2021~~2022, ~~$84.4 million in~~ ~~2022~~ ~~and $35.3 million in~~ 2023 and ~~thereafter.~~2024, 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 March 31, ~~2021.~~2022.

For the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

Contract Fulfillment Costs

Contract fulfillment costs consist of costs incurred in fulfilling a contract with a customer. Our contract fulfillment costs primarily relate to costs incurred for mobilization of personnel and equipment at the beginning of a contract and costs incurred for demobilization at the end of a contract. Mobilization costs are deferred and amortized ratably over the contract term (including anticipated contract extensions) based on the pattern of the provision of services to which the contract fulfillment costs relate. Demobilization costs are recognized when incurred at the end of the contract. 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 3). Our deferred contract costs totaled ~~$19.6~~$6.2 million at March 31, ~~2021~~2022 and ~~$24.4~~$3.3 million at December 31, ~~2020.~~2021. For the three-month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, we recorded ~~$10.4~~$4.6 million and ~~$9.2~~$10.4 million, respectively, related to amortization of these deferred contract costs. There were no associated impairment losses for any period presented.

For additional information regarding revenue recognition, see Notes 2 and 12 to our ~~2020~~2021 Form 10-K.

1916

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Note 8 — Earnings Per Share

We have shares of restricted stock issued and outstanding that are currently unvested. Because holders of shares of unvested restricted stock are entitled to the same liquidation and dividend rights as the holders of our unrestricted common stock, we are required to compute basic and diluted ~~EPS~~earnings per share (“EPS”) under the two-class method in periods in which we have earnings. Under the two-class method, net income or loss attributable to common shareholders for each period is allocated based on the participation rights of both common shareholders and the holders of any participating securities as if earnings for the respective periods had been distributed. For periods in which we have a net loss we do not use the two-class method as holders of our restricted shares are not obligated to share in such losses.

Basic EPS is computed by dividing net income or loss available to common shareholders by the weighted average shares of our common stock outstanding. The calculation of diluted EPS is similar to that for basic EPS, except that the denominator includes dilutive common stock equivalents and the numerator excludes the effects of dilutive common stock equivalents, if any. The computations of the numerator ~~(income)~~(earnings or loss) and denominator (shares) to derive the basic and diluted EPS amounts presented on the face of the accompanying condensed consolidated statements of operations are as follows (in thousands):


	Three Months Ended			Three Months Ended			Three Months Ended			Three Months Ended
	March 31, 2021			March 31, 2020			March 31, 2022			March 31, 2021
	Income		Shares	Income		Shares	Income		Shares	Income		Shares
Basic and Diluted:
Net loss attributable to common shareholders	$	(2,878)		$	(11,938)		$	(42,031)		$	(2,878)
Less: Accretion of redeemable noncontrolling interests		(241)			(2,086)			—			(241)
Net loss available to common shareholders	$	(3,119)	149,935	$	(14,024)	148,863	$	(42,031)	151,142	$	(3,119)	149,935

We had net losses for the three-month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021. Accordingly, our diluted EPS calculation for these periods excluded any assumed exercise or conversion of common stock equivalents. These common stock equivalents were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable periods. Shares that otherwise would have been included in the diluted per share calculations assuming we had earnings are as follows (in thousands):


	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2021	2020	2022	2021
Diluted shares (as reported)	149,935	148,863	151,142	149,935
Share-based awards	1,093	722	953	1,093
Total	151,028	149,585	152,095	151,028

The following potentially dilutive shares related to the 2022 Notes, the 2023 Notes and the 2026 Notes were excluded from the diluted EPS calculation as they were anti-dilutive (in thousands):


	Three Months Ended		Three Months Ended
	March 31,		March 31,
	2021	2020	2022	2021
2022 Notes	2,519	8,997	2,435	2,519
2023 Notes	3,168	13,202	3,168	3,168
2026 Notes	28,676	—	28,676	28,676

2017

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Note 9 — Employee Benefit Plans

Long-Term Incentive Plan

As of March 31, ~~2021,~~2022, there were ~~6.0~~4.2 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, ~~2021,~~2022, the following grants of share-based awards were made under the 2005 Incentive Plan:


		Grant Date					Grant Date
		Fair Value					Fair Value
Date of Grant	Shares/Units	Per Share/Unit		Vesting Period	Award Type	Shares/Units	Per Share/Unit		Vesting Period
January 1, 2021 ⁽¹⁾	452,381	$	4.20	33% per year over three years
January 4, 2021 ⁽²⁾	452,381	$	5.33	100% on January 4, 2024
January 4, 2021 ⁽³⁾	14,249	$	4.20	100% on January 1, 2023
January 1, 2022 ⁽¹⁾					RSU	1,065,705	$	3.12	33% per year over three years
January 4, 2022 ⁽¹⁾					PSU	1,065,705	$	4.25	100% on January 4, 2025
January 4, 2022 ⁽²⁾					Restricted stock	15,775	$	3.12	100% on January 1, 2024

(1)	Reflects grants ~~of restricted stock units (“RSUs”)~~ to our executive officers.

(2)

Reflects grants of performance share units (“PSUs”) to our executive officers. These PSUs consist of two components: (i) 50% based on the performance of our common stock and (ii) 50% based on cumulative total Free Cash Flow (“FCF”). The grant date fair value represents the average grant date fair value of the two components.

~~(3)~~

~~Reflects grants of restricted stock~~ 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.

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. NoNaN restricted stock awards ~~were~~have been granted to our executive officers or other employees in ~~2021. All outstanding unvested restricted stock awards were granted in 2020 and 2019.~~2022. For the three-month periods ended March 31, 2022 and 2021, ~~and 2020, $0.8~~$0.6 million and ~~$1.1~~$0.8 million, respectively, were recognized as share-based compensation related to restricted stock.

Our ~~existing PSUs~~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. Those PSUs, which contain a service ~~condition~~ and a market ~~condition.~~condition, are based on the performance of our common stock against peer group companies. Our PSUs granted inbeginning 2021 may be settled in either cash or shares of our common stock upon vesting at the discretion of the Compensation Committee of our Board and ~~are initially~~have been accounted for as equity awards. ~~The~~Those PSUs ~~granted in 2021~~ consist of 2 components: (i) 50% based on the performance of our common stock against peer group companies, which component contains a service ~~condition~~ and a market condition, and (ii) 50% based on cumulative total ~~FCF,~~Free Cash Flow, which component contains a service ~~condition~~ and a performance condition. ~~FCF~~Free Cash Flow is calculated as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. 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 0.

~~Compensation cost for~~For PSUs that have a service ~~condition~~ 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. ~~The grant date estimated fair value is determined using a Monte Carlo simulation model. Compensation cost for~~For PSUs that have a service ~~condition~~ and a performance condition and 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-month periods ended March 31, 2022 and 2021, ~~and 2020, $1.0~~$1.1 million and ~~$1.1~~$1.0 million, respectively, were recognized as share-based compensation related to equity PSUs. In January ~~2021,~~2022, based on the performance of our common stock price as compared to our performance peer group over a three-year period, ~~368,038~~559,150 equity PSUs granted in ~~2018~~2019 vested at ~~200%~~157%, representing ~~736,075~~876,469 shares of our common stock with a total market value of ~~$3.1~~$3.2 million.

~~Table~~Our restricted stock units (“RSUs”) may be settled in either cash or shares of ~~Contents~~

~~RSUs granted in 2021~~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. Cumulative compensation cost for vested liability RSUs equals the actual payout value upon vesting. For the three-month ~~period~~periods ended March 31, 2022 and 2021, $0.6 million and $0.2 million, ~~was~~respectively, were recognized as compensation cost.

Table of Contents

In ~~2021~~2022 and ~~2020,~~2021, we granted fixed-value cash awards of ~~$3.4~~$5.0 million and ~~$4.7~~$3.5 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~~Compensation cost of $1.0 million was recognized for each of the three-month periods ended March 31, ~~2021~~2022 and ~~2020, $1.0 million and $1.2 million, respectively, were recognized as compensation cost.~~2021.

Defined Contribution Plan

We sponsor a defined contribution 401(k) retirement plan. ~~We suspended our~~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 ~~an indefinite period~~2021 and re-activated beginning January ~~2021.~~2022. For the three-month period ended March 31, 2022, we made $0.4 million in contributions to the 401(k) plan.

Employee Stock Purchase Plan

We have an employee stock purchase plan (the “ESPP”). As of March 31, ~~2021, 1.7~~2022, 1.5 million shares were available for issuance under the ESPP. The ESPP currently has a purchase limit of 260 shares per employee per purchase period.

For more information regarding our employee benefit plans, including the 2005 Incentive Plan and the ESPP, see Note 14 to our ~~2020~~2021 Form 10-K.

Note 10 — Business Segment Information

We have 3 reportable business segments: Well Intervention, Robotics and Production Facilities. 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 ~~well~~production enhancement or decommissioning operations primarily in the Gulf of Mexico, Brazil, the North Sea and West Africa. 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 ~~IRSs, SILs and the ROAM,~~intervention systems, some of which we provide on a stand-alone basis. Our Robotics segment provides offshore construction, ~~cable~~ trenching, seabed clearance ~~inspection, repair~~ and ~~maintenance~~IRM services to both the oil and gas and the renewable energy markets globally. ~~Our~~Additionally, our Robotics services ~~also~~are used in and complement our well intervention services. Our Robotics segment includes ROVs, trenchers and ~~a ROVDrill, and 2~~ robotics support vessels under ~~long-term charter, the~~ ~~Grand Canyon II~~ ~~and the~~ ~~Grand Canyon III~~,term charters as well as spot vessels as needed. Our Production Facilities segment includes the HP I, the HFRS and our ownership of oil and gas properties (Note 11). All material intercompany transactions between the segments have been eliminated.

We evaluate our performance based on operating income of each reportable segment. Certain financial data by reportable segment are summarized as follows (in thousands):


	Three Months Ended
	March 31,
	2022		2021
Net revenues —
Well Intervention	$	106,367	$	133,768
Robotics		37,351		22,156
Production Facilities		18,294		16,447
Intercompany eliminations		(11,887)		(8,956)
Total	$	150,125	$	163,415

Income (loss) from operations —
Well Intervention	$	(31,758)	$	5,243
Robotics		1,480		(2,934)
Production Facilities		5,851		6,514
Segment operating income (loss)		(24,427)		8,823
Corporate, eliminations and other		(8,550)		(9,378)
Total	$	(32,977)	$	(555)

2219

Table of Contents

~~We evaluate our performance based on operating income of each reportable segment. Certain financial data by reportable segment are summarized as follows (in thousands):~~

Three Months Ended

March 31,

2021

2020

Net revenues —





Well Intervention

$
133,768

$
140,652

Robotics

22,156

35,258

Production Facilities

16,447

15,541

Intercompany eliminations

(8,956)

(10,430)

Total

$
163,415

$
181,021

Income (loss) from operations —





Well Intervention

$
5,243

$
(5,692)

Robotics

(2,934)

(2,824)

Production Facilities

6,514

3,643

Segment operating income (loss)

8,823

(4,873)

Goodwill impairment ⁽¹⁾

—

(6,689)

Corporate, eliminations and other

(9,378)

(9,465)

Total

$
(555)

$
(21,027)

~~(1)~~

As a result of the decline in oil prices as well as energy and energy services valuations during the first quarter 2020 due to the COVID-19 pandemic and the price war among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other non-OPEC producer nations (collectively with OPEC members, “OPEC+”), we impaired all of our goodwill, which consisted entirely of goodwill attributable to the acquisition of a controlling interest in Subsea Technologies Group Limited (“STL”).

Intercompany segment amounts are derived primarily from equipment and services provided to other business segments. Intercompany segment revenues are as follows (in thousands):


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Well Intervention	$	2,587	$	3,304	$	3,850	$	2,587
Robotics		6,369		7,126		8,037		6,369
Total	$	8,956	$	10,430	$	11,887	$	8,956

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, most notably the majority of our cash and cash equivalents.~~segments. The following table reflects total assets by reportable segment (in thousands):


	March 31,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Well Intervention	$	2,081,641	$	2,134,081	$	2,026,522	$	2,012,214
Robotics		108,372		132,550		87,575		96,249
Production Facilities		134,989		129,773		115,977		119,004
Corporate and other		96,747		101,874		77,296		98,561
Total	$	2,421,749	$	2,498,278	$	2,307,370	$	2,326,028

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Note 11 — Asset Retirement Obligations

Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure decommissioning and plug and abandonment (“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. After its initial recognition, an ARO liability is increased for the passage of time as accretion expense, which is a component of our depreciation and amortization expense. An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations.

Our 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. The following table describes the changes in our AROs ~~(both current and long-term)~~ (in thousands):


	2021		2020		2022		2021
AROs at January 1,	$	30,913	$	28,258	$	29,658	$	30,913
Accretion expense		48		676		741		48
AROs at March 31,	$	30,961	$	28,934	$	30,399	$	30,961

Note 12 — Commitments and Contingencies and Other Matters

Commitments

We have long-term charter agreements with Siem Offshore AS ~~(“Siem”)~~ for the Siem Helix 1 and Siem Helix 2 ~~vessels, which are currently used in connection with our contracts with Petróleo Brasileiro S.A. (“Petrobras”) to perform well intervention work offshore Brazil. The initial term of~~vessels. During the first quarter 2022, the charter agreements ~~with Siem is~~ for ~~seven years, with options to extend. The~~the Siem Helix1 ~~charter expires June 2023~~ and the Siem Helix2 ~~charter expires~~were extended to February ~~2024.~~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 for use in our robotics operations.~~vessels. The expiration date of the Grand Canyon II charter was extended ~~in February 2021 from April 2021 until~~to December ~~2021,~~2022, with an option to renew. The Grand Canyon III charter expires May 2023. 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.

Contingencies and Claims

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

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Litigation

We are involved in various legal proceedings, some involving claims for personal injury under the General Maritime Laws of the United States and the Jones Act. In addition, from time to time we receive other claims, such as contract and employment-related disputes, in the normal course of business.

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 issued a ruling adverse to us that may also 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 and continue to vigorously defend these lawsuits. Notwithstanding that we believe we retain valid defenses, we have established a liability for probable losses in certain 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.

Note 13 — Statement of Cash Flow Information

We define cash and cash equivalents as cash and all highly liquid financial instruments with original maturities of three months or less. We classify cash as restricted when there are legal or contractual restrictions for its withdrawal. The following table provides supplemental cash flow information (in thousands):


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Interest paid, net of interest capitalized	$	9,397	$	4,785
Interest paid					$	8,708	$	9,397
Income taxes paid		1,790		2,584		2,736		1,790

Our capital additions include the acquisition of property and equipment for which payment has not been made. These non-cash capital additions totaled ~~$0.6~~$0.3 million at March 31, ~~2021~~2022 and ~~$1.6 million at~~ December 31, ~~2020.~~2021.

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Note 14 — Allowance for Credit Losses

We estimate current expected credit losses on our accounts receivable at each reporting ~~date. We estimate current expected credit losses~~date based on our credit loss history, adjusted for current factors including global economic and business conditions, offshore energy industry and market conditions, customer mix, contract payment terms and past due accounts receivable.

The following table sets forth the activity in our allowance for credit losses (in thousands):


	2021		2020		2022		2021
Balance at January 1,	$	3,469	$	—	$	1,477	$	3,469
Additions ⁽¹⁾		7		586
Additions (reductions) ⁽¹⁾						(126)		7
Write-offs ⁽²⁾		(1,811)		—		—		(1,811)
Adjustments ⁽³⁾		—		785
Balance at March 31,	$	1,665	$	1,371	$	1,351	$	1,665

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

(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.

~~(3)~~

~~The adjustment in allowance for credit losses reflects provision for current expected credit losses upon the adoption of ASU No. 2016-13 on January 1, 2020.~~

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Note 15 — Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value accounting rules establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

●

Level 1. Observable inputs such as quoted prices in active markets;

●

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

●

Level 3. Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of three valuation approaches as follows:

(a)

Market Approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

(b)

Cost Approach. Amount that would be required to replace the service capacity of an asset (replacement cost).

(c)

Income Approach. Techniques to convert expected future cash flows to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models).

Our financial instruments include cash and cash equivalents, receivables, accounts payable and long-term debt. The carrying amount of cash and cash equivalents, trade and other current receivables as well as accounts payable approximates fair value due to the short-term nature of these instruments.

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


	March 31, 2021				December 31, 2020				March 31, 2022				December 31, 2021
	Principal		Fair		Principal		Fair		Principal		Fair		Principal		Fair
	Amount ⁽¹⁾		Value ^{(2) (3)}		Amount ⁽¹⁾		Value ^{(2) (3)}		Amount ⁽¹⁾		Value ⁽²⁾		Amount ⁽¹⁾		Value ⁽²⁾
Term Loan (matures December 2021)	$	28,875	$	28,622	$	29,750	$	28,969
Nordea Q5000 Loan (matured January 2021) ⁽⁴⁾		—		—		53,572		53,598
MARAD Debt (matures February 2027)		52,676		58,502		56,410		62,318	$	44,930	$	46,688	$	48,850	$	52,481
2022 Notes (mature May 2022)		35,000		34,917		35,000		33,513		35,000		35,022		35,000		34,794
2023 Notes (mature September 2023)		30,000		28,942		30,000		28,650		30,000		29,693		30,000		29,054
2026 Notes (mature February 2026)		200,000		232,674		200,000		211,383		200,000		226,816		200,000		200,562
Total debt	$	346,551	$	383,657	$	404,732	$	418,431	$	309,930	$	338,219	$	313,850	$	316,891

(1)	Principal amount includes current maturities and excludes any related unamortized ~~debt discount and~~ debt issuance costs. See Note 5 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. The fair value of the ~~Term Loan, the Nordea Q5000 Loan and 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.

~~(3)~~

The principal amount and estimated fair value of the 2022 Notes, the 2023 Notes and the 2026 Notes are for the entire instrument inclusive of the conversion feature, which had been accounted for in shareholders’ equity through December 31, 2020.

~~(4)~~

~~The Nordea Q5000 Loan was fully repaid upon maturity in January 2021 (Note 5).~~

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS AND ASSUMPTIONS

This Quarterly Report on Form 10-Q contains or incorporates by reference various statements that contain forward-looking information regarding Helix and represent our current expectations or forecasts of future events. This forward-looking information is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995 as set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements included herein or incorporated by reference herein that are predictive in nature, that depend upon or refer to future events or conditions, or that use terms and phrases such as “achieve,” “anticipate,” “believe,” “estimate,” “budget,” “expect,” “forecast,” “plan,” “project,” “propose,” “strategy,” “predict,” “envision,” “hope,” “intend,” “will,” “continue,” “may,” “potential,” “should,” “could” and similar terms and phrases are forward-looking statements although not all forward-looking statements contain such identifying words. Included in forward-looking statements are, among other things:

●

statements regarding our business strategy, corporate initiatives and any other business plans, forecasts or objectives, any or all of which are subject to change;

●

statements regarding projections of revenues, gross margins, expenses, earnings or losses, working capital, debt and liquidity, capital expenditures or other financial items;

●

statements regarding our backlog and commercial contracts and rates thereunder;

●

statements regarding our ability to enter into and/or perform commercial contracts, including the scope, timing and outcome of those contracts;

●

statements regarding the spot market, the continuation of our current backlog, our spending and cost reduction plans and our ability to manage changes, and the ~~ongoing~~ COVID-19 pandemic and oil price volatility and their respective effects and results on the foregoing as well as our protocols and plans;

●

statements regarding the acquisition, construction, completion, upgrades to or maintenance of vessels, systems or equipment and any anticipated costs or downtime related thereto;

●

statements regarding any financing transactions or arrangements, or our ability to enter into such transactions or arrangements;

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statements regarding potential legislative, governmental, regulatory, administrative or other public body actions, requirements, permits or decisions;

●

statements regarding our trade receivables and their collectability;

●

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

●

statements regarding our Environmental, Social and Governance (“ESG”) initiatives and the successes thereon or regarding our environmental efforts, including greenhouse gas emissions targets;

●

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

●

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

●

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

●

statements regarding the underlying assumptions related to any projection or forward-looking statement; and

●

any other statements that relate to non-historical or future information.

Although we believe that the expectations reflected in our forward-looking statements are reasonable and are based on reasonable assumptions, they do involve risks, uncertainties and other factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include:

●

the ~~results and effects of the ongoing COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto;~~

●

~~the~~ impact of domestic and global economic conditions and the future impact of such conditions on the offshore energy industry and the demand for our services;

●

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

●

the potential effects of regional tensions that have escalated or may escalate, including into conflicts or wars, and their impact on the global economy, 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;

●

the results and effects of the COVID-19 pandemic and actions by governments, customers, suppliers and partners with respect thereto;

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●

the results of corporate initiatives such as alliances, partnerships, joint ventures, mergers, acquisitions, divestitures and restructurings, or the determination not to pursue or effect such initiatives;

●

the impact of any potential cancellation, deferral or modification of our work or contracts by our customers;

●

the ability to effectively bid, renew and perform our contracts, including the impact of equipment problems or failure;

●

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

●

unexpected future capital expenditures, including the amount and nature thereof;

●

the effectiveness and timing of ~~completion of~~ our vessel and/or system upgrades, regulatory recertification and inspection as well as major maintenance items;

●

unexpected delays in the delivery, chartering or customer acceptance, and terms of acceptance, of our assets;

●

the effects of our indebtedness, our ability to comply with debt covenants and our ability to reduce capital commitments;

●

the results of our continuing efforts to control costs and improve performance;

●

the success of our risk management ~~activities;~~activities, including with respect to our cybersecurity initiatives;

●

the effects of competition;

●

the availability of capital (including any financing) to fund our business strategy and/or operations;

●

the effectiveness of our ESG initiatives and disclosures;

●

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

●

the future impact of ~~U.K.’s exit from the European Union (the “EU”), known as Brexit,~~international activity and ~~related~~ trade agreements ~~between the U.K. and the EU~~ on our business, operations and financial condition;

●

the effect of adverse weather conditions and/or other risks associated with marine operations;

●

the impact of foreign currency exchange controls, potential illiquidity of those currencies and exchange rate fluctuations;

●

the effectiveness of our 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; ~~and~~

●

the impact of general, market, industry or business ~~conditions.~~conditions; and

●

the impact of inflation and our ability to recoup rising costs in the rates we charge to our customers.

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Our actual results could also differ materially from those anticipated in any forward-looking statements as a result of a variety of factors, including those described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2020~~2021 Form 10-K. Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

We caution you not to place undue reliance on ~~the~~ forward-looking statements. Forward-looking statements are only as of the date they are made, and other than as required under the securities laws, we assume no obligation to update or revise ~~these~~ forward-looking statements, all of which are expressly qualified by the statements in this section, or provide reasons why actual results may differ. All forward-looking statements, express or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We urge you to carefully review and consider the disclosures made in this Quarterly Report and our reports filed with the SEC and incorporated by reference in our ~~2020~~2021 Form 10-K that attempt to advise interested parties of the risks and factors that may affect our business.

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EXECUTIVE SUMMARY

Our Business

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. The services we offer to the oil and gas market cover the lifecycle of an offshore oil or gas field, and the services we offer to the renewable energy market are currently focused on offshore wind farm projects, including trenching and cable burial and seabed clearance operations. Our well intervention fleet includes seven purpose-built well intervention vessels ~~six IRSs, three SILs~~ and ~~the ROAM.~~10 intervention systems. Our robotics equipment includes 4240 work-class ROVs and four ~~trenchers and one ROVDrill.~~trenchers. We charter ~~ROV~~robotics support vessels on both long-term and spot bases to facilitate our ROV and trenching operations. Our well intervention and robotics operations are geographically dispersed throughout the world. Our Production Facilities segment includes the HP I, the HFRS and our ownership of oil and gas properties.

Economic Outlook and Industry Influences

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. The performance of our business is ~~also~~ 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 ~~several~~various other ~~factors, including:~~factors.

●

~~worldwide economic activity and general economic and business conditions, including access to global capital and capital markets;~~

●

~~the global supply and demand for oil and natural gas;~~

●

~~political and economic uncertainty and geopolitical unrest, including regional conflicts and economic and political conditions~~

Oil and gas prices experienced recent highs during the first quarter 2022 as global demand continued to recover from COVID-19 related restrictions and supply was disrupted by regional conflicts. The increases in ~~oil-producing regions;~~

●

~~actions taken by OPEC and/or OPEC+;~~

●

~~the availability and discovery rate of new oil and natural gas reserves in offshore areas;~~

●

~~the exploration and production of onshore shale oil and natural gas;~~

●

~~the cost of offshore exploration for and production and transportation of oil and natural gas;~~

●

~~the level of excess production capacity;~~

●

~~the ability of oil and gas companies to generate funds or otherwise obtain external capital for capital projects and production operations;~~

●

~~the environmental and social sustainability of the oil and gas sector and the perception thereof, including within the investing community;~~

●

~~the sale and expiration dates of offshore leases globally;~~

●

~~governmental restrictions on oil and gas leases;~~

●

~~technological advances affecting energy exploration, production, transportation and consumption;~~

●

~~potential acceleration of the development of alternative fuels;~~

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~~shifts in end-customer preferences toward fuel efficiency and the use of natural gas or renewable energy alternatives;~~

●

~~weather conditions, natural disasters, and epidemic and pandemic diseases, including the ongoing COVID-19 pandemic;~~

●

~~laws, regulations and policies directly related to the industries in which we provide services, and their interpretation and enforcement;~~

●

~~environmental and other governmental regulations; and~~

●

~~domestic and international tax laws, regulations and policies.~~

~~Crude~~ oil prices, ~~historically have been volatile, which volatility has been exacerbated recently due to the ongoing COVID-19 pandemic~~ as well as ~~actions taken by OPEC+ nations. Prices have since recovered to pre-COVID-19 levels, but their stability and recovery remain uncertain. The decline in~~the outlook for higher sustained oil prices, ~~in 2020~~should lead to higher customer spending for the industry. However, despite the current strong commodity price environment, there are broad headwinds to commodity price stability. The headwinds include those regional conflicts, high inflation, ongoing COVID-related uncertainties, various governmental and ~~the~~customer ESG initiatives and continued shifting of resource allocation to renewable energy. We expect this will contribute to commodity price volatility and ~~uncertainty in prices have caused~~may temper customer spending for oil and gas operators to drastically reduce spending (on both operational activities and capital projects), which has decreased the demand and rates for services provided by offshore oil and gas services providers. projects.

Historically, drilling rigs have been the asset class used for offshore well intervention work, and rig day rates are a pricing indicator for our services. Our customers have used drilling rigs on existing long-term contracts (rig overhang) to perform well intervention work instead of new drilling activities. ~~Rig day rates are also a pricing indicator for our services. Rig overhang, combined with lower~~Current volumes of work, ~~and lower~~the day rates quoted by drilling rig contractors ~~affects~~and existing rig overhang affect the utilization and/or rates we can achieve for our assets and services. Furthermore, additional volatile and uncertain macroeconomic conditions in some regions and countries around the world, such as West Africa, Brazil, China and the U.K. following Brexit, may have a direct and/or indirect impact on our existing contracts and contracting opportunities and may introduce further volatility into our operations and/or financial results.

The ~~ongoing~~ COVID-19 pandemic ~~has~~ resulted in a new ~~period of~~ market ~~weakness.~~dynamics and challenges to us, including contributing significantly to oil and gas price volatility and increased costs related to our supply chain, logistics and human capital resources. While the full impact of the COVID-19 pandemic, including the duration of ~~the decrease in~~its impact on economic activity, ~~and the resulting impact on the demand and price of oil,~~ remains unknown, we expect ~~that~~such impact may continue into the impact of COVID-19 on the industry will continue to be felt through 2021 and possibly longer. We believe the uncertainty and other conditions of the current environment will make it more difficult for us to secure long-term contracts forforeseeable future, including affecting our ~~vessels and systems, as operators have been less willing~~customers’ willingness to commit to future ~~spending. These developments have also impacted, and are expected to continue to impact, many other aspects of our industry and the global economy, including~~spending, limiting access to and use of capital, ~~across various sources and markets,~~ disrupting supply chains and increasing costs, and negatively affecting human capital ~~resources including complicating offshore crew changes due to health and travel restrictions~~resources.

Over the near-term, as well as the overall health of the global workforce. The COVID-19 pandemic and its effects on our industry and the global economy impacted our 2020 and 2021 operating results to date. Most if not all of our oil and gas ~~customers have cut~~companies evaluate their ~~spending, which has reduced the demand and rates for the services offered to our~~budgetary spend allocations, we expect they may be weighted towards short-cycle production enhancement of existing wells rather than new long-cycle exploration projects, as historically enhancement is less expensive per incremental barrel of oil ~~and gas customers. We warm-stacked two of our vessels in 2020 as a result of decreased demand and government lock-downs, and the~~ ~~Seawell~~ in the North Sea remains stacked to date. The COVID-19 pandemic continues to pose challenges with, and increase costs related to, our supply chain, logistics and human capital resources, including minimizing the direct impact of COVID-19 on our offshore workforce and challenges with offshore crew changes due to travel restrictions and quarantine measures.

~~Despite this current period of market weakness and volatility, over~~than exploration. Over the longer term, we continue to expect oil and gas companies to increasingly focus on optimizing production of their existing subsea wells. As oil and gas companies re-assess and focus their budgetary spend allocations, we expect that it may be weighted towards production enhancement activities rather than exploration projects as enhancement is less expensive per incremental barrel of oil than new exploration. Moreover, as the subsea tree base expands and ages and customers shift resources to renewable energy, the demand for P&A services should persist. Our well intervention and robotics operations ~~are intended to~~ service the lifecycle of an oil and gas field ~~as well as to~~and provide P&A services at the end of the life of a field as required by governmental ~~regulations. We~~regulations, and we believe that we have a competitive advantage in performing ~~well intervention~~these services ~~efficiently and we believe that~~efficiently.

We expect the fundamentals for our business will remain favorable over the longer term as the need to prolong well life in oil and gas production and safely decommission end of life wells are primary drivers of demand for our services. This ~~belief~~expectation is based on multiple factors, ~~including:~~including (1) maintaining the ~~need~~optimal production of a well through enhancement is fundamental to ~~extend~~maximizing the ~~life~~overall economics of ~~subsea wells is significant to the commercial viability of the wells as P&A costs are considered;~~well production; (2) our services offer commercially viable alternatives for reducing the finding and development costs of reserves as compared to new ~~drilling as well as extending and enhancing the commercial life of subsea wells;~~drilling; and (3) ~~in past cycles, well intervention and workover have been some~~extending the production of offshore wells not only maximizes a well’s production economics but also enables the ~~first activities to recover, and in a prolonged market downturn are important to the commercial viability~~financial benefit of ~~deepwater wells.~~delaying P&A costs, which can be substantial.

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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 production and/or reduce the cost of renewable energy, expansion of offshore renewable energy projects to deeper water, and government subsidies for renewable energy projects.

We are subject to the effects of changing prices. Inflation rates have been relatively low and stable over the previous three decades; however, in 2021 due in part to supply chain disruptions and the effects of the COVID-19 pandemic, inflation rates began to rise significantly and remained high through the first quarter 2022. Although we are able to reduce some of our exposure to price increases through the rates we charge, we bear the costs of operating and maintaining our assets, including labor and material costs as well as recertification and dry dock costs. While the cost outlook is not certain, we believe that we can manage these inflationary pressures by introducing appropriate sales price adjustments and by actively pursuing internal cost reduction efforts. However, competitive market pressures may affect our ability to recoup these price increases through the rates we charge, which may result in reductions in our operating margins and cash flows in the future. The recent high inflation rates seen in various major economies have caused concerns for central banks’ tightening of monetary policies. These concerns have contributed to stock market volatility as well as higher interest rates, which, combined with ongoing regional conflicts and unrest and continued COVID-related disruptions throughout the globe, could provide a strained macroeconomic outlook and in turn affect energy markets.

Backlog

We provide services and methodologies that we believe are critical to maximizing production economics. Our services cover the lifecycle of an offshore oil or gas field. In addition to serving the oil and gas market, our robotics assets are contracted for the development of offshore renewable energy projects (wind farms). We provide services primarily in deepwater in the Gulf of Mexico, Brazil, North Sea, Asia Pacific and West Africa regions.define backlog as firm commitments represented by signed contracts. As of March 31, ~~2021,~~2022, our consolidated backlog ~~that is supported by written agreements or contracts~~ totaled ~~$358~~$548 million, of which ~~$239~~$263 million is expected to be performed over the remainder of 2021. The substantial majority of our backlog is associated with our Well Intervention segment. As of March 31, 2021, our well intervention backlog was $162 million, all of which is expected to be performed over the remainder of 2021.2022. Our contract with BPTrident Energy Do Brasil LTDA. to provide ~~well intervention~~P&A services offshore Brazil with ~~our~~the ~~Q5000~~Siem Helix1 ~~semi-submersible~~chartered vessel, our ~~agreements~~contract with ~~Petrobras~~Petróleo Brasileiro S.A. (“Petrobras”) to provide well intervention services offshore Brazil with the Siem Helix 1 ~~and~~ ~~Siem Helix~~2 chartered ~~vessels,~~vessel, our well intervention contract with Shell Offshore Inc. for the Q5000 and our fixed fee agreement for the HP I ~~represent~~represented approximately ~~57%~~58% of our total backlog as of March 31, ~~2021.~~2022. Backlog is not necessarily a reliable indicator of revenues derived from ~~these~~our contracts as services are often added but may sometimes be ~~added or~~ 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. 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 ~~the rates we would have generated had we performed the contract.~~amounts reflected in backlog.

RESULTS OF OPERATIONS

We have three reportable business segments: Well Intervention, Robotics 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.

Non-GAAP Financial Measures

A non-GAAP financial measure is generally defined by the SEC as a numerical measure of a company’s historical or future performance, financial position or cash flows that includes or excludes amounts from the most directly comparable measure under GAAP. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, our reported results prepared in accordance with GAAP. Users of this financial information should consider the types of events and transactions that are excluded from these measures.

We measure our operating performance based on EBITDA, ~~and free cash flow.~~Adjusted EBITDA and ~~free cash flow~~Free Cash Flow. EBITDA, Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures that are commonly used but are not recognized accounting terms under GAAP. We use EBITDA, Adjusted EBITDA and ~~free cash flow~~Free Cash Flow to monitor and facilitate internal evaluation of the performance of our business operations, to facilitate external comparison of our business results to those of others in our industry, to analyze and evaluate financial and strategic planning decisions regarding future investments and acquisitions, to plan and evaluate operating budgets, and in certain cases, to report our results to the holders of our debt as required by our debt covenants. We believe that our measures of EBITDA, Adjusted EBITDA and ~~free cash flow~~Free Cash Flow provide useful information to the public regarding our operating performance and ability to service debt and fund capital expenditures and may help our investors understand and compare our results to other companies that have different financing, capital and tax structures. Other companies may calculate their measures of EBITDA, Adjusted EBITDA and ~~free cash flow~~Free Cash Flow differently from the way we do, which may limit their usefulness as comparative measures. EBITDA, Adjusted EBITDA and ~~free cash flow~~Free Cash Flow should not be considered in isolation or as a substitute for, but instead are supplemental to, income from operations, net income, cash flows from operating activities, or other income or cash flow data prepared in accordance with GAAP.

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We define EBITDA as earnings before income taxes, net interest expense, gain or loss on extinguishment of long-term debt, net other income or expense, and depreciation and amortization expense. Non-cash impairment losses on goodwill and other long-lived assets and non-cash gains and losses on equity investments are also added back if applicable. To arrive at our measure of Adjusted EBITDA, we exclude the gain or loss on disposition of assets and the general provision (release) for current expected credit losses, if any. In addition, we include realized losses from foreign currency exchange contracts not designated as hedging instruments, which are excluded from EBITDA as a component of net other income or expense. We define ~~free cash flow~~Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from sale of assets. In the following reconciliation, we provide amounts as reflected in the condensed consolidated financial statements unless otherwise noted.

The reconciliation of our net loss to EBITDA and Adjusted EBITDA is as follows (in thousands):


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Net loss	$	(3,050)	$	(13,928)	$	(42,031)	$	(3,050)
Adjustments:
Income tax provision (benefit)		116		(21,093)
Income tax provision						2,140		116
Net interest expense		6,053		5,746		5,174		6,053
Other (income) expense, net		(1,617)		10,427		3,881		(1,617)
Depreciation and amortization		34,566		31,598		33,488		34,566
Goodwill impairment		—		6,689
EBITDA		36,068		19,439		2,652		36,068
Adjustments:
General provision for current expected credit losses		100		586
Realized losses from foreign exchange contracts not designated as hedging instruments		—		(682)
General provision (release) for current expected credit losses						(126)		100
Adjusted EBITDA	$	36,168	$	19,343	$	2,526	$	36,168

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


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2021		2020		2022		2021
Cash flows from operating activities	$	39,869	$	(17,222)	$	(17,413)	$	39,869
Less: Capital expenditures, net of proceeds from sale of assets		(1,329)		(12,389)		(623)		(1,329)
Free cash flow	$	38,540	$	(29,611)
Free Cash Flow					$	(18,036)	$	38,540

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Comparison of Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021


	Three Months Ended						Increase/				Three Months Ended						Increase/
	March 31,						(Decrease)				March 31,						(Decrease)
	2021			2020			Amount		Percent		2022			2021			Amount		Percent
Net revenues —
Well Intervention	$	133,768		$	140,652		$	(6,884)	(5)	%	$	106,367		$	133,768		$	(27,401)	(20)	%
Robotics		22,156			35,258			(13,102)	(37)	%		37,351			22,156			15,195	69	%
Production Facilities		16,447			15,541			906	6	%		18,294			16,447			1,847	11	%
Intercompany eliminations		(8,956)			(10,430)			1,474				(11,887)			(8,956)			(2,931)
	$	163,415		$	181,021		$	(17,606)	(10)	%	$	150,125		$	163,415		$	(13,290)	(8)	%

Gross profit (loss) —
Well Intervention	$	8,726		$	(1,256)		$	9,982	795	%	$	(28,446)		$	8,726		$	(37,172)	(426)	%
Robotics		(933)			(467)			(466)	100	%		3,520			(933)			4,453	477	%
Production Facilities		7,213			4,207			3,006	71	%		6,609			7,213			(604)	(8)	%
Corporate, eliminations and other		(382)			(474)			92				(292)			(382)			90
	$	14,624		$	2,010		$	12,614	628	%	$	(18,609)		$	14,624		$	(33,233)	(227)	%

Gross margin —
Well Intervention		7	%		(1)	%						(27)	%		7	%
Robotics		(4)	%		(1)	%						9	%		(4)	%
Production Facilities		44	%		27	%						36	%		44	%
Total company		9	%		1	%						(12)	%		9	%
										��
Number of vessels or robotics assets ⁽¹⁾ / Utilization ⁽²⁾
Well Intervention vessels		7 / 70	%		7 / 72	%						7 / 67	%		7 / 70	%
Robotics assets ⁽³⁾		47 / 24	%		49 / 34	%						45 / 35	%		47 / 24	%
Chartered robotics vessels		3 / 90	%		6 / 89	%						5 / 90	%		3 / 90	%

(1)	Represents the number of vessels or robotics assets as of the end of the period, including spot vessels and those under ~~long-term charter,~~term charters, and excluding acquired vessels prior to their in-service dates and vessels or assets disposed of and/or taken out of service.

(2)

Represents the average utilization rate, which is calculated by dividing the total number of days the vessels or robotics assets generated revenues by the total number of ~~available~~ calendar days in the applicable period. ~~The average utilization~~Utilization rates of chartered robotics vessels during the three-month periods ended March 31, 2022 and 2021 included 136 and ~~2020 included~~ three ~~and 272~~ spot vessel days, respectively, at near full utilization.

(3)	Consists of ROVs ~~trenchers~~ and ~~ROVDrill.~~trenchers.

Intercompany segment amounts are derived primarily from equipment and services provided to other business segments. Intercompany segment revenues are as follows (in thousands):


	Three Months Ended						Three Months Ended
	March 31,				Increase/		March 31,				Increase/
	2021		2020		(Decrease)		2022		2021		(Decrease)
Well Intervention	$	2,587	$	3,304	$	(717)	$	3,850	$	2,587	$	1,263
Robotics		6,369		7,126		(757)		8,037		6,369		1,668
	$	8,956	$	10,430	$	(1,474)	$	11,887	$	8,956	$	2,931

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Net Revenues. Our consolidated net revenues for the three-month period ended March 31, ~~2021~~2022 decreased by ~~10%~~8% as compared to the same period in ~~2020,~~2021, reflecting lower revenues from our Well Intervention ~~and Robotics segments,~~segment, offset in part by higher revenues from our Robotics and Production Facilities ~~segment.~~segments.

~~Table of Contents~~

Our Well Intervention revenues decreased by 5%20% for the three-month period ended March 31, ~~2021~~2022 as compared to the same period in ~~2020,~~2021, primarily reflecting lower rates and vessel utilization in Brazil and the North Sea, ~~and West Africa during the quarter,~~ offset in part by higher utilization in ~~the Gulf of Mexico. Utilization in the Gulf of Mexico~~West Africa. Our Brazil operations were on legacy contract rates with Petrobras with near full utilization during the first quarter ~~2020 was~~2021. However, during the first quarter 2022, the Siem Helix 2 operated at lower ~~due to our scheduled~~rates under the extended contract with Petrobras and incurred 23 days off contract during its five-year regulatory ~~certification inspections for the~~ ~~Q4000~~inspection, and the Siem Helix 1 was operating on a short-term accommodations project offshore Ghana at lower rates. The Q7000 was fully utilized in West Africa during the first quarter 2022 as compared to 67% utilized during the first quarter 2021. Gulf of Mexico revenues were nominally changed from the prior year, with the Q5000.’s higher-margin work on the legacy BP contract during the first quarter 2021 replaced by higher cost integrated projects during the first quarter 2022.

Our Robotics revenues ~~decreased~~increased by ~~37%~~69% for the three-month period ended March 31, ~~2021~~2022 as compared to the same period in ~~2020,~~2021, primarily reflecting ~~a reduction in~~higher vessel and ROV activities. Chartered vessel days ~~as well as decreased utilization of ROVs and ROVDrill, offset in part by an increase in trenching activities. Our results included 165 vessel days and 72 trenching~~increased to 323 days during the ~~three-month period ended March 31, 2021~~first quarter 2022 as compared to ~~405 vessel days and 42 trenching~~165 days during the ~~same period~~first quarter 2021, although vessel utilization was flat at 90% during both periods. Vessel days during the first quarter 2022 included 136 spot vessel days performing seabed clearance work in ~~2020.~~the North Sea as compared to three spot vessel days during the first quarter 2021. ROV and trencher utilization increased to 35% in the first quarter 2022 from 24% during the first quarter 2021, although trenching days decreased to 66 days during the first quarter 2022 as compared to 72 days during the first quarter 2021.

Our Production Facilities revenues increased by 6%11% for the three-month period ended March 31, ~~2021~~2022 as compared to the same period in ~~2020,~~2021, primarily reflecting higher oil and gas ~~production revenues.~~prices.

Gross Profit (Loss). Our consolidated gross ~~profit increased by $12.6~~loss was $18.6 million for the three-month period ended March 31, ~~2021~~2022 as compared toconsolidated gross profit of $14.6 million for the same period in ~~2020,~~2021, primarily reflecting ~~higher gross profit~~decreased profitability in our Well Intervention and Production Facilities segments, offset in part by ~~higher gross loss~~increased profitability in our Robotics segment.

~~The gross profit related to our~~Our Well Intervention segment ~~increased by $10.0~~had a gross loss of $28.4 million for the three-month period ended March 31, ~~2021~~2022 as compared to a gross profit of $8.7 million for the same period in ~~2020,~~2021, primarily reflecting ~~higher~~lower segment revenues ~~on the~~ ~~Q5000~~ ~~and cost reduction efforts associated with~~as well as lower ~~utilization~~margins in the ~~North Sea and West Africa during idle periods.~~Gulf of Mexico due to higher integrated project costs.

~~The gross loss related to our~~Our Robotics segment ~~increased by $0.5~~had a gross profit of $3.5 million for the three-month period ended March 31, ~~2021~~2022 as compared to a gross loss of $0.9 million for the same period in ~~2020, primarily reflecting lower revenues, offset in part by lower operating costs.~~

~~The gross profit related to our Production Facilities segment increased by $3.0 million for the three-month period ended March 31,~~ 2021, ~~as compared to the same period in 2020,~~ primarily reflecting higher ~~oil and gas production~~ revenues due to increased ROV activity and a ~~reduction in direct costs.~~

~~Goodwill Impairment.~~ ~~The $6.7 million charge in the three-month period ended March 31, 2020 reflects the impairment~~higher number of ~~the entire goodwill balance, which related to our acquisition of a controlling interest in STL (Note 10).~~vessel days.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses were ~~$15.2~~$14.4 million for the three-month period ended March 31, ~~2021~~2022 as compared to ~~$16.3~~$15.2 million for the same period in ~~2020,~~2021, primarily reflecting lower ~~credit loss reserves and lower~~ employee incentive compensation costs.

Other Income (Expense), Net. Net ~~Interest Expense.~~ ~~Our net interest~~other expense ~~totaled $6.1~~was $3.9 million for the three-month period ended March 31, ~~2021 as compared~~2022 primarily due to ~~$5.7 million for the same period in 2020, primarily~~foreign currency transaction losses reflecting the ~~cessation of interest capitalization with the completion~~weakening of the ~~Q7000~~ ~~in the first quarter 2020. Net interest expense for the three-month period ended March 31, 2020 excluded $1.2 million in capitalized interest associated with the~~ ~~Q7000~~ ~~(Note 5).~~

~~Other Income (Expense), Net.~~ British pound. Net other income was $1.6 million for the ~~three-month period ended March 31, 2021 as compared to net other expense of $10.4 million for the~~ same period in ~~2020,~~2021 primarily ~~reflecting~~due to foreign currency transaction gains ~~due to~~reflecting the strengthening of the British pound.

Income Tax ~~Provision (Benefit).~~Provision. Income tax provision was ~~$0.1~~$2.1 million for the three-month period ended March 31, ~~2021~~2022 as compared to ~~an income tax benefit of $21.1~~$0.1 million for the same period in ~~2020.~~2021. The effective tax rates for the three-month periods ended March 31, 2022 and 2021 ~~and 2020~~ were ~~(4.0)~~(5.4)% and ~~60.2%~~(4.0)%, respectively. ~~The decrease in the effective tax rate was~~These variances were primarily attributable to the absence of tax benefits derived from the CARES Act recorded in the same period last year, which included the carrying back of certain net operating losses to prior periods with higher income tax rates, as well as the result of the consolidation of certain U.S. branch operations with the Helix U.S. consolidated tax group and the earnings mix between our higher and lower tax rate jurisdictions as well as losses for which no financial statement benefits have been recognized (Note 6).

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LIQUIDITY AND CAPITAL RESOURCES

~~Overview~~Financial Condition and Liquidity

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


	March 31,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Net working capital ⁽¹⁾	$	270,504	$	246,338	$	246,745	$	251,255
Long-term debt ⁽¹⁾		299,560		258,912		258,496		262,137
Liquidity ⁽²⁾		376,992		451,532		270,983		304,660

(1)

Long-term debt is net of unamortized debt issuance costs. Current maturities of our long-term debt of ~~$36.5~~$43.1 million and ~~$90.7~~$42.9 million, respectively, are ~~included in net working capital and~~ excluded from long-term debt. ~~Long-term debt as of March 31, 2021 is net of unamortized debt issuance costs. Long-term debt as of December 31, 2020 is net of unamortized debt discounts and debt issuance costs.~~ See Note 5 for information relating to our long-term ~~debt, including the impact of our adoption of ASU No. 2020-06.~~

~~(2)~~

Liquidity, as defined by us, is equal to cash and cash equivalents, excluding restricted cash, plus available capacity under the Revolving Credit Facility. Our liquidity at March 31, 2021 included cash and cash equivalents of $204.8 million and $172.2 million of available borrowing capacity under the Revolving Credit Facility (Note 5). Our liquidity at March 31, 2021 excluded $65.6 million of restricted cash securing a project related letter of credit (short-term), the restriction from which is expected to be released upon completion of the project. Our liquidity at December 31, 2020 included cash and cash equivalents of $291.3 million and $160.2 million of available borrowing capacity under the Revolving Credit Facility.debt.

~~The carrying amounts~~Net Working Capital

Net working capital is equal to current assets minus current liabilities. It measures short-term liquidity and operational efficiency and is important for predicting cash flow and debt requirements. Our net working capital includes current maturities of our long-term debt.

Liquidity

We define liquidity as cash and cash equivalents, excluding restricted cash, plus available capacity under our credit facility. Our liquidity at March 31, 2022 included $229.7 million of cash and cash equivalents and $41.2 million of available borrowing capacity under the ABL Facility (Note 5) and excluded $72.9 million of restricted cash primarily related to a short-term project related letter of credit, the restriction from which is expected to be released upon completion of the project. Our liquidity at December 31, 2021 included $253.5 million of cash and cash equivalents and $51.1 million of available borrowing capacity under the ABL Facility and excluded $73.6 million of short-term project related restricted cash.

The COVID-19 pandemic impacted our operations and our revenues. We responded by deferring or reducing planned capital expenditures and operating costs during the past two years. This spending is expected to return with our outlook of increased activity. Furthermore, we have convertible debt ~~are as follows (in thousands):~~instruments and other term debt maturities during 2022 that we intend to settle in cash. We believe that our cash on hand, internally generated cash flows and availability under the ABL Facility will be sufficient to fund our operations and service our debt over at least the next 12 months.

An ongoing period of weak, or continued decreases in, industry activity may make it difficult to comply with the covenants and other restrictions in our debt agreements. Our failure to comply with the covenants and other restrictions could lead to an event of default. Decreases in our borrowing base may limit our ability to fully access the ABL Facility. At March 31, 2022, our available borrowing capacity under the ABL Facility was $41.2 million, net of $2.3 million of letters of credit issued under that facility. We currently do not anticipate borrowing under the ABL Facility other than for the issuance of letters of credit.

March 31,

December 31,

2021

2020
Term Loan (matures December 2021)

$
28,732

$
29,559
Nordea Q5000 Loan (matured January 2021) ⁽¹⁾

—

53,532
MARAD Debt (matures February 2027)

49,749

53,361
2022 Notes (mature May 2022) ⁽²⁾

34,794

33,477
2023 Notes (mature September 2023) ⁽²⁾

29,555

26,922
2026 Notes (mature February 2026) ⁽²⁾

193,208

152,712
Total debt ⁽³⁾

336,038

349,563
Less current maturities

(36,478)

(90,651)
Long-term debt

$
299,560

$
258,912

~~(1)~~

~~The Nordea Q5000 Loan was fully repaid upon maturity in January 2021 (Note 5).~~

~~(2)~~

~~As a result of the adoption of ASU No. 2020-06 beginning January 1, 2021, there is no longer any debt discount associated with the 2022 Notes, the 2023 Notes and the 2026 Notes (Note 1).~~

~~(3)~~

~~Amounts include current maturities and are net of any unamortized debt discounts and debt issuance costs.~~

Cash Flows

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

Three Months Ended

March 31,


2021

2020
Cash provided by (used in):



Operating activities

$
39,869

$
(17,222)
Investing activities

(1,329)

(12,389)
Financing activities

(59,885)

(18,391)


	Three Months Ended
	March 31,
	2022		2021
Cash provided by (used in):
Operating activities	$	(17,413)	$	39,869
Investing activities		(623)		(1,329)
Financing activities		(5,408)		(59,885)

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~~Our current requirements for cash primarily reflect the need to fund our operations and capital spending for our current lines of business and to service our debt.~~

Operating Activities

The ~~ongoing COVID-19 pandemic, challenging market conditions and industry-wide spending cuts have impacted~~decrease in our ~~revenues and we expect these events to continue to impact our results into the near future. Our~~ operating cash flows are impacted to the extent we cannot replace those revenues or reduce costs. Despite these challenges, we remain focused on maintaining a strong balance sheet and adequate liquidity. We have reduced, deferred or cancelled certain planned capital expenditures and reduced our overall cost structure commensurate with our level of activities. In 2020, we extended our debt maturity profile with refinancing a portion of our 2022 Notes and 2023 Notes in favor of the 2026 Notes. Notwithstanding, we have at the same time continued to de-lever our balance sheet with the repayment of our Nordea Q5000 Loan in January 2021. We have reduced operating costs through various measures including warm stacking our vessels when idle. These costs should return with increases in activity. We believe that our cash on hand, internally generated cash flows and availability under the Revolving Credit Facility will be sufficient to fund our operations and service our debt over at least the next 12 months.

The ongoing COVID-19 pandemic and its impact on the energy and financial markets have contributed to rising yields on our existing debt as well as volatility in our stock price, both of which increase our cost of capital. The yield on the 2026 Notes is significantly higher than that of the 2022 Notes and 2023 Notes. The COVID-19 pandemic has also contributed to limited access to certain capital markets.

An ongoing period of weak, or continued decreases in, industry activity may make it difficult to comply with our covenants and the other restrictions in the agreements governing our debt, and our failure to comply with these covenants and other restrictions could lead to an event of default. Current global and market conditions have increased the potential for that difficulty and are expected to negatively impact the terms on which we secure a replacement of, or our lenders’ willingness to continue to participate in, our credit facility, which expires December 2021. Decreases in our revenues and EBITDA, including as may be attributable to the fallout from the ongoing COVID-19 pandemic, may also limit our ability to fully access the Revolving Credit Facility. At March 31, 2021, our available borrowing capacity under the Revolving Credit Facility, based on the applicable leverage ratio covenant, was $172.2 million, net of $2.8 million of letters of credit issued under that facility. We currently do not anticipate borrowing under the Revolving Credit Facility other than for the issuance of letters of credit.

~~Operating Cash Flows~~

~~Net cash flows provided by operating activities were $39.9 million~~ for the three-month period ended March 31, ~~2021~~2022 as compared to ~~net cash flows used by operating activities of $17.2 million for~~ the same period in ~~2020. The $57.1 million increase in operating cash flows~~2021 primarily reflects lower ~~operating loss~~earnings, higher regulatory recertification costs for our vessels and ~~decreases~~systems and negative changes in net working capital. Operating cash flows for the three-month periods ended March 31, 2022 and 2021 included the receipt of $1.1 million and $6.6 million, respectively, in income tax refunds related to the U.S. Coronavirus Aid, Relief, and Economic Security Act.

Investing Activities

~~Capital expenditures represent cash paid principally~~Cash flows used in investing activities for the ~~acquisition, construction, completion, upgrade, modification~~three-month periods ended March 31, 2022 and ~~refurbishment~~2021 reflect the deferral or reduction of long-lived property and equipment such as dynamically positioned vessels, topside equipment and subsea systems. Capital expenditures also include interest on property and equipment under development. Significant (uses) sources of cash associated with investing activities are as follows (in thousands):

Three Months Ended

March 31,


2021

2020
Capital expenditures:



Well Intervention

$
(1,259)

$
(12,263)
Robotics

—

(44)
Production Facilities

(70)

—
Other

—

(82)
Net cash used in investing activities

$
(1,329)

$
(12,389)

~~Our~~our planned capital expenditures ~~during~~as our response to the adverse impact to our operations as a result of the COVID-19 pandemic.

Financing Activities

Net cash outflows from financing activities for the three-month period ended March 31, ~~2020~~2022 primarily ~~included payments associated with~~reflect the ~~construction and completion~~repayment of ~~the~~ ~~Q7000~~~~, which commenced operations in January 2020.~~

~~Table of Contents~~

~~Financing Activities~~

~~Cash flows from financing activities consist primarily of proceeds and repayments~~$3.9 million related to ~~our long-term debt.~~the MARAD Debt (Note 5). Net cash outflows from financing activities ~~of $59.9 million~~ for the three-month period ended March 31, 2021 primarily reflect the repayment of $58.2 million ~~of scheduled maturities~~ related to our indebtedness, including the final maturity of $53.6 million of ~~our~~the Nordea Q5000 ~~Loan (Note 5). Net~~Loan.

Material Cash Requirements

Our material cash ~~outflows from financing activities of $18.4 million for the three-month period ended March 31, 2020 primarily reflect the repayment of $13.4 million of~~requirements include our ~~indebtedness (Note 5).~~obligations to repay our long-term debt, satisfy other contractual cash commitments and fund other obligations.

~~Free Cash Flow~~

Free cash flow increased by $68.2 million for the three-month period ended March 31, 2021 as compared to the same period in 2020. The increase was primarily attributable to the increase in operating cash flowsLong-term debt and ~~the decrease in capital expenditures.~~

~~Free cash flow is a non-GAAP financial measure. See “RESULTS OF OPERATIONS” above for the definition and calculation of free cash flow.~~

~~Contractual Obligations and Commercial Commitments~~other contractual commitments

The following table summarizes the principal amount of our long-term debt and related debt service costs as well as other contractual ~~cash~~commitments, which include commitments for property and equipment and operating lease obligations, as of March 31, ~~2021~~2022 and the ~~scheduled years~~portions of those amounts that are short-term (due in ~~which~~less than one year) and long-term (due in one year or greater) based on their stated maturities (in thousands). 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 March 31, 2022. Our 2022 Notes, 2023 Notes and 2026 Notes have certain early redemption and conversion features that could affect the ~~obligations~~timing and amount of any cash requirements. Although upon conversion these notes are ~~contractually due (in thousands):~~able to be settled in either cash or shares, we intend to settle their principal amounts in cash (Note 5).


			Less Than						More Than		Total		Short-Term		Long-Term
	Total ⁽¹⁾		1 Year		1-3 Years		3-5 Years		5 Years
Term Loan	$	28,875	$	28,875	$	—	$	—	$	—
MARAD debt		52,676		7,746		16,672		18,377		9,881	$	44,930	$	8,133	$	36,797
2022 Notes ⁽²⁾		35,000		—		35,000		—		—
2023 Notes ⁽³⁾		30,000		—		30,000		—		—
2026 Notes ⁽⁴⁾		200,000		—		—		200,000		—
Interest related to debt ⁽⁵⁾		80,319		20,126		32,621		27,285		287
2022 Notes												35,000		35,000		—
2023 Notes												30,000		—		30,000
2026 Notes												200,000		—		200,000
Interest related to debt												62,148		17,362		44,786
Property and equipment		6,184		6,078		106		—		—		9,125		9,125		—
Operating leases ⁽⁶⁾		242,043		97,752		134,611		5,796		3,884
Operating leases ⁽¹⁾												308,370		99,767		208,603
Total cash obligations	$	675,097	$	160,577	$	249,010	$	251,458	$	14,052	$	689,573	$	169,387	$	520,186

(1)	Excludes unsecured letters of credit outstanding at March 31, 2021 totaling $2.8 million. These letters of credit may be issued to support various obligations, such as contractual obligations, contract bidding and insurance activities.

~~(2)~~

~~Notes mature in May 2022. See Note 5 for additional information.~~

~~(3)~~

~~Notes mature in September 2023. See Note 5 for additional information.~~

~~(4)~~

~~Notes mature in February 2026. See Note 5 for additional information.~~

~~(5)~~

~~Interest payment obligations were calculated using stated coupon rates for fixed rate debt and interest rates applicable at March 31, 2021 for variable rate debt.~~

~~(6)~~

Operating leases include vessel charters and facility and equipment leases. At March 31, ~~2021,~~2022, our commitment related to long-term vessel charters totaled approximately ~~$215.8~~$268.4 million, of which ~~$86.9~~$111.8 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, ~~2021.~~2022.

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Other material cash requirements

Other material cash requirements include the following:

Decommissioning. We have decommissioning obligations associated with our oil and gas properties (Note 11). Those obligations approximate $31.0 million (undiscounted) as of March 31, 2022 and are all expected to be paid during the next 12 months. We are entitled to receive certain amounts from Marathon Oil Corporation as these decommissioning obligations are fulfilled.

Regulatory recertification and dry dock. Our vessels and intervention systems are subject to certain regulatory recertification requirements that must be satisfied in order for the vessels and intervention systems to operate. Recertification may require dry dock and other compliance costs on a periodic basis, usually every 30 months. These costs can vary and generally range between $3.0 million to $15.0 million per vessel and $0.5 million to $5.0 million per intervention system. The timing of these costs can vary.

We expect the sources of funds to satisfy our material cash requirements to primarily come from our ongoing operations and existing cash on hand, but may also come from availability under the ABL Facility and access to capital markets.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Our discussion and analysis of our financial condition and results of operations, as reflected in the condensed consolidated financial statements and related footnotes, are prepared in conformity with GAAP. As such, we are required to make certain estimates, judgments and assumptions that ~~affect the reported amounts~~have had or are reasonably likely to have a material impact on our financial condition or results of ~~assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented.~~operations. We base our estimates on historical experience, available information and various other assumptions we believe to be reasonable under the circumstances. These estimates involve a significant level of estimation uncertainty and may change over time as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes.

For information regarding our critical accounting estimates, ~~and policies, please read~~see our “Critical Accounting ~~Estimates and Policies”~~Estimates” as disclosed in our ~~2020~~2021 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of March 31, ~~2021,~~2022, we were exposed to market risks associated with ~~interest rates and~~ foreign currency exchange rates.

~~Interest Rate Risk.~~ ~~As of March 31, 2021, $28.9 million of our~~ We had no exposure to interest rate risk as we had no outstanding debt ~~was~~ subject to floating rates. The interest rate applicable to our variable rate debt may rise, thereby increasing our interest expense and related cash outlay. The impact of interest rate risk is estimated using a hypothetical increase in interest rates by 100 basis points for our variable rate long-term debt that is not hedged. Based on this hypothetical assumption, we would have incurred an additional $0.1 million in interest expense for the three-month period ended March 31, 2021.

Foreign Currency Exchange Rate Risk. Because we operate in various regions around the world, we conduct a portion of our business in currencies other than the U.S. dollar. As such, our earnings are impacted by movements in foreign currency exchange rates when (i) transactions are denominated in currencies other than the functional currency of the relevant Helix entity or (ii) the functional currency of our subsidiaries is not the U.S. dollar. In order to mitigate the effects of exchange rate risk in areas outside the U.S., we endeavor to pay a portion of our expenses in local currencies to partially offset revenues that are denominated in the same local currencies. In addition, a substantial portion of our contracts are denominated, and provide for collections from our customers, in U.S. dollars.

Assets and liabilities of our subsidiaries that do not have the U.S. dollar as their functional currency are translated using the exchange rates in effect at the balance sheet date, resulting in translation adjustments that are reflected in “Accumulated other comprehensive loss” in the shareholders’ equity section of our condensed consolidated balance sheets. For the three-month period ended March 31, ~~2021,~~2022, we recorded foreign currency translation ~~gains~~losses of ~~$4.6~~$13.1 million to accumulated other comprehensive loss. Deferred taxes have not been provided on foreign currency translation adjustments ~~since we consider~~as our non-U.S. undistributed earnings ~~(when applicable) of our non-U.S. subsidiaries without operations in the U.S. to be~~are permanently reinvested.

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When currencies other than the functional currency are to be paid or received, the resulting transaction gain or loss associated with changes in the applicable foreign currency exchange rate is recognized in the condensed consolidated statements of operations as a component of “Other income (expense), net.” Foreign currency gains or losses from the remeasurement of monetary assets and liabilities as well as unsettled foreign currency transactions, including intercompany transactions that are not of a long-term investment nature, are also recognized as a component of “Other income (expense), net.” For the three-month period ended March 31, ~~2021,~~2022, we recorded foreign currency transaction ~~gains~~losses of ~~$1.6~~$3.9 million, primarily related to our subsidiaries in the U.K.

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Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, ~~2021.~~2022. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, ~~2021~~2022 to ensure that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Item 1, Note 12 to the Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


				(c)					(c)
				Total number	(d)				Total number	(d)
				of shares	Maximum				of shares	Maximum
	(a)	(b)		purchased as	number of shares	(a)	(b)		purchased as	number of shares
	Total number	Average		part of publicly	that may yet be	Total number	Average		part of publicly	that may yet be
	of shares	price paid		announced	purchased under	of shares	price paid		announced	purchased under
Period	purchased ⁽¹⁾	per share		program	the program ⁽²⁾	purchased ⁽¹⁾	per share		program	the program ⁽²⁾
January 1 to January 31, 2021	447,139	$	4.43	—	7,734,655
February 1 to February 28, 2021	—		—	—	7,734,655
March 1 to March 31, 2021	—		—	—	7,734,655
January 1 to January 31, 2022						488,718	$	3.12	—	9,183,183
February 1 to February 28, 2022						—		—	—	9,183,183
March 1 to March 31, 2022						—		—	—	9,183,183
	447,139	$	4.43	—		488,718	$	3.12	—

(1)	Includes shares forfeited in satisfaction of tax obligations upon vesting of ~~restricted shares.~~share-based awards under our existing long-term incentive plans.

(2)

Under the terms of our stock repurchase program, we may repurchase shares of our common stock in an amount equal to any equity granted 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 ~~ESPP~~Employee Stock Purchase Plan (Note 9), and such shares increase the number of shares available for repurchase. For additional information regarding our stock repurchase program, see Note 11 to our ~~2020~~2021 Form 10-K.

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Item 6. Exhibits


Exhibit Number	Description	Filed or Furnished Herewith or Incorporated by Reference from the Following Documents (Registration or File Number)
3.1	2005 Amended and Restated Articles of Incorporation, as amended, of Helix Energy Solutions Group, Inc.	Exhibit 3.1 to the Current Report on Form 8-K filed on March 1, 2006 (000-22739)
3.2	Second Amended and Restated By-Laws of Helix Energy Solutions Group, Inc., as amended.	Exhibit 3.1 to the Current Report on Form 8-K filed on September 28, 2006 (001-32936)
31.1	Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Owen Kratz, Chief Executive Officer.	Filed herewith
31.2	Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 by Erik Staffeldt, Chief Financial Officer.	Filed herewith
32.1	Certification of Helix’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes–Oxley Act of 2002.	Furnished herewith
101.INS	XBRL Instance Document.	The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document.	Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).	Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		HELIX ENERGY SOLUTIONS GROUP, INC.
		(Registrant)

Date: April ~~28, 2021~~27, 2022	By:	/s/ Owen Kratz
		Owen Kratz
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: April ~~28, 2021~~27, 2022	By:	/s/ Erik Staffeldt
		Erik Staffeldt
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

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