FTS International, Inc. (NYSE: FTSI) (the “Company” or “FTSI”)
today reported its financial and operational results for the fourth
quarter and full year 2019.
Michael Doss, FTSI’s Chief Executive Officer, commented, “I am
immensely proud of our team’s efforts in the fourth quarter. We
were able to take costs out quicker and reach a new level of
efficiency, despite the slowdown we experienced from many of our
customers. We continue to achieve industry-leading performance for
our customers, which simply wouldn’t be possible without our crews’
complete dedication to service quality, our outstanding maintenance
team, and our well-maintained fleet.”
Fourth Quarter 2019 Compared to the Third Quarter
2019
- Revenue was $142.3 million, down from $186.0 million
- Net loss was $13.0 million, down from loss of $10.8
million
- Earnings per share of $(0.12), down from $(0.10)
- Adjusted EBITDA was $22.7 million, up from $20.6 million
- Adjusted EBITDA per average active fleet was $5.5 million on an
annualized basis, up from $4.2 million
- Ahead of schedule on achieving annualized cost savings target
of $40 million
Full Year 2019
- Revenue was $776.6 million and net loss was $72.9 million or
$(0.67) per share
- Adjusted EBITDA was $124.6 million or $6.5 million per average
active fleet
- Net cash provided by operating activities of $123.9 million
less capital expenditures of $54.4 million resulted in free cash
flow of $69.5 million
- Free cash flow, including asset disposal and joint venture sale
proceeds of $34.0 million, was $103.5 million
Operational Update
Average active fleets during the fourth quarter 2019 was 16.5,
down from 19.8 in the third quarter 2019. The Company exited the
fourth quarter 2019 with 16 active fleets and has 17 fleets active
today.
FTSI completed 6,346 stages during the fourth quarter 2019, or
385 stages per active fleet. This compares to 7,050 stages in the
third quarter 2019, or 356 stages per active fleet.
Michael Doss further commented, “The increase in stages per
fleet was accomplished despite more white space in the calendar
than usual. Our crews relentlessly push for new records every day,
and in the fourth quarter they gave us the highest average pumping
hours per day and stages per fleet in our company’s history.
Nonetheless, I expect to see further increases in efficiencies in
2020 as the amount of white space is reduced to a more normalized
level.”
Liquidity and Capital Resources
Capital expenditures were $14.9 million in the fourth quarter
and $54.4 million in 2019.
At December 31, 2019, FTSI had $456.9 million of long-term debt
and $223.0 million of cash. Net debt, which excludes unamortized
discount and debt issuance costs, was $236.9 million at December
31, 2019. Additionally, at year end, total liquidity was $278.9
million, including $55.9 million of availability under the
Company’s revolving credit facility. During the fourth quarter
2019, the Company had no borrowings outstanding under its revolving
credit facility.
Conference Call & Webcast
FTS International will hold a conference call that will also be
webcast on its website on Thursday, February 13, 2020 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, who will then be joined by Buddy Petersen, Chief
Operating Officer and Lance Turner, Chief Financial Officer, for
Q&A.
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) 231-2919 at least 10 minutes
before the call. A replay will be available through March 5 by
dialing (402) 977-9140 and using the conference ID 21952053#.
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 independent hydraulic fracturing service companies and
one of the only vertically integrated service providers of its kind
in North America.
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; supply commitment charges; gain on sale
of equity interest in joint venture affiliate; and acquisition or
disposition transaction costs. The most comparable financial
measure to Adjusted EBITDA under GAAP is net income or loss. The
Company also uses Adjusted EBITDA per average active fleet on an
annualized basis, which is a non-GAAP measure and is defined as
Adjusted EBITDA divided by the average active fleets per quarter
then multiplying the result by four. Adjusted EBITDA and Adjusted
EBITDA per average active fleet on an annualized basis 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. Adjusted EBITDA and Adjusted
EBITDA per average active fleet on an annualized basis 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 Adjusted EBITDA and Adjusted EBITDA per
average active fleet on an annualized basis 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.
Free cash flow is a non‐GAAP financial measure that FTSI defines
as cash flow from operations less capital expenditures, and free
cash flow, including asset disposal and joint venture sale
proceeds, is a non‐GAAP financial measure that FTSI defines as cash
flow from operations less capital expenditures plus proceeds from
disposal of assets plus proceeds from sale of equity interest in
joint venture affiliate. The most comparable financial measure to
free cash flow and free cash flow, including asset disposal and
joint venture sale proceeds, is net cash provided by (used in)
operating activities. Free cash flow and free cash flow, including
asset disposal and joint venture sale proceeds, are used by
management to evaluate our ongoing business operations. Free cash
flow and free cash flow, including asset disposal and joint venture
sale proceeds, should not be used by investors or others as the
sole basis for formulating investment decisions, as it excludes
important items. These calculations are commonly used as a basis
for investors to evaluate and compare the operating performance and
value of companies within our industry, although FTSI’s definition
of free cash flow and free cash flow, including asset disposal and
joint venture sale proceeds, may differ from other industry peer
companies.
Net debt is a non-GAAP financial measure that FTSI defines as
total long-term debt plus unamortized discount and debt issuance
costs 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 and helps our
investors better understand 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
increases in efficiencies in 2020, expected timing of achieving
annualized cost savings target, 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 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 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.
Consolidated Statements of Operations
(unaudited)
Three Months Ended
Twelve Months Ended
Dec. 31,
Sep. 30,
Dec. 31,
Dec. 31,
Dec. 31,
(In millions, except per share amounts)
2019
2019
2018
2019
2018
Revenue Revenue
$
142.3
$
186.0
$
248.1
$
775.7
$
1,450.4
Revenue from related parties
-
-
-
0.9
92.9
Total revenue
142.3
186.0
248.1
776.6
1,543.3
Operating expenses Costs of revenue, excluding
depreciation and amortization
102.7
147.2
169.4
578.9
1,033.2
Selling, general and administrative
22.7
21.1
21.6
89.1
87.9
Depreciation and amortization
22.1
22.7
22.3
90.0
84.7
Impairments and other charges
0.9
5.1
3.2
69.6
19.2
Gain on disposal of assets, net
(0.4)
(0.1)
(0.3)
(1.4)
(0.1)
Total operating expenses
148.0
196.0
216.2
826.2
1,224.9
Operating (loss) income
(5.7)
(10.0)
31.9
(49.6)
318.4
Interest expense, net
(7.2)
(7.6)
(9.4)
(30.7)
(49.3)
Gain (loss) on extinguishment of debt, net
-
0.8
0.9
1.2
(9.8)
Gain on sale of equity interest in joint venture affiliate
-
7.0
-
7.0
-
Equity in net income of joint venture affiliate
-
-
3.0
0.6
1.1
(Loss) income before income taxes
(12.9)
(9.8)
26.4
(71.5)
260.4
Income tax expense (benefit)
0.1
1.0
(0.1)
1.4
2.0
Net (loss) income
$
(13.0)
$
(10.8)
$
26.5
$
(72.9)
$
258.4
Net (loss) income attributable to common stockholders
$
(13.0)
$
(10.8)
$
26.5
$
(72.9)
$
681.6
Basic and diluted earnings per share attributable to common
stockholders
$
(0.12)
$
(0.10)
$
0.24
$
(0.67)
$
6.54
Shares used in computing basic and diluted earnings per
share
107.3
108.6
109.4
108.8
104.2
Consolidated Balance Sheets
(unaudited)
Dec. 31,
Sep. 30,
Dec. 31,
(In millions)
2019
2019
2018
ASSETS Current assets Cash and cash
equivalents
$
223.0
$
204.2
$
177.8
Accounts receivable, net
77.0
119.5
158.3
Inventories
45.5
48.3
66.6
Prepaid expenses and other current assets
7.0
11.9
7.0
Total current assets
352.5
383.9
409.7
Property, plant, and equipment, net
227.0
237.7
275.3
Operating lease right-of-use assets
26.3
30.2
-
Intangible assets, net
29.5
29.5
29.5
Investment in joint venture affiliate
-
-
23.2
Other assets
4.0
4.2
6.0
Total assets
$
639.3
$
685.5
$
743.7
LIABILITIES AND EQUITY Current liabilities
Accounts payable
$
36.4
$
57.6
$
86.8
Accrued expenses
22.9
34.8
29.3
Current portion of operating lease liabilities
14.3
15.0
-
Other current liabilities
11.6
12.0
16.3
Total current liabilities
85.2
119.4
132.4
Long-term debt
456.9
456.6
503.2
Operating lease liabilities
13.9
17.2
-
Other liabilities
45.6
45.8
1.2
Total liabilities
601.6
639.0
636.8
Equity Common stock
36.4
36.4
36.4
Additional paid-in capital
4,382.0
4,377.8
4,378.4
Accumulated deficit
(4,380.7
)
(4,367.7
)
(4,307.9
)
Total equity
37.7
46.5
106.9
Total liabilities and equity
$
639.3
$
685.5
$
743.7
Consolidated Statement of Cash Flows
(unaudited)
Three Months Ended
Twelve Months Ended
Dec. 31,
Sep. 30,
Dec. 31,
Dec. 31,
Dec. 31,
(In millions)
2019
2019
2018
2019
2018
Cash flows from operating activities Net (loss)
income
$
(13.0
)
$
(10.8
)
$
26.5
$
(72.9
)
$
258.4
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: Depreciation and amortization
22.1
22.7
22.3
90.0
84.7
Stock-based compensation
5.8
2.9
7.0
15.4
15.2
Amortization of debt discounts and issuance costs
0.4
0.5
0.5
1.8
2.5
Impairment of assets
-
4.2
-
9.7
-
Gain on disposal of assets, net
(0.4
)
(0.1
)
(0.3
)
(1.4
)
(0.1
)
(Gain) loss on extinguishment of debt, net
-
(0.8
)
(0.9
)
(1.2
)
9.8
Gain on sale of equity interest in joint venture affiliate
-
(7.0
)
-
(7.0
)
-
Inventory write-down
-
-
-
1.4
-
Non-cash provision for supply commitment charges
0.9
0.9
3.2
58.5
19.2
Cash paid to settle supply commitment charges
(1.5
)
(0.2
)
(3.2
)
(17.6
)
(5.3
)
Other non-cash items
3.1
1.6
(3.4
)
4.7
(1.6
)
Changes in operating assets and liabilities: Accounts receivable
40.3
21.9
56.7
79.0
72.7
Accounts receivable from related parties
-
-
7.4
-
3.0
Inventories
2.2
11.2
0.7
19.0
(22.6
)
Prepaid expenses and other assets
5.4
1.7
1.7
(1.5
)
2.8
Accounts payable
(18.8
)
(16.2
)
(16.4
)
(47.3
)
(41.6
)
Accrued expenses and other liabilities
(12.5
)
10.1
(19.6
)
(6.7
)
(12.3
)
Net cash provided by operating activities
34.0
42.6
82.2
123.9
384.8
Cash flows from investing activities Capital
expenditures
(14.9
)
(13.0
)
(15.6
)
(54.4
)
(100.5
)
Proceeds from disposal of assets
1.4
0.6
0.9
3.3
1.9
Proceeds from sale of equity interest in joint venture affiliate
-
30.7
-
30.7
-
Net cash (used in) provided by investing activities
(13.5
)
18.3
(14.7
)
(20.4
)
(98.6
)
Cash flows from financing activities Repayments of
long-term debt
-
(15.1
)
(55.8
)
(46.4
)
(625.1
)
Repurchases of common stock
(1.6
)
(3.7
)
-
(9.9
)
-
Taxes paid related to net share settlement of equity awards
(0.1
)
-
(1.1
)
(2.0
)
(1.1
)
Net proceeds from issuance of common stock
-
-
-
-
303.0
Payments of revolving credit facility issuance costs
-
-
-
-
(2.4
)
Net cash used in financing activities
(1.7
)
(18.8
)
(56.9
)
(58.3
)
(325.6
)
Net increase (decrease) in cash and cash equivalents
18.8
42.1
10.6
45.2
(39.4
)
Cash, cash equivalents, and restricted cash at beginning of period
204.2
162.1
167.2
177.8
217.2
Cash and cash equivalents at end of period
$
223.0
$
204.2
$
177.8
$
223.0
$
177.8
Reconciliation of Net (Loss) Income to
Adjusted EBITDA
Three Months Ended
Twelve Months Ended
Dec. 31,
Sep. 30,
Dec. 31,
Dec. 31,
Dec. 31,
(In millions, except average active fleets)
2019
2019
2018
2019
2018
Net (loss) income
$
(13.0
)
$
(10.8
)
$
26.5
$
(72.9
)
$
258.4
Interest expense, net
7.2
7.6
9.4
30.7
49.3
Income tax expense (benefit)
0.1
1.0
(0.1
)
1.4
2.0
Depreciation and amortization
22.1
22.7
22.3
90.0
84.7
Gain on disposal of assets, net
(0.4
)
(0.1
)
(0.3
)
(1.4
)
(0.1
)
(Gain) loss on extinguishment of debt, net
-
(0.8
)
(0.9
)
(1.2
)
9.8
Stock-based compensation
5.8
2.9
7.0
15.4
15.2
Non-cash provision for supply commitment charges
0.9
0.9
3.2
58.5
19.2
Impairment of assets
-
4.2
-
9.7
-
Gain on sale of equity interest in joint venture affiliate
-
(7.0
)
-
(7.0
)
-
Inventory write-down
-
-
-
1.4
-
Adjusted EBITDA
22.7
20.6
67.1
124.6
438.5
Average active fleets
16.5
19.8
19.3
19.3
24.2
Annualized adjusted EBITDA per average active fleet
$
5.5
$
4.2
$
13.9
$
6.5
$
18.1
Reconciliation of Free cash Flow and
Free Cash Flow, Including Asset Disposal and Joint Venture Sale
Proceeds
Three Months Ended
Twelve Months Ended
Dec. 31,
Sep. 30,
Dec. 31,
Dec. 31,
Dec. 31,
(In millions)
2019
2019
2018
2019
2018
Net cash provided by operating activities
$
34.0
$
42.6
$
82.2
$
123.9
$
384.8
Capital expenditures
(14.9
)
(13.0
)
(15.6
)
(54.4
)
(100.5
)
Free cash flow
$
19.1
$
29.6
$
66.6
$
69.5
$
284.3
Plus: Proceeds from disposal of assets
1.4
0.6
0.9
3.3
1.9
Plus: Proceeds from sale of equity interest in joint venture
affiliate
-
30.7
-
30.7
-
Free cash flow, including asset disposal and joint venture sale
proceeds
$
20.5
$
60.9
$
67.5
$
103.5
$
286.2
Reconciliation of Long-term Debt to Net
Debt
Dec. 31,
Sep. 30,
Dec. 31,
(In millions)
2019
2019
2018
Term loan due April 2021
$
90.0
$
90.0
$
121.0
Senior notes due May 2022
369.9
369.9
386.9
Less unamortized discount and debt issuance costs
(3.0
)
(3.3
)
(4.7
)
Total long-term debt
456.9
456.6
503.2
Add unamortized discount and debt issuance costs
3.0
3.3
4.7
Total principal amount of debt
459.9
459.9
507.9
Less cash and cash equivalents
(223.0
)
(204.2
)
(177.8
)
Net debt
$
236.9
$
255.7
$
330.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200212005799/en/
Lance Turner Chief Financial Officer FTS International, Inc.
817-862-2000
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