In the news release, Tesco Corporation Reports First Quarter
2016 Results, issued 10-May-2016 by
Tesco Corporation over PR Newswire, we are advised by the company
that some numbers have changed in the following: 1) The third
sentence in the third bullet under Products Segment; 2) the second
sentence in the second bullet under Other Segments and Expenses;
and 3) the Products and the Corporate & Other columns of the
Three Months Ended March 31, 2016
Reconciliation of GAAP Operating Income (Loss) to Adjusted
Operating Income (Loss) table. The complete, corrected release
follows:
Tesco Corporation Reports First Quarter 2016 Results - Revenues
declined to
$35.5 million as a result
of challenging market conditions - Cash increased
$2.4 million during the quarter, ending at
$53.9 million with no debt - Adjusted
EBITDA was
$(7.8) million, or (22)%
of revenue - Reported diluted EPS was a loss of
$1.45 and adjusted EPS was a loss of
$0.46, after
$0.99
in charges - Restructuring programs since Q4 2014 expected to yield
$60 million of annualized savings
HOUSTON, May 10, 2016
/CNW/ -- Tesco Corporation ("TESCO" or the "Company") (NASDAQ:
TESO) today reported first quarter 2016 financial and operating
results.
First Quarter Operating Results
Fernando Assing, Tesco's Chief
Executive Officer, commented, "We continue to maintain the position
that the market will remain lower for longer and cash generation is
our number one priority. We were pleased that our overall cash
levels increased during the first quarter despite the drop in
revenue and profitability."
"We implemented additional global restructuring actions in the
first quarter that are expected to produce annualized savings of
approximately $10-15 million. As the
bottom of the market forms and restructuring opportunities are
exhausted, we will be shifting our focus to adding revenue back to
our platform by more aggressively marketing our automated product
offerings and services as well as rig control technologies. We must
continue to adapt our business and commercial models to create a
more sustainable and competitive company."
Tesco reported revenue of $35.5
million for the first quarter ended March 31, 2016,
down from $52.2 million, or (32)%, in
the fourth quarter of 2015, and down from $91.7 million, or (61)%, for the first quarter of
2015.The sequential decline in revenue was primarily from lower
activity in North America and
lower rental and tubular services activity in Latin America.
Tesco reported a net loss of $(56.8)
million, or $(1.45) per
diluted share, for the first quarter ended March 31, 2016. Our
adjusted net loss for the quarter was $(17.9) million, or $(0.46) per diluted share, excluding special
items, consisting primarily of several charges related to asset
impairments, additional inventory reserves, and restructuring
costs. This compares to a net loss of $(78.1) million, or $(2.00) per diluted share, in the fourth quarter
of 2015, and a net loss of $(8.3)
million, or $(0.21) per
diluted share, for the first quarter of 2015. Adjusted net loss in
the fourth quarter of 2015 was $(13.4)
million, or $(0.33) per
diluted share, and in the first quarter of 2015 was $(3.3) million, or $(0.08) per diluted share.
Adjusted EBITDA was $(7.8) million
for the first quarter ended March 31, 2016 compared to
adjusted EBITDA of $(2.0) million in
the fourth quarter of 2015. Sequential adjusted EBITDA decrementals
were approximately 35% on nearly 32% revenue decline. While the
benefits of restructuring in the fourth quarter reduced the
decremental rate in the first quarter, these benefits could not
offset the rapid decline in activity experienced in the first
quarter. Additional restructuring was implemented in the
first quarter. Adjusted operating loss during the first quarter was
$(17.2) million which excludes the
impact of $37.6 million of charges.
Cash and cash equivalents as of March 31, 2016 increased
sequentially by approximately $2.4 million
to $53.9 million, with free cash flow of over $2 million before approximately $3.7 million of restructuring payments. Accounts
receivable declined by over $15
million through focused collection efforts. Excluding the
additional reserve, inventory declined by approximately
$1 million in the first quarter, a
downward trend we expect to continue. In addition, cash was
consumed for capital expenditures of $0.8
million offset by $1.1 million
of proceeds from the sale of used equipment and $1.6 million in research and engineering
investments.
Tesco ended the quarter with $53.9
million of cash and no borrowings on its credit facility,
other than supporting $4.4 million of
letters of credit. During the first quarter, we worked with our
bank group on options to replace our existing credit facility. We
received an extension of the current credit facility compliance
waiver through the second quarter filing period. We do have a
commitment for an ABL facility that should accommodate letters of
credit and limited borrowing capacity not subject to EBITDA
covenants. We are still negotiating and expect to finalize it in
the second quarter.
Products Segment
- We have renamed our previously named Top Drive segment to
Products to reflect our broader offerings. There were no changes to
the underlying product line reporting within the segment.
- Revenue from the Products segment for Q1 2016 was $16.6 million, an $8.9
million, or 34.9%, decrease from Q4 2015 and a $33.4 million, or 66.8%, decrease from Q1 2015.
- Product sales for Q1 2016 included 6 top drive units (3 new and
3 used), compared to 17 units (6 new and 11 used) sold in Q4 2015
and 14 units (14 new and 0 used) sold in Q1 2015.
- The rental top drive fleet was 121 at the end of the first
quarter with a utilization of 14%, down from 124 units at the end
of the fourth quarter of 2015.
- Operating loss before adjustments in the Products segment for
Q1 2016 was $(39.2) million, a
$22.5 million, or 135%, decrease from
Q4 2015 and a $43.8 million decrease
from Q1 2015. Our Products operating margin before
adjustments was (237)% in Q1 2016, a decrease from 65% and 9% in Q4
2015 and Q1 2015, respectively. First quarter operating loss and
operating margin after adjustments were $4.0
million and (24)%, respectively, with sequential decremental
margins of 49%. This decline in profitability is primarily related
to the impact of reduced global top drive sales and lower Latin
American rental activity.
- At March 31, 2016, backlog of top drives was 10 units,
with a total potential value of $9.5
million, compared to 8 units at December 31, 2015, with
a potential value of $7.2
million. This compares to a backlog of 24 units at
March 31, 2015, with a potential value of $23.1 million. In addition, the Company expects
to ship its first offshore catwalk and an offshore pipe handling
package with a combined value of $3.5
million in the second quarter which are not included in this
reported top drive backlog. Today, our top drive backlog stands at
12 units with a potential value of $11.7
million.
Tubular Services Segment
- Revenue from the Tubular Services segment for Q1 2016 was
$18.9 million, a $7.8 million, or 29.2%, decrease from Q4 2015 and
a $22.8 million, or 54.7%, decrease
from Q1 2015.
- Operating income before adjustments in the Tubular Services
segment for Q1 2016 was $(6.0)
million, a $35.8 million
increase from Q4 2015 and an $8.0
million decrease from Q1 2015. Our Tubular Services
operating margin was (32)% for Q1 2016, down from (157)% and 5% in
Q4 2015 and Q1 2015, respectively. First quarter operating loss and
operating margin after adjustments were $5.6
million and (30)%, respectively. The sequential adjusted
decremental margin was 19% and stems from lower revenues in
Argentina and the U.S.
Other Segments and Expenses
- Research and engineering costs for Q1 2016 were $1.6 million, compared to $2.2 million in Q4 2015 and $2.9 million in Q1 2015. We continue to invest in
the development, commercialization, and enhancement of our
proprietary technologies relating to our Products and Tubular
Services segments.
- Corporate and other costs for Q1 2016 were $8.0 million, a $1.4
million, or 21.2%, increase from Q4 2015 and a $1.3 million, or 14.0%, decrease from Q1 2015.
Excluding restructuring costs and other special items, adjusted
costs would have been $5.9
million.
- Net foreign exchange losses for Q1 2016 were $1.2 million, compared to $8.6 million in Q4 2015 and $3.2 million in Q1 2015. The largest foreign
exchange losses were from Argentina.
- Our effective tax rate for Q1 2016 was a 1% expense compared to
a 2% expense in Q4 2015 and a 6% benefit in Q1 2015.
- Total capital expenditures were $0.8
million in Q1 2016, primarily for tubular services
equipment, a $2.2 million, or 73%,
decrease from Q4 2015 and a $6.5
million, or 89%, decrease from Q1 2015.
Outlook
The global markets will continue to be challenging in the second
quarter as the first quarter rig count declines will be compounded
with the additional rig count declines expected in that
quarter.
Products revenue is expected to increase sequentially between
15% and 20% as we ship 3-5 top drives in addition to the offshore
catwalk and the offshore pipe handling package. Product rentals and
AMSS results are expected to continue to trend down as those follow
the rig counts. Products adjusted operating profit is expected to
increase over the first quarter primarily due to the effect of the
non-recurring new products shipping activity within the
quarter.
Tubular Services revenue is expected to be down sequentially
between 25% and 30%. This decline is being driven primarily by
lower land drilling activity in the US along with some market share
decline due to not bidding in some cases where pricing is below
breakeven EBITDA. We will not be performing work temporarily on two
contracted rigs in the Gulf of
Mexico due to drilling schedules. In addition, we do not
have work scheduled in the North Sea as all activity under our
multi-platform contract has been indefinitely postponed. However,
decremental margins are expected to be similar to the first quarter
as we see the benefits of prior restructuring and cost
controls.
Corporate and R&E expenses are expected to decrease slightly
in the second quarter. Depreciation expense should decrease to
approximately $7.5 million per
quarter after adjusting for the impairment charge in the first
quarter.
These factors should cause adjusted EBITDA to be flat to
slightly down over first quarter levels. Cash is expected to be
slightly down sequentially as inventory reduction during the second
quarter driven by the higher Product sales partially offsets EBITDA
losses. Capital spending is expected to remain in the $1-$2 million range per quarter.
"Despite the difficult market, we continue to implement the
strategy we outlined in 2014" Assing said. "Technology is a key
differentiator for Tesco, and we are committed to investing in the
development of products and services that we believe can improve
both market share and margins while reducing the drilling and
completion costs of our customers. Consistent with this, we are
gaining tubular services market share in our targeted offshore
markets, particularly in the Gulf of
Mexico and are encouraged by greater acceptance of
technology adoption in key land markets due to the cost reductions
it can bring, as evidenced by recent contract awards in
Saudi Arabia."
"Our investments in technology initiatives continue to progress
and we plan to accelerate the deployment of optimized offerings
that more radically reduce the cost structure for our clients. We
completed several field trials of our Automated Rig Control
platform and are pleased by the initial results. We continue to
test the Pipe Drive System ("PDS"), the Differential Speed
Disengager ("DSD") and a new Multi-Plug launcher system that
significantly increases the capability of our Side Entry Cement
Swivel and will allow the CDS to be more competitive and address
more applications."
"While our short-term priority remains cash generation and
improving profitability, positioning is also important. We will
continue to implement our strategy and fund our technology as
market conditions dictate. We are reducing our cost structure,
eliminating smaller operations, adapting our business models and
developing third-party market channels. All of these measures will
transform Tesco in to a leaner, more efficient company that will
generate greater operating leverage in the recovery," he
concluded.
Conference Call
The Company will conduct a conference call to discuss its
results for the first quarter 2016 on May
10 at 9:00 a.m. Central
Time. To participate in the conference call, dial
1-877-407-0672 inside the U.S. or 1-412-902-0003 outside the U.S.
approximately 10 minutes prior to the scheduled start time. The
conference call and all questions and answers will be recorded and
made available until May 24. To
listen to the replay, call 1-877-660-6853 inside the U.S. or
1-201-612-7415 outside the U.S. and enter conference ID
13634625#.
The conference call will be webcast live as well as by replay at
the Company's web site, www.tescocorp.com. Listeners may access the
call through the "Conference Calls" link in the Investors section
of the site.
TESCO Corporation is a global leader in the design, manufacture
and service of technology based solutions for the upstream energy
industry. The Company's strategy is to change the way people drill
wells by delivering safer and more efficient solutions that add
real value by reducing the costs of drilling for and producing oil
and natural gas. TESCO® is a registered trademark in
the United States, Canada and the European Union. Casing Drive
System™, CDS™ is a trademark in the
United States and Canada.
For further information please contact:
Chris
Boone (713) 359-7000
Tesco Corporation
Caution Regarding Forward-Looking Information and Risk
Factors
This news release contains forward-looking statements within
the meaning of Canadian and United
States securities laws, including the United States Private
Securities Litigation Reform Act of 1995. From time to time, our
public filings, press releases and other communications (such as
conference calls and presentations) will contain forward-looking
statements. Forward-looking information is often, but not always
identified by the use of words such as "anticipate," "believe,"
"expect," "plan," "intend," "forecast," "target," "project," "may,"
"will," "should," "could," "estimate," "predict" or similar words
suggesting future outcomes or language suggesting an outlook.
Forward-looking statements in this press release include, but are
not limited to, statements with respect to expectations of our
prospects, future revenue, earnings, activities and technical
results.
Forward-looking statements and information are based on
current beliefs as well as assumptions made by, and information
currently available to, us concerning anticipated financial
performance, business prospects, strategies and regulatory
developments. Although management considers these assumptions to be
reasonable based on information currently available to it, they may
prove to be incorrect. The forward-looking statements in this news
release are made as of the date it was issued and we do not
undertake any obligation to update publicly or to revise any of the
included forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific, and
risks that outcomes implied by forward-looking statements will not
be achieved. We caution readers not to place undue reliance on
these statements as a number of important factors could cause the
actual results to differ materially from the beliefs, plans,
objectives, expectations and anticipations, estimates and
intentions expressed in such forward-looking statements.
These risks and uncertainties include, but are not limited
to, the impact of: levels and volatility of oil and gas
prices; cyclical nature of the energy industry and credit risks of
our customers; fluctuations of our revenue and earnings; operating
hazards inherent in our operations; changes in governmental
regulations, including those related to the climate and hydraulic
fracturing; consolidation or loss of our customers; the highly
competitive nature of our business; technological advancements and
trends in our industry, and improvements in our competitors'
products; global economic and political environment, and financial
markets; terrorist attacks, natural disasters and pandemic
diseases; our presence in international markets, including
political or economic instability, currency restrictions and trade
and economic sanctions; cybersecurity incidents; protecting and
enforcing our intellectual property rights; changes in, or our
failure to comply with, environmental regulations; restrictions
under our credit facility that that may limit our ability to
finance future operations or capital needs and could accelerate our
debt payments; failure of our manufactured products and claims
under our product warranties; availability of raw materials,
component parts and finished products to produce our products, and
our ability deliver the products we manufacture in a timely manner;
retention and recruitment of a skilled workforce and key employees;
and ability to identify and complete acquisitions. These risks and
uncertainties may cause our actual results, levels of activity,
performance or achievements to be materially different from those
expressed or implied by any forward-looking statements. When
relying on our forward-looking statements to make decisions,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events.
Copies of our Canadian public filings are available through
www.tescocorp.com and on SEDAR at www.sedar.com. Our U.S. public
filings are available at www.sec.gov and through
www.tescocorp.com.
The risks included here are not exhaustive. Refer to "Part I,
Item 1A - Risk Factors" in our Annual Report on Form 10-K filed for
the year ended December 31, 2015 for further discussion
regarding our exposure to risks. Additionally, new risk factors
emerge from time to time and it is not possible for us to predict
all such factors, nor to assess the impact such factors might have
on our business or the extent to which any factor or combination of
factors may cause actual results to differ materially from those
contained in any forward looking statements. Given these risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual
results.
TESCO
CORPORATION
|
Condensed
Consolidated Statements of Income
|
(in millions,
except per share information)
|
|
|
Three Months
Ended
March 31,
|
|
2016
|
|
2015
|
|
(Unaudited)
|
Revenue
|
$
|
35.5
|
|
$
|
91.7
|
Operating
expenses
|
|
|
|
Cost of sales and
services
|
46.9
|
|
83.3
|
Selling, general and
administrative
|
6.3
|
|
11.1
|
Long-lived asset
impairments
|
35.5
|
|
—
|
Research and
engineering
|
1.6
|
|
2.9
|
|
90.3
|
|
97.3
|
Operating
loss
|
(54.8)
|
|
(5.6)
|
Interest expense,
net
|
0.4
|
|
0.2
|
Other expense,
net
|
1.1
|
|
3.0
|
Loss before income
taxes
|
(56.3)
|
|
(8.8)
|
Income tax provision
(benefit)
|
0.5
|
|
(0.5)
|
Net loss
|
$
|
(56.8)
|
|
$
|
(8.3)
|
Loss per
share:
|
|
|
|
Basic
|
$
|
(1.45)
|
|
$
|
(0.21)
|
Diluted
|
$
|
(1.45)
|
|
$
|
(0.21)
|
Dividends per
share:
|
|
|
|
Basic
|
$
|
—
|
|
$
|
0.05
|
Weighted average
number of shares:
|
|
|
|
Basic
|
39.3
|
|
39.0
|
Diluted
|
39.3
|
|
39.0
|
TESCO
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
(in
millions)
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
(Unaudited)
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
53.9
|
|
$
|
51.5
|
Accounts receivable,
net
|
48.5
|
|
64.3
|
Inventories,
net
|
93.3
|
|
95.5
|
Other current
assets
|
22.7
|
|
25.2
|
Total current
assets
|
218.4
|
|
236.5
|
Property, plant and
equipment, net
|
136.1
|
|
177.7
|
Other
assets
|
6.0
|
|
7.5
|
Total
assets
|
$
|
360.5
|
|
$
|
421.7
|
Liabilities and Shareholders'
Equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
13.8
|
|
14.3
|
Accrued and other
current liabilities
|
22.4
|
|
27.2
|
Income taxes
payable
|
1.3
|
|
1.4
|
Total current
liabilities
|
37.5
|
|
42.9
|
Other
liabilities
|
2.1
|
|
2.2
|
Deferred income
taxes
|
1.6
|
|
1.6
|
Shareholders'
equity
|
319.3
|
|
375.0
|
Total
liabilities and shareholders' equity
|
$
|
360.5
|
|
$
|
421.7
|
TESCO
CORPORATION
|
Consolidated
Statement of Cash Flows
|
(in
millions)
|
|
|
Three Months
Ended
March 31,
|
|
2016
|
|
2015
|
|
(Unaudited)
|
Operating
Activities
|
|
|
|
Net loss
|
$
|
(56.8)
|
|
$
|
(8.3)
|
Adjustments to
reconcile net loss to cash provided by (used for) operating
activities:
|
|
|
|
Depreciation and
amortization
|
8.0
|
|
10.1
|
Stock compensation
expense
|
1.1
|
|
1.0
|
Bad debt expense
(recovery)
|
0.5
|
|
(0.4)
|
Deferred income
taxes
|
—
|
|
(3.2)
|
Amortization of
financial items
|
0.2
|
|
0.1
|
Gain (loss) on sale
of operating assets
|
(0.3)
|
|
—
|
Long-lived asset
impairments
|
35.5
|
|
—
|
Changes in the fair
value of contingent earn-out obligations
|
(0.1)
|
|
(0.2)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable
trade, net
|
15.3
|
|
26.2
|
Inventories,
net
|
2.2
|
|
(5.5)
|
Prepaid and other
current assets
|
2.3
|
|
(1.0)
|
Accounts payable and
accrued liabilities
|
(5.9)
|
|
(14.2)
|
Income taxes
recoverable
|
0.1
|
|
(1.4)
|
Other noncurrent
assets and liabilities, net
|
—
|
|
(0.9)
|
Net cash provided by
operating activities
|
2.1
|
|
2.3
|
Investing
Activities
|
|
|
|
Additions to
property, plant and equipment
|
(0.8)
|
|
(7.3)
|
Proceeds on sale of
operating assets
|
1.1
|
|
—
|
Other, net
|
—
|
|
1.7
|
Net cash provided by
(used in) investing activities
|
0.3
|
|
(5.6)
|
Financing
Activities
|
|
|
|
Repayments of
debt
|
—
|
|
—
|
Proceeds from
exercise of stock options
|
—
|
|
0.1
|
Net cash provided by
financing activities
|
—
|
|
0.1
|
Change in cash and
cash equivalents
|
2.4
|
|
(3.2)
|
Cash and cash
equivalents, beginning of period
|
51.5
|
|
72.5
|
Cash and cash
equivalents, end of period
|
$
|
53.9
|
|
$
|
69.3
|
Supplemental cash
flow information
|
|
|
|
Cash payments for
interest
|
$
|
0.1
|
|
$
|
0.1
|
Cash payments for
income taxes, net of refunds
|
0.5
|
|
4.6
|
Property, plant and
equipment accrued in accounts payable
|
0.6
|
|
1.7
|
TESCO
CORPORATION
|
Segment
Results
|
(in millions,
except per share information)
|
|
|
Three Months
Ended March 31,
|
|
Three Months
Ended
December 31,
|
|
2016
|
|
2015
|
|
2015
|
Segment
revenue
|
(Unaudited)
|
Products
|
|
|
|
|
|
Sales
|
$
|
4.2
|
|
$
|
17.8
|
|
$
|
8.1
|
Rental
services
|
6.6
|
|
20.1
|
|
9.9
|
After-market sales and
service
|
5.8
|
|
12.1
|
|
7.5
|
|
16.6
|
|
50.0
|
|
25.5
|
Tubular
Services
|
|
|
|
|
|
Land
|
10.8
|
|
30.6
|
|
19.0
|
Offshore
|
7.4
|
|
9.8
|
|
6.6
|
CDS, Parts &
Accessories
|
0.7
|
|
1.3
|
|
1.1
|
|
18.9
|
|
41.7
|
|
26.7
|
|
|
|
|
|
|
Consolidated
revenue
|
$
|
35.5
|
|
$
|
91.7
|
|
$
|
52.2
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
Products
|
$
|
(39.2)
|
|
$
|
4.6
|
|
$
|
(16.7)
|
Tubular
Services
|
(6.0)
|
|
2.0
|
|
(41.8)
|
Research and
Engineering
|
(1.6)
|
|
(2.9)
|
|
(2.2)
|
Corporate and
Other
|
(8.0)
|
|
(9.3)
|
|
(6.6)
|
Operating
loss
|
$
|
(54.8)
|
|
$
|
(5.6)
|
|
$
|
(67.3)
|
Net loss
|
$
|
(56.8)
|
|
$
|
(8.3)
|
|
$
|
(78.1)
|
Loss per share
(diluted)
|
$
|
(1.45)
|
|
$
|
(0.21)
|
|
$
|
(2.00)
|
Adjusted
EBITDA(a) (as defined)
|
$
|
(7.8)
|
|
$
|
9.6
|
|
$
|
(2.0)
|
________________________
(a)
|
See explanation of
Non-GAAP measure below.
|
TESCO
CORPORATION
|
Non-GAAP Measure -
Adjusted EBITDA (1)
|
(in
millions)
|
|
|
Three Months
Ended March 31,
|
|
Three Months
Ended
December 31,
|
|
2016
|
|
2015
|
|
2015
|
Net loss under U.S.
GAAP
|
$
|
(56.8)
|
|
$
|
(8.3)
|
|
$
|
(78.1)
|
Income tax expense
(benefit)
|
0.5
|
|
(0.5)
|
|
1.8
|
Depreciation and
amortization
|
8.0
|
|
10.1
|
|
9.0
|
Net interest
expense
|
0.4
|
|
0.2
|
|
0.5
|
Stock compensation
expense—non-cash
|
1.1
|
|
1.0
|
|
0.5
|
Severance &
executive retirement charges
|
3.0
|
|
2.6
|
|
3.6
|
Bad debt from certain
accounts
|
0.3
|
|
—
|
|
3.2
|
Foreign exchange
loss
|
1.2
|
|
3.2
|
|
8.6
|
Asset sale
reserves
|
(2.3)
|
|
—
|
|
—
|
Venezuela
charges
|
—
|
|
—
|
|
0.5
|
Warranty & legal
reserves
|
—
|
|
—
|
|
0.3
|
Inventory
reserves
|
1.1
|
|
—
|
|
13.5
|
Long-lived asset
impairments
|
35.5
|
|
—
|
|
—
|
Prepaid credit
facility costs
|
0.2
|
|
—
|
|
—
|
Goodwill
impairment
|
—
|
|
—
|
|
34.4
|
Financial revision
costs
|
—
|
|
1.3
|
|
0.2
|
Adjusted
EBITDA
|
$
|
(7.8)
|
|
$
|
9.6
|
|
$
|
(2.0)
|
|
|
(1)
|
Our management
reports our financial statements in accordance with U.S. GAAP but
evaluates our performance based on non-GAAP measures, of which a
primary performance measure is Adjusted EBITDA. Adjusted EBITDA
consists of earnings (net income or loss) available to common
stockholders before interest expense, income tax expense, foreign
exchange gains or losses, noted income or charges from certain
accounts, non-cash stock compensation, non-cash impairments,
depreciation and amortization, gains or losses from merger and
acquisition transactions and other non-cash items. This measure may
not be comparable to similarly titled measures employed by other
companies and is not a measure of performance calculated in
accordance with GAAP. Adjusted EBITDA should not be considered in
isolation or as substitutes for operating income, net income or
loss, cash flows provided by operating, investing and financing
activities, or other income or cash flow statement data prepared in
accordance with GAAP.
|
We believe Adjusted EBITDA is useful to an investor in
evaluating our operating performance because:
- it is widely used by investors in our industry to measure a
company's operating performance without regard to items such as net
interest expense, depreciation and amortization, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, financing methods, capital
structure and the method by which assets were acquired;
- it helps investors more meaningfully evaluate and compare the
results of our operations from period to period by removing the
impact of our capital structure (primarily interest), merger and
acquisition transactions (primarily gains/losses on sale of a
business), and asset base (primarily depreciation and amortization)
and actions that do not affect liquidity (stock compensation
expense and non-cash impairments) from our operating results;
and
- it helps investors identify items that are within our
operational control. Depreciation and amortization charges, while a
component of operating income, are fixed at the time of the asset
purchase in accordance with the depreciable lives of the related
asset and as such are not a directly controllable period operating
charge.
Our management uses Adjusted EBITDA:
- as a measure of operating performance because it assists us in
comparing our performance on a consistent basis as it removes the
impact of our capital structure and asset base from our operating
results;
- as one method we use to evaluate potential acquisitions;
- in presentations to our Board of Directors to enable them to
have the same consistent measurement basis of operating performance
used by management;
- to assess compliance with financial ratios and covenants
included in our credit agreements; and
- in communications with investors, analysts, lenders, and others
concerning our financial performance.
TESCO
CORPORATION
|
Reconciliation of
GAAP Net Income (Loss) to Adjusted Net Income (Loss)
(2)
|
(in millions.
except earnings per share data)
|
|
|
Three Months
Ended March 31,
|
|
Three Months
Ended
December 31,
|
|
2016
|
|
2015
|
|
2015
|
Net loss under U.S.
GAAP
|
$
|
(56.8)
|
|
$
|
(8.3)
|
|
$
|
(78.1)
|
Severance &
executive retirement charges
|
3.0
|
|
1.8
|
|
3.1
|
Bad debt on certain
accounts
|
0.3
|
|
—
|
|
3.1
|
Certain foreign
exchange losses
|
1.1
|
|
2.4
|
|
8.3
|
Asset sale
reserves
|
(2.3)
|
|
—
|
|
—
|
Venezuela
charges
|
—
|
|
—
|
|
0.4
|
Warranty & legal
reserves
|
—
|
|
—
|
|
0.3
|
Inventory
reserves
|
1.1
|
|
—
|
|
13.1
|
Long-lived asset
impairments
|
35.5
|
|
—
|
|
—
|
Prepaid credit
facility costs
|
0.2
|
|
—
|
|
—
|
Goodwill
impairment
|
—
|
|
—
|
|
30.1
|
Financial revision
costs
|
—
|
|
0.8
|
|
0.2
|
Certain tax-related
charges
|
—
|
|
—
|
|
6.1
|
Adjusted net
loss
|
$
|
(17.9)
|
|
$
|
(3.3)
|
|
$
|
(13.4)
|
|
|
|
|
|
|
Diluted loss per
share under U.S. GAAP
|
$
|
(1.45)
|
|
$
|
(0.21)
|
|
$
|
(2.00)
|
Severance &
executive retirement charges
|
0.07
|
|
0.05
|
|
0.08
|
Bad debt on certain
accounts
|
0.01
|
|
—
|
|
0.08
|
Certain foreign
exchange losses
|
0.03
|
|
0.06
|
|
0.21
|
Asset sale
reserves
|
(0.06)
|
|
—
|
|
—
|
Venezuela
charges
|
—
|
|
—
|
|
0.01
|
Warranty & legal
reserves
|
—
|
|
—
|
|
0.01
|
Inventory
reserves
|
0.03
|
|
—
|
|
0.34
|
Long-lived asset
impairments
|
0.90
|
|
—
|
|
—
|
Prepaid credit
facility costs
|
0.01
|
|
—
|
|
—
|
Goodwill
impairment
|
—
|
|
—
|
|
0.77
|
Financial revision
costs
|
—
|
|
0.02
|
|
0.01
|
Certain tax-related
charges
|
—
|
|
—
|
|
0.16
|
Adjusted diluted loss
per share
|
$
|
(0.46)
|
|
$
|
(0.08)
|
|
$
|
(0.33)
|
|
|
(2)
|
Adjusted net income
is a non-GAAP measure comprised of net income attributable to Tesco
excluding the impact of certain identified items. The Company
believes that adjusted net income is useful to investors because it
is a consistent measure of the underlying results of the Company's
business. Furthermore, management uses adjusted net income as a
measure of the performance of the Company's operations.
|
TESCO
CORPORATION
|
Reconciliation of
GAAP Operating Income (Loss) to Adjusted Operating Income
(Loss)(3)
|
(in
millions)
|
|
|
Three Months Ended
March 31, 2016
|
|
Products
|
|
Tubular
Services
|
|
Research &
Engineering
|
|
Corporate
& Other
|
|
Total
|
Operating loss under
U.S. GAAP
|
$
|
(39.2)
|
|
(6.0)
|
|
(1.6)
|
|
$
|
(8.0)
|
|
$
|
(54.8)
|
Severance &
executive retirement charges
|
0.6
|
|
2.3
|
|
(0.1)
|
|
0.2
|
|
3.0
|
Bad debt on certain
accounts
|
0.3
|
|
—
|
|
—
|
|
—
|
|
0.3
|
Asset sale
reserves
|
(0.2)
|
|
(2.1)
|
|
—
|
|
—
|
|
(2.3)
|
Inventory
reserves
|
0.9
|
|
0.2
|
|
—
|
|
—
|
|
1.1
|
Long-lived asset
impairments
|
33.6
|
|
—
|
|
—
|
|
1.9
|
|
35.5
|
Adjusted operating
loss
|
$
|
(4.0)
|
|
$
|
(5.6)
|
|
$
|
(1.7)
|
|
$
|
(5.9)
|
|
$
|
(17.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2015
|
|
Products
|
|
Tubular
Services
|
|
Research &
Engineering
|
|
Corporate
& Other
|
|
Total
|
Operating loss under
U.S. GAAP
|
$
|
(16.7)
|
|
$
|
(41.8)
|
|
$
|
(2.2)
|
|
$
|
(6.6)
|
|
$
|
(67.3)
|
Severance &
executive retirement charges
|
1.5
|
|
1.4
|
|
0.1
|
|
0.6
|
|
3.6
|
Bad debt on certain
accounts
|
2.0
|
|
1.2
|
|
—
|
|
—
|
|
3.2
|
Venezuela
charges
|
0.4
|
|
0.1
|
|
—
|
|
—
|
|
0.5
|
Warranty & legal
reserves
|
0.3
|
|
—
|
|
—
|
|
—
|
|
0.3
|
Inventory
reserves
|
11.2
|
|
2.3
|
|
—
|
|
—
|
|
13.5
|
Goodwill
impairment
|
1.7
|
|
32.7
|
|
—
|
|
—
|
|
34.4
|
Financial revision
costs
|
—
|
|
—
|
|
—
|
|
0.2
|
|
0.2
|
Adjusted operating
income (loss)
|
$
|
0.4
|
|
$
|
(4.1)
|
|
$
|
(2.1)
|
|
$
|
(5.8)
|
|
$
|
(11.6)
|
|
|
|
|
|
Three Months Ended
March 31, 2015
|
|
Products
|
|
Tubular
Services
|
|
Research &
Engineering
|
|
Corporate
& Other
|
|
Total
|
Operating income
(loss) under U.S. GAAP
|
$
|
4.6
|
|
$
|
2.0
|
|
$
|
(2.9)
|
|
$
|
(9.3)
|
|
$
|
(5.6)
|
Severance &
executive retirement charges
|
1.4
|
|
0.9
|
|
—
|
|
0.3
|
|
2.6
|
Financial revision
costs
|
—
|
|
—
|
|
—
|
|
1.3
|
|
1.3
|
Adjusted operating
income (loss)
|
$
|
6.0
|
|
$
|
2.9
|
|
$
|
(2.9)
|
|
$
|
(7.7)
|
|
$
|
(1.7)
|
|
|
(3)
|
Adjusted operating
income (loss) is a non-GAAP measure comprised of operating income
(loss) attributable to Tesco excluding the impact of certain
identified items. The Company believes that adjusted operating
income (loss) is useful to investors because it is a consistent
measure of the underlying results of the Company's business.
Furthermore, management uses adjusted operating income (loss) as a
measure of the performance of the Company's operations.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/tesco-corporation-reports-first-quarter-2016-results-300265549.html
SOURCE Tesco Corporation