- Revenues declined to $52.2
million as a result of challenging market conditions
- Adjusted EBITDA was $(2.0)
million, or 3.8% of revenue
- The quarter ended with cash of $51.5
million and no debt
- Reported diluted EPS was a loss of $2.00 and adjusted EPS was a loss of $0.33
- Restructuring programs to date expected to yield $50 million of annualized savings
- Dividend suspension will improve 2016 cash flow by
$8 million
HOUSTON, March 1, 2016
/PRNewswire/ -- Tesco Corporation ("Tesco" or the "Company")
(NASDAQ: TESO) today reported fourth quarter and full-year 2015
financial and operating results as well as the Board of Director's
decision to suspend the quarterly dividend.
Fourth Quarter Operating Results
Fernando Assing, Tesco's Chief
Executive Officer, commented, "We continue to position our business
under the assumption that the market will remain lower for longer.
Consistent with our commitment of sustainability through the
current market cycle, we implemented additional global
restructuring actions in the fourth quarter that are expected to
produce annualized savings of approximately $10 million, bringing our expected total
annualized savings from restructuring to $50
million. These actions are designed to lower our cost
structure and better match current market activity.
"Our near-term objective is to become cash flow neutral at the
bottom of this downturn and to use our safety record, our service
and product quality and our technology to gain additional market
acceptance and market share. We continue to adapt our business
models to create a more sustainable and competitive company."
In line with this cash preservation objective, the Board of
Directors has decided to suspend Tesco's quarterly dividend as part
of a broader plan of reducing costs, working capital, and capital
expenditures. By suspending what has been a $0.05 per share quarterly dividend, Tesco will
preserve approximately $8 million
cash annually.
Tesco reported revenue of $52.2
million for the fourth quarter ended December 31, 2015,
down from $61.4 million, or 15%, in
the third quarter of 2015 and down from $134.5 million, or 61%, in the fourth quarter of
2014. The sequential decline in revenue was primarily from lower
activity and revenues in North
America and Latin America
for our rental and AMSS offerings.
Tesco reported a net loss of $78.1
million, or $(2.00) per
diluted share, for the fourth quarter ended December 31, 2015.
Our adjusted net loss for the quarter was $13.4 million, or $(0.33) per diluted share, excluding special
items, consisting of a several large non-cash charges related to
the full impairment of goodwill, additional inventory reserves,
write-off of deferred tax assets and increased bad debt reserves,
coupled with additional restructuring costs, significant foreign
exchange losses due to a strong U.S. dollar and exit costs related
to the sale of our Venezuelan operations. This compares to a
reported net loss of $19.9 million,
or $(0.51) per diluted share, in the
third quarter of 2015, and a net loss of $2.1 million, or $(0.05) per diluted share, for the fourth quarter
of 2014. Adjusted net loss in the third quarter of 2015 was
$12.5 million, or $(0.32) per diluted share, and adjusted net
income in the fourth quarter of 2014 was $4.8 million, or $0.12 per diluted share.
Adjusted EBITDA was $(2.0) million
for the fourth quarter of 2015 compared to adjusted EBITDA of
$(1.0) million in the third quarter
of 2015. Sequential adjusted EBITDA decrementals were approximately
11% on nearly 15% revenue decline, highlighting the positive impact
of cost reductions and restructuring. Adjusted operating loss
during the fourth quarter was $11.6
million which excludes the impact of $55.7 million of non-cash charges related to
goodwill, inventory and bad debt plus additional restructuring
costs, Venezuela exit costs and
significant foreign exchange losses.
Cash and cash equivalents as of December 31, 2015 declined
sequentially by approximately $5.3 million
to $51.5 million, with free cash flow near break-even before
approximately $2 million of severance
payments. Excluding the additional reserve, inventory declined by
over $6 million in the fourth
quarter, a downward trend we expect to continue. Despite the
challenging market environment, cash from operations was nearly
breakeven excluding the impact of restructuring payments and the
Argentina currency devaluation. In
addition, cash was consumed for capital expenditures of
$3.0 million offset by proceeds from
the sale of used equipment of $5.9
million, $2.0 million in
dividend payments and $2.2 million in
research and engineering investments.
Tesco ended the year with $51.5
million of cash and no borrowings on its credit facility,
other than supporting $1.3 million of
letters of credit. Excluding $10
million of restructuring payments in 2015, the Company's
cash flow from operating activities would have been approximately
$3.5 million. The company believes
its existing cash balances provide adequate liquidity in this
market. Nonetheless, as a result of a reduction of trailing twelve
month earnings and other charges, the Company was not in compliance
with certain financial covenants on its undrawn facility, for which
we received a two month waiver and agreed to reduce the revolver to
$60 million. The Company intends to
replace its existing credit facility to provide incremental
liquidity should it be required in the future in excess of its cash
balances.
Top Drives Segment
- Revenue from the Top Drive segment for Q4 2015 was $25.5 million, a $3.3
million, or 11%, decrease from Q3 2015 and a $54.6 million, or 68%, decrease from Q4 2014.
- Top Drive sales for Q4 2015 included 17 units (6 new and 11
used), compared to 5 units (5 new and 0 used) sold in Q3 2015 and
26 units (26 new and 0 used) sold in Q4 2014. Of the 11 used unit
sales during the fourth quarter, 7 were related to the sale of our
Venezuelan assets.
- The rental top drive fleet totaled 124 units during the fourth
quarter with a utilization of 19%, down from 134 at the end of the
third quarter.
- Operating loss before adjustments in the Top Drive segment for
Q4 2015 was $16.7 million, a
$12.8 million, or 328%, decrease from
Q3 2015 and a $26.5 million, or 270%,
decrease from Q4 2014. Our Top Drive operating margins before
adjustments were (65)% in Q4 2015, a decrease from (14)% and 12% in
Q3 2015 and Q4 2014, respectively. Fourth quarter operating income
and operating margin after adjustments were $0.4 million and 2%, respectively, with higher
operating income offset by decreased revenues. On an adjusted
basis, this sequential improvement in profitability was primarily
related to better flow through from restructuring activities at
Manufacturing and a favorable retroactive rate adjustment in Latin
America.
- At December 31, 2015, Top Drive backlog was 8 units, with
a total potential value of $7.2
million, compared to 20 units at September 30, 2015,
with a potential value of $20.0
million. This compares to a backlog of 33 units at
December 31, 2014, with a potential value of $35.5 million. During the fourth quarter,
Tesco negotiated with a customer to cancel orders for 6 units in
exchange for a multi-year guaranteed volume after-market contract.
In addition, four units were cancelled due to customer funding
issues. Today, our backlog stands at 9 units with a potential value
of $8.1 million, four of which ship
after 2016, with several other booking opportunities in
process.
Tubular Services Segment
- Revenue from the Tubular Services segment for Q4 2015 was
$26.7 million, a $5.9 million, or 18%, decrease from Q3 2015 and a
$27.7 million, or 51%, decrease from
Q4 2014.
- Operating loss before adjustments in the Tubular Services
segment for Q4 2015 was $41.8
million, a $38.3 million
decrease from Q3 2015 and a $45.9
million decrease from Q4 2014. Our Tubular Services
operating margin was (157)% for Q4 2015, a decrease from (11)% and
8% in Q3 2015 and Q4 2014, respectively. Fourth quarter
operating loss and operating margin after adjustments were
$4.1 million and (15)%, respectively.
The sequential decremental margin was 29% and stems from lower land
revenues in Latin America and less
CDSTM sales in the Middle
East.
Other Segments and Expenses
- Research and engineering costs for Q4 2015 were $2.2 million, compared to $2.1 million in Q3 2015 and $2.8 million in Q4 2014. We continue to invest in
the development, commercialization, and enhancement of our
proprietary technologies relating to our Top Drive and Tubular
Services segments.
- Corporate and other costs for Q4 2015 were $6.6 million, a $0.4
million, or 6%, increase from Q3 2015 and a $2.9 million, or 31%, decrease from Q4
2014. Excluding restructuring costs and other special items,
adjusted costs would have been $5.8
million.
- Net foreign exchange losses for Q4 2015 were $8.6 million, compared to $2.0 million in Q3 2015 and $1.9 million in Q4 2014. The largest
foreign exchange losses were from Latin
America.
- Our effective tax rate for Q4 2015 was (2)% compared to 11% in
Q3 2015 and (552)% in Q4 2014.
- Total capital expenditures were $3.0
million in Q4 2015, primarily for tubular services
equipment, a $0.9 million, or 43%,
increase from Q3 2015 and a $2.3
million, or 43%, decrease from Q4 2014.
Outlook
Declines in commodity prices since the first of the year have
added additional uncertainty to levels of drilling activity in
2016. International and North
America rig count are expected to continue to decline during
2016, with continued pressure on pricing. We expect activity and
revenue levels to be down in 2016 over 2015 and first quarter 2016
to be down sequentially over the fourth quarter of 2015 in all
product lines, especially tubular services. The Company expects to
incur an additional operating loss before restructuring charges in
the first quarter of 2016.
Tesco will remain focused on generating positive EBITDA and free
cash flow through spending controls and working capital reductions.
However, due to restructuring payments, cash is expected to decline
in the first quarter.
"Despite the difficult market, we continue to implement the
strategy we outlined last year," 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 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 North
America land due to the cost reductions it can bring. We
have successfully completed a five-well pilot project for casing
running jobs that have clearly demonstrated the full potential of
our technologies. We plan to accelerate the deployment of this
optimized offering.
"Our investments in technology initiatives continue to progress.
We performed 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
improved profitability, we will continue to implement our strategy
and fund technology investments as market conditions dictate.
We are adapting our business models and cost structure to address
the current market and cyclic nature of the sector to position
Tesco to take advantage of the eventual market recovery. We are not
just cutting costs, but are transforming Tesco to be a leaner, more
streamlined company that will provide greater operating leverage in
the recovery," he concluded.
Conference Call
The Company will conduct a conference call to discuss its
results for the fourth quarter 2015 on March
1 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 March 15. 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
13629421#.
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 "Events Calendar" 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 more 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 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, 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
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
|
Revenue
|
$
|
52.2
|
|
|
$
|
134.5
|
|
|
$
|
279.7
|
|
|
$
|
543.0
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of sales and
services
|
70.9
|
|
|
114.8
|
|
|
296.6
|
|
|
433.6
|
|
Selling, general and
administrative
|
12.0
|
|
|
15.3
|
|
|
41.9
|
|
|
53.3
|
|
Goodwill
impairment
|
34.4
|
|
|
—
|
|
|
34.4
|
|
|
—
|
|
Research and
engineering
|
2.2
|
|
|
2.8
|
|
|
9.2
|
|
|
9.6
|
|
|
119.5
|
|
|
132.9
|
|
|
382.1
|
|
|
496.5
|
|
Operating income
(loss)
|
(67.3)
|
|
|
1.6
|
|
|
(102.4)
|
|
|
46.5
|
|
Interest expense,
net
|
0.5
|
|
|
0.2
|
|
|
1.3
|
|
|
1.0
|
|
Other expense
(income), net
|
8.5
|
|
|
1.7
|
|
|
14.8
|
|
|
7.1
|
|
Income (loss) before
income taxes
|
(76.3)
|
|
|
(0.3)
|
|
|
(118.5)
|
|
|
38.4
|
|
Income
taxes
|
1.8
|
|
|
1.8
|
|
|
15.3
|
|
|
17.0
|
|
Net income
(loss)
|
$
|
(78.1)
|
|
|
$
|
(2.1)
|
|
|
$
|
(133.8)
|
|
|
$
|
21.4
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(2.00)
|
|
|
$
|
(0.05)
|
|
|
$
|
(3.43)
|
|
|
$
|
0.54
|
|
Diluted
|
$
|
(2.00)
|
|
|
$
|
(0.05)
|
|
|
$
|
(3.43)
|
|
|
$
|
0.53
|
|
Dividends per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
Weighted average
number of shares:
|
|
|
|
|
|
|
|
Basic
|
39.1
|
|
|
39.7
|
|
|
39.0
|
|
|
39.9
|
|
Diluted
|
39.1
|
|
|
39.7
|
|
|
39.0
|
|
|
40.5
|
|
TESCO
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
(in
millions)
|
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
51.5
|
|
$
|
72.5
|
Accounts receivable,
net
|
64.3
|
|
128.7
|
Inventories,
net
|
95.5
|
|
114.7
|
Other current
assets
|
25.2
|
|
44.8
|
Total current
assets
|
236.5
|
|
360.7
|
Property, plant and
equipment, net
|
177.7
|
|
202.5
|
Goodwill
|
—
|
|
34.4
|
Other
assets
|
7.5
|
|
21.7
|
Total
assets
|
$
|
421.7
|
|
$
|
619.3
|
Liabilities and Shareholders'
Equity
|
|
|
|
Current
liabilities
|
|
|
|
Current portion of
long term debt
|
$
|
—
|
|
$
|
—
|
Accounts
payable
|
14.3
|
|
36.1
|
Accrued and other
current liabilities
|
27.2
|
|
46.7
|
Income taxes
payable
|
1.4
|
|
8.9
|
Total current
liabilities
|
42.9
|
|
91.7
|
Other
liabilities
|
2.2
|
|
2.2
|
Long-term
debt
|
—
|
|
—
|
Deferred income
taxes
|
1.6
|
|
12.3
|
Shareholders'
equity
|
375.0
|
|
513.1
|
Total
liabilities and shareholders' equity
|
$
|
421.7
|
|
$
|
619.3
|
TESCO
CORPORATION
|
Consolidated
Statement of Cash Flows
|
(in
millions)
|
|
|
For the years
ended December 31,
|
|
2015
|
|
2014
|
Operating
Activities
|
|
|
|
Net income
(loss)
|
$
|
(133.8)
|
|
$
|
21.4
|
Adjustments to
reconcile net income (loss) to cash provided by operating
activities
|
|
|
|
Depreciation and
amortization
|
38.1
|
|
42.0
|
Stock compensation
expense
|
3.5
|
|
4.7
|
Bad debt
expense
|
3.1
|
|
4.8
|
Deferred income
taxes
|
10.2
|
|
(3.5)
|
Amortization of
financial items
|
0.3
|
|
0.3
|
Gain on sale of
operating assets
|
(1.8)
|
|
(1.0)
|
Goodwill
impairment
|
34.4
|
|
—
|
Changes in the fair
value of contingent earn-out obligations
|
(0.9)
|
|
(0.4)
|
Venezuela
charges
|
—
|
|
3.3
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable
trade, net
|
61.5
|
|
6.1
|
Inventories
|
19.4
|
|
(17.2)
|
Prepaid and other
current assets
|
7.6
|
|
2.6
|
Accounts payable and
accrued liabilities
|
(41.3)
|
|
(26.0)
|
Income taxes payable
(recoverable)
|
(7.1)
|
|
2.0
|
Other noncurrent
assets and liabilities, net
|
0.2
|
|
1.5
|
Net cash provided by
(used in) operating activities
|
(6.6)
|
|
40.6
|
Investing
Activities
|
|
|
|
Additions to
property, plant and equipment
|
(15.3)
|
|
(38.3)
|
Cash paid for
acquisitions, net of cash acquired
|
—
|
|
(5.0)
|
Proceeds on sale of
operating assets
|
6.7
|
|
4.3
|
Other, net
|
1.7
|
|
—
|
Net cash used in
investing activities
|
(6.9)
|
|
(39.0)
|
Financing
Activities
|
|
|
|
Repayments of
debt
|
—
|
|
(0.4)
|
Proceeds from
exercise of stock options
|
0.3
|
|
6.4
|
Dividend
distribution
|
(7.8)
|
|
(6.0)
|
Share repurchase
program
|
—
|
|
(27.3)
|
Excess tax benefit
associated with equity based compensation
|
—
|
|
0.9
|
Net cash used in
financing activities
|
(7.5)
|
|
(26.4)
|
Change in cash and
cash equivalents
|
(21.0)
|
|
(24.8)
|
Net cash and cash
equivalents, beginning of period
|
72.5
|
|
97.3
|
Net cash and cash
equivalents, end of period
|
$
|
51.5
|
|
$
|
72.5
|
Supplemental cash
flow information
|
|
|
|
Cash payments for
interest
|
$
|
0.5
|
|
$
|
0.5
|
Cash payments for
income taxes, net of refunds
|
16.1
|
|
19.8
|
Property, plant and
equipment accrued in accounts payable
|
1.0
|
|
3.3
|
TESCO
CORPORATION
|
Summary of
Results
|
(in millions,
except per share information)
|
|
|
Three Months Ended
December 31,
|
|
Three Months
Ended
September 30,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Segment
revenue
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Top Drives
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
8.1
|
|
$
|
35.2
|
|
$
|
5.4
|
|
$
|
45.0
|
|
$
|
142.6
|
Rental
services
|
9.9
|
|
25.5
|
|
14.0
|
|
61.7
|
|
103.7
|
After-market sales and
service
|
7.5
|
|
19.4
|
|
9.4
|
|
39.0
|
|
72.5
|
|
25.5
|
|
80.1
|
|
28.8
|
|
145.7
|
|
318.8
|
Tubular
Services
|
|
|
|
|
|
|
|
|
|
Land
|
19.0
|
|
40.7
|
|
21.0
|
|
94.0
|
|
156.9
|
Offshore
|
6.6
|
|
7.7
|
|
7.4
|
|
32.6
|
|
39.9
|
CDS, Parts &
Accessories
|
1.1
|
|
6.0
|
|
4.2
|
|
7.4
|
|
27.3
|
|
26.7
|
|
54.4
|
|
32.6
|
|
134.0
|
|
224.1
|
|
|
|
|
|
|
|
|
|
|
Casing
Drilling
|
—
|
|
—
|
|
—
|
|
—
|
|
0.1
|
Consolidated
revenue
|
$
|
52.2
|
|
$
|
134.5
|
|
$
|
61.4
|
|
$
|
279.7
|
|
$
|
543.0
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
|
Top Drives
|
$
|
(16.7)
|
|
$
|
9.8
|
|
$
|
(3.9)
|
|
$
|
(18.9)
|
|
$
|
58.6
|
Tubular
Services
|
(41.8)
|
|
4.1
|
|
(3.5)
|
|
(46.1)
|
|
35.5
|
Casing
Drilling
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.6)
|
Research and
Engineering
|
(2.2)
|
|
(2.8)
|
|
(2.1)
|
|
(9.2)
|
|
(9.6)
|
Corporate and
other
|
(6.6)
|
|
(9.5)
|
|
(6.2)
|
|
(28.2)
|
|
(37.4)
|
Consolidated
operating income (loss)
|
$
|
(67.3)
|
|
$
|
1.6
|
|
$
|
(15.7)
|
|
$
|
(102.4)
|
|
$
|
46.5
|
Net income
(loss)
|
$
|
(78.1)
|
|
$
|
(2.1)
|
|
$
|
(19.9)
|
|
$
|
(133.8)
|
|
$
|
21.4
|
Earnings (loss) per
share (diluted)
|
$
|
(2.00)
|
|
$
|
(0.05)
|
|
$
|
(0.51)
|
|
$
|
(3.43)
|
|
$
|
0.53
|
Adjusted
EBITDA(a) (as defined)
|
$
|
(2.0)
|
|
$
|
22.6
|
|
$
|
(1.0)
|
|
$
|
8.3
|
|
$
|
104.1
|
________________________
(a)
|
See explanation of
Non-GAAP measure below
|
TESCO
CORPORATION
|
Non-GAAP Measure -
Adjusted EBITDA (1)
|
(in
millions)
|
|
|
Three Months Ended
December 31,
|
|
Three Months
Ended
September 30,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Net income (loss)
under U.S. GAAP
|
$
|
(78.1)
|
|
$
|
(2.1)
|
|
$
|
(19.9)
|
|
$
|
(133.8)
|
|
$
|
21.4
|
Income tax
expense
|
1.8
|
|
1.8
|
|
1.9
|
|
15.3
|
|
17.0
|
Depreciation and
amortization
|
9.0
|
|
11.5
|
|
9.4
|
|
38.1
|
|
42.0
|
Net interest
expense
|
0.5
|
|
0.2
|
|
0.2
|
|
1.3
|
|
1.0
|
Stock compensation
expense—non-cash
|
0.5
|
|
0.8
|
|
0.9
|
|
3.5
|
|
4.7
|
Severance &
executive retirement charges
|
3.6
|
|
2.8
|
|
1.7
|
|
10.9
|
|
2.8
|
Bad debt from certain
accounts
|
3.2
|
|
—
|
|
—
|
|
3.6
|
|
2.4
|
Foreign exchange
loss
|
8.6
|
|
1.9
|
|
2.0
|
|
15.1
|
|
7.1
|
Venezuela
charges
|
0.5
|
|
3.1
|
|
—
|
|
0.5
|
|
3.1
|
Warranty & legal
reserves
|
0.3
|
|
2.6
|
|
—
|
|
1.6
|
|
2.6
|
Inventory
reserves
|
13.5
|
|
—
|
|
2.8
|
|
16.3
|
|
—
|
Goodwill
impairment
|
34.4
|
|
—
|
|
—
|
|
34.4
|
|
—
|
Financial revision
costs
|
0.2
|
|
—
|
|
—
|
|
1.5
|
|
—
|
Adjusted
EBITDA
|
$
|
(2.0)
|
|
$
|
22.6
|
|
$
|
(1.0)
|
|
$
|
8.3
|
|
$
|
104.1
|
|
|
(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
December 31,
|
|
Three Months
Ended
September 30,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Net income (loss)
under U.S. GAAP
|
$
|
(78.1)
|
|
$
|
(2.1)
|
|
$
|
(19.9)
|
|
$
|
(133.8)
|
|
$
|
21.4
|
Inventory
reserves
|
13.1
|
|
—
|
|
2.8
|
|
15.9
|
|
—
|
Severance &
executive retirement charges
|
3.1
|
|
2.1
|
|
1.7
|
|
8.8
|
|
2.1
|
Warranty & legal
reserves
|
0.3
|
|
1.9
|
|
—
|
|
1.3
|
|
1.9
|
Certain foreign
exchange losses
|
8.3
|
|
0.6
|
|
1.8
|
|
13.2
|
|
4.7
|
Bad debt on certain
accounts
|
3.1
|
|
—
|
|
—
|
|
3.4
|
|
1.6
|
Certain tax-related
charges
|
6.1
|
|
—
|
|
1.1
|
|
22.5
|
|
0.9
|
Venezuela
charges
|
0.4
|
|
2.3
|
|
—
|
|
0.4
|
|
2.3
|
Goodwill
impairment
|
30.1
|
|
—
|
|
—
|
|
30.1
|
|
—
|
Financial revision
costs
|
0.2
|
|
—
|
|
—
|
|
1.0
|
|
—
|
Adjusted net income
(loss)
|
$
|
(13.4)
|
|
$
|
4.8
|
|
$
|
(12.5)
|
|
$
|
(37.2)
|
|
$
|
34.9
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
under U.S. GAAP
|
$
|
(2.00)
|
|
$
|
(0.05)
|
|
$
|
(0.51)
|
|
$
|
(3.43)
|
|
$
|
0.53
|
Inventory
reserves
|
0.34
|
|
—
|
|
0.07
|
|
0.41
|
|
—
|
Severance &
executive retirement charges
|
0.08
|
|
0.05
|
|
0.04
|
|
0.23
|
|
0.05
|
Warranty & legal
reserves
|
0.01
|
|
0.05
|
|
—
|
|
0.03
|
|
0.05
|
Certain foreign
exchange losses
|
0.21
|
|
0.01
|
|
0.05
|
|
0.34
|
|
0.12
|
Bad debt on certain
accounts
|
0.08
|
|
—
|
|
—
|
|
0.09
|
|
0.04
|
Certain tax-related
charges
|
0.16
|
|
—
|
|
0.03
|
|
0.58
|
|
0.02
|
Venezuela
charges
|
0.01
|
|
0.06
|
|
—
|
|
0.01
|
|
0.06
|
Goodwill
impairment
|
0.77
|
|
—
|
|
—
|
|
0.77
|
|
—
|
Financial revision
costs
|
0.01
|
|
—
|
|
—
|
|
0.03
|
|
—
|
Adjusted earnings
(loss) per share
|
$
|
(0.33)
|
|
$
|
0.12
|
|
$
|
(0.32)
|
|
$
|
(0.94)
|
|
$
|
0.87
|
|
|
(2)
|
Adjusted net income
(loss) is a non-GAAP measure comprised of net income (loss)
attributable to Tesco excluding the impact of certain identified
items. The Company believes that adjusted net 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 net income (loss) 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
December 31, 2015
|
|
Top
Drive
|
|
Tubular
Services
|
|
Casing
Drilling
|
|
Research &
Engineering
|
|
Corporate &
Other
|
|
Total
|
Operating loss under
U.S. GAAP
|
$
|
(16.7)
|
|
$
|
(41.8)
|
|
$
|
—
|
|
$
|
(2.2)
|
|
$
|
(6.6)
|
|
$
|
(67.3)
|
Inventory
reserves
|
11.2
|
|
2.3
|
|
—
|
|
—
|
|
—
|
|
13.5
|
Severance &
executive retirement charges
|
1.5
|
|
1.4
|
|
—
|
|
0.1
|
|
0.6
|
|
3.6
|
Warranty & legal
reserves
|
0.3
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.3
|
Bad debt on certain
accounts
|
2.0
|
|
1.2
|
|
—
|
|
—
|
|
—
|
|
3.2
|
Venezuela
charges
|
0.4
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
0.5
|
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
September 30, 2015
|
|
Top
Drive
|
|
Tubular
Services
|
|
Casing
Drilling
|
|
Research &
Engineering
|
|
Corporate &
Other
|
|
Total
|
Operating loss under
U.S. GAAP
|
$
|
(3.9)
|
|
$
|
(3.5)
|
|
$
|
—
|
|
$
|
(2.1)
|
|
$
|
(6.2)
|
|
$
|
(15.7)
|
Inventory
reserves
|
2.2
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
2.8
|
Severance &
executive retirement charges
|
0.8
|
|
0.5
|
|
—
|
|
—
|
|
0.4
|
|
1.7
|
Warranty & legal
reserves
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Bad debt on certain
accounts
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Venezuela
charges
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Goodwill
impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Financial revision
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted operating
loss
|
$
|
(0.9)
|
|
$
|
(2.4)
|
|
$
|
—
|
|
$
|
(2.1)
|
|
$
|
(5.8)
|
|
$
|
(11.2)
|
|
|
|
|
|
Year Ended
December 31, 2015
|
|
Top
Drive
|
|
Tubular
Services
|
|
Casing
Drilling
|
|
Research &
Engineering
|
|
Corporate &
Other
|
|
Total
|
Operating loss under
U.S. GAAP
|
$
|
(18.9)
|
|
$
|
(46.1)
|
|
$
|
—
|
|
$
|
(9.2)
|
|
$
|
(28.2)
|
|
$
|
(102.4)
|
Inventory
reserves
|
13.4
|
|
2.9
|
|
—
|
|
—
|
|
—
|
|
16.3
|
Severance &
executive retirement charges
|
5.5
|
|
3.9
|
|
—
|
|
0.1
|
|
1.4
|
|
10.9
|
Warranty & legal
reserves
|
1.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1.6
|
Bad debt on certain
accounts
|
2.4
|
|
1.2
|
|
—
|
|
—
|
|
—
|
|
3.6
|
Venezuela
charges
|
0.4
|
|
0.1
|
|
—
|
|
—
|
|
—
|
|
0.5
|
Goodwill
impairment
|
1.7
|
|
32.7
|
|
—
|
|
—
|
|
—
|
|
34.4
|
Financial revision
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
1.5
|
|
1.5
|
Adjusted operating
income (loss)
|
$
|
6.1
|
|
$
|
(5.3)
|
|
$
|
—
|
|
$
|
(9.1)
|
|
$
|
(25.3)
|
|
$
|
(33.6)
|
|
|
|
|
|
Three Months Ended
December 31, 2014
|
|
Top
Drive
|
|
Tubular
Services
|
|
Casing
Drilling
|
|
Research &
Engineering
|
|
Corporate &
Other
|
|
Total
|
Operating income
(loss) under U.S. GAAP
|
$
|
9.8
|
|
$
|
4.1
|
|
$
|
—
|
|
$
|
(2.8)
|
|
$
|
(9.5)
|
|
$
|
1.6
|
Inventory
reserves
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Severance &
executive retirement charges
|
0.6
|
|
0.3
|
|
—
|
|
—
|
|
1.9
|
|
2.8
|
Warranty & legal
reserves
|
2.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2.6
|
Bad debt on certain
accounts
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Venezuela
charges
|
2.5
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
3.1
|
Goodwill
impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Financial revision
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted operating
income (loss)
|
$
|
15.5
|
|
$
|
5.0
|
|
$
|
—
|
|
$
|
(2.8)
|
|
$
|
(7.6)
|
|
$
|
10.1
|
|
|
|
|
|
Year Ended
December 31, 2014
|
|
Top
Drive
|
|
Tubular
Services
|
|
Casing
Drilling
|
|
Research &
Engineering
|
|
Corporate &
Other
|
|
Total
|
Operating income
(loss) under U.S. GAAP
|
$
|
58.6
|
|
$
|
35.5
|
|
$
|
(0.6)
|
|
$
|
(9.6)
|
|
$
|
(37.4)
|
|
$
|
46.5
|
Inventory
reserves
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Severance &
executive retirement charges
|
0.6
|
|
0.3
|
|
—
|
|
—
|
|
1.9
|
|
2.8
|
Warranty & legal
reserves
|
2.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2.6
|
Bad debt on certain
accounts
|
1.0
|
|
1.4
|
|
—
|
|
—
|
|
—
|
|
2.4
|
Venezuela
charges
|
2.5
|
|
0.6
|
|
—
|
|
—
|
|
—
|
|
3.1
|
Goodwill
impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Financial revision
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted operating
income (loss)
|
$
|
65.3
|
|
$
|
37.8
|
|
$
|
(0.6)
|
|
$
|
(9.6)
|
|
$
|
(35.5)
|
|
$
|
57.4
|
|
|
(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-fourth-quarter-2015-results-and-announces-suspension-of-dividend-300228265.html
SOURCE Tesco Corporation