Parker Drilling Reports 2019 Second Quarter Results
HOUSTON, Aug. 5, 2019 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced results for the second quarter ended June 30, 2019, which included a net income of $4.6 million, or diluted earnings of $0.31 per share on revenues of $156.0 million. Second quarter Adjusted EBITDA was $37.8 million ((1)).
Gary Rich, the Company's President and CEO, said, "Our second quarter results, as demonstrated by our positive net income and strong Adjusted EBITDA, is a testament to our strong operational execution, ability to capture additional opportunities and improved balance sheet.
"In our rental tools business, our International rentals segment benefited from whipstock sales and continued demand for tubular running services, in particular our proprietary casing running tool. Our U.S. rental tools segment performed admirably in the second quarter in spite of the U.S. land rig count continuing to decline. Despite this softness, the U.S. offshore market continues to show modest signs of strength, and we are confident in our ability to perform well in both the U.S. land and offshore markets this year.
"In our drilling services business, our ongoing shift to more capital efficient and increasingly profitable operating activities supported the second quarter results. We also benefited from ongoing O&M activities and improving rig utilization, in both our U.S. (lower 48) drilling and International and Alaska drilling segments, as rigs returned to service in the inland barge and Mexico markets.
"Despite current market softness in the U.S., our diversified global exposure, ability to adjust capex spending, and improved capital structure provide us the ability to execute on profitable projects and deliver solid returns."
Second Quarter Review
Revenues were $156.0 million and $157.4 million for the second and first quarter, respectively. Operating gross margin, excluding depreciation and amortization expense (gross margin) was $43.4 million and $36.5 million for the second and first quarter, respectively.
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, revenues were $75.1 million and $73.7 million for the second and first quarter, respectively. Gross margin was $30.6 million and $29.5 million for the second and first quarter, respectively. Gross margin as a percentage of revenues was 40.8 percent and 40.1 percent for the second and first quarter, respectively.
U.S. Rental Tools
U.S. rental tools segment revenues were $52.9 million and $52.6 million for the second and first quarter, respectively. Gross margin was $27.7 million and $29.0 million for the second and first quarter, respectively. Our second quarter revenues were primarily driven by customer activity in U.S. land and offshore shelf rentals.
International Rental Tools
International rental tools segment revenues were $22.2 million and $21.1 million for the second and first quarter, respectively. Gross margin was $2.9 million and $0.5 million for the second and first quarter, respectively. Our second quarter revenues were primarily driven by well construction, well intervention services and surface and tubular services.
(1) Adjusted EBITDA is a non-GAAP
financial measure. See the
reconciliation and table of net
income/(loss) to EBITDA and
Adjusted EBITDA later in this
release for more information on
non-GAAP financial measures.
Drilling Services
For the Company's drilling services business, which is comprised of the U.S. (lower 48) drilling and International & Alaska drilling segments, revenues were $80.9 million and $83.7 million for the second and first quarter, respectively. Gross margin was $12.8 million and $7.0 million for the second and first quarter, respectively. Gross margin as a percentage of revenues was 15.8 percent, and 8.3 percent for the second and first quarter, respectively.
U.S. (Lower 48) Drilling
U.S. (lower 48) drilling segment revenues were $12.5 million and $6.6 million for the second and first quarter, respectively. Gross margin was $2.6 million for the second quarter and a loss of $0.7 million for the first quarter. Our second quarter revenues were primarily driven by our inland barge rig fleet and operations and management ("O&M") revenue.
International & Alaska Drilling
International & Alaska drilling segment revenues were $68.5 million and $77.1 million for the second and first quarter, respectively. Gross margin were $10.2 million and $7.7 million for the second and first quarter, respectively. Our second quarter revenues were primarily driven by O&M revenue and revenue from Company-owned rigs in Sakhalin Island, Russia, Mexico and the Kurdistan region of Iraq.
Consolidated
General and administrative expense was $5.6 million for the 2019 second quarter. Total liquidity at the end of the quarter, exclusive of $2.0 million restricted cash, was $163.9 million, consisting of $139.1 million in unrestricted cash and cash equivalents and $24.8 million available under the Company's credit facility.
Capital expenditures in the second quarter were $25.1 million, primarily related to the Company's Rentals 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 Tuesday, August 6, 2019, 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 13, 2019 at (+1) (201) 612-7415, conference ID 13692051#.
Cautionary Statement
This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). All statements contained in this Form 10-Q, other than statements of historical facts, are forward-looking statements for purposes of these provisions. In some cases, you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "outlook," "may," "should," "plan," "seek," "forecast," "target," "will," and "would" or similar words. Forward-looking statements are based on certain assumptions and analyses we make in light of our experience and perception of historical trends, current conditions, expected future developments, and other factors we believe are relevant. Although we believe our assumptions are reasonable based on information currently available, those assumptions are subject to significant risks and uncertainties, many of which are outside our control. Each forward-looking statement speaks only as of the date of this Form 10-Q, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You should be aware that certain events could have a material adverse effect on our business, results of operations, financial condition, and cash flows. For more information about such events, see "Risk Factors" described in Item 1A. of the Company's Annual Report filed on Form 10-K, and the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2019, along with additional risk factors described from time to time in our SEC filings.
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 through the use of Parker-owned and customer-owned rig fleets in select U.S. and international markets, specializing in remote and harsh environment regions. 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)
Successor Predecessor
---
June 30, December 31,
2019 2018
---
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $
139,099 $
48,602
Restricted cash 2,024 10,389
Accounts and notes receivable, net of
allowance for bad debts 162,718 136,437
Rig materials and supplies 19,360 36,245
Other current assets 25,234 35,231
Total current assets 348,435 266,904
Property, plant and equipment, net of
accumulated depreciation 304,978 534,371
Intangible assets, net 16,558 4,821
Deferred income taxes 4,618 2,143
Other non-current assets 33,322 20,175
Total assets $
707,911 $
828,414
LIABILITIES AND STOCKHOLDERS
' EQUITY
Current liabilities:
Debtor in possession financing
$ $
10,000
Accounts payable and accrued
liabilities 121,245 75,063
Accrued income taxes 5,021 3,385
Total current liabilities 126,266 88,448
Long-term debt 211,132
Other long-term liabilities 16,801 11,544
Long-term deferred tax liability 4,554 510
Commitments and contingencies
Total liabilities not subject to
compromise 358,753 100,502
Liabilities subject to compromise - 600,996
Total liabilities 358,753 701,498
Stockholders' equity:
Predecessor preferred stock - 500
Predecessor common stock - 1,398
Predecessor capital in excess of par
value - 766,347
Predecessor accumulated other
comprehensive income (loss) - (6,879)
Successor common stock 150
Successor capital in excess of par
value 344,519
Successor accumulated other
comprehensive income (loss) (152)
Retained earnings (accumulated deficit) 4,641 (634,450)
Total stockholders' equity 349,158 126,916
Total liabilities and stockholders'
equity $
707,911 $
828,414
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Successor
Predecessor
Three Months Three Months Three Months
Ended June 30, Ended June 30, Ended March 31,
---
2019 2018 2019
---
Revenues $
156,031 $
118,603 $
157,397
Expenses:
Operating expenses 112,649 91,634 120,871
Depreciation and
amortization 20,391 27,136 25,102
133,040 118,770 145,973
Total operating gross
margin (loss) 22,991 (167) 11,424
General and
administrative
expense (5,610) (8,288) (8,147)
Gain (loss) on
disposition of
assets, net (53) (478) 384
Reorganization items (962) (92,977)
Total operating income
(loss) 16,366 (8,933) (89,316)
Other income (expense):
Interest expense (7,663) (11,197) (274)
Interest income 374 30 8
Other (644) (1,191) (10)
Total other income
(expense) (7,933) (12,358) (276)
Income (loss) before
income taxes 8,433 (21,291) (89,592)
Income tax expense 3,792 1,586 656
Net income (loss) 4,641 (22,877) (90,248)
Less: Predecessor
preferred stock
dividend - 907
Net income (loss)
available to common
stockholders $
4,641 $
(23,784) $
(90,248)
Basic earnings (loss)
per common share: $
0.31 $
(2.56) $
(9.63)
Diluted earnings
(loss) per common
share: $
0.31 $
(2.56) $
(9.63)
Number of common shares used in
computing earnings per share:
Basic 15,044,739 9,292,224 9,368,322
Diluted 15,044,739 9,292,224 9,368,322
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Successor
Predecessor
Three Months Three Months Six Months
Ended June 30, Ended March 31, Ended June 30,
---
2019 2019 2018
---
Revenues $
156,031 $
157,397 $
228,278
Expenses:
Operating expenses 112,649 120,871 183,168
Depreciation and
amortization 20,391 25,102 55,685
133,040 145,973 238,853
Total operating gross
margin (loss) 22,991 11,424 (10,575)
General and
administrative
expense (5,610) (8,147) (14,489)
Gain (loss) on
disposition of
assets, net (53) 384 (135)
Reorganization items (962) (92,977)
Total operating income
(loss) 16,366 (89,316) (25,199)
Other income (expense):
Interest expense (7,663) (274) (22,437)
Interest income 374 8 53
Other (644) (10) (900)
Total other income
(expense) (7,933) (276) (23,284)
Income (loss) before
income taxes 8,433 (89,592) (48,483)
Income tax expense 3,792 656 3,190
Net income (loss) 4,641 (90,248) (51,673)
Less: Predecessor
preferred stock
dividend - 1,813
Net income (loss)
available to common
stockholders $
4,641 $
(90,248) $
(53,486)
Basic earnings (loss)
per common share: $
0.31 $
(9.63) $
(5.77)
Diluted earnings
(loss) per common
share: $
0.31 $
(9.63) $
(5.77)
Number of common shares used in
computing earnings per share:
Basic 15,044,739 9,368,322 9,271,759
Diluted 15,044,739 9,368,322 9,271,759
PARKER DRILLING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
Successor
Predecessor
Three Months Three Months Three Months
Ended June 30, Ended June 30, Ended March 31,
2019 2018 2019
Revenues:
U.S. rental tools $
52,936 $
42,083 $
52,595
International rental tools 22,155 19,935 21,109
Total rental tools services 75,091 62,018 73,704
U.S. (lower 48) drilling 12,479 3,283 6,627
International and Alaska drilling 68,461 53,302 77,066
Total drilling services 80,940 56,585 83,693
Total revenues 156,031 118,603 157,397
Operating expenses:
U.S. rental tools 25,267 19,326 23,591
International rental tools 19,224 19,344 20,575
Total rental tools services 44,491 38,670 44,166
U.S. (lower 48) drilling 9,923 4,686 7,327
International and Alaska drilling 58,235 48,278 69,378
Total drilling services 68,158 52,964 76,705
Total operating expenses 112,649 91,634 120,871
Operating gross margin (loss), excluding depreciation and amortization:
U.S. rental tools 27,669 22,757 29,004
International rental tools 2,931 591 534
Total rental tools services 30,600 23,348 29,538
U.S. (lower 48) drilling 2,556 (1,403) (700)
International and Alaska drilling 10,226 5,024 7,688
Total drilling services 12,782 3,621 6,988
Total operating gross margin (loss), excluding
depreciation and amortization 43,382 26,969 36,526
Depreciation and amortization (20,391) (27,136) (25,102)
Total operating gross margin (loss) $
22,991 $
(167) $
11,424
PARKER DRILLING COMPANY AND SUBSIDIARIES
ADJUSTED EBITDA
(Dollars in Thousands)
(Unaudited)
Successor
Predecessor
Three Months
Three Months Ended
Ended
June 30, 2019 March 31, 2019 December 31, September 30, June 30, 2018
2018 2018
Net income (loss) available to
common stockholders $
4,641 $
(90,248) $
(43,073) $
(71,857) $
(23,784)
Interest expense 7,663 274 8,778 11,350 11,197
Income tax expense 3,792 656 2,235 2,371 1,586
Depreciation and amortization 20,391 25,102 24,340 27,520 27,136
Predecessor preferred stock dividend 906 907
EBITDA 36,487 (64,216) (7,720) (29,710) 17,042
Adjustments:
Loss on impairment 6,708 43,990
(Gain) loss on disposition of
assets, net 53 (384) 1,598 (9) 478
Pre-petition restructuring charges
(1) 11,411 7,724 2,685
Reorganization items 962 92,977 9,789
Interest income (374) (8) (15) (23) (30)
Other 644 10 414 709 1,191
Adjusted EBITDA (1) (2) $
37,772 $
28,379 $
22,185 $
22,681 $
21,366
(1) Pre-petition restructuring charges
have been allocated to the respective
period in which the expense was
incurred. Accordingly adjusted EBITDA
will differ from what was reported
previously.
(2) 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.
PARKER DRILLING COMPANY AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EARNINGS PER SHARE
(Dollars in Thousands, except Per Share)
(Unaudited)
Successor
Predecessor
Three Months Three Months Three Months
Ended June 30, Ended June 30, Ended March 31,
2019 2018 2019
Net income (loss) available
to common stockholders $
4,641 $
(23,784) $
(90,248)
Diluted earnings (loss) per
common share $
0.31 $
(2.56) $
(9.63)
Adjustments:
Net adjustments
Adjusted net income (loss)
available to common
stockholders (1) $
4,641 $
(23,784) $
(90,248)
Adjusted diluted earnings
(loss) per common share
(1) $
0.31 $
(2.56) $
(9.63)
(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.
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SOURCE Parker Drilling Company
