Trading Symbol:
'TESO' on NASDAQ
HOUSTON, TX, Aug. 5 /PRNewswire-FirstCall/ - Tesco Corporation ('TESCO' or the 'Company') today reported a net loss for the quarter ended June 30, 2009 of $3.6 million, or $0.10 per diluted share. This compares to net income of $4.4 million, or $0.12 per diluted share, for the first quarter of 2009, and net income of $12.7 million, or $0.34 per diluted share, for the second quarter of 2008. Operating income for the current quarter was negatively impacted by $1.6 million in severance costs, a $0.5 million loss on the sale of operating assets and a $1.8 million write down of scrap equipment held for sale. Without these items, the net loss would have been $1.8 million, or $0.05 per diluted share.
Revenue was $88.4 million for the quarter ended June 30, 2009, compared to revenue of $110.2 million for the first quarter of 2009 and $126.2 million for the second quarter of 2008.
Summary of Results
(in millions of U.S. $, except per share amounts)
U.S. GAAP-Unaudited
Quarter 2 Quarter 1 Six Months Ended
------------------- --------- -------------------
2009 2008 2009 06/30/09 06/30/08
--------- --------- --------- --------- ---------
Revenues $ 88.4 $ 126.2 $ 110.2 $ 198.6 $ 255.5
Operating (Loss) Income (7.2) 17.0 4.0 (3.2) 33.4
Net (Loss) Income (3.6) 12.7 4.4 0.8 23.4
(Loss) Earnings per
Share (diluted) ($0.10) $ 0.34 $ 0.12 $ 0.02 $ 0.62
Adjusted EBITDA*
(as defined) $ 4.2 $ 28.2 $ 15.1 $ 19.2 $ 52.3
*See explanation of Non-GAAP measure below
Commentary
Julio Quintana, TESCO's Chief Executive Officer, commented 'The ongoing economic conditions continue to hurt our industry, particularly in North America. However, despite our loss for the quarter, our balance sheet continues to improve. During the quarter, we generated positive cash flow and again reduced our net debt outstanding. While we continue to manage our costs, we are not certain that TESCO has seen the bottom of this market downturn. We have taken measures to offset the economic circumstances and have reduced our global headcount by nearly 30% during the last six months, with almost all reductions occurring in North America. In addition, we have reduced capital spending by 70% year over year. Longer term, we believe the fundamentals driving the growth of our global business remain intact. This should give us the ability to maintain our core strengths and weather the current downturn while sustaining free cash flow.'
Segment Information
(in millions of U.S. $)
Unaudited
Quarter 2 Quarter 1 Six Months Ended
------------------- --------- -------------------
2009 2008 2009 06/30/09 06/30/08
--------- --------- --------- --------- ---------
Revenues:
---------
Top Drives:
Sales $ 27.8 $ 36.7 $ 28.7 $ 56.5 $ 75.1
Aftermarket Sales and
Service 11.9 16.1 15.8 27.7 31.2
Rental Services 18.1 26.8 23.6 41.7 54.4
--------- --------- --------- --------- ---------
57.8 79.6 68.1 125.9 160.7
--------- --------- --------- --------- ---------
Tubular Services* :
Conventional 4.5 20.1 9.6 14.1 43.6
Proprietary* 23.4 18.7 27.4 50.8 37.0
--------- --------- --------- --------- ---------
27.9 38.8 37.0 64.9 80.6
--------- --------- --------- --------- ---------
CASING DRILLING(TM)* 2.7 7.8 5.1 7.8 14.2
--------- --------- --------- --------- ---------
Total Revenues $ 88.4 $ 126.2 $ 110.2 $ 198.6 $ 255.5
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Operating (Loss) Income:
------------------------
Top Drives $ 10.2 $ 26.4 $ 16.0 $ 26.2 $ 50.2
Tubular Services (1.7) 3.5 2.7 1.0 9.6
CASING DRILLING(TM) (4.9) (3.5) (1.4) (6.3) (6.1)
Research and
Engineering (1.8) (2.8) (2.6) (4.4) (5.6)
Corporate/Other (9.0) (6.6) (10.7) (19.7) (14.7)
--------- --------- --------- --------- ---------
Total Operating (Loss)
Income $ (7.2) $ 17.0 $ 4.0 $ (3.2) $ 33.4
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--------- --------- --------- --------- ---------
* 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 reporting method.
Q2 2009 Financial and Operating Highlights
Top Drives Segment
------------------
- Revenues from the Top Drive segment for Q2 2009 were $57.8 million,
down 15% from revenues of $68.1 million in Q1 2009, primarily due to a
decline in Top Drive rental activity, lower after market sales and
services and fewer Top Drive units sold during the quarter. Revenues
for Q2 2008 were $79.6 million.
- Top Drive sales for Q2 2009 included 28 units (27 new and 1 from the
rental fleet), compared to 32 units (31 new and 1 from the rental
fleet) sold in Q1 2009 and 30 units sold in Q2 2008 (24 new and 6 from
the rental fleet).
- At June 30, 2009, Top Drive backlog was 10 units, with a total value
of $10 million, versus 35 units at March 31, 2009, with a total value
of $34 million. This compares to a backlog of 52 units at June 30,
2008 with a total value of $51 million.
- Operating days for the Top Drive rental fleet decreased to 3,682 for
Q2 2009 compared to 4,673 in Q1 2009 and 5,660 in Q2 2008. This
decline was primarily due to a continuing decrease in rental activity,
particularly in North America, directly resulting from the decline in
rig count. Additionally, pricing pressures from decreased demand
further reduced revenues earned during Q2.
- Revenues from after-market sales and services for Q2 2009 were $11.9
million, down 25% from revenues of $15.8 million in Q1 2009. Along
with the decrease in rig count, our customers have decreased their
demand for after-market parts and maintenance and repair services.
- Our Top Drive operating margins were 18% in Q2 2009 compared to 23% in
Q1 2009 and 33% in Q2 2008. The margin decrease compared to Q1 2009 is
primarily due to decreased rental activities and lower revenues in our
aftermarket business. In addition, we incurred $0.5 million of
severance costs during Q2 2009.
Tubular Services Segment
------------------------
- Revenues from the Tubular Services segment for Q2 2009 were $27.9
million, down 25% from revenues of $37.0 million in Q1 2009. Revenues
were $38.8 million in Q2 2008. Revenues declined in both our
conventional and proprietary businesses. Our conventional business is
primarily conducted in North America and is directly tied to the rig
count which has sharply declined over the past nine months. Our
proprietary business declined due to a slightly lower number of
projects completed during Q2 2009, particularly in North America and
Latin America. We performed a total of 538 proprietary casing running
jobs in Q2 2009 compared to 562 in Q1 2009 and 443 in Q2 2008. We
remain focused on converting the market to running casing with our
proprietary CDS(TM) technology.
- Operating Loss in the Tubular Services segment for Q2 2009 was $1.7
million, compared to income of $2.7 million in Q1 2009 and income of
$3.5 million in Q2 2008.
