Heres Why Helix Energy Solutions Group Incs Stock Sank 14% Today

By Matt

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Helix Energy Solutions Group Inc stock sank as much as 15% in early morning trading after the company reported fourth-quarter earnings. We can blame the earnings, or lack thereof, on the sell-off. The company reported earnings of just $8 million, or $0.08 per share, which was well short of the $0.24 per share that analysts were expecting.

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So what: There were a number of factors that affected Helix Energy Solutions in the quarter. The plunging price of oil caused vessel utilization to drop, which took revenue down with it. The company's Well Intervention segment saw its revenue drop 41% year-over-year asvessel utilization fell from 95% just last quarter to just 64% in the fourth-quarter. It was a similar story at Helix Energy Solution's Robotics segment as revenue fell 39% year-over-year as vessel utilization dropped from 90% to 79% quarter-over-quarter.

Impacting vessel utilization, and therefore revenue and profits, was a number of unexpected issues that cropped up during the quarter. The company experienced downtime after its Q4000 vessel was accidentally hit by a nearby supply boat. That was followed by mechanical problems that were related to the redeployment of its intervention riser system. If that wasn't bad enough, work that was scheduled for the H534 was canceled on short notice. Suffice it to say, the company had a rough quarter, with much of its issues being beyond its control.

Now what: As an offshore-focused oil-field service contractor Helix Energy Solutions future is tied to oil and gas development. That development is noticeably slowing down due to weak oil prices. Helix saw that last quarter as its vessel utilization dropped significantly in just one quarter. That trend could continue until the price of oil, and therefore drilling activity, improves.

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