Frank’s International N.V. (NYSE: FI) (the “Company” or “Frank’s”)
today reported financial and operational results for the three and
six months ended June 30, 2021.
Second Quarter 2021 Financial
Highlights
- Delivered second quarter revenue of
$107.8 million, an improvement of 14% from the first quarter of
2021 and a 25% improvement from the second quarter of 2020.
- Second quarter net loss totaled
$12.6 million, improving from a prior quarter net loss of $23.9
million.
- Generated Adjusted EBITDA of $12.4
million for the second quarter of 2021, an improvement of 85%
compared to the prior quarter with improving revenue across all
segments and product lines.
- Benefits from profitability
improvement project and continued roll-out of the Company’s
advanced technology packages drove Adjusted EBITDA margins of
12%.
- Awarded project for geothermal
energy development, demonstrating Frank’s ability to contribute to
the energy transition from commercialized organic operations.
- Progressed toward closing the
strategic combination with Expro Group to create a leading
full-cycle energy services company with integration planning
meaningfully advanced and the transaction expected to close in the
third quarter of 2021, as previously communicated.
“We are very pleased to announce continued and
robust momentum this quarter for the company, demonstrating strong
growth on both the top line and overall profitability. When we
shared our year end results earlier this year, we communicated some
ambitious targets. Due to the hard work and focus of our Frank’s
employees, we are well on our way to, not only achieving, but
exceeding those targets,” said Michael Kearney, the Company’s
Chairman, President and Chief Executive Officer.
“We experienced revenue improvement across all
of our segments and product lines with our U.S. Gulf of Mexico
business growing by more than 20%. Adjusted EBITDA margins of 12%
are the highest margins achieved since the beginning of 2016 and
were driven by cost improvement activities and the uptake of higher
margin technology packages. Our Tubular Running Services segment
saw revenue growth in every operating region. We are also
encouraged that our Tubulars segment showed strong revenue growth
due to an international tubular delivery and an over 25% revenue
increase in our Drilling Technologies product line. Earlier this
year we added our AERO™ Reamer tool to our portfolio, and we
are pleased to report that initial revenue growth rates are
impressive. Finally, the Cementing Equipment segment saw meaningful
topline improvement driven by the Gulf of Mexico and continued
international growth. The company-wide growth across our businesses
this quarter confirms our view that we are firmly on a solid upward
trajectory. Our opportunity set in the second half of this year is
significant because of our investment in technologies that increase
our customers’ efficiency and safety, as well as ongoing strong
cost control focus. In short, the future is quite bright for
Frank’s,” Kearney continued.
“In reviewing operational and technology
accomplishments during the quarter, Frank’s continues to build a
significant business in the performance drilling market. The
previously noted AERO™ Reamer series of tools represents our
successful entry into the Ream While Drilling (RWD) business. These
tools expand the Company’s Drilling Technologies toolbox and add a
solution focused on wellbore conditioning and wear mitigation.
Frank’s is successfully collaborating with customers to apply this
technology in their operations to improve performance and limit
costly wear damage. This tool has exceeded our business objectives
since its introduction in the first quarter.
“As momentum continues to build to promote
renewable energy and more sustainable operations throughout our
industry, Frank’s is adapting and actively participating in this
transition. A major player in the renewable energy sector recently
awarded Frank’s a multi-phase tubular installation project in the
Caribbean for their geothermal energy development project. Frank’s
is pleased to have been selected to partner with this customer on
their geothermal project and looks forward to playing a meaningful
role in the clean energy arena to help create a sustainable energy
future.
“As we look forward, our confidence continues to
grow as we continue to execute on the successful strategy we have
defined in recent years. We have strategically grown in key areas,
focused on controlling costs and made targeted investments on the
technology front, all while maintaining our focus on helping
customers operate more safely and efficiently. We anticipate
activity levels will continue to ramp up in the second half of this
year and the Company will experience incremental financial
improvements on all fronts.
“Our announced merger with Expro Group will be a
vital step in completing our strategic vision, and we remain on
track to close the transaction by the end of the third quarter. Our
respective teams are collaborating in the development of detailed
integration plans and our confidence continues to build around the
opportunities we will have as a combined company. Both Frank’s and
Expro are keenly focused on unlocking the synergy potential that
will be created upon combination.
“None of these accomplishments would have been
possible without the full support of our global workforce, which
has relentlessly performed safely and efficiently for our
customers. Our culture of exceptional service quality and building
long-term value for our stakeholders resonates today, just as it
always has,” concluded Mr. Kearney.
Segment Results
Tubular Running Services
Tubular Running Services revenue totaled $71.9
million in the second quarter of 2021, compared to $66.3 million in
the first quarter of 2021, and $62.3 million in the second quarter
of 2020. The sequential improvement was driven by contributions
from the Asia Pacific, Europe and Africa regions, as well as
continued recovery in the North America Offshore region.
Segment adjusted EBITDA in the second quarter of
2021 totaled $9.8 million, or 14% of revenue, compared to $8.1
million, or 12% of revenue, in the first quarter of 2021, and $4.1
million, or 7% of revenue, in the second quarter of 2020. The
sequential increase in adjusted EBITDA was driven by an increase in
customer activity levels and a change in geographical mix. Despite
these improved results, this segment does continue to experience
labor cost pressure related to on-going global travel restrictions
due to the pandemic.
Tubulars
Tubulars revenue in the second quarter of 2021
totaled $16.6 million, compared to $11.7 million in the first
quarter of 2021, and $8.7 million in the second quarter of 2020.
Improvements were driven by higher tubular product sales, including
an international tubular delivery, and increased drilling
technologies activity.
Segment adjusted EBITDA in the second quarter of
2021 totaled $4.1 million, or 25% of revenue, compared to $0.6
million, or 5% of revenue, in the first quarter of 2021, and $0.7
million, or 8% of revenue, in the second quarter of 2020.
Improvement in margins were driven by increased activity levels and
product mix. First quarter results were negatively impacted by
higher product costs related to a significant tubular delivery.
Cementing Equipment
Cementing Equipment revenue totaled $19.4
million in the second quarter of 2021, compared to $16.9 million in
the first quarter of 2021, and $15.0 million in the second quarter
of 2020. The sequential increase was driven by higher activity
levels in the U.S. Gulf of Mexico and an increase in international
activity as the Company has continued to actively pursue
international growth in this segment.
Segment adjusted EBITDA in the second quarter of
2021 totaled $4.9 million, or 25% of revenue, compared to $4.8
million, or 28% of revenue, in the first quarter of 2021, and $0.9
million, or 6% of revenue, in the second quarter of 2020. Current
year results have benefited from efficiency and cost cutting
initiatives put into place over the past year.
Other Financial Information
Capital expenditures related to property, plant
and equipment totaled $2.2 million in the second quarter of 2021
and year to date totaled $4.5 million. The Company continues to
plan for expenditures during 2021 in the range of $20 to $25
million.
As of June 30, 2021, the Company’s consolidated
cash and cash equivalents totaled $188.6 million. The Company had
no outstanding debt as of June 30, 2021. Company liquidity as of
June 30, 2021, totaled $224.6 million, including cash and cash
equivalents, short-term investments, and $34.0 million of
availability under the Company’s credit facility. Cash flows were
affected during the quarter as a result of payments on tubular
purchases into inventory of $9.9 million as well as $4.3 million of
payments of merger related expenses.
Income taxes for the quarter represented an
expense of $6.8 million compared to $1.1 million in the prior
quarter. The change in income taxes was primarily driven by 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 second quarter 2021 results on Tuesday, August 3, 2021, 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 50203986. 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 40 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
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, uncertainties related to the merger with
Expro Group, 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, 2020 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 June 30, 2021 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. 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.
No Offer or Solicitation
This communication relates to a proposed merger
and related transactions (the “Transactions”) between Frank’s
International N.V. (“Frank’s”) and Expro Group Holdings
International Limited (“Expro”). This communication is for
informational purposes only and does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval, in any jurisdiction, pursuant
to the Transactions or otherwise, nor shall there be any sale,
issuance, exchange or transfer of the securities referred to in
this document in any jurisdiction in contravention of applicable
law. No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
Important Additional
Information
In connection with the Transactions, Frank’s has
filed a registration statement on Form S-4 (the “Registration
Statement”) with the U.S. Securities and Exchange Commission (the
“SEC”), which includes a preliminary proxy statement/prospectus of
Frank’s. In addition, Frank’s intends to file other relevant
materials with the SEC regarding the Transactions. After the
Registration Statement has been declared effective by the SEC, a
definitive proxy statement/prospectus will be mailed to the
shareholders of Frank’s and Expro. SHAREHOLDERS OF FRANK’S AND
EXPRO ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING
ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS
RELATING TO THE TRANSACTIONS THAT WILL BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTIONS.
Such shareholders will be able to obtain free copies of the proxy
statement/prospectus and other documents containing important
information about Frank’s and Expro once such documents are filed
with the SEC through the website maintained by the SEC at
http://www.sec.gov. Additional information is available on the
Frank’s website, www.franksinternational.com.
Participants in the
Solicitation
Frank’s and its directors and executive officers
may be deemed to be participants in the solicitation of proxies
from the shareholders of Frank’s in connection with the
Transactions. Expro and its officers and directors may also be
deemed participants in such solicitation. Information regarding
Frank’s directors and executive officers is contained in the
preliminary proxy statement/prospectus, the proxy statement for
Frank’s 2020 Annual Meeting of Shareholders, which was filed with
the SEC on April 28, 2020, Frank’s Annual Report on Form 10-K for
the year ended December 31, 2020, which was filed with the SEC on
March 1, 2021, and certain of its Current Reports on Form 8-K. You
can obtain a free copy of these documents at the SEC’s website at
http://www.sec.gov or by accessing Frank’s website at
http://www.franksinternational.com. Other information regarding
persons who may be deemed participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, are contained in the Registration
Statement and the preliminary proxy statement/prospectus and will
be contained in amendments thereto, as well as other relevant
materials to be filed with the SEC when they become available.
Forward-Looking Statements and
Cautionary Statements
The foregoing 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. All
statements, other than statements of historical fact, included in
this communication that address activities, events or developments
that Expro or Frank’s expects, believes or anticipates will or may
occur in the future are forward-looking statements. Words such as
“estimate,” “project,” “predict,” “believe,” “expect,”
“anticipate,” “potential,” “create,” “intend,” “could,” “may,”
“foresee,” “plan,” “will,” “guidance,” “look,” “outlook,” “goal,”
“future,” “assume,” “forecast,” “build,” “focus,” “work,”
“continue” or the negative of such terms or other variations
thereof and words and terms of similar substance that convey the
uncertainty of future events or outcomes identify the
forward-looking statements, although not all forward-looking
statements contain such identifying words. Without limiting the
generality of the foregoing, forward-looking statements contained
in this press release specifically include, but are not limited to,
statements, estimates and projections regarding the Transactions,
pro forma descriptions of the combined company, anticipated or
expected revenues, EBITDA, synergies or cost-savings, operations,
integration and transition plans, opportunities and anticipated
future performance. These statements are based on certain
assumptions made by Frank’s and Expro 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 Frank’s and Expro believe the
expectations reflected in these 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 Frank’s, which may cause actual results
to differ materially from those implied or expressed by the
forward-looking statements. Such risks and uncertainties include
the risk of the failure to obtain the required votes of Frank’s and
Expro’s shareholders; the timing to consummate the Transactions;
the risk that the conditions to closing of the Transactions may not
be satisfied or that the closing of the Transactions otherwise does
not occur; the failure to close the Transactions on the anticipated
terms, including the anticipated tax treatment; the risk that a
regulatory approval, consent or authorization that may be required
for the Transactions is not obtained in a timely manner or at all,
or is obtained subject to conditions that are not anticipated; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement relating to
the Transactions; unanticipated difficulties or expenditures
relating to the Transactions; the diversion of management time on
Transactions-related matters; the ultimate timing, outcome and
results of integrating the operations of Frank’s and Expro; the
effects of the business combination of Frank’s and Expro following
the consummation of the Transactions, including the combined
company’s future financial condition, results of operations,
strategy and plans; the risk that any announcements relating to the
Transactions could have adverse effects on the market price of
Frank’s common stock; potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the Transactions; expected synergies and other
benefits from the Transactions; the potential for litigation
related to the Transactions; results of litigation, settlements and
investigations; actions by third parties, including governmental
agencies; volatility in customer spending and in oil and natural
gas prices, which could adversely affect demand for Frank’s and
Expro’s services and their associated effect on rates, utilization,
margins and planned capital expenditures; unique risks associated
with offshore operations; global economic conditions; liabilities
from operations; decline in, and ability to realize, backlog;
equipment specialization and new technologies; adverse industry
conditions; adverse credit and equity market conditions; difficulty
in building and deploying new equipment; difficulty in integrating
acquisitions; shortages, delays in delivery and interruptions of
supply of equipment, supplies and materials; weather; loss of, or
reduction in business with, key customers; legal proceedings;
ability to effectively identify and enter new markets; governmental
regulation, including legislative and regulatory initiatives
addressing global climate change or other environmental concerns;
investment in and development of competing or alternative energy
sources; ability to retain and hire key personnel, including
management and field personnel; 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 ease
current restrictions on various commercial and economic activities;
and other important factors that could cause actual results to
differ materially from those projected. All such factors are
difficult to predict and are beyond Expro’s or Frank’s control,
including those detailed in Frank’s annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K that
are available on Frank’s website at
http://www.franksinternational.com and on the SEC’s website at
http://www.sec.gov. Any forward-looking statement speaks only as of
the date on which such statement is made, and Expro and Frank’s
undertake 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. Readers are
cautioned not to place undue reliance on these forward- looking
statements.
FRANK’S INTERNATIONAL N.V. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share data) |
(Unaudited) |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
|
$ |
90,520 |
|
|
$ |
81,523 |
|
|
$ |
74,583 |
|
|
$ |
172,043 |
|
|
$ |
179,666 |
|
Products |
|
|
17,321 |
|
|
|
13,288 |
|
|
|
11,518 |
|
|
|
30,609 |
|
|
|
29,927 |
|
Total revenue |
|
|
107,841 |
|
|
|
94,811 |
|
|
|
86,101 |
|
|
|
202,652 |
|
|
|
209,593 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue, exclusive of depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services |
|
|
68,619 |
|
|
|
63,935 |
|
|
|
61,051 |
|
|
|
132,554 |
|
|
|
140,431 |
|
Products |
|
|
14,408 |
|
|
|
10,914 |
|
|
|
8,286 |
|
|
|
25,322 |
|
|
|
22,274 |
|
General and administrative expenses |
|
|
16,427 |
|
|
|
16,447 |
|
|
|
22,286 |
|
|
|
32,874 |
|
|
|
48,969 |
|
Depreciation and amortization |
|
|
15,332 |
|
|
|
16,107 |
|
|
|
17,252 |
|
|
|
31,439 |
|
|
|
36,970 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
57,146 |
|
Severance and other charges, net |
|
|
3,399 |
|
|
|
7,376 |
|
|
|
5,162 |
|
|
|
10,775 |
|
|
|
25,887 |
|
Gain on disposal of assets |
|
|
(1,479 |
) |
|
|
(182 |
) |
|
|
(650 |
) |
|
|
(1,661 |
) |
|
|
(590 |
) |
Operating loss |
|
|
(8,865 |
) |
|
|
(19,786 |
) |
|
|
(27,286 |
) |
|
|
(28,651 |
) |
|
|
(121,494 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
|
404 |
|
|
|
125 |
|
|
|
156 |
|
|
|
529 |
|
|
|
2,182 |
|
Interest income (expense), net |
|
|
(101 |
) |
|
|
(287 |
) |
|
|
178 |
|
|
|
(388 |
) |
|
|
711 |
|
Foreign currency gain (loss) |
|
|
2,718 |
|
|
|
(2,868 |
) |
|
|
1,693 |
|
|
|
(150 |
) |
|
|
(8,199 |
) |
Total other income (expense) |
|
|
3,021 |
|
|
|
(3,030 |
) |
|
|
2,027 |
|
|
|
(9 |
) |
|
|
(5,306 |
) |
Loss before income taxes |
|
|
(5,844 |
) |
|
|
(22,816 |
) |
|
|
(25,259 |
) |
|
|
(28,660 |
) |
|
|
(126,800 |
) |
Income tax expense
(benefit) |
|
|
6,773 |
|
|
|
1,070 |
|
|
|
8,986 |
|
|
|
7,843 |
|
|
|
(6,577 |
) |
Net loss |
|
$ |
(12,617 |
) |
|
$ |
(23,886 |
) |
|
$ |
(34,245 |
) |
|
$ |
(36,503 |
) |
|
$ |
(120,223 |
) |
Loss per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.06 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.53 |
) |
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
228,013 |
|
|
|
227,019 |
|
|
|
225,853 |
|
|
|
227,519 |
|
|
|
225,855 |
|
FRANK’S INTERNATIONAL N.V. |
SELECTED OPERATING SEGMENT DATA |
(In thousands) |
(Unaudited) |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tubular Running Services |
|
$ |
71,895 |
|
|
$ |
66,285 |
|
|
$ |
62,327 |
|
|
$ |
138,180 |
|
|
$ |
151,824 |
|
Tubulars |
|
|
16,566 |
|
|
|
11,669 |
|
|
|
8,741 |
|
|
|
28,235 |
|
|
|
21,283 |
|
Cementing Equipment |
|
|
19,380 |
|
|
|
16,857 |
|
|
|
15,033 |
|
|
|
36,237 |
|
|
|
36,486 |
|
Total |
|
$ |
107,841 |
|
|
$ |
94,811 |
|
|
$ |
86,101 |
|
|
$ |
202,652 |
|
|
$ |
209,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tubular Running Services |
|
$ |
9,750 |
|
|
$ |
8,128 |
|
|
$ |
4,049 |
|
|
$ |
17,878 |
|
|
$ |
17,354 |
|
Tubulars |
|
|
4,108 |
|
|
|
639 |
|
|
|
681 |
|
|
|
4,746 |
|
|
|
2,077 |
|
Cementing Equipment |
|
|
4,851 |
|
|
|
4,795 |
|
|
|
886 |
|
|
|
9,647 |
|
|
|
3,430 |
|
Corporate |
|
|
(6,297 |
) |
|
|
(6,909 |
) |
|
|
(7,308 |
) |
|
|
(13,207 |
) |
|
|
(17,494 |
) |
Total |
|
$ |
12,412 |
|
|
$ |
6,653 |
|
|
$ |
(1,692 |
) |
|
$ |
19,064 |
|
|
$ |
5,367 |
|
FRANK’S INTERNATIONAL N.V. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
(Unaudited) |
|
|
June 30, |
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
188,581 |
|
|
$ |
209,575 |
|
Restricted cash |
|
|
1,776 |
|
|
|
1,672 |
|
Short-term investments |
|
|
2,026 |
|
|
|
2,252 |
|
Accounts receivables, net |
|
|
127,931 |
|
|
|
110,607 |
|
Inventories, net |
|
|
94,680 |
|
|
|
81,718 |
|
Assets held for sale |
|
|
3,025 |
|
|
|
2,939 |
|
Other current assets |
|
|
6,415 |
|
|
|
7,744 |
|
Total current assets |
|
|
424,434 |
|
|
|
416,507 |
|
Property, plant and equipment, net |
|
|
244,457 |
|
|
|
272,707 |
|
Goodwill |
|
|
42,785 |
|
|
|
42,785 |
|
Intangible assets, net |
|
|
9,909 |
|
|
|
7,897 |
|
Deferred tax assets, net |
|
|
16,482 |
|
|
|
18,030 |
|
Operating lease right-of-use assets |
|
|
26,356 |
|
|
|
28,116 |
|
Other assets |
|
|
31,081 |
|
|
|
30,859 |
|
Total assets |
|
$ |
795,504 |
|
|
$ |
816,901 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
111,031 |
|
|
$ |
99,986 |
|
Current portion of operating lease liabilities |
|
|
7,625 |
|
|
|
7,832 |
|
Deferred revenue |
|
|
585 |
|
|
|
586 |
|
Other current liabilities |
|
|
241 |
|
|
|
1,674 |
|
Total current liabilities |
|
|
119,482 |
|
|
|
110,078 |
|
Deferred tax liabilities |
|
|
— |
|
|
|
1,548 |
|
Non-current operating lease liabilities |
|
|
19,645 |
|
|
|
21,208 |
|
Other non-current liabilities |
|
|
25,235 |
|
|
|
22,818 |
|
Total liabilities |
|
|
164,362 |
|
|
|
155,652 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
2,896 |
|
|
|
2,866 |
|
Additional paid-in capital |
|
|
1,094,447 |
|
|
|
1,087,733 |
|
Accumulated deficit |
|
|
(413,849 |
) |
|
|
(377,346 |
) |
Accumulated other comprehensive loss |
|
|
(30,384 |
) |
|
|
(31,966 |
) |
Treasury stock |
|
|
(21,968 |
) |
|
|
(20,038 |
) |
Total stockholders’ equity |
|
|
631,142 |
|
|
|
661,249 |
|
Total liabilities and equity |
|
$ |
795,504 |
|
|
$ |
816,901 |
|
FRANK’S INTERNATIONAL N.V. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
(Unaudited) |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(36,503 |
) |
|
$ |
(120,223 |
) |
Adjustments to reconcile net loss to cash from operating
activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
31,439 |
|
|
|
36,970 |
|
Equity-based compensation expense |
|
|
6,297 |
|
|
|
5,661 |
|
Goodwill impairment |
|
|
— |
|
|
|
57,146 |
|
Loss on asset impairments and retirements |
|
|
307 |
|
|
|
20,532 |
|
Amortization of deferred financing costs |
|
|
194 |
|
|
|
194 |
|
Deferred tax provision (benefit) |
|
|
— |
|
|
|
(1,690 |
) |
Provision for bad debts |
|
|
437 |
|
|
|
1,750 |
|
Gain on disposal of assets |
|
|
(1,661 |
) |
|
|
(590 |
) |
Changes in fair value of investments |
|
|
(1,012 |
) |
|
|
813 |
|
Other |
|
|
— |
|
|
|
(380 |
) |
Changes in operating assets
and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(17,618 |
) |
|
|
24,465 |
|
Inventories |
|
|
(12,863 |
) |
|
|
(4,539 |
) |
Other current assets |
|
|
1,320 |
|
|
|
2,272 |
|
Other assets |
|
|
672 |
|
|
|
390 |
|
Accounts payable and accrued liabilities |
|
|
13,085 |
|
|
|
(15,187 |
) |
Deferred revenue |
|
|
(2 |
) |
|
|
(226 |
) |
Other non-current liabilities |
|
|
(152 |
) |
|
|
(3,212 |
) |
Net cash provided by
(used in) operating activities |
|
|
(16,060 |
) |
|
|
4,146 |
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment |
|
|
(4,517 |
) |
|
|
(20,259 |
) |
Proceeds from sale of
assets |
|
|
4,209 |
|
|
|
6,565 |
|
Proceeds from sale of
investments |
|
|
1,501 |
|
|
|
2,832 |
|
Purchase of investments |
|
|
(1,294 |
) |
|
|
— |
|
Investment in intellectual
property |
|
|
(1,608 |
) |
|
|
— |
|
Other |
|
|
(179 |
) |
|
|
(256 |
) |
Net cash used in
investing activities |
|
|
(1,888 |
) |
|
|
(11,118 |
) |
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Repayments of borrowings |
|
|
(1,431 |
) |
|
|
— |
|
Treasury shares withheld for
taxes |
|
|
(1,930 |
) |
|
|
(1,086 |
) |
Treasury share repurchase |
|
|
— |
|
|
|
(1,498 |
) |
Proceeds from the issuance of
ESPP shares |
|
|
447 |
|
|
|
552 |
|
Net cash used in
financing activities |
|
|
(2,914 |
) |
|
|
(2,032 |
) |
Effect of exchange rate
changes on cash |
|
|
(28 |
) |
|
|
6,543 |
|
Net decrease in cash, cash
equivalents and restricted cash |
|
|
(20,890 |
) |
|
|
(2,461 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
|
211,247 |
|
|
|
196,740 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
190,357 |
|
|
$ |
194,279 |
|
FRANK’S INTERNATIONAL N.V. |
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION |
(In thousands) |
(Unaudited) |
|
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
RECONCILIATION |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
107,841 |
|
|
$ |
94,811 |
|
|
$ |
86,101 |
|
|
$ |
202,652 |
|
|
$ |
209,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(12,617 |
) |
|
$ |
(23,886 |
) |
|
$ |
(34,245 |
) |
|
$ |
(36,503 |
) |
|
$ |
(120,223 |
) |
Goodwill impairment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
57,146 |
|
Severance and other charges,
net |
|
|
3,399 |
|
|
|
7,376 |
|
|
|
5,162 |
|
|
|
10,775 |
|
|
|
25,887 |
|
Interest (income) expense,
net |
|
|
101 |
|
|
|
287 |
|
|
|
(178 |
) |
|
|
388 |
|
|
|
(711 |
) |
Depreciation and
amortization |
|
|
15,332 |
|
|
|
16,107 |
|
|
|
17,252 |
|
|
|
31,439 |
|
|
|
36,970 |
|
Income tax expense
(benefit) |
|
|
6,773 |
|
|
|
1,070 |
|
|
|
8,986 |
|
|
|
7,843 |
|
|
|
(6,577 |
) |
Gain on disposal of
assets |
|
|
(1,479 |
) |
|
|
(182 |
) |
|
|
(650 |
) |
|
|
(1,661 |
) |
|
|
(590 |
) |
Foreign currency (gain)
loss |
|
|
(2,718 |
) |
|
|
2,868 |
|
|
|
(1,693 |
) |
|
|
150 |
|
|
|
8,199 |
|
Charges and credits (1) |
|
|
3,621 |
|
|
|
3,013 |
|
|
|
3,674 |
|
|
|
6,633 |
|
|
|
5,266 |
|
Adjusted EBITDA |
|
$ |
12,412 |
|
|
$ |
6,653 |
|
|
$ |
(1,692 |
) |
|
$ |
19,064 |
|
|
$ |
5,367 |
|
Adjusted EBITDA margin |
|
|
11.5 |
% |
|
|
7.0 |
% |
|
|
(2.0 |
)% |
|
|
9.4 |
% |
|
|
2.6 |
% |
(1 |
) |
Comprised of Equity-based compensation expense (for the three
months ended June 30, 2021, March 31, 2021 and June 30, 2020:
$3,399, $2,872 and $3,515, respectively, and for the six months
ended June 30, 2021 and 2020: $6,297 and $5,661, respectively),
Unrealized and realized (gains) losses (for the three months ended
June 30, 2021, March 31, 2021 and June 30, 2020: $108, $99 and
$111, respectively, and for the six months ended June 30, 2021 and
2020: $206 and $(1,593), respectively) and Investigation-related
matters (for the three months ended June 30, 2021, March 31, 2021
and June 30, 2020: $88, $42 and $48, respectively, and for the six
months ended June 30, 2021 and 2020: $130 and $1,198,
respectively). |
FRANK’S INTERNATIONAL N.V. |
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION |
(In thousands) |
(Unaudited) |
|
SEGMENT ADJUSTED EBITDA RECONCILIATION |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Segment Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tubular Running Services |
|
$ |
9,750 |
|
|
$ |
8,128 |
|
|
$ |
4,049 |
|
|
$ |
17,878 |
|
|
$ |
17,354 |
|
Tubulars |
|
|
4,108 |
|
|
|
639 |
|
|
|
681 |
|
|
|
4,746 |
|
|
|
2,077 |
|
Cementing Equipment |
|
|
4,851 |
|
|
|
4,795 |
|
|
|
886 |
|
|
|
9,647 |
|
|
|
3,430 |
|
Corporate |
|
|
(6,297 |
) |
|
|
(6,909 |
) |
|
|
(7,308 |
) |
|
|
(13,207 |
) |
|
|
(17,494 |
) |
|
|
|
12,412 |
|
|
|
6,653 |
|
|
|
(1,692 |
) |
|
|
19,064 |
|
|
|
5,367 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(57,146 |
) |
Severance and other charges,
net |
|
|
(3,399 |
) |
|
|
(7,376 |
) |
|
|
(5,162 |
) |
|
|
(10,775 |
) |
|
|
(25,887 |
) |
Interest income (expense),
net |
|
|
(101 |
) |
|
|
(287 |
) |
|
|
178 |
|
|
|
(388 |
) |
|
|
711 |
|
Depreciation and
amortization |
|
|
(15,332 |
) |
|
|
(16,107 |
) |
|
|
(17,252 |
) |
|
|
(31,439 |
) |
|
|
(36,970 |
) |
Income tax (expense)
benefit |
|
|
(6,773 |
) |
|
|
(1,070 |
) |
|
|
(8,986 |
) |
|
|
(7,843 |
) |
|
|
6,577 |
|
Gain on disposal of
assets |
|
|
1,479 |
|
|
|
182 |
|
|
|
650 |
|
|
|
1,661 |
|
|
|
590 |
|
Foreign currency gain
(loss) |
|
|
2,718 |
|
|
|
(2,868 |
) |
|
|
1,693 |
|
|
|
(150 |
) |
|
|
(8,199 |
) |
Charges and credits (1) |
|
|
(3,621 |
) |
|
|
(3,013 |
) |
|
|
(3,674 |
) |
|
|
(6,633 |
) |
|
|
(5,266 |
) |
Net loss |
|
$ |
(12,617 |
) |
|
$ |
(23,886 |
) |
|
$ |
(34,245 |
) |
|
$ |
(36,503 |
) |
|
$ |
(120,223 |
) |
(1 |
) |
Comprised of Equity-based compensation expense (for the three
months ended June 30, 2021, March 31, 2021 and June 30, 2020:
$3,399, $2,872 and $3,515, respectively, and for the six months
ended June 30, 2021 and 2020: $6,297 and $5,661, respectively),
Unrealized and realized gains (losses) (for the three months ended
June 30, 2021, March 31, 2021 and June 30, 2020: $(108), $(99) and
$(111), respectively, and for the six months ended June 30, 2021
and 2020: $(206) and $1,593, respectively) and
Investigation-related matters (for the three months ended June 30,
2021, March 31, 2021 and June 30, 2020: $88, $42 and $48,
respectively, and for the six months ended June 30, 2021 and 2020:
$130 and $1,198, respectively). |
FRANK’S INTERNATIONAL N.V. |
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATION |
(In thousands) |
(Unaudited) |
|
FREE CASH FLOW RECONCILIATION |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities |
|
$ |
(579 |
) |
|
$ |
(15,481 |
) |
|
$ |
26,398 |
|
|
$ |
(16,060 |
) |
|
$ |
4,146 |
|
Less: purchases of property,
plant and equipment |
|
|
2,171 |
|
|
|
2,346 |
|
|
|
10,291 |
|
|
|
4,517 |
|
|
|
20,259 |
|
Free cash
flow |
|
$ |
(2,750 |
) |
|
$ |
(17,827 |
) |
|
$ |
16,107 |
|
|
$ |
(20,577 |
) |
|
$ |
(16,113 |
) |
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 |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(12,617 |
) |
|
$ |
(23,886 |
) |
|
$ |
(34,245 |
) |
|
$ |
(36,503 |
) |
|
$ |
(120,223 |
) |
Goodwill impairment (net of
tax) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
55,740 |
|
Severance and other charges,
net (net of tax) |
|
|
3,399 |
|
|
|
7,347 |
|
|
|
4,937 |
|
|
|
10,779 |
|
|
|
25,292 |
|
Net loss excluding
certain items |
|
$ |
(9,218 |
) |
|
$ |
(16,539 |
) |
|
$ |
(29,308 |
) |
|
$ |
(25,724 |
) |
|
$ |
(39,191 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per diluted
share |
|
$ |
(0.06 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.53 |
) |
Goodwill impairment (net of
tax) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.25 |
|
Severance and other charges,
net (net of tax) |
|
|
0.02 |
|
|
|
0.04 |
|
|
|
0.02 |
|
|
|
0.05 |
|
|
|
0.11 |
|
Loss per diluted share
excluding certain items |
|
$ |
(0.04 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.17 |
) |
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