Trading Symbol:
'TESO' on NASDAQ
HOUSTON, TX, Feb. 26 /PRNewswire-FirstCall/ - Tesco Corporation ('TESCO' or the 'Company') today reported net income for the quarter ended December 31, 2008 of $12.0 million, or $0.31 per diluted share. This compares to net income of $6.6 million, or $0.18 per diluted share, for the fourth quarter of 2007, and net income of $17.6 million, or $0.46 per diluted share, for the third quarter of 2008.
Revenue was $139.4 million for the quarter ended December 31, 2008, compared to revenue of $124.4 million for the comparable period in 2007 and $140.0 million in the third quarter of 2008.
Summary of Results
(in millions of U.S. $, except per share amounts)
U.S. GAAP-Unaudited
Year Ended
Quarter 4 Quarter 3 December 31,
------------------- --------- ------------------
2008 2007 2008 2008 2007
--------- --------- --------- --------- ---------
Revenues $ 139.4 $ 124.4 $ 140.0 $ 534.9 $ 462.4
Operating Income 16.9 13.3 25.4 75.7 48.5
Net Income 12.0 6.6 17.6 52.9 32.3
EPS (diluted) $ 0.31 $ 0.18 $ 0.46 $ 1.40 $ 0.86
Adjusted EBITDA*
(as defined) $ 28.7 $ 18.9 $ 34.9 $ 115.9 $ 79.2
*See explanation of Non-GAAP measure below
Commentary
Julio Quintana, TESCO's Chief Executive Officer, commented 'We are very pleased with our Q4 and full year 2008 results. While we expect 2009 to be a challenging economic time, we are confident that our solid financial position and focus on operating efficiencies will enable TESCO to endure an economic downturn and prepare for the future. While our Q4 2008 margins were impacted by the recent adverse market conditions, our overall financial performance remained strong; 2008 was a record year for us in terms of revenues, operating income and operating cash flows. We increased our revenues in all three of our operating segments and reduced our outstanding debt by over $31 million. We ended the year with a backlog of 65 Top Drive units. This is down from 77 units at September 30, but it represents about two quarters of production for us. We are pleased with the performance of our employees and will count on them to help us through the current economic downturn.'
Segment Information
(in millions of U.S. $)
Unaudited
Year Ended
Quarter 4 Quarter 3 December 31,
------------------- --------- ------------------
2008 2007 2008 2008 2007
--------- --------- --------- --------- ---------
Revenues:
Top Drives:
Sales $ 43.1 $ 33.9 $ 46.0 $ 164.1 $ 127.6
Aftermarket Support 17.1 15.5 17.0 65.3 51.9
Rental 29.8 28.3 27.7 112.0 109.7
--------- --------- --------- --------- ---------
90.0 77.7 90.7 341.4 289.2
--------- --------- --------- --------- ---------
Tubular Services*:
Conventional 16.8 26.2 18.9 79.4 92.9
Proprietary 26.2 14.2 23.9 87.1 65.7
--------- --------- --------- --------- ---------
43.0 40.4 42.8 166.5 158.6
CASING DRILLING(TM)* 6.4 6.3 6.5 27.0 14.6
--------- --------- --------- --------- ---------
Total Revenues $ 139.4 $124.4 $ 140.0 $ 534.9 $ 462.4
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Operating Income**:
---------------------
Top Drives $ 26.1 $ 20.6 $ 32.1 $ 108.3 $ 80.7
Tubular Services 5.0 5.2 7.4 22.0 23.7
CASING DRILLING(TM) (3.4) (2.2) (3.1) (12.6) (14.1)
Research and
Engineering (2.9) (3.5) (2.6) (11.0) (12.0)
Corporate/Other (7.9) (6.8) (8.4) (31.0) (29.8)
--------- --------- --------- --------- ---------
Total Operating Income $ 16.9 $ 13.3 $ 25.4 $ 75.7 $ 48.5
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
* Effective December 31, 2008, we began reporting our CASING
DRILLING(TM) operations as a distinct operating segment separate
from our Tubular Services business and we have recast prior
periods to be presented consistently with this structure.
** Operating income for the Top Drive, Tubular Services and CASING
DRILLING(TM) segments reflect a change in methodology used to
allocate indirect costs. Total Operating Income did not change.
This change in methodology will be more fully described in Note 12
of the Form 10-K to be filed for the year ended December 31, 2008.
Q4 2008 Financial and Operating Highlights
Top Drives Segment
------------------
- Revenues from the Top Drive segment for Q4 2008 were $90.0 million,
down slightly from the record revenues of $90.7 million in Q3 2008,
primarily due to a decrease in used Top Drive sales. Top Drive sales
for Q4 2008 included a record number of new units (37 new units sold
and 1 from the rental fleet). This compares to 38 units sold in Q3
2008 (32 new units sold and 6 from the rental fleet) and 29 units
sold in Q4 2007 (20 new and 9 from the rental fleet).
- During Q4 2008, we built and delivered 8 units to our rental fleet
(in addition to the 37 new third party units). Our rental fleet now
stands at 126 units as of December 31, 2008 compared to 119 units at
September 30, 2008 and 110 units at December 31, 2007.
- At December 31, 2008, Top Drive backlog was 65 units, with a total
value of $57 million, versus 77 units at September 30, 2008, with a
total value of $72 million. This compares to a backlog of 38 units at
December 31, 2007 with a total value of $39 million.
- Operating days for the Top Drive rental fleet decreased to 5,808 for
Q4 2008 compared to 6,014 in Q3 2008 and 5,978 in Q4 2007, primarily
due to units being removed from our rental fleet in preparation for
sale and the timing of new rental units being activated.
- Our Top Drive operating margins were 29% in Q4 2008 compared to 35%
in Q3 2008 and 27% in Q4 2007. The margin decrease compared to Q3
2008 is a result of fewer sales of used Top Drive units (1 in Q4 2008
compared to 6 in Q3 2008) and costs incurred to prepare additional
used units for sale, partially offset by increased rental margins.
The increase from last year is primarily as a result of better
margins in Top Drive sales and in our after-market sales and service
business.
Tubular Services Segment
------------------------
- Revenues from the Tubular Services segment for Q4 2008 were
$43.0 million, an increase of $0.2 million from Q3 2008 primarily
related to an increase in the number of proprietary jobs, but offset
by a decline in our conventional revenues. We performed a record
total of 540 proprietary casing running jobs in Q4 2008 compared to
496 in Q3 2008 and 348 in Q4 2007. We remain focused on converting
the market to running casing with our proprietary CDS(TM) technology.
As demand for our proprietary services increases, we expect our
conventional revenue base to continue to decline.
- Operating Income in our Tubular Services segment for Q4 2008 was
$5.0 million, compared to $7.4 million in Q3 2008 and $5.2 million in
Q4 2007. Q4 2008's operating income was unfavorably impacted by
pricing pressures that squeezed revenues while costs increased due to
increased labor and fuel prices associated with the increase in
proprietary jobs performed.
CASING DRILLING(TM) Segment
---------------------------
- CASING DRILLING(TM) revenue in Q4 2008 was $6.4 million, compared to
$6.5 million in Q3 2008, and $6.3 million in Q4 2007. The slight
decrease in Q4 2008 compared to Q3 2008 was primarily due to lower
revenue in North America.
- Operating Loss in our CASING DRILLING(TM) segment for Q4 2008 was
$3.4 million, compared to $3.1 million in Q3 2008 and $2.2 million in
Q4 2007.
