Parker Drilling Reports 2019 Third Quarter Results

⁽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.

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in Thousands)

Successor

Predecessor

September 30,
 2019

December 31,
 2018

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

101,106

$

48,602

Restricted cash

—

10,389

Accounts and notes receivable, net of allowance for bad debts

167,236

136,437

Rig materials and supplies

22,367

36,245

Other current assets

28,380

35,231

Total current assets

319,089

266,904

Property, plant and equipment, net of accumulated depreciation

297,213

534,371

Intangible assets, net

15,117

4,821

Deferred income taxes

4,608

2,143

Other non-current assets

31,630

20,175

Total assets

$

667,657

$

828,414

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Debtor in possession financing

$

—

$

10,000

Accounts payable and accrued liabilities

107,638

75,063

Accrued income taxes

6,352

3,385

Total current liabilities

113,990

88,448

Long-term debt

177,032

—

Other long-term liabilities

15,328

11,544

Long-term deferred tax liability

6,491

510

Commitments and contingencies

Total liabilities not subject to compromise

312,841

100,502

Liabilities subject to compromise

—

600,996

Total liabilities

312,841

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

345,831

—

Successor accumulated other comprehensive income (loss)

205

—

Retained earnings (accumulated deficit)

8,630

(634,450)

Total stockholders' equity

354,816

126,916

$

667,657

$

828,414

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)

(Unaudited)

Successor

Predecessor

Three Months Ended
September 30,

Three Months Ended
June 30,

Three Months Ended
September 30,

2019

2019

2018

Revenues

$

160,083

$

156,031

$

123,395

Expenses:

Operating expenses

117,486

112,649

93,943

Depreciation and amortization

20,329

20,391

27,520

137,815

133,040

121,463

Total operating gross margin

22,268

22,991

1,932

General and administrative expense

(5,983)

(5,610)

(14,495)

Loss on impairment

—

—

(43,990)

Gain (loss) on disposition of assets, net

(92)

(53)

9

Reorganization items

(211)

(962)

—

Total operating income (loss)

15,982

16,366

(56,544)

Other income (expense):

Interest expense

(7,118)

(7,663)

(11,350)

Interest income

362

374

23

Other

(258)

(644)

(709)

Total other income (expense)

(7,014)

(7,933)

(12,036)

Income (loss) before income taxes

8,968

8,433

(68,580)

Income tax expense

4,979

3,792

2,371

Net income (loss)

3,989

4,641

(70,951)

Less: Predecessor preferred stock dividend

—

—

906

Net income (loss) available to common stockholders

$

3,989

$

4,641

$

(71,857)

Basic earnings (loss) per common share:

$

0.27

$

0.31

$

(7.70)

Diluted earnings (loss) per common share:

$

0.27

$

0.31

$

(7.70)

Number of common shares used in computing earnings per share:

Basic

15,044,739

15,044,739

9,334,390

Diluted

15,044,739

15,044,739

9,334,390

PARKER DRILLING COMPANY AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Data)

(Unaudited)

Successor

Predecessor

Six Months Ended
September 30,

Three Months Ended
March 31,

Nine Months Ended
September 30,

2019

2019

2018

Revenues

$

316,114

$

157,397

$

351,673

Expenses:

Operating expenses

230,135

120,871

277,111

Depreciation and amortization

40,720

25,102

83,205

270,855

145,973

360,316

Total operating gross margin

45,259

11,424

(8,643)

General and administrative expense

(11,593)

(8,147)

(28,984)

Loss on impairment

—

—

(43,990)

Gain (loss) on disposition of assets, net

(145)

384

(126)

Reorganization items

(1,173)

(92,977)

—

Total operating income (loss)

32,348

(89,316)

(81,743)

Other income (expense):

Interest expense

(14,781)

(274)

(33,787)

Interest income

736

8

76

Other

(902)

(10)

(1,609)

Total other income (expense)

(14,947)

(276)

(35,320)

Income (loss) before income taxes

17,401

(89,592)

(117,063)

Income tax expense

8,771

656

5,561

Net income (loss)

8,630

(90,248)

(122,624)

Less: Predecessor preferred stock dividend

—

—

2,719

Net income (loss) available to common stockholders

$

8,630

$

(90,248)

$

(125,343)

Basic earnings (loss) per common share:

$

0.57

$

(9.63)

$

(13.49)

Diluted earnings (loss) per common share:

$

0.57

$

(9.63)

$

(13.49)

Number of common shares used in computing earnings per share:

Basic

15,044,739

9,368,322

9,292,858

Diluted

15,044,739

9,368,322

9,292,858

PARKER DRILLING COMPANY AND SUBSIDIARIES

SELECTED FINANCIAL DATA

(Dollars in Thousands)

(Unaudited)

Successor

Predecessor

Three Months Ended
September 30,

Three Months Ended
June 30,

Three Months Ended
September 30,

2019

2019

2018

Revenues:

U.S. rental tools

$

49,256

$

52,936

$

50,944

International rental tools

24,067

22,155

20,151

Total rental tools services

73,323

75,091

71,095

U.S. (lower 48) drilling

14,487

12,479

4,530

International and Alaska drilling

72,273

68,461

47,770

Total drilling services

86,760

80,940

52,300

Total revenues

160,083

156,031

123,395

Operating expenses:

U.S. rental tools

25,513

25,267

21,949

International rental tools

20,243

19,224

18,773

Total rental tools services

45,756

44,491

40,722

U.S. (lower 48) drilling

10,549

9,923

5,701

International and Alaska drilling

61,181

58,235

47,520

Total drilling services

71,730

68,158

53,221

Total operating expenses

117,486

112,649

93,943

Operating gross margin, excluding depreciation and amortization:

U.S. rental tools

23,743

27,669

28,995

International rental tools

3,824

2,931

1,378

Total rental tools services

27,567

30,600

30,373

U.S. (lower 48) drilling

3,938

2,556

(1,171)

International and Alaska drilling

11,092

10,226

250

Total drilling services

15,030

12,782

(921)

Total operating gross margin, excluding depreciation and amortization

42,597

43,382

29,452

Depreciation and amortization

(20,329)

(20,391)

(27,520)

Total operating gross margin

$

22,268

$

22,991

$

1,932

PARKER DRILLING COMPANY AND SUBSIDIARIES

ADJUSTED EBITDA

(Dollars in Thousands)

(Unaudited)

Successor

Predecessor

Three Months Ended

Three Months Ended

September 30,
2019

June 30,
2019

March 31,
2019

December 31,
2018

September 30,
2018

Net income (loss) available to common stockholders

$

3,989

$

4,641

$

(90,248)

$

(43,073)

$

(71,857)

Interest expense

7,118

7,663

274

8,778

11,350

Income tax expense

4,979

3,792

656

2,235

2,371

Depreciation and amortization

20,329

20,391

25,102

24,340

27,520

Predecessor preferred stock dividend

—

—

—

—

906

EBITDA

36,415

36,487

(64,216)

(7,720)

(29,710)

Adjustments:

Loss on impairment

—

—

—

6,708

43,990

(Gain) loss on disposition of assets, net

92

53

(384)

1,598

(9)

Pre-petition restructuring charges ⁽¹⁾

—

—

—

11,411

7,724

Reorganization items

211

962

92,977

9,789

—

Interest income

(362)

(374)

(8)

(15)

(23)

Other

258

644

10

414

709

Adjusted EBITDA ^{(1) (2)}

$

36,614

$

37,772

$

28,379

$

22,185

$

22,681

(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 Ended
September 30,

Three Months Ended
June 30,

Three Months Ended
September 30,

2019

2019

2018

Net income (loss) available to common stockholders

$

3,989

$

4,641

$

(71,857)

Diluted earnings (loss) per common share

$

0.27

$

0.31

$

(7.70)

Adjustments:

Loss on impairment

$

—

$

—

$

43,990

Net adjustments

—

—

43,990

Adjusted net income (loss) available to common stockholders ⁽¹⁾

$

3,989

$

4,641

$

(27,867)

Adjusted diluted earnings (loss) per common share ⁽¹⁾

$

0.27

$

0.31

$

(2.99)

(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.