FTS International, Inc. (NYSE: FTSI) (the “Company” or “FTSI”)
today reported its financial and operational results for the second
quarter of 2019.
Michael Doss, FTSI’s Chief Executive Officer, commented, “We're
pleased to report another quarter of outstanding operational
performance and achieved near record efficiency. Our adjusted
EBITDA was in-line with our expectations and we continue to deliver
above average returns as reflected by our adjusted EBITDA less
capex performance. While we are seeing softer demand in second half
of the year, we still expect to generate cash flow of approximately
$100 million in 2019.”
Second Quarter 2019 Compared to First Quarter 2019
- Revenue was $225.8 million, up from $222.5 million
- Net income was $5.9 million, up from a net loss of $(55.0)
million, which included a $56.6 million supply commitment charge
and $4.2 million of wireline asset impairment and inventory
write-down
- Earnings per share was $0.05, up from $(0.50)
- Adjusted EBITDA was $41.9 million, up from $39.4 million
- Adjusted EBITDA per average active fleet was $8.0 million on an
annualized basis, up slightly from $7.9 million
- Adjusted EBITDA less capital expenditures was $27.1 million,
down slightly from $27.7 million
- Adjusted EBITDA less capital expenditures per average active
fleet was $5.2 million on an annualized basis, down slightly from
$5.5 million
Operational Update
Average active fleets during the second quarter was 21 and
subsequent to June 30 the Company stacked one fleet leaving 20
fleets active today. However, with softening demand in the second
half of 2019, the Company currently expects to stack two to three
additional fleets in the third quarter.
FTSI completed 7,230 stages during the second quarter, or 344
stages per active fleet. This compares to 6,740 stages in the first
quarter, or 337 stages per active fleet, and 9,356 stages in the
second quarter of last year, or 334 stages per active fleet. Second
quarter efficiencies represent the second highest stages per active
fleet ever recorded by the Company while pumping 16% longer stages
and 12% more hours per day than when the record was achieved in
second quarter 2017.
Liquidity and Capital Resources
Capital expenditures were $14.8 million in the second quarter
compared to $11.7 million in the first quarter. The Company has
also tightened the range of its full-year 2019 capital expenditure
expectation to $55 million – $60 million.
During the second quarter, the Company repaid $5.0 million of
debt to bring the total principal amount of debt outstanding to
$475.9 million at June 30, 2019. At June 30, 2019, FTSI had $162.1
million of cash, resulting in net debt of $313.8 million, and
availability under the Company’s revolving credit facility was
$112.4 million. During the second quarter, the Company had no
borrowings outstanding under its revolving credit facility.
During the second quarter, the Company repurchased 761,014
shares under its stock repurchase program for $4.6 million. At June
30, 2019, the Company had $95.4 million remaining under its share
repurchase program. The program does not obligate the Company to
purchase shares and it may be modified or suspended at any
time.
Conference Call & Webcast
FTSI will hold a conference call that will also be webcast on
its website on Wednesday, July 31, 2019 at 9:00 a.m. Central Time
(10:00 a.m. Eastern Time) to discuss the results. Presenting the
Company’s results will be Michael Doss, Chief Executive Officer,
Buddy Petersen, Chief Operating Officer and Lance Turner, Chief
Financial Officer.
Please see below for instructions on how to access the
conference call and webcast. If you intend to ask a question in the
Q&A portion of the call, please join by phone.
By Phone:
Dial (212) 231-2906 at least 10 minutes
before the call. A replay will be available through August 21st by
dialing (402) 977-9140 and using the conference ID 21927011#.
By Webcast:
Connect to the webcast via the Events page
of FTSI’s website at www.FTSI.com/investor-relations/events. Please
join the webcast at least 10 minutes in advance to register and
download any necessary software. A replay will be available shortly
after the call.
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 stimulate hydrocarbon flow from oil and natural
gas wells drilled by exploration and production companies primarily
in shale resource formations. To learn more, visit
www.FTSI.com.
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; acquisition or disposition transaction
costs; and supply commitment charges. The most comparable financial
measure to Adjusted EBITDA under GAAP is net income or loss.
Adjusted EBITDA per average active fleet on an annualized basis is
also a non-GAAP measure and is defined as Adjusted EBITDA divided
by the average active fleets per quarter then multiplying the
result by four. The Company also uses Adjusted EBITDA less capital
expenditures, and Adjusted EBITDA less capital expenditures per
average active fleet on an annualized basis. Adjusted EBITDA less
capital expenditures further adjusts Adjusted EBITDA to exclude
capital expenditures. Adjusted EBITDA less capital expenditures per
average active fleet on an annualized basis is calculated in the
same manner as Adjusted EBITDA per average active fleet on an
annualized basis. These non-GAAP measures are used by management to
evaluate the operating performance of the business for comparable
periods and Adjusted EBITDA is a metric used for management
incentive compensation. Our non-GAAP measures should not be used by
investors or others as the sole basis for formulating investment
decisions, as they exclude a number of important items. The Company
believes the non-GAAP measures it uses are important indicators of
operating performance because they exclude the effects of the
Company’s capital structure and certain non-cash items from the
Company’s 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 is a non-GAAP financial measure that FTSI defines as
total long-term debt less cash and cash equivalents. The most
comparable financial measure to net debt under GAAP is long-term
debt. Net debt is used by management as a measure of our financial
leverage. Net debt 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
expected cash flow generation, the expected reduction of fleets,
and full-year 2019 capital expenditure guidance, and other
statements identified by words such as “could,” “may,” “might,”
“will,” “likely,” “anticipates,” “intends,” “potential,” “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 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, the
projected operations of FTSI; results of litigation, arbitration,
settlements and investigations; 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 capital expenditures; global economic
conditions; excess availability of pressure pumping equipment;
liabilities from operations; weather; decline in, and ability to
realize, backlog; potential delay in future equipment
specialization and new technologies, including electric fleets;
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 and other risks and
uncertainties. 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.
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, including the most recently filed
Forms 10-Q and 10-K. FTSI’s filings may be reviewed on FTSI’s
website at ftsi.com or through the SEC’s Electronic Data Gathering
and Analysis Retrieval System (EDGAR) at http://www.sec.gov.
Consolidated Statements of Operations
(unaudited)
Three Months Ended
Six Months Ended
(In millions, except per share
amounts)
Jun. 30,
2019
Mar. 31, 2019
Jun. 30,
2018
Jun. 30,
Jun. 30,
2019
2018
Revenue
Revenue
$
225.8
$
221.6
$
454.6
$
447.4
$
877.9
Revenue from related parties
–
0.9
38.7
0.9
82.9
Total revenue
225.8
222.5
493.3
448.3
960.8
Operating expenses
Costs of revenue
165.9
163.1
329.4
329.0
641.6
Selling, general and administrative
21.7
23.6
20.8
45.3
46.6
Depreciation and amortization
22.8
22.4
20.7
45.2
41.3
Impairments and other charges
2.8
60.8
4.0
63.6
6.0
(Gain) loss on disposal of assets, net
(1.2
)
0.3
(0.2
)
(0.9
)
0.3
Total operating expenses
212.0
270.2
374.7
482.2
735.8
Operating income (loss)
13.8
(47.7
)
118.6
(33.9
)
225.0
Interest expense, net
(7.7
)
(8.2
)
(12.1
)
(15.9
)
(29.5
)
(Loss) gain on extinguishment of debt,
net
(0.1
)
0.5
(0.8
)
0.4
(10.1
)
Equity in net income (loss) of joint
venture affiliate
–
0.6
(1.2
)
0.6
(1.2
)
Income (loss) before income
taxes
6.0
(54.8
)
104.5
(48.8
)
184.2
Income tax expense
0.1
0.2
0.9
0.3
1.9
Net income (loss)
$
5.9
$
(55.0
)
$
103.6
$
(49.1
)
$
182.3
Net income (loss) attributable to common
stockholders
$
5.9
$
(55.0
)
$
103.6
$
(49.1
)
$
605.5
Basic and diluted earnings per share
attributable to common stockholders
$
0.05
$
(0.50
)
$
0.95
$
(0.45
)
$
6.12
Shares used in computing basic and diluted
earnings per share
109.7
109.7
109.3
109.7
98.9
Consolidated Balance Sheets
(unaudited)
Jun. 30,
Dec. 31,
(In millions)
2019
2018
ASSETS
Current assets
Cash and cash equivalents
$
162.1
$
177.8
Accounts receivable, net
141.6
158.3
Inventories
59.5
66.6
Prepaid expenses and other current
assets
14.3
7.0
Total current assets
377.5
409.7
Property, plant, and equipment, net
251.4
275.3
Operating lease right-of-use assets
34.8
–
Intangible assets, net
29.5
29.5
Investment in joint venture affiliate
24.2
23.2
Other assets
5.1
6.0
Total assets
$
722.5
$
743.7
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
73.3
$
86.8
Accrued expenses
25.8
29.3
Current portion of operating lease
liabilities
16.6
–
Other current liabilities
12.1
16.3
Total current liabilities
127.8
132.4
Long-term debt
472.2
503.2
Operating lease liabilities
20.5
–
Other liabilities
44.0
1.2
Total liabilities
664.5
636.8
Stockholders’ equity
Common stock
36.4
36.4
Additional paid-in capital
4,378.5
4,378.4
Accumulated deficit
(4,356.9
)
(4,307.9
)
Total stockholders’ equity
58.0
106.9
Total liabilities and stockholders’
equity
$
722.5
$
743.7
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
Six Months Ended
(In millions)
Jun. 30,
2019
Mar. 31,
2019
Jun. 30,
2018
Jun. 30,
2019
Jun. 30,
2018
Cash flows from operating
activities
Net income (loss)
$
5.9
$
(55.0
)
$
103.6
$
(49.1
)
$
182.3
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
22.8
22.4
20.7
45.2
41.3
Stock-based compensation
3.7
3.0
3.4
6.7
5.0
Amortization of debt discounts and
issuance costs
0.4
0.5
0.6
0.9
1.5
(Gain) loss on disposal of assets, net
(1.2
)
0.3
(0.2
)
(0.9
)
0.3
(Gain) loss on extinguishment of debt,
net
0.1
(0.5
)
0.8
(0.4
)
10.1
Non-cash provision for supply commitment
charges
0.1
56.6
4.0
56.7
6.0
Cash paid to settle supply commitment
charges
(15.9
)
—
(2.0
)
(15.9
)
(2.0
)
Impairment of assets
2.7
2.8
—
5.5
—
Inventory write-down
—
1.4
—
1.4
—
Other non-cash items
0.8
(0.8
)
1.0
—
1.1
Changes in operating assets and
liabilities:
Accounts receivable
9.1
7.7
(22.7
)
16.8
(54.8
)
Accounts receivable from related
parties
—
—
14.8
—
(19.4
)
Inventories
7.3
(1.7
)
(8.2
)
5.6
(17.3
)
Prepaid expenses and other assets
(8.9
)
0.3
(0.5
)
(8.6
)
(0.8
)
Accounts payable
(1.0
)
(11.3
)
(5.7
)
(12.3
)
21.0
Accrued expenses and other liabilities
(12.5
)
8.2
(10.4
)
(4.3
)
(0.8
)
Net cash provided by operating
activities
13.4
33.9
99.2
47.3
173.5
Cash flows from investing
activities
Capital expenditures
(14.8
)
(11.7
)
(28.5
)
(26.5
)
(66.3
)
Proceeds from disposal of assets
1.2
0.1
0.3
1.3
0.6
Net cash used in investing activities
(13.6
)
(11.6
)
(28.2
)
(25.2
)
(65.7
)
Cash flows from financing
activities
Repayments of long-term debt
(5.0
)
(26.3
)
(100.0
)
(31.3
)
(499.3
)
Taxes paid related to net share settlement
of equity awards
(0.2
)
(1.7
)
—
(1.9
)
—
Net proceeds from issuance of common
stock
—
—
—
—
303.0
Repurchase of common stock
(4.6
)
—
—
(4.6
)
—
Payments of revolving credit facility
issuance costs
—
—
(0.2
)
—
(2.4
)
Net cash used in financing activities
(9.8
)
(28.0
)
(100.2
)
(37.8
)
(198.7
)
Net (decrease) increase in cash and cash
equivalents
(10.0
)
(5.7
)
(29.2
)
(15.7
)
(90.9
)
Cash and cash equivalents at beginning of
period
172.1
177.8
155.5
177.8
217.2
Cash and cash equivalents at end of
period
$
162.1
$
172.1
$
126.3
$
162.1
$
126.3
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
Three Months Ended
(In millions except average active
fleets)
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Net income (loss)
$
5.9
$
(55.0
)
$
103.6
Interest expense, net
7.7
8.2
12.1
Income tax expense
0.1
0.2
0.9
Depreciation and amortization
22.8
22.4
20.7
(Gain) loss on disposal of assets, net
(1.2
)
0.3
(0.2
)
Loss (gain) on extinguishment of debt,
net
0.1
(0.5
)
0.8
Stock-based compensation
3.7
3.0
3.4
Supply commitment charges
0.1
56.6
4.0
Impairment of assets
2.7
2.8
—
Inventory write-down
—
1.4
—
Adjusted EBITDA
41.9
39.4
145.3
Average Active Fleets
21.0
20.0
28.0
Annualized Adjusted EBITDA Per Average
Active Fleet
$
8.0
$
7.9
$
20.8
Adjusted EBITDA
$
41.9
$
39.4
$
145.3
Capital Expenditures
(14.8
)
(11.7
)
(28.5
)
Adjusted EBITDA less Capital
Expenditures
27.1
27.7
116.8
Average Active Fleets
21.0
20.0
28.0
Annualized Adjusted EBITDA less Capital
Expenditures Per Average Active Fleet
$
5.2
$
5.5
$
16.7
Reconciliation of Long-term Debt to Net
Debt
Jun. 30,
Dec. 31,
(In millions)
2019
2018
Long-term debt
$
472.2
$
503.2
Add: unamortized discount and debt
issuance costs
3.7
4.7
Total principal amount of debt
475.9
507.9
Less: cash and cash equivalents
162.1
177.8
Net debt
$
313.8
$
330.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190730006048/en/
Lance Turner Chief Financial Officer FTS International, Inc.
817-862-2000
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