- As a result of difficult market conditions, third quarter
revenues declined to $61 million
- Adjusted EBITDA for the third quarter was $(1.0) million and free cash flow was near
break-even after restructuring
- Restructuring programs to date have yielded $40 million of annualized savings, with
additional opportunities for further investment to simplify our
structure and improve efficiency
- TESCO was awarded meaningful offshore tubular services
contracts in the GOM and North Sea
- We remain committed to new technology, with $2.1 million of R&E investment in Q3
- Third quarter reported diluted EPS was a loss of $0.51 and adjusted EPS was a loss of $0.32
HOUSTON, Nov. 4, 2015
/PRNewswire/ -- TESCO Corporation ("TESCO" or the "Company")
(NASDAQ: TESO) today reported third quarter 2015 financial and
operating results.
Third Quarter Operating Results
Fernando Assing, TESCO's Chief
Executive Officer, commented, "We continue to be impacted by market
conditions that reduced drilling activity and pricing. We are
positioning our business under the assumption that the market will
be lower for longer. Consistent with our commitment of
sustainability through the current market, we implemented
additional global restructuring actions in the third quarter with
annualized savings of approximately $5
million, bringing our total annualized savings from
restructuring to $40 million. These
actions are designed to lower our cost structure and better match
current market activity. We continue to see opportunities to
improve our operating performance and improve cash generation.
"It is worth noting that the actions taken and those planned do
not impair our ability to invest in markets where we can gain share
or to develop technologies that can create competitive advantages
for TESCO. Our service quality has convinced key customers in
the Gulf of Mexico and the North
Sea to expand their use of TESCO tubular services. In
addition, we completed a project in North
America land which demonstrated that TESCO's automated
casing running technology can improve safety and reduce well
costs. The combination of a strong balance sheet, efficiency
improvements and performance-based growth should enable TESCO to
strengthen its position and capitalize on opportunities that will
arise when the market recovers."
TESCO reported revenue of $61.4
million for the third quarter ended September 30, 2015, down from $74.5 million, or (18)%, in the second quarter of
2015 and down from $141.9 million, or
(57)%, in the third quarter of 2014. The sequential decline
in revenue was primarily from lower new top drive sales and rental
revenue.
TESCO reported a net loss of $19.9
million, or $(0.51) per
diluted share, for the third quarter ended September 30, 2015.
Excluding special items, consisting of a valuation allowance on
Russian deferred tax assets, restructuring costs, inventory
reserves primarily for product line discontinuations and certain
foreign currency losses, TESCO reported an adjusted net loss for
the quarter of $12.5 million, or
$(0.32) per diluted share. This
compares to a reported net loss of $27.5
million, or $(0.71) per
diluted share, in the second quarter of 2015, and net income of
$7.5 million, or $0.18 per diluted share, for the third quarter of
2014. Adjusted net loss in the second quarter of 2015 was
$8.0 million, or $(0.21) per diluted share, and adjusted net
income in the third quarter of 2014 was $11.1 million, or $0.27 per diluted share.
Adjusted EBITDA was $(1.0) million
for the third quarter of 2015 and $10.3
million for the nine months ended September 30,
2015. Adjusted operating loss during the third quarter was
$11.2 million, which excludes
$4.5 million of restructuring costs
and the inventory reserve.
During the third quarter of 2015, cash and cash equivalents
declined by approximately $5.8 million to
$56.8 million, with free cash flow near break-even after
approximately $2 million of severance
payments. Excluding the additional reserve, inventory declined by
$1 million in the third quarter, a
trend we expect to continue. Despite the challenging market
environment, year-to-date, we have generated cash from operations
of almost $10 million before
restructuring expenses. While we were able to reduce accounts
receivable by $53 million, reductions
in accounts payable, prior-year tax liabilities and customer
deposits partially offset this receivables drawdown. In addition,
cash was consumed for capital expenditures of over $12 million primarily for prior-year commitments,
$6 million in dividend payments and
$6.9 million in R&E investments.
Excluding letters of credit, we had access to $53.2 million under our credit facility at the
end of the third quarter, with total liquidity of $110 million.
Top Drives Segment
- Revenue from the Top Drive segment for Q3 2015 was $28.8 million, a $12.7
million, or 30.6%, decrease from Q2 2015 and a $58.9 million, or 67.2%, decrease from Q3 2014.
- Top Drive sales for Q3 2015 included 5 units (5 new and 0
used), compared to 11 units (10 new and 1 used) sold in Q2 2015 and
33 units (32 new and 1 used) sold in Q3 2014.
- The rental top drive fleet was 134 during the third quarter
with a utilization of 25%.
- Operating loss before adjustments in the Top Drive segment for
Q3 2015 was $3.9 million, a
$1.1 million, or 39.3%, decrease from
Q2 2015 and a $22.8 million, or
120.6%, decrease from Q3 2014. Our Top Drive operating margins
before adjustments were (14)% in Q3 2015, a decrease from (7)% and
22% in Q2 2015 and Q3 2014, respectively. Third quarter operating
loss and operating margin after adjustments were $1.0 million and (3)%, respectively, with
sequential decremental adjusted margins of 13.6%. This sequential
decline in profitability is primarily related to the impact of
reduced global top drive production and sales as well as lower
rental pricing and utilization in North and South America, partially offset by the
benefits of restructuring efforts.
- At September 30, 2015, Top Drive
backlog was 20 units, with a total potential value of $20.0 million, compared to 20 units at
June 30, 2015, with a potential value
of $20.0 million. This compares to a
backlog of 47 units at September 30,
2014, with a potential value of $52.0
million. Today, our backlog stands at 20 units with a
potential value of $20.0
million.
Tubular Services Segment
- Revenue from the Tubular Services segment for Q3 2015 was
$32.6 million, a $0.4 million, or 1.2%, decrease from Q2 2015 and
a $21.6 million, or 39.9%, decrease
from Q3 2014.
- Operating loss before adjustments in the Tubular Services
segment for Q3 2015 was $3.5 million,
a $0.7 million, or 25.0%, decrease
from Q2 2015 and a $12.8 million, or
137.6%, decrease from Q3 2014. Our Tubular Services operating
margins were (11)% for Q3 2015, down from (8)% and 17% in Q2 2015
and Q3 2014, respectively. Third quarter operating losses and
operating margin after adjustments were $2.4
million and (7)%, respectively. This sequential decline in
profitability is primarily related to the unfavorable mix effect of
lower offshore revenue in Asia
offset by higher land revenue in the Middle East.
Other Segments and Expenses
- Investments in research and engineering for Q3 2015 remained at
$2.1 million, compared to Q2 2015 and
$1.9 million in Q3 2014. We continue
to invest in the development, commercialization and enhancements of
our proprietary technologies related to our Top Drive and Tubular
Services segments.
- Corporate and other costs for Q3 2015 were $6.2 million, a $0.2
million, or 3.3%, increase from Q2 2015 and a $2.8 million, or 31.1%, decrease from Q3 2014.
Adjusted costs would have been $5.8
million primarily as a result of the restructuring
efforts.
- Net foreign exchange losses for Q3 2015 were $2.0 million, compared to losses of $1.4 million in Q2 2015 and $3.1 million in Q3 2014. The largest foreign
exchange losses were from Latin
America.
- Our effective tax rate for Q3 2015 was a 11% expense compared
to a 79% expense in Q2 2015 and a 45% expense in Q3 2014. The
effective tax rate in Q2 2015 was mostly affected by a $15.3 million valuation allowance related to
deferred tax assets in Canada.
- Total capital expenditures were $2.1
million in Q3 2015, primarily for tubular services
equipment, a $0.8 million, or 28%,
decrease from Q2 2015 and an $11.6
million, or 85%, decrease from Q3 2014.
Outlook
Recent declines in commodity prices below $50 per barrel have added additional uncertainty
to levels of drilling activity in the fourth quarter of 2015 and in
2016. International rig count is still expected to continue to
decline slightly over the rest of the year. Requests for additional
pricing concessions in North
America have slowed but some additional requests for
moderate pricing concessions from international customers are
continuing. The Company expects to incur an additional operating
loss before restructuring charges in the fourth quarter of
2015.
The Company will remain focused on generating positive EBITDA
and free cash flow through spending controls and working capital
reductions.
Top Drives Segment
- During the fourth quarter of 2015 the Company expects to ship
approximately 3-5 top drives with bookings predicted to occur at a
similar pace. After-market and rental activity recovery will be
flat to down sequentially.
- Adjusted operating margins are expected to be slightly lower
than third quarter levels, as pricing pressure is expected to
outweigh the benefits from restructuring realized to date.
Tubular Services Segment
- Revenue from the Tubular Services segment is expected to
decline primarily from lower activity in international
markets.
- Operating margins are expected to decline sequentially due to
the leverage impact of lower revenue exceeding the benefits from
restructuring realized to date.
Other Segments and Expenses
- Research and engineering costs are expected to run
approximately $1.5 to $2.0 million in
the fourth quarter, and corporate and other costs are expected to
run approximately $6.0 million in the
fourth quarter.
- The effective tax rate for the remainder of 2015 will be mainly
driven by the impact of earnings and losses by tax jurisdiction as
well as non-deductible items such as certain foreign exchange gains
and losses, but we do not expect to record any tax benefits on
losses.
- Total capital expenditures for 2015 are expected to be
approximately $14 to $15
million.
"We are committed to sustainability through difficult market
conditions while preserving capacity and the capability to deliver
results over the long run through technology and service
excellence. Accordingly, despite the current challenging
market, we continue to successfully implement the strategy we
outlined last year," Assing added. "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.
"Consistent with this, we are gaining tubular services market
share in our targeted offshore markets and are encouraged by
greater receptiveness to technology adoption in North America land due to the related cost
reductions it can bring and have successfully completed two pilot
casing running jobs that have clearly demonstrated the full
potential of our technologies. We plan to accelerate the deployment
of this optimized offering.
"In the Gulf of Mexico, we were
awarded our first floater rig to perform a complete tubular service
package, including casing and completion running, under our
existing multi-rig, multi-year contract. This contract begins in
late 2015. Also, we have secured a high-end deepwater completions
running contract with a new client for two rigs, with the first one
starting in the second quarter 2016. In the North Sea, we were also
awarded a large contract to run complete tubular services packages,
including casing and completions running on six platforms that
begins in early 2016.
"In addition to increased third-party land top drive
re-certifications, we successfully completed our first third-party
offshore top drive recertification project in the third quarter and
believe we will have additional opportunities in this market. We
are seeing increased top drive sales opportunities from the Eastern
Hemisphere with the greatest opportunity coming from China.
Finally, we continue to actively test our new pipe handling
technologies.
"While our short-term priority remains cash generation and
improved profitability, we will continue to implement our strategy
and fund technology investments as market conditions dictate.
We intend to maintain a strong balance sheet to provide stability
through periods of volatility and enhance optionality when the
market begins to recover," Assing concluded.
Conference Call
The Company will conduct a conference call to discuss its
results for the third quarter 2015 on November 4, 2015 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
November 18, 2015. 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 13621438#.
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 Investor Relations
section of the site.
About TESCO
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™, Multiple Control Line Running System™ and MCLRS™ are
trademarks in the United States
and Canada.
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 changes in oil and natural gas prices and
worldwide and domestic economic conditions on drilling activity and
demand for and pricing of our products and services, other risks
inherent in the drilling services industry (e.g. operational risks,
potential delays or changes in customers' exploration or
development projects or capital expenditures, the uncertainty of
estimates and projections relating to levels of rental activities,
uncertainty of estimates and projections of costs and expenses,
risks in conducting foreign operations, the consolidation of our
customers, and intense competition in our
industry), risks, including litigation, associated with
our intellectual property and with the performance of our
technology. 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, 2014 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.
For further information please contact:
Chris Boone (713) 359-7000
TESCO Corporation
TESCO
CORPORATION
|
Condensed
Consolidated Statements of Income
|
(in millions,
except per share information)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenue
|
$
|
61.4
|
|
|
$
|
141.9
|
|
|
$
|
227.5
|
|
|
$
|
408.5
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of sales and
services
|
65.7
|
|
|
112.4
|
|
|
225.7
|
|
|
318.8
|
|
Selling, general and
administrative
|
9.3
|
|
|
10.6
|
|
|
29.9
|
|
|
38.0
|
|
Research and
engineering
|
2.1
|
|
|
1.9
|
|
|
7.0
|
|
|
6.8
|
|
|
77.1
|
|
|
124.9
|
|
|
262.6
|
|
|
363.6
|
|
Operating income
(loss)
|
(15.7)
|
|
|
17.0
|
|
|
(35.1)
|
|
|
44.9
|
|
Interest expense,
net
|
0.2
|
|
|
0.2
|
|
|
0.7
|
|
|
0.7
|
|
Other expense,
net
|
2.1
|
|
|
3.2
|
|
|
6.3
|
|
|
5.5
|
|
Income (loss) before
income taxes
|
(18.0)
|
|
|
13.6
|
|
|
(42.1)
|
|
|
38.7
|
|
Income
taxes
|
1.9
|
|
|
6.1
|
|
|
13.5
|
|
|
15.2
|
|
Net income
(loss)
|
$
|
(19.9)
|
|
|
$
|
7.5
|
|
|
$
|
(55.6)
|
|
|
$
|
23.5
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.51)
|
|
|
$
|
0.19
|
|
|
$
|
(1.43)
|
|
|
$
|
0.59
|
|
Diluted
|
$
|
(0.51)
|
|
|
$
|
0.18
|
|
|
$
|
(1.43)
|
|
|
$
|
0.58
|
|
Dividends per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
|
$
|
0.10
|
|
Weighted average
number of shares:
|
|
|
|
|
|
|
|
Basic
|
39.0
|
|
|
40.0
|
|
|
39.0
|
|
|
40.0
|
|
Diluted
|
39.0
|
|
|
40.6
|
|
|
39.0
|
|
|
40.6
|
|
TESCO
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
(in
millions)
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
56.8
|
|
|
$
|
72.5
|
|
Accounts receivable,
net
|
75.8
|
|
|
128.7
|
|
Inventories,
net
|
114.0
|
|
|
114.7
|
|
Other current
assets
|
39.0
|
|
|
44.8
|
|
Total current
assets
|
285.6
|
|
|
360.7
|
|
Property, plant and
equipment, net
|
184.0
|
|
|
202.5
|
|
Goodwill
|
34.4
|
|
|
34.4
|
|
Other
assets
|
11.8
|
|
|
21.7
|
|
Total
assets
|
$
|
515.8
|
|
|
$
|
619.3
|
|
Liabilities and Shareholders'
Equity
|
|
|
|
Current
liabilities
|
|
|
|
Current portion of
long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
Accounts
payable
|
18.6
|
|
|
36.1
|
|
Accrued and other
current liabilities
|
30.5
|
|
|
46.7
|
|
Income taxes
payable
|
0.5
|
|
|
8.9
|
|
Total current
liabilities
|
49.6
|
|
|
91.7
|
|
Other
liabilities
|
3.3
|
|
|
2.2
|
|
Long-term
debt
|
—
|
|
|
—
|
|
Deferred income
taxes
|
8.7
|
|
|
12.3
|
|
Shareholders'
equity
|
454.2
|
|
|
513.1
|
|
Total
liabilities and shareholders' equity
|
$
|
515.8
|
|
|
$
|
619.3
|
|
TESCO
CORPORATION
|
Segment
Results
|
(in millions,
except per share information)
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Segment
revenue
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Top Drives
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
5.4
|
|
|
$
|
41.6
|
|
|
$
|
13.7
|
|
|
$
|
36.9
|
|
|
$
|
107.4
|
|
Rental
services
|
14.0
|
|
|
26.7
|
|
|
17.8
|
|
|
51.7
|
|
|
78.2
|
|
After-market sales and
service
|
9.4
|
|
|
19.4
|
|
|
10.0
|
|
|
31.6
|
|
|
53.1
|
|
|
28.8
|
|
|
87.7
|
|
|
41.5
|
|
|
120.2
|
|
|
238.7
|
|
Tubular
Services
|
|
|
|
|
|
|
|
|
|
Land
|
21.0
|
|
|
39.1
|
|
|
23.5
|
|
|
$
|
75.1
|
|
|
118.6
|
|
Offshore
|
7.4
|
|
|
9.0
|
|
|
8.7
|
|
|
26.0
|
|
|
29.9
|
|
CDS, Parts, &
Accessories
|
4.2
|
|
|
$
|
6.1
|
|
|
0.8
|
|
|
6.2
|
|
|
$
|
21.3
|
|
|
32.6
|
|
|
54.2
|
|
|
33.0
|
|
|
107.3
|
|
|
169.8
|
|
|
|
|
|
|
|
|
|
|
|
Casing
Drilling
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Consolidated
revenue
|
$
|
61.4
|
|
|
$
|
141.9
|
|
|
$
|
74.5
|
|
|
$
|
227.5
|
|
|
$
|
408.5
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
|
Top Drives
|
$
|
(3.9)
|
|
|
$
|
18.9
|
|
|
$
|
(2.8)
|
|
|
$
|
(2.2)
|
|
|
$
|
48.9
|
|
Tubular
Services
|
(3.5)
|
|
|
9.3
|
|
|
(2.8)
|
|
|
(4.3)
|
|
|
31.4
|
|
Casing
Drilling
|
—
|
|
|
(0.3)
|
|
|
—
|
|
|
—
|
|
|
(0.6)
|
|
Research and
Engineering
|
(2.1)
|
|
|
(1.9)
|
|
|
(2.1)
|
|
|
(7.0)
|
|
|
(6.8)
|
|
Corporate and
other
|
(6.2)
|
|
|
(9.0)
|
|
|
(6.0)
|
|
|
(21.6)
|
|
|
(28.0)
|
|
Consolidated operating
income (loss)
|
$
|
(15.7)
|
|
|
$
|
17.0
|
|
|
$
|
(13.7)
|
|
|
$
|
(35.1)
|
|
|
$
|
44.9
|
|
Net income
(loss)
|
$
|
(19.9)
|
|
|
$
|
7.5
|
|
|
$
|
(27.5)
|
|
|
$
|
(55.6)
|
|
|
$
|
23.5
|
|
Earnings (loss) per
share (diluted)
|
$
|
(0.51)
|
|
|
$
|
0.18
|
|
|
$
|
(0.71)
|
|
|
$
|
(1.43)
|
|
|
$
|
0.58
|
|
Adjusted
EBITDA(a) (as defined)
|
$
|
(1.0)
|
|
|
$
|
28.5
|
|
|
$
|
1.8
|
|
|
$
|
10.3
|
|
|
$
|
80.8
|
|
|
________________________
|
(a) See explanation of
Non-GAAP measure below
|
TESCO
CORPORATION
|
Non-GAAP Measure -
Adjusted EBITDA (1)
|
(in
millions)
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Net income (loss)
under U.S. GAAP
|
$
|
(19.9)
|
|
|
$
|
7.5
|
|
|
$
|
(27.5)
|
|
|
$
|
(55.6)
|
|
|
$
|
23.5
|
|
Income tax
expense
|
1.9
|
|
|
6.1
|
|
|
12.2
|
|
|
13.5
|
|
|
15.2
|
|
Depreciation and
amortization
|
9.4
|
|
|
10.4
|
|
|
9.6
|
|
|
29.1
|
|
|
30.5
|
|
Net interest
expense
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
|
0.7
|
|
|
0.7
|
|
Stock compensation
expense—non-cash
|
0.9
|
|
|
1.2
|
|
|
1.1
|
|
|
3.0
|
|
|
4.0
|
|
Severance &
executive retirement charges
|
1.7
|
|
|
—
|
|
|
3.0
|
|
|
7.3
|
|
|
—
|
|
Bad debt from certain
accounts
|
—
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
|
1.6
|
|
Foreign exchange
loss
|
2.0
|
|
|
3.1
|
|
|
1.4
|
|
|
6.5
|
|
|
5.3
|
|
Warranty & legal
reserves
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
|
—
|
|
Excess &
obsolescence reserve
|
2.8
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
Financial revision
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
(1.0)
|
|
|
$
|
28.5
|
|
|
$
|
1.8
|
|
|
$
|
10.3
|
|
|
$
|
80.8
|
|
|
|
(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 to Adjusted Net Income
(2)
|
(in millions.
except earnings per share data)
|
|
|
Three Months Ended
September 30,
|
|
Three Months Ended
June 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Net income (loss)
under U.S. GAAP
|
$
|
(19.9)
|
|
|
$
|
7.5
|
|
|
$
|
(27.5)
|
|
|
$
|
(55.6)
|
|
|
$
|
23.5
|
|
Excess &
obsolescence reserve
|
2.8
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
Severance &
executive retirement charges
|
1.7
|
|
|
—
|
|
|
2.2
|
|
|
5.7
|
|
|
—
|
|
Warranty & legal
reserves
|
—
|
|
|
—
|
|
|
1.0
|
|
|
1.0
|
|
|
—
|
|
Certain foreign
exchange losses
|
1.8
|
|
|
2.7
|
|
|
0.7
|
|
|
4.9
|
|
|
4.8
|
|
Bad debt from certain
accounts
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.3
|
|
|
1.6
|
|
Certain tax-related
charges
|
1.1
|
|
|
0.9
|
|
|
15.3
|
|
|
16.4
|
|
|
0.6
|
|
Unbenefited tax
losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
Financial revision
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
Adjusted net income
(loss)
|
$
|
(12.5)
|
|
|
$
|
11.1
|
|
|
$
|
(8.0)
|
|
|
$
|
(23.7)
|
|
|
$
|
31.4
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
under U.S. GAAP
|
$
|
(0.51)
|
|
|
$
|
0.18
|
|
|
$
|
(0.71)
|
|
|
$
|
(1.43)
|
|
|
$
|
0.58
|
|
Excess &
obsolescence reserve
|
0.07
|
|
|
—
|
|
|
—
|
|
|
0.07
|
|
|
—
|
|
Severance &
executive retirement charges
|
0.04
|
|
|
—
|
|
|
0.06
|
|
|
0.15
|
|
|
—
|
|
Warranty & legal
reserves
|
—
|
|
|
—
|
|
|
0.03
|
|
|
0.03
|
|
|
—
|
|
Certain foreign
exchange losses
|
0.05
|
|
|
0.07
|
|
|
0.01
|
|
|
0.13
|
|
|
0.12
|
|
Bad debt from certain
accounts
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
0.04
|
|
Certain tax-related
charges
|
0.03
|
|
|
0.02
|
|
|
0.39
|
|
|
0.42
|
|
|
0.02
|
|
Unbenefited tax
losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
Financial revision
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Adjusted earnings
(loss) per share
|
$
|
(0.32)
|
|
|
$
|
0.27
|
|
|
$
|
(0.21)
|
|
|
$
|
(0.60)
|
|
|
$
|
0.78
|
|
|
|
(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.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/tesco-corporation-reports-third-quarter-2015-results-300171953.html
SOURCE Tesco Corporation