Helix Energy (HLX) Q4 2025 Earnings Transcript

Image source: The Motley Fool.

DATE

Tuesday, Feb. 24, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Owen Kratz
• Chief Operating Officer — Scott Sparks
• Chief Financial Officer — Erik Staffeldt
• General Counsel — Kenneth Neikirk
• Vice President, Commercial — Daniel Stuart
• Vice President, Finance & Investor Relations — Brent Arriaga

TAKEAWAYS

• Quarterly Revenue -- $334,000,000, with a gross profit of $51,000,000 and net income of $8,000,000, reflecting the company’s highest fourth-quarter performance since 2013.
• Adjusted EBITDA -- $74,000,000 for the quarter, supported by improved Gulf of America shelf results, positive late-season utilization, and successful vessel contract transitions.
• Quarterly Free Cash Flow -- $107,000,000, derived from positive operating cash flow of $113,000,000.
• Yearly Revenue -- $1,300,000,000, with gross profit of $159,000,000 and net income of $31,000,000; adjusted EBITDA reached $272,000,000.
• Year-End Cash & Liquidity -- Cash and cash equivalents totaled $445,000,000, and total liquidity reached $554,000,000.
• Funded Debt & Net Debt -- Total funded debt stood at $315,000,000, resulting in negative net debt of $137,000,000 at year end.
• Robotics Segment Performance -- Achieved full-year activity with all six trenchers, seven vessels, and three boulder grabs operating, and further rate increases in renewables-related work.
• Brazil Well Intervention -- Three vessels operated on long-term contracts, with the SH 1 and SH 2 both under three-year Petrobras contracts at higher rates, while the Q7000 completed a 400-day contract for Shell.
• North Sea Contracting -- A multiyear P&A contract was secured enabling the reactivation of the Seawell and strong expected utilization for both North Sea vessels in 2026.
• Operating Guidance for 2026 -- Revenue projected at $1,200,000,000 to $1,400,000,000; EBITDA guided to $230,000,000 to $290,000,000, negatively affected by the Thunder Hawk workover and C Helix 1 docking totaling a $40,000,000 EBITDA reduction; capital expenditures expected at $70,000,000 to $80,000,000.
• 2026 Free Cash Flow Forecast -- Expected range of $100,000,000 to $160,000,000, with generation timing skewed toward the second half of the year due to seasonality and capital spending patterns.
• Thunder Hawk Workover Expense -- $16,000,000 direct cost incurred early in the first quarter, impacting Q1 results.
• C Helix 1 Recertification -- Scheduled for mid-2026, resulting in more than $20,000,000 of expense and vessel downtime.
• Share Repurchase Target -- Management expects to repurchase shares equal to 25% of free cash flow generated in 2026.
• Succession Planning -- The Board is actively engaged in CEO succession following Owen Kratz’s announced retirement, with commitment to a “smooth transition.”

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Staffeldt stated, Our outlook for 2026 is impacted by two distinct events causing year-over-year EBITDA reductions in the range of $40,000,000. referring to the Thunder Hawk workover and C Helix 1 recertification.
• Kratz said, Thunder Hawk remained offline for the entire year as partners decided to defer the required intervention until 2026. resulting in forecasted near-term production delays despite recent successful workover operations.
• Staffeldt disclosed, that lacks conviction or direction. citing macroeconomic crosscurrents, geopolitical risks, and conflicting pricing dynamics as factors contributing to near-term uncertainty.
• Management expects increased competitive pressures as contractors position for the expected improved market of 2027. in shallow water abandonment, leading to a flat to marginal drop in results compared to 2025.

SUMMARY

Management explicitly guided for 2026 revenue to be in line with the prior year, with EBITDA meaningfully down due to the combined financial impact of the Thunder Hawk workover and the scheduled C Helix 1 recertification. Robotics segment activity remained high, with multiple significant trenching contracts supporting visibility through 2030 and noted year-over-year rate improvement. Management indicated strong cash generation has positioned the company for potential M&A or capital investment, but the final approach will be determined by the incoming CEO and ongoing Board discussions.

• Kratz confirmed, We expect operations in Brazil, the results to be meaningfully impacted as we see this SH-1 out of service and unavailable for approximately 45 days.
• Sparks said, “there has been a sizable change towards decommissioning [in the North Sea]… both the Seawell and the Well Enhancer will have very active seasons.”
• Sparks stated, The intervention market in Brazil is our strongest market. There is the most activity. We have the two long-term contracts with the SH 1 and the SH 2 for Petrobras, both coming into this year with three-year contracts. And those contracts have options for Petrobras to extend, and they are at better rates than we had previously.
• Staffeldt clarified, I think modeling the impact of the Thunder Hawk workover into Q1 is appropriate. I think when you look at our historical performance the last several years, Q1 is our lowest quarter, naturally from a seasonal standpoint.
• The company expects Robotics should continue to show strong performance with long visibility on sustained strong results.

INDUSTRY GLOSSARY

• P&A: Plug and Abandon — the process of permanently sealing and removing oil and gas wells and associated infrastructure.
• ROV: Remotely Operated Vehicle — an underwater robot used for inspection, maintenance, and intervention work on subsea assets.
• iRUB Boulder Grab: Specialized subsea equipment for removing boulders during offshore construction and renewables site clearance.
• White Space: Periods in vessel schedules without contracted work, representing potential downtime and lost revenue opportunities.
• Recertification/Dry Dock: Mandatory regulatory survey and overhaul for vessels involving asset downtime and capital expenditure.

Full Conference Call Transcript

Brent Arriaga: Good morning, everyone, and thank you for joining us today on our conference call where we will be reviewing our fourth quarter and full year 2025 earnings release. Participating on this call for Helix Energy Solutions Group, Inc. today are Owen Kratz, our CEO; Scott Sparks, our COO; Erik Staffeldt, our CFO; Kenneth Neikirk, our General Counsel; Daniel Stuart, our Vice President, Commercial; and myself. Hopefully, you have had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixesg.com.

The press release and slides can be accessed under the News and Events tab. Before we begin our prepared remarks, Kenneth Neikirk will make a statement regarding forward-looking information. Kenneth?

Kenneth Neikirk: During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations and assumptions as of today. Such forward-looking statements may include projections and estimates of future events, business or trends, or business or financial results. All statements in this conference call or in the associated presentation other than statements of historical fact are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Our actual and future results may differ materially from our projections and forward-looking statements due to a number and variety of risks, uncertainties, assumptions, and factors including those set forth in Slide 2 of our presentation and our most recently filed annual report on Form 10-Ks, our quarterly reports on Form 10-Q, and in our other filings with the SEC. You should not place undue reliance on forward-looking statements, and we do not undertake any duty to update any forward-looking statement. We disclaim any written or oral statements made by any third party regarding the subject matter of this conference call. Also during this call, certain non-GAAP financial disclosures may be made.

In accordance with SEC rules, the final slides of our presentation provide reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations along with this presentation, earnings press release, our annual report on Form 10-Ks, and a replay of this broadcast will be available under the For the Investors section of our website at www.helixesg.com. Please remember that information on this conference call speaks only as of today, 02/24/2026, and therefore, you are advised that any time information may no longer be accurate as of any replay of this call. Scott?

Scott Sparks: Thanks, Ken. Good morning, everyone. Thank you for joining our call today. Hope everybody is doing well. This morning, we will review our fourth quarter and full year 2025 results, financial performance and operations. We will provide our view of the current market and provide guidance for 2026. Our teams offshore and onshore safely delivered another well-executed quarter. The fourth quarter turned out to be much stronger than we anticipated, even with some segments being in a softer market condition and returning to winter seasonal conditions that usually drive down utilization. In terms of earnings, the fourth quarter was our highest fourth quarter since 2013, so congratulations to our teams.

Moving on to the presentation. Slides five, six, and seven provide a high-level summary of our results and key highlights for the quarter and for the year. As mentioned, our fourth quarter results were better than expected, despite the continued low-cost stacking of the Seawell and lower utilization for the Q4000 in the Gulf of America. Revenues for the fourth quarter were $334,000,000 with a gross profit of $51,000,000, and a net income of $8,000,000. Adjusted EBITDA was $74,000,000 for the quarter, and we had positive operating cash flow of $113,000,000 resulting in positive free cash flow of $107,000,000.

Highlights for the quarter include improved results in the Gulf of America shelf with good late season utilization, including work in the Epikedron late into December; the successful transition of the C Helix 1 to its three-year Petrobras contract; securing a multiyear P&A contract in the North Sea should enable both vessels in the region to be utilized in 2026, bringing the Seawell out of stacking.

The year ended with revenues of $1,300,000,000 with a gross profit of $159,000,000 and a net income of $31,000,000, generating an adjusted EBITDA of $272,000,000, and we had positive operating cash flow of $137,000,000, resulting in positive free cash flow of $120,000,000. Our cash and liquidity remains strong. We have increased cash and cash equivalents of $445,000,000 and increased liquidity of $554,000,000 at year end.

Highlights for the year include a strong year in the Robotics segment working all six trenchers, seven vessels, and three boulder grabs, with market conditions allowing for further increased rates; three vessels on long-term contracts in Brazil, the SH 1 and SH 2 both finished the year under three-year contracts with Petrobras at higher rates; the Q7000 is on a 400-day contract with Shell; and significant year-over-year improvement for the shallow water abandonment results.

Over to Slide 9, Slide 9 provides a more detailed review of our segment results and segment utilization. In the fourth quarter, we continued to operate globally with minimal operational disruption with operations in Europe, Asia Pacific, Brazil, the Gulf of America, and the U.S. East Coast. Slide 10 provides further detail of our Well Intervention segment. In the Gulf of America, the Q5000 achieved high utilization completing work on a multi-well campaign for Shell, and then commenced work on a two-scope program for BP.

The Q4000 had some gaps in the schedule in Q4, working on lower rates R/V decommissioning projects for Murphy for a good portion of the quarter, returned to contracted works at well intervention level rates last month. In the North Sea, the Well Enhancer had 70% utilization during the quarter working for two customers. The Seawell remained on one stack for the quarter, and we reactivated the vessel in January and commenced work earlier this month. In Q4, the Q7000 completed work on numerous wells for Shell, the 400-day decommissioning campaign in Brazil with 100% utilization.

The SH 1 had 61% utilization during the quarter, and the vessel completed a decommissioning contract for Trident and then completed inspections and acceptance prior to commencing its three-year Petrobras contract. The SH 2 had a very strong quarter with 100% utilization for Petrobras. The standalone 15K IRS was on hire in Brazil, contracted to SLB in the quarter, achieving 75% utilization in the quarter prior to returning to the U.S.A.

Moving to Slide 11. Slide 11 provides further detail of our Robotics business. Robotics had another strong quarter and a very good year. The business performed at high standards, operating six vessels during the quarter, working between trenching, ROV support, and site survey work on renewables and oil and gas related projects globally. Robotics worked four vessels on renewables related projects during the quarter, and had strong vessel utilization overall, with two vessels working on trenching projects and two vessels working on site clearance. Five trenchers and two iRUB boulder grabs were utilized during the quarter. We operated two vessel trenching spreads in Europe including the GC3 and the North Sea Enabler.

The Glomar Wave and the Trim support vessels worked on renewable site clearance projects, utilizing the iRUB boulder grabs in Europe. We returned the Glomar Wave to its owners in late December following its expiration of its charter. We replaced the vessel with the higher spec vessel, the Patriot, in January. The Shelia Bordelon completed ROV works in the Gulf of America, where she is currently undertaking ROV support works, prior to being scheduled to head back to the U.S. East Coast.

Also, in renewables, the T1401 trencher completed work on a longer-term contract from a client-provided Bestloft Taiwan, and the T1402 worked from a client-provided vessel for a longer-term contract in the Mediterranean, which has now been extended to the end Q1 2027. The GC2 in the Asia Pacific region performed oil and gas support work offshore Malaysia during the quarter. Our renewables and trenching outlook continues to remain very robust with numerous sizable contracted works in 2026 through 2030, with a solid pipeline of tender activity as far out as 2032 with an improving rate year over year.

Slide 12 provides detail of our shallow water abandonment business. Q4 is usually seasonally low in terms of utilization in the shallow water abandonment business. However, in Q4, the Hedron heavy lift barge worked well into December with 92% utilization. The dive boats completed 54% utilization, and the lift boats 53% utilization. P&A spreads working offshore totaling 538 days of utilization and the coiled tubing systems had 83 days of utilization.

In summary, whilst the year was softer than expected at the start, we finished relatively strong. We are encouraged by our strong Robotics and Brazil segments, and see improving market conditions in the later half of 2026 and into 2027. I would like to thank our employees for their efforts delivering again safely at a high level of execution, producing one of our best years in regards of MPT, and our safety statistics continue to remain among our best on record. Before I turn the call over, I would be remiss if I did not address the announcement we made in December when Owen, our long-time CEO, announced his intent to retire.

Our Board is focused on selecting the next CEO for Helix Energy Solutions Group, Inc., following a long-established succession plan, working with outside advisers and Owen. We, the management team, the Board, and Owen, are committed to business continuity and a smooth transition. We are grateful that we can benefit from Owen's expertise and perspective during the transition as Helix Energy Solutions Group, Inc. is well positioned with a strong balance sheet that affords opportunities for future growth. On a personal note, I have worked with Owen for over 25 years. He has been a pioneer in intervention, providing leadership and vision to build Helix Energy Solutions Group, Inc. and drive long-term value creation.

On behalf of the Helix Energy Solutions Group, Inc. family, thank you, Owen. To continue our call, I will now turn the call over to Brent.

Brent Arriaga: Thanks, Scotty. Moving to Slide 14, it outlines our key balance sheet as of December 31. At year end, we had $445,000,000 of cash and liquidity of $554,000,000 including the availability on our ABL facility. Our total funded debt was $315,000,000 and we had negative net debt of $137,000,000 at year end. Our cash, our balance sheet remains strong, but we expect to continue adding to our war chest of cash as we anticipate generating meaningful free cash flow in 2026 with minimal debt repayment obligations between now and 2029. I will now turn the call over to Erik for discussion on our outlook.

Erik Staffeldt: Thanks, Brent. We are pleased with the strong finish to 2025 delivered by our team. Our operating season extended deep into the fourth quarter before the winter season slowdown. As we enter 2026, we see conflicting signals. We have a strong backlog for the year and a base level of activity in our markets which remain supportive and constructive. However, we also have a market that lacks conviction or direction. The macroeconomics crosscurrents allow an uncertain environment to persist, driven by geopolitics, regional conflicts, and conflicting supply and demand and pricing dynamics. Despite these challenges, momentum is building as producers signal expanding operations and activity in late 2026 or early 2027. The global renewables market continues to be robust.

Our outlook remains positive despite these near-term headwinds.

As we provide our outlook for 2026, it is supported by contracts for several of our key well intervention assets and trenching contracts in our robotics segment. Our outlook for 2026 is impacted by two distinct events causing year-over-year EBITDA reductions in the range of $40,000,000. Earlier this month, we completed the successful workover of the Thunder Hawk field at an estimated cost of $16,000,000. This will impact our Q1 results. Mid-year 2026, the C Helix 1 is scheduled to perform a ten-year recertification, impacting our results by more than $20,000,000. Absent these events and despite the fact that various macro challenges from 2025 continue into 2026, we nonetheless see an environment that is better than 2025.

We are providing guidance of certain key financial metrics from our 2026 forecast: revenue of $1,200,000,000 to $1,400,000,000, revenues in line with 2025; EBITDA of $230,000,000 to $290,000,000, as mentioned, impacted by Thunder Hawk workover and the C Helix 1 docking; CapEx of $70,000,000 to $80,000,000. Our 2026 spending plans are primarily a mix of regulatory maintenance on our vessels and intervention systems and fleet renewal of our Robotics ROVs. Free cash flow, $100,000,000 to $160,000,000, continued meaningful free cash flow generation, with variability driven by ultimate working capital movements. These ranges include some key assumptions and estimates. Any significant variation from these assumptions and estimates could cause our results to fall outside the ranges provided.

Key forecast drivers for our annual guidance include second-half utilization on the Q4 and Q7000, recovery of the North Sea well intervention market, strong markets for our Robotics fleet, and a stable shallow water abandonment segment. Overall, as shown on Slide 16, our guidance highlights our reliable EBITDA margins and free cash flow generation. This slide highlights our consistent and healthy cash conversion rates and attractive yields. Our quarterly results will continue to be impacted by seasonal weather in the North Sea and U.S. Gulf Shelf, primarily in the first and fourth quarters. In addition, the Thunder Hawk workover and timing of our vessel maintenance period will cause variances between quarters.

Our quarterly financial performance in 2026 is expected to follow the same cadence as our previous year's results, the second and third quarter being our most active quarters, and the first and fourth quarters impacted by winter weather. With seasonal quarterly impacts and capital spending expected to be front-loaded, the timing of our free cash flow generation is likely skewed to the second half of the year.

Providing key assumptions by segment and region starting on Slide 18, first with our Well Intervention segment, the U.S. Gulf of America continues to be a mixed bag. The 5,000 has good contract coverage with white space to fill in her Q3 schedule. The 4,000 is starting the year with contracted work into Q2, with white space in the second half of 2026. Utilization on the 4,000 is one of our key areas of focus for 2026. We are seeing a nice rebound in the U.K. North Sea well intervention market, albeit with some lower margin work. We have secured almost 400 days of work in the region, with several additional opportunities.

The Seawell has been reactivated and is currently working. We expect good utilization for the Seawell this year. The Well Enhancer season is expected to start in March. We are pleased with the recent level of activity in the market and are expecting a solid multiyear recovery. The 7,000 is currently in Brazil completing its project for Shell. Short-term opportunities for the vessel in Brazil and West Africa are being developed. Utilization on the 7,000 is another one of our key areas of focus this year. The C Helix 1 and CEM Helix 2 are contracted to work for Petrobras throughout the year.

The C Helix 1 has the scheduled ten-year docking midyear with a significant impact to our 2026 outlook.

Moving to Robotics. The Robotics trenching market continues to be a bright spot for Helix Energy Solutions Group, Inc., specifically in Europe. In 2025, we announced multiple significant trenching contracts in the North Sea that form a foundation of our strong outlook. Bidding activity has been and continues to be extremely active. The APAC market is expected to be softer in 2026 with plans to complete trenching projects in Taiwan and relocate the GC2 to the North Sea for trenching projects there. In the North Sea, the Grand Canyon 3, Horizon Enabler, and GC2 are expected to have strong trenching utilization in 2026.

The GC3 does have a docking in Q1, and the GC2 has the transit to the North Sea in Q2. The site clearance vessels are forecasted to have good utilization. The T1402 is contracted for the year on a project in the Mediterranean. In the U.S., the Shelia Bordelon utilization will likely be lumpy with a forecasted combination of work in the U.S. Gulf Coast and U.S. East Coast.

Moving on to production facilities. The HP1 is on contract for the balance of 2026, recently extended to June 2027 with no current expected change. We expect variability with production as Droshky field continues to deplete and the successful Thunder Hawk field workover expected to resolve in this past two. The workover expense of $60,000,000 will impact our Q1 results.

Continuing to Alliance, we are expecting to have traditional seasonality in our shallow water abandonment segment with greater impacts during Q1 and Q4. Once again, we believe results will be ultimately driven by the length of the good weather season. We are seeing improvements in Marine Offshore, increased competition in the Energy Services diving, heavy lift. We expect the Marine Offshore business to maintain good utilization of up to seven lift boats, with some variability and seasonality on the OSVs and crew boats. The Energy Services should have good utilization for four to seven P&A spreads and one to two coiled tubing units. There is seasonality in diving and heavy lift business.

The Fekidron is currently completing its docking and is expected to remain idle with limited winter opportunities, after which we do expect an active season during Q2 and Q3.

Moving to Slide 19. Our CapEx forecast for 2026 is heavily impacted by drydocks and maintenance periods on our vessels. The Hedron is currently completing a docking. The C Helix 1 has a 45-day docking scheduled midyear. Our CapEx range for 2026 is currently $70,000,000 to $80,000,000. The majority of our CapEx continues to be maintenance and project related, which primarily falls into our operating cash flow. Reviewing our balance sheet, our funded debt of $315,000,000 is expected to decrease by $10,000,000 in 2026 with scheduled principal payments on our merit debt. We expect to continue our share repurchase program with the target repurchases of 25% of free cash flow.

At this time, I will turn the call back to Owen for a discussion on our outlook for JYSPHERE and LUBEON for closing comments. Owen?

Owen Kratz: Thanks, Eric. 2025 has been softer than 2024, with impact on both rates and utilization over revenue down 5% and EBITDA down 10%. However, this is better than expected and better than our revised guidance following the unexpected collapse of work in the U.K. Excuse me. The Gulf of America intervention results were impacted as a result of accelerating the timing of the Q4000 dry dock from 2026 into 2025. We did this to take advantage of what could be a stronger year in 2026 versus the softer '5? The rest of the company showed flat to marginal improved results over expectations in our other segments, highlighted by much improved results in shallow water abandonment, and Droshky production.

However, Thunder Hawk remained offline for the entire year as partners decided to defer the required intervention until 2026.

On the production side, there are some positive developments. Droshky continues to produce much better than expected. The Thunder Hawk and Nerve completed in February with successful results. The host facility operated by others has experienced issues that do not allow us to immediately start production, but production is expected to start in early April. Absorbing the cost of the intervention and the slower than desired start-up will see EBITDA negatively affected for 2025, but it is a good intervention result with positive future impacts.

All in all, it was not a bad performance for the year, allowing us to meet our revised guidance of $255,000,000 of EBITDA, which was set following the unexpected shutdown of activity in the North Sea.

Going forward into 2026, we expect the macro outlook to continue to be on the soft side with ongoing uncertainties. Expect the North Sea to start to become more active, led by decommissioning. We have reactivated the Seawell and expect market improvements. Likewise, we expect the Well Operations U.S. business to marginally improve. These expected improvements will be offset by the 7,000 results as it transitions between contracts. In Brazil, we have a five-year special survey dry dock due on the SH A SH-1 before we therefore, we expect well operations in Brazil. Excuse me. We expect operations in Brazil, the results to be meaningfully impacted as we see this SH-1 out of service and unavailable for approximately 45 days.

Robotics should continue to show strong performance with long visibility on sustained strong results.

In shallow water abandonment, we have expected for a while that decommissioning should increase markedly in 2027. In 2026, we expect increased competitive pressures as contractors position for the expected improved market of 2027. Therefore, we are expecting a flat to marginal drop in results compared to 2025. Production facilities HP1 performance should continue unabated for 2026. There are a few give and takes, but we could see a full year in 2026 with similar overall results as 2025 as we get set for what we anticipate will be a stronger 2027 all around.

Just a note on our guidance for 2026. We are expensing the Thunder Hawk intervention, and we have a five-year special survey dry dock on the SA 1 scheduled for 45 days out of service, as Erik had mentioned. Combined, these two events represent $40,000,000 of EBITDA. You can do the math, but this highlights how strong and improving our core business is, and we anticipate a strengthening of the market into and through 2027. We have a lot of cash on the balance sheet and more to come. It should be time to put some of this cash to work. We exit 2025 with a strong balance sheet as mentioned with negative net debt and a significant cash position.

Helix Energy Solutions Group, Inc. financial strength continues as we expect another year of strong free cash flow generation leading to a potential cash balance approaching $600,000,000 by the 2026. The market continues to be a bit soft with uncertainties. These two events combined create conditions that mean 2026 could be a year to consider meaningful M&A activities or capital investments, which could positively impact the company's shareholder value. We remain a market leader in intervention, DCOM, and Robotics. We continue to demonstrate our resilience, our ability to deliver results even in a challenging market environment, and we are well positioned for the future. So with that, I will hand it back to you, thanks, Helen.

Operator, at this time, we will take any questions.

Operator: Okay. Thank you. And we will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from James Rollyson from Raymond James. Please go ahead.

Connor Jensen: Hey, guys. This is Connor Jensen for Jim at Raymond James. I was just wondering, kind of as you mentioned, a lot of cash on the balance sheet, more free cash flow expected in 2026. Maybe just talk about your preference of using that for repurchases versus M&A, and then how the M&A market is looking at this time and if there are any actionable opportunities out there. Thanks.

Owen Kratz: Well, there are actionable opportunities. Right now, I would say that the Board, management, and myself are all collaborating on looking at all the options. Of course, I think with my retirement and a new CEO coming in, there needs to be some buy-in and participation with the new CEO. So I think right now, all I can say is that there are opportunities, and they are being assessed.

Connor Jensen: Got it. Makes sense. And then you noted you reactivated the Seawell and expect strong utilization there. I was just wondering how the North Sea market was looking at this point and what you are hearing from operators there after the weaker activity this year, or last year?

Scott Sparks: Good morning. So we are seeing much better activity in 2026 than we did in 2025. In 2025, there were a lot of mergers of operators that put a lot of things on hold. There has been a sizable change towards decommissioning. We have landed a couple of large-sized decommissioning projects, and so we are seeing this year that both the Seawell and the Well Enhancer will have very active seasons. And we are also already starting to see activity into 2027. So it is definitely an improved market, but certainly a swing towards decommissioning over production enhancement.

Connor Jensen: Got it. Thanks. I’ll turn it back.

Scott Sparks: Thank you.

Operator: And your next question comes from James Schumm from TD Cowen. Please go ahead.

James Schumm: Hey. Good morning, everybody. First, I just want to say, Owen, just want to wish you the best in your retirement. Thank you for all the support over the last several years. You will be missed, and I hope to see you again soon. And then just maybe on the Robotics revenue guidance, it is about flat year over year. Can you talk about some of the components of that? For example, is the oil and gas portion up, down, or flat? Is offshore wind up this year? And then I thought trenching activity was supposed to be higher or stronger in 2026, but perhaps you could give some color there as well.

Scott Sparks: Yep. Sure. So we expect the oil and gas side for Robotics to remain flat. If anything, it will go down from moving the GC2 from the Asian market to the North Sea for the trenching contract for the MKT announcement that we put out there. So trenching is going to increase. Rates are increasing on the trenching side, but there are a lot of moving parts. The GC2 is going to come up from APAC and establish itself in the North Sea. Then we have to swap out trenchers from the Enabler to the GC2 and then put the T1401 from originally working in Taiwan last year back to the North Sea and put that onto the Enabler.

So there are quite a few moving parts of interregional transitions and then mobilizations to various vessels that set us up very well from 2027 onwards. It is still going to be a very good year in trenching, and rates are improving year over year. And we have got a very solid outlook for trenching.

James Schumm: Okay. Thanks, Scotty. And then maybe just on Q1, I think maybe it would be a good idea to sort of level set expectations so your stock does not get whipsawed in April. The consensus, I show $47,000,000 of EBITDA. I mean, should we think about, I do not think anybody had modeled those two issues. I mean, I do not know if we can just haircut $40,000,000 from $47,000,000. That would be only $7,000,000 of EBITDA in the first quarter. Is there any help you can give to us to get some sort of reasonable expectations?

Erik Staffeldt: Yeah. Thanks for the question, Jim. I think we tried to highlight that the impact of the workover expense that we incurred will be a Q1 event, and that is the estimated $16,000,000. So that is a Q1 event. The C Helix 1 right now, we expect that to be a Q2 event, could slip a little bit into Q3, but it is definitely not a Q1 event. But I think modeling the impact of the Thunder Hawk workover into Q1 is appropriate. I think when you look at our historical performance the last several years, Q1 is our lowest quarter, naturally from a seasonal standpoint. And, of course, we have now this year the impact of the Thunder Hawk.

So that is the right way to model and think about Q1.

James Schumm: Okay. Thanks a lot, Erik. Appreciate it, guys. I will get back in the queue.

Operator: And your next question comes from Joshua Jayne from Daniel Energy Partners. Please go ahead.

Joshua Jayne: Thanks. Good morning. First question is just on the Q7, the slide deck highlights additional opportunities in Brazil, but also that you could see some potential utilization gaps. Could you just elaborate what you are expecting from that asset in the back half of the year? And then also just speak generally to the intervention market today in Brazil? That would be helpful. Thanks.

Scott Sparks: The intervention market in Brazil is our strongest market. There is the most activity. We have the two long-term contracts with the SH 1 and the SH 2 for Petrobras, both coming into this year with three-year contracts. And those contracts have options for Petrobras to extend, and they are at better rates than we had previously. So Brazil is looking good. The Q7000 is currently contracted into April, May time frame with Shell. And then we are looking at opportunities within Brazil. There are a few smaller clients there that have some well work. If that work does not come to fruition, we are probably going to send the vessel to Africa.

We are very close to a larger contract for a good client in Nigeria. And so we have got targets in Brazil and targets in West Africa. There is also potential for opening up Angola. We have never really worked in Angola. We had quite a bit of bid opportunity in Angola in recent times. So I think Q7000 will be utilized. There may be some gaps in schedule, but it will probably bounce between Africa and Brazil in the coming years.

Joshua Jayne: And I think, in Owen’s towards the end of the prepared remarks, Owen had talked about, I guess, a little bit more of a competitive nature within the Well Intervention segment. For the assets that have gaps in utilization, how much of this is, do you think, driven by a bit more competitive environment versus potential operators shifting some of their CapEx programs more towards exploration instead of well intervention type activities. Could you elaborate that a little bit more on how you potentially could see a recovery in 2027 after a lull this year?

Owen Kratz: Just to clarify, and then I will turn it back over. The comment that I made about the increased competition was specifically meant to address the shallow water market.

Joshua Jayne: Which is—

Owen Kratz: Okay. Yeah. That is going to continue to be soft for 2026 with, we anticipate, strong competitors coming into the market in 2027. But as a result, there is more competition, will be pretty stiff as everyone positions for the next year.

Scott Sparks: Competition on the well intervention side is generally minimal. We compete mostly against rig white space, so we are seeing some rig white space in the Gulf, for instance, and that has given us a flatter look at the Q4000 for this year. But as I think everybody knows, going into the latter part of 2026 and 2027, the drillers are expecting to have high utilization, and therefore, operators will switch their white space intervention work from rigs and hopefully back to us guys, and that should lead to a better 2027.

Joshua Jayne: So just to one last follow-up on that point. So is that fair, just given that backdrop, is it fair to say that the outlook, for example, for the Q4 is probably better in 2027 than it is in 2026? Is that fair?

Scott Sparks: Yes. I think for the Q4, for instance, we have a good first half of the year. We have got some white space in the second half of the year. We may end up chasing decommissioning work like we did in the latter part of 2025 for the Q4. But 2027, we should see a more solid year.

Joshua Jayne: Understood. Thanks for taking the questions. I will turn it back.

Operator: You are welcome. Okay. And before we proceed, again, just want to remind everyone that if you want to join the queue, simply press star 1. And your next question comes from John Basler from Basler Capital. Please go ahead.

John Basler: Hi. Thank you for taking my question. I am just curious what types of gaps in your portfolio would you be looking to address or scale to be gained through M&A?

Owen Kratz: Well, there are quite a few. I would not call them gaps. I think strategically looking forward, we are sort of at a crossroads here where since we started, basically started building the company following the ’08 financial collapse, the focus has been on building out a fundamental fleet that puts us in a leadership role for well intervention, which we consider the most essential tool for the post-PDP section of the market. Having done that, we completed that, spent the COVID years, and focused on paying down the debt and strengthening the balance sheet again, to the point now where we have a very strong balance sheet.

Now the next phase of growth will be to increase the value received on our assets by increasing our capabilities to become more and more of a solutions provider rather than simply a commoditized service provider. That would be one direction. I think there is still some geographic expansion for us to look at. So there are a number of pathways that we are looking at here.

John Basler: Thank you. And if I could ask one more, is there any metrics or scenarios that you would look to determine whether you would revisit a strategic review as opposed to M&A? Thanks.

Owen Kratz: I am not sure I understand—

Erik Staffeldt: I think from our strategy, I think we have positioned the company to, obviously, to have a strong balance sheet and are well positioned from a, you could say, a standpoint of M&A or capital investment. I think the Board and management team has been open to either direction. You know, I think having the strong balance sheet and strong performance over the last several years has really positioned us for this. I think we see the benefit of, as Owen mentioned, adding different solutions and geographic expansion, but we also understand the benefits associated with scale. So I think from that standpoint, I think we are open to both.

John Basler: Great. Thank you.

Operator: And your next question comes from James Schumm from TD Cowen. Please go ahead.

James Schumm: Hey, thanks. Just one more for me. Can you give us a sense of the out of service time, like dry docks, out of service days, for 2025, 2026, and then what you have sort of scheduled for 2027. And I am not looking for 2027 guidance or anything, but I am just trying to get a sense of, you know, you have got this SH 1 headwind. Do we have a similar headwind for the SH 2 in 2027? Just what are the things that, as we sit here today, that we know that there are some potential headwinds or tailwinds for next year?

Erik Staffeldt: Yeah. I think you will find most of the information on our 2025 already in our results there. But we had the Q7, the Q5, and the Q4 at different times in 2025 drydock. As we look at 2026, you know, the assets that are impacting our results specifically—and that means being out of service during potential revenue generating—really, this year is the SH 1. An example, the Hedron is in dock right now, but absent being in the dock, it still would not be working because of the winter weather. So that is not negatively impacting us in 2026. I do not recall if there is another one in 2026 that is negatively impacting us.

As we look at 2027, we do have the SH 2 that will be out of service. Right now, that is expected to be early in 2027 from a docking standpoint. And I think I would have to get back to you on any other of the larger assets that would have a docking later in 2027. But the SH 2 will have one early in 2027.

James Schumm: Okay. Good to know. Thanks, Erik.

Scott Sparks: The Seawell and the Well Enhancer will sometime in 2027, but it will be in the off season. So again, it will not affect our EBITDA generation. It will be in the early part of the year.

James Schumm: Okay. Thanks, Scotty.

Operator: And your next question comes from Ben Summers from BTIG. Please go ahead.

Ben Summers: Hey, good morning, guys, and thanks for taking my question. So, sorry if I missed this earlier, but just kind of thinking about the expected improving market environment, kind of late 2026, early 2027. Just kind of any thoughts around potential pricing for well intervention work and then maybe specific basins that you think could really maybe see a marked improvement and maybe be able to push pricing for some of that work?

Scott Sparks: Yeah. I think as we go into 2027, I mentioned earlier that we believe that the drillers will have high utilization, and if that is the case, then their rates will increase. We usually fall behind the drilling rates, but as they increase, we tend to increase 5b as well. So I think we will see improved rates in the U.S. Gulf of Mexico. And then the North Sea, we should see more decommissioning work that should lead to slightly improved rates. I do not think there will be a big jump in rates in the North Sea because we do not really follow the drilling market in the North Sea. Then it is where can we take the Q7000?

If it is in Brazil, probably have higher rates. If we have to chase work in Nigeria or Angola, Equatorial Guinea, we will have to see what the market conditions allow for. It is going to be a bit of a mixed bag, but I would like to think slightly improved.

Ben Summers: Awesome. Thank you. And then just kind of on the there, just kind of curious what you see in terms of near-term utilization. I know you said we have some pockets for the Q5000 and Q4000 this year. So just kind of curious for any more color there and kind of the 2026 outlook for that market.

Scott Sparks: Yes. So the Q5000 is pretty well taken care of for the first half of the year. We have some gaps in Q3, but then a solid Q4 for the Q5000. The first half of the year for the Q4000 is looking relatively good. And then, like I say, it gets a bit lumpy up there. There are two or three intervention jobs that we are chasing for the Q4000 in the second half of the year, but then we might have to start going back to decommissioning work or some construction work. But it is early days for the year, but certainly, we have some space to fill on the Q4000 in the second half of the year.

Ben Summers: Awesome. Thank you guys for the detail and the update.

Operator: There are no further questions at this time. And now I will give back the floor to the company for the closing remarks. Please go ahead.

Erik Staffeldt: Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our first quarter 2026 call in April. Thank you.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.