HOUSTON, Nov. 3, 2015 /PRNewswire/ -- Key Energy
Services, Inc. (NYSE: KEG) reported third quarter 2015 consolidated
revenues of $176.9 million and a
pre-tax GAAP loss of $765.8 million,
or $4.06 per share. The results for
the third quarter include:
- pre-tax charges of $618.5
million, or $3.28 per share,
related to the impairment of the Company's U.S. goodwill and
certain U.S. assets;
- pre-tax charges of $63.1 million,
or $0.33 per share, related to
impairment of assets primarily associated with the Company's exit
from markets outside North
America;
- pre-tax costs of $4.0 million, or
$0.02 per share, due to
severance;
- pre-tax costs of $2.5 million, or
$0.01 per share, related to the
previously disclosed Foreign Corrupt Practices Act ("FCPA")
investigations; and
- a pre-tax loss of $2.5 million,
or $0.01 per share, on foreign
currency translation.
Excluding these items, the Company reported a pre-tax loss of
$75.3 million, or $0.40 per share. Additionally, the Company
incurred an after-tax charge of $23.0
million, or $0.15 per share,
related to deferred tax valuation allowances in markets outside of
the U.S. Excluding this tax-related charge, the Company
reported an after-tax loss of $40.0
million, or $0.25 per share.
Second quarter 2015 consolidated revenues were $197.5 million with a pre-tax GAAP loss of
$96.1 million, or $0.42 per share. The results for the second
quarter included a pre-tax loss of $21.4
million, or $0.10 per share,
related to a pending sale and the associated impairment of the
Company's assets in Oman, pre-tax
costs of $8.4 million, or
$0.04 per share, related to the
previously disclosed FCPA investigations, a pre-tax loss of
$2.1 million, or $0.01 per share, on the sale of certain U.S.
assets and pre-tax costs of $1.1
million, or $0.00 per share,
due to severance. Excluding these items, the Company reported a
second quarter 2015 pre-tax loss of $63.1 million, or $0.27 per share.
Overview and Outlook
Key's Chief Executive Officer, Dick
Alario, stated, "The third quarter continued the
deterioration in what is now the worst peak-to-trough downturn in
several decades. The steps we took during the quarter to improve
our cost structure in the U.S. helped mitigate these pressures to
yield a normalized U.S. decremental operating margin of 23%
sequentially. Further, our highly-capable Class 4 rigs continued to
exhibit activity improvement as hours in this rig class improved
11% sequentially.
"Consistent with our outlook entering the third quarter, Key's
management team continued to take action during the quarter to
reduce the Company's cost structure and we'll see the full benefit
from these actions moving forward. During the third quarter, we
reduced U.S. headcount by 10%, outpacing the decline we saw in U.S.
revenue, bringing the total U.S. headcount reduction over the last
twelve months to 37%.
"We believe our liquidity burn rate will moderate in the fourth
quarter given the absence of the large cash interest payment
incurred in the third quarter, a reduction in capital expenditures,
the savings generated from headcount reductions and cash proceeds
from our exit from markets outside of North America. We expect the impact from
seasonality in the fourth quarter to be about double that of recent
years, though we do expect activity to return to pre-holiday levels
in the first quarter. However, it is clear that due to the current
pricing environment, Key must continue to evaluate additional
avenues to enhance liquidity and we will continue to do so."
The following table sets forth summary data for the third
quarter 2015 and prior comparable quarterly periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended (unaudited)
|
|
|
September 30,
2015
|
|
June 30,
2015
|
|
September 30,
2014
|
|
|
(in
millions, except per share amounts)
|
Revenues
|
|
$
|
176.9
|
|
|
$
|
197.5
|
|
|
$
|
365.8
|
|
Net loss
|
|
(640.2)
|
|
|
(65.4)
|
|
|
(62.2)
|
|
Diluted loss per
share
|
|
(4.06)
|
|
|
(0.42)
|
|
|
(0.41)
|
|
Adjusted
EBITDA*
|
|
(13.3)
|
|
|
(8.6)
|
|
|
28.1
|
|
|
* Adjusted EBITDA
does not exclude costs incurred in connection with the Company's
on-going FCPA investigations.
|
U.S. Results
Third quarter 2015 U.S. Rig Services revenues of $85.2 million were down 8.6% as compared to the
second quarter. Third quarter operating loss excluding impairments
was $3.9 million, or -4.6% of
revenue, compared to second quarter operating loss of $4.1 million, or -4.4% of revenue. Third quarter
results include costs associated with the relocation of rigs from
outside the U.S. of $1.0 million;
excluding this cost, operating loss was $2.9
million, or -3.4% of revenue. Total rig hours were down 2%
sequentially and pricing declined 5% sequentially driven by
competitive pressures in the back half of the quarter, though tight
cost controls drove an improvement in operating income.
Third quarter 2015 Fluid Management Services revenues of
$35.5 million were down 9.3% as
compared to the second quarter. Third quarter operating loss
excluding impairments was $3.9
million, or -10.9% of revenue, compared to second quarter
operating loss of $0.1 million, or
-0.2% of revenue. Pricing remained stable during the quarter as
total truck hours fell 9.5% sequentially.
Third quarter 2015 Fishing & Rental Services revenues of
$27.6 million were down 1.8% as
compared to the second quarter. Third quarter operating loss
excluding impairments was $5.1
million, or -18.5% of revenue, compared to second quarter
operating loss of $6.6 million, or
-23.4% of revenue.
Third quarter 2015 Coiled Tubing Services revenues of
$20.8 million were down 3.7% as
compared to the second quarter. Third quarter operating loss
excluding impairments was $5.0
million, or -23.9% of revenue. Second quarter operating loss
was $4.1 million, or -18.9% of
revenue. Coiled Tubing Services activity declined approximately 10%
during the quarter as activity softened late in the quarter.
International Segment
Third quarter 2015 International revenues were $7.7 million, down 49.8% as compared to second
quarter 2015 revenues of $15.3
million. Third quarter operating loss excluding impairments
was $12.9 million, or -167.2% of
revenues, compared to second quarter operating loss of $7.5 million, or -49.1% of revenues. Third
quarter results included approximately $3
million of costs and inefficiencies, including
severance, associated with the cessation of operations in
certain markets outside of the U.S. During the third quarter, the
Company continued to make progress on the International wind-down
and moved closer to an exit of markets outside of North America. The Company incurred costs
associated with the exit process as it ceased operations in
Colombia, Ecuador and Oman. Additionally, during
October, the Company neared finalization of the sale of
its business in Bahrain and its
assets in Oman.
General and Administrative Expenses
General and Administrative (G&A) expenses were $45.3 million for the third quarter compared to
$50.7 million in the prior quarter.
Third quarter G&A expenses include $2.5
million in costs associated with the FCPA investigations and
$1.6 million of severance. The
sequential decline can primarily be attributed to the reduction in
costs associated with the FCPA investigations and headcount
reductions.
Capital Expenditures and Balance Sheet
Capital expenditures were $6.2
million during the third quarter 2015. Key's consolidated
cash balance at September 30, 2015
was $199.1 million compared to
$225.5 million at June 30, 2015. Total debt at September 30, 2015 was $964.7 million compared to total debt of
$964.2 million at June 30, 2015. At the end of the third quarter,
there was $229.6 of total liquidity
available to the Company.
Conference Call Information
As previously announced, Key management will host a conference
call to discuss its third quarter 2015 financial results on
Wednesday, November 4, 2015 at
10:00 a.m. CST. Callers from the U.S.
and Canada should dial
888-794-4637 to access the call. International callers should dial
660-422-4879. All callers should ask for the "Key Energy Services
Conference Call" or provide the access code 49581546. The
conference call will also be available live via the internet. To
access the webcast, go to www.keyenergy.com and select "Investor
Relations."
A telephonic replay of the conference call will be available on
Wednesday, November 4, 2015,
beginning approximately two hours after the completion of the
conference call and will remain available for one week. To access
the replay, call 855-859-2056 or 800-585-8367. The access code for
the replay is 49581546. The replay will also be accessible at
www.keyenergy.com under "Investor Relations" for a period of at
least 90 days.
Quarterly rig and truck hours have been posted on Key's website;
to access the file, go to www.keyenergy.com and select "Investor
Relations."
Consolidated
Statements of Operations (in thousands, except per share amounts,
unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September 30,
2015
|
|
June 30,
2015
|
|
September 30,
2014
|
|
September 30,
2015
|
|
September 30,
2014
|
REVENUES
|
|
$
|
176,857
|
|
|
$
|
197,496
|
|
|
$
|
365,798
|
|
|
$
|
642,152
|
|
|
$
|
1,072,534
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
Direct operating
expenses
|
|
174,505
|
|
|
158,841
|
|
|
272,112
|
|
|
537,876
|
|
|
793,297
|
|
Depreciation and
amortization expense
|
|
45,270
|
|
|
45,896
|
|
|
50,924
|
|
|
138,377
|
|
|
154,203
|
|
General and
administrative expenses
|
|
45,314
|
|
|
50,710
|
|
|
65,224
|
|
|
163,668
|
|
|
175,971
|
|
Impairment
expense
|
|
649,944
|
|
|
21,352
|
|
|
60,792
|
|
|
692,996
|
|
|
89,479
|
|
Operating
loss
|
|
(738,176)
|
|
|
(79,303)
|
|
|
(83,254)
|
|
|
(890,765)
|
|
|
(140,416)
|
|
Interest expense, net
of amounts capitalized
|
|
21,704
|
|
|
17,058
|
|
|
13,417
|
|
|
52,104
|
|
|
40,397
|
|
Other (income) loss,
net
|
|
5,915
|
|
|
(248)
|
|
|
348
|
|
|
10,099
|
|
|
(2,454)
|
|
Loss before tax
income taxes
|
|
(765,795)
|
|
|
(96,113)
|
|
|
(97,019)
|
|
|
(952,968)
|
|
|
(178,359)
|
|
Income tax
benefit
|
|
125,634
|
|
|
30,734
|
|
|
34,790
|
|
|
187,752
|
|
|
52,035
|
|
NET
LOSS
|
|
$
|
(640,161)
|
|
|
$
|
(65,379)
|
|
|
$
|
(62,229)
|
|
|
$
|
(765,216)
|
|
|
$
|
(126,324)
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(4.06)
|
|
|
$
|
(0.42)
|
|
|
$
|
(0.41)
|
|
|
$
|
(4.90)
|
|
|
$
|
(0.82)
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
157,605
|
|
|
156,347
|
|
|
153,550
|
|
|
156,266
|
|
|
153,327
|
|
Condensed
Consolidated Balance Sheets (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
199,117
|
|
|
$
|
27,304
|
|
|
Other current
assets
|
|
241,546
|
|
|
406,491
|
|
Total current
assets
|
|
440,663
|
|
|
433,795
|
|
Property and
equipment, net
|
|
1,005,826
|
|
|
1,235,258
|
|
Goodwill
|
|
—
|
|
|
582,739
|
|
Other assets,
net
|
|
47,535
|
|
|
70,971
|
|
TOTAL
ASSETS
|
|
$
|
1,494,024
|
|
|
$
|
2,322,763
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
36,131
|
|
|
$
|
77,631
|
|
|
Current portion of
long-term debt
|
|
3,150
|
|
|
—
|
|
|
Other current
liabilities
|
|
99,025
|
|
|
164,227
|
|
Total current
liabilities
|
|
138,306
|
|
|
241,858
|
|
Long-term
debt
|
|
961,566
|
|
|
737,691
|
|
Other non-current
liabilities
|
|
101,471
|
|
|
285,151
|
|
Equity
|
|
292,681
|
|
|
1,058,063
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
|
1,494,024
|
|
|
$
|
2,322,763
|
|
Consolidated Cash
Flow Data (in thousands, unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
September 30,
2015
|
|
September 30,
2014
|
Net cash provided by
(used in) operating activities
|
|
$
|
(20,838)
|
|
|
$
|
126,084
|
|
Net cash used in
investing activities
|
|
(26,812)
|
|
|
(91,842)
|
|
Net cash provided by
(used in) financing activities
|
|
220,076
|
|
|
(12,052)
|
|
Effect of exchange
rates on cash
|
|
(613)
|
|
|
6,896
|
|
Net increase in cash
and cash equivalents
|
|
171,813
|
|
|
29,086
|
|
Cash and cash
equivalents, beginning of period
|
|
27,304
|
|
|
28,306
|
|
Cash and cash
equivalents, end of period
|
|
$
|
199,117
|
|
|
$
|
57,392
|
|
Segment Revenue
and Operating Income (in thousands, except for percentages,
unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September 30,
2015
|
|
June 30,
2015
|
|
September 30,
2014
|
|
September 30,
2015
|
|
September 30,
2014
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
85,200
|
|
|
$
|
93,253
|
|
|
$
|
178,219
|
|
|
$
|
299,275
|
|
|
$
|
512,950
|
|
Fluid Management
Services
|
|
35,519
|
|
|
39,178
|
|
|
63,818
|
|
|
125,452
|
|
|
187,493
|
|
Coiled Tubing
Services
|
|
20,820
|
|
|
21,609
|
|
|
42,309
|
|
|
73,446
|
|
|
129,912
|
|
Fishing & Rental
Services
|
|
27,629
|
|
|
28,142
|
|
|
55,502
|
|
|
98,461
|
|
|
158,052
|
|
International
|
|
7,689
|
|
|
15,314
|
|
|
25,950
|
|
|
45,518
|
|
|
84,127
|
|
Consolidated
Total
|
|
$
|
176,857
|
|
|
$
|
197,496
|
|
|
$
|
365,798
|
|
|
$
|
642,152
|
|
|
$
|
1,072,534
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
(305,334)
|
|
|
$
|
(4,132)
|
|
|
$
|
28,137
|
|
|
$
|
(301,466)
|
|
|
$
|
75,440
|
|
Fluid Management
Services
|
|
(28,336)
|
|
|
(59)
|
|
|
(142)
|
|
|
(26,919)
|
|
|
3,163
|
|
Coiled Tubing
Services
|
|
(116,572)
|
|
|
(4,083)
|
|
|
16
|
|
|
(144,477)
|
|
|
5,572
|
|
Fishing & Rental
Services
|
|
(186,078)
|
|
|
(6,574)
|
|
|
(55,415)
|
|
|
(192,708)
|
|
|
(51,782)
|
|
International
|
|
(72,168)
|
|
|
(28,871)
|
|
|
(9,256)
|
|
|
(110,650)
|
|
|
(56,593)
|
|
Functional
Support
|
|
(29,688)
|
|
|
(35,584)
|
|
|
(46,594)
|
|
|
(114,545)
|
|
|
(116,216)
|
|
Consolidated
Total
|
|
$
|
(738,176)
|
|
|
$
|
(79,303)
|
|
|
$
|
(83,254)
|
|
|
$
|
(890,765)
|
|
|
$
|
(140,416)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) % of Revenues
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
(358.4)%
|
|
|
(4.4)%
|
|
|
15.8%
|
|
|
(100.7)%
|
|
|
14.7%
|
|
Fluid Management
Services
|
|
(79.8)%
|
|
|
(0.2)%
|
|
|
(0.2)%
|
|
|
(21.5)%
|
|
|
1.7%
|
|
Coiled Tubing
Services
|
|
(559.9)%
|
|
|
(18.9)%
|
|
|
—%
|
|
|
(196.7)%
|
|
|
4.3%
|
|
Fishing & Rental
Services
|
|
(673.5)%
|
|
|
(23.4)%
|
|
|
(99.8)%
|
|
|
(195.7)%
|
|
|
(32.8)%
|
|
International
|
|
(938.6)%
|
|
|
(188.5)%
|
|
|
(35.7)%
|
|
|
(243.1)%
|
|
|
(67.3)%
|
|
Consolidated
Total
|
|
(417.4)%
|
|
|
(40.2)%
|
|
|
(22.8)%
|
|
|
(138.7)%
|
|
|
(13.1)%
|
|
Following is a reconciliation of net loss as presented in
accordance with United States
generally accepted accounting principles (GAAP) to EBITDA and
Adjusted EBITDA as required under Regulation G of the Securities
Exchange Act of 1934.
Reconciliations of
EBITDA and Adjusted EBITDA to net loss (in thousands, except for
percentages, unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2015
|
|
June 30,
2015
|
|
September 30,
2014
|
Net loss
|
|
$
|
(640,161)
|
|
|
$
|
(65,379)
|
|
|
$
|
(62,229)
|
|
Income tax
benefit
|
|
(125,634)
|
|
|
(30,734)
|
|
|
(34,790)
|
|
Interest expense, net
of amounts capitalized
|
|
21,704
|
|
|
17,058
|
|
|
13,417
|
|
Interest
income
|
|
(61)
|
|
|
(25)
|
|
|
(14)
|
|
Depreciation and
amortization
|
|
45,270
|
|
|
45,896
|
|
|
50,924
|
|
EBITDA
|
|
$
|
(698,882)
|
|
|
$
|
(33,184)
|
|
|
$
|
(32,692)
|
|
% of revenues
|
|
(395.2)%
|
|
|
(16.8)%
|
|
|
(8.9)%
|
|
|
|
|
|
|
|
|
Severance
costs
|
|
3,988
|
|
|
1,104
|
|
|
—
|
|
Impairment
expense
|
|
649,944
|
|
|
21,352
|
|
|
60,792
|
|
Write-off of
notes receivable
|
|
3,755
|
|
|
—
|
|
|
—
|
|
Bad debt expense -
International
|
|
18,537
|
|
|
—
|
|
|
—
|
|
Project
write-off
|
|
3,729
|
|
|
—
|
|
|
—
|
|
Sales tax
accrual
|
|
5,600
|
|
|
—
|
|
|
—
|
|
Loss on sales of
certain assets
|
|
—
|
|
|
2,127
|
|
|
—
|
|
Adjusted
EBITDA*
|
|
$
|
(13,329)
|
|
|
$
|
(8,601)
|
|
|
$
|
28,100
|
|
% of revenues
|
|
(7.5)%
|
|
|
(4.4)%
|
|
|
7.7%
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
176,857
|
|
|
$
|
197,496
|
|
|
$
|
365,798
|
|
|
* Adjusted EBITDA
does not exclude costs incurred in connection with the Company's
on-going FCPA investigations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2015
|
|
U.S. Rig
Services
|
|
Fluid Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
Net income
(loss)
|
$
|
(305,373)
|
|
|
$
|
(28,321)
|
|
|
$
|
(116,570)
|
|
|
$
|
(185,784)
|
|
|
$
|
(95,352)
|
|
|
$
|
91,239
|
|
|
$
|
(640,161)
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,944
|
|
|
(146,578)
|
|
|
(125,634)
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
21,688
|
|
|
21,704
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23)
|
|
|
(38)
|
|
|
(61)
|
|
Depreciation and
amortization
|
14,876
|
|
|
6,618
|
|
|
5,671
|
|
|
8,561
|
|
|
6,236
|
|
|
3,308
|
|
|
45,270
|
|
EBITDA
|
$
|
(290,497)
|
|
|
$
|
(21,703)
|
|
|
$
|
(110,899)
|
|
|
$
|
(177,223)
|
|
|
$
|
(68,179)
|
|
|
$
|
(30,381)
|
|
|
$
|
(698,882)
|
|
% of revenues
|
(341.0)%
|
|
|
(61.1)%
|
|
|
(532.7)%
|
|
|
(641.4)%
|
|
|
(886.7)%
|
|
|
—%
|
|
|
(395.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
180
|
|
|
73
|
|
|
32
|
|
|
50
|
|
|
2,301
|
|
|
1,352
|
|
|
3,988
|
|
Impairment
expense
|
297,719
|
|
|
24,479
|
|
|
105,995
|
|
|
180,974
|
|
|
40,777
|
|
|
—
|
|
|
649,944
|
|
Write-off of
notes
receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,755
|
|
|
3,755
|
|
Bad debt
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,537
|
|
|
—
|
|
|
18,537
|
|
Project
write-off
|
3,729
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,729
|
|
Sales tax
accrual
|
—
|
|
|
—
|
|
|
5,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,600
|
|
Adjusted
EBITDA*
|
$
|
11,131
|
|
|
$
|
2,849
|
|
|
$
|
728
|
|
|
$
|
3,801
|
|
|
$
|
(6,564)
|
|
|
$
|
(25,274)
|
|
|
$
|
(13,329)
|
|
% of revenues
|
13.1%
|
|
|
8.0%
|
|
|
3.5%
|
|
|
13.8%
|
|
|
(85.4)%
|
|
|
—%
|
|
|
(7.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
85,200
|
|
|
$
|
35,519
|
|
|
$
|
20,820
|
|
|
$
|
27,629
|
|
|
$
|
7,689
|
|
|
$
|
—
|
|
|
$
|
176,857
|
|
|
* Adjusted EBITDA
does not exclude costs incurred in connection with the Company's
on-going FCPA investigations.
|
"EBITDA" is defined as income or loss attributable to Key
before interest, taxes, depreciation, and amortization.
"Adjusted EBITDA" is EBITDA as further adjusted for certain
non-recurring or extraordinary items such as loss on debt
extinguishment, certain other gains or losses, asset retirements
and impairments, and certain non-recurring transaction or other
costs.
EBITDA and Adjusted EBITDA are non-GAAP measures that are
used as supplemental financial measures by the Company's management
and directors and by external users of the Company's financial
statements, such as investors, to assess:
- The financial performance of the Company's assets without
regard to financing methods, capital structure or historical cost
basis;
- The ability of the Company's assets to generate cash
sufficient to pay interest on its indebtedness;
- The Company's operating performance and return on invested
capital as compared to those of other companies in the well
services industry, without regard to financing methods and capital
structure; and
- The Company's operating trends underlying the items that
tend to be of a non-recurring nature.
EBITDA and Adjusted EBITDA have limitations as analytical
tools and should not be considered an alternative to net income,
operating income, cash flow from operating activities, or any other
measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but
not all, items that affect net income and operating income and
these measures may vary among other companies. Limitations to using
EBITDA and Adjusted EBITDA as an analytical tool include:
- EBITDA and Adjusted EBITDA do not reflect Key's current or
future requirements for capital expenditures or capital
commitments;
- EBITDA and Adjusted EBITDA do not reflect changes in, or
cash requirements necessary to service, interest or principal
payments on Key's debt;
- EBITDA and Adjusted EBITDA do not reflect income
taxes;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not
reflect any cash requirements for such replacements;
- Other companies in Key's industry may calculate EBITDA and
Adjusted EBITDA differently than Key does, limiting their
usefulness as a comparative measure; and
- EBITDA and Adjusted EBITDA are a different calculation from
earnings before interest, taxes, depreciation and amortization as
defined for purposes of the financial covenants in the Company's
senior secured credit facility, and therefore should not be relied
upon for assessing compliance with covenants.
Forward-Looking Statements
This press release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Any statements as to matters that are not of historic fact
are forward-looking statements. The forward-looking statements
include a description of our intention to consider alternatives to
cure the NYSE continued listing requirement deficiency. These
forward-looking statements are based on Key's current expectations,
estimates and projections about Key, its industry, its management's
beliefs and certain assumptions made by management, and include
statements regarding estimated capital expenditures, future
operational and activity expectations, international growth, and
anticipated financial performance for the remainder of 2015 and the
first quarter of 2016. No assurance can be given that such
expectations, estimates or projections will prove to have been
correct. Whenever possible, these "forward-looking statements" are
identified by words such as "expects," "believes," "anticipates"
and similar phrases.
Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and are subject
to certain risks, uncertainties and assumptions that are difficult
to predict, including, but not limited to: risks that Key
will be unable to achieve its financial, capital expenditure and
operational projections, including quarterly and annual projections
of revenue and/or operating income and risks that Key's
expectations regarding future activity levels, customer demand, and
pricing stability may not materialize (whether for Key as a whole
or for geographic regions and/or business segments individually);
risks that fundamentals in the U.S. oil and gas markets may not
yield anticipated future growth in Key's businesses, or could
further deteriorate or worsen from the recent market
declines, and/or that Key could experience further unexpected
declines in activity and demand for its rig service, fluid
management service, coiled tubing service, and fishing and rental
service businesses; risks relating to Key's ability to implement
technological developments and enhancements; risks relating to
compliance with environmental, health and safety laws and
regulations, as well as actions by governmental and regulatory
authorities; risks relating to compliance with the FCPA and
anti-corruption laws, including risks related to increased costs in
connection with FCPA investigations; risks regarding the timing or
conclusion of the FCPA investigations, including the risk of fines
or penalties imposed by government agencies for violations of the
FCPA; risks affecting Key's international operations, including
risks affecting Key's ability to execute its plans to withdraw from
its international markets outside North
America; risks that Key may be unable to achieve the
benefits expected from acquisition and disposition transactions,
and risks associated with integration of the acquired operations
into Key's operations; risks, in responding to changing or
declining market conditions, that Key may not be able to reduce,
and could even experience increases in, the costs of labor, fuel,
equipment and supplies employed and used in Key's businesses; risks
relating to changes in the demand for or the price of oil and
natural gas; risks that Key may not be able to execute its capital
expenditure program and/or that any such capital expenditure
investments, if made, will not generate adequate returns; risks
relating to Key's ability to satisfy listing requirements for its
equity securities; risks that Key may not have sufficient
liquidity; risks relating to Key's ability to comply with covenants
under its current credit facilities; and other risks affecting
Key's ability to maintain or improve operations, including its
ability to maintain prices for services under market pricing
pressures, weather risks, and the impact of potential increases in
general and administrative expenses.
Because such statements involve risks and uncertainties, many
of which are outside of Key's control, Key's actual results and
performance may differ materially from the results expressed or
implied by such forward-looking statements. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. Other important risk factors that
may affect Key's business, results of operations and financial
position are discussed in its most recently filed Annual Report on
Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K and in other Securities and Exchange Commission
filings. Unless otherwise required by law, Key also disclaims any
obligation to update its view of any such risks or uncertainties or
to announce publicly the result of any revisions to the
forward-looking statements made here. However, readers should
review carefully reports and documents that Key files periodically
with the Securities and Exchange Commission.
About Key Energy Services
Key Energy Services is the largest onshore, rig-based well
servicing contractor based on the number of rigs owned. Key
provides a complete range of well intervention services and has
operations in all major onshore oil and gas producing regions of
the continental United States and
internationally in Mexico and
Russia.
Contact:
West Gotcher
713-757-5539
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/key-energy-services-reports-third-quarter-2015-earnings-300171940.html
SOURCE Key Energy Services, Inc.