Parker Drilling Reports 2017 First Quarter Results

News provided by

Parker Drilling Company

May 02, 2017, 16:30 ET

HOUSTON, May 2, 2017 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced results for the first quarter ended March 31, 2017, including a reported net loss of $39.8 million, or a $0.31 loss per share, on revenues of $98.3 million. 

First quarter Adjusted EBITDA was $5.4 million.

"Parker continues to execute well in a difficult market and our first quarter results were in line with our expectations," said Gary Rich, the Company's Chairman, President and CEO.  "Activity in the U.S. for both our rental tools and barge businesses improved in the first quarter.  Our U.S. rental tools business performed well as U.S. land revenue growth of 37 percent outpaced U.S. land rig count growth of 27 percent and incremental margins for the segment, including land and offshore, were 67 percent.  In the U.S. barge business, we mobilized one barge rig during the quarter and began operating two additional barge rigs in April. We are also in ongoing discussions to place up to two additional barge rigs into service by the middle of this year.

"Internationally, we believe our drilling activity is at or near the bottom and we continue to see positive indicators across select markets for projects with anticipated start-ups in late 2017 and into 2018. In our international rentals business, the startup of several new well construction contracts have now commenced and should positively impact activity going forward.

"We also successfully completed a $75 million concurrent equity offering during the first quarter. We believe the offering makes us a stronger company by allowing us to be more aggressive in the recovery; giving us greater flexibility to invest in growth opportunities, pursue strategic acquisitions, and fund the working capital needed to support growth. We are encouraged by the positive signals we are seeing across all our business lines and we believe we are well positioned to capitalize on these to drive improving financial performance," concluded Rich.

First Quarter Review

Parker Drilling's revenues for the 2017 first quarter, compared with the 2016 fourth quarter, increased 4.6 percent to $98.3 million from $94.0 million.  Operating gross margin excluding depreciation and amortization expense (gross margin) decreased 7.4 percent to $12.5 million from $13.5 million and gross margin as a percentage of revenues was 12.7 percent, compared with 14.4 percent for the 2016 fourth 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, first quarter revenues increased 3.4 percent to $64.4 million from $62.3 million for the 2016 fourth quarter.  Gross margin decreased 25.9 percent to $8.0 million from $10.8 million, and gross margin as a percentage of revenues was 12.4 percent, compared with 17.3 percent for the prior period.  Contracted backlog was $323 million at the end of the first quarter compared with $379 million at the end of the fourth quarter.

U.S. (Lower 48) Drilling

U.S. (Lower 48) Drilling segment revenues increased 50.0 percent to $1.2 million from $0.8 million for the 2016 fourth quarter. Gross margin increased 11.8 percent to a $3.0 million loss from a loss of $3.4 million for the 2016 fourth quarter. The increase in revenues and gross margin improvement were primarily the result of slightly increased activity.

International & Alaska Drilling

International & Alaska Drilling segment revenues increased 2.8 percent to $63.2 million from $61.5 million for the 2016 fourth quarter. Gross margin was $11.0 million, a 22.5 percent decrease from 2016 fourth quarter gross margin of $14.2 million.  The increase in revenues was attributable to an increase in reimbursable revenues.  The decrease in gross margin was primarily attributable to an O&M contract that was completed in the quarter and increased operating expenses that were largely due to the timing of certain payroll taxes as well as cost benefits realized in the fourth quarter that did not repeat in the first quarter.

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, first quarter revenues increased 6.6 percent to $33.8 million from $31.7 million for the 2016 fourth quarter.  Gross margin increased 63.0 percent to $4.4 million from $2.7 million, and gross margin as a percentage of revenues was 13.0 percent compared with 8.5 percent for the prior period.

U.S. Rental Tools

U.S. Rental Tools segment revenues increased 25.5 percent to $20.2 million, from $16.1 million for the 2016 fourth quarter.  Gross margin increased 70.0 percent to $6.8 million from $4.0 million for the 2016 fourth quarter.  The increases in revenues and gross margin were driven by increased oil & gas activity in the U.S. land drilling market and select price increases.

International Rental Tools

International Rental Tools segment revenues decreased 12.8 percent to $13.6 million from $15.6 million for the 2016 fourth quarter.  Gross margin decreased 84.6 percent to a $2.4 million loss from a $1.3 million loss for the 2016 fourth quarter.  The decreases in revenues and in gross margin were attributable to reduced rental activity in Europe and West Africa.

Consolidated

General and Administrative expenses were $7.0 million for the 2017 first quarter, down from $9.1 million for the 2016 fourth quarter.  The decrease was primarily due to incentive plan adjustments during the 2017 first quarter and a severance charge taken in the 2016 fourth quarter that did not repeat in the first quarter.

Capital expenditures in the first quarter were $14.5 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, May 3, 2017, to review first quarter results.  The call will be available by telephone by dialing (+1) (412) 902-0003 and asking for the Parker Drilling First 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 May 10, 2017 at (+1) (201) 612-7415, conference ID 13658797#.

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.

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: Jason Geach, Vice President, Investor Relations & Corporate Development, (+1) (281) 406-2310, [email protected].


PARKER DRILLING COMPANY

Consolidated Condensed Balance Sheets

(Dollars in Thousands)





March 31, 2017

December 31, 2016

(Unaudited)

ASSETS:


Current Assets


Cash and Cash Equivalents

$

149,688

$

119,691

Accounts and Notes Receivable, net

118,114

113,231

Rig Materials and Supplies

35,053

32,354

Other Current Assets

23,092

21,042

Total Current Assets

325,947

286,318




Property, Plant and Equipment, net

676,881

693,439




Other Assets


Deferred Income Taxes

74,416

70,309

Other Assets

52,311

53,485

Total Other Assets

126,727

123,794




Total Assets

$

1,129,555

$

1,103,551




LIABILITIES & STOCKHOLDERS' EQUITY:


Current Liabilities


Accounts Payable and Accrued Liabilities

$

93,709

$

102,921

Total Current Liabilities

93,709

102,921




Long-Term Debt, net of debt issuance costs

576,728

576,326




Deferred Tax Liability

72,849

69,333




Other Long-Term Liabilities

12,828

15,836




Total Stockholders' Equity

373,441

339,135




Total Liabilities and Stockholders' Equity

$

1,129,555

$

1,103,551


 

PARKER DRILLING COMPANY

Consolidated Statements Of Operations

(Dollars in Thousands, Except Per Share Data)

(Unaudited)





Three Months Ended
December 31,

Three Months Ended March 31,

2017

2016

2016






Revenues

$

98,271

$

130,503

$

94,025






Expenses:




Operating Expenses

85,814

108,117

80,529

Depreciation and Amortization

32,202

35,814

33,190

118,016

143,931

113,719

Total Operating Gross Margin

(19,745)

(13,428)

(19,694)






General and Administrative Expense

(7,040)

(9,781)

(9,132)

Gain (Loss) on Disposition of Assets, net

(352)

(60)

(1,364)

Total Operating Income (Loss)

(27,137)

(23,269)

(30,190)






Other Income (Expense)




Interest Expense

(10,870)

(11,562)

(11,048)

Interest Income

10

7

10

Other

530

2,485

(1,409)

Total Other Income (Expense)

(10,330)

(9,070)

(12,447)






Income (Loss) before Income Taxes

(37,467)

(32,339)

(42,637)






Income Tax Expense (Benefit)

2,342

63,496

6,292






Net Income (Loss)

(39,809)

(95,835)

(48,929)

Mandatory convertible preferred stock dividend

—

—

—

Net Income (Loss) Available to Common Stockholders

$

(39,809)

$

(95,835)

$

(48,929)






Income (Loss) per Common Share - Basic




Net Income (Loss)

$

(0.31)

$

(0.78)

$

(0.39)






Income (Loss) per Common Share - Diluted




Net Income (Loss)

$

(0.31)

$

(0.78)

$

(0.39)






Number of common shares used in computing earnings per share:




Basic

130,142,527

123,090,238

124,830,473

Diluted

130,142,527

123,090,238

124,830,473

PARKER DRILLING COMPANY

Selected Financial Data

(Dollars in Thousands)

(Unaudited)



















Three Months Ended



March 31,

December 31,



2017

2016

2016








Revenues:





Drilling Services:





U.S. (Lower 48) Drilling

$

1,215

$

2,085

$

848

International & Alaska Drilling

63,213

88,619

61,478

Total Drilling Services

64,428

90,704

62,326

Rental Tools Services:





U.S. Rental Tools

$

20,231

$

22,555

$

16,130

International Rental Tools

13,612

17,244

15,569

Total Rental Tools Services

33,843

39,799

31,699

  Total Revenues

$

98,271

$

130,503

$

94,025








Operating Expenses:





Drilling Services:





U.S. (Lower 48) Drilling

$

4,200

$

5,422

$

4,232

International & Alaska Drilling

52,184

69,725

47,307

Total Drilling Services

56,384

75,147

51,539

Rental Tools Services:





U.S. Rental Tools

$

13,455

$

15,102

$

12,102

International Rental Tools

15,975

17,868

16,888

Total Rental Tools Services

29,430

32,970

28,990

  Total Operating Expenses

$

85,814

$

108,117

$

80,529








Operating Gross Margin:





Drilling Services:





U.S. (Lower 48) Drilling

$

(2,985)

$

(3,337)

$

(3,384)

International & Alaska Drilling

11,029

18,894

14,171

Total Drilling Services

8,044

15,557

10,787

Rental Tools Services:





U.S. Rental Tools

$

6,776

$

7,453

$

4,028

International Rental Tools

(2,363)

(624)

(1,319)

Total Rental Tools Services

4,413

6,829

2,709

Total Operating Gross Margin Excluding Depreciation and Amortization

$

12,457

$

22,386

$

13,496

Depreciation and Amortization

(32,202)

(35,814)

(33,190)

Total Operating Gross Margin

(19,745)

(13,428)

(19,694)

PARKER DRILLING COMPANY

Adjusted EBITDA (1)

(Dollars in Thousands)

(Unaudited)













Three Months Ended


March 31,
 2017

December 31,
 2016

September 30,
 2016

June 30,
 2016

March 31,
 2016











Net Income (Loss)

$

(39,809)

$

(48,929)

$

(46,228)

$

(39,822)

$

(95,835)

Interest Expense

10,870

11,048

11,015

12,187

11,562

Income Tax Expense (Benefit)

2,342

6,292

5,295

(913)

63,496

Depreciation and Amortization

32,202

33,190

34,474

36,317

35,814











EBITDA

5,605

1,601

4,556

7,769

15,037











Adjustments:









Other (Income) Expense

(540)

1,399

342

326

(2,492)

(Gain) Loss on Disposition of Assets, net

352

1,364

187

2

60

Special items (2)

—

876

—

—

—











Adjusted EBITDA

$

5,417

$

5,240

$

5,085

$

8,097

$

12,605











(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) Special items include:

- For the three months ended December 31, 2016, special items include $0.9 million of net severance associated with the departure of three executives.

PARKER DRILLING COMPANY

Reconciliation of Adjusted Earnings Per Share

(Dollars in Thousands, Except Per Share Data)

(Unaudited)



Three Months Ended



March 31,

December 31,



2017

2016

2016








Net Income (Loss) Available to Common Shareholders

$

(39,809)

$

(95,835)

$

(48,929)

Income (Loss) per Diluted Share

$

(0.31)

$

(0.78)

$

(0.39)








 Adjustments:





Valuation Allowance

$

—

$

73,125

$

6,772

Special Items

—

—

876

Total adjustments

—

73,125

7,648

 Tax effect of adjustments

—

—

—

Net adjustments

—

73,125

7,648








 Adjusted Net Income (Loss) Available to Common Shareholders(1)

$

(39,809)

$

(22,710)

$

(41,281)

 Adjusted Income (Loss) per Diluted Share (1)

$

(0.31)

$

(0.18)

$

(0.33)








(1) We believe Adjusted Net Income (Loss) Available to Common Shareholders and Adjusted Income (Loss) 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 (Loss) Available to Common Shareholders and Income (Loss) per Diluted Share to be items outside of the Company's normal operating results. Adjusted Net Income (Loss) Available to Common Shareholders and Adjusted Income (Loss) 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 Income (Loss) per Diluted Share.

SOURCE Parker Drilling Company