FTS International, Inc. (NYSE: FTSI) (the “Company” or “FTSI”)
today announced preliminary financial and operational results for
the fourth quarter of 2018.
Preliminary Fourth Quarter Results
- Revenue of $245 million to $250
million
- Net income of $25 million to $27
million
- Adjusted EBITDA of $62 million to $64
million
- Capital expenditures of approximately
$16 million for the fourth quarter and $101 million for the
year
- Repaid $57 million of debt, bringing
principal amount of debt to approximately $508 million
- $330 million of net debt, excluding
unamortized discount and debt issuance costs
Operational Update
FTSI experienced challenging market conditions in the fourth
quarter 2018. Softer demand and pricing on opportunities compelled
us to idle one additional fleet in the quarter. The Company exited
the fourth quarter 2018 with 19 active fleets.
Average active fleets during the fourth quarter 2018 were 19.3,
down from 21.8 in the third quarter 2018.
FTSI completed 6,038 stages during the fourth quarter 2018, or
313 stages per active fleet. This compares to 6,991 stages in the
third quarter 2018, or 321 stages per active fleet.
Michael Doss, Chief Executive Officer commented, “I am proud of
the performance we accomplished in the fourth quarter despite the
challenging environment we faced. We were able to achieve the
profitability levels we expected and generated free cash flow that
supported further deleveraging.
Looking ahead, the commodity price volatility we witnessed at
the end of 2018 has resulted in greater uncertainty for frac demand
in the first half of 2019. We also expect E&Ps will prioritize
flexibility in their capital spending, providing us with little
visibility for the rest of the year until they feel more confident
about the market outlook.
Based on discussions with our customers, we currently expect to
deploy one or two additional fleets in the first quarter 2019.
Pricing pressure, however, has continued in the first quarter 2019,
which will lower our annualized adjusted EBITDA per fleet
further.
With our in-house manufacturing cost advantage and our
disciplined approach, we are well positioned to steadily re-deploy
fleets to optimize profitability and cash flow.”
About FTS International, Inc.
Headquartered in Fort Worth, Texas, FTS International is one of
the largest providers of hydraulic fracturing services in North
America with an operating footprint consisting of five of the most
active major unconventional basins in the United States. The
Company’s services enhance hydrocarbon flow from oil and natural
gas wells drilled by exploration and production, or E&P,
companies in shale and other unconventional resource formations. To
learn more, visit www.FTSI.com.
Preliminary Results
The unaudited preliminary financial and operational results for
the fourth quarter 2018 represent the most current information
available to management and are based on calculations or figures
that have been prepared internally by management and have not been
reviewed or audited by the Company’s independent registered public
accounting firm. The Company’s actual results may differ materially
from these preliminary financial and operational results due to the
completion of the Company’s financial closing procedures, final
adjustments and other developments that may arise between the date
of this announcement and when results for the fourth quarter 2018
are finalized. The preliminary financial and operational results
included in this announcement are subject to risks and
uncertainties and should not be viewed as a substitute for full
financial statements prepared in accordance with GAAP. The Company
expects to release fourth quarter 2018 and full year 2018 results
on February 27, 2019 after the market closes.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP financial measure that FTSI
defines as earnings before interest; income taxes; and depreciation
and amortization, as well as, the following items, if applicable:
gain or loss on disposal of assets; debt extinguishment gains or
losses; inventory write-downs, asset and goodwill impairments; gain
on insurance recoveries; acquisition earn-out adjustments;
stock-based compensation; and acquisition or disposition
transaction costs. The most comparable financial measure to
Adjusted EBITDA under GAAP is net income or loss. Adjusted EBITDA
is used by management to evaluate the operating performance of
FTSI’s business for comparable periods and it is a metric used for
management incentive compensation. Adjusted EBITDA should not be
used by investors or others as the sole basis for formulating
investment decisions, as it excludes a number of important items.
The Company believes Adjusted EBITDA is an important indicator of
operating performance because it excludes the effects of FTSI’s
capital structure and certain non-cash items from its operating
results. Adjusted EBITDA is also commonly used by investors in the
oilfield services industry to measure a company's operating
performance, although FTSI’s definition of Adjusted EBITDA may
differ from other industry peer companies.
Net debt, excluding unamortized discount and debt issuance costs
is a non-GAAP financial measure that FTSI defines as total
principal amount of long-term debt less cash and cash equivalents.
The most comparable financial measure to net debt, excluding
unamortized discount and debt issuance costs under GAAP is
principal amount of long-term debt. Net debt is used by management
as a measure of our financial leverage. Net debt, excluding
unamortized discount and debt issuance costs should not be used by
investors or others as the sole basis in formulating investment
decisions as it does not represent the Company’s actual
indebtedness.
Forward-Looking and Cautionary Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include statements regarding the
Company’s preliminary fourth quarter 2018 financial and operational
results, customer demand in the first half of 2019, the
reactivation of fleets in the first quarter of 2019, pricing
pressure in the first quarter 2019, and our annualized adjusted
EBITDA per fleet in the first quarter 2019, and other statements
identified by words such as “could,” “may,” “might,” “will,”
“likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,”
“estimates,” “expects,” “continues,” “projects” and similar
references to future periods. Forward-looking statements are based
on FTSI’s current expectations and assumptions as of the date of
this announcement regarding capital market conditions, FTSI’s
business, the economy and other future conditions. Because
forward-looking statements relate to the future, by their nature,
they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. As a result, FTSI’s
actual results may differ materially from those contemplated by the
forward-looking statements. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include, but are not limited to FTSI’s
financial closing procedures, final adjustments and other
developments that may arise between the date of this presentation
and when results for the fourth quarter 2018 are finalized; the
operations of FTSI; results of litigation, settlements and
investigations; the final terms of new and renegotiated supply and
customer contracts; actions by third parties, including
governmental agencies; volatility in customer spending and in oil
and natural gas prices, which could adversely affect demand for
FTSI's services and their associated effect on rates, utilization,
margins and planned capital expenditures; global economic
conditions; excess availability of pressure pumping equipment,
including as a result of low commodity prices, reactivation or
construction; liabilities from operations; weather; decline in, and
ability to realize, backlog; equipment specialization and new
technologies; shortages, delays in delivery and interruptions of
supply of equipment and materials; ability to hire and retain
personnel; loss of, or reduction in business with, key customers;
difficulty with growth and in integrating acquisitions; product
liability; political, economic and social instability risk; ability
to effectively identify and enter new markets; cybersecurity risk;
dependence on our subsidiaries to meet our long-term debt
obligations; variable rate indebtedness risk; and anti-takeover
measures in our charter documents. Any forward-looking statement
made in this press release speaks only as of the date on which it
is made. FTSI undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as required
by law.
When considering these forward-looking statements, you should
keep in mind the risk factors and other cautionary statements in
FTSI’s filings with the SEC. The risk factors and other factors
noted in FTSI’s filings with the SEC could cause the Company’s
actual results to differ materially from those contained in any
forward-looking statement.
Reconciliation of Net Income to Adjusted
EBITDA
Three Months Ended December 31, 2018 (In
millions)
Low
High Net income $ 24.6 $ 26.6 Interest
expense, net 9.4 9.4 Income tax expense (0.1 ) (0.1 ) Depreciation
and amortization 22.3 22.3 (Gain) loss on disposal of assets, net
(0.3 ) (0.3 ) Loss on extinguishment of debt, net (0.9 ) (0.9 )
Stock-based compensation 7.0 7.0
Adjusted EBITDA $ 62.0 $ 64.0
Reconciliation of Principal Amount of Debt
to Net Debt, Excluding Unamortized Discount and Debt Issuance
Costs
(In millions)
December 31, 2018 Term loan due April 2021 $ 121.0
Senior notes due May 2022 386.9 Total principal
amount of debt 507.9 Less: cash and cash equivalents (177.8
)
Net debt, excluding unamortized discount and debt issuance
costs $ 330.1
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version on businesswire.com: https://www.businesswire.com/news/home/20190211005262/en/
Lance Turner, Chief Financial OfficerFTS International,
Inc.817-862-2000
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