HOUSTON, Aug. 8, 2017 /PRNewswire/ -- Key Energy Services,
Inc. (NYSE:KEG) reported second quarter 2017 consolidated
revenues of $107.8 million and a
pre-tax GAAP loss of $14.0 million,
or $0.66 per share. The results for
the second quarter include a $21.0
million gain on sale of assets, $4.0
million of stock-based compensation expense and $1.6 million of severance expense. Excluding
these items, the Company reported a pre-tax loss of $29.4 million, or $1.42 per share.
Overview and Outlook
Key's President and Chief Executive Officer, Robert Drummond, stated, "During the second
quarter, each of our U.S. segments generated positive Adjusted
EBITDA for the first time in well over a year driven by top-line
improvement, particularly in Coiled Tubing Services, and strong
incremental margins in each business as the benefits of our
organizational restructuring initiatives continued to emerge.
Margins also benefited from some sequential pricing increases in
each business. In total, consolidated Adjusted EBITDA, excluding
International results, increased by approximately $10 million sequentially. While we experienced
increasing activity, oil price pressure dampened the activity
momentum we anticipated entering the second quarter yielding lower
than anticipated activity growth.
"Additionally, during the second quarter, we improved our
liquidity position through the disposition of two non-core
businesses. The proceeds realized from these divestitures, along
with the removal of cash flow negative businesses, will allow us to
deploy the capital to actionable return-accretive opportunities as
broader market conditions and activity levels warrant these
investments."
Drummond continued, "Looking forward, I see significant
opportunities in production services, particularly as it relates to
the aging horizontal wellbore and the growing backlog of wells that
have experienced deferred maintenance. We are pleased with how the
Company is positioned to take advantage of these opportunities and
with the incremental earnings generation capacity the Company
offers today compared to the last market up-cycle. We believe when
oil prices stabilize at a sufficiently economic level for our
customers that activity will begin to ramp for our core production
services."
Financial Overview
Upon emergence from Chapter 11 bankruptcy on December 15, 2016, the Company adopted fresh
start accounting, which resulted in the Company becoming a new
entity for financial reporting purposes. References to "Successor"
relate to the financial position of the reorganized Key as of and
subsequent to December 16, 2016;
references to "Predecessor" refer to the financial position of Key
as of and prior to December 15, 2016
and the results of operations through December 15, 2016. References to fourth quarter
2016 will reflect pro-forma results for the Predecessor and
Successor entities.
The following table sets forth summary data for the second
quarter 2017 and prior comparable quarterly periods:
|
|
Successor
|
|
|
Predecessor
|
|
|
Three Months
Ended June 30,
2017
|
|
Three Months
Ended March 31,
2017
|
|
|
Three Months
Ended June 30,
2016
|
Revenues
|
|
$
|
107.8
|
|
|
$
|
101.5
|
|
|
|
$
|
95.0
|
|
Net loss
|
|
(13.2)
|
|
|
(46.9)
|
|
|
|
(92.8)
|
|
Diluted loss per
share
|
|
(0.66)
|
|
|
(2.33)
|
|
|
|
(0.58)
|
|
Adjusted
EBITDA*
|
|
(0.7)
|
|
|
(11.0)
|
|
|
|
(24.4)
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's FCPA
investigations completed in 2016.
|
U.S. Results
Second quarter 2017 U.S. Rig Services revenues of $61.8 million were up 2.5% as compared to the
first quarter 2017. Second quarter operating loss was $0.2 million, or -0.3% of revenue, which included
severance of $0.9 million,
stock-based compensation expense of $0.6
million and a gain on sale of assets of $0.4 million; excluding these items, normalized
operating income was $1.0 million, or
1.6% of revenue. These results compare to first quarter operating
loss of $2.1 million, or -3.5% of
revenue, which included stock-based compensation expense of
$0.4 million; excluding this item,
normalized operating loss was $1.6
million, or -2.7% of revenue. The operating loss for the
first quarter also included approximately $1.1 million of incremental employment related
taxes and $1.1 million of equipment
make-ready costs.
Second quarter 2017 Fluid Management Services revenues of
$18.9 million were up 5.4% as
compared to the first quarter 2017. Second quarter operating loss
was $3.2 million, or -17.1% of
revenue, which included $0.1 million
of stock-based compensation expense and a gain on sale as of assets
of $0.2 million; excluding these
items, normalized operating loss was $3.4
million, or -17.9% of revenue. These results compare to
first quarter operating loss of $6.9
million, or -38.8% of revenue, which included $0.1 million of stock-based compensation expense
and a gain on sale as of assets of $0.1
million; excluding these items, normalized operating loss
was $6.9 million, or -38.8% of
revenue. The operating loss for the first quarter also includes
approximately $0.3 million of
additional employment related taxes and $0.9
million of costs associated with an SWD explosion due to
lightning. Truck hours were up approximately 3% sequentially while
pricing was up approximately 2% sequentially.
Second quarter 2017 Coiled Tubing Services revenues of
$9.2 million were up 71.6% as
compared to the first quarter 2017. Second quarter operating income
was $0.3 million, or 3.5% of revenue,
which included $0.1 million of
stock-based compensation expense; excluding this item, normalized
operating income was $0.4
million, or 4.2% of revenue. These results compare to first
quarter operating loss of $2.3
million, or -42.8% of revenue, which included $0.1 million of stock-based compensation expense
and $0.1 million of severance;
excluding these items, normalized operating loss was $2.2 million, or -40.6% of revenue. Activity in
our largest, completions-driven coiled tubing units was up
approximately 110% as we deployed a large-diameter unit early in
the quarter and pricing on these units was up approximately
17% sequentially.
Second quarter 2017 Fishing & Rental Services revenues of
$15.8 million were down -0.5% as
compared to the first quarter 2017. Second quarter operating income
was $17.5 million, or 110.9% of
revenue, which included a $20.7
million gain on sale of assets and $0.1 million of severance expense; excluding
these items, normalized operating loss was $3.1 million, or -19.8% of revenue. These results
compare to first quarter operating loss of $3.9 million, or -24.5% of revenue, which
included $0.1 million of severance
expense and a $0.1 million gain on
sale of assets; excluding these items, normalized operating loss
was $4.0 million, or -25.0% of
revenue. The frac stack and well testing business reported within
the Fishing & Rental Services segment was divested during the
second quarter. Excluding the revenue associated with the divested
assets, second quarter Fishing & Rental services revenue was
$13.8 million, up 1.9% million as
compared to the first quarter. Excluding the results associated
with the divested assets, normalized operating loss in the second
quarter was $2.8 million, or -20.3%
of revenue, as compared to a normalized operating loss of
$3.5 million, or -26.2% of revenue,
in the first quarter.
International Segment
Second quarter 2017 International revenues were $2.2 million, up 4.8% as compared to first
quarter 2017 revenues of $2.1
million. Second quarter operating loss was $1.3 million, or -62.3% of revenues, which
included a $0.3 million loss on sale
of assets; excluding this item, normalized operating income was
$1.0 million, or -46.7% of revenue.
These results compare to first quarter 2017 operating loss of
$2.3 million, or -111.1% of revenues,
which included severance of $0.3
million, a $0.2 million charge
associated with an impairment of assets and a $0.1 million loss associated with the sale of
assets; excluding these items, normalized operating income was
$1.8 million, or -85.7% of
revenue.
General and Administrative
Expenses
General and Administrative (G&A) expenses were $30.3 million for the second quarter 2017
compared to $31.0 million in the
prior quarter. Second quarter G&A expenses included
$3.7 million of stock-based
compensation expense and $1.5 million
in severance. This compares to first quarter 2017 G&A expenses
that included $3.5 million of
stock-based compensation expense, $1.8
million in professional fees associated with the Company's
financial restructuring $0.7 million
in higher employment related taxes and $0.1
million in severance. Excluding these items and
International G&A of $0.9
million, G&A expense in the second quarter was
$24.2 million as compared to
$23.5 million in the first
quarter.
Liquidity
As of June 30, 2017, the Company
had total liquidity of $120.4
million, consisting of $94.7
million in unrestricted cash and $25.7 million of borrowing capacity available
under the Company's $100.0 million
asset-based loan facility. This compares to total liquidity of
$108.8 million at March 31, 2017, consisting of $82.7 million in unrestricted cash and
$26.1 million of borrowing capacity
available under the Company's $100.0
million asset-based loan facility.
Conference Call Information
As previously announced, Key management will host a conference
call to discuss its second quarter 2017 financial results on
Wednesday, August 9, 2017 at
10:00 a.m. CDT. Callers from the U.S.
and Canada should dial
888-794-4637 to access the call. International callers should dial
352-204-8973. All callers should ask for the "Key Energy Services
Conference Call" or provide the access code 57872114. The
conference call will also be available live via the internet. To
access the webcast, go to www.keyenergy.com and select
"Investor Relations."
A telephonic replay of the conference call will be available on
Wednesday, August 9, 2017, beginning
approximately two hours after the completion of the conference call
and will remain available for one week. To access the replay, call
855-859-2056 or 800-585-8367. The access code for the replay is
57872114. The replay will also be accessible at www.keyenergy.com
under "Investor Relations" for a period of at least 90
days.
Consolidated
Statements of Operations (in thousands, except per share amounts,
unaudited):
|
|
|
|
Successor
|
|
|
Predecessor
|
|
Successor
|
|
|
Predecessor
|
|
|
Three Months
Ended June
30, 2017
|
|
Three Months
Ended March
31, 2017
|
|
|
Three Months
Ended June
30, 2016
|
|
Six Months
Ended June
30, 2017
|
|
|
Six Months
Ended June
30, 2016
|
REVENUES
|
|
$
|
107,780
|
|
|
$
|
101,452
|
|
|
|
$
|
95,012
|
|
|
$
|
209,232
|
|
|
|
$
|
206,100
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating
expenses
|
|
63,560
|
|
|
87,306
|
|
|
|
89,419
|
|
|
150,866
|
|
|
|
180,017
|
|
Depreciation and
amortization expense
|
|
20,910
|
|
|
21,301
|
|
|
|
35,856
|
|
|
42,211
|
|
|
|
71,608
|
|
General and
administrative expenses
|
|
30,334
|
|
|
30,996
|
|
|
|
40,903
|
|
|
61,330
|
|
|
|
87,148
|
|
Impairment
expense
|
|
—
|
|
|
187
|
|
|
|
—
|
|
|
187
|
|
|
|
—
|
|
Operating
loss
|
|
(7,024)
|
|
|
(38,338)
|
|
|
|
(71,166)
|
|
|
(45,362)
|
|
|
|
(132,673)
|
|
Interest expense, net
of amounts capitalized
|
|
7,872
|
|
|
7,710
|
|
|
|
21,357
|
|
|
15,582
|
|
|
|
42,941
|
|
Other (income) loss,
net
|
|
(961)
|
|
|
(240)
|
|
|
|
412
|
|
|
(1,201)
|
|
|
|
(819)
|
|
Reorganization items,
net
|
|
101
|
|
|
1,340
|
|
|
|
—
|
|
|
1,441
|
|
|
|
—
|
|
Loss before tax
income taxes
|
|
(14,036)
|
|
|
(47,148)
|
|
|
|
(92,935)
|
|
|
(61,184)
|
|
|
|
(174,795)
|
|
Income tax
benefit
|
|
853
|
|
|
289
|
|
|
|
133
|
|
|
1,142
|
|
|
|
379
|
|
NET
LOSS
|
|
$
|
(13,183)
|
|
|
$
|
(46,859)
|
|
|
|
$
|
(92,802)
|
|
|
$
|
(60,042)
|
|
|
|
$
|
(174,416)
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.66)
|
|
|
$
|
(2.33)
|
|
|
|
$
|
(0.58)
|
|
|
$
|
(2.99)
|
|
|
|
$
|
(1.09)
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
20,099
|
|
|
20,096
|
|
|
|
160,982
|
|
|
20,098
|
|
|
|
160,514
|
|
Segment Revenue
and Operating Income (in thousands, except for percentages,
unaudited):
|
|
|
|
Successor
|
|
|
Predecessor
|
|
Successor
|
|
|
Predecessor
|
|
|
Three Months
Ended June
30, 2017
|
|
Three Months
Ended March
31, 2017
|
|
|
Three Months
Ended June
30, 2016
|
|
Six Months
Ended June
30, 2017
|
|
|
Six Months
Ended June
30, 2016
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
61,802
|
|
|
$
|
60,291
|
|
|
|
$
|
51,502
|
|
|
$
|
122,093
|
|
|
|
$
|
110,490
|
|
Fluid Management
Services
|
|
18,867
|
|
|
17,895
|
|
|
|
19,591
|
|
|
36,762
|
|
|
|
42,261
|
|
Coiled Tubing
Services
|
|
9,165
|
|
|
5,341
|
|
|
|
7,617
|
|
|
14,506
|
|
|
|
17,148
|
|
Fishing & Rental
Services
|
|
15,776
|
|
|
15,855
|
|
|
|
13,412
|
|
|
31,631
|
|
|
|
29,695
|
|
International
|
|
2,170
|
|
|
2,070
|
|
|
|
2,890
|
|
|
4,240
|
|
|
|
6,506
|
|
Consolidated
Total
|
|
$
|
107,780
|
|
|
$
|
101,452
|
|
|
|
$
|
95,012
|
|
|
$
|
209,232
|
|
|
|
$
|
206,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
(177)
|
|
|
$
|
(2,087)
|
|
|
|
$
|
(13,674)
|
|
|
$
|
(2,264)
|
|
|
|
$
|
(20,040)
|
|
Fluid Management
Services
|
|
(3,227)
|
|
|
(6,937)
|
|
|
|
(7,555)
|
|
|
(10,164)
|
|
|
|
(13,827)
|
|
Coiled Tubing
Services
|
|
325
|
|
|
(2,285)
|
|
|
|
(6,057)
|
|
|
(1,960)
|
|
|
|
(12,206)
|
|
Fishing & Rental
Services
|
|
17,494
|
|
|
(3,877)
|
|
|
|
(8,776)
|
|
|
13,617
|
|
|
|
(12,788)
|
|
International
|
|
(1,352)
|
|
|
(2,300)
|
|
|
|
(4,901)
|
|
|
(3,652)
|
|
|
|
(9,961)
|
|
Functional
Support
|
|
(20,087)
|
|
|
(20,852)
|
|
|
|
(30,203)
|
|
|
(40,939)
|
|
|
|
(63,851)
|
|
Consolidated
Total
|
|
$
|
(7,024)
|
|
|
$
|
(38,338)
|
|
|
|
$
|
(71,166)
|
|
|
$
|
(45,362)
|
|
|
|
$
|
(132,673)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) % of Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
(0.3)%
|
|
|
(3.5)%
|
|
|
|
(26.6)%
|
|
|
(1.9)%
|
|
|
|
(18.1)%
|
|
Fluid Management
Services
|
|
(17.1)%
|
|
|
(38.8)%
|
|
|
|
(38.6)%
|
|
|
(27.6)%
|
|
|
|
(32.7)%
|
|
Coiled Tubing
Services
|
|
3.5%
|
|
|
(42.8)%
|
|
|
|
(79.5)%
|
|
|
(13.5)%
|
|
|
|
(71.2)%
|
|
Fishing & Rental
Services
|
|
110.9%
|
|
|
(24.5)%
|
|
|
|
(65.4)%
|
|
|
43.0%
|
|
|
|
(43.1)%
|
|
International
|
|
(62.3)%
|
|
|
(111.1)%
|
|
|
|
(169.6)%
|
|
|
(86.1)%
|
|
|
|
(153.1)%
|
|
Consolidated
Total
|
|
(6.5)%
|
|
|
(37.8)%
|
|
|
|
(74.9)%
|
|
|
(21.7)%
|
|
|
|
(64.4)%
|
|
Following is a reconciliation of net loss as presented in
accordance with United States
generally accepted accounting principles (GAAP) to EBITDA and
Adjusted EBITDA as required under Regulation G of the Securities
Exchange Act of 1934.
Reconciliations of
EBITDA and Adjusted EBITDA to net loss (in thousands, except for
percentages, unaudited):
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
Three Months
Ended June 30,
2017
|
|
Three Months
Ended March 31,
2017
|
|
|
Three Months
Ended June 30,
2016
|
Net loss
|
|
$
|
(13,183)
|
|
|
$
|
(46,859)
|
|
|
|
$
|
(92,802)
|
|
Income tax
benefit
|
|
(853)
|
|
|
(289)
|
|
|
|
(133)
|
|
Interest expense, net
of amounts capitalized
|
|
7,872
|
|
|
7,710
|
|
|
|
21,357
|
|
Interest
income
|
|
(155)
|
|
|
(198)
|
|
|
|
(134)
|
|
Depreciation and
amortization
|
|
20,910
|
|
|
21,301
|
|
|
|
35,856
|
|
EBITDA
|
|
$
|
14,591
|
|
|
$
|
(18,335)
|
|
|
|
$
|
(35,856)
|
|
%
of revenues
|
|
13.5%
|
|
|
(18.1)%
|
|
|
|
(37.7)%
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
|
1,650
|
|
|
473
|
|
|
|
1,091
|
|
Stock-based
compensation
|
|
3,969
|
|
|
3,700
|
|
|
|
—
|
|
Restructuring items,
net
|
|
101
|
|
|
1,340
|
|
|
|
—
|
|
Impairment
expense
|
|
—
|
|
|
187
|
|
|
|
—
|
|
(Gain) loss on sales
of assets
|
|
(20,968)
|
|
|
(147)
|
|
|
|
885
|
|
Restructuring
professional fees
|
|
—
|
|
|
1,780
|
|
|
|
9,522
|
|
Adjusted
EBITDA*
|
|
$
|
(657)
|
|
|
$
|
(11,002)
|
|
|
|
$
|
(24,358)
|
|
%
of revenues
|
|
(0.6)%
|
|
|
(10.8)%
|
|
|
|
(25.6)%
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
107,780
|
|
|
$
|
101,452
|
|
|
|
$
|
95,012
|
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's FCPA
investigations completed in 2016.
|
|
Three Months Ended
June 30, 2017
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
Net loss
|
$
|
(19)
|
|
|
$
|
(3,071)
|
|
|
$
|
330
|
|
|
$
|
17,514
|
|
|
$
|
(1,074)
|
|
|
$
|
(26,863)
|
|
|
$
|
(13,183)
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
(884)
|
|
|
(853)
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,872
|
|
|
7,872
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18)
|
|
|
(137)
|
|
|
(155)
|
|
Depreciation and
amortization
|
7,895
|
|
|
5,469
|
|
|
1,284
|
|
|
5,850
|
|
|
32
|
|
|
380
|
|
|
20,910
|
|
EBITDA
|
$
|
7,876
|
|
|
$
|
2,398
|
|
|
$
|
1,614
|
|
|
$
|
23,364
|
|
|
$
|
(1,029)
|
|
|
$
|
(19,632)
|
|
|
$
|
14,591
|
|
%
of revenues
|
12.7%
|
|
|
12.7%
|
|
|
17.6%
|
|
|
148.1%
|
|
|
(47.4)%
|
|
|
—%
|
|
|
13.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
855
|
|
|
29
|
|
|
11
|
|
|
94
|
|
|
—
|
|
|
661
|
|
|
1,650
|
|
Stock-based
compensation
|
641
|
|
|
55
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
3,219
|
|
|
3,969
|
|
Restructuring items,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|
101
|
|
(Gain) loss on sales
of assets
|
(357)
|
|
|
(239)
|
|
|
(8)
|
|
|
(20,711)
|
|
|
338
|
|
|
9
|
|
|
(20,968)
|
|
Adjusted
EBITDA*
|
$
|
9,015
|
|
|
$
|
2,243
|
|
|
$
|
1,671
|
|
|
$
|
2,747
|
|
|
$
|
(691)
|
|
|
$
|
(15,642)
|
|
|
$
|
(657)
|
|
%
of revenues
|
14.6%
|
|
|
11.9%
|
|
|
18.2%
|
|
|
17.4%
|
|
|
(31.8)%
|
|
|
—%
|
|
|
(0.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
61,802
|
|
|
$
|
18,867
|
|
|
$
|
9,165
|
|
|
$
|
15,776
|
|
|
$
|
2,170
|
|
|
$
|
—
|
|
|
$
|
107,780
|
|
|
*
|
Adjusted EBITDA does
not exclude costs incurred in connection with the Company's FCPA
investigations completed in
2016.
|
|
Three Months Ended
March 31, 2017
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
Net loss
|
$
|
(2,091)
|
|
|
$
|
(7,165)
|
|
|
$
|
(2,278)
|
|
|
$
|
(3,674)
|
|
|
$
|
(1,952)
|
|
|
$
|
(29,699)
|
|
|
$
|
(46,859)
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(292)
|
|
|
3
|
|
|
(289)
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,710
|
|
|
7,710
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30)
|
|
|
(168)
|
|
|
(198)
|
|
Depreciation and
amortization
|
7,324
|
|
|
5,808
|
|
|
1,413
|
|
|
5,950
|
|
|
525
|
|
|
281
|
|
|
21,301
|
|
EBITDA
|
$
|
5,233
|
|
|
$
|
(1,357)
|
|
|
$
|
(865)
|
|
|
$
|
2,276
|
|
|
$
|
(1,749)
|
|
|
$
|
(21,873)
|
|
|
$
|
(18,335)
|
|
%
of revenues
|
8.7%
|
|
|
(7.6)%
|
|
|
(16.2)%
|
|
|
14.4%
|
|
|
(84.5)%
|
|
|
—%
|
|
|
(18.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
10
|
|
|
7
|
|
|
63
|
|
|
52
|
|
|
286
|
|
|
55
|
|
|
473
|
|
Stock-based
compensation
|
438
|
|
|
54
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
3,155
|
|
|
3,700
|
|
Restructuring cost,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,340
|
|
|
1,340
|
|
Impairment
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
187
|
|
|
—
|
|
|
187
|
|
(Gain) loss on sales
of assets
|
—
|
|
|
(66)
|
|
|
—
|
|
|
(135)
|
|
|
54
|
|
|
—
|
|
|
(147)
|
|
Restructuring
professional fees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,780
|
|
|
1,780
|
|
Adjusted
EBITDA*
|
$
|
5,681
|
|
|
$
|
(1,362)
|
|
|
$
|
(749)
|
|
|
$
|
2,193
|
|
|
$
|
(1,222)
|
|
|
$
|
(15,543)
|
|
|
$
|
(11,002)
|
|
%
of revenues
|
9.4%
|
|
|
(7.6)%
|
|
|
(14.0)%
|
|
|
13.8%
|
|
|
(59.0)%
|
|
|
—%
|
|
|
(10.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
60,291
|
|
|
$
|
17,895
|
|
|
$
|
5,341
|
|
|
$
|
15,855
|
|
|
$
|
2,070
|
|
|
$
|
—
|
|
|
$
|
101,452
|
|
|
* Adjusted
EBITDA does not exclude costs incurred in connection with the
Company's FCPA investigations.
|
"EBITDA" is defined as income or loss attributable to Key
before interest, taxes, depreciation, and amortization.
"Adjusted EBITDA" is EBITDA as further adjusted for certain
non-recurring or extraordinary items such as impairment expense,
severance expense, loss on debt extinguishment, gains or losses on
asset sales, asset retirements and impairments, and certain
non-recurring transaction or other costs.
EBITDA and Adjusted EBITDA are non-GAAP measures that are
used as supplemental financial measures by the Company's management
and directors and by external users of the Company's financial
statements, such as investors, to assess:
- The financial performance of the Company's assets without
regard to financing methods, capital structure or historical cost
basis;
- The ability of the Company's assets to generate cash
sufficient to pay interest on its indebtedness;
- The Company's operating performance and return on invested
capital as compared to those of other companies in the well
services industry, without regard to financing methods and capital
structure; and
- The Company's operating trends underlying the items that
tend to be of a non-recurring nature.
Normalized operating loss is a non-GAAP financial measure and
is defined as operating loss plus or minus certain items such as
impairment expense, severance expense, FCPA settlement costs and
FCPA investigation costs. Normalized operating loss is used
as a supplemental financial measure by the Company's management and
directors and by external users of the Company's financial
statements, such as investors, primarily to compare the Company's
core operating and financial performance from period to period
without regard to the many non-cash accounting charges or unusual
expenses that have impacted the Company's GAAP operating income and
net income due to the severe downturn in the company's
business.
EBITDA, Adjusted EBITDA and normalized operating income have
limitations as analytical tools 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, Adjusted
EBITDA and normalized operating income exclude some, but not all,
items that affect net income and operating income and these
measures may vary among other companies. Limitations in using
normalized operating loss as an analytical tool include that
normalized operating loss excludes certain cash costs and losses
actually incurred by the Company. Limitations to using EBITDA and
Adjusted EBITDA as an analytical tool include:
- EBITDA and Adjusted EBITDA do not reflect Key's current or
future requirements for capital expenditures or capital
commitments;
- EBITDA and Adjusted EBITDA do not reflect changes in, or
cash requirements necessary to service, interest or principal
payments on Key's debt;
- EBITDA and Adjusted EBITDA do 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 and Adjusted EBITDA do not
reflect any cash requirements for such replacements;
- Other companies in Key's industry may calculate EBITDA and
Adjusted EBITDA differently than Key does, limiting their
usefulness as a comparative measure; and
- EBITDA and Adjusted EBITDA are a different calculation from
earnings before interest, taxes, depreciation and amortization as
defined for purposes of the financial covenants in the Company's
senior secured credit facility, and therefore should not be relied
upon for assessing compliance with covenants.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements that are not historical in nature or that relate
to future events and conditions are, or may be deemed to be,
forward-looking statements. These forward-looking statements are
based on Key's current expectations, estimates and projections and
its management's beliefs and assumptions concerning future events
and financial trends affecting its financial condition and results
of operations. In some cases, you can identify these statements by
terminology such as "may," "will," "should," "predicts," "expects,"
"believes," "anticipates," "projects," "potential" or "continue" or
the negative of such terms and other comparable terminology. These
statements are only predictions and are subject to substantial
risks and uncertainties and are not guarantees of performance.
Future actions, events and conditions and future results of
operations may differ materially from those expressed in these
statements. In evaluating those statements, you should carefully
consider the information above as well as the risks outlined in
"Item 1A. Risk Factors," in Key's Annual Report on Form 10-K for
the year ended December 31, 2016 and
in other reports Key files with the Securities and Exchange
Commission.
Key undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date of this
press release except as required by law. All of Key's written and
oral forward-looking statements are expressly qualified by these
cautionary statements and any other cautionary statements that may
accompany such forward-looking statements.
Important factors that may affect Key's expectations,
estimates or projections include, but are not limited to, the
following: conditions in the oil and natural gas industry,
especially oil and natural gas prices and capital expenditures by
oil and natural gas companies; volatility in oil and natural gas
prices; Key's ability to implement price increases or maintain
pricing on its core services; risks that Key may not be able to
reduce, and could even experience increases in, the costs of labor,
fuel, equipment and supplies employed in its businesses; industry
capacity; asset impairments or other charges; the periodic low
demand for Key's services and resulting operating losses and
negative cash flows; Key's highly competitive industry as well as
operating risks, which are primarily self-insured, and the
possibility that its insurance may not be adequate to cover all of
its losses or liabilities; significant costs and potential
liabilities resulting from compliance with applicable laws,
including those resulting from environmental, health and safety
laws and regulations, specifically those relating to hydraulic
fracturing, as well as climate change legislation or initiatives;
Key's historically high employee turnover rate and its ability to
replace or add workers, including executive officers and skilled
workers; Key's ability to incur debt or long-term lease
obligations; Key's ability to implement technological developments
and enhancements; severe weather impacts on Key's business; Key's
ability to successfully identify, make and integrate acquisitions
and its ability to finance future growth of its operations or
future acquisitions; Key's ability to achieve the benefits expected
from disposition transactions; the loss of one or more of Key's
larger customers; Key's ability to generate sufficient cash flow to
meet debt service obligations; the amount of Key's debt and the
limitations imposed by the covenants in the agreements governing
its debt, including its ability to comply with covenants under its
current debt agreements; an increase in Key's debt service
obligations due to variable rate indebtedness; Key's inability to
achieve its financial, capital expenditure and operational
projections, including quarterly and annual projections of revenue
and/or operating income and its inaccurate assessment of future
activity levels, customer demand, and pricing stability which may
not materialize (whether for Key as a whole or for geographic
regions and/or business segments individually); risks affecting
Key's international operations, including risks affecting Key's
ability to execute its plans to withdraw from international markets
outside North America; Key's
ability to respond to changing or declining market conditions,
including Key's ability to reduce the costs of labor, fuel,
equipment and supplies employed and used in its businesses; Key's
ability to maintain sufficient liquidity; the adverse impact of
litigation; and other factors affecting Key's business described in
"Item 1A. Risk Factors" in its Annual Report on Form 10-K for the
year ended December 31, 2016, and
other reports Key files with the Securities and Exchange
Commission.
About Key Energy Services
Key Energy Services is the largest onshore, rig-based well
servicing contractor based on the number of rigs owned. Key
provides a complete range of well intervention services and has
operations in all major onshore oil and gas producing regions of
the continental United States and
internationally in Russia.
Contact:
West Gotcher
713-757-5539
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content:http://www.prnewswire.com/news-releases/key-energy-services-reports-second-quarter-2017-earnings-300501597.html
SOURCE Key Energy Services, Inc.