Tesco Corporation ("TESCO" or the "Company") (NASDAQ:TESO) today
reported third quarter 2017 financial and operating results.
Third Quarter Operating
Results
Fernando Assing, TESCO's President and Chief
Executive Officer, commented, "Our business continues to improve,
especially in Tubular Services with a favorable mix to increased
offshore and CDS sales and lower U.S. land ramp-up costs in the
third quarter. Despite lower used top drive sales, revenue and
EBITDA both improved sequentially. Also, while Hurricane Harvey had
a minor impact on our financial results this quarter of
approximately $0.2 million in EBITDA, it did have a significant
direct impact on many of our employees. I am proud of the quick
response our employees made to help those with both immediate and
longer-term needs."
TESCO reported revenue of $40.5 million in the
third quarter of 2017, up from $40.1 million, or 1%, in the second
quarter of 2017, and up from $30.4 million, or 33%, in the third
quarter of 2016.
TESCO reported a U.S. GAAP net loss of $13.0
million, or $(0.28) per share, in the third quarter of 2017.
Adjusted net loss for the quarter was $9.2 million, or $(0.20) per
share, excluding special items, consisting primarily of charges
related to restructuring and transaction costs. Restructuring costs
were mainly for facility consolidation and headcount reductions in
Latin America. This compares to a U.S. GAAP net loss of $12.1
million, or $(0.26) per diluted share, in the second quarter of
2017, and a U.S. GAAP net loss of $22.1 million, or (0.48) per
diluted share, in the third quarter of 2016. Adjusted net loss in
the second quarter of 2017 was $11.6 million, or $(0.25) per
diluted share, and in the third quarter of 2016 was $17.3 million,
or $(0.37) per diluted share.
Adjusted EBITDA loss was $2.1 million in the
third quarter of 2017 compared to an adjusted EBITDA loss of $3.9
million in the second quarter of 2017 on a 1% revenue increase. For
the third quarter of 2017, U.S. GAAP operating loss was $12.7
million and adjusted operating loss was $8.4 million. This compares
to the second quarter 2017 U.S. GAAP operating loss of $11.5
million and adjusted operating loss of $11.4 million, which
excluded $0.1 million of charges.
Cash and cash equivalents as of
September 30, 2017 decreased from the second quarter of 2017
by $7.9 million to $64.6 million primarily due to continued
operating losses and $1.0 million of transaction-related payments.
While working capital levels remained relatively flat compared to
the end of the second quarter, working capital levels had been
projected to decline. Certain international payments valued at over
$4 million were delayed but are expected to be paid in the fourth
quarter. Inventory ended higher by nearly $3 million primarily to
support increased top drive sales expected in the fourth
quarter.
Free cash flow was a use of cash of $7.9 million
before approximately $1.0 million of transaction-related payments
and $1.4 million of restructuring payments.
Products Segment
- Revenue in the third quarter was $18.5 million, a $1.0 million,
or 5%, decrease from the second quarter of 2017 and a $1.5 million,
or 9%, increase from the third quarter of 2016. This decline was
primarily due to a reduction in used product sales.
- Product sales in the third quarter of 2017 included four new
top drive units, compared to seven units (4 new and 3 used) sold in
the second quarter of 2017, and three new units sold in the third
quarter of 2016. We did not sell any new catwalks in the third
quarter of 2017.
- There were 113 top drives in our rental fleet at the end of the
third quarter with a utilization of 18% compared to 15% for the
second quarter.
- U.S. GAAP operating loss before adjustments in the Products
segment for the third quarter of 2017 was $2.2 million, or (12)% of
revenue, a $1.8 million increase from the second quarter of 2017.
Third quarter operating loss and operating margin after adjustments
were $1.6 million and (9)% respectively. The sequential decline in
profitability was primarily related to lower used top drive sales
and higher rental operating expenses.
- At September 30, 2017, the top drive backlog was 5 units
with a total potential value of $4.2 million, compared to 5 units
at June 30, 2017, with a potential value of $4.2
million. This compares to a backlog of 9 units at
September 30, 2016, with a potential value of $7.8 million.
Today, our top drive backlog stands at 4 units with a potential
value of $3.3 million.
Tubular Services Segment
- Revenue in the third quarter of 2017 was $22.0 million, a 7%
increase from the second quarter of 2017 of $20.6 million and a 64%
increase from the third quarter of 2016 of $13.4 million. This
sequential increase was driven by higher offshore activity and
greater CDS sales.
- U.S. GAAP operating loss before adjustments in the Tubular
Services segment in the third quarter of 2017 was $2.3 million, a
$2.2 million improvement from the second quarter of 2017. Third
quarter operating loss and operating margin after adjustments were
$0.7 million and (3)%, respectively, compared to $4.1 million and
(20)% in the second quarter of 2017. The sequential improvement was
driven primarily by the favorable mix of higher offshore CDS sales
and reduced ramp-up costs in U.S. land.
Other Segments and Expenses
- Research and Engineering U.S. GAAP costs for the third quarter
of 2017 were $0.8 million, compared to $0.8 million in the second
quarter of 2017 and $1.2 million in the third quarter of 2016. We
continue to invest in the development, commercialization, and
enhancement of our proprietary technologies.
- Corporate and Other U.S. GAAP costs for the third quarter of
2017 were $7.4 million, a $1.6 million, or 28%, increase from the
second quarter of 2017 and a $2.1 million, or 40%, increase with
the third quarter of 2016. Adjusting for transaction costs of $2.1
million, sequential costs would have been approximately flat.
- Net foreign exchange gain in the third quarter of 2017 was $0.1
million, compared to net foreign exchange loss of $0.5 million in
the second quarter of 2017 and $0.4 million in the third quarter of
2016, primarily from the stronger Russian ruble.
- The effective tax rate for the third quarter of 2017 was a 1%
expense compared to a 3% expense in the second quarter of 2017 and
a 2% benefit in the third quarter of 2016.
- Capital expenditures were $1.4 million in the third quarter of
2017, primarily for tubular services equipment and infrastructure
projects, a $0.6 million increase from the second quarter of 2017
and a $1.2 million, or 46%, decrease from the third quarter of
2016.
Nabors Transaction
"We were pleased that the organization remained
focused on improving profitability this quarter while still
supporting the Nabors transaction process. Since the announcement
on August 14, significant progress has been made in the regulatory
process required to close, with U.S. and Canadian anti-trust
clearance received last week. The Russian anti-trust approval
process has been initiated with the regulator’s determination
expected in the next few weeks. With our special shareholder
meeting scheduled for December 1st, we still expect to close in the
fourth quarter of 2017,” Mr. Assing said.
Conference Call
The Company will not be conducting a conference
call in conjunction with this earnings release.
Tesco Corporation is a global leader in the
design, manufacture and service of technology based solutions for
the upstream energy industry. The Company's strategy is to change
the way people drill wells by delivering safer and more efficient
solutions that add real value by reducing the costs of drilling for
and producing oil and natural gas. TESCO® is a registered trademark
in the United States, Canada and the European Union. Casing Drive
System™, CDS™, is a trademark in the United States and Canada.
For further information please contact:Chris
Boone (713) 359-7000Tesco Corporation
Caution Regarding Forward-Looking
Information
This news release for the quarter ended
September 30, 2017 contains forward-looking statements within
the meaning of Canadian and United States securities laws,
including within the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. From time to
time, our public filings, press releases and other communications
by our officers and representatives (such as conference calls and
presentations) will contain forward-looking
statements. Forward-looking information is often, but not
always, identified by the use of words such as "anticipate",
"believe", "expect", "plan", "intend", "forecast", "target",
"project", "may", "will", "should", "could", "estimate", "predict",
or similar words suggesting future outcomes or language suggesting
an outlook. Forward-looking statements in this Quarterly
Report on Form 10-Q include, but are not limited to, statements
with respect to expectations of our prospects, future revenue,
earnings, activities and technical results.
Such forward-looking statements may include, but
are not limited to, statements regarding any projections of
economic prospects, earnings, revenues or other financial items;
any statements regarding the plans, strategies and objectives for
future operations; any statements of expectation or belief; any
statements regarding general industry conditions and competition;
any statements regarding economic conditions, such as interest
rate, commodity prices and currency exchange rate fluctuations; any
statements regarding timing of development or potential expansion
or improvements; any statements regarding commodity prices; any
statements regarding the expected timing of the completion of the
Arrangement with Nabors, our ability to complete the Arrangement
with Nabors considering the various closing conditions, the
benefits of such transaction and its impact on the participants’
businesses; and any statements of assumptions underlying any of the
foregoing.
Forward-looking statements and information are
based on current beliefs as well as assumptions made by, and
information currently available to, us concerning anticipated
financial performance, business prospects, strategies and
regulatory developments. Although management considers these
assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect. The
forward-looking statements in this report are made as of the date
it was issued, and we do not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks that outcomes implied by forward-looking
statements will not be achieved. We caution readers not to place
undue reliance on these statements as a number of important factors
could cause the actual results to differ materially from the
beliefs, plans, objectives, expectations and anticipations,
estimates and intentions expressed in such forward-looking
statements.
These risks and uncertainties include, but are
not limited to, the impact of: levels and volatility of oil and gas
prices; cyclical nature of the energy industry and credit risks of
our customers; fluctuations of our revenue and earnings; operating
hazards inherent in our operations; changes in governmental
regulations, including those related to the climate and hydraulic
fracturing; consolidation or loss of our customers; the highly
competitive nature of our business; technological advancements and
trends in our industry, and improvements in our competitors’
products; global economic and political environment, and financial
markets; terrorist attacks, natural disasters and pandemic
diseases; our presence in international markets, including
political or economic instability, currency restrictions and trade
and economic sanctions; cybersecurity incidents; protecting and
enforcing our intellectual property rights; changes in, or our
failure to comply with, environmental regulations; failure of our
manufactured products and claims under our product warranties;
availability of raw materials, component parts and finished
products to produce our products, and our ability to deliver the
products we manufacture in a timely manner; retention and
recruitment of a skilled workforce and key employees; and ability
to identify and complete acquisitions. These risks and
uncertainties may cause our actual results, levels of activity,
performance or achievements to be materially different from those
expressed or implied by any forward-looking statements. When
relying on our forward-looking statements to make decisions,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events.
Copies of our Canadian public filings are
available through SEDAR at www.sedar.com. Our U.S. public
filings are available through www.tescocorp.com and on EDGAR at
www.sec.gov.
Please see Part I, Item 1A—"Risk Factors"
of our Annual Report on Form 10-K for the year ended
December 31, 2016 ("2016 Annual Report on Form 10-K") and Part
II, Item 1A—"Risk Factors" of this Quarterly Report on Form
10-Q for further discussion regarding our exposure to
risks. Additionally, new risk factors emerge from time to time
and it is not possible for us to predict all such risk factors, nor
to assess the impact such risk factors might have on our business
or the extent to which any factor or combination of risk factors
may cause actual results to differ materially from those contained
in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
|
|
| TESCO CORPORATION |
| Condensed Consolidated Statements of
Income |
| (in millions, except per share
information) |
| |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(Unaudited) |
| Revenue |
$ |
40.5 |
|
|
$ |
30.4 |
|
|
$ |
117.4 |
|
|
$ |
99.5 |
|
| Operating expenses |
|
|
|
|
|
|
|
| Cost of sales and
services |
44.0 |
|
|
44.3 |
|
|
131.4 |
|
|
134.9 |
|
| Selling, general and
administrative |
8.4 |
|
|
6.8 |
|
|
20.7 |
|
|
20.7 |
|
| Long-lived asset
impairments |
— |
|
|
— |
|
|
— |
|
|
35.5 |
|
| Research and
engineering |
0.8 |
|
|
1.2 |
|
|
2.4 |
|
|
4.3 |
|
| |
53.2 |
|
|
52.3 |
|
|
154.5 |
|
|
195.4 |
|
| Operating loss |
(12.7 |
) |
|
(21.9 |
) |
|
(37.1 |
) |
|
(95.9 |
) |
| Interest expense,
net |
0.1 |
|
|
0.2 |
|
|
0.1 |
|
|
0.4 |
|
| Foreign exchange loss
(gain) |
(0.1 |
) |
|
0.4 |
|
|
0.2 |
|
|
1.5 |
|
| Other expense
(income) |
0.2 |
|
|
0.2 |
|
|
(0.1 |
) |
|
0.3 |
|
| Loss before income
taxes |
(12.9 |
) |
|
(22.7 |
) |
|
(37.3 |
) |
|
(98.1 |
) |
| Income tax provision
(benefit) |
0.1 |
|
|
(0.6 |
) |
|
1.5 |
|
|
(0.3 |
) |
| Net loss |
$ |
(13.0 |
) |
|
$ |
(22.1 |
) |
|
$ |
(38.8 |
) |
|
$ |
(97.8 |
) |
| Loss per share: |
|
|
|
|
|
|
|
| Basic |
$ |
(0.28 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.83 |
) |
|
$ |
(2.33 |
) |
| Diluted |
$ |
(0.28 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.83 |
) |
|
$ |
(2.33 |
) |
| Weighted average number
of shares: |
|
|
|
|
|
|
|
| Basic |
46.8 |
|
|
46.4 |
|
|
46.7 |
|
|
42.0 |
|
| Diluted |
46.8 |
|
|
46.4 |
|
|
46.7 |
|
|
42.0 |
|
| |
| TESCO CORPORATION |
| Condensed Consolidated Balance
Sheets |
| (in millions) |
| |
|
|
September 30, 2017 |
|
December 31, 2016 |
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
| Current assets |
|
|
|
| Cash and cash
equivalents |
$ |
64.6 |
|
|
$ |
91.5 |
|
| Accounts receivable
trade, net |
44.6 |
|
|
33.3 |
|
| Inventories, net |
77.6 |
|
|
76.2 |
|
| Other current
assets |
16.5 |
|
|
20.0 |
|
| Total current
assets |
203.3 |
|
|
221.0 |
|
| Property, plant and
equipment, net |
106.8 |
|
|
120.7 |
|
| Other assets |
2.8 |
|
|
2.6 |
|
| Total assets |
$ |
312.9 |
|
|
$ |
344.3 |
|
|
Liabilities and Shareholders’ Equity |
|
|
|
| Current
liabilities |
|
|
|
| Accounts payable |
$ |
15.6 |
|
|
$ |
13.5 |
|
| Accrued and other
current liabilities |
19.1 |
|
|
17.1 |
|
| Income taxes
payable |
1.8 |
|
|
2.1 |
|
| Total current
liabilities |
36.5 |
|
|
32.7 |
|
| Deferred income
taxes |
0.3 |
|
|
0.4 |
|
| Other liabilities |
1.6 |
|
|
1.6 |
|
| Shareholders'
equity |
274.5 |
|
|
309.6 |
|
| Total liabilities
and shareholders’ equity |
$ |
312.9 |
|
|
$ |
344.3 |
|
| |
| TESCO CORPORATION |
| Consolidated Statement of Cash
Flows |
| (in millions) |
| |
|
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
|
(Unaudited) |
| Operating
Activities |
|
|
| Net loss |
$ |
(38.8 |
) |
|
$ |
(97.8 |
) |
| Adjustments to
reconcile net loss to cash used in operating activities: |
|
|
|
| Depreciation and
amortization |
17.2 |
|
|
22.5 |
|
| Stock compensation
expense |
3.7 |
|
|
3.2 |
|
| Bad debt expense
(recovery) |
(0.7 |
) |
|
0.5 |
|
| Deferred income
taxes |
(0.1 |
) |
|
0.2 |
|
| Amortization of
financial items |
— |
|
|
0.4 |
|
| Gain on sale of
operating assets |
(2.1 |
) |
|
(0.6 |
) |
| Long-lived asset
impairments |
— |
|
|
35.5 |
|
| Changes in the fair
value of contingent earn-out obligations |
— |
|
|
(0.1 |
) |
| Changes in operating
assets and liabilities: |
|
|
|
| Accounts receivable
trade, net |
(9.1 |
) |
|
24.8 |
|
| Inventories, net |
(1.3 |
) |
|
14.9 |
|
| Prepaid and other
current assets |
0.6 |
|
|
3.2 |
|
| Accounts payable and
accrued liabilities |
1.0 |
|
|
(12.7 |
) |
| Income taxes
payable |
1.9 |
|
|
0.6 |
|
| Other non-current
assets and liabilities, net |
0.6 |
|
|
(0.2 |
) |
| Net cash used in
operating activities |
(27.1 |
) |
|
(5.6 |
) |
| Investing
Activities |
|
|
|
| Additions to property,
plant, equipment and intangibles |
(2.9 |
) |
|
(4.5 |
) |
| Proceeds on sale of
operating assets |
2.4 |
|
|
2.9 |
|
| Other, net |
— |
|
|
0.2 |
|
| Net cash used in
investing activities |
(0.5 |
) |
|
(1.4 |
) |
| Financing
Activities |
|
|
|
| Proceeds from stock
issuance |
— |
|
|
47.9 |
|
| Stock issuance
costs |
— |
|
|
(0.3 |
) |
| Changes in restricted
cash |
0.7 |
|
|
(2.0 |
) |
| Net cash provided by
financing activities |
0.7 |
|
|
45.6 |
|
| Change in cash and cash
equivalents |
(26.9 |
) |
|
38.6 |
|
| Cash and cash
equivalents, beginning of period |
91.5 |
|
|
51.5 |
|
| Cash and cash
equivalents, end of period |
$ |
64.6 |
|
|
$ |
90.1 |
|
| Supplemental
cash flow information |
|
|
|
| Cash payments for
interest |
$ |
— |
|
|
$ |
0.4 |
|
| Cash payments for
income taxes, net of refunds |
(0.7 |
) |
|
1.4 |
|
| Property, plant and
equipment accrued in accounts payable |
0.4 |
|
|
2.3 |
|
|
|
| TESCO CORPORATION |
| Segment Results |
| (in millions, except per share
information) |
| |
|
|
Three Months Ended September 30, |
|
Three Months Ended June 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2017 |
|
2016 |
| Segment
revenue |
(Unaudited) |
| Products |
|
|
|
|
|
|
|
|
|
| Products sales |
$ |
3.9 |
|
|
$ |
4.4 |
|
|
$ |
5.3 |
|
|
$ |
15.2 |
|
|
$ |
17.0 |
|
| Rental services |
6.6 |
|
|
7.1 |
|
|
5.7 |
|
|
17.6 |
|
|
19.6 |
|
| Aftermarket sales and
services |
8.0 |
|
|
5.5 |
|
|
8.5 |
|
|
25.3 |
|
|
17.5 |
|
| |
18.5 |
|
|
17.0 |
|
|
19.5 |
|
|
58.1 |
|
|
54.1 |
|
| Tubular Services |
|
|
|
|
|
|
|
|
|
| Land |
12.1 |
|
|
7.7 |
|
|
12.2 |
|
|
34.6 |
|
|
26.4 |
|
| Offshore |
5.6 |
|
|
4.1 |
|
|
4.5 |
|
|
14.4 |
|
|
15.9 |
|
| CDS, Parts &
Accessories |
4.3 |
|
|
1.6 |
|
|
3.9 |
|
|
10.3 |
|
|
3.1 |
|
| |
22.0 |
|
|
13.4 |
|
|
20.6 |
|
|
59.3 |
|
|
45.4 |
|
| |
|
|
|
|
|
|
|
|
|
| Consolidated
revenue |
$ |
40.5 |
|
|
$ |
30.4 |
|
|
$ |
40.1 |
|
|
$ |
117.4 |
|
|
$ |
99.5 |
|
| |
|
|
|
|
|
|
|
|
|
| Segment operating
loss: |
|
|
|
|
|
|
|
|
|
| Products |
$ |
(2.2 |
) |
|
$ |
(7.4 |
) |
|
$ |
(0.4 |
) |
|
$ |
(3.5 |
) |
|
$ |
(49.3 |
) |
| Tubular Services |
(2.3 |
) |
|
(8.0 |
) |
|
(4.5 |
) |
|
(12.5 |
) |
|
(23.3 |
) |
| Research and
Engineering |
(0.8 |
) |
|
(1.2 |
) |
|
(0.8 |
) |
|
(2.4 |
) |
|
(4.3 |
) |
| Corporate and
Other |
(7.4 |
) |
|
(5.3 |
) |
|
(5.8 |
) |
|
(18.7 |
) |
|
(19.0 |
) |
| Consolidated operating
loss |
$ |
(12.7 |
) |
|
$ |
(21.9 |
) |
|
$ |
(11.5 |
) |
|
$ |
(37.1 |
) |
|
$ |
(95.9 |
) |
| |
|
|
|
|
|
|
|
|
|
| U.S. GAAP consolidated
net loss |
$ |
(13.0 |
) |
|
$ |
(22.1 |
) |
|
$ |
(12.1 |
) |
|
$ |
(38.8 |
) |
|
$ |
(97.8 |
) |
| U.S. GAAP loss per
share (diluted) |
$ |
(0.28 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.83 |
) |
|
$ |
(2.33 |
) |
| |
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA(a) (as
defined) |
$ |
(2.1 |
) |
|
$ |
(9.1 |
) |
|
$ |
(3.9 |
) |
|
$ |
(10.7 |
) |
|
$ |
(24.3 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
________________________(a) See explanation of Non-GAAP
measure below.
Non-GAAP Measures
Our management reports our financial statements
in accordance with United States Generally Accepted Accounting
Principles ("U.S. GAAP") but evaluates our performance based on
non-GAAP measures as defined under the SEC's Regulation G. These
measures may not be comparable to similarly titled measures
employed by other companies and is not a measure of performance
calculated in accordance with GAAP. Non-GAAP measures should not be
considered in isolation or as substitutes for operating income, net
income or loss, cash flows provided by operating, investing and
financing activities, or other income or cash flow statement data
prepared in accordance with GAAP.
Our management uses Non-GAAP measures:
- to assess the performance of the Company’s operations;
- as a method used to evaluate potential acquisitions;
- in presentations to our Board of Directors to enable them to
have the same consistent measurement basis of operating performance
used by management; and
- in communications with investors, analysts, lenders, and others
concerning our financial performance.
|
|
| TESCO CORPORATION |
| Non-GAAP Measure - Adjusted EBITDA
(1) |
| (in millions) |
| |
|
|
Three Months Ended September 30, |
|
Three Months Ended June 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2017 |
|
2016 |
| Net loss under U.S.
GAAP |
$ |
(13.0 |
) |
|
$ |
(22.1 |
) |
|
$ |
(12.1 |
) |
|
$ |
(38.8 |
) |
|
$ |
(97.8 |
) |
| Income tax expense
(benefit) |
0.1 |
|
|
(0.6 |
) |
|
0.4 |
|
|
1.5 |
|
|
(0.3 |
) |
| Depreciation and
amortization |
5.4 |
|
|
7.3 |
|
|
5.8 |
|
|
17.2 |
|
|
22.5 |
|
| Interest expense |
0.2 |
|
|
0.2 |
|
|
— |
|
|
0.3 |
|
|
0.9 |
|
| Stock compensation
expense-non-cash |
1.0 |
|
|
1.1 |
|
|
1.5 |
|
|
3.7 |
|
|
3.2 |
|
| Acquisition transaction
costs |
2.1 |
|
|
— |
|
|
— |
|
|
2.1 |
|
|
— |
|
| Severance &
restructuring charges |
2.4 |
|
|
1.0 |
|
|
0.5 |
|
|
3.6 |
|
|
6.9 |
|
| Bad debt from certain
accounts |
— |
|
|
0.3 |
|
|
(0.4 |
) |
|
(0.4 |
) |
|
0.6 |
|
| Foreign exchange loss
(gain) |
(0.1 |
) |
|
0.3 |
|
|
0.4 |
|
|
0.2 |
|
|
1.5 |
|
| Asset sale
reserves |
— |
|
|
(0.5 |
) |
|
— |
|
|
— |
|
|
(3.5 |
) |
| Warranty & legal
reserves |
— |
|
|
0.7 |
|
|
— |
|
|
0.1 |
|
|
1.4 |
|
| Inventory reserves |
(0.2 |
) |
|
3.1 |
|
|
— |
|
|
(0.2 |
) |
|
4.4 |
|
| Long-lived asset
impairments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
35.5 |
|
| Credit facility
costs |
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
0.4 |
|
| Adjusted EBITDA |
$ |
(2.1 |
) |
|
$ |
(9.1 |
) |
|
$ |
(3.9 |
) |
|
$ |
(10.7 |
) |
|
$ |
(24.3 |
) |
|
|
(1) Adjusted EBITDA consists of earnings (net income or loss)
attributable to TESCO before interest expense, income tax expense
(benefit), depreciation and amortization, acquisition transaction
costs, severance and restructuring charges, foreign exchange gains
or losses, noted income or charges from certain accounts, non-cash
stock compensation, non-cash impairments and other non-cash
items.
We believe Adjusted EBITDA is useful to an
investor in evaluating our operating performance because:
- it is widely used by investors in our industry to measure a
company's operating performance without regard to items such as
interest expense, income tax expense (benefit), depreciation and
amortization, which can vary substantially from company to company
depending upon accounting methods and book value of assets,
severance and restructuring charges, financing methods, capital
structure and the method by which assets were acquired;
- it helps investors more meaningfully evaluate and compare the
results of our operations from period to period by removing the
impact of our capital structure (primarily interest), merger and
acquisition transactions (primarily gains/losses on sale of a
business), and asset base (primarily depreciation and amortization)
and actions that do not affect liquidity (stock compensation
expense and non-cash impairments) from our operating results;
and
- it helps investors identify items that are within our
operational control. Depreciation and amortization charges, while a
component of operating income, are fixed at the time of the asset
purchase in accordance with the depreciable lives of the related
asset and as such are not a directly controllable period operating
charge.
|
|
| TESCO CORPORATION |
| Reconciliation of GAAP Net Income (Loss) to
Adjusted Net Income (Loss)(2) |
| (in millions except earnings per share
data) |
| |
|
|
Three Months Ended September 30, |
|
Three Months Ended June 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2017 |
|
2016 |
| Net loss under U.S.
GAAP |
$ |
(13.0 |
) |
|
$ |
(22.1 |
) |
|
$ |
(12.1 |
) |
|
$ |
(38.8 |
) |
|
$ |
(97.8 |
) |
| Acquisition transaction
costs |
2.1 |
|
|
— |
|
|
— |
|
|
2.1 |
|
|
— |
|
| Severance &
restructuring charges |
2.0 |
|
|
1.0 |
|
|
0.4 |
|
|
3.0 |
|
|
6.6 |
|
| Bad debt on certain
accounts |
— |
|
|
0.3 |
|
|
(0.4 |
) |
|
(0.4 |
) |
|
0.6 |
|
| Certain foreign
exchange losses (gains) |
(0.1 |
) |
|
0.2 |
|
|
0.7 |
|
|
0.2 |
|
|
1.5 |
|
| Asset sale
reserves |
— |
|
|
(0.5 |
) |
|
— |
|
|
— |
|
|
(3.5 |
) |
| Warranty & legal
reserves |
— |
|
|
0.7 |
|
|
— |
|
|
0.1 |
|
|
1.4 |
|
| Inventory reserves |
(0.2 |
) |
|
2.9 |
|
|
— |
|
|
(0.2 |
) |
|
4.2 |
|
| Long-lived asset
impairments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
35.5 |
|
| Credit facility
costs |
— |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
0.5 |
|
| Certain tax-related
charges |
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
|
— |
|
| Adjusted net loss |
$ |
(9.2 |
) |
|
$ |
(17.3 |
) |
|
$ |
(11.6 |
) |
|
$ |
(34.2 |
) |
|
$ |
(51.0 |
) |
| |
|
|
|
|
|
|
|
|
|
| Diluted loss per share
under U.S. GAAP |
$ |
(0.28 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.83 |
) |
|
$ |
(2.33 |
) |
| Acquisition transaction
costs |
0.04 |
|
|
— |
|
|
— |
|
|
0.04 |
|
|
|
| Severance &
restructuring charges |
0.04 |
|
|
0.02 |
|
|
0.01 |
|
|
0.07 |
|
|
0.16 |
|
| Bad debt on certain
accounts |
— |
|
|
0.01 |
|
|
(0.01 |
) |
|
(0.01 |
) |
|
0.01 |
|
| Certain foreign
exchange losses (gains) |
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
0.04 |
|
| Asset sale
reserves |
— |
|
|
(0.01 |
) |
|
— |
|
|
— |
|
|
(0.08 |
) |
| Warranty & legal
reserves |
— |
|
|
0.02 |
|
|
— |
|
|
— |
|
|
0.03 |
|
| Inventory reserves |
— |
|
|
0.07 |
|
|
— |
|
|
— |
|
|
0.11 |
|
| Long-lived asset
impairments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.84 |
|
| Credit facility
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
| Certain tax-related
charges |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Adjusted diluted loss
per share |
$ |
(0.20 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.73 |
) |
|
$ |
(1.21 |
) |
|
|
(2) Adjusted net income (loss) is a non-GAAP measure comprised
of net income attributable to TESCO excluding the impact of
acquisition transaction costs, severance and restructuring charges,
non-cash impairments, noted income or charges from certain accounts
and certain tax-related charges.
We believe adjusted net income (loss) is useful
to an investor in evaluating our operating performance because:
- it is a consistent measure of the underlying results of the
Company’s business by excluding items that could mask the Company's
operating performance;
- it is widely used by investors in our industry to measure a
company's operating performance, especially when comparing those
results with previous and subsequent periods or forecasting
performance for future periods, primarily because management views
the excluding items to be outside of the Company's normal operating
results; and
- it helps investors identify and analyze underlying trends in
the business.
|
|
| TESCO CORPORATION |
| Non-GAAP Measure - Adjusted Operating Income
(Loss)(3) |
| (in millions) |
| |
|
|
Three Months Ended September 30,
2017 |
|
|
Products |
|
Tubular Services |
|
Research & Engineering |
|
Corporate & Other |
|
Total |
| Operating loss under
U.S. GAAP |
$ |
(2.2 |
) |
|
$ |
(2.3 |
) |
|
$ |
(0.8 |
) |
|
$ |
(7.4 |
) |
|
$ |
(12.7 |
) |
| Acquisition transaction
costs |
— |
|
|
— |
|
|
— |
|
|
2.1 |
|
|
2.1 |
|
| Severance &
restructuring charges |
0.8 |
|
|
1.6 |
|
|
— |
|
|
— |
|
|
2.4 |
|
| Inventory reserves |
(0.2 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
| Adjusted operating
loss |
$ |
(1.6 |
) |
|
$ |
(0.7 |
) |
|
$ |
(0.8 |
) |
|
$ |
(5.3 |
) |
|
$ |
(8.4 |
) |
| |
|
| |
Three Months Ended September 30,
2016 |
| |
Products |
|
Tubular Services |
|
Research & Engineering |
|
Corporate & Other |
|
Total |
| Operating loss under
U.S. GAAP |
$ |
(7.4 |
) |
|
$ |
(8.0 |
) |
|
$ |
(1.2 |
) |
|
$ |
(5.3 |
) |
|
$ |
(21.9 |
) |
| Severance &
restructuring charges |
— |
|
|
0.8 |
|
|
— |
|
|
— |
|
|
0.8 |
|
| Bad debt on certain
accounts |
0.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
| Warranty & legal
reserves |
0.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.7 |
|
| Asset sale
reserves |
(0.4 |
) |
|
(0.1 |
) |
|
— |
|
|
— |
|
|
(0.5 |
) |
| Inventory reserves |
3.0 |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
3.1 |
|
| Credit facility
costs |
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.1 |
|
| Adjusted operating
loss |
$ |
(3.8 |
) |
|
$ |
(7.2 |
) |
|
$ |
(1.2 |
) |
|
$ |
(5.2 |
) |
|
$ |
(17.4 |
) |
| |
|
|
|
Three Months Ended June 30, 2017 |
|
|
Products |
|
Tubular Services |
|
Research & Engineering |
|
Corporate & Other |
|
Total |
| Operating loss under
U.S. GAAP |
$ |
(0.4 |
) |
|
$ |
(4.5 |
) |
|
$ |
(0.8 |
) |
|
$ |
(5.8 |
) |
|
$ |
(11.5 |
) |
| Severance &
executive retirement charges |
0.2 |
|
|
0.4 |
|
|
(0.1 |
) |
|
— |
|
|
0.5 |
| Bad debt on certain
accounts |
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
| Adjusted operating
loss |
$ |
(0.6 |
) |
|
$ |
(4.1 |
) |
|
$ |
(0.9 |
) |
|
$ |
(5.8 |
) |
|
$ |
(11.4 |
) |
| |
|
| |
Nine Months Ended September 30,
2017 |
| |
Products |
|
Tubular Services |
|
Research & Engineering |
|
Corporate & Other |
|
Total |
| Operating loss under
U.S. GAAP |
$ |
(3.5 |
) |
|
$ |
(12.5 |
) |
|
$ |
(2.4 |
) |
|
$ |
(18.7 |
) |
|
(37.1 |
) |
| Acquisition transaction
costs |
— |
|
|
— |
|
|
— |
|
|
2.1 |
|
|
2.1 |
|
| Severance &
restructuring charges |
1.1 |
|
|
2.6 |
|
|
(0.1 |
) |
|
— |
|
|
3.6 |
|
| Bad debt on certain
accounts |
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
| Warranty & legal
reserves |
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
| Inventory reserves |
(0.2 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
| Adjusted operating
loss |
$ |
(2.9 |
) |
|
$ |
(9.9 |
) |
|
$ |
(2.5 |
) |
|
$ |
(16.6 |
) |
|
$ |
(31.9 |
) |
| |
Nine Months Ended September 30,
2016 |
| |
Products |
|
Tubular Services |
|
Research & Engineering |
|
Corporate & Other |
|
Total |
| Operating loss under
U.S. GAAP |
$ |
(49.3 |
) |
|
$ |
(23.3 |
) |
|
$ |
(4.2 |
) |
|
$ |
(19.1 |
) |
|
$ |
(95.9 |
) |
| Severance &
restructuring charges |
1.4 |
|
|
5.1 |
|
|
— |
|
|
0.2 |
|
|
6.7 |
|
| Bad debt on certain
accounts |
0.6 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.6 |
|
| Asset sale
reserves |
(1.2 |
) |
|
(2.3 |
) |
|
— |
|
|
— |
|
|
(3.5 |
) |
| Warranty & legal
reserves |
0.7 |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
1.4 |
|
| Inventory reserves |
4.0 |
|
|
0.4 |
|
|
— |
|
|
— |
|
|
4.4 |
|
| Long-lived asset
impairments |
33.6 |
|
|
— |
|
|
— |
|
|
1.9 |
|
|
35.5 |
|
| Credit facility
costs |
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
0.2 |
|
| Adjusted operating
loss |
$ |
(10.2 |
) |
|
$ |
(19.4 |
) |
|
$ |
(4.2 |
) |
|
$ |
(16.8 |
) |
|
$ |
(50.6 |
) |
|
|
(3) Adjusted operating income (loss) is a non-GAAP measure
comprised of operating income (loss) attributable to TESCO
excluding the impact of acquisition transaction costs, severance
and restructuring charges, non-cash impairments and noted income or
charges from certain accounts. Management uses adjusted operating
income (loss) as a measure of the performance of the Company’s
operations.
We believe adjusted operating income (loss) is
useful to an investor in evaluating our operating performance
because:
- it is a consistent measure of the underlying results of the
Company’s business by excluding items that could mask the Company's
operating performance;
- it is widely used by investors in our industry to measure a
company's operating performance, especially when comparing those
results with previous and subsequent periods or forecasting
performance for future periods, primarily because management views
the excluding items to be outside of the Company's normal operating
results; and
- it helps investors identify and analyze underlying trends in
the business.
|
|
| TESCO CORPORATION |
| Non-GAAP Measure - Free Cash
Flow(4) |
| (in millions) |
| |
|
|
|
Three Months Ended September 30,
2017 |
|
Three Months Ended June 30, 2017 |
|
Nine Months Ended September 30,
2017 |
| Net cash used in
operating activities |
|
$ |
(6.7 |
) |
|
$ |
(11.5 |
) |
|
$ |
(27.1 |
) |
| Capital
expenditures |
|
(1.4 |
) |
|
(0.8 |
) |
|
(2.9 |
) |
| Proceeds on asset
sales |
|
0.2 |
|
|
1.8 |
|
|
2.4 |
|
| Free cash flow |
|
(7.9 |
) |
|
(10.5 |
) |
|
(27.6 |
) |
| Severance &
restructuring payments |
|
(1.4 |
) |
|
(0.3 |
) |
|
(2.8 |
) |
| Acquisition transaction
payments |
|
(1.0 |
) |
|
— |
|
|
(1.0 |
) |
| Adjusted free cash
flow |
|
$ |
(5.5 |
) |
|
$ |
(10.2 |
) |
|
$ |
(23.8 |
) |
|
|
(4) Free cash flow is a non-GAAP measure comprised of cash flow
from operations, capital expenditures and proceeds on asset sales.
Adjusted free cash flow excludes the impact of severance and
restructuring payments and acquisition transaction payments.
We believe free cash flow is useful to an
investor in evaluating our operating performance because:
- it measures the Company's ability to generate cash;
- it is widely used by investors in our industry to measure a
company's cash flow performance; and
- it helps investors identify and analyze underlying trends in
the business.
Tesco Corp. (MM) (NASDAQ:TESO)
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부터 12월(12) 2024 으로 1월(1) 2025
Tesco Corp. (MM) (NASDAQ:TESO)
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부터 1월(1) 2024 으로 1월(1) 2025
