Parker Drilling Reports 2015 Third Quarter Results

Nov 03, 2015, 17:44 ET from Parker Drilling Company

HOUSTON, Nov. 3, 2015 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced a net loss of $48.6 million, or a $0.40 loss per share on revenues of $173.4 million for the third quarter ended September 30, 2015. The net loss includes a $36.6 million non-cash valuation allowance taken primarily against U.S. foreign tax credits and certain foreign net operating losses that accounted for $0.30 of the reported loss per share. While the carry-forwards have been reserved on the Company's financial statements, they have not expired and remain available to offset future cash taxes. Excluding this valuation allowance, the adjusted loss per share was $0.10.

Third quarter adjusted EBITDA was $35.4 million, compared with $32.8 million for the preceding quarter.

Gary Rich, Chairman, President and CEO, said, "Both our adjusted EBITDA and our adjusted EBITDA as a percentage of revenue increased sequentially primarily due to strong results from our International & Alaska Drilling segment. In addition, we continued to benefit from company-wide cost efficiencies undertaken during the course of the year.

"From an outlook perspective, we anticipate that continued uncertainty over commodity prices will lead to further declines in customer spending and pricing during the remainder of the year. As a result, we anticipate lower activity for our drilling services and rental tools services businesses, which will drive lower operating results in the fourth quarter.

"We continue to manage our business as if this downturn will persist through 2016. Throughout this year, we have taken proactive steps to achieve our goal of generating free cash flow, including head count and operating expense reductions, maintaining our working capital diligence and reducing capital expenditures while striving to sustain utilization and market share. In addition, previously-announced amendments to our credit facility preserve our financial flexibility and enhance our position in this uncertain market. I believe our balanced profile of product and service mix, geographic diversity and backlog are enabling us to perform better than most of our peers. With our solid balance sheet and prudent management during this downturn, we believe we are positioned to grow once the market environment stabilizes and the outlook improves," Mr. Rich concluded.

Third Quarter Review

Parker Drilling's revenues for the 2015 third quarter, compared with the 2015 second quarter, decreased 6.7 percent to $173.4 million from $185.9 million, operating gross margin excluding depreciation and amortization expense (gross margin) increased 5.0 percent to $44.4 million from $42.3 million and gross margin as a percentage of revenues was 25.6 percent, compared with 22.8 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 4.3 percent to $116.6 million from $121.8 million, gross margin increased 31.4 percent to $27.2 million from $20.7 million, and gross margin as a percentage of revenues was 23.3 percent, compared with 17.0 percent for the prior period.

U.S. (Lower 48) Drilling

U.S. (Lower 48) Drilling segment revenues were $6.0 million, an 11.8 percent decrease from 2015 second quarter revenues of $6.8 million. Gross margin was a $1.9 million loss as compared with a 2015 second quarter gross margin loss of $2.0 million. The declines in revenues were primarily the result of lower activity in the Company's California O&M business, while gross margin improved as a result of slightly higher utilization and lower costs in the Gulf of Mexico drilling barge business.

International & Alaska Drilling

International & Alaska Drilling segment revenues were $110.7 million, a 3.7 percent decrease from 2015 second quarter revenues of $115.0 million. Gross margin was $29.1 million, a 28.8 percent increase from 2015 second quarter gross margin of $22.6 million. Gross margin as a percentage of revenues was 26.3 percent as compared with 19.7 percent in the 2015 second quarter. The decrease in revenues is attributable to a $7.1 million decrease in reimbursable expenses and lower Eastern Hemisphere rig utilization, partially offset by an increase in Latin America utilization and project services activities. The increase in gross margin is due to the increase in Latin America utilization and project services activities along with lower operating expenses.

Rental Tools Services

Rental Tools segment revenues were $56.8 million, an 11.4 percent decrease from 2015 second quarter revenues of $64.1 million. Gross margin was $17.2 million, a 20.7 percent decrease from 2015 second quarter gross margin of $21.7 million. Gross margin as a percentage of revenues was 30.3 percent as compared with 33.9 percent in the 2015 second quarter. Reduced revenues and gross margin were primarily due to the continued decline in U.S. land drilling activity, as well as lower pricing and business mix in certain international rental tools markets.

General and Administrative expense decreased to $8.9 million for the 2015 third quarter, from $9.5 million for the 2015 second quarter.

Capital expenditures in third quarter were $17.9 million, and year-to-date through September 30, 2015 were $72.5 million.

Conference Call

Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Wednesday, November 4, 2015, to review reported results. The call will be available by telephone at (888) 287-5563, access code 235454. 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 or by telephone for 1 week from November 4, 2015 at (888) 203-1112, using the access code 235454#.

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 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.

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 Drilling-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, Except Per Share Data)

September 30, 2015

December 31, 2014

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and Cash Equivalents

$

104,651

$

108,456

Accounts and Notes Receivable, Net

224,996

270,952

Rig Materials and Supplies

38,516

47,943

Deferred Costs

2,961

5,673

Deferred Income Taxes

5,448

7,476

Other Current Assets

25,033

29,279

TOTAL CURRENT ASSETS

401,605

469,779

PROPERTY, PLANT AND EQUIPMENT, NET

841,923

895,940

OTHER ASSETS

Deferred Income Taxes

133,058

122,689

Other Assets

65,597

32,251

TOTAL OTHER ASSETS

198,655

154,940

TOTAL ASSETS

$

1,442,183

$

1,520,659

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Current Portion of Long-Term Debt

$

$

10,000

Accounts Payable and Accrued Liabilities

150,170

168,665

TOTAL CURRENT LIABILITIES

150,170

178,665

LONG-TERM DEBT

585,000

605,000

LONG-TERM DEFERRED TAX LIABILITY

75,197

52,115

OTHER LONG-TERM LIABILITIES

20,141

18,665

TOTAL CONTROLLING INTEREST IN STOCKHOLDERS' EQUITY

606,498

662,431

Noncontrolling interest

5,177

3,783

TOTAL EQUITY

611,675

666,214

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,442,183

$

1,520,659

Current Ratio

2.67

2.63

Total Debt as a Percent of Capitalization

49%

48%

Book Value Per Common Share

$

4.92

$

5.43

 

PARKER DRILLING COMPANY

Consolidated Statement Of Operations

(Dollars in Thousands, Except Per Share Data)

(Unaudited)

Three Months Ended June 30,

Three Months Ended September 30,

2015

2014

2015

REVENUES

$

173,418

$

242,012

$

185,941

EXPENSES:

Operating Expenses

128,963

160,797

143,569

Depreciation and Amortization

39,584

36,149

38,351

168,547

196,946

181,920

TOTAL OPERATING GROSS MARGIN

4,871

45,066

4,021

General and Administrative Expense

(8,895)

(9,370)

(9,511)

Provision for Reduction in Carrying Value of Certain Assets

(906)

(2,316)

Gain (Loss) on Disposition of Assets, Net

383

(457)

(138)

TOTAL OPERATING INCOME

(4,547)

35,239

(7,944)

OTHER INCOME AND (EXPENSE):

Interest Expense

(11,293)

(10,848)

(11,396)

Interest Income

7

36

19

Other

(719)

(536)

(1,529)

TOTAL OTHER EXPENSE

(12,005)

(11,348)

(12,906)

INCOME (LOSS) BEFORE INCOME TAXES

(16,552)

23,891

(20,850)

INCOME TAX EXPENSE (BENEFIT)

31,930

11,014

(6,916)

NET INCOME (LOSS)

(48,482)

12,877

(13,934)

Less: net income attributable to noncontrolling interest

138

311

95

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST

$

(48,620)

$

12,566

$

(14,029)

EARNINGS PER SHARE - BASIC

Net Income (loss)

$

(0.40)

$

0.10

$

(0.11)

EARNINGS PER SHARE - DILUTED

Net Income (loss)

$

(0.40)

$

0.10

$

(0.11)

NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE

Basic

122,933,518

121,523,674

122,481,425

Diluted

122,933,518

123,177,753

122,481,425

 

PARKER DRILLING COMPANY

Consolidated Statement Of Operations

(Dollars in Thousands, Except Per Share Data)

(Unaudited)

Nine Months Ended September 30,

2015

2014

REVENUES

$

563,435

$

725,471

EXPENSES:

Operating Expenses

411,802

501,391

Depreciation and Amortization

118,474

106,666

530,276

608,057

TOTAL OPERATING GROSS MARGIN

33,159

117,414

General and Administrative Expense

(29,243)

(25,341)

Provision for Reduction in Carrying Value of Certain Assets

(3,222)

Gain on Disposition of Assets, Net

2,686

433

TOTAL OPERATING INCOME

3,380

92,506

OTHER INCOME AND (EXPENSE):

Interest Expense

(33,767)

(33,486)

Interest Income

209

156

Loss on extinguishment of debt

(30,152)

Other

(3,628)

1,391

TOTAL OTHER EXPENSE

(37,186)

(62,091)

INCOME (LOSS) BEFORE INCOME TAXES

(33,806)

30,415

INCOME TAX EXPENSE (BENEFIT)

24,832

14,093

NET INCOME (LOSS)

(58,638)

16,322

Less: net income attributable to noncontrolling interest

789

624

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST

$

(59,427)

$

15,698

EARNINGS PER SHARE - BASIC

Net Income (loss)

$

(0.49)

$

0.13

EARNINGS PER SHARE - DILUTED

Net Income (loss)

$

(0.49)

$

0.13

NUMBER OF COMMON SHARES USED IN COMPUTING EARNINGS PER SHARE

Basic

122,430,957

120,994,728

Diluted

122,430,957

122,972,014

 

PARKER DRILLING COMPANY

Selected Financial Data

(Dollars in Thousands)

(Unaudited)

Three Months Ended

September 30,

June 30,

2015

2014

2015

REVENUES:

Drilling Services:

U.S. (Lower 48) Drilling

$

5,961

$

44,409

$

6,848

International & Alaska Drilling

110,661

109,892

114,969

Total Drilling Services

116,622

154,301

121,817

Rental Tools

56,796

87,711

64,124

   Total Revenues

$

173,418

$

242,012

$

185,941

OPERATING EXPENSES:

Drilling Services:

U.S. (Lower 48) Drilling

$

7,820

$

22,687

$

8,829

International & Alaska Drilling

81,586

86,123

92,329

Total Drilling Services

89,406

108,810

101,158

Rental Tools

39,557

51,987

42,411

   Total Operating Expenses

$

128,963

$

160,797

$

143,569

OPERATING GROSS MARGIN:

Drilling Services:

U.S. (Lower 48) Drilling

$

(1,859)

$

21,722

$

(1,981)

International & Alaska Drilling

29,075

23,769

22,640

Total Drilling Services

27,216

45,491

20,659

Rental Tools

17,239

35,724

21,713

Depreciation and Amortization

(39,584)

(36,149)

(38,351)

   Total Operating Gross Margin

$

4,871

$

45,066

$

4,021

 

PARKER DRILLING COMPANY

Adjusted EBITDA

(Dollars in Thousands)

(Unaudited)

Three Months Ended

September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

Net Income (Loss) Attributable to Controlling Interest

$

(48,620)

$

(14,029)

$

3,222

$

7,753

$

12,566

Adjustments:

Income Tax (Benefit) Expense

31,930

(6,916)

(182)

9,983

11,014

Interest Expense

11,293

11,396

11,078

10,779

10,848

Other Income and Expense

712

1,510

1,197

(1,187)

500

(Gain) Loss on Disposition of Assets, Net

(383)

138

(2,441)

(621)

457

Depreciation and Amortization

39,584

38,351

40,539

38,455

36,149

Provision for Reduction in Carrying Value of Certain Assets

906

2,316

Adjusted EBITDA*

35,422

32,766

53,413

65,162

71,534

Adjustments:

Non-routine Items

(1,250)

Adjusted EBITDA after Non-routine Items

$

35,422

$

32,766

$

53,413

$

65,162

$

70,284

*Adjusted EBITDA, a non-GAAP financial measure, excludes items that management believes are of a non-routine nature and which detract from an understanding of normal operating performance and comparisons with other periods. Management also believes that results excluding these items are more comparable to estimates provided by securities analysts and used by them in evaluating the Company's performance.

 

PARKER DRILLING COMPANY

Reconciliation of Adjusted Earnings Per Share

(Dollars in Thousands, except Per Share)

(Unaudited)

Three Months Ended

September 30,

June 30,

2015

2014

2015

Net income attributable to controlling interest

$

(48,620)

$

12,566

$

(14,029)

Earnings per diluted share

$

(0.40)

$

0.10

$

(0.11)

Adjustments:

Escrow clawback

$

$

(1,250)

$

Provision for reduction in carrying value of certain assets**

 

2,316

Valuation allowance

36,632

      Total adjustments

36,632

(1,250)

2,316

Tax effect of adjustments

 

500

(443)

      Net adjustments

36,632

(750)

1,873

Adjusted net income attributable to controlling interest*

$

(11,988)

$

11,816

$

(12,156)

Adjusted earnings per diluted share

$

(0.10)

$

0.10

$

(0.10)

*Adjusted net income, a non-GAAP financial measure, excludes items that management believes are of a non-routine nature and which detract from an understanding of normal operating performance and comparisons with other periods. Management also believes that results excluding these items are more comparable to estimates provided by securities analysts and used by them in evaluating the Company's performance.

**The three months ended September 30, 2015 excludes provision for reduction in carrying value of certain assets of $0.9 million ($0.5 million, net of tax) deemed not meaningful to adjusted earnings per diluted share for the period.

 

SOURCE Parker Drilling Company



RELATED LINKS

http://www.parkerdrilling.com