Helix Energy Solutions Group (NYSE:HLX) Seems To Use Debt Quite Sensibly

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Helix Energy Solutions Group, Inc. (NYSE:HLX) makes use of debt. But the real question is whether this debt is making the company risky.

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When Is Debt Dangerous?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we think about a company's use of debt, we first look at cash and debt together.

How Much Debt Does Helix Energy Solutions Group Carry?

As you can see below, Helix Energy Solutions Group had US$311.6m of debt, at June 2025, which is about the same as the year before. You can click the chart for greater detail. However, its balance sheet shows it holds US$319.7m in cash, so it actually has US$8.13m net cash.

How Strong Is Helix Energy Solutions Group's Balance Sheet?

Zooming in on the latest balance sheet data, we can see that Helix Energy Solutions Group had liabilities of US$348.0m due within 12 months and liabilities of US$755.8m due beyond that. Offsetting these obligations, it had cash of US$319.7m as well as receivables valued at US$369.6m due within 12 months. So it has liabilities totalling US$414.4m more than its cash and near-term receivables, combined.

While this might seem like a lot, it is not so bad since Helix Energy Solutions Group has a market capitalization of US$967.2m, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution. Despite its noteworthy liabilities, Helix Energy Solutions Group boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Helix Energy Solutions Group

Shareholders should be aware that Helix Energy Solutions Group's EBIT was down 38% last year. If that decline continues then paying off debt will be harder than selling foie gras at a vegan convention. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Helix Energy Solutions Group's ability to maintain a healthy balance sheet going forward. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, while the tax-man may adore accounting profits, lenders only accept cold hard cash. Helix Energy Solutions Group may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. Over the last three years, Helix Energy Solutions Group actually produced more free cash flow than EBIT. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

While Helix Energy Solutions Group does have more liabilities than liquid assets, it also has net cash of US$8.13m. The cherry on top was that in converted 125% of that EBIT to free cash flow, bringing in US$108m. So we are not troubled with Helix Energy Solutions Group's debt use. We'd be motivated to research the stock further if we found out that Helix Energy Solutions Group insiders have bought shares recently. If you would too, then you're in luck, since today we're sharing our list of reported insider transactions for free.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.