FORT WORTH, Texas, April 23, 2015 /PRNewswire/ -- Basic Energy
Services, Inc. (NYSE: BAS) ("Basic") today announced its financial
and operating results for the first quarter ended March 31, 2015.
FIRST QUARTER 2015 HIGHLIGHTS
First quarter 2015 revenue declined 35% to $261.7 million from $400.9
million in the fourth quarter of 2014 as all lines of
services experienced reduced activity levels and pricing
pressures. First quarter 2015 revenue decreased 21% from
$331.3 million generated in the first
quarter of 2014. All metrics for the first quarter of 2014
were adjusted for the divestiture of Basic's barge rig operations
in March 2014 for comparability
purposes.
For the first quarter of 2015, Basic reported a net loss of
$32.6 million, or a loss of
$0.81 per basic and diluted share.
This compares to a net loss of $18.8
million, or a loss of $0.45
per basic and diluted share, reported in the fourth quarter of
2014. The fourth quarter of 2014 included a tax-effected,
non-cash charge of $23.5 million
($34.7 million before tax), or
$0.56 per basic and diluted share,
for impairment of all the goodwill associated with the well
servicing and fluid services segments. Excluding this special item,
Basic reported net income of $4.7
million, or $0.11 per basic
and diluted share. In the first quarter of 2014, Basic reported a
net loss of $3.3 million, or a loss
of $0.08 per basic and diluted
share.
Roe Patterson, Basic's President and Chief Executive Officer,
stated, "Our first quarter results reflect the overall impact of
the rapid decline in oil prices that began during the fourth
quarter of 2014. This challenging environment has triggered drastic
capital spending reductions by our customers, resulting in the
scaling back of our operations to fit operating cash flow in order
to preserve liquidity and match customer activity. As customers
reduce their service needs, pricing concessions have been required
to maximize our utilization levels across all of our lines of
business. In addition, our first quarter performance was impacted
by severe weather disruptions that further reduced our revenue.
"First quarter margins were most impacted in our completion and
remedial services driven by a rapid decline in the U.S. land
drilling rig count. We continue to face fierce rate competition in
the completion lines of business across all of our operating areas,
with pricing discounts reaching as high as 40% from their peak
levels in 2014.
"We have maintained our strategy of protecting market share,
maximizing utilization, and reducing rates as necessary in all
segments. We continue our efforts to lower input costs and
right-size our workforce. Our overall headcount is now 20% lower
than its peak of mid fourth quarter 2014. As we allocate assets
into markets where activity is strongest, we continue to high-grade
our marketed fleet and to stack excess equipment. We have
increased our stacked well servicing rig count by 40 during the
first quarter and added to it during April.
"We have successfully employed these defensive strategies in
previous down cycles, and combined with the strength of our current
financial position, these strategies should allow us to withstand
the effects of a prolonged downturn in activity. In light of these
challenging operating conditions, we have scaled back our 2015
capital expenditure plan down below our original estimate of
$100 million, having already shifted
primarily to a maintain-and-sustain revenue mode. At current
activity levels, this number could be as low as $75 million for 2015.
"During the month of March, we saw less of a sequential
reduction in activity levels compared to the previous
month-over-month period, and we are starting to see some signs of
flattening utilization levels. However, it is still too early to
predict whether the second quarter will reflect a potential floor
for activity. Looking ahead, we currently anticipate our second
quarter revenue to be down 10% to 15% sequentially, as declines in
activity and continued pricing pressures will likely combine to
reduce utilization. Generating free cash flow and preserving
liquidity remains our main financial focus.
"This week, we amended our existing revolver from a cash
flow-based facility to an asset-based facility. This
amendment allows us to maintain ample liquidity, while eliminating
potential covenant compliance issues we may have faced later in the
year due to market conditions. We will share more details on this
amendment on the quarterly earnings call."
Adjusted EBITDA decreased to $27.3
million, or 10% of revenues for the first quarter of 2015,
from $85.6 million, or 21% of revenue
in the fourth quarter of 2014. In the first quarter of 2014,
Basic generated Adjusted EBITDA of $65.4
million, or 19% of revenue, including the impact of the
barge rig operations. Adjusted EBITDA is defined as net
income before interest, taxes, depreciation and amortization, and
the net gain or loss from the disposal of assets. EBITDA and
Adjusted EBITDA, which are not measures determined in accordance
with United States generally
accepted accounting principles ("GAAP"), are defined and reconciled
in note 3 under the accompanying financial tables.
Business Segment Results
Completion and Remedial Services
Completion and remedial services revenue dropped by 45% to
$112.8 million in the first quarter
of 2015 from $203.4 million in the
prior quarter. The sequential decrease in revenue resulted
primarily from reduced activity in our pumping and coil tubing
services, due to the general decline in completion activity, driven
by the significant reduction in the drilling rig count during the
first quarter. In the first quarter of 2014, this segment generated
$137.5 million in revenue.
As of March 31, 2015, Basic had
approximately 443,000 hydraulic horsepower ("HHP"), flat compared
to the end of the previous quarter and 301,000 HHP as of
March 31, 2014. Weighted average HHP
for the first quarter of 2015 was 443,000 compared to 427,000 in
the fourth quarter of 2014.
Segment profit in the first quarter of 2015 decreased 59% to
$31.5 million compared to
$77.1 million in the prior
quarter. Segment margin for the 2015 first quarter decreased
990 basis points to 28% compared to the previous quarter, due
mainly to decremental margins on the lower revenue base.
During the first quarter of 2014, segment profit was $51.0 million, or 37% of revenue.
Fluid Services
Fluid services revenue in the first quarter of 2015 decreased
21% to $73.8 million compared to
$93.8 million in the prior
quarter. The decrease in revenue was due to lower utilization
as well as reduced rates, particularly in our higher margin service
lines. During the first quarter of 2014, this segment
generated $92.8 million in
revenue.
The weighted average number of fluid services trucks increased
to 1,046 during the first quarter of 2015, compared to 1,043 during
the fourth quarter of 2014 and 1,006 during the first quarter of
2014. Truck hours of 595,100 during the first quarter of 2015
decreased 10% from the 661,900 generated in the fourth quarter of
2014, and decreased 2% compared to 607,200 in the same period in
2014.
The average revenue per fluid service truck decreased to
$71,000 from $90,000 in the fourth quarter of 2014 mainly due
to the decreases in overall rates, disposal utilization and skim
oil revenues. In the comparable quarter of 2014, average revenue
per fluid truck was $92,000.
Segment profit in the first quarter of 2015 was $19.7 million, compared to a profit of
$26.6 million in the prior quarter,
with segment profit margin decreasing by 170 basis points to 27%,
caused by lower levels of frac tank rentals and skim oil revenues,
and a 50 basis point impact from the annual reset of payroll taxes.
Segment profit in the same period in 2014 was $26.1 million, or 28% of revenue.
Well Servicing
Well servicing revenues decreased 28% to $63.7 million during the first quarter of 2015
compared to $88.0 million in the
prior quarter, due to significantly lower utilization resulting
from price cuts related to the competitive market environment, a
general decline in our customers' capital and operating budgets,
and adverse winter weather during the first quarter. Revenues from
the Taylor manufacturing operations were $1.8 million in the first quarter of 2015
compared to $3.0 million in the prior
quarter. In the first quarter of 2014, well servicing
revenues were $87.5 million, adjusted
for the sale of our barge operations in March 2014. All
amounts and percentages below have been adjusted for the sale of
our barge rigs in the first quarter of 2014.
At March 31, 2015, the well
servicing rig count was 421, the same as the end of the prior
quarter and at March 31, 2014. Rig
hours were 163,900 in the first quarter of 2015, down from 204,400
in the previous quarter and down from 209,700 hours in the
comparable quarter of last year. Rig utilization was 55% in the
first quarter of 2015, down from 67% in the prior quarter and down
from 70% in the first quarter of 2014.
Excluding revenues associated with the Taylor manufacturing
operations, revenue per well servicing rig hour was $377 in the first quarter of 2015, compared to
$416 in the previous quarter and to
$407 reported in the first quarter of
2014. The first quarter decline was due to pricing concessions
given to customers in all operating markets.
Segment profit in the first quarter of 2015 was $11.3 million compared to $19.8 million in the prior quarter and
$21.0 million during the same period
in 2014. Segment profit margin decreased to 18% in the first
quarter of 2015 from 23% in the previous quarter. The first quarter
profit margin was negatively impacted by pricing concessions given
to customers beginning in the latter part of the fourth quarter of
2014, as well as downhole issues, resulting in a 360 basis point
impact to margins, and a 75 basis point impact from the reset
of payroll taxes. In the first quarter of 2014, adjusted
segment profit was 25% of revenue. Segment profit from the Taylor
manufacturing operations was $255,000
in the first quarter of 2015 compared to $432,000 in the prior quarter and $134,000 in the first quarter of 2014.
Contract Drilling
Contract drilling revenue decreased 27% to $11.5 million during the first quarter of 2015
from $15.7 million in the prior
quarter. During the first quarter of 2014, this segment
generated $13.5 million in
revenue. Basic operated 12 drilling rigs during the first
quarter of 2015, the same number of rigs as in the previous quarter
as well as the first quarter of 2014. Revenue per drilling
day in the first quarter of 2015 was $17,000, up from $16,600 in the previous quarter and up from
$16,500 in the first quarter of
2014. The increase in revenue per drilling day is due to an
early termination payment of $732,000
on the long-term contract of one of our rigs.
Rig operating days during the first quarter of 2015 decreased
29% to 674 compared to 948 in the prior quarter, resulting in rig
utilization of 62% during the first quarter of 2015 compared to 86%
during the prior quarter. In the comparable period in 2014,
rig operating days were 821, producing a utilization of 76%.
Segment profit in the first quarter of 2015 was $4.0 million, a 23% decrease compared to profit
of $5.1 million in the prior quarter
and a decrease from $4.4 million in
the first quarter of 2014. Segment margin for the first
quarter of 2015 was 34% of revenues compared to 33% from the prior
quarter. Last year in the comparable period, segment margin
was 32%.
G&A Expense
General and administrative ("G&A") expense in the first
quarter of 2015 was $39.2 million, or
15% of revenue, compared to $43.3
million, or 11% of revenue, for the prior quarter. The lower
G&A expense was primarily due to the impact of cost savings
initiatives initiated during the first quarter, reduced personnel
costs and lower incentive compensation expense. G&A
expense in the first quarter of 2014 was $39.6 million, or 12% of revenue.
Tax Benefit
Basic's tax benefit for the first quarter of 2015 was
$17.9 million, compared to a tax
benefit of $7.3 million in the fourth
quarter of 2014. Excluding the special item in the fourth quarter
of 2014, tax expense was $3.9
million. The tax benefit in the first quarter of 2015
had an effective rate of 35%, compared to the prior quarter's
effective tax adjusted expense rate of 45%. The tax benefit of
$1.4 million in the first quarter of
2014 translated into an effective tax rate of 30%.
Cash and Total Liquidity
On March 31, 2015, Basic had cash
and cash equivalents of approximately $105
million, up from $80 million
at December 31, 2014 and down from
$117 million on March 31, 2014.
On April 21, 2015, Basic amended
its existing revolving credit facility with the current syndicate
of lenders. The amendment revises the revolver from the
existing $300 million cash-flow based
facility to a $250 million
asset-based facility. The facility includes a $100 million accordion feature, which could
maximize the revolver to $350
million. The borrowing base is comprised of eligible
accounts receivable and equipment. This amendment also
eliminates the existing cash flow-based covenants. Certain
secured leverage ratio and fixed charge ratio
maintenance covenants will apply if availability under the
Facility declines below certain thresholds. Total pro forma
liquidity at March 31, 2015 would be
approximately $230 million.
Capital Expenditures
Total capital expenditures during the first quarter 2015,
including capital leases of $8.3
million, were approximately $34.1
million, comprised of $12.0
million for expansion projects, $19.6
million for sustaining and replacement projects and
$2.5 million for other
projects. Expansion capital spending included $5.6 million for the well servicing segment,
$5.4 million for the completion and
remedial services segment, and $1.0
million for the fluid services segment. Other capital
expenditures were mainly for facilities and IT infrastructure.
Conference Call
Basic will host a conference call to discuss its first quarter
2015 results on Friday,
April 24, 2015, at 9:00 a.m. Eastern
Time (8:00 a.m.
Central). To access the call, please dial (412) 902-0003 and
ask for the "Basic Energy Services" call at least 10 minutes prior
to the start time. The conference call will also be broadcast
live via the Internet and can be accessed through the investor
relations section of Basic's corporate website,
www.basicenergyservices.com.
A telephonic replay of the conference call will be available
until May 8, 2015 and may be accessed
by calling (201) 612-7415 and using pass code 13605363#. A
webcast archive will be available at www.basicenergyservices.com
shortly after the call and will be accessible for approximately 30
days.
About Basic Energy Services
Basic Energy Services provides well site services essential to
maintaining production from the oil and gas wells within its
operating area. The company employs more than 4,700 employees
in more than 100 service points throughout the major oil and gas
producing regions in Texas,
Louisiana, Oklahoma, New
Mexico, Arkansas,
Kansas, California, and the Rocky Mountain and
Appalachian regions. Additional information on Basic Energy
Services is available on the Company's website at
www.basicenergyservices.com.
Safe Harbor Statement
This release includes forward-looking statements and
projections, made in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Basic has
made every reasonable effort to ensure that the information and
assumptions on which these statements and projections are based are
current, reasonable, and complete. However, a variety of
factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in
this release, including (i) changes in demand for our services and
any related material impact on our pricing and utilizations rates,
(ii) Basic's ability to execute, manage and integrate acquisitions
successfully and (iii) changes in our expenses, including labor or
fuel costs and financing costs. Additional important risk
factors that could cause actual results to differ materially from
expectations are disclosed in Item 1A of Basic's Form 10-K for the
year ended December 31, 2014 and
subsequent Form 10-Qs filed with the SEC. While Basic makes
these statements and projections in good faith, neither Basic nor
its management can guarantee that anticipated future results will
be achieved. Basic assumes no obligation to publicly update
or revise any forward-looking statements made herein or any other
forward-looking statements made by Basic, whether as a result of
new information, future events, or otherwise.
Contacts:
|
Alan
Krenek,
|
|
Chief Financial
Officer
|
|
Basic Energy
Services, Inc.
|
|
817-334-4100
|
|
|
|
Jack Lascar/Stephanie
Smith
|
|
Dennard ▪ Lascar
Associates
|
|
713-529-6600
|
-Tables to Follow-
Basic Energy
Services, Inc.
|
Consolidated
Statements of Operations and Other Financial Data
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Income Statement
Data:
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
Completion and remedial
services
|
$
|
112,775
|
|
$
|
137,485
|
Fluid
services
|
|
73,803
|
|
|
92,835
|
Well
servicing
|
|
63,668
|
|
|
92,912
|
Contract
drilling
|
|
11,475
|
|
|
13,524
|
Total
revenues
|
|
261,721
|
|
|
336,756
|
Expenses:
|
|
|
|
|
|
Completion and remedial
services
|
|
81,251
|
|
|
86,480
|
Fluid
services
|
|
54,132
|
|
|
66,782
|
Well
servicing
|
|
52,401
|
|
|
69,759
|
Contract
drilling
|
|
7,525
|
|
|
9,166
|
General and
administrative (1)
|
|
39,204
|
|
|
39,559
|
Depreciation and
amortization
|
|
60,929
|
|
|
51,705
|
(Gain) loss on disposal
of assets
|
|
48
|
|
|
(679)
|
Total
expenses
|
|
295,490
|
|
|
322,772
|
Operating income
(loss)
|
|
(33,769)
|
|
|
13,984
|
Other income
(expense):
|
|
|
|
|
|
Interest
expense
|
|
(16,863)
|
|
|
(16,859)
|
Interest
income
|
|
6
|
|
|
13
|
Other income
|
|
120
|
|
|
366
|
Loss before income
taxes
|
|
(50,506)
|
|
|
(2,496)
|
Income tax
benefit
|
|
17,882
|
|
|
589
|
Net loss
|
$
|
(32,624)
|
|
$
|
(1,907)
|
Loss per share of
common stock:
|
|
|
|
|
|
Basic
|
$
|
(0.81)
|
|
$
|
(0.05)
|
Diluted
|
$
|
(0.81)
|
|
$
|
(0.05)
|
|
|
|
|
|
|
Other Financial
Data (unaudited):
|
|
|
|
|
|
EBITDA (3)
|
$
|
27,280
|
|
$
|
66,055
|
Adjusted EBITDA
(3)
|
|
27,328
|
|
|
65,376
|
Capital
expenditures:
|
|
|
|
|
|
Acquisitions, net of
cash acquired
|
|
-
|
|
|
-
|
Property and
equipment
|
|
25,861
|
|
|
33,106
|
|
|
|
|
|
|
|
As
of
|
|
March 31,
2015
|
|
December 31,
2014
|
|
|
|
|
|
|
|
(Unaudited)
|
|
(Audited)
|
Balance Sheet
Data:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
104,936
|
|
$
|
79,915
|
Net property and
equipment
|
|
982,153
|
|
|
1,007,969
|
Total
assets
|
|
1,499,550
|
|
|
1,597,177
|
Total long-term
debt
|
|
878,219
|
|
|
882,572
|
Total stockholders'
equity
|
|
307,464
|
|
|
342,653
|
|
Three months ended
March 31,
|
|
2015
|
|
2014
|
Segment
Data:
|
(Unaudited)
|
Completion and
Remedial Services
|
|
|
|
|
|
Segment Profits as a
percent of revenue
|
|
28.0%
|
|
|
37.1%
|
|
|
|
|
|
|
Fluid
Services
|
|
|
|
|
|
Weighted average
number of fluid service trucks
|
|
1,046
|
|
|
1,006
|
Truck hours
(000's)
|
|
595.1
|
|
|
607.2
|
Revenue per fluid
services truck (000's)
|
$
|
71
|
|
$
|
92
|
Segment profits per
fluid services truck (000's)
|
$
|
19
|
|
$
|
26
|
Segment profits as a
percent of revenue
|
|
26.7%
|
|
|
28.1%
|
|
|
|
|
|
|
Well Servicing
(2)
|
|
|
|
|
|
Weighted average
number of rigs
|
|
421
|
|
|
421
|
Rig hours
(000's)
|
|
163.9
|
|
|
209.7
|
Rig utilization
rate
|
|
55%
|
|
|
70%
|
Revenue per rig hour,
excluding manufacturing
|
$
|
377
|
|
$
|
407
|
Well servicing rig
profit per rig hour
|
$
|
69
|
|
$
|
100
|
Segment profits as a
percent of revenue
|
|
17.7%
|
|
|
24.0%
|
|
|
|
|
|
|
Contact
Drilling
|
|
|
|
|
|
Weighted average
number of rigs
|
|
12
|
|
|
12
|
Rig operating
days
|
|
674
|
|
|
821
|
Drilling utilization
rate
|
|
62%
|
|
|
76%
|
Revenue per
day
|
$
|
17,000
|
|
$
|
16,500
|
Drilling rig profit
per day
|
$
|
5,900
|
|
$
|
5,300
|
Segment profits as a
percent of revenue
|
|
34.4%
|
|
|
32.2%
|
|
|
(1)
|
Includes
approximately $4,532,000 and $3,569,000 of non-cash compensation
expense for the three months ended March 31, 2015 and March 31,
2014, respectively.
|
|
|
(2)
|
Excludes Basic's
barge rig operations that were sold on March 31, 2014.
|
|
|
(3)
|
This earnings release
contains references to the non-GAAP financial measure of earnings
(net income) before interest, taxes, depreciation and amortization,
or "EBITDA." This earnings release also contains references to the
non-GAAP financial measure of earnings (net income) before
interest, taxes, depreciation, amortization, and the gain or loss
on disposal of assets or "Adjusted EBITDA." EBITDA and Adjusted
EBITDA should not be considered in isolation or as a substitute 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. However,
Basic believes EBITDA and Adjusted EBITDA are useful supplemental
financial measures used by its management and directors and by
external users of its financial statements, such as investors, to
assess:
|
|
|
•
|
The financial
performance of its assets without regard to financing methods,
capital structure or historical cost basis;
|
•
|
The ability of its
assets to generate cash sufficient to pay interest on its
indebtedness; and
|
•
|
Its operating
performance and return on invested capital as compared to those of
other companies in the well servicing industry, without regard to
financing methods and capital structure.
|
|
|
|
EBITDA and Adjusted
EBITDA each have limitations as an analytical tool and should not
be considered an alternative to net income, operating income, cash
flow from operating activities or any other measure of financial
performance or liquidity presented in accordance with GAAP. EBITDA
and Adjusted EBITDA exclude some, but not all, items that affect
net income and operating income, and these measures may vary among
other companies. Limitations to using EBITDA as an analytical tool
include:
|
|
|
•
|
EBITDA does not
reflect its current or future requirements for capital expenditures
or capital commitments;
|
•
|
EBITDA does not
reflect changes in, or cash requirements necessary, to service
interest or principal payments on, its debt;
|
•
|
EBITDA does not
reflect income taxes;
|
•
|
Although depreciation
and amortization are non-cash charges, the assets being depreciated
and amortized will often have to be replaced in the future, and
EBITDA does not reflect any cash requirements for such
replacements; and
|
•
|
Other companies in
its industry may calculate EBITDA differently than Basic does,
limiting its usefulness as a comparative measure.
|
|
|
|
In addition to each
of the limitations with respect to EBITDA noted above, the
limitations to using Adjusted EBITDA as an analytical tool
include:
|
•
|
Adjusted EBITDA does
not reflect Basic's gain or loss on disposal of assets;
and
|
•
|
Other companies in
our industry may calculate Adjusted EBITDA differently than Basic
does, limiting its usefulness as a comparative measure.
|
The following table presents a reconciliation of net income to
EBITDA, which is the most comparable GAAP performance measure, for
each of the periods indicated:
|
Three months ended
March 31,
|
|
2015
|
|
2014
|
Reconciliation of
Net Loss to EBITDA:
|
(Unaudited)
|
Net loss
|
$
|
(32,624)
|
|
$
|
(1,907)
|
Income
taxes
|
|
(17,882)
|
|
|
(589)
|
Net
interest expense
|
|
16,857
|
|
|
16,846
|
Depreciation and amortization
|
|
60,929
|
|
|
51,705
|
EBITDA
|
$
|
27,280
|
|
$
|
66,055
|
The following table presents a reconciliation of net income to
"Adjusted EBITDA," which means our EBITDA excluding the gain or
loss on disposal of assets:
|
Three months ended
March 31,
|
|
2015
|
|
2014
|
Reconciliation of
Net Loss to Adjusted EBITDA:
|
(Unaudited)
|
Net loss
|
$
|
(32,624)
|
|
$
|
(1,907)
|
Income
taxes
|
|
(17,882)
|
|
|
(589)
|
Net
interest expense
|
|
16,857
|
|
|
16,846
|
Depreciation and amortization
|
|
60,929
|
|
|
51,705
|
(Gain) loss on
disposal of assets
|
|
48
|
|
|
(679)
|
Adjusted
EBITDA
|
$
|
27,328
|
|
$
|
65,376
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/basic-energy-services-reports-first-quarter-2015-results-300071566.html
SOURCE Basic Energy Services, Inc.