Image source: The Motley Fool.
Helix Energy Solutions Group Inc (HLX 0.27%)
Q1 2020 Earnings Call
Apr 23, 2020, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings and welcome to the First Quarter 2020 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded Thursday, April 23, 2020.
I would now like to turn the conference over to Erik Staffeldt, Executive Vice President and Chief Financial Officer. Please go head sir.
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
Good morning everyone and thanks for joining us today on our conference call for our first quarter 2020 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; Ken Neikirk, our General Counsel, and myself.
Hopefully, you've 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 our Investors page on our website at www.helixesg.com. The press release can be accessed under the Press Releases tab, and the slide presentation can be accessed by clicking on today's webcast icon.
Before we begin our prepared remarks, Ken Neikirk will make a statement regarding forward-looking information. Ken?
Ken Neikirk -- Senior Vice President, General Counsel and Corporate Secretary
During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations. 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 future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in Slide 2, in our most recently filed Annual Report on Form 10-K and in our other filings with the SEC.
Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slide of our presentation provides reconciliations of certain non-GAAP measures to comparable GAAP [Technical Issues]. These reconciliations along with this presentation, the earnings press release, our annual report and a replay of this broadcast are available under the For The Investor section of our website at www.helixesg.com. Owen?
Owen Kratz -- President and Chief Executive Officer
Thanks, good morning. We hope everyone out there and their families are doing well and staying safe. This morning, we will review our Q1 performance, our operations in this challenging environment and provide our near-term outlook.
Moving to presentation Slides 5 through 8, which provide a high level of summary of our results, the first quarter historically has been a financially weaker quarter for us with the seasonal slowdown of activity in the North Sea. In an effort to maximize our earnings for this year, we made the decision to front load Q1 with five-vessel dry-dock recertification projects negatively impacting our results with a minimum of 73 days of lost availability. In addition, we commenced operations on the Q7000 in West Africa, a new vessel operating in a new region.
Revenues in Q1 were reported at $181 million with a net loss of $12 million and EBITDA of $19 million. The increase in revenues from Q4 was driven by the addition of the Q7000 to our fleet working in West Africa, partially offset by reduced revenues and utilization in the well intervention Gulf of Mexico and UK regions. The addition of the Q7000 on an integrated project increased our cost basis, combined with lower revenues in the UK and Gulf of Mexico. This reduced our gross profit to $2 million. We had several discreet items that impacted our results, including a $6.7 million charge for goodwill write-off, then a $14.1 million tax benefit related to the CARES Act and other tax restructuring efforts.
Our results in the first quarter were better than anticipated. The start-up operations on the Q7000 were outstanding with little downtime on the vessel and the execution of our business units was exceptional. Robotics and production facilities continued to deliver. However, this has been completely overshadowed by recent market events. The impact of COVID-19 on the oil market is unprecedented. While the impact has been relatively minimal through our first quarter results, the impact of COVID-19 that it will have on the remainder of 2020 and beyond will be significant.
The instability and unpredictability of our current market resulted in us withdrawing our guidance for 2020. While we're not yet in a position to provide guidance at this point, with this call and associated presentation, we will lay out the key data points as we see them that are currently influencing our business.
On to Slide 8, returning to our presentation, from a balance sheet perspective, our cash balance at the end of the quarter was $159 million with an additional $52 million in restricted cash associated with the short-term LC. As expected, our cash flows were negatively impacted by the heavy load of vessel recertification costs during the quarter. Our net debt at the end of the quarter increased to $183 million.
I'll now turn the call over to Scotty for an in-depth discussion of our operating results.
Scotty Sparks -- Executive Vice President and Chief Operating Officer
Thanks Owen, and good morning everyone. Moving on to Slide 10. These are certainly different and challenging times; however, we have risen to the occasion, and the first quarter was better than expected in [Technical Issues] considering the effects of the virus globally, the slower winter seasonal period and we completed planned regulatory certification and other maintenance on five of our seven of our well intervention vessels. The virus has caused numerous logistical challenges. However, we have managed to keep the fleet active currently working in six countries on four continents and currently operational on 12 vessels; five well intervention vessels, six ROV support vessels and the HP1 with strong operational performance regarding safety and uptime.
In February, in swift response to the virus, we introduced strict measures and set protocols on all our vessels. Our offshore crews, alliance partners and suppliers have been fantastic and rose to the challenge. Offshore personnel self-isolate for 14 days, complete health documents before travel and are screened prior to joining the vessels. In the UK, the US and Brazil, we have recently been able to test personnel for the virus prior to allowing access to the vessels, although test kits can still be hard to come by. Once on board the vessel, life is now somewhat different than before; common areas such as gyms, lounges and cinemas are currently closed. Face covering are always worn when not in cabins, social spacing and PPEs adhered to. Meal times are restricted in number attending and to allow social distancing and no buffet services are available.
Our teams have undertaken to extend the length of shift patterns to reduce travel and if at any time any person shows any symptoms related to the virus, they immediately quarantine and they are removed from the vessel. We also have deep cleaning crews on the vessels continuously cleansing work in accommodation areas.
Over to Slide 11, in the first quarter, we achieved revenues of $181 million, resulting in the gross profit of 1% resulting in a profit of $2 million. Considering the effects of the virus, the seasonal winter period and our planned regulatory maintenance period, we have seen good levels of utilization. The Well Intervention fleet achieved utilization of 72% globally and the Robotics chartered fleet achieved utilization of 89% globally.
In the Gulf of Mexico, the Q5000 completed its scheduled five-year inspection and the Q4000 completed its scheduled annual inspection. Both vessels worked for two clients on numerous wells. The North Sea business had five vessels complete expected seasonal warm stack and scheduled maintenance periods and worked with customers on four wells. The Q7000 had a very successful project in Nigeria performing well with very little downtime and completing work on five wells for the clients, highlights an exceptional start-up for a new vessel in the subsea system. The vessel is now in transit to the warm layoff Period.
Performance in Brazil was usually strong again. Both vessels performed very well achieving high utilization of 99% with excellent uptime. Robotics chartered fleet was very active working between ROV support and renewable works completing 405 days of utilization across eight vessels with four of the vessels working outside the oil and gas market.
Again, we are really proud of our Helix teams and partners, our offshore teams are following our requirements and kept the fleet performing, and our onshore staff have done a great job working remotely supporting all of our businesses. We are still very active globally. However, this is a challenging time and we have commenced cost reduction programs and as the market evolves, we will right size through it accordingly.
Slide 12 provides a detailed review of our operations for our Well Intervention business in the Gulf of Mexico. The Q5000 had 51% utilization after completing its scheduled five-year inspection program and then performed two further ultra-deepwater intervention works for two clients, working on the well enhancement project for one client and performing abandonment work for another client. The Helix [Indecipherable] jointly owned 15K IRS system is currently mobilized to the Q5000 and we have now commenced work for BP and contracted for the remainder of the year.
The Q5000 now has a fully integrated Schlumberger spread on the vessel and we look to continue working closely with Schlumberger pilots and initiatives to multi-skilling our staff to reduce headcount and ultimately the costs.
The Q4000 performed well with 68% utilization in ultra deepwater completing a multi-well program for one client and then completed its planned regulatory inspections. The vessel then went straight back to work undertaking production enhancement work on two wells.
Moving to Slide 13, our North Sea Well Intervention business performed well coming out of the seasonal warm stack and maintenance periods working in the harsher winter conditions on both vessels. The Well Enhancer achieved 63% utilization working for one client on one well completing scheduled maintenance during its seasonal stack period. The vessel then recommenced work for a major client.
The Seawell achieved 34% utilization performing scheduled maintenance during the seasonal warm stack period commencing multi-well abandonment work for two clients. The Q7000 mobilized with Schlumberger services equipment arrived in Nigeria in early January and after clearing customs and completing regulatory inspections and final climate testing, the vessel went on hire January 23 and completed production enhancement work on four wells in the quarter. The vessel completed the project sizing in five wells in mid-April and is currently in transit to the warm [Indecipherable].
Moving to Slide 14, in Brazil, our operations for Petrobras continued to go extremely well and again produced another quarter of operational excellence with continued strong performance regarding safety, uptime and efficiency. We're currently ranked the number one rig contractor for Petrobras.
In the first quarter, the Siem Helix 1 achieved 98% utilization, working on four wells, one well being production enhancement works and working on three wells performing abandonments. The Siem Helix 2 achieved 99% utilization, working on four wells performing production enhancement scopes on two wells and abandonment works on two wells. The vessel also completed scheduled shipyard maintenance during the quarter.
Moving on to Slide 15 for our Robotics review. Robotics continues to go on and is looking to have a solid year. We have continued to diversify our Robotics business internationally with numerous works that are not oil and gas related. In the first quarter, the vessel charter fleet utilization was 89% including 272 days from Spot Vessels. Three vessels were utilized mostly in renewable energy projects in the North Sea. The Grand Canyon II and the MV Pride worked in the APAC region and the Ross Candies operated in the Gulf of Mexico. In the APAC region, the Grand Canyon II had 100% utilization performing works on ROV support projects. The MV Pride is currently working in Australia undertaking an interest in 70 to 80 day salvage projects. The Ross Candies had 53 days utilization work in ROV support for three clients in the Gulf of Mexico. In the North Sea, the Grand Canyon III had 46% utilization working 42 days in renewable trenching. We also continued work from two small spot chartered vessels, the GloMar Wave and the Kristiansand throughout the quarter working on the long-term windfarm site clearance and survey projects.
It's exciting to share how we're expanding our renewable service offering globally and contract another service of -- other than just trenching. We now also have been awarded our first renewable trenching project in the USA mobilizing the T1200 trenching unit to the client provided vessel this week in the UK to transit to the US East Coast. We've also just signed a contract adding significant trenching backlog adding further work in 2022 and in 2023 in Europe.
Over to Slide 16, I'll leave this slide detail on the vessels, ROV, and trenching utilization for your reference.
I'll now turn over the call to Erik for a discussion on our balance sheet and our 2020 outlook.
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
Thanks Scotty. Slide 18 outlines our debt instruments and their principal maturity profile. In the first quarter, we extended the maturity of our Q5000 loan until January of 2021. The extension was completed to align the debt maturity with our expected cash flow generation in the second half of 2020.
Moving to Slide 19, this slide provides an update on key balance sheet metrics, including long-term debt and net debt levels as of the first quarter. Our net debt in Q1 increased to $183 million from $143 million in Q4. The increase in net debt during Q1 was driven by the incurred recertification costs of our fleet approximately $18 million in capital expenditures during the quarter, approximately $12 million. We reduced our long-term debt by $13 million. Our cash position at the end of Q1 was $159 million, excluding $52 million of restricted cash. Our quarter-end net debt-to-book capitalization was 10%.
Moving to Slide 21 for our discussion on our 2020 outlook, our industry and our market is in unprecedented territory. In late March, we withdrew our guidance for 2020 with a clear expectation of being cash flow positive in 2020. The lack of stability that led to that decision to withdraw guidance remains today even to a greater extent. Our expectations have not changed, although we will not provide guidance today as we had hoped. Therefore, we are focusing on providing the details of our business as we know them today that serve as our foundation to our current expectations.
Our contracted backlog for the balance of 2020 is approximately $400 million. Although subject to change, we expect the majority, if not all of this contract work to be completed in 2020. Providing more color by segment and region, first with our Well Intervention segment. The UK, North Sea, we expect this region to be a 1-vessel region for the balance of 2020. The Well Enhancer has contracted work into Q3 with spot opportunities. The Seawell completed contract work in Q2 and will be stacked until work resumes with discussions providing upside ongoing. Q7000 had successfully completed its first campaign in West Africa. The add-on work has been suspended and the vessel will be warm stacked until work resumes whether in West Africa or another region. In the Gulf of Mexico, the Q5000 commenced operations for BP and is expected to remain on hire for the balance of 2020. Q4000 has contracted work into Q3 with the likely challenging spot market thereafter. In Brazil, the Siem Helix 1 and Siem Helix 2 are on hire for the balance of 2020.
Moving to our Robotics segment on Slide 22, Robotics has thus far been more resilient in this market than Well Intervention. Work in the renewables windfarm sector continues mostly undeterred by current events. Project awards have continued during this time providing much needed science and continued work. Robotics is certainly expected to be impacted by the slowdown in oil and gas work, but the continued reductions in costs and the activity levels in the renewables market are mitigating a significant portion of the impact to date. The Grand Canyon II is on contract through April and is expected to have good utilization for the remainder of 2020. The Grand Canyon III is currently working with contracted trenching operations made through September. Ross candies is expected to have good utilization through charter expiration in early Q3. Our windfarm survey and site clearance project using two VOOs is expected to continue into Q4.
Moving to production facilities, the HP1 is on contract for the balance of 2020 with no expected change. As we have previously stated, we will aggressively move to reduce our cost commensurate with the levels of work activity by assets and overheads.
Continuing to Slide 23, we have lowered our capex forecast to approximately $38 million for the year comprising primarily of the recertification costs of our vessels, the majority of which has already been spent in Q1. Reviewing our balance sheet, our funded debt is expected to decrease by $33 million for the remainder of 2020 as a result of scheduled principal payments. With the recent completion of the Q7000 campaign, we expect our restricted cash to be released in the near future. We also anticipate tax refunds in the amount of $16 million in the next eight to 18 months as a result of the tax changes from the CARES Act. I'll skip Slide 25 and leave it for your reference.
At this time, I'll turn the call back to Owen for closing comments.
Owen Kratz -- President and Chief Executive Officer
Thanks, Eric. Well, first I'd like to applaud and thank all Helix personnel that might be listening in. As the virus continued to spread globally, our initial focus was on safely maintaining operability. We established [Technical Issues] protocols and evolved to utilization of testing to keep 13 vessels in six countries on four continents operable. We've avoided infections on most of our vessels and have caught and contained outbreaks on two vessels without a loss of any meaningful productive time. Our operations team have done an outstanding job. Our offshore personnel have demonstrated flexibility, patience and resolve to keep operations up. Our office personnel have adopted to be very efficient working from home and our IT department has enabled us to make what seems to be a seamless transition. So my thanks to everyone involved.
We had purposely planned greater than historic levels of maintenance periods on our vessels during this past quarter. So, from the outset, our expectations were for a slow quarter. In spite of this and everything that's transpired in such a short period, our people have produced a quarter that exceeded our expectations.
Having said that, I realized that there are three issues that investors are primarily interested in; outlook, cash flow and debt. On our fireside chat a few weeks ago, we said that we expected to be free cash flow positive in 2020 and 2021 and that we would give more detail at our earnings call. Given the changing environment, we continue to speak with our clients, continue reviewing our contract provisions and continue stress testing of our financial models, all of which have reinforced our previous assumptions.
And let me just say, we are not really focused on trying to zero in exactly on what we think our guidance could be this year, our focus has really been on running various sensitivities at worst cases to assess our needs and not what our future looks like. So, that's another reason why the guidance is not out right now is we're really focused on the downside. We continue to believe that we'd be free cash flow positive for 2020 and 2021. At the beginning of this week, we thought we would be in a position to announce our guidance for 2020 based on primarily our contracted backlog with minimal additions from anything from the spot market. While we considered that max storage might be reached, that did actually start to occur and we're starting to see the results of what that might look like this last Monday. So, as everyone knows, the landscape continues to evolve all the time and what no one knows is what will happen now. We can share some of the broader assumptions that we were and are considering in our modeling.
Under outlook, we were considering that max storage would be filled in the near term. We considered that the impact from COVID-19 on shutdowns and therefore demand could extend through the end of 2020. Reopening efforts might produce a sharp but relatively modest uptick in demand on initiation, but would be hampered by a virus infection rate induced start-stop cycles, lagging consumer confidence and capacity to spend. This would especially be true if a deep recession occurs.
Thereafter, we think demand might build at a slow rate until an effective therapeutic or vaccine is available. Shut-ins could be forced, they will be forced on the industry. These shut-ins might not be uniform, but may disproportionately impact shale, small independent producers without a downstream refining capacity. As demand rises, shut-ins to be restored, but with loss of capacity due to bankruptcies, access to capital, lack of capital spending, reservoir damage and decline. Structural damage to supply should not be underestimated limiting the ability to restore supply to previous pre-crisis levels.
Offsetting this though is that demand may also not recover to pre-crisis levels. Shut-in production will compete with stored oil, depressing oil prices until demand exceeds production and storage is reduced to a rational level. Oil prices will gradually increase, but perhaps not to a level that promotes new development. This process could take place over 12 to 18 months and likely only begins with reopening in earnest. Our best guess would be early 2022 with producers starting to spend ahead of this in anticipation. We would expect offshore, especially in regions with ready access to markets or having an oil quality and high demand would be less affected. In fact some of our clients are giving signals that they intend to proceed with intervention work as usual, but we'll have to see how that unfolds. As far as free cash flow is concerned, using these conditions, again, this is our sensitivity testing. Using these conditions, we have stress tested the models. We've looked at each region as the impact will not be completely uniform.
Our conclusion is that we need to be prepared for a sharp decline in work volume in the second half of 2020 that continues through most of 2021. Our work is like a field work falling under the producers opex budgets, most of our work involves keeping the well flowing and remediation, while reduced commerciality may advance the timing of required P&A work, we believe that much of this might be allowed to be deferred, some operators may seek to take advantage of low cost or abandoned, but at this point, we don't see a tremendous boom in abandonment work occurring. We've had several projects planned for the second half of 2020 deferred into 2021 and we're receiving request for rate discounts, but we've had very little in the way of contract terminations.
Our rates never fully recovered from the downturn in 2016, so this time around, there is less margin for EBITDA destruction from discounting but we have taken it into consideration. We've spoken with our major long-term contract holders and so far we believe it is secure. We were hoping to issue revised guidance today; however, the industry entering territory that's never been seen before, and then instead of running the risk of providing more precise, but inaccurate guidance, we will continue to observe the market and our clients' reactions and assess the validity of our assumptions.
Applying what's been outlined here and barring further degradation to our outlook, we still believe we should be able to manage to a 2020 EBITDA result that is free cash flow positive. We also believe that 2021 will likely be our trough year but we should nevertheless be able to manage and be able to remain free cash flow positive through 2021.
With regard to our debt, we have $423 million of funded debt obligations. We plan to pay down $33 million during the last three quarters in 2020 and have another $91 million in 2021. We anticipate being able to maintain a strong cash position on the balance sheet at year-end 2020 and 2021. With an outlook of remaining free cash flow positive through this period, we should be able to meet our debt obligations out of cash on hand and cash flows. We're not completely dependent on refinancing or rolling of debt. This does not mean that we'll simply sit back and wait though, we are and we'll be seeking possible solutions for restructuring of our debt that provides investors with confidence in our ability to meet our obligations.
Our strategy remains the same as it has been, which is to use our cash and cash flow to reduce debt. We no longer have significant capex obligations as we did going into the last downturn. We were anticipating the time when we would be strongly free cash flow positive and could return value to shareholders. That's still our ultimate goal, but we're going to have to be patient for a while, probably a few years out as our previous goal of getting to net debt zero is now more like debt free. There is no way to sugar coat what's happening. So I've tried only to be as realistic as possible.
However, there is a silver lining. I expect emerging on the other side of this will be a much leaner oilfield service market with diminished capacity for supply. Services should be in high demand and rate and utilization recovery may well be faster than what we've been seeing. Helix would be in a good position to be a significant beneficiary of this. We may in fact be further along in realization of our earnings potential at that time than we would have been under the circumstances over the past couple of years continuing, as we've had to deal with supply overhang in the OFS sector. Bottom line is that 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 do whatever it takes to emerge on the other side. So with that, I'll turn it back to Erik.
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
Thanks, Owen. Operator, at this time, we'll take any questions.
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from the line of Ian Macpherson. Please proceed with your question.
Owen Kratz -- President and Chief Executive Officer
Well, thanks, good morning.
Ian Macpherson -- Piper Jaffray -- Analyst
Good morning, Owen and Scotty and Erik. Thank you for the long commentary. I think coming into the year, Scotty, you had mentioned that you were expecting to have, I think, you said 60% of your activity oriented toward intervention, maybe a little bit more than that, I don't know if that's changed much, and I hear you, Owen, that you expect P&A obligations to be deferred in this environment. But my question is, is there a window of opportunity now to transact for assets in this oil price environment what you did with Marathon or Droshky or is the commodity price too unaccommodative to continue that part of the business strategy right now?
Owen Kratz -- President and Chief Executive Officer
I think that remains to be seen, Ian. Prior to Monday, we were actually getting calls of interest, so if you had asked me on Friday, I would have said it is becoming very interesting, the possibilities there. On Monday, of course, everything blew up and everything went on pause and we're probably in a period right now with everyone just sort of trying to see where everything settles. But yes, when commodity prices drop to a point where the expected liabilities of abandonment are high and we have a lower cost of abandonment that creates an arbitrage there for us to realize value. So, I think, we are entering a period where we will be very open to taking calls and talking with producers about what's possible.
Ian Macpherson -- Piper Jaffray -- Analyst
Yes, it just strikes me that the opportunity to [Indecipherable] utilization is one of the biggest levers you have right now in terms of preserving and EBITDA floor. And I think my follow-up question would be, maybe you could just update us on what your flexibility on vessel cost is as you have to tap dance between ready active vessels in warm stack, or if you go, it may be a little bit cooler than warm, what is the range of variability on variable costs as you pivot or think about longer-term states of readiness, maybe on a per vessel basis, it would be easy for us to digest?
Scotty Sparks -- Executive Vice President and Chief Operating Officer
I'll take that one, Ian. So, currently, our plan is that where we warm stack in the Q7000, lukewarm stacking the Seawell until work comes back, we are in discussions with clients for both of those vessels to have work later in the year. We have to wait and see if that comes together. But the range of stack costs from warm to sort of cold is anything from the low '20s down to about 4,000 a day.
Ian Macpherson -- Piper Jaffray -- Analyst
Okay.
Scotty Sparks -- Executive Vice President and Chief Operating Officer
It is far less than our usual operating costs.
Owen Kratz -- President and Chief Executive Officer
Ian, I will just add, our sensitivity is sort of based on the possibility of stacking three vessels. Now whether or not they remain in stack or they come out for work is yet to be determined. So, for instance, in Seawell, we're starting off with a warm stack here because we are talking with producers about work further on this year, although we're not considering that work which should be considered upside to our current expectations. So, we will remain in cold stack, and if the work falls away, then it would revert to cold stack. So it's not possible for us to give you a number of days on specific vessels as to what will happen until the market unfolds a little more.
Ian Macpherson -- Piper Jaffray -- Analyst
Understood, thanks. But the three vessels that you're looking at would be the Seawell and the 7,000 and what's the third one?
Owen Kratz -- President and Chief Executive Officer
Possibly the Q4000, but that's very uncertain at this point because the Gulf of Mexico, we sort of see the Gulf of Mexico remaining a little more active.
Scotty Sparks -- Executive Vice President and Chief Operating Officer
I'll add to that as well. We are in discussions with clients. The Q4000 has work into August. We're in discussions with four clients to work after that. In the North Sea, we're in discussions for other works for the two vessels. This morning alone, we were awarded a 30-day project for one of the vessels that has further add-on work to the Robotics company as well. So, it's not like the market is dead. We're in discussions for all these vessels. We are just taking a look at it.
Ian Macpherson -- Piper Jaffray -- Analyst
Good, thank you guys for the answers. Appreciate it.
Operator
Our next question comes from the line of Mike Sabella. Please proceed with your question.
Owen Kratz -- President and Chief Executive Officer
Good morning.
Mike Sabella -- Bank of America Merrill Lynch -- Analyst
Hey, good morning everybody. Just kind of hoping we could talk for, you touched a little bit on capital allocation, we can all look out there [Indecipherable] debt today. Could you just walk us through sort of the options you have with respect to maybe thinking about bringing some of that in early? Is there any limitations that you have in your credit facilities that would stop you from doing so?
Owen Kratz -- President and Chief Executive Officer
We don't have any limitations under the credit facilities that I am aware of Erik?
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
And that's from my side.
Owen Kratz -- President and Chief Executive Officer
Well, let me tell just you, our capex for this year, we have lowered from $50 million down to...
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
$38 million or so.
Owen Kratz -- President and Chief Executive Officer
$38 million. Most of that was already spent in the first quarter because of the high maintenance period. So, we have a relatively small tranche left for the rest of this year. Next year, our expectations are that it's going to be somewhere between $15 million and $20 million. So you'll see another reduction in capex at that point. So we are reducing -- we have reduced the capex expectations and I'm not understanding the move forward. We do have some flexibility on moving dry docks around which would affect capex, but we only have one maintenance period for next year that I'm aware of.
Mike Sabella -- Bank of America Merrill Lynch -- Analyst
And then, specifically around potentially bringing some of the debt in early?
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
Okay. From that standpoint, we currently have here within, like Owen mentioned, $33 million still scheduled to pay off this year, $91 million scheduled for next year. So, we are being aggressive on paying that down. I think other than that, I do think that there are certain requirements within our credit facility as far as maintaining liquidity and things of that nature if we were going to try to accelerate any of the debt that's out there in '22 or '23. So, I think, there would be certain requirements we would have to meet.
Owen Kratz -- President and Chief Executive Officer
I'm sorry, I thought you were talking about capex, not capital obligation, my apologies.
Mike Sabella -- Bank of America Merrill Lynch -- Analyst
Yes. No worries, I probably asked the question poorly. And then if we just go and start thinking about the Robotics segment, are we positive, confident that we can maintain positive EBITDA in this segment through the cycle? And as we kind of think about fixed costs in this business, how should we be thinking about EBITDA on the segment level?
Scotty Sparks -- Executive Vice President and Chief Operating Officer
So, robotics, like we said we're expecting quite a solid year. I think there's a lot of moving parts with the robotic side of the business. But we've expanded our offerings in the renewable side. The trenching season that is pretty good in the North Sea. The GC II is on higher all year in APAC. We've picked up some other spot work, like we said the MV Pride is currently working in Australia. So, we should expect that our EBITDA is somewhat in line with last year, but it's also down to some of the cost reductions we've had up in our renewable services.
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
I think also remember in previous earnings, we mentioned that this year was expected to be an off-year for trenching for us with the recovery in '21.
Mike Sabella -- Bank of America Merrill Lynch -- Analyst
That's perfect. Thanks guys.
Operator
[Operator Instructions] Our next question comes from the line of Michael Maffey [Phonetic]. Please proceed with your question.
Michael Maffey -- Analyst
Hello, yes. My question is in regard to gross margin. I know this for Q1, it was at 1.1%, but historically, we have a 14.5% gross margin. I just want to know if you guys could speak to why the margin was reduced so much this first quarter?
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
Yes, I think if you look at our historical performance, if you go back five years, our gross margin fluctuates by quarter. Usually the first and fourth quarter, which are the quarters that we have challenged utilization, our margins are lower and I think that was the case here in the first quarter. The vessels, the Q4000, Q5000, which worked in the fourth quarter had I think about 70 plus days of idle time as they did their dry-dock recertification costs. So, idle asset utilization definitely hurts us in those standpoints and that with the addition of the Q7000 to our cost basis really drove our gross margin down in the first quarter.
Michael Maffey -- Analyst
All right, great, thanks.
Operator
Our next question comes from the line of Shri Natsind [Phonetic]. Please proceed with your question.
Shri Natsind -- Analyst
Hi, quick question. Can you clarify the $52 million of cash that's in restricted cash and when do those restrictions come off and in what conditions?
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
So that was restricted cash that we had to put in place for an LC related to our work in West Africa on the Q7000. That work is completed and the vessel has left the region. So, we expect that LC to be released here in the near term.
Shri Natsind -- Analyst
Thank you.
Operator
And there are no further questions at this time. I will turn the call back to you for your closing remarks.
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our second quarter 2020 call in July. Thank you.
Operator
[Operator Closing Remarks]
Duration: 44 minutes
Call participants:
Erik Staffeldt -- Executive Vice President and Chief Financial Officer
Ken Neikirk -- Senior Vice President, General Counsel and Corporate Secretary
Owen Kratz -- President and Chief Executive Officer
Scotty Sparks -- Executive Vice President and Chief Operating Officer
Ian Macpherson -- Piper Jaffray -- Analyst
Mike Sabella -- Bank of America Merrill Lynch -- Analyst
Michael Maffey -- Analyst
Shri Natsind -- Analyst
