Parker Drilling Reports 2015 Fourth Quarter Results

Feb 17, 2016, 21:22 ET from Parker Drilling Company

HOUSTON, Feb. 17, 2016 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today reported results for the quarter ended December 31, 2015, including a net loss of $35.6 million, or $(0.29) per share, on revenues of $148.7 million.

The net loss included the following pre-tax charges:

* $6.1 million of asset and inventory write-offs, which include $4.8 million to reduce the carrying value of two rigs and $1.3 million in inventory writedowns, related to the Company's decision to no longer provide its drilling services in Colombia;

* $4.3 million of non-cash charges to increase the provision for the reduction in carrying value of certain drilling-related assets; and,

* $4.8 million loss associated with the sale of the Company's investment in a joint venture.

Excluding these pre-tax charges, the adjusted net loss was $23.3 million, or $(0.19) per share.

Fourth quarter Adjusted EBITDA was $28.6 million, compared with $35.4 million for the preceding quarter.

Gary Rich, the Company's Chairman, President and CEO said, "Cost reductions, particularly those implemented in the second half of the year, resulted in fourth quarter Adjusted EBITDA that was slightly higher than we anticipated despite a 14 percent sequential decline in revenues. We experienced activity declines across all three segments as low commodity prices continued to curtail customer activity across multiple geographic markets.

2015 Summary

"In 2015, we successfully accomplished several initiatives aimed at navigating this difficult operating environment. We lowered our cost base through headcount reductions and minimized rig-related costs, maintained our working capital diligence, reduced capital expenditures and, where possible, sustained utilization and market share.

"We further strengthened our financial position by reducing our total debt by $30 million during the year and enhanced our liquidity and financial flexibility by increasing our revolver capacity. By efficiently managing our cash receipts and spending, we ended the year with a cash balance of $134 million and an undrawn revolver. Our total liquidity as of December 31, 2015 was approximately $322 million as compared with approximately $178 million at December 31, 2014.

"From an operational perspective, our U.S. rental tools business outperformed the U.S. rig count as we maintained share and grew our Gulf of Mexico footprint. While the U.S. rig count declined 47 percent in 2015, our U.S. rental tools revenue was 37 percent lower. In addition, we increased gross margin as a percentage of revenue in our international rental tools business despite lower revenue as we inserted new management, consolidated and closed locations, reduced headcount, and improved the management of our supply chain.

"Going forward, we believe rig utilization and pricing will continue to come under pressure, especially as the deteriorating market fundamentals impact our international drilling customers. We also think the lower U.S. rig count will further impact utilization and pricing for our rental tools. In response, we will maintain our focus on managing our cash flows. As part of that strategy, our 2016 capital expenditures are expected to be approximately $50 million as compared with $88 million in 2015."

Fourth Quarter Review

Parker Drilling's revenues for the 2015 fourth quarter, compared with the 2015 third quarter, decreased 14.2 percent to $148.7 million from $173.4 million, operating gross margin excluding depreciation and amortization expense (gross margin) decreased 22.7 percent to $34.3 million from $44.4 million and gross margin as a percentage of revenues was 23.1 percent, compared with 25.6 percent for the prior period.

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 declined 15.1 percent to $99.0 million from $116.6 million, gross margin decreased 24.6 percent to $20.5 million from $27.2 million, and gross margin as a percentage of revenues was 20.7 percent, compared with 23.3 percent for the prior period.

U.S. (Lower 48) Drilling

U.S. (Lower 48) Drilling segment revenues were $3.5 million, a 41.7 percent decrease from 2015 third quarter revenues of $6.0 million. Gross margin was a $2.2 million loss as compared with a 2015 third quarter gross margin loss of $1.9 million. The declines in revenues and margin were primarily the result of lower utilization, partially offset by lower costs.

International & Alaska Drilling

International & Alaska Drilling segment revenues were $95.5 million, a 13.7 percent decrease from 2015 third quarter revenues of $110.7 million. Gross margin was $22.6 million, a 22.3 percent decrease from 2015 third quarter gross margin of $29.1 million. Gross margin as a percentage of revenues was 23.7 percent as compared with 26.3 percent in the 2015 third quarter. The decrease in revenues is primarily attributable to lower Latin America rig utilization and project services activities, partially offset by lower operating costs.

Rental Tools Services

Rental Tools segment revenues were $49.8 million, a 12.3 percent decrease from 2015 third quarter revenues of $56.8 million. Gross margin was $13.8 million, a 19.8 percent decrease from 2015 third quarter gross margin of $17.2 million. Gross margin as a percentage of revenues was 27.7 percent as compared with 30.3 percent in the 2015 third quarter. Reduced revenues and gross margin were primarily due to the continued decline in U.S. land drilling activity, as well as lower activity in certain international markets.

General and Administrative expense decreased to $6.9 million for the 2015 fourth quarter, from $8.9 million for the 2015 third quarter.

The Company's effective tax rate in the fourth quarter was 7%, primarily due to discrete items as well as receiving no tax benefit from certain charges incurred during the quarter.

Capital expenditures in the fourth quarter were $15.7 million, and were $88.2 million for the year.

Conference Call

Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Thursday, February 18, 2016, to review reported results.  The call will be available by telephone at (888) 510-1785, access code 2054769.  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 from February 18, 2016 through February 25, 2016 at (888) 203-1112, access code 2054769#.

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 that address activities, events or developments that 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 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 sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs or rental equipment for operation; the strengthening of the Company's financial position; increases 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 that its expectations stated in this press release are reasonable, 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.

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 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.

PARKER DRILLING COMPANY

Consolidated Condensed Balance Sheets

(Dollars in Thousands)






December 31, 2015


December 31, 2014


(Unaudited)



ASSETS




CURRENT ASSETS




Cash and Cash Equivalents

$

134,294



$

108,456


Accounts and Notes Receivable, Net

175,105



270,952


Rig Materials and Supplies

34,937



47,943


Deferred Costs

1,367



5,673


Other Current Assets

21,038



29,279


TOTAL CURRENT ASSETS

366,741



462,303






PROPERTY, PLANT AND EQUIPMENT, NET

805,841



895,940






OTHER ASSETS




Deferred Income Taxes

139,282



130,165


Other Assets

65,040



32,251


TOTAL OTHER ASSETS

204,322



162,416






TOTAL ASSETS

$

1,376,904



$

1,520,659






LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES




Current Portion of Long-Term Debt

$



$

10,000


Accounts Payable and Accrued Liabilities

136,121



168,665


TOTAL CURRENT LIABILITIES

136,121



178,665






LONG-TERM DEBT

585,000



605,000






LONG-TERM DEFERRED TAX LIABILITY

68,654



52,115






OTHER LONG-TERM LIABILITIES

18,617



18,665






TOTAL CONTROLLING INTEREST IN STOCKHOLDERS' EQUITY

568,512



662,431


Noncontrolling interest



3,783


TOTAL EQUITY

568,512



666,214






TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,376,904



$

1,520,659










Current Ratio

2.69



2.59






Total Debt as a Percent of Capitalization

51

%


48

%

 

PARKER DRILLING COMPANY

Consolidated Statement Of Operations

(Dollars in Thousands, Except Per Share Data)

(Unaudited)






Three Months
Ended
September 30,


Three Months Ended December 31,



2015


2014


2015







REVENUES

$

148,748



$

243,213



$

173,418








EXPENSES:






Operating Expenses

114,488



167,990



128,963


Depreciation and Amortization

37,720



38,455



39,584



152,208



206,445



168,547


TOTAL OPERATING GROSS MARGIN

(3,460)



36,768



4,871








General and Administrative Expense

(6,947)



(9,675)



(8,895)


Provision for Reduction in Carrying Value of Certain Assets

(9,268)





(906)


Gain (Loss) on Disposition of Assets, Net

(1,043)



621



383








TOTAL OPERATING INCOME (LOSS)

(20,718)



27,714



(4,547)








OTHER INCOME AND (EXPENSE):






Interest Expense

(11,388)



(10,779)



(11,293)


Interest Income

60



39



7


Other

(6,119)



1,148



(719)


TOTAL OTHER EXPENSE

(17,447)



(9,592)



(12,005)








INCOME (LOSS) BEFORE INCOME TAXES

(38,165)



18,122



(16,552)








INCOME TAX EXPENSE (BENEFIT)

(2,519)



9,983



31,930








NET INCOME (LOSS)

(35,646)



8,139



(48,482)








Less: net income attributable to noncontrolling interest



386



138


NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST

$

(35,646)



$

7,753



$

(48,620)














EARNINGS (LOSS) PER SHARE - BASIC

$

(0.29)



$

0.06



$

(0.40)








EARNINGS (LOSS) PER SHARE - DILUTED

$

(0.29)



$

0.06



$

(0.40)














NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE:






Basic

122,951,598



121,755,421



122,933,518


Diluted

122,951,598



123,295,412



122,933,518


 

PARKER DRILLING COMPANY

Consolidated Statement Of Operations

(Dollars in Thousands, Except Per Share Data)

(Unaudited)








Year Ended December 31,


2015


2014


2013







REVENUES

$

712,183



$

968,684



$

874,172








EXPENSES:






     Operating Expenses

526,290



669,381



571,672


     Depreciation and Amortization

156,194



145,121



134,053



682,484



814,502



705,725


TOTAL OPERATING GROSS MARGIN

29,699



154,182



168,447








General and Administrative Expense

(36,190)



(35,016)



(68,025)


Provision for Reduction in Carrying Value of Certain Assets

(12,490)





(2,544)


Gain on Disposition of Assets, Net

1,643



1,054



3,994








TOTAL OPERATING INCOME (LOSS)

(17,338)



120,220



101,872








OTHER INCOME AND (EXPENSE):






     Interest Expense

(45,155)



(44,265)



(47,820)


     Interest Income

269



195



2,450


     Loss on extinguishment of debt



(30,152)



(5,218)


     Other

(9,747)



2,539



1,503


TOTAL OTHER EXPENSE

(54,633)



(71,683)



(49,085)








INCOME (LOSS) BEFORE INCOME TAXES

(71,971)



48,537



52,787








INCOME TAX EXPENSE

22,313



24,076



25,608








NET INCOME (LOSS)

(94,284)



24,461



27,179








Less: net income attributable to noncontrolling interest

789



1,010



164


NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST

$

(95,073)



$

23,451



$

27,015














EARNINGS (LOSS) PER SHARE - BASIC

$

(0.78)



$

0.19



$

0.23








EARNINGS (LOSS) PER SHARE - DILUTED

$

(0.78)



$

0.19



$

0.22








NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE:






     Basic

122,562,187



121,186,464



119,284,468


     Diluted

122,562,187



123,076,648



121,224,550


 

PARKER DRILLING COMPANY

Selected Financial Data

(Dollars in Thousands)

(Unaudited)
































Three Months Ended


Year Ended December 31,




December 31,


September 30,


2015


2014


2013




2015


2014


2015




REVENUES:














Drilling Services:














U.S. (Lower 48) Drilling


$

3,451



$

32,124



$

5,961



$

30,358



$

158,405



$

153,624



International & Alaska Drilling


95,546



118,711



110,661



435,096



462,513



410,507



Total Drilling Services:


98,997



150,835



116,622



465,454



620,918



564,131



Rental Tools


49,751



92,378



56,796



246,729



347,766



310,041



 Total Revenues


$

148,748



$

243,213



$

173,418



$

712,183



$

968,684



$

874,172
















OPERATING EXPENSES:














Drilling Services:














U.S. (Lower 48) Drilling


$

5,616



$

21,369



$

7,820



$

36,247



$

90,314



$

84,209



International & Alaska Drilling


72,902



93,564



81,586



325,346



368,424



324,439



Total Drilling Services:


78,518



114,933



89,406



361,593



458,738



408,648



Rental Tools


35,970



53,057



39,557



164,697



210,643



163,024



 Total Operating Expenses


$

114,488



$

167,990



$

128,963



$

526,290



$

669,381



$

571,672
















OPERATING GROSS MARGIN:














Drilling Services:














U.S. (Lower 48) Drilling


$

(2,165)



$

10,755



$

(1,859)



$

(5,889)



$

68,091



$

69,415



International & Alaska Drilling


22,644



25,147



29,075



109,750



94,089



86,068



Total Drilling Services:


20,479



35,902



27,216



103,861



162,180



155,483



Rental Tools


13,781



39,321



17,239



82,032



137,123



147,017



Depreciation and Amortization


(37,720)



(38,455)



(39,584)



(156,194)



(145,121)



(134,053)



 Total Operating Gross Margin


$

(3,460)



$

36,768



$

4,871



$

29,699



$

154,182



$

168,447


 

PARKER DRILLING COMPANY

Adjusted EBITDA

(Dollars in Thousands)

(Unaudited)














Three Months Ended



December 31,
2015


September 30,
2015


June 30,
2015


March 31,
2015


December 31,
2014












Net Income (Loss) Attributable to Controlling Interest


$

(35,646)



$

(48,620)



$

(14,029)



$

3,222



$

7,753


Interest Expense


11,388



11,293



11,396



11,078



10,779


Income Tax (Benefit) Expense


(2,519)



31,930



(6,916)



(182)



9,983


Depreciation and Amortization


37,720



39,584



38,351



40,539



38,455













EBITDA


10,943



34,187



28,802



54,657



66,970













Adjustments:











Other Income and Expense


6,059



712



1,510



1,197



(1,187)


(Gain) Loss on Disposition of Assets, Net


1,043



(383)



138



(2,441)



(621)


Provision for Reduction in Carrying Value of Certain Assets


9,268



906



2,316






Special items (2)


1,265





















Adjusted EBITDA (1)


$

28,578



$

35,422



$

32,766



$

53,413



$

65,162




(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, 2015, special items include a $1.3 million write-off of inventory associated with our decision to no longer provide drilling services in Colombia.

 

PARKER DRILLING COMPANY

Reconciliation of Adjusted Earnings Per Share

(Dollars in Thousands, Except Per Share Data)

(Unaudited)




Three Months Ended




December 31,


September 30,




2015


2014


2015









 Net income attributable to controlling interest


$

(35,646)



$

7,753



$

(48,620)


 Earnings per diluted share


$

(0.29)



$

0.06



$

(0.40)










 Adjustments:








Sale of investment in joint venture


$

4,799







Provision for reduction in carrying value of certain assets


9,268







Write-off inventory


1,265







Valuation allowance






36,632



           Total adjustments


15,332





36,632



 Tax effect of adjustments


(3,010)







           Net adjustments


12,322





36,632










 Adjusted net income attributable to controlling interest(1)


$

(23,324)



$

7,753



$

(11,988)


 Adjusted earnings per diluted share(1)


$

(0.19)



$

0.06



$

(0.10)




(1)

We believe Adjusted net income (loss) attributable to controlling interest and Adjusted earnings per diluted 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 attributable to controlling interest and earnings per diluted share to be items outside of the Company's normal operating results. Adjusted net income (loss) attributable to controlling interest and Adjusted earnings per diluted share are not measures of financial performance under GAAP, and should not be considered in isolation or as an alternative to net income (loss) or earnings per diluted share.

 

SOURCE Parker Drilling Company



RELATED LINKS

http://www.parkerdrilling.com