Frank’s International N.V. (NYSE: FI) (the “Company” or “Frank’s”)
today reported financial and operational results for the three and
nine months ended September 30, 2020.
Third Quarter 2020 Financial
Highlights
- Third quarter net loss of $27.8 million, a 19% improvement
compared to the prior quarter.
- Third quarter revenue of $84.4 million with strong performance
in the Tubulars segment partially offsetting declines in the
Tubular Running Services segment related to drilling activity
declines quarter over quarter.
- Adjusted EBITDA of ($1.0) million improving from the prior
quarter reflecting incremental margin improvement predominately
driven by continued realization of cost reduction measures.
- Third quarter cash flows from operating activities of $21.2
million and free cash flow generation of $15.7 million driven by
continued cost reductions, tax refunds and working capital
improvements.
- Year over year cost reductions expected to exceed 25% of total
cost base and reflect savings of approximately $60 million of
indirect and SG&A support costs.
- Repeat winner of 2020 World Oil Award for Health, Safety,
Environmental/Sustainable Development Offshore Award for its
SKYHOOK® Wireless Cement Line Make Up Device, with an additional
two tools finalists in award categories.
“Our third quarter results continued to reflect
the effects of the historic industry downturn created by the
Covid-19 pandemic this year. Despite the unprecedented and
historic customer spending reductions, this quarter’s performance
demonstrated our ability to operate more efficiently while
delivering high quality solutions to our customers. Our
revenue was resilient in the quarter benefiting from strong results
in our Tubulars segment that partially offset the effect of
drilling activity declines on our Tubular Running Services
segment. From a cost perspective, we continued to focus on
things within our control, and our cost reduction efforts enabled
us to improve adjusted EBITDA despite challenging market
conditions. Our efforts to permanently realign the support
cost structure of our business are continuing to take hold.
The actions we have taken this year, while difficult, have
reduced our indirect cost structure by more than $50 million
permanently,” said Michael Kearney, the Company’s Chairman,
President and Chief Executive Officer.
“We also believe there will be more savings to
harvest in 2021 as we implement our new enterprise resource
planning (“ERP”) information system, and we will continue to be
laser focused on further improving our already strong balance
sheet. Our cost control efforts, operational efficiency,
capital expenditure controls, and working capital improvements all
contributed to another quarter of strong free cash flow
generation.”
Mr. Kearney continued, “As we turn our attention
to the fourth quarter, we continue to see an improving revenue
backdrop from the current depressed levels. We expect
near-term activity levels to be driven by the return of rigs to the
marketplace, the start-up of previously delayed work, and the
commencement of certain projects scheduled to begin during the
fourth quarter. We see these trends continuing into 2021 and
believe next year will provide for stronger overall financial
results.
“On the technology front, the Frank’s
International SKYHOOK® Wireless Cement Line Make Up Device was
recently named the winner of the 2020 World Oil Awards in the
category of “Best Health, Safety, Environment/Sustainable
Development – Offshore.” This tool eliminates the need for
hands-on intervention of cementing line make-ups high in the
derrick, which increases efficiency and eliminates the dangerous
potential for falls and dropped objects. In addition to this
achievement, Frank’s had two additional technologies, the iCAM®
Connection Analyzed Make-up System, and the BRUTE-FORCETM System,
also honored as award finalists.
“Frank’s continues to generate value for our
customers by offering technological solutions that safely reduce
the time to drill, case, cement and complete wells. As a
recent example, Frank’s deployed 1000-Ton Drilling Slips on behalf
of a major operator in the Caribbean. These Drilling Slips
feature a unique design that enables tripping and drilling at
optimal speeds, increased reliability under high current and rig
heave conditions, and resistance to slip crush. The operator
noted a decrease in drill pipe connection times leading to overall
program time and cost savings, as well as a reduction of red zone
personnel, as a direct result of incorporating this
technology.
“These awards and nominations demonstrate our
commitment to safety and efficiency by bringing innovative tools to
the marketplace for our customers, as well as reflect the
environmental, social and governance centric values of the
company,” concluded Mr. Kearney.
Segment Results
Tubular Running Services
Tubular Running Services revenue totaled $52.9
million in the third quarter of 2020, compared to $62.3 million in
the second quarter of 2020, and $102.3 million in the third quarter
of 2019. Both the sequential and year over year decreases
were primarily driven by continued customer spending reductions and
associated drilling activity declines in response to Covid-19 and
depressed oil prices, which were partially offset by improved
activity levels in the Caribbean due to rig redeployments.
Segment adjusted EBITDA in the third quarter of
2020 totaled $1.0 million, or 2% of revenue, compared to $4.1
million, or 7% of revenue, in the second quarter of 2020, and $23.9
million, or 23% of revenue, in the third quarter of 2019. The
decrease in adjusted EBITDA was due to revenue declines and lower
activity levels in most of our operating regions.
Tubulars
Tubulars revenue in the third quarter of 2020
totaled $16.5 million, compared to $8.7 million in the second
quarter of 2020, and $12.5 million in the third quarter of 2019.
The increase was the result of higher product sales during
the quarter in the Gulf of Mexico region and in certain
international markets, where the company has placed an expanded
focus.
Segment adjusted EBITDA in the third quarter of
2020 totaled $1.8 million, or 11% of revenue, compared to $0.7
million, or 8% of revenue, in the second quarter of 2020, and $0.5
million, or 4% of revenue, in the third quarter of 2019.
Cementing Equipment
Cementing Equipment revenue totaled $15.0
million in the third quarter of 2020, compared to $15.0 million in
the second quarter of 2020, and $25.6 million in the third quarter
of 2019. The year over year revenue decrease was primarily
related to reduced customer activity levels in both the U.S.
onshore and offshore markets. During the third quarter, we
experienced sequential improvement in the U.S. offshore market,
which was primarily offset by continued weakness in U.S.
land. International growth in this segment is expected to
exceed 35% in 2020 over the prior year partially offsetting
significant declines experienced in the U.S. onshore market.
Segment adjusted EBITDA in the third quarter of
2020 totaled $3.4 million, or 23% of revenue, compared to $0.9
million, or 6% of revenue, in the second quarter of 2020, and $3.0
million, or 12% of revenue, in the third quarter of 2019. The
sequential increase in third quarter adjusted EBITDA was driven by
more profitable international and U.S. offshore activity and
reduced operating costs.
Profit Improvement Actions Update
The Company is expecting to realize reductions
in its cost structure of more than 25% year over year, which
includes approximately $90 million of operational cost savings and
$60 million of indirect and SG&A support cost savings.
In the fall of 2019, the Company announced a
Profitability Improvement Program ("PIP") with a goal of saving $30
million in 2020 and an additional $15 million in 2021 related to
indirect and SG&A savings. We are pleased to share that
the cost reductions we expect to achieve specific to those support
costs are now expected to yield savings of approximately $60
million in 2020, double the original estimate.
The Company remains focused on improving
profitability every quarter and has placed a strong focus on
incremental efficiencies that can be gained in 2021. We will
be prepared to speak to those incremental 2021 savings in future
quarters.
Other Financial Information
Cash expenditures related to property, plant and
equipment and intangibles totaled $5.5 million in the third quarter
of 2020 as compared to $10.3 million in the second quarter,
demonstrating efforts to further reduce capital spending.
Year to date capital expenditures have totaled $25.7 million and
the Company estimates total capital expenditures for the full year
2020 to be approximately $30 million.
As of September 30, 2020, the Company’s
consolidated cash and cash equivalents totaled $205.9 million
compared to $192.9 million as of the prior quarter, an improvement
of $13.0 million. The Company had no outstanding debt as of
quarter end. Company liquidity as of September 30, 2020
totaled $236.1 million, including cash and cash equivalents and
$30.2 million of availability under the Company’s credit facility.
For the third quarter of 2020, the Company generated
operating cash flow of $21.2 million resulting in free cash flow of
$15.7 million. For the nine months ended September 30, 2020,
the Company generated $25.3 million of operating cash flow.
Income tax expense for the quarter totaled $6.4
million compared to $9.0 million in the second quarter. The
decline in income tax expense is due to a change in the
geographical mix of income.
The financial measures provided that are not
presented in accordance with U.S. generally accepted accounting
principles (“GAAP”) are defined and reconciled to their most
directly comparable GAAP measures. Please see “Use of Non-GAAP
Financial Measures” and the reconciliations to the nearest
comparable GAAP measures.
Conference Call
The Company will host a conference call to
discuss third quarter 2020 results on Tuesday, November 3, 2020 at
10:00 a.m. Central Time (11:00 a.m. Eastern Time).
Participants may join the conference call by dialing (800)
708-4540 or (847) 619-6397. The conference call ID number is
49992927. To listen via live webcast, please visit the Investor
Relations section of the Company's website,
www.franksinternational.com. A presentation will also be
posted on the Company’s website prior to the conference call.
An audio replay of the conference call will be
available in the Investor Relations section of the Company’s
website approximately two hours after the conclusion of the call
and remain available for a period of approximately 90 days.
About Frank’s International
Frank’s International N.V. is a global oil
services company that provides a broad and comprehensive range of
highly engineered tubular running services, tubular fabrication,
and specialty well construction and well intervention solutions
with a focus on complex and technically demanding wells. Founded in
1938, Frank’s has approximately 2,400 employees and provides
services to leading exploration and production companies in both
onshore and offshore environments in approximately 50 countries on
six continents. The Company’s common stock is traded on the
NYSE under the symbol “FI.” Additional information is
available on the Company’s website,
www.franksinternational.com.
Investor Contact:
Melissa Cougleinvestor.info@franksintl.com281-966-7300
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(In thousands, except per share data) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| Revenue: |
|
|
|
|
|
|
|
|
|
|
Services |
$ |
66,418 |
|
|
$ |
74,583 |
|
|
$ |
119,572 |
|
|
$ |
246,084 |
|
|
$ |
362,069 |
|
|
Products |
17,999 |
|
|
11,518 |
|
|
20,845 |
|
|
47,926 |
|
|
78,410 |
|
|
Total revenue |
84,417 |
|
|
86,101 |
|
|
140,417 |
|
|
294,010 |
|
|
440,479 |
|
| |
|
|
|
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of revenue, exclusive of depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
Services |
56,574 |
|
|
61,051 |
|
|
86,745 |
|
|
197,005 |
|
|
255,769 |
|
|
Products |
13,733 |
|
|
8,286 |
|
|
14,247 |
|
|
36,007 |
|
|
57,850 |
|
|
General and administrative expenses |
18,665 |
|
|
22,286 |
|
|
26,921 |
|
|
67,634 |
|
|
96,358 |
|
|
Depreciation and amortization |
15,950 |
|
|
17,252 |
|
|
21,482 |
|
|
52,920 |
|
|
70,637 |
|
|
Goodwill impairment |
— |
|
|
— |
|
|
— |
|
|
57,146 |
|
|
— |
|
|
Severance and other charges, net |
3,549 |
|
|
5,162 |
|
|
5,222 |
|
|
29,436 |
|
|
6,492 |
|
|
(Gain) loss on disposal of assets |
(308 |
) |
|
(650 |
) |
|
603 |
|
|
(898 |
) |
|
984 |
|
|
Operating loss |
(23,746 |
) |
|
(27,286 |
) |
|
(14,803 |
) |
|
(145,240 |
) |
|
(47,611 |
) |
| |
|
|
|
|
|
|
|
|
|
| Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
Tax receivable agreement (“TRA”) related adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
220 |
|
|
Other income, net |
109 |
|
|
156 |
|
|
1,620 |
|
|
2,291 |
|
|
2,818 |
|
|
Interest income (expense), net |
(93 |
) |
|
178 |
|
|
563 |
|
|
618 |
|
|
1,757 |
|
|
Foreign currency gain (loss) |
2,334 |
|
|
1,693 |
|
|
(3,872 |
) |
|
(5,865 |
) |
|
(4,050 |
) |
|
Total other income (expense) |
2,350 |
|
|
2,027 |
|
|
(1,689 |
) |
|
(2,956 |
) |
|
745 |
|
| |
|
|
|
|
|
|
|
|
|
| Loss before income taxes |
(21,396 |
) |
|
(25,259 |
) |
|
(16,492 |
) |
|
(148,196 |
) |
|
(46,866 |
) |
| Income tax expense
(benefit) |
6,395 |
|
|
8,986 |
|
|
7,297 |
|
|
(182 |
) |
|
20,370 |
|
| Net loss |
$ |
(27,791 |
) |
|
$ |
(34,245 |
) |
|
$ |
(23,789 |
) |
|
$ |
(148,014 |
) |
|
$ |
(67,236 |
) |
| |
|
|
|
|
|
|
|
|
|
| Loss per common
share: |
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.12 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.30 |
) |
| |
|
|
|
|
|
|
|
|
|
| Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
226,143 |
|
|
225,853 |
|
|
225,415 |
|
|
225,951 |
|
|
225,043 |
|
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
SELECTED OPERATING SEGMENT DATA |
|
(In thousands) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| Revenue |
|
|
|
|
|
|
|
|
|
|
Tubular Running Services |
$ |
52,926 |
|
|
$ |
62,327 |
|
|
$ |
102,277 |
|
|
$ |
204,750 |
|
|
$ |
306,971 |
|
|
Tubulars |
16,483 |
|
|
8,741 |
|
|
12,519 |
|
|
37,766 |
|
|
53,510 |
|
|
Cementing Equipment |
15,008 |
|
|
15,033 |
|
|
25,621 |
|
|
51,494 |
|
|
79,998 |
|
| Total |
$ |
84,417 |
|
|
$ |
86,101 |
|
|
$ |
140,417 |
|
|
$ |
294,010 |
|
|
$ |
440,479 |
|
| |
|
|
|
|
|
|
|
|
|
| Segment Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
Tubular Running Services |
$ |
982 |
|
|
$ |
4,049 |
|
|
$ |
23,884 |
|
|
$ |
18,336 |
|
|
$ |
67,019 |
|
|
Tubulars |
1,806 |
|
|
681 |
|
|
456 |
|
|
3,883 |
|
|
8,502 |
|
|
Cementing Equipment |
3,376 |
|
|
886 |
|
|
3,031 |
|
|
6,806 |
|
|
9,854 |
|
|
Corporate |
(7,151 |
) |
|
(7,308 |
) |
|
(11,350 |
) |
|
(24,645 |
) |
|
(42,533 |
) |
|
Total |
$ |
(987 |
) |
|
$ |
(1,692 |
) |
|
$ |
16,021 |
|
|
$ |
4,380 |
|
|
$ |
42,842 |
|
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(In thousands) |
|
(Unaudited) |
| |
|
|
|
| |
September 30, |
|
December 31, |
| |
2020 |
|
2019 |
| Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
205,900 |
|
|
$ |
195,383 |
|
|
Restricted cash |
1,524 |
|
|
1,357 |
|
|
Accounts receivables, net |
99,821 |
|
|
166,694 |
|
|
Inventories, net |
82,817 |
|
|
78,829 |
|
|
Assets held for sale |
3,479 |
|
|
13,795 |
|
|
Other current assets |
7,584 |
|
|
10,360 |
|
|
Total current assets |
401,125 |
|
|
466,418 |
|
| |
|
|
|
|
Property, plant and equipment, net |
286,340 |
|
|
328,432 |
|
|
Goodwill |
42,785 |
|
|
99,932 |
|
|
Intangible assets, net |
8,770 |
|
|
16,971 |
|
|
Deferred tax assets, net |
16,874 |
|
|
16,590 |
|
|
Operating lease right-of-use assets |
28,108 |
|
|
32,585 |
|
|
Other assets |
29,770 |
|
|
33,237 |
|
|
Total assets |
$ |
813,772 |
|
|
$ |
994,165 |
|
| |
|
|
|
| Liabilities and
Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
91,514 |
|
|
$ |
120,321 |
|
|
Current portion of operating lease liabilities |
7,795 |
|
|
7,925 |
|
|
Deferred revenue |
144 |
|
|
657 |
|
|
Total current liabilities |
99,453 |
|
|
128,903 |
|
| |
|
|
|
|
Deferred tax liabilities |
1,418 |
|
|
2,923 |
|
|
Non-current operating lease liabilities |
21,656 |
|
|
24,969 |
|
|
Other non-current liabilities |
22,802 |
|
|
27,076 |
|
|
Total liabilities |
145,329 |
|
|
183,871 |
|
| |
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock |
2,863 |
|
|
2,846 |
|
|
Additional paid-in capital |
1,085,160 |
|
|
1,075,809 |
|
|
Accumulated deficit |
(369,140 |
) |
|
(220,805 |
) |
|
Accumulated other comprehensive loss |
(30,560 |
) |
|
(30,298 |
) |
|
Treasury stock |
(19,880 |
) |
|
(17,258 |
) |
|
Total stockholders’ equity |
668,443 |
|
|
810,294 |
|
|
Total liabilities and equity |
$ |
813,772 |
|
|
$ |
994,165 |
|
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(In thousands) |
| |
|
|
|
| |
Nine Months Ended September 30, |
| |
2020 |
|
2019 |
| Cash flows from
operating activities |
|
|
|
|
Net loss |
$ |
(148,014 |
) |
|
$ |
(67,236 |
) |
|
Adjustments to reconcile net loss to cash from operating
activities |
|
|
|
|
Depreciation and amortization |
52,920 |
|
|
70,637 |
|
|
Equity-based compensation expense |
8,434 |
|
|
8,238 |
|
|
Goodwill impairment |
57,146 |
|
|
— |
|
|
Loss on asset impairments and retirements |
20,532 |
|
|
4,268 |
|
|
Amortization of deferred financing costs |
291 |
|
|
274 |
|
|
Deferred tax provision (benefit) |
(1,783 |
) |
|
3,887 |
|
|
Provision for (recovery of) bad debts |
980 |
|
|
(27 |
) |
|
(Gain) loss on disposal of assets |
(898 |
) |
|
984 |
|
|
Changes in fair value of investments |
218 |
|
|
(1,935 |
) |
|
Unrealized gain on derivative instruments |
— |
|
|
(349 |
) |
|
Other |
(380 |
) |
|
(566 |
) |
| Changes in operating assets
and liabilities |
|
|
|
|
Accounts receivable |
63,307 |
|
|
9,872 |
|
|
Inventories |
(3,625 |
) |
|
(14,191 |
) |
|
Other current assets |
2,567 |
|
|
2,537 |
|
|
Other assets |
667 |
|
|
179 |
|
|
Accounts payable and accrued liabilities |
(22,486 |
) |
|
(7,844 |
) |
|
Deferred revenue |
(513 |
) |
|
110 |
|
|
Other non-current liabilities |
(4,048 |
) |
|
(353 |
) |
| Net cash provided by
operating activities |
25,315 |
|
|
8,485 |
|
| Cash flows from
investing activities |
|
|
|
| Purchases of property, plant
and equipment and intangibles |
(25,722 |
) |
|
(26,979 |
) |
| Proceeds from sale of
assets |
7,037 |
|
|
353 |
|
| Purchase of investments |
— |
|
|
(20,304 |
) |
| Proceeds from sale of
investments |
2,832 |
|
|
46,739 |
|
| Other |
(356 |
) |
|
— |
|
| Net cash used in
investing activities |
(16,209 |
) |
|
(191 |
) |
| Cash flows from
financing activities |
|
|
|
| Repayments of borrowings |
— |
|
|
(5,110 |
) |
| Treasury shares withheld for
taxes |
(1,125 |
) |
|
(1,874 |
) |
| Treasury share repurchase |
(1,498 |
) |
|
— |
|
| Proceeds from the issuance of
ESPP shares |
934 |
|
|
1,752 |
|
| Deferred financing costs |
— |
|
|
(184 |
) |
| Net cash used in
financing activities |
(1,689 |
) |
|
(5,416 |
) |
| Effect of exchange rate
changes on cash |
3,267 |
|
|
2,684 |
|
| Net increase in cash, cash
equivalents and restricted cash |
10,684 |
|
|
5,562 |
|
| Cash, cash equivalents and
restricted cash at beginning of period |
196,740 |
|
|
186,212 |
|
| Cash, cash equivalents and
restricted cash at end of period |
$ |
207,424 |
|
|
$ |
191,774 |
|
| |
|
|
|
|
|
|
|
Forward Looking Statements
This release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical facts, included in
this press release that address activities, events or developments
that the Company expects, believes or anticipates will or may occur
in the future are forward-looking statements. Without limiting the
generality of the foregoing, forward-looking statements contained
in this press release specifically include statements, estimates
and projections regarding the Company’s future business strategy
and prospects for growth, cash flows and liquidity, financial
strategy, budget, projections and operating results, the amount,
nature and timing of capital expenditures, the availability and
terms of capital, the level of activity in the oil and gas
industry, volatility of oil and gas prices, unique risks associated
with offshore operations, political, economic and regulatory
uncertainties in international operations, the ability to develop
new technologies and products, the ability to protect intellectual
property rights, the ability to employ and retain skilled and
qualified workers, the level of competition in the Company’s
industry, global or national health concerns, including health
epidemics, including Covid-19, the continuation of a swift and
material decline in global crude oil demand and crude oil prices
for an uncertain period of time, the length of time it will take
for the United States and the rest of the world to slow the spread
of the Covid-19 virus to the point where applicable authorities are
comfortable easing current restrictions on various commercial and
economic activities, future actions of foreign oil producers such
as Saudi Arabia and Russia and the risk that they take actions that
will prolong or exacerbate the current over-supply of crude oil,
the timing, pace and extent of an economic recovery in the United
States and elsewhere, the impact of current and future laws,
rulings, governmental regulations, accounting standards and
statements, and related interpretations, and other guidance. These
statements are based on certain assumptions made by the Company
based on management’s experience, expectations and perception of
historical trends, current conditions, anticipated future
developments and other factors believed to be appropriate.
Forward-looking statements are not guarantees of performance.
Although the Company believes the expectations
reflected in its forward-looking statements are reasonable and are
based on reasonable assumptions, no assurance can be given that
these assumptions are accurate or that any of these expectations
will be achieved (in full or at all) or will prove to have been
correct. Moreover, such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of the Company, which may cause actual results to differ
materially from those implied or expressed by the forward-looking
statements. These include the factors discussed or referenced in
the “Risk Factors” section of the Company’s Annual Report on Form
10-K for the year ended December 31, 2019 filed with the SEC and
the additional factors discussed or referenced in the “Risk
Factors” section of the Company’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2020 that will be filed with the
SEC. Any forward-looking statement speaks only as of the date on
which such statement is made, and the Company undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as required by applicable law, and we caution you not to
rely on them unduly.
Use of Non-GAAP Financial
Measures
This press release and the accompanying
schedules include the non-GAAP financial measures of adjusted net
loss, adjusted net loss per diluted share, free cash flow, adjusted
EBITDA and adjusted EBITDA margin, which may be used periodically
by management when discussing the Company’s financial results with
investors and analysts. The accompanying schedules of this press
release provide a reconciliation of these non-GAAP financial
measures to their most directly comparable financial measure
calculated and presented in accordance with GAAP. Adjusted net
loss, adjusted net loss per diluted share, free cash flow, adjusted
EBITDA and adjusted EBITDA margin are presented because management
believes these metrics provide additional information relative to
the performance of the Company’s business. These metrics are
commonly employed by financial analysts and investors to evaluate
the operating and financial performance of the Company from period
to period and to compare it with the performance of other publicly
traded companies within the industry. You should not consider
adjusted net loss, adjusted net loss per diluted share, free cash
flow, adjusted EBITDA and adjusted EBITDA margin in isolation or as
a substitute for analysis of the Company’s results as reported
under GAAP. Because adjusted net loss, adjusted net loss per
diluted share, free cash flow, adjusted EBITDA and adjusted EBITDA
margin may be defined differently by other companies in the
Company’s industry, the Company’s presentation of these non-GAAP
financial measures may not be comparable to similarly titled
measures of other companies, thereby diminishing their utility.
The Company defines adjusted net loss as net
loss before goodwill impairment and severance and other charges,
net, net of tax. The Company defines adjusted net loss per share as
net loss before goodwill impairment and severance and other
charges, net, net of tax, divided by diluted weighted average
common shares. The Company defines free cash flow as net cash
provided by (used in) operating activities less purchases of
property, plant and equipment and intangibles. The Company defines
adjusted EBITDA as net income (loss) before interest income, net,
depreciation and amortization, income tax benefit or expense, asset
impairments, gain or loss on disposal of assets, foreign currency
gain or loss, equity-based compensation, the effects of the tax
receivable agreement, unrealized and realized gains or losses and
other non-cash adjustments and other charges or credits. The
Company uses adjusted EBITDA to assess its financial performance
because it allows the Company to compare its operating performance
on a consistent basis across periods by removing the effects of its
capital structure (such as varying levels of interest expense),
asset base (such as depreciation and amortization), income tax,
foreign currency exchange rates and other charges and credits. The
Company defines adjusted EBITDA margin as adjusted EBITDA divided
by total revenue.
Please see the accompanying financial tables for
a reconciliation of these non-GAAP measures to their most directly
comparable GAAP measures.
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION |
|
(In thousands) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
RECONCILIATION |
| |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
84,417 |
|
|
$ |
86,101 |
|
|
$ |
140,417 |
|
|
$ |
294,010 |
|
|
$ |
440,479 |
|
| |
|
|
|
|
|
|
|
|
|
| Net loss |
$ |
(27,791 |
) |
|
$ |
(34,245 |
) |
|
$ |
(23,789 |
) |
|
$ |
(148,014 |
) |
|
$ |
(67,236 |
) |
| Goodwill impairment |
— |
|
|
— |
|
|
— |
|
|
57,146 |
|
|
— |
|
| Severance and other charges,
net |
3,549 |
|
|
5,162 |
|
|
5,222 |
|
|
29,436 |
|
|
6,492 |
|
| Interest (income) expense,
net |
93 |
|
|
(178 |
) |
|
(563 |
) |
|
(618 |
) |
|
(1,757 |
) |
| Depreciation and
amortization |
15,950 |
|
|
17,252 |
|
|
21,482 |
|
|
52,920 |
|
|
70,637 |
|
| Income tax expense
(benefit) |
6,395 |
|
|
8,986 |
|
|
7,297 |
|
|
(182 |
) |
|
20,370 |
|
| (Gain) loss on disposal of
assets |
(308 |
) |
|
(650 |
) |
|
603 |
|
|
(898 |
) |
|
984 |
|
| Foreign currency (gain)
loss |
(2,334 |
) |
|
(1,693 |
) |
|
3,872 |
|
|
5,865 |
|
|
4,050 |
|
| TRA related adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(220 |
) |
| Charges and credits (1) |
3,459 |
|
|
3,674 |
|
|
1,897 |
|
|
8,725 |
|
|
9,522 |
|
|
Adjusted EBITDA |
$ |
(987 |
) |
|
$ |
(1,692 |
) |
|
$ |
16,021 |
|
|
$ |
4,380 |
|
|
$ |
42,842 |
|
|
Adjusted EBITDA margin |
(1.2 |
)% |
|
(2.0 |
)% |
|
11.4 |
% |
|
1.5 |
% |
|
9.7 |
% |
_______________________________
|
(1) |
Comprised of Equity-based compensation expense (for the three
months ended September 30, 2020, June 30, 2020 and September 30,
2019: $2,773, $3,515 and $2,647, respectively, and for the nine
months ended September 30, 2020 and 2019: $8,434 and $8,238,
respectively), Unrealized and realized (gains) losses (for the
three months ended September 30, 2020, June 30, 2020 and September
30, 2019: $113, $111 and $(1,382), respectively, and for the nine
months ended September 30, 2020 and 2019: $(1,480) and $(2,073),
respectively) and Investigation-related matters (for the three
months ended September 30, 2020, June 30, 2020 and September 30,
2019: $573, $48 and $632, respectively, and for the nine months
ended September 30, 2020 and 2019: $1,771 and $3,357,
respectively). |
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION |
|
(In thousands) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
SEGMENT ADJUSTED EBITDA RECONCILIATION |
| |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| Segment Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
Tubular Running Services |
$ |
982 |
|
|
$ |
4,049 |
|
|
$ |
23,884 |
|
|
$ |
18,336 |
|
|
$ |
67,019 |
|
|
Tubulars |
1,806 |
|
|
681 |
|
|
456 |
|
|
3,883 |
|
|
8,502 |
|
|
Cementing Equipment |
3,376 |
|
|
886 |
|
|
3,031 |
|
|
6,806 |
|
|
9,854 |
|
|
Corporate |
(7,151 |
) |
|
(7,308 |
) |
|
(11,350 |
) |
|
(24,645 |
) |
|
(42,533 |
) |
| |
(987 |
) |
|
(1,692 |
) |
|
16,021 |
|
|
4,380 |
|
|
42,842 |
|
| Goodwill impairment |
— |
|
|
— |
|
|
— |
|
|
(57,146 |
) |
|
— |
|
| Severance and other charges,
net |
(3,549 |
) |
|
(5,162 |
) |
|
(5,222 |
) |
|
(29,436 |
) |
|
(6,492 |
) |
| Interest income (expense),
net |
(93 |
) |
|
178 |
|
|
563 |
|
|
618 |
|
|
1,757 |
|
| Depreciation and
amortization |
(15,950 |
) |
|
(17,252 |
) |
|
(21,482 |
) |
|
(52,920 |
) |
|
(70,637 |
) |
| Income tax (expense)
benefit |
(6,395 |
) |
|
(8,986 |
) |
|
(7,297 |
) |
|
182 |
|
|
(20,370 |
) |
| Gain (loss) on disposal of
assets |
308 |
|
|
650 |
|
|
(603 |
) |
|
898 |
|
|
(984 |
) |
| Foreign currency gain
(loss) |
2,334 |
|
|
1,693 |
|
|
(3,872 |
) |
|
(5,865 |
) |
|
(4,050 |
) |
| TRA related adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
220 |
|
| Charges and credits (1) |
(3,459 |
) |
|
(3,674 |
) |
|
(1,897 |
) |
|
(8,725 |
) |
|
(9,522 |
) |
|
Net loss |
$ |
(27,791 |
) |
|
$ |
(34,245 |
) |
|
$ |
(23,789 |
) |
|
$ |
(148,014 |
) |
|
$ |
(67,236 |
) |
_______________________________
|
(1) |
Comprised of Equity-based compensation expense (for the three
months ended September 30, 2020, June 30, 2020 and September 30,
2019: $2,773, $3,515 and $2,647, respectively, and for the nine
months ended September 30, 2020 and 2019: $8,434 and $8,238,
respectively), Unrealized and realized gains (losses) (for the
three months ended September 30, 2020, June 30, 2020 and September
30, 2019: $(113), $(111) and $1,382, respectively, and for the nine
months ended September 30, 2020 and 2019: $1,480 and $2,073,
respectively) and Investigation-related matters (for the three
months ended September 30, 2020, June 30, 2020 and September 30,
2019: $573, $48 and $632, respectively, and for the nine months
ended September 30, 2020 and 2019: $1,771 and $3,357,
respectively). |
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION |
|
(In thousands) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
FREE CASH FLOW RECONCILIATION |
| |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
21,169 |
|
|
$ |
26,398 |
|
|
$ |
25,874 |
|
|
$ |
25,315 |
|
|
$ |
8,485 |
|
| Less: purchases of property,
plant and equipment and intangibles |
5,463 |
|
|
10,291 |
|
|
9,739 |
|
|
25,722 |
|
|
26,979 |
|
| Free cash
flow |
$ |
15,706 |
|
|
$ |
16,107 |
|
|
$ |
16,135 |
|
|
$ |
(407 |
) |
|
$ |
(18,494 |
) |
|
|
|
FRANK’S INTERNATIONAL N.V. |
|
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION |
|
(In thousands, except per share amounts) |
|
(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ADJUSTED NET LOSS AND ADJUSTED NET LOSS
PER DILUTED SHARE |
| |
|
|
|
|
|
|
|
|
|
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| |
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(27,791 |
) |
|
$ |
(34,245 |
) |
|
$ |
(23,789 |
) |
|
$ |
(148,014 |
) |
|
$ |
(67,236 |
) |
| Goodwill impairment (net of
tax) |
— |
|
|
— |
|
|
— |
|
|
55,740 |
|
|
— |
|
| Severance and other charges,
net (net of tax) |
4,889 |
|
|
4,937 |
|
|
5,425 |
|
|
30,181 |
|
|
6,492 |
|
| Net loss excluding
certain items |
$ |
(22,902 |
) |
|
$ |
(29,308 |
) |
|
$ |
(18,364 |
) |
|
$ |
(62,093 |
) |
|
$ |
(60,744 |
) |
| |
|
|
|
|
|
|
|
|
|
| Loss per diluted
share |
$ |
(0.12 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.30 |
) |
| Goodwill impairment (net of
tax) |
— |
|
|
— |
|
|
— |
|
|
0.25 |
|
|
— |
|
| Severance and other charges,
net (net of tax) |
0.02 |
|
|
0.02 |
|
|
0.02 |
|
|
0.13 |
|
|
0.03 |
|
| Loss per diluted share
excluding certain items |
$ |
(0.10 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.27 |
) |
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