Helix Energy Solutions Group, Inc. (HLX) Earnings Call Transcript & Summary

Welcome to the Helix Energy Solutions Annual Meeting of Shareholders. I would now like to turn the meeting over to Owen Kratz, President and CEO.

Good morning. And welcome to the 2020 Virtual Annual Meeting of Shareholders of Helix Energy Solutions Group, Inc. I'm Owen Kratz, President and Chief Executive Officer of Helix Energy Solutions Group, and I'll act as Chairman of the meeting today. We decided to host a virtual meeting this year due to concerns about the health and safety of our shareholders, directors, officers, employees, meeting attendees and the general public in light of the current health crisis. Throughout the meeting, if any validated shareholder wishes to ask a question about the proposals on the ballot or issues reasonably related to the management of the company, you may do so via the meeting's web portal. I'd like to introduce the other directors, executive officers of your company in addition to me. The directors joining us today are Bill Transier, who's also our Chairman of the Board; Amerino Gatti; John Lovoi; Amy Nelson; Jan Rask; and James Watt. I'd also like to especially recognize Nancy Quinn, who, as of today, has retired from our Board. Nancy served the company extremely well as a director over the past 11-plus years, including serving as our Audit Committee Chair for the past 4 years. She's been a stalwart for Helix and helped navigate this company through a number of cycles as we built vessels, entered new markets and evolved our business. We all thank Nancy for her service, and she'll be truly missed. In addition to me, the executive officers of the company present are Scotty Sparks, our Executive Vice President and Chief Operating Officer; Erik Staffeldt, our Executive Vice President and Chief Financial Officer; and Ken Neikirk, our Senior Vice President, General Counsel and Corporate Secretary. Ken will also act as secretary and moderator of the meeting today. Finally, I'd like to introduce the representatives of our independent registered public accounting firm, KPMG. Joining us today are Camaron Thorson, Engagement Audit Partner; and Chrissy Venzke, Audit Senior Manager. I'll now turn it over to Ken Neikirk to conduct the formal business portion of the meeting.

Good morning, everyone. The 2020 Annual Meeting of Shareholders of Helix Energy Solutions Group, Inc. is now called to order. The meeting will consist of 2 parts: one, a vote on the formal matters described in our proxy statement; and two, a report on the company's business with time at the end for questions and answers. This annual meeting is held pursuant to a notice mailed on or about April 7, 2020, to each shareholder of record of our common stock as of the close of business on March 23, 2020, the record date for this meeting. The notice was sent to our shareholders of record in accordance with our bylaws. On May 4, 2020, the notice was supplemented with information related to our decision to change this annual meeting from an in-person physical meeting to a virtual one as part of our concern regarding the health and safety of our shareholders, directors, officers, employees, meeting attendees and the general public in light of the current health crisis. A list of shareholders of record of our company as of the close of business on the record date, has been on file at the company's principal office for the last 30 days, and is available during the meeting by following instructions listed on the meeting website. That list and copies of the form of notice of annual meeting, additional proxy materials, proxy statement and proxy card are available should any shareholder wish to review those materials. At this time, I'd like to introduce Nancy Petersen, Assistant Vice President and Relationship Manager at EQ Shareowner Services and the Inspector of Election for this meeting. Nancy has executed and delivered the oath of Inspector of Election. Based upon our records, on the record date for this annual meeting, 149,962,115 shares of our company's common stock were outstanding. And based upon our records and as verified by the Inspector of Election, the holders of at least 137 million shares are present at this meeting or were represented by proxy immediately prior to this meeting. As this number of shares is greater than a majority of our outstanding shares, a quorum is present. As such, the 2020 Annual Meeting of Shareholders is officially convened. We will now proceed with the business of the meeting, which is: one, the election of 2 Class III directors with a term ending in 2023; two, the ratification of the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; and three, the vote to approve on a nonbinding advisory basis, the 2019 compensation of our named executive officers. Amy Nelson and Bill Transier have been nominated by the Corporate Governance and Nominating Committee of our Board of Directors to serve as Class III directors. By following instructions listed on the meeting website, now is the time to submit any questions with respect to the proposals to be voted on today. The proposals are now submitted for voting, and the polls are now open. I ask all shareholders present who have not submitted their proxies who wish to vote or who wish to change their vote to please follow the instructions listed on the meeting website and do so at this time. If you have already turned in your proxy and do not wish to change your vote, you do not need to take further action because your shares will be voted by your proxy. [Voting]

I now declare the polls closed. The Inspector of Election has delivered her preliminary report to me. According to the inspector's preliminary report: one, each of the director nominees has received votes representing a plurality of the votes cast and the 2 nominees, therefore, have been elected; two, the ratification of the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020, has received votes representing a majority of the votes cast, and the selection of KPMG is therefore ratified; three, the vote to approve on a nonbinding advisory basis, the 2019 compensation of our named executive officers has received votes representing a majority of the votes cast and is therefore approved. Due to the virtual nature of this year's meeting, we will publish the final voting results in accordance with the inspector's final reports once it is received. Thank you for your attendance at this meeting and especially for making the effort given these challenging times. We greatly appreciate the loyalty of our shareholders. This concludes the formal portion of the meeting, and the meeting is now adjourned. I will now turn it over to Erik Staffeldt, our Executive Vice President and Chief Financial Officer, who will provide a brief report on the company. Erik?

Good morning, all. Thank you for joining us this morning for our 2020 Annual Shareholders' Meeting. If you're following along with our slide deck, please turn to Slide 3. Helix is one of the leading global providers of well intervention, robotic services to the offshore energy industry. We have more than 25 years of experience providing offshore well intervention services, working on more than 1,400 wells worldwide. We have a track record that spans more than 20 years of providing robotic services to the oil and gas, mining and renewable energy industries in the offshore energy market. We provide value-added services to our customers, combining our experienced and highly skilled workforce with our purpose-built assets. We foster an innovative and problem-solving culture, delivering efficient, sustainable and technologically advanced solutions for our customers. Turning to Slide 4. We are truly a global corporation. We provide services worldwide, including all the major oil and gas basins. Today, our operations are centered in 4 areas: the North Sea, Gulf of Mexico, Brazil and Asia Pacific. With facility and support operations in these areas, we are able to provide global coverage to the offshore energy market. Turning to Slides 5 and 6. The long-term sustainability and corporate stewardship of our business is paramount at Helix. These tenants that have long been guiding principles at Helix, safety, sustainability and value creation, have been incorporated into our ESG initiatives. The services we provide to our customer maximizes value of their existing assets, which minimizes the impact on the environment. We also provide maintenance and end-of-life services that largely remediate environmental impact from the oil and gas industry, and we're expanding our offerings in the renewable energy offshore market. Our employees are our greatest assets. We focus on hiring and retaining high-caliber workforce who embody our innovative values and culture of safety. The safe execution of our operations is key to our workforce, our customers, our shareholders and our communities. We have structures and processes in place that drive decisions and actions that are in the best interest of all our stakeholders. We continuously strive to improve our safety, reduce environmental impact and increase our transparency. You can find more information about our ESG initiatives in our corporate sustainability report found on our website. Turning to Slide 7. 2019 was a good year for Helix. It was the third consecutive year of revenue, margin and EBITDA growth at Helix. We took delivery of the Q7000, completing our major capital expansion program in our Well Intervention segment. We generated free cash flow and continue to delever the balance sheet. We were recognized by Petrobras as the Supplier of the Year for Maritime Rig Operations. Moving to Slides 8 and 9. 2020 will be a year defined by the COVID-19 pandemic and its impact on the oil and gas market. In the first quarter of 2020, as the virus began to spread globally, we quickly reacted to protect the safety of our employees and customers. We established stringent safety measures and protocols on our vessels and for crude changes. Many of the precautions that are now common in everyday life onshore were implemented in our offshore operations. The impact on our customers in the oil and gas market has been severe, and we expect the demand of our services will be impacted in the near term. We are managing the challenges head-on and minimizing disruptions to our operations thus far. We recognize this will be a constant battle for the foreseeable future. Despite these challenges, we believe Helix is in a relatively good position. We have a strong backlog. We are able to scale down our costs, commensurate with activity levels and can scale back when activity returns. The impact of the oil and gas downturn on our Robotics segment is expected to be significantly mitigated by our renewables work and the expansion of our services in that market. Our balance sheet is in good shape, and we have a strong liquidity position. We expect that we'll be able to manage this environment in a way that generates free cash flow based on our contracted work with minimal reliance on the spot market. And we have a plan to address our debt maturities in a way that doesn't rely on major market recovery or other aspirational factors. We believe we're in a position to weather this latest storm, and are committed to managing through the challenges to emerge on the other side. I will leave the final slide for your reference, highlighting the qualities that differentiate our company. That concludes our presentation today. At this time, I'll ask Ken Neikirk, the company's General Counsel [Audio Gap] purposes of this meeting to read aloud any appropriate questions or comments reasonably related to management of the company that have been submitted via the web portal.

No questions or comments have been submitted. Owen?

Well this concludes our report. Thank you again for your attendance today. We intend to hold next year's meeting in person, and we look forward to seeing you again soon.

This concludes today's meeting, you may now disconnect.