Parker Drilling Reports 2018 Second Quarter Results
HOUSTON, Aug. 1, 2018 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced results for the second quarter ended June 30, 2018, including a reported net loss of $23.8 million on revenues of $118.6 million. This equates to a loss of $2.56 per common share taking into account the 1-for-15 reverse stock split effective July 27, 2018, or a loss of $0.17 per common share on a pre-split basis.
Second quarter Adjusted EBITDA was $18.7 million.
Gary Rich, the Company's Chairman, President and CEO, stated, "Our second quarter results improved noticeably from the prior quarter, driven primarily by increased activity in our Rental Tools Services business. During the second quarter, our U.S. Rental Tools segment grew at a higher rate than the U.S. rig count, and we are very pleased with the contributions this segment continues to provide. Additionally, our International Rentals segment posted improved revenues and margins as we continue to see stronger demand for tubular running services in many of our markets.
"In our Drilling Services business, our U.S. (Lower 48) Drilling segment results also improved in the second quarter driven by higher utilization. The International and Alaska Drilling segment reactivated two rigs during the quarter, one in the Kurdistan Region of Iraq and the other in Kazakhstan, and we are actively participating in numerous tenders. While we are pleased to see improved equipment utilization and tendering activity across our Drilling Services business, pricing remains soft given high capacity available in the market."
Mr. Rich added, "We continue to be judicious with respect to capital spending, prioritizing opportunities with strong rates of return and quick payback periods. Also, to increase our financial flexibility, we are carefully evaluating options to enhance our capital structure in light of upcoming debt maturities."
Second Quarter Review
Parker Drilling's revenues for the 2018 second quarter, compared with the 2018 first quarter, increased 8.1 percent to $118.6 million from $109.7 million. Operating gross margin excluding depreciation and amortization expense (gross margin) increased 49.2 percent to $27.0 million from $18.1 million and gross margin as a percentage of revenues was 22.8 percent, compared with 16.5 percent for the 2018 first quarter.
Drilling Services
For the Company's Drilling Services business, which is comprised of the U.S. (Lower 48) Drilling and International & Alaska Drilling segments, second quarter revenues decreased 1.6 percent to $56.6 million from $57.5 million for the 2018 first quarter. Gross margin increased 80.0 percent to $3.6 million from $2.0 million, and gross margin as a percentage of revenues was 6.4 percent, compared with 3.5 percent for the prior period. Contracted backlog was approximately $215.5 million at the end of the second quarter, compared to $246.0 million at the end of the first quarter.
U.S. (Lower 48) Drilling
U.S. (Lower 48) Drilling segment revenues increased 135.7 percent to $3.3 million from $1.4 million for the 2018 first quarter. Gross margin increased 48.1 percent to a $1.4 million loss, compared to the gross margin loss of $2.7 million in the first quarter. Improvements in revenues and gross margin were primarily due to increased utilization in the second quarter.
International & Alaska Drilling
International & Alaska Drilling segment revenues decreased 5.0 percent to $53.3 million from $56.1 million for the 2018 first quarter. However, gross margin increased 6.4 percent to $5.0 million from first quarter gross margin of $4.7 million. The decrease in revenues was primarily due to lower reimbursable revenues from our operations on Sakhalin Island, Russia. Excluding reimbursables, which have a minimal impact on margins, segment revenues were down 2.6 percent from the first quarter. Gross margin was positively impacted by lower operating expenses in Sakhalin, partially offset by higher operating expense in Kurdistan associated with a rig reactivation.
Rental Tools Services
For the Company's Rental Tools Services business, which is comprised of the U.S. Rental Tools and International Rental Tools segments, second quarter revenues increased 18.8 percent to $62.0 million from $52.2 million for the first quarter. Gross margin increased 44.4 percent to $23.4 million from $16.2 million, and gross margin as a percentage of revenues was 37.7 percent compared with 31.0 percent for the prior period.
U.S. Rental Tools
U.S. Rental Tools segment revenues increased 21.3 percent to $42.1 million, from $34.7 million for the 2018 first quarter. Gross margin increased 44.3 percent to $22.8 million from $15.8 million for the 2018 first quarter. The increase in revenues was primarily due to strong activity and volume in U.S. land. Gross margin increased as a result of incremental revenues, combined with lower operating costs.
International Rental Tools
International Rental Tools segment revenues increased 13.7 percent to $19.9 million from $17.5 million for the prior quarter. Gross margin increased 50.0 percent to $0.6 million from $0.4 million for the 2018 first quarter. Revenue and gross margin improvements resulted predominately from the continued demand for our tubular running services.
Consolidated
General and Administrative expenses were $8.3 million for the 2018 second quarter, up from $6.2 million for the 2018 first quarter. The increase was largely due to professional fees related to ongoing capital structure analysis during the quarter. Total liquidity at the end of the quarter was $167.0 million, consisting of $114.5 million in cash and cash equivalents and $52.5 million available under our revolving credit facility.
Capital expenditures in the second quarter were $23.6 million. Year to date through June 30, 2018, capital expenditures were $32.5 million, with 97.3 percent dedicated to our Rental Tools Services business.
Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Thursday, August 2, 2018, to review second quarter results. The call will be available by telephone by dialing (+1) (412) 902-0003 and asking for the Parker Drilling Second Quarter Conference Call. The call can also be accessed through the Investor Relations section of the Company's website. A replay of the call can be accessed on the Company's website for 12 months and will be available by telephone through August 9, 2018 at (+1) (201) 612-7415, conference ID 13681009#.
Cautionary Statement
This press release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements in this press release other than statements of historical facts addressing activities, events or developments the Company expects, projects, believes, or anticipates will or may occur in the future are forward-looking statements. These statements include, but are not limited to, statements about our evaluation of options to enhance our capital structure in light of upcoming debt maturities, anticipated future financial or operational results; the outlook for rental tools utilization and rig utilization and dayrates; the results of past capital expenditures; scheduled start-ups of rigs; general industry conditions such as the demand for drilling and the factors affecting demand; competitive advantages such as technological innovation; future operating results of the Company's rigs, rental tools operations and projects under management; future capital expenditures; expansion and growth opportunities; acquisitions or joint ventures; asset purchases and sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs or rental equipment for operation; the Company's financial position; changes in utilization or market share; outcomes of legal proceedings; compliance with credit facility and indenture covenants; and similar matters. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Although the Company believes its expectations stated in this press release are based on reasonable assumptions, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that could cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to changes in worldwide economic and business conditions, fluctuations in oil and natural gas prices, compliance with existing laws and changes in laws or government regulations, the failure to realize the benefits of, and other risks relating to, acquisitions, the risk of cost overruns, our ability to refinance our debt and other important factors, many of which could adversely affect market conditions, demand for our services, and costs, and all or any one of which could cause actual results to differ materially from those projected. For more information, see "Risk Factors" in the Company's Annual Report filed on Form 10-K with the Securities and Exchange Commission and other public filings and press releases. Each forward-looking statement speaks only as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
This news release contains non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable U.S. Generally Accepted Accounting Principles (GAAP) financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided in the following tables.
Company Description
Parker Drilling provides drilling services and rental tools to the energy industry. The Company's Drilling Services business serves operators in the inland waters of the U.S. Gulf of Mexico utilizing Parker Drilling's barge rig fleet and in select U.S. and international markets and harsh-environment regions utilizing Parker-owned and customer-owned equipment. The Company's Rental Tools Services business supplies premium equipment and well services to operators on land and offshore in the U.S. and international markets. More information about Parker Drilling can be found on the Company's website at www.parkerdrilling.com.
Contact: Nick Henley, Director, Investor Relations, (+1) (281) 406-2082, nick.henley@parkerdrilling.com.
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
June 30, December 31,
2018 2017
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $114,459 $141,549
Accounts and notes receivable, net of
allowance for bad debt 122,673 122,511
Rig materials and supplies 31,921 31,415
Other current assets 23,640 22,361
------ ------
Total current assets 292,693 317,836
------- -------
Property, plant and equipment, net of
accumulated depreciation 602,069 625,771
Deferred income taxes 2,161 1,284
Other assets 40,296 45,388
------
Total other assets 42,457 46,672
------ ------
Total assets $937,219 $990,279
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $106,254 $103,676
-------- --------
Total current liabilities 106,254 103,676
------- -------
Long-term debt, net of unamortized debt
issuance costs 578,840 577,971
Other long-term liabilities 10,335 12,433
Long-term deferred tax liability 60 78
Total stockholders' equity 241,730 296,121
Total liabilities and stockholders' equity $937,219 $990,279
======== ========
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months
Ended March 31,
---------------
Three Months Ended June 30,
2018 2017 2018
---- ---- ----
Revenues $118,603 $109,607 $109,675
Expenses:
Operating expenses 91,634 89,641 91,534
Depreciation and
amortization 27,136 30,982 28,549
118,770 120,623 120,083
------- ------- -------
Total operating gross
margin (loss) (167) (11,016) (10,408)
---- ------- -------
General and
administrative expense (8,288) (6,503) (6,201)
Gain (loss) on
disposition of assets,
net (478) (113) 343
---- ----
Total operating income
(loss) (8,933) (17,632) (16,266)
------ ------- -------
Other income (expense):
Interest expense (11,197) (11,095) (11,240)
Interest income 30 22 23
Other (1,191) 560 291
Total other income
(expense) (12,358) (10,513) (10,926)
------- ------- -------
Income (loss) before
income taxes (21,291) (28,145) (27,192)
Income tax expense
(benefit) 1,586 1,743 1,604
----- ----- -----
Net income (loss) (22,877) (29,888) (28,796)
------- ------- -------
Less: Convertible
preferred stock dividend 907 1,239 906
Net income (loss)
available to common
stockholders $(23,784) $(31,127) $(29,702)
======== ======== ========
Basic earnings (loss) per
common share: (1) $(2.56) $(3.39) $(3.21)
Diluted earnings (loss)
per common share: (1) $(2.56) $(3.39) $(3.21)
Number of common shares used in computing
earnings per share:
Basic (1) 9,292,224 9,188,888 9,251,066
Diluted (1) 9,292,224 9,188,888 9,251,066
(1) The Company's 1-for-15
reverse stock split was
effective when markets opened
on July 27, 2018. All share
and per share data have been
retroactively restated for all
periods presented.
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Six Months Ended June 30,
2018 2017
---- ----
Revenues $228,278 $207,878
Expenses:
Operating
expenses 183,168 175,455
Depreciation
and
amortization 55,685 63,184
238,853 238,639
------- -------
Total
operating
gross
margin
(loss) (10,575) (30,761)
------- -------
General
and
administrative
expense (14,489) (13,543)
Gain
(loss)
on
disposition
of
assets,
net (135) (465)
---- ----
Total
operating
income
(loss) (25,199) (44,769)
------- -------
Other income (expense):
Interest
expense (22,437) (21,965)
Interest
income 53 32
Other (900) 1,090
Total
other
income
(expense) (23,284) (20,843)
------- -------
Income
(loss)
before
income
taxes (48,483) (65,612)
Income
tax
expense
(benefit) 3,190 4,085
----- -----
Net
income
(loss) (51,673) (69,697)
------- -------
Less:
Convertible
preferred
stock
dividend 1,813 1,239
-----
Net
income
(loss)
available
to
common
stockholders $(53,486) $(70,936)
======== ========
Basic
earnings
(loss)
per
common
share:
(1) $(5.77) $(7.94)
Diluted
earnings
(loss)
per
common
share:
(1) $(5.77) $(7.94)
Number of common shares
used in computing earnings
per share:
Basic (1) 9,271,759 8,933,945
Diluted
(1) 9,271,759 8,933,945
(1) The Company's 1-for-15
reverse stock split was
effective when markets opened
on July 27, 2018. All share
and per share data have been
retroactively restated for all
periods presented.
PARKER DRILLING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
Three Months Ended
June 30, March 31,
2018 2017 2018
---- ---- ----
Revenues:
Drilling Services:
------------------
U.S. (Lower 48) Drilling $3,283 $5,042 $1,354
International and Alaska
Drilling 53,302 60,669 56,096
------ ------
Total Drilling Services 56,585 65,711 57,450
Rental Tools Services:
----------------------
U.S. Rental Tools $42,083 $29,704 $34,748
International Rental Tools 19,935 14,192 17,477
Total Rental Tools
Services 62,018 43,896 52,225
Total revenues $118,603 $109,607 $109,675
-------- -------- --------
Operating expenses:
Drilling Services:
------------------
U.S. (Lower 48) Drilling $4,686 $6,067 $4,053
International and Alaska
Drilling 48,278 51,404 51,426
------
Total Drilling Services 52,964 57,471 55,479
Rental Tools Services:
----------------------
U.S. Rental Tools $19,326 $15,973 $18,938
International Rental Tools 19,344 16,197 17,117
------ ------ ------
Total Rental Tools
Services 38,670 32,170 36,055
Total operating expenses $91,634 $89,641 $91,534
------- ------- -------
Operating gross margin
(loss), excluding
depreciation and
amortization:
Drilling Services:
------------------
U.S. (Lower 48) Drilling $(1,403) $(1,025) $(2,699)
International and Alaska
Drilling 5,024 9,265 4,670
----- -----
Total Drilling Services 3,621 8,240 1,971
Rental Tools Services:
----------------------
U.S. Rental Tools $22,757 $13,731 $15,810
International Rental Tools 591 (2,005) 360
--- ------ ---
Total Rental Tools
Services 23,348 11,726 16,170
Total Operating gross
margin (loss), excluding
depreciation and
amortization $26,969 $19,966 $18,141
Depreciation and
amortization (27,136) (30,982) (28,549)
------- ------- -------
Total operating gross
margin (167) (11,016) (10,408)
---- ------- -------
PARKER DRILLING COMPANY AND SUBSIDIARIES
ADJUSTED EBITDA (1)
(Dollars in Thousands)
(Unaudited)
Three Months Ended
June 30, 2018 March 31, 2018 December 31, September 30, June 30, 2017
2017 2017
---- ----
Net income (loss) available
to common stockholders $(23,784) $(29,702) $(29,599) $(21,217) $(31,127)
Interest expense 11,197 11,240 11,194 11,067 11,095
Income tax expense (benefit) 1,586 1,604 3,036 1,919 1,743
Depreciation and
amortization 27,136 28,549 29,122 30,067 30,982
Convertible preferred stock
dividend 907 906 906 906 1,239
--- --- --- --- -----
EBITDA 17,042 12,597 14,659 22,742 13,932
====== ====== ====== ====== ======
Adjustments:
Interest income and other 1,161 (314) 242 510 (582)
(Gain) loss on disposition
of assets, net 478 (343) 2,483 (97) 113
Provision for reduction in
carrying value of certain
assets - - 1,938 - -
Special items (2) - - 3,033 - -
--- --- ----- --- ---
Adjusted EBITDA $18,681 $11,940 $22,355 $23,155 $13,463
======= ======= ======= ======= =======
(1) We believe Adjusted EBITDA is an
important measure of operating
performance because it allows
management, investors and others to
evaluate and compare our core
operating results from period to
period by removing the impact of our
capital structure (interest expense
from our outstanding debt), asset
base (depreciation and amortization),
remeasurement of foreign currency
transactions, tax consequences,
impairment and other special items.
Special items include items impacting
operating expenses that management
believes detract from an
understanding of normal operating
performance. Management uses Adjusted
EBITDA as a supplemental measure to
review current period operating
performance and period to period
comparisons. Our Adjusted EBITDA may
not be comparable to a similarly
titled measure of another company
because other entities may not
calculate EBITDA in the same manner.
EBITDA and Adjusted EBITDA are not
measures of financial performance
under U.S. Generally Accepted
Accounting Principles (GAAP), and
should not be considered in isolation
or as an alternative to operating
income or loss, net income or loss,
cash flows provided by or used in
operating, investing and financing
activities, or other income or cash
flow statement data prepared in
accordance with GAAP.
(2) For the three months ended December
31, 2017, special items include a
$3.0 million write-off of inventory
associated with select international
drilling assets. This item is
recorded in operating expenses in the
Consolidated Statement Of Operations.
PARKER DRILLING COMPANY AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EARNINGS PER SHARE
(Dollars in Thousands, except Per Share)
(Unaudited)
Three Months Ended
June 30, March 31,
2018 2017 2018
---- ---- ----
Net income (loss) available to common
stockholders $(23,784) $(31,127) $(29,702)
Diluted earnings (loss) per common share
(2) $(2.56) $(3.39) $(3.21)
Adjustments:
(Gain) loss on disposition of assets,
net $ - $ - $ -
Provision for reduction in carrying
value of certain assets - - -
Write-off inventory - - -
Net adjustments - - -
--- --- ---
Adjusted net income (loss) available to
common stockholders(1) $(23,784) $(31,127) $(29,702)
======== ======== ========
Adjusted diluted earnings (loss) per
common share (1) $(2.56) $(3.39) $(3.21)
====== ====== ======
(1) We believe Adjusted net income
(loss) available to common
stockholders and Adjusted diluted
earnings (loss) per common share
are useful financial measures for
investors to assess and understand
operating performance for period to
period comparisons. Management
views the adjustments to Net income
(loss) available to common
stockholders and Diluted earnings
(loss) per common share to be items
outside of the Company's normal
operating results. Adjusted net
income (loss) available to common
stockholders and Adjusted diluted
earnings (loss) per common share
are not measures of financial
performance under GAAP, and should
not be considered in isolation or
as an alternative to Net income
(loss) available to common
stockholders or Diluted earnings
(loss) per common share.
(2) On July 27, 2018, the Company
completed a 1 for 15 reverse stock
split. All share and per share data
have been retroactively restated
for all periods presented.
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SOURCE Parker Drilling Company
