PARKER DRILLING COMPANY HOUSTON, May 5, 2015 /PRNewswire/ -- Parker Drilling Company (NYSE-PKD), an international provider of drilling services and rental tools to the energy industry, today reported results for the quarter ended March 31, 2015, including net income of $3.2 million, or $0.03 per diluted share, on revenues of $204.1 million. First quarter adjusted EBITDA was $53.4 million, compared with $65.2 million for the preceding quarter.
"In the 2015 first quarter, while we experienced significant declines in our U.S. markets for rental tools and barge drilling services, we increased our international and Alaska drilling fleet utilization, and benefited from growth in our international O&M (operations and maintenance) and project services," said Gary Rich, chairman, president and chief executive officer. "Our results also reflect the impact of cost reductions throughout the business.
"Solid cash flow from operations throughout the quarter allowed us to reduce debt by $30 million and close the quarter with a strong cash position. During the quarter we also increased the capacity of our revolving credit facility and extended its maturity.
"We achieved good operating results and a solid financial condition by maintaining our clear focus on lowering our cost base, sustaining our utilization, managing our cash and liquidity, and preserving our ability to respond when conditions improve. We reacted quickly and decisively to the severe downturn in drilling activity that first impacted U.S. drilling markets and has begun to affect international markets. We are prepared to make further adjustments to our business to address changing market conditions and take advantage of opportunities as they occur."
Outlook
"We believe overall energy market conditions will remain weak. We expect our Rental Tools Services business to continue to be impacted by the severe downturn in U.S. land and shallow water offshore drilling markets, with lower utilization and continued price pressure. This may be moderated by improvements in our international rental tools operations. Similarly, we expect our Drilling Services business to continue to be impacted by the sharp decline in U.S. lower 48 drilling activity, tempered by more resilient activity in our International & Alaska Drilling segment, particularly international O&M services and drilling operations in Alaska," Mr. Rich added.
First Quarter Review
Parker Drilling's revenues for the 2015 first quarter, compared with the 2014 fourth quarter, declined 16 percent to $204.1 million from $243.2 million, operating gross margin excluding depreciation and amortization expense (gross margin) declined 14 percent to $64.8 million from $75.2 million and gross margin as a percentage of revenues was 31.8 percent, compared with 30.9 percent for the prior period.
For the Company's Drilling Services business, revenues declined 15 percent to $128.0 million from $150.8 million, gross margin declined 1 percent to $35.5 million from $35.9 million, and gross margin as a percentage of revenues was 27.7 percent, compared with 23.8 percent for the prior period. The decrease in revenues is primarily due to the sharp decline in barge drilling activity in the U.S. Gulf of Mexico inland water drilling market and a decrease in revenues from reimbursable expenses.
-- U.S. (Lower 48) Drilling revenues were $14.1 million and gross margin
was $0.1 million. Both revenues and gross margin were below 2014 fourth
quarter levels, primarily due to lower utilization and average dayrate
for our barge drilling rig fleet in the U.S. Gulf of Mexico.
-- International & Alaska Drilling revenues were $113.9 million, gross
margin was $35.4 million, and gross margin as a percentage of revenues
was 31.1 percent. Compared with the 2014 fourth quarter, revenues
decreased 4 percent and gross margin increased 41 percent. The decline
in revenues was primarily due to a decrease in revenues from
reimbursable expenses. The increase in gross margin reflects a greater
contribution from O&M and project activities, the benefit of early
termination and demobilization fees, and operating expense reductions.
Rental Tools Services revenues were $76.1 million, gross margin was $29.3 million and gross margin as a percentage of revenues was 38.5 percent. Compared with the 2014 fourth quarter, revenues decreased 18 percent and gross margin decreased 25 percent. Reduced revenues and gross margin were primarily due to the continued decline in U.S. land and shallow water offshore drilling activity and the resulting lower demand and stiff price competition for U.S. rental tools services, as well as softer demand in international rental tools markets. This was partially offset by lower operating costs.
General and Administrative Expense increased to $10.8 million for the 2015 first quarter, from $9.7 million for the 2014 fourth quarter. The increased expense is primarily due to a one-time gain in the 2014 fourth quarter from a change in our employee benefit program and incremental expenses in the 2015 first quarter associated with implementation of our new ERP system.
Capital expenditures year-to-date through March 31, 2015 were $33.5 million.
"In current market conditions, we believe customers will value, more than ever, our focus on operational execution and on providing innovative, reliable and efficient solutions that help them safely manage their costs and mitigate their risks. We believe we are in sound condition, prepared to meet the challenges ahead and capture opportunities that arise," concluded Mr. Rich.
Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Wednesday, May 6, 2015, to review reported results. The call will be available by telephone at (888) 523-1228, access code 5566922. The call can also be accessed through the Investor Relations section of the Company's website. A replay of the call can be accessed on the Company's website for 12 months or by telephone for 1 week from May 6, 2015 at (888) 203-1112, using the access code 5566922#.
Cautionary Statement
This press release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements in this press release other than statements of historical facts addressing activities, events or developments the Company expects, projects, believes, or anticipates will or may occur in the future are forward-looking statements. These statements include, but are not limited to, statements about anticipated future financial or operational results; the outlook for rental tools utilization and rig utilization and dayrates; the results of past capital expenditures; scheduled start-ups of rigs; general industry conditions such as the demand for drilling and the factors affecting demand; competitive advantages such as technological innovation; future operating results of the Company's rigs, rental tools operations and projects under management; future capital expenditures; expansion and growth opportunities; acquisitions or joint ventures; asset purchases and sales; successful negotiation and execution of contracts; scheduled delivery of drilling rigs or rental equipment for operation; the Company's financial position; changes in utilization or market share; outcomes of legal proceedings; compliance with credit facility and indenture covenants; and similar matters. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Although the Company believes its expectations stated in this press release are based on reasonable assumptions, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that could cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to changes in worldwide economic and business conditions, fluctuations in oil and natural gas prices, compliance with existing laws and changes in laws or government regulations, the failure to realize the benefits of, and other risks relating to, acquisitions, the risk of cost overruns, our ability to refinance our debt and other important factors, many of which could adversely affect market conditions, demand for our services, and costs, and all or any one of which could cause actual results to differ materially from those projected. For more information, see "Risk Factors" in the Company's Annual Report filed on Form 10-K with the Securities and Exchange Commission and other public filings and press releases. Each forward-looking statement speaks only as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Company Description
Parker Drilling (NYSE: PKD) provides drilling services and rental tools to the energy industry. The Company's Drilling Services business serves operators in the inland waters of the U.S. Gulf of Mexico utilizing Parker Drilling's barge rig fleet and in select international markets and harsh-environment regions utilizing Parker Drilling-owned and customer-owned equipment. The Company's Rental Tools Services business supplies premium equipment and well services to operators on land and offshore in the U.S. and international markets. More information about Parker Drilling can be found on the Company's website at www.parkerdrilling.com.
PARKER DRILLING COMPANY
Consolidated Condensed Balance Sheets
(Dollars in Thousands, Except Per Share Data)
March 31, 2015 December 31, 2014
-------------- -----------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $113,199 $108,456
Accounts and Notes Receivable,
Net 279,420 270,952
Rig Materials and Supplies 50,336 47,943
Deferred Costs 6,432 5,673
Deferred Income Taxes 5,648 7,476
Other Current Assets 28,218 29,279
TOTAL CURRENT ASSETS 483,253 469,779
------- -------
PROPERTY, PLANT AND EQUIPMENT,
NET 885,233 895,940
OTHER ASSETS
Deferred Income Taxes 135,820 122,689
Other Assets 36,009 32,251
TOTAL OTHER ASSETS 171,829 154,940
------- -------
TOTAL ASSETS $1,540,315 $1,520,659
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term
Debt $ - $10,000
Accounts Payable and Accrued
Liabilities 209,399 168,665
TOTAL CURRENT LIABILITIES 209,399 178,665
------- -------
LONG-TERM DEBT 585,000 605,000
LONG-TERM DEFERRED TAX LIABILITY 58,312 52,115
OTHER LONG-TERM LIABILITIES 18,559 18,665
TOTAL CONTROLLING INTEREST IN
STOCKHOLDERS' EQUITY 664,868 662,431
Noncontrolling interest 4,177 3,783
-----
TOTAL EQUITY 669,045 666,214
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,540,315 $1,520,659
========== ==========
Current Ratio 2.31 2.63
Total Debt as a Percent of
Capitalization 47% 48%
Book Value Per Common Share $5.43 $5.43
PARKER DRILLING COMPANY
Consolidated Statement Of Operations
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months
Ended
December 31,
------------
Three Months Ended March 31,
----------------------------
2015 2014 2014
---- ---- ----
REVENUES $204,076 $229,225 $243,213
EXPENSES:
Operating Expenses 139,270 166,025 167,990
Depreciation and Amortization 40,539 34,337 38,455
179,809 200,362 206,445
------- ------- -------
TOTAL OPERATING GROSS MARGIN 24,267 28,863 36,768
------ ------ ------
General and Administrative
Expense (10,837) (8,964) (9,675)
Gain (Loss) on Disposition of
Assets, Net 2,441 (129) 621
----- ----
TOTAL OPERATING INCOME 15,871 19,770 27,714
------ ------ ------
OTHER INCOME AND (EXPENSE):
Interest Expense (11,078) (12,039) (10,779)
Interest Income 183 32 39
Loss on extinguishment of debt - (29,673) -
Other (1,380) 895 1,148
TOTAL OTHER EXPENSE (12,275) (40,785) (9,592)
------- ------- ------
INCOME (LOSS) BEFORE INCOME
TAXES 3,596 (21,015) 18,122
INCOME TAX EXPENSE (BENEFIT) (182) (8,623) 9,983
---- ------ -----
NET INCOME (LOSS) 3,778 (12,392) 8,139
----- ------- -----
Less: net income attributable
to noncontrolling interest 556 157 386
NET INCOME (LOSS) ATTRIBUTABLE
TO CONTROLLING INTEREST $3,222 $(12,549) $7,753
====== ======== ======
EARNINGS PER SHARE - BASIC
Net Income (loss) $0.03 $(0.10) $0.06
EARNINGS PER SHARE - DILUTED
Net Income (loss) $0.03 $(0.10) $0.06
NUMBER OF COMMON SHARES USED IN COMPUTING
EARNINGS PER SHARE
Basic 121,887,072 120,368,650 121,755,421
Diluted 123,708,623 120,368,650 123,295,412
PARKER DRILLING COMPANY
Selected Financial Data
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------
March 31, December 31,
---------
2015 2014 2014
---- ---- ----
REVENUES:
U.S. (Lower 48) Drilling $14,097 $35,787 $32,124
International & Alaska Drilling 113,921 112,932 118,711
Rental Tools 76,058 80,506 92,378
Total Revenues $204,076 $229,225 $243,213
OPERATING EXPENSES:
U.S. (Lower 48) Drilling $13,982 $22,995 $21,369
International & Alaska Drilling 78,529 91,275 93,563
Rental Tools 46,759 51,755 53,058
Total Operating Expenses $139,270 $166,025 $167,990
OPERATING GROSS MARGIN:
U.S. (Lower 48) Drilling $115 $12,792 $10,755
International & Alaska Drilling 35,392 21,657 25,148
Rental Tools 29,299 28,751 39,320
Depreciation and Amortization (40,539) (34,337) (38,455)
Total Operating Gross Margin $24,267 $28,863 $36,768
PARKER DRILLING COMPANY
Adjusted EBITDA
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------
March 31, 2015 December 31, September 30,
2014 2014 June 30, 2014 March 31, 2014
-------------- ------------- -------------- ------------- --------------
Net Income (Loss) Attributable
to Controlling Interest $3,222 $7,753 $12,566 $15,681 $(12,549)
Adjustments:
Income Tax (Benefit) Expense (182) 9,983 11,014 11,702 (8,623)
Interest Expense 11,078 10,779 10,848 10,599 12,039
Other Income and Expense 1,197 (1,187) 500 (641) 28,746
(Gain) Loss on Disposition of
Assets, Net (2,441) (621) 457 (1,019) 129
Depreciation and Amortization 40,539 38,455 36,149 36,180 34,337
Adjusted EBITDA* 53,413 65,162 71,534 72,502 54,079
------ ------ ------ ------ ------
Adjustments:
Non-routine Items - - (1,250) (1,500) -
--- --- ------ ---
Adjusted EBITDA after Non-
routine Items $53,413 $65,162 $70,284 $71,002 $54,079
======= ======= ======= ======= =======
* Adjusted EBITDA, a non-GAAP
financial measure, excludes items
that management believes are of a
non-routine nature and which
detract from an understanding of
normal operating performance and
comparisons with other periods.
Management also believes that
results excluding these items are
more comparable to estimates
provided by securities analysts
and used by them in evaluating the
Company's performance.
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SOURCE Parker Drilling
