HOUSTON, Feb. 15, 2017 /PRNewswire/ -- Parker Drilling Company (NYSE: PKD) today announced results for the fourth quarter ended December 31, 2016, including a reported net loss of $48.9 million, or a $0.39 loss per share, on revenues of $94.0 million.
The net loss includes a pre-tax $0.9 million expense related to executive departures and a $6.8 million non-cash valuation allowance taken primarily against UK deferred tax assets largely relating to fixed assets. The valuation allowance accounted for $0.05 of the reported loss per share. While the deferred tax assets have been reserved on the Company's financial statements, they have not expired and remain available to offset future cash taxes. Excluding these items, the adjusted net loss was $41.3 million, or a $0.33 loss per share.
Fourth quarter Adjusted EBITDA was $5.2 million.
"Our fourth quarter results were in line with our expectations in the face of ongoing market challenges. We continue our efforts to maximize results and aggressively pursue opportunities across all of our business lines," said Gary Rich, the Company's Chairman, President and CEO.
"U.S. land activity drove improvements in our U.S. Rental Tools Tubular Goods Utilization Index. We also saw continued multi-well rig inquiries in the U.S. barge business. We executed a contract for an 11 well, or approximately six month, project for 1 barge rig that has mobilized to its first well location and have prospects for 2 to 3 additional contracts with anticipated start-ups late in the first quarter. Internationally, current activity levels remain low; however, we see increased rig tendering in many of our markets for work anticipated to begin in late 2017 or early 2018.
"Throughout 2016, we remained focused on disciplined cost control and cash management while maintaining the strength of our business lines in order to benefit from improving conditions. We ended the quarter with $210 million in liquidity, up from $194 million at the end of the third quarter, including $120 million in cash and $90 million available on our undrawn revolver.
"For 2017, we have identified a number of growth opportunities and estimate total capital expenditures of $40 to $50 million, with expenditures weighted toward the first half of 2017. While we are increasing investments in our growth, we will continue to carefully manage our liquidity and costs so we can respond to changing market conditions and opportunities that develop," concluded Rich.
Fourth Quarter Review
Parker Drilling's revenues for the 2016 fourth quarter, compared with the 2016 third quarter, decreased 3.3 percent to $94.0 million from $97.2 million. Operating gross margin, excluding depreciation and amortization expense (gross margin) increased 8.0 percent to $13.5 million from $12.5 million and gross margin as a percentage of revenues was 14.4 percent, compared with 12.9 percent for the prior period.
Drilling Services
For the Company's Drilling Services business, which is comprised of the U.S. (Lower 48) Drilling and the International & Alaska Drilling segments, revenues declined 6.6 percent to $62.3 million from $66.7 million. Gross margin increased 9.1 percent to $10.8 million from $9.9 million, and gross margin as a percentage of revenues was 17.3 percent, compared with 14.8 percent for the prior period. Contracted backlog was $379 million at the end of the fourth quarter compared with $421 million as of September 30, 2016.
U.S. (Lower 48) Drilling
U.S. (Lower 48) Drilling segment revenues were $0.8 million, a 42.9 percent decrease from 2016 third quarter revenues of $1.4 million. Gross margin was a $3.4 million loss as compared with a 2016 third quarter loss of $3.7 million. The decline in revenues was primarily the result of fewer revenue days, and the improvement in gross margin was due to lower costs.
International & Alaska Drilling
International & Alaska Drilling segment revenues were $61.5 million, a 5.8 percent decrease from 2016 third quarter revenues of $65.3 million. Gross margin was $14.2 million, a 4.4 percent increase from 2016 third quarter gross margin of $13.6 million. Gross margin as a percentage of revenues was 23.1 percent as compared with 20.8 percent for the 2016 third quarter. The decrease in revenues was primarily attributable to lower reimbursable activity partially offset by an increase in activity associated with our Atlantic Canada O&M project. The increase in gross margin was primarily the result of lower operating expenses in addition to a benefit associated with the release of a legacy contract related accrual.
Rental Tools Services
Rental Tools Services revenues were $31.7 million, a 3.9 percent increase from 2016 third quarter revenues of $30.5 million. Gross margin was $2.7 million, a 3.8 percent increase from $2.6 million for the 2016 third quarter. Gross margin as a percentage of revenues was 8.5 percent as compared with 8.5 percent in the 2016 third quarter.
U.S. Rental Tools
U.S. Rental tools segment revenues were $16.1 million, compared with $15.0 million for the 2016 third quarter. Gross margin was $4.0 million compared with $4.2 million for the 2016 third quarter. Revenues were up as land based activity outpaced declines in offshore activity. Gross margin declined as a result of bad debt expense.
International Rental Tools
International Rental Tools segment revenues were $15.6 million, compared with $15.5 million for the 2016 third quarter and gross margin was a loss of $1.3 million compared with a loss of $1.7 million for the 2016 third quarter. The improvement in gross margin was due to lower operating expenses.
Consolidated
General and Administrative expense increased to $9.1 million for the 2016 fourth quarter, from $7.4 million for the 2016 third quarter, predominately due to incentive plan adjustments and a $0.9 million charge related to executive departures recorded in the fourth quarter of 2016.
Capital expenditures in the fourth quarter were $8.0 million, and were $29.0 million for the year.
Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Thursday, February 16, 2017, to review reported results. You may access the call by telephone at (412) 902-0003 and asking for the 2016 Fourth Quarter Conference Call. The call may 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 and will be available by telephone through February 23, 2017, at (201) 612-7415, access code 13653021#.
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.
This news release contains non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable U.S. Generally Accepted Accounting Principles (GAAP) financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided in the following tables.
Company Description
Parker Drilling 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 U.S. and international markets and harsh-environment regions utilizing Parker-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.
Contact: Jason Geach, Vice President, Investor Relations & Corporate Development (+1) (281) 406-2310, jason.geach@parkerdrilling.com.
PARKER DRILLING COMPANY Consolidated Condensed Balance Sheets (Dollars in Thousands) December 31, 2016 December 31, 2015 ----------------- ----------------- (Unaudited) ASSETS: Current Assets Cash and Cash Equivalents $119,691 $134,294 Accounts and Notes Receivable, Net 113,231 175,105 Rig Materials and Supplies 32,354 34,937 Deferred Costs 1,436 1,367 Other Current Assets 19,606 21,038 Total Current Assets 286,318 366,741 ------- ------- Property, Plant and Equipment, net 693,439 805,841 Other Assets Deferred Income Taxes 70,309 139,282 Other Assets 53,485 54,838 Total Other Assets 123,794 194,120 ------- ------- Total Assets $1,103,551 $1,366,702 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities Accounts Payable and Accrued Liabilities $102,921 $136,121 Total Current Liabilities 102,921 136,121 ------- ------- Long-Term Debt, net of debt issuance costs 576,326 574,798 Deferred Tax Liability 69,333 68,654 Other Long-Term Liabilities 15,836 18,617 Total Stockholders' Equity 339,135 568,512 ------- ------- Total Liabilities and Stockholders' Equity $1,103,551 $1,366,702 ========== ==========
PARKER DRILLING COMPANY Consolidated Statement Of Operations (Dollars in Thousands, Except Per Share Data) (Unaudited) Three Months Ended September 30, ------------- Three Months Ended December 31, 2016 2015 2016 ---- ---- ---- Revenues $94,025 $148,748 $97,189 Expenses: Operating Expenses 80,529 114,488 84,680 Depreciation and Amortization 33,190 37,720 34,474 113,719 152,208 119,154 ------- ------- ------- Total Operating Gross Margin (19,694) (3,460) (21,965) ------- ------ ------- General and Administrative Expense (9,132) (6,947) (7,424) Provision for Reduction in Carrying Value of Certain Assets - (9,268) - Gain (Loss) on Disposition of Assets, net (1,364) (1,043) (187) ------ ------ ---- Total Operating Income (Loss) (30,190) (20,718) (29,576) ------- ------- ------- Other Income (Expense) Interest Expense (11,048) (11,388) (11,015) Interest Income 10 60 9 Other (1,409) (6,119) (351) Total Other Income (Expense) (12,447) (17,447) (11,357) ------- ------- ------- Income (Loss) before Income Taxes (42,637) (38,165) (40,933) Income Tax Expense (Benefit) 6,292 (2,519) 5,295 ----- ------ ----- Net Income (Loss) (48,929) (35,646) (46,228) ------- ------- ------- Less: Net Income (Loss) Attributable to Noncontrolling Interest - - - --- --- --- Net Income (Loss) Attributable to Controlling Interest $(48,929) $(35,646) $(46,228) ======== ======== ======== Income (Loss) per Share - Basic Net Income (Loss) $(0.39) $(0.29) $(0.37) Income (Loss) per Share - Diluted Net Income (Loss) $(0.39) $(0.29) $(0.37) Number of common shares used in computing earnings per share: Basic 124,830,473 122,951,598 124,486,848 Diluted 124,830,473 122,951,598 124,486,848
PARKER DRILLING COMPANY Consolidated Statement Of Operations (Dollars in Thousands, Except Per Share Data) (Unaudited) Year Ended December 31, 2016 2015 2014 ---- ---- ---- Revenues $427,004 $712,183 $968,684 Expenses: Operating Expenses 362,521 526,290 669,381 Depreciation and Amortization 139,795 156,194 145,121 502,316 682,484 814,502 ------- ------- ------- Total Operating Gross Margin (75,312) 29,699 154,182 ------- ------ ------- General and Administrative Expense (34,332) (36,190) (35,016) Provision for Reduction in Carrying Value of Certain Assets - (12,490) - Gain (Loss) on Disposition of Assets, Net (1,613) 1,643 1,054 Total Operating Income (Loss) (111,257) (17,338) 120,220 -------- ------- ------- Other Income (Expense) Interest Expense (45,812) (45,155) (44,265) Interest Income 58 269 195 Loss on extinguishment of debt - - (30,152) Other 367 (9,747) 2,539 Total Other Income (Expense) (45,387) (54,633) (71,683) Income (Loss) before Income Taxes (156,644) (71,971) 48,537 Income Tax Expense (Benefit) 74,170 22,313 24,076 ------ ------ ------ Net Income (Loss) (230,814) (94,284) 24,461 Less: Net Income (Loss) Attributable to Noncontrolling Interest - 789 1,010 --- --- ----- Net Income (Loss) Attributable to Controlling Interest $(230,814) $(95,073) $23,451 ========= ======== ======= Income (Loss) per Share - Basic Net Income (Loss) $(1.86) $(0.78) $0.19 Income (Loss) per Share - Diluted Net Income (Loss) $(1.86) $(0.78) $0.19 Number of common shares used in computing earnings per share: Basic 124,130,004 122,562,187 121,186,464 Diluted 124,130,004 122,562,187 123,076,648
PARKER DRILLING COMPANY Selected Financial Data (Dollars in Thousands) (Unaudited) Three Months Ended Year Ended December 31, December 31, September 30, 2016 2015 2014 ---- ---- ---- 2016 2015 2016 ---- ---- ---- Revenues: Drilling Services: ------------------ U.S. (Lower 48) Drilling $848 $3,451 $1,431 $5,429 $30,358 $158,405 International & Alaska Drilling 61,478 95,546 65,307 287,332 435,096 462,513 ------ ------ ------ ------- ------- ------- Total Drilling Services: 62,326 98,997 66,738 292,761 465,454 620,918 Rental Tools Services: ---------------------- U.S. Rental Tools 16,130 28,734 14,967 71,613 141,889 223,545 International Rental Tools 15,569 21,017 15,484 62,630 104,840 124,221 ------ ------ ------ ------ ------- ------- Total Rental Tools Services 31,699 49,751 30,451 134,243 246,729 347,766 Total Revenues $94,025 $148,748 $97,189 $427,004 $712,183 $968,684 Operating Expenses: Drilling Services: ------------------ U.S. (Lower 48) Drilling $4,232 $5,616 $5,112 $19,733 $36,247 $90,314 International & Alaska Drilling 47,307 72,902 51,682 222,824 325,346 368,424 ------ ------ ------ ------- ------- ------- Total Drilling Services: 51,539 78,518 56,794 242,557 361,593 458,738 Rental Tools Services: ---------------------- U.S. Rental Tools 12,102 15,593 10,746 50,216 77,056 105,353 International Rental Tools 16,888 20,377 17,140 69,748 87,641 105,290 ------ ------ ------ ------ ------ ------- Total Rental Tools Services 28,990 35,970 27,886 119,964 164,697 210,643 Total Operating Expenses $80,529 $114,488 $84,680 $362,521 $526,290 $669,381 Operating Gross Margin: Drilling Services: ------------------ U.S. (Lower 48) Drilling $(3,384) $(2,165) $(3,681) $(14,304) $(5,889) $68,091 International & Alaska Drilling 14,171 22,644 13,625 64,508 109,750 94,089 Total Drilling Services 10,787 20,479 9,944 50,204 103,861 162,180 Rental Tools Services: ---------------------- U.S. Rental Tools 4,028 13,141 4,221 21,397 64,833 118,192 International Rental Tools (1,319) 640 (1,656) (7,118) 17,199 18,931 ------ --- ------ ------ ------ ------ Total Rental Tools Services 2,709 13,781 2,565 14,279 82,032 137,123 Total Operating Gross Margin Excluding 13,496 34,260 12,509 64,483 185,893 299,303 Depreciation and Amortization Depreciation and Amortization (33,190) (37,720) (34,474) (139,795) (156,194) (145,121) ------- ------- ------- -------- -------- -------- Total Operating Gross Margin $(19,694) $(3,460) $(21,965) $(75,312) $29,699 $154,182
PARKER DRILLING COMPANY Adjusted EBITDA (1) (Dollars in Thousands) (Unaudited) Three Months Ended December September June 30, March 31, December 31, 2016 30, 2016 2016 2016 31, 2015 -------- -------- ---- ---- -------- Net Income (Loss) Attributable to Controlling Interest $(48,929) $(46,228) $(39,822) $(95,835) $(35,646) Interest Expense 11,048 11,015 12,187 11,562 11,388 Income Tax Expense (Benefit) 6,292 5,295 (913) 63,496 (2,519) Depreciation and Amortization 33,190 34,474 36,317 35,814 37,720 ------ ------ ------ ------ ------ EBITDA 1,601 4,556 7,769 15,037 10,943 ===== ===== ===== ====== ====== Adjustments: Other (Income) Expense 1,399 342 326 (2,492) 6,059 (Gain) Loss on Disposition of Assets, net 1,364 187 2 60 1,043 Provision for Reduction in Carrying Value of Certain Assets - - - - 9,268 Special items (2) 876 - - - 1,265 --- --- --- --- ----- Adjusted EBITDA $5,240 $5,085 $8,097 $12,605 $28,578 ====== ====== ====== ======= =======
(1) We believe Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), remeasurement of foreign currency transactions, tax consequences, impairment and other special items. Special items include items impacting operating expenses that management believes detract from an understanding of normal operating performance. Management uses Adjusted EBITDA as a supplemental measure to review current period operating performance and period to period comparisons. Our Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner. EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. Generally Accepted Accounting Principles (GAAP), and should not be considered in isolation or as an alternative to operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. (2) Special items include: For the three months ended December 31, 2015, special items include a $1.3 million write-off of inventory associated with our decision to no longer provide drilling services in Colombia. - - For the three months ended December 31, 2016, special items include $0.9 million of net severance associated with the departure of three executives.
PARKER DRILLING COMPANY Reconciliation of Adjusted Earnings Per Share (Dollars in Thousands, Except Per Share Data) (Unaudited) Three Months Ended December 31, September 30, 2016 2015 2016 ---- ---- ---- Net Income (Loss) Attributable to Controlling Interest $(48,929) $(35,646) $(46,228) Income (Loss) per Diluted Share $(0.39) $(0.29) $(0.37) Adjustments: Sale of investment in joint venture $ - 4,799 - Provision for reduction in carrying value of certain assets - 9,268 - Write-off inventory - 1,265 - Valuation allowance 6,772 - - Special Items 876 - - Total adjustments 7,648 15,332 - Tax effect of adjustments - (3,010) - Net adjustments 7,648 12,322 - Adjusted net income (loss) attributable to controlling interest(1) $(41,281) $(23,324) $(46,228) ======== ======== ======== Adjusted income (loss) per diluted share(1) $(0.33) $(0.19) $(0.37) ====== ====== ======
(1) We believe Adjusted Net Income (Loss) Attributable to Controlling Interest and Adjusted Income (Loss) per Diluted Share are useful financial measures for investors to assess and understand operating performance for period to period comparisons. Management views the adjustments to Net Income (Loss) Attributable to Controlling Interest and Income (Loss) per Diluted Share to be items outside of the Company's normal operating results. Adjusted Net Income (Loss) Attributable to Controlling Interest and Adjusted Income (Loss) per Diluted Share are not measures of financial performance under GAAP, and should not be considered in isolation or as an alternative to Net Income (Loss) or Income (Loss) per Diluted Share.
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SOURCE Parker Drilling Company