HOUSTON,
Feb. 17, 2016 /PRNewswire/
-- Key Energy Services, Inc. (NYSE: KEG) reported fourth
quarter 2015 consolidated revenues of $150.2
million and a pre-tax GAAP loss of $157.6 million, or $0.97 per share. The results for the fourth
quarter include:
- pre-tax charges of $62.9 million,
or $0.39 per share, related to the
loss on sale of and impairment of assets primarily associated with
the Company's exit from markets outside North America;
- pre-tax charges of $23.1 million,
or $0.14 per share, related to the
loss on sale of assets, write-off of certain vendor deposits and a
true-up to asset impairments in the third quarter in the Company's
U.S. business;
- pre-tax costs of $2.7 million, or
$0.02 per share, related to the
previously disclosed Foreign Corrupt Practices Act ("FCPA")
investigations;
- pre-tax costs of $1.3 million, or
$0.01 per share, due to severance;
and
- an after-tax charge of $23.5
million, or $0.15 per share of
tax expense, related to deferred tax valuation allowances in the
markets outside of the U.S.
Excluding these items, the Company reported a
pre-tax loss of $67.6 million, or
$0.27 per share. Third quarter 2015
consolidated revenues were $176.9
million with a pre-tax GAAP loss of $765.8 million, or $4.06 per share. The results for the third
quarter included 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 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.
The Company's consolidated cash balance at
December 31, 2015 was $204.4 million as compared to $199.1 million at September 30, 2015. Total liquidity available at
December 31, 2015 was $231.5 million as compared to $229.6 million at September 30, 2015.
The following table sets forth summary data for
the fourth quarter 2015 and prior comparable quarterly periods.
|
|
Three Months
Ended (unaudited)
|
|
|
December 31,
2015
|
|
September 30,
2015
|
|
December 31,
2014
|
|
|
(in
millions, except per share amounts)
|
Revenues
|
|
$
|
150.2
|
|
|
$
|
176.9
|
|
|
$
|
354.8
|
|
Net loss
|
|
(152.5)
|
|
|
(640.2)
|
|
|
(52.3)
|
|
Diluted loss per
share
|
|
(0.97)
|
|
|
(4.06)
|
|
|
(0.34)
|
|
Adjusted
EBITDA*
|
|
(6.7)
|
|
|
(13.3)
|
|
|
16.1
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
on-going FCPA investigations.
|
For the full-year 2015, consolidated revenues were $792.3 million, down 44.5% compared to
$1.43 billion for the full-year 2014.
Full-year 2015 GAAP net loss was $917.7
million, or $5.86 per share,
compared to full-year 2014 GAAP net loss of $178.6 million, or $1.16 per share.
The following table sets forth summary data from continuing
operations for the full-year 2015 and 2014.
|
|
Twelve Months
Ended
|
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
(unaudited)
|
|
|
|
|
(in
millions, except per share amounts)
|
Revenues
|
|
$
|
792.3
|
|
|
$
|
1,427.3
|
|
Net loss
|
|
(917.7)
|
|
|
(178.6)
|
|
Diluted loss per
share
|
|
(5.86)
|
|
|
(1.16)
|
|
Adjusted
EBITDA*
|
|
(28.1)
|
|
|
124.1
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
on-going FCPA investigations.
|
Overview and Outlook
Key's Chief Executive Officer, Dick Alario, stated, "Current commodity prices
have left the U.S. oilfield services industry dealing with the most
precipitous and sustained activity collapse in multiple decades.
Key has aggressively reshaped its organizational structure and
resized its cost structure to address the realities of today's
market. Key has continued to adopt the mantra of "control what we
can control" and took another meaningful component of costs out of
the business in the third quarter, which drove normalized
G&A expenses down another 14% sequentially. Further, through
the continued rationalization of our U.S. businesses, we were able
to improve our U.S. normalized operating loss by approximately
$3 million sequentially, even as
revenue declined approximately $24
million.
Alario continued, "The structural changes
implemented over the past several quarters to shift the
organizational alignment of Key's U.S. operations have allowed us
to maintain our service quality standards while at the same time
reduce costs. The flattening of the organization has allowed us to
efficiently meet our customers' needs and, thus, compete
effectively in a turbulent market environment.
"Though we've taken significant costs out of the
Company, we remain diligent in looking for ways to further reduce
our cost burden and to preserve capital. Steps we took during the
third quarter of 2015 allowed us to maintain our liquidity
sequentially and, so far in the first quarter, we've enacted
another meaningful cost reduction effort that should continue to
reduce the Company's operating costs. Additionally, Key continues
to identify and evaluate additional steps to enhance its liquidity
profile.
"Finally, we disclosed in August of last
year plans for my retirement from Key Energy Services during 2016
and for Robert Drummond to assume
the role of Chief Executive Officer in addition to his current
duties as President and Chief Operating Officer. This transition
will be effective March
1st. I want to thank Key's Board for
effectively and transparently leading this transition and to thank
all of Key's employees for their commitment to the Company during
my twelve year tenure."
U.S. Results
Fourth quarter 2015 U.S. Rig Services revenues of
$77.9 million were down 8.6% as
compared to the third quarter of 2015. Fourth quarter operating
loss was $6.5 million, or -8.3% of
revenue and includes the write-off of certain vendor deposits due
to vendor insolvency or cancelled orders, loss on sale of assets
and severance of $5.6 million;
excluding these losses, normalized operating loss was $0.8 million, or -1.1% of revenue. These results
compare to third quarter operating loss, excluding impairments, of
$3.9 million, or -4.6% of revenue.
Although revenue for this segment was down sequentially, normalized
operating loss improved by $3.1
million as organizational cost efficiencies were realized.
The U.S. Rig Services operating loss also includes $1.2 million of costs associated with mobilizing
rigs from international markets to the U.S. as compared to
$1.0 million the third quarter.
Fourth quarter 2015 Fluid Management Services
revenues of $27.7 million were down
22.0% as compared to the third quarter of 2015. Fourth quarter
operating loss was $16.6 million, or
-59.8% of revenue, and includes a loss on the sale of salt-water
disposal wells in the Bakken of $10.5
million and severance of $0.2
million; excluding these losses, normalized operating loss
was $5.8 million, or -21.1% of
revenue. These results compare to third quarter operating loss,
excluding impairments, of $3.9
million, or -10.9% of revenue. Seasonal pressure, including
fewer daylight hours and holidays as well
as customer activity disruptions led to the sequential revenue
decline.
Fourth quarter 2015 Coiled Tubing Services
revenues of $16.4 million were down
21.3% as compared to the third quarter of 2015. Fourth quarter
operating loss, excluding impairments, was $3.6 million, or -22.0% of revenue. These results
compare to third quarter operating loss, excluding impairments, of
$5.0 million, or -23.9% of revenue.
Activity declined sequentially as new-well completion activity
continued to contract due to commodity prices.
Fourth quarter 2015 Fishing & Rental Services
revenues of $23.4 million were down
15.2% as compared to the third quarter of 2015. Fourth quarter
operating loss was $4.7 million, or
-20.1% of revenue, and includes a loss on the sale of assets and
severance of $0.3 million; excluding
these losses, normalized operating loss was $4.4 million, or -18.7% of revenue. These results
compare to third quarter operating loss, excluding impairments, of
$5.1 million, or -18.5% of
revenue.
International Segment
Fourth quarter 2015 International revenues were
$4.8 million, down 37.3% as compared
to third quarter 2015 revenues of $7.7
million. Fourth quarter operating loss was $71.9 million, or -1,492.0% of revenues, include
a loss on asset sales of $39.9
million, a loss on the impairment of certain assets of
$23.0 million and severance of
$0.1 million; excluding these losses,
normalized operating loss was $8.9
million, or -185.1% of revenue. These results compare to
third quarter operating loss, excluding impairments, of
$12.9 million, or -167.2% of
revenues.
General and Administrative Expenses
General and Administrative (G&A) expenses
were $39.0 million for the fourth
quarter compared to $45.3 million in
the prior quarter. Fourth quarter G&A expenses included
$2.7 million in costs associated with
the FCPA investigations and $0.7
million in severance compared to third quarter G&A
expenses that included $2.5 million
in costs associated with the FCPA investigations and $1.6 million in severance. Excluding these items,
G&A expense in the fourth quarter was $35.6 million as compared to $41.2 million in the third quarter.
Capital Expenditures and Balance Sheet
Capital expenditures were $1.9 million during the fourth quarter 2015 and
$40.8 for the full-year 2015. Key's
consolidated cash balance at December 31,
2015 was $204.4 million
compared to $199.1 million at
September 30, 2015. Total debt at
December 31, 2015 was $964.9 million compared to total debt of
$964.7 million at September 30, 2015. The Company had $231.5 of total liquidity available at
December 31, 2015.
Conference Call Information
As previously announced, Key management will host
a conference call to discuss its fourth quarter and full-year 2015
financial results on Thursday, February 18,
2016 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
34233710. 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 Thursday, February 18,
2016, 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 34233710. The replay will also be accessible
at www.keyenergy.com under "Investor Relations" for a period of at
least 90 days.
Contact:
West Gotcher, Investor Relations
713-757-5539
Consolidated
Statements of Operations (in thousands, except per share amounts,
unaudited):
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December 31,
2015
|
|
September 30,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
REVENUES
|
|
$
|
150,174
|
|
|
$
|
176,857
|
|
|
$
|
354,802
|
|
|
$
|
792,326
|
|
|
$
|
1,427,336
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
Direct operating
expenses
|
|
176,761
|
|
|
174,505
|
|
|
266,354
|
|
|
714,637
|
|
|
1,059,651
|
|
Depreciation and
amortization expense
|
|
41,894
|
|
|
45,270
|
|
|
46,535
|
|
|
180,271
|
|
|
200,738
|
|
General and
administrative expenses
|
|
38,963
|
|
|
45,314
|
|
|
73,675
|
|
|
202,631
|
|
|
249,646
|
|
Impairment
expense
|
|
29,100
|
|
|
649,944
|
|
|
31,697
|
|
|
722,096
|
|
|
121,176
|
|
Operating
loss
|
|
(136,544)
|
|
|
(738,176)
|
|
|
(63,459)
|
|
|
(1,027,309)
|
|
|
(203,875)
|
|
Interest expense, net
of amounts capitalized
|
|
21,743
|
|
|
21,704
|
|
|
13,830
|
|
|
73,847
|
|
|
54,227
|
|
Other (income) loss,
net
|
|
(705)
|
|
|
5,915
|
|
|
3,463
|
|
|
9,394
|
|
|
1,009
|
|
Loss before tax
income taxes
|
|
(157,582)
|
|
|
(765,795)
|
|
|
(80,752)
|
|
|
(1,110,550)
|
|
|
(259,111)
|
|
Income tax
benefit
|
|
5,097
|
|
|
125,634
|
|
|
28,448
|
|
|
192,849
|
|
|
80,483
|
|
NET
LOSS
|
|
$
|
(152,485)
|
|
|
$
|
(640,161)
|
|
|
$
|
(52,304)
|
|
|
$
|
(917,701)
|
|
|
$
|
(178,628)
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.97)
|
|
|
$
|
(4.06)
|
|
|
$
|
(0.34)
|
|
|
$
|
(5.86)
|
|
|
$
|
(1.16)
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
157,585
|
|
|
157,605
|
|
|
153,501
|
|
|
156,598
|
|
|
153,371
|
|
Condensed
Consolidated Balance Sheets (in thousands):
|
|
|
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
204,354
|
|
|
$
|
27,304
|
|
|
Other current
assets
|
|
216,072
|
|
|
406,491
|
|
Total current
assets
|
|
420,426
|
|
|
433,795
|
|
Property and
equipment, net
|
|
880,032
|
|
|
1,235,258
|
|
Goodwill
|
|
—
|
|
|
582,739
|
|
Other assets,
net
|
|
27,340
|
|
|
70,971
|
|
TOTAL
ASSETS
|
|
$
|
1,327,798
|
|
|
$
|
2,322,763
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
30,740
|
|
|
$
|
77,631
|
|
|
Current portion of
long-term debt
|
|
3,150
|
|
|
—
|
|
|
Other current
liabilities
|
|
120,593
|
|
|
164,227
|
|
Total current
liabilities
|
|
154,483
|
|
|
241,858
|
|
Long-term
debt
|
|
961,700
|
|
|
737,691
|
|
Other non-current
liabilities
|
|
71,325
|
|
|
285,151
|
|
Equity
|
|
140,290
|
|
|
1,058,063
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
|
1,327,798
|
|
|
$
|
2,322,763
|
|
Consolidated Cash
Flow Data (in thousands, unaudited):
|
|
|
|
Twelve Months
Ended
|
|
|
December 31,
2015
|
|
December 31,
2014
|
Net cash provided by
(used in) operating activities
|
|
$
|
(22,386)
|
|
|
$
|
164,168
|
|
Net cash used in
investing activities
|
|
(19,403)
|
|
|
(146,840)
|
|
Net cash provided by
(used in) financing activities
|
|
218,729
|
|
|
(22,058)
|
|
Effect of exchange
rates on cash
|
|
110
|
|
|
3,728
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
177,050
|
|
|
(1,002)
|
|
Cash and cash
equivalents, beginning of period
|
|
27,304
|
|
|
28,306
|
|
Cash and cash
equivalents, end of period
|
|
$
|
204,354
|
|
|
$
|
27,304
|
|
Segment Revenue
and Operating Income (in thousands, except for percentages,
unaudited):
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December 31,
2015
|
|
September 30,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
77,856
|
|
|
$
|
85,200
|
|
|
$
|
166,095
|
|
|
$
|
377,131
|
|
|
$
|
679,045
|
|
Fluid Management
Services
|
|
27,701
|
|
|
35,519
|
|
|
62,096
|
|
|
153,153
|
|
|
249,589
|
|
Coiled Tubing
Services
|
|
16,377
|
|
|
20,820
|
|
|
43,452
|
|
|
89,823
|
|
|
173,364
|
|
Fishing & Rental
Services
|
|
23,422
|
|
|
27,629
|
|
|
54,546
|
|
|
121,883
|
|
|
212,598
|
|
International
|
|
4,818
|
|
|
7,689
|
|
|
28,613
|
|
|
50,336
|
|
|
112,740
|
|
Consolidated
Total
|
|
$
|
150,174
|
|
|
$
|
176,857
|
|
|
$
|
354,802
|
|
|
$
|
792,326
|
|
|
$
|
1,427,336
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
(6,473)
|
|
|
$
|
(305,334)
|
|
|
$
|
20,947
|
|
|
$
|
(307,939)
|
|
|
$
|
96,387
|
|
Fluid Management
Services
|
|
(16,565)
|
|
|
(28,336)
|
|
|
164
|
|
|
(43,484)
|
|
|
3,327
|
|
Coiled Tubing
Services
|
|
(10,691)
|
|
|
(116,572)
|
|
|
(16,391)
|
|
|
(155,168)
|
|
|
(10,819)
|
|
Fishing & Rental
Services
|
|
(4,704)
|
|
|
(186,078)
|
|
|
(7,162)
|
|
|
(197,412)
|
|
|
(58,944)
|
|
International
|
|
(71,886)
|
|
|
(72,168)
|
|
|
(8,839)
|
|
|
(182,536)
|
|
|
(65,432)
|
|
Functional
Support
|
|
(26,225)
|
|
|
(29,688)
|
|
|
(52,178)
|
|
|
(140,770)
|
|
|
(168,394)
|
|
Consolidated
Total
|
|
$
|
(136,544)
|
|
|
$
|
(738,176)
|
|
|
$
|
(63,459)
|
|
|
$
|
(1,027,309)
|
|
|
$
|
(203,875)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) % of Revenues
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
(8.3)%
|
|
|
(358.4)%
|
|
|
12.6%
|
|
|
(81.7)%
|
|
|
14.2%
|
|
Fluid Management
Services
|
|
(59.8)%
|
|
|
(79.8)%
|
|
|
0.3%
|
|
|
(28.4)%
|
|
|
1.3%
|
|
Coiled Tubing
Services
|
|
(65.3)%
|
|
|
(559.9)%
|
|
|
(37.7)%
|
|
|
(172.7)%
|
|
|
(6.2)%
|
|
Fishing & Rental
Services
|
|
(20.1)%
|
|
|
(673.5)%
|
|
|
(13.1)%
|
|
|
(162.0)%
|
|
|
(27.7)%
|
|
International
|
|
(1,492.0)%
|
|
|
(938.6)%
|
|
|
(30.9)%
|
|
|
(362.6)%
|
|
|
(58.0)%
|
|
Consolidated
Total
|
|
(90.9)%
|
|
|
(417.4)%
|
|
|
(17.9)%
|
|
|
(129.7)%
|
|
|
(14.3)%
|
|
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
|
|
Twelve Months
Ended
|
|
|
December 31,
2015
|
|
September 30,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
Net loss
|
|
$
|
(152,485)
|
|
|
$
|
(640,161)
|
|
|
$
|
(52,304)
|
|
|
$
|
(917,701)
|
|
|
$
|
(178,628)
|
|
Income tax
benefit
|
|
(5,097)
|
|
|
(125,634)
|
|
|
(28,448)
|
|
|
(192,849)
|
|
|
(80,483)
|
|
Interest expense, net
of amounts capitalized
|
|
21,743
|
|
|
21,704
|
|
|
13,830
|
|
|
73,847
|
|
|
54,227
|
|
Interest
income
|
|
(58)
|
|
|
(61)
|
|
|
(19)
|
|
|
(159)
|
|
|
(81)
|
|
Depreciation and
amortization
|
|
41,894
|
|
|
45,270
|
|
|
46,535
|
|
|
180,271
|
|
|
200,738
|
|
EBITDA
|
|
$
|
(94,003)
|
|
|
$
|
(698,882)
|
|
|
$
|
(20,406)
|
|
|
$
|
(856,591)
|
|
|
$
|
(4,227)
|
|
%
of revenues
|
|
(62.6)%
|
|
|
(395.2)%
|
|
|
(5.8)%
|
|
|
(108.1)%
|
|
|
(0.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
|
1,340
|
|
|
3,988
|
|
|
1,086
|
|
|
9,718
|
|
|
3,413
|
|
Impairment
expense
|
|
29,100
|
|
|
649,944
|
|
|
31,697
|
|
|
722,096
|
|
|
121,176
|
|
Allowance for
collectibility of notes receivable
|
|
—
|
|
|
3,755
|
|
|
—
|
|
|
7,705
|
|
|
—
|
|
Loss on assets
destroyed in Mexico
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,160
|
|
|
—
|
|
Loss on sales of
assets
|
|
50,907
|
|
|
—
|
|
|
3,700
|
|
|
53,034
|
|
|
3,700
|
|
Bad debt expense -
International
|
|
—
|
|
|
18,537
|
|
|
—
|
|
|
18,537
|
|
|
—
|
|
Other
write-offs
|
|
5,937
|
|
|
3,729
|
|
|
—
|
|
|
9,666
|
|
|
—
|
|
Sales tax
accrual
|
|
—
|
|
|
5,600
|
|
|
—
|
|
|
5,600
|
|
|
—
|
|
Adjusted
EBITDA*
|
|
$
|
(6,719)
|
|
|
$
|
(13,329)
|
|
|
$
|
16,077
|
|
|
$
|
(28,075)
|
|
|
$
|
124,062
|
|
%
of revenues
|
|
(4.5)%
|
|
|
(7.5)%
|
|
|
4.5%
|
|
|
(3.5)%
|
|
|
8.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
150,174
|
|
|
$
|
176,857
|
|
|
$
|
354,802
|
|
|
$
|
792,326
|
|
|
$
|
1,427,336
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
on-going FCPA investigations.
|
|
Three Months Ended
December 31, 2015
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
Net income
(loss)
|
$
|
(6,491)
|
|
|
$
|
(16,564)
|
|
|
$
|
(10,690)
|
|
|
$
|
(4,741)
|
|
|
$
|
(94,598)
|
|
|
$
|
(19,401)
|
|
|
$
|
(152,485)
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,250
|
|
|
(28,347)
|
|
|
(5,097)
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
21,702
|
|
|
21,743
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16)
|
|
|
(42)
|
|
|
(58)
|
|
Depreciation and
amortization
|
14,954
|
|
|
7,273
|
|
|
4,314
|
|
|
8,155
|
|
|
4,300
|
|
|
2,898
|
|
|
41,894
|
|
EBITDA
|
$
|
8,463
|
|
|
$
|
(9,291)
|
|
|
$
|
(6,376)
|
|
|
$
|
3,414
|
|
|
$
|
(67,023)
|
|
|
$
|
(23,190)
|
|
|
$
|
(94,003)
|
|
%
of revenues
|
10.9%
|
|
|
(33.5)%
|
|
|
(38.9)%
|
|
|
14.6%
|
|
|
(1,391.1)%
|
|
|
—%
|
|
|
(62.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
335
|
|
|
168
|
|
|
80
|
|
|
96
|
|
|
91
|
|
|
570
|
|
|
1,340
|
|
Impairment
expense
|
—
|
|
|
—
|
|
|
6,100
|
|
|
—
|
|
|
23,000
|
|
|
—
|
|
|
29,100
|
|
Loss on sale of
assets
|
316
|
|
|
10,544
|
|
|
(56)
|
|
|
226
|
|
|
39,877
|
|
|
—
|
|
|
50,907
|
|
Other
write-offs
|
4,977
|
|
|
—
|
|
|
960
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,937
|
|
Adjusted
EBITDA*
|
$
|
14,091
|
|
|
$
|
1,421
|
|
|
$
|
708
|
|
|
$
|
3,736
|
|
|
$
|
(4,055)
|
|
|
$
|
(22,620)
|
|
|
$
|
(6,719)
|
|
%
of revenues
|
18.1%
|
|
|
5.1%
|
|
|
4.3%
|
|
|
16.0%
|
|
|
(84.2)%
|
|
|
—%
|
|
|
(4.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
77,856
|
|
|
$
|
27,701
|
|
|
$
|
16,377
|
|
|
$
|
23,422
|
|
|
$
|
4,818
|
|
|
$
|
—
|
|
|
$
|
150,174
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's
on-going FCPA investigations.
|
|
Twelve Months
Ended December 31, 2015
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
Net income
(loss)
|
$
|
(306,069)
|
|
|
$
|
(46,340)
|
|
|
$
|
(154,685)
|
|
|
$
|
(196,685)
|
|
|
$
|
(229,002)
|
|
|
$
|
15,080
|
|
|
$
|
(917,701)
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,698
|
|
|
(236,547)
|
|
|
(192,849)
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
73,790
|
|
|
73,847
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(70)
|
|
|
(89)
|
|
|
(159)
|
|
Depreciation and
amortization
|
59,515
|
|
|
28,138
|
|
|
21,593
|
|
|
34,662
|
|
|
23,872
|
|
|
12,491
|
|
|
180,271
|
|
EBITDA
|
$
|
(246,554)
|
|
|
$
|
(18,202)
|
|
|
$
|
(133,092)
|
|
|
$
|
(162,023)
|
|
|
$
|
(161,445)
|
|
|
$
|
(135,275)
|
|
|
$
|
(856,591)
|
|
%
of revenues
|
(65.4)%
|
|
|
(11.9)%
|
|
|
(148.2)%
|
|
|
(132.9)%
|
|
|
(320.7)%
|
|
|
—%
|
|
|
(108.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
1,383
|
|
|
485
|
|
|
197
|
|
|
412
|
|
|
3,804
|
|
|
3,437
|
|
|
9,718
|
|
Impairment
expense
|
297,719
|
|
|
24,479
|
|
|
133,795
|
|
|
180,974
|
|
|
85,129
|
|
|
—
|
|
|
722,096
|
|
Allowance for
collectibility of notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,705
|
|
|
7,705
|
|
Loss on assets
destroyed in Mexico
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,160
|
|
|
—
|
|
|
2,160
|
|
Loss on sales of
assets
|
2,471
|
|
|
10,042
|
|
|
(66)
|
|
|
697
|
|
|
39,890
|
|
|
—
|
|
|
53,034
|
|
Bad debt
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,537
|
|
|
—
|
|
|
18,537
|
|
Other
write-offs
|
8,706
|
|
|
—
|
|
|
960
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,666
|
|
Sales tax
accrual
|
—
|
|
|
—
|
|
|
5,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,600
|
|
Adjusted
EBITDA*
|
$
|
63,725
|
|
|
$
|
16,804
|
|
|
$
|
7,394
|
|
|
$
|
20,060
|
|
|
$
|
(11,925)
|
|
|
$
|
(124,133)
|
|
|
$
|
(28,075)
|
|
%
of revenues
|
16.9%
|
|
|
11.0%
|
|
|
8.2%
|
|
|
16.5%
|
|
|
(23.7)%
|
|
|
—%
|
|
|
(3.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
377,131
|
|
|
$
|
153,153
|
|
|
$
|
89,823
|
|
|
$
|
121,883
|
|
|
$
|
50,336
|
|
|
$
|
—
|
|
|
$
|
792,326
|
|
|
|
*
|
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
- 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
- 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. 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 future oil and natural gas prices, anticipated cost
savings from our cost saving initiatives, available liquidity and
steps to enhance our liquidity, estimated capital expenditures,
future operational and activity expectations, and anticipated
financial performance. 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
and may not be successful in achieving steps to enhance its
liquidity profile; risks relating to Key's ability to comply with
covenants under its current credit facilities rendering the
liquidity provided by those facilities unavailable and resulting in
an event of default; 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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/key-energy-services-reports-fourth-quarter-and-full-year-2015-earnings-300222001.html
SOURCE Key Energy Services, Inc.