- Global restructuring efforts generating cumulative annualized
savings of $30 million
- 6 Top Drive bookings suggest market resilience
- Company readies deployment of new technologies as investments
in R&E totaled $2.1 million
- Second quarter reported diluted EPS loss of $0.71
- Second quarter adjusted diluted EPS loss of $0.21, after $0.50
in charges, and positive adjusted EBITDA of $1.8 million
HOUSTON, Aug. 6, 2015
/PRNewswire/ -- Tesco Corporation ("TESCO" or the "Company")
(NASDAQ: TESO) today reported second quarter 2015 results.
Second Quarter Operating Results
Fernando Assing, TESCO's Chief
Executive Officer, commented, "While we expected the second quarter
of 2015 results to be negatively impacted by continued market
weakness, the severity of the rig count decline and pricing in
North America exceeded our
expectations. In the second quarter, we took additional
restructuring actions with an after-tax cost of $2.2 million, especially in our international
markets, to lower our cost structure and better match current
market activity. We are still projecting a slow recovery in
commodity prices and related drilling activity for the remainder of
2015 and into 2016. Accordingly we are taking additional
restructuring steps in the third quarter to reduce operating losses
and improve cash generation."
TESCO reported a net loss of $27.5
million, or $(0.71) per
diluted share, for the second quarter ended June 30, 2015.
Excluding certain special items, consisting of a valuation
allowance on Canadian deferred tax assets, restructuring costs,
specific warranty reserves for new products, certain foreign
currency losses and specific bad debt expense related to an
international customer, TESCO reported an adjusted net loss for the
quarter of $8.0 million, or
$(0.21) per diluted share. This
compares to a net loss of $8.3
million, or $(0.21) per
diluted share, in the first quarter of 2015, and net income of
$12.7 million, or $0.31 per diluted share, for the second quarter
of 2014. Adjusted net loss in the first quarter of 2015 was
$3.3 million, or $(0.08) per diluted share, and in the second
quarter of 2014 was $11.9 million, or
$0.29 per diluted share.
Adjusted operating loss during the second quarter was
$9.0 million which excludes
$4.7 million of restructuring costs,
certain new product warranty costs and a bad debt expense reserve.
Second quarter 2015 revenue was $74.5
million, compared to $91.7
million for the first quarter of 2015 and to $145.1 million for the second quarter of 2014, a
decrease of 19% and 49%, respectively. Adjusted EBITDA has remained
positive at $1.8 million for the
second quarter of 2015 and $11.4
million for first half of 2015.
During the second quarter of 2015, cash and cash equivalents
declined by approximately $9.8 million to
$62.7 million, including over $10
million of outlays related to an extra dividend payment,
severance payments and prior-year tax liabilities. Despite the
circumstances, year-to-date, we have generated cash from operations
of $1.7 million after restructuring
expenses and inventory growth of $3
million from long lead-time purchases that could not be
cancelled. While we were able to reduce accounts receivable
by over $40 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 $10 million primarily for prior year commitments.
Excluding letters of credit, we had access to $114.6 million under our credit facility at the
end of the second quarter. No shares were repurchased in the second
quarter and the first and second quarter dividends were both paid
in the second quarter for a total cash expenditure of $3.9 million.
Top Drives Segment
- Revenue from the Top Drive segment for Q2 2015 was $41.5 million, an $8.5
million, or 17.0%, decrease from Q1 2015 and a $44.8 million, or 51.9%, decrease from Q2 2014.
- Top Drive sales for Q2 2015 included 11 units (10 new and 1
used), compared to 14 units (14 new and 0 used) sold in Q1 2015 and
35 units (33 new and 2 used) sold in Q2 2014.
- The rental top drive fleet remained unchanged at 135 during the
second quarter with a utilization of 30%.
- Operating loss before adjustments in the Top Drive segment for
Q2 2015 was $2.8 million, a
$7.4 million, or 160.9%, decrease
from Q1 2015 and a $22.0 million, or
114.6%, decrease from Q2 2014. Our Top Drive operating
margins before adjustments were (7)% in Q2 2015, a decrease from 9%
and 22% in Q1 2015 and Q2 2014, respectively. Second quarter
operating income and operating margin after adjustments were
$0.7 million and 1.7%, respectively,
with sequential decremental adjusted margins of 62%. This
sequential decline in profitability is primarily related to the
impact of reduced global top drive sales, lower rental pricing and
utilization in North and South
America, continued weakness in after-market bookings as
customers defer maintenance and low manufacturing activity on plant
utilization.
- At June 30, 2015, Top Drive backlog was 20 units, with a
total potential value of $20.0
million, compared to 24 units at March 31, 2015, with a
potential value of $23.1
million. This compares to a backlog of 51 units
at June 30, 2014, with a potential value of $56.7 million. Thirteen units of the
backlog at the end of the second quarter are not scheduled to ship
until 2016. Today, our backlog stands at 21 units with a
potential value of $22 million.
Tubular Services Segment
- Revenue from the Tubular Services segment for Q2 2015 was
$33.0 million, a $8.7 million, or 20.9%, decrease from Q1 2015 and
a $25.8 million, or 43.9%, decrease
from Q2 2014.
- Operating loss before adjustments in the Tubular Services
segment for Q2 2015 was $2.8 million,
a $4.8 million, or 240.0%, decrease
from Q1 2015 and a $14.1 million, or
124.8%, decrease from Q2 2014. Our Tubular Services operating
margins were (9)% for Q2 2015, down from 5% and 19% in Q1 2015 and
Q2 2014, respectively. Second quarter operating losses and
operating margin after adjustments were $1.7
million and 5.2%, respectively, with sequential adjusted
decremental margins of 52%. This sequential decline in
profitability is primarily related to the full quarter impact of
lower North America activity and
pricing as well as lower activity and pricing in certain
Latin America and Asia Pacific markets.
Other Segments and Expenses
- Research and engineering costs for Q2 2015 were $2.1 million, compared to $2.9 million in Q1 2015 and $2.5 million in Q2 2014. We continue to
invest in the development, commercialization, and enhancements of
our proprietary technologies relating to our Top Drive and Tubular
Services segments.
- Corporate and other costs for Q2 2015 were $6.0 million, a $3.3
million, or 35.5%, decrease from Q1 2015 and a $3.2 million, or 34.8%, decrease from Q2
2014. Adjusted costs would have been $5.9 million primarily as a result of the
restructuring efforts.
- Net foreign exchange losses for Q2 2015 were $1.4 million, compared to losses of $3.2 million in Q1 2015 and gains of $1.1 million in Q2 2014. The largest
foreign exchange losses were from Latin
America.
- Our effective tax rate for Q2 2015 was a 79% expense compared
to a 6% benefit in Q1 2015 and a 36% expense in Q2 2014. The
effective tax rate was mostly affected by a $15.3 million valuation allowance related to
deferred tax assets in Canada.
- Total capital expenditures were $2.9
million in Q2 2015, primarily for tubular services equipment
and our test rig, a $4.4 million, or
60%, decrease from Q1 2015 and a $8.6
million, or 75%, decrease from Q2 2014.
Outlook
While North America rig count
showed indications of hitting bottom during the second quarter of
2015, recent declines in commodity prices below $50 a barrel add uncertainty to levels of
drilling activity in the second half of 2015 and 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 with some additional requests for moderate pricing
concessions from international customers continuing. The Company
expects to incur an additional operating loss before restructuring
charges in the third quarter of 2015.
The Company will remain focused on generating positive free cash
flow during the second half of 2015 through spending controls and
working capital reductions. The Company will continue to assess the
timing of additional share repurchases under the remaining
authorization of $73 million against
market outlook and other investment opportunities.
Top Drives Segment
- During the second half of 2015 the Company expects to ship
approximately 3-5 top drives per quarter with bookings predicted to
occur at a similar pace. After-market and rental activity recovery
will depend on rig count increases.
- Operating margins are expected to decline sequentially in the
third quarter due to leverage impact on infrastructure of lower
expected sales in all product lines.
Tubular Services Segment
- Revenue increases from the Tubular Services segment will depend
on higher drilling activity, despite some expected improvement in
North America market share.
- Operating margins are not expected to improve sequentially as
additional weakness in certain international markets offsets
restructuring benefits.
Other Segments and Expenses
- Research and engineering costs are expected to run
approximately $2.0 million per
quarter and corporate and other costs are expected to run
approximately $6.0 to $7.0 million
per quarter for the balance of 2015.
- The effective tax rate for the second half of 2015 will be
sensitive to the impact of earnings and losses by tax jurisdiction
as well as non-deductible items such as certain foreign exchange
gains and losses.
- Total capital expenditures for 2015 are expected to be
approximately $12 to $15
million.
"Despite the current challenging market, we have continued to
implement the strategy we outlined last year," Assing added. "We
continue to gain tubular service market share in our targeted
offshore markets and are encouraged by greater technology adoption
in North America land, which is
focused on helping our customers become more efficient and cost
effective. We will ship our first third-party offshore top drive
recertification project in the third quarter and believe we will
have additional opportunities in this market. Finally, we are
actively testing new pipe handling technologies on our new test rig
that are expected to be deployed over the next few quarters."
"While our short-term priority remains cash generation and
preservation and improved profitability, we plan to continue to
implement our strategic plans and technology investments, deploying
our cash and liquidity for shareholder returns, acquisitions and
organic investments as market conditions dictate," he
concluded.
Conference Call
The Company will conduct a conference call to discuss its
results for the second quarter 2015 on August 6, 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
August 20, 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 13613125#.
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.
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 and Canada. Casing Drive System™, CDS™, Multiple
Control Line Running System™ and MCLRS™ are trademarks 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 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.
TESCO
CORPORATION
|
Condensed
Consolidated Statements of Income
|
(in millions,
except per share information)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenue
|
$
|
74.5
|
|
|
$
|
145.1
|
|
|
$
|
166.1
|
|
|
$
|
266.5
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of sales and
services
|
76.7
|
|
|
110.5
|
|
|
160.0
|
|
|
206.3
|
|
Selling, general and
administrative
|
9.4
|
|
|
13.3
|
|
|
20.6
|
|
|
27.3
|
|
Research and
engineering
|
2.1
|
|
|
2.5
|
|
|
4.9
|
|
|
5.0
|
|
|
88.2
|
|
|
126.3
|
|
|
185.5
|
|
|
238.6
|
|
Operating income
(loss)
|
(13.7)
|
|
|
18.8
|
|
|
(19.4)
|
|
|
27.9
|
|
Interest expense,
net
|
0.3
|
|
|
0.2
|
|
|
0.5
|
|
|
0.6
|
|
Other expense
(income), net
|
1.3
|
|
|
(1.1)
|
|
|
4.2
|
|
|
2.2
|
|
Income (loss) before
income taxes
|
(15.3)
|
|
|
19.7
|
|
|
(24.1)
|
|
|
25.1
|
|
Income
taxes
|
12.2
|
|
|
7.0
|
|
|
11.6
|
|
|
9.1
|
|
Net income
(loss)
|
$
|
(27.5)
|
|
|
$
|
12.7
|
|
|
$
|
(35.7)
|
|
|
$
|
16.0
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.71)
|
|
|
$
|
0.32
|
|
|
$
|
(0.92)
|
|
|
$
|
0.40
|
|
Diluted
|
$
|
(0.71)
|
|
|
$
|
0.31
|
|
|
$
|
(0.92)
|
|
|
$
|
0.39
|
|
Dividends per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.10
|
|
|
$
|
0.05
|
|
Weighted average
number of shares:
|
|
|
|
|
|
|
|
Basic
|
39.0
|
|
|
40.2
|
|
|
39.0
|
|
|
40.0
|
|
Diluted
|
39.0
|
|
|
40.8
|
|
|
39.0
|
|
|
40.6
|
|
TESCO
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
(in
millions)
|
|
|
June 30,
2015
|
|
December 31,
2014
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
62.7
|
|
|
$
|
72.5
|
|
Accounts receivable,
net
|
87.6
|
|
|
128.7
|
|
Inventories,
net
|
118.0
|
|
|
114.7
|
|
Other current
assets
|
35.9
|
|
|
44.8
|
|
Total current
assets
|
304.2
|
|
|
360.7
|
|
Property, plant and
equipment, net
|
189.3
|
|
|
202.5
|
|
Goodwill
|
34.4
|
|
|
34.4
|
|
Other
assets
|
12.2
|
|
|
21.7
|
|
Total
assets
|
$
|
540.1
|
|
|
$
|
619.3
|
|
Liabilities and Shareholders'
Equity
|
|
|
|
Current
liabilities
|
|
|
|
Current portion of
long term debt
|
$
|
—
|
|
|
$
|
—
|
|
Accounts
payable
|
22.0
|
|
|
36.1
|
|
Accrued and other
current liabilities
|
32.9
|
|
|
46.7
|
|
Income taxes
payable
|
1.0
|
|
|
8.9
|
|
Total current
liabilities
|
55.9
|
|
|
91.7
|
|
Other
liabilities
|
1.5
|
|
|
2.2
|
|
Long-term
debt
|
—
|
|
|
—
|
|
Deferred income
taxes
|
7.3
|
|
|
12.3
|
|
Shareholders'
equity
|
475.4
|
|
|
513.1
|
|
Total
liabilities and shareholders' equity
|
$
|
540.1
|
|
|
$
|
619.3
|
|
TESCO
CORPORATION
|
Segment
Results
|
(in millions,
except per share information)
|
|
|
Three Months Ended
June 30,
|
|
Three Months Ended
March 31,
|
|
Six Months
Ended
June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Segment
revenue
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
Top Drives
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
13.7
|
|
|
$
|
40.6
|
|
|
$
|
17.8
|
|
|
$
|
31.5
|
|
|
$
|
65.9
|
|
Rental
services
|
17.8
|
|
|
26.7
|
|
|
20.1
|
|
|
37.7
|
|
|
51.4
|
|
After-market sales and
service
|
10.0
|
|
|
19.0
|
|
|
12.1
|
|
|
22.2
|
|
|
33.7
|
|
|
41.5
|
|
|
86.3
|
|
|
50.0
|
|
|
91.4
|
|
|
151.0
|
|
Tubular
Services
|
|
|
|
|
|
|
|
|
|
Land
|
23.5
|
|
|
39.6
|
|
|
30.6
|
|
|
54.1
|
|
|
79.5
|
|
Offshore
|
8.7
|
|
|
10.0
|
|
|
9.8
|
|
|
18.6
|
|
|
20.9
|
|
CDS, Parts, &
Accessories
|
0.8
|
|
|
9.2
|
|
|
1.3
|
|
|
2.0
|
|
|
15.1
|
|
|
33.0
|
|
|
58.8
|
|
|
41.7
|
|
|
74.7
|
|
|
115.5
|
|
|
|
|
|
|
|
|
|
|
|
Casing
Drilling
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Consolidated
revenue
|
$
|
74.5
|
|
|
$
|
145.1
|
|
|
$
|
91.7
|
|
|
$
|
166.1
|
|
|
$
|
266.5
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
|
Top Drives
|
$
|
(2.8)
|
|
|
$
|
19.2
|
|
|
$
|
4.6
|
|
|
$
|
1.7
|
|
|
$
|
30.0
|
|
Tubular
Services
|
(2.8)
|
|
|
11.3
|
|
|
2.0
|
|
|
(0.8)
|
|
|
22.1
|
|
Casing
Drilling
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
Research and
Engineering
|
(2.1)
|
|
|
(2.5)
|
|
|
(2.9)
|
|
|
(4.9)
|
|
|
(5.0)
|
|
Corporate and
other
|
(6.0)
|
|
|
(9.2)
|
|
|
(9.3)
|
|
|
(15.4)
|
|
|
(18.9)
|
|
Consolidated operating
income
|
$
|
(13.7)
|
|
|
$
|
18.8
|
|
|
$
|
(5.6)
|
|
|
$
|
(19.4)
|
|
|
$
|
27.9
|
|
Net income
(loss)
|
$
|
(27.5)
|
|
|
$
|
12.7
|
|
|
$
|
(8.3)
|
|
|
$
|
(35.7)
|
|
|
$
|
16.0
|
|
Earnings (loss) per
share (diluted)
|
$
|
(0.71)
|
|
|
$
|
0.31
|
|
|
$
|
(0.21)
|
|
|
$
|
(0.92)
|
|
|
$
|
0.39
|
|
Adjusted
EBITDA(a) (as defined)
|
$
|
1.8
|
|
|
$
|
30.3
|
|
|
$
|
9.6
|
|
|
$
|
11.4
|
|
|
$
|
52.4
|
|
________________________
|
(a)
|
See explanation of
Non-GAAP measure below
|
TESCO
CORPORATION
|
Non-GAAP Measure -
Adjusted EBITDA (1)
|
(in
millions)
|
|
|
Three Months Ended
June 30,
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Net income (loss)
under U.S. GAAP
|
$
|
(27.5)
|
|
|
$
|
12.7
|
|
|
$
|
(8.3)
|
|
|
$
|
(35.7)
|
|
|
$
|
16.0
|
|
Income tax expense
(benefit)
|
12.2
|
|
|
7.0
|
|
|
(0.5)
|
|
|
11.6
|
|
|
9.1
|
|
Depreciation and
amortization
|
9.6
|
|
|
10.4
|
|
|
10.1
|
|
|
19.7
|
|
|
20.1
|
|
Net interest
expense
|
0.3
|
|
|
0.2
|
|
|
0.2
|
|
|
0.5
|
|
|
0.6
|
|
Stock compensation
expense—non-cash
|
1.1
|
|
|
1.1
|
|
|
1.0
|
|
|
2.1
|
|
|
2.8
|
|
Severance &
executive retirement charges
|
3.0
|
|
|
—
|
|
|
2.6
|
|
|
5.6
|
|
|
—
|
|
Bad debt from certain
accounts
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
1.6
|
|
Foreign exchange
(gain) loss
|
1.4
|
|
|
(1.1)
|
|
|
3.2
|
|
|
4.6
|
|
|
2.2
|
|
Warranty & legal
reserves
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
Financial revision
costs
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
1.8
|
|
|
$
|
30.3
|
|
|
$
|
9.6
|
|
|
$
|
11.4
|
|
|
$
|
52.4
|
|
|
|
(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
June 30,
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2015
|
|
2014
|
Net income (loss)
under U.S. GAAP
|
$
|
(27.5)
|
|
|
$
|
12.7
|
|
|
$
|
(8.3)
|
|
|
$
|
(35.7)
|
|
|
$
|
16.0
|
|
Severance &
executive retirement charges
|
2.2
|
|
|
—
|
|
|
1.8
|
|
|
4.0
|
|
|
—
|
|
Warranty & Legal
reserves
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
Certain foreign
exchange losses
|
0.7
|
|
|
(0.8)
|
|
|
2.4
|
|
|
3.1
|
|
|
2.1
|
|
Bad debt on certain
accounts
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
1.6
|
|
Certain tax-related
charges
|
15.3
|
|
|
—
|
|
|
—
|
|
|
15.3
|
|
|
—
|
|
Financial revision
costs
|
—
|
|
|
—
|
|
|
0.8
|
|
|
0.8
|
|
|
—
|
|
Adjusted Net Income
(Loss)
|
$
|
(8.0)
|
|
|
$
|
11.9
|
|
|
$
|
(3.3)
|
|
|
$
|
(11.2)
|
|
|
$
|
19.7
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
under U.S. GAAP
|
$
|
(0.71)
|
|
|
$
|
0.31
|
|
|
$
|
(0.21)
|
|
|
$
|
(0.92)
|
|
|
$
|
0.39
|
|
Severance &
executive retirement charges
|
0.06
|
|
|
—
|
|
|
0.05
|
|
|
0.10
|
|
|
—
|
|
Warranty & Legal
reserves
|
0.03
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
Certain foreign
exchange losses
|
0.01
|
|
|
(0.02)
|
|
|
0.06
|
|
|
0.08
|
|
|
0.05
|
|
Bad debt on certain
accounts
|
0.01
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.04
|
|
Certain tax-related
charges
|
0.39
|
|
|
—
|
|
|
—
|
|
|
0.39
|
|
|
—
|
|
Financial revision
costs
|
—
|
|
|
—
|
|
|
0.02
|
|
|
0.02
|
|
|
—
|
|
Adjusted Net Income
(Loss)
|
$
|
(0.21)
|
|
|
$
|
0.29
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.29)
|
|
|
$
|
0.48
|
|
|
|
(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-second-quarter-2015-results-300124700.html
SOURCE Tesco Corporation