HOUSTON,
April 26, 2018 /PRNewswire/
-- INDEPENDENCE CONTRACT DRILLING, INC. (the "Company") (NYSE:
ICD) today reported financial results for the three months ended
March 31, 2018.
First Quarter 2018 Highlights
- Record quarterly revenues of $25.6
million.
- Net loss of $4.1 million,
or $0.11 per share.
- Adjusted net loss, as defined below, of $4.3 million, or $0.11 per share.
- Adjusted EBITDA, as defined below, of $3.9 million.
- Fleet utilization of 100.0%.
- Revenue days of 1,259.
- Fully-burdened margin per day of $5,641 per day.
- Net debt, excluding capitalized leases, of $50.7 million, on a borrowing base of
$102.6 million.
In the first quarter of 2018, the Company reported record
quarterly revenues of $25.6 million,
a net loss of $4.1 million, or
$0.11 per share, an adjusted net loss
(defined below) of $4.3 million, or
$0.11 per share, and adjusted EBITDA
(defined below) of $3.9 million.
This compares to revenues of $25.0
million, a net loss of $5.7
million, or $0.15 per share,
an adjusted net loss of $4.6 million,
or $0.12 per share, and adjusted
EBITDA of $3.7 million in the fourth
quarter of 2017, and revenues of $20.2
million, a net loss of $6.3
million, or $0.17 per share,
an adjusted net loss of $5.3 million,
or $0.14 per share, and adjusted
EBITDA of $2.6 million in the first
quarter of 2017.
Chief Executive Officer Byron
Dunn commented, "ICD's first quarter continued the trend of
full effective utilization of our ShaleDriller fleet. The
first quarter also reflected the initial rerating of contracts in
backlog to current market conditions, evidenced by sequential
improvements in revenue per day. Based upon the contract
expiration matrix currently established for 2018, as well as
additional opportunities to renew contracts for remaining contract
rolls, we are confident this trend will continue throughout
2018. Construction of our next newbuild ShaleDriller has
begun and it remains on schedule to enter our drilling fleet mid
third quarter".
Quarterly Operational Results
In the first quarter of 2018, the Company's fleet operated
at 100.0% utilization and recorded 1,259 revenue days, compared to
100% utilization and 1,289 revenue days in the fourth quarter of
2017, and 91.7% utilization and 1,073 revenue days in the first
quarter of 2017.
Operating revenues in the first quarter of 2018 totaled
$25.6 million, compared to
$25.0 million in the fourth quarter
of 2017 and $20.2 million in the
first quarter of 2017. On a revenue per day basis, revenues
were $19,055 per day in the first
quarter of 2018, compared to $18,338
in the fourth quarter of 2017 and $17,949 in the first quarter of 2017.
Sequential revenue per day improvements were driven by
increased pricing on contract renewals.
Operating costs in the first quarter of 2018 totaled
$18.9 million, compared to
$18.8 million in the fourth quarter
of 2017 and $14.9 million in the
first quarter of 2017. Fully-burdened operating costs,
excluding reactivation and rig construction costs, were
$13,414 per day in the first quarter
of 2018, compared to $13,094 in the
fourth quarter of 2017 and $11,930 in
the first quarter of 2017. The sequential increase in cost
per day related primarily to higher payroll taxes and rig level
incentive compensation.
First quarter 2018 fully-burdened rig operating margins,
excluding reactivation and rig construction costs, were
$5,641 per day, compared to
$5,244 per day in the fourth quarter
of 2017 and $6,019 per day in the
first quarter of 2017.
Selling, general and administrative expenses in the first
quarter of 2018 were $3.5 million
(including $0.6 million of non-cash
stock-based compensation), compared to $3.1
million (including $0.5
million of non-cash stock-based compensation) in the fourth
quarter of 2017 and $3.7 million
(including $1.0 million of non-cash
stock-based compensation) in the first quarter of 2017. The
sequential increase in selling, general and administrative expenses
related primarily to higher payroll taxes, stock-based compensation
and training expenses.
Drilling Operations Update
All 14 of the Company's ShaleDriller® rigs are contracted
and operating under term contracts.
The Company's March 31, 2018
backlog of revenues from contracts, with original terms of six
months or more, was $52.7 million.
Approximately 84% of this backlog is expected to be realized during
the remainder of 2018.
Capital Expenditures and Liquidity
Update
Aggregate cash outlays for capital expenditures in the
first quarter of 2018, net of disposals, were $6.1 million, including $5.3 million of payments for fourth quarter 2017
deliveries. The Company's aggregate capital expenditure
budget for 2018 is $22 million,
including $10 million associated with
the completion of one additional newbuild rig.
As of March 31, 2018, the
Company had drawn $53.2 million on
its $85.0 million credit facility and
had net debt, excluding capital leases, of $50.7 million. The borrowing base under the
Company's credit facility was $102.6
million as of March 31,
2018.
Conference Call Details
A conference call for investors will be held today,
April 26, 2018, at 11:00 a.m. Central Time (12:00 p.m. Eastern Time) to discuss the Company's
first quarter 2018 results. Hosting the call
will be Byron A. Dunn, President and
Chief Executive Officer, and Philip A.
Choyce, Executive Vice President and Chief Financial
Officer.
The call can be accessed live over the telephone by
dialing (855) 239-3115 or for international callers, (412)
542-4125. A replay will be available shortly after the call
and can be accessed by dialing (877) 344-7529 or for international
callers, (412) 317-0088. The passcode for the replay is
10119271. The replay will be available until May 3, 2018.
Interested parties may also listen to a simultaneous
webcast of the conference call by logging onto the Company's
website at www.icdrilling.com in the Investor Relations
section. A replay of the webcast will also be available for
approximately 30 days following the call.
About Independence Contract Drilling,
Inc.
Independence Contract Drilling provides land-based
contract drilling services for oil and natural gas producers in
the United States. The Company
constructs, owns and operates a fleet of pad-optimal ShaleDriller
rigs that are specifically engineered and designed to accelerate
its clients' production profiles and cash flows from their most
technically demanding and economically impactful oil and gas
properties. For more information, visit
www.icdrilling.com.
Forward-Looking Statements
This news release contains certain forward-looking
statements within the meaning of the federal securities laws. Words
such as "anticipated," "estimated," "expected," "planned,"
"scheduled," "targeted," "believes," "intends," "objectives,"
"projects," "strategies" and similar expressions are used to
identify such forward-looking statements. However, the absence of
these words does not mean that a statement is not forward-looking.
Forward-looking statements relating to Independence Contract
Drilling's operations are based on a number of expectations or
assumptions which have been used to develop such information and
statements but which may prove to be incorrect. These statements
are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict, and
there can be no assurance that actual outcomes and results will not
differ materially from those expected by management of Independence
Contract Drilling. For more information concerning factors that
could cause actual results to differ materially from those conveyed
in the forward-looking statements, please refer to the "Risk
Factors" section of the Company's Annual Report on Form 10-K, filed
with the SEC and the information included in subsequent amendments
and other filings. These forward-looking statements are based on
and include our expectations as of the date hereof. Independence
Contract Drilling does not undertake any obligation to update or
revise such forward-looking statements to reflect events or
circumstances that occur, or which Independence Contract Drilling
becomes aware of, after the date hereof.
INDEPENDENCE
CONTRACT DRILLING, INC.
|
Unaudited
|
(in thousands,
except par value and share data)
|
|
BALANCE
SHEETS
|
|
|
March 31,
2018
|
|
December 31,
2017
|
Assets
|
|
|
Cash and cash
equivalents
|
$
2,503
|
|
$
2,533
|
Accounts receivable,
net
|
16,244
|
|
18,056
|
Inventories
|
2,795
|
|
2,710
|
Assets held for
sale
|
1,920
|
|
1,920
|
Prepaid expenses and
other current assets
|
3,381
|
|
2,957
|
Total
current assets
|
26,843
|
|
28,176
|
Property, plant and
equipment, net
|
274,046
|
|
275,105
|
Other long-term
assets, net
|
1,236
|
|
1,364
|
Total
assets
|
$
302,125
|
|
$
304,645
|
Liabilities and
Stockholders' Equity
|
|
|
|
Liabilities
|
|
|
|
Current portion of
long-term debt (1)
|
$
511
|
|
$
533
|
Accounts
payable
|
10,500
|
|
11,627
|
Accrued
liabilities
|
5,018
|
|
6,969
|
Total
current liabilities
|
16,029
|
|
19,129
|
Long-term debt
(2)
|
53,886
|
|
49,278
|
Deferred income taxes,
net
|
634
|
|
683
|
Other long-term
liabilities
|
41
|
|
73
|
Total
liabilities
|
70,590
|
|
69,163
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity
|
|
|
|
Common stock, $0.01 par
value, 100,000,000 shares authorized; 38,597,447 and
38,246,919 shares issued, respectively; and 38,252,765 and
37,985,225 shares outstanding, respectively
|
383
|
|
380
|
Additional paid-in
capital
|
327,162
|
|
326,616
|
Accumulated
deficit
|
(93,791)
|
|
(89,645)
|
Treasury stock, at
cost, 344,682 and 261,694 shares, respectively
|
(2,219)
|
|
(1,869)
|
Total
stockholders' equity
|
231,535
|
|
235,482
|
Total
liabilities and stockholders' equity
|
$
302,125
|
|
$
304,645
|
|
|
(1)
|
Current portion of
long-term debt relates to the current portion of vehicle capital
lease obligations.
|
|
|
(2)
|
As of March 31, 2018,
long-term debt includes $666K of long-term vehicle capital lease
obligations. As of December 31, 2017, long-term debt included
$737K of long-term vehicle capital lease
obligations.
|
INDEPENDENCE
CONTRACT DRILLING, INC.
|
Unaudited
|
(in thousands,
except per share amounts)
|
|
STATEMENTS OF
OPERATIONS
|
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2017
|
|
|
|
|
|
|
Revenues
|
$
25,627
|
|
$
20,236
|
|
$
25,041
|
Costs and
expenses
|
|
|
|
|
|
Operating
costs
|
18,926
|
|
14,898
|
|
18,780
|
Selling, general and
administrative
|
3,479
|
|
3,718
|
|
3,112
|
Depreciation and
amortization
|
6,591
|
|
6,256
|
|
6,724
|
Asset impairments,
net
|
(35)
|
|
129
|
|
994
|
(Gain) loss on
disposition of assets, net
|
(82)
|
|
828
|
|
104
|
Total
cost and expenses
|
28,879
|
|
25,829
|
|
29,714
|
Operating
loss
|
(3,252)
|
|
(5,593)
|
|
(4,673)
|
Interest
expense
|
(943)
|
|
(630)
|
|
(895)
|
Loss
before income taxes
|
(4,195)
|
|
(6,223)
|
|
(5,568)
|
Income tax (benefit)
expense
|
(49)
|
|
46
|
|
177
|
Net
loss
|
$
(4,146)
|
|
$
(6,269)
|
|
$
(5,745)
|
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
|
Basic and
Diluted
|
$
(0.11)
|
|
$
(0.17)
|
|
$
(0.15)
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
Basic and
Diluted
|
38,124
|
|
37,546
|
|
37,983
|
INDEPENDENCE
CONTRACT DRILLING, INC.
|
Unaudited
|
(in
thousands)
|
|
STATEMENTS OF CASH
FLOWS
|
|
|
Three Months Ended
March 31,
|
|
2018
|
|
2017
|
|
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$(4,146)
|
|
$(6,269)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities
|
|
|
|
Depreciation and amortization
|
6,591
|
|
6,256
|
Asset impairments, net
|
(35)
|
|
129
|
Stock-based compensation
|
644
|
|
1,012
|
(Gain) loss on disposition of assets, net
|
(82)
|
|
828
|
Deferred income taxes
|
(49)
|
|
46
|
Amortization of deferred financing costs
|
90
|
|
125
|
Bad debt expense
|
22
|
|
-
|
Changes in operating assets and liabilities
|
|
|
|
Accounts
receivable
|
1,790
|
|
(807)
|
Inventories
|
(56)
|
|
(75)
|
Prepaid
expenses and other assets
|
(386)
|
|
(885)
|
Accounts
payable and accrued liabilities
|
(2,371)
|
|
(1,780)
|
Net cash provided by (used in) operating activities
|
2,012
|
|
(1,420)
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
Purchases of
property, plant and equipment
|
(6,259)
|
|
(8,645)
|
Proceeds from the
sale of assets
|
146
|
|
13
|
Net cash used in investing activities
|
(6,113)
|
|
(8,632)
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
Borrowings under
credit facility
|
13,779
|
|
13,457
|
Repayments under
credit facility
|
(9,100)
|
|
(2,600)
|
Purchase of treasury
stock
|
(350)
|
|
(24)
|
RSUs withheld for
taxes
|
(95)
|
|
(455)
|
Payments for capital
lease obligations
|
(163)
|
|
(109)
|
Net cash provided by financing activities
|
4,071
|
|
10,269
|
Net (decrease) increase in cash and cash equivalents
|
(30)
|
|
217
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
Beginning of
period
|
2,533
|
|
7,071
|
End of
period
|
$
2,503
|
|
$
7,288
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
Cash paid during the
period for interest
|
$
848
|
|
$
510
|
Supplemental
disclosure of non-cash investing and financing
activity
|
|
|
|
Change in property,
plant and equipment purchases in accounts payable
|
$
(739)
|
|
$
(263)
|
Additions to
property, plant and equipment through capital leases
|
$
70
|
|
$
327
|
Transfer of assets
from held for sale to held and used
|
$
2,717
|
|
$
-
|
The following table provides various financial and
operational data for the Company's operations during the three
months ended March 31, 2018 and 2017,
and December 31, 2017. This
information contains non-GAAP financial measures of
the Company's operating performance. The Company believes
this non-GAAP information is useful because it provides a means to
evaluate the operating performance of the Company on an ongoing
basis using criteria that are used by our management.
Additionally, it highlights operating trends and aids analytical
comparisons. However, this information has limitations and
should not be used as an alternative to operating income (loss) or
cash flow performance measures determined in accordance with GAAP,
as this information excludes certain costs that may affect the
Company's operating performance in future periods.
OTHER FINANCIAL
& OPERATING DATA
|
Unaudited
|
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
March 31,
2017
|
|
December 31,
2017
|
|
|
|
|
|
|
Number of completed
rigs end of period
|
14
|
|
14
|
|
14
|
Rig operating days
(1)
|
1,259.4
|
|
1,072.9
|
|
1,288.6
|
Average number of
operating rigs (2)
|
14.0
|
|
11.9
|
|
14.0
|
Rig utilization
(3)
|
100.0%
|
|
91.7%
|
|
100.0%
|
Average revenue per
operating day (4)
|
$
19,055
|
|
$
17,949
|
|
$
18,338
|
Average cost per
operating day (5)
|
$
13,414
|
|
$
11,930
|
|
$
13,094
|
Average rig margin
per operating day
|
$
5,641
|
|
$
6,019
|
|
$
5,244
|
|
|
(1)
|
Rig operating days
represent the number of days our rigs are earning revenue under a
contract during the period, including days that standby revenues
are earned. During the three months ended March 31, 2018
and December 31, 2017 we did not earn any revenue on a standby
basis. During the three months ended March 31, 2017,
there were 77.9 operating days in which we earned revenue on a
standby basis, including 69.0 standby-without-crew days.
|
|
|
(2)
|
Average number of
operating rigs is calculated by dividing the total number of rig
operating days in the period by the total number of calendar days
in the period.
|
|
|
(3)
|
Rig utilization is
calculated as rig operating days divided by the total number of
days our drilling rigs are available during the applicable
period.
|
|
|
(4)
|
Average revenue per
operating day represents total contract drilling revenues earned
during the period divided by rig operating days in the
period. Excluded in calculating average revenue per operating
day are revenues associated with the reimbursement of out-of-pocket
costs paid by customers of $1.6 million, $1.0 million and $1.4
million during the three months ended March 31, 2018 and 2017,
and December 31, 2017, respectively.
|
|
|
(5)
|
Average cost per
operating day represents operating costs incurred during the period
divided by rig operating days in the period. The following
costs are excluded in calculating average cost per operating day:
(i) out-of-pocket costs reimbursed by customers of $1.6 million,
$1.0 million and $1.4 million during the three months ended March
31, 2018 and 2017, and December 31, 2017, respectively, (ii) new
crew training costs of $25.0 thousand, $60.0 thousand and zero
during the three months ended March 31, 2018 and 2017, and
December 31, 2017, respectively, (iii) construction overhead costs
expensed due to reduced rig construction activity of $0.4 million,
$0.2 million and $0.5 million during the three months ended
March 31, 2018 and 2017, and December 31, 2017, respectively,
(iv) rig reactivation costs associated with the redeployment of
previously stacked rigs, excluding new crew training costs
(included in (ii) above), of $0.7 million during the three months
ended March 31, 2017 and (v) out-of-pocket expenses of $0.1
million, net of insurance recoveries, incurred as a result of
damage to one of our rig's mast during the three months ended
March 31, 2017.
|
|
|
Non-GAAP Financial Measures
Adjusted net loss, EBITDA and adjusted EBITDA are
supplemental non-GAAP financial measures that are used by
management and external users of our financial statements, such as
industry analysts, investors, lenders and rating agencies. In
addition, adjusted EBITDA is consistent with how EBITDA is
calculated under our credit facility for purposes of determining
our compliance with various financial covenants. We define
"EBITDA" as earnings (or loss) before interest, taxes,
depreciation, and amortization, and we define "adjusted EBITDA" as
EBITDA before stock-based compensation, non-cash asset impairments,
gains or losses on disposition of assets, and other non-recurring
items added back to, or subtracted from, net income for purposes of
calculating EBITDA under our credit facility. Neither
adjusted net loss, EBITDA or adjusted EBITDA is a measure of net
income as determined by U.S. generally accepted accounting
principles ("GAAP").
Management believes adjusted net loss, EBITDA and adjusted
EBITDA are useful because they allow our stockholders to more
effectively evaluate our operating performance and compliance with
various financial covenants under our credit facility and compare
the results of our operations from period to period and against our
peers without regard to our financing methods or capital structure
or non-recurring, non-cash transactions. We exclude the items
listed above from net income (loss) in calculating adjusted net
loss, EBITDA and adjusted EBITDA because these amounts can vary
substantially from company to company within our industry depending
upon accounting methods and book values of assets, capital
structures and the method by which the assets were acquired. None
of adjusted net loss, EBITDA or adjusted EBITDA should be
considered an alternative to, or more meaningful than, net income
(loss), the most closely comparable financial measure calculated in
accordance with GAAP, or as an indicator of our operating
performance or liquidity. Certain items excluded from adjusted net
loss, EBITDA and adjusted EBITDA are significant components in
understanding and assessing a company's financial performance, such
as a company's return on assets, cost of capital and tax structure.
Our presentation of adjusted net loss, EBITDA and adjusted EBITDA
should not be construed as an inference that our results will be
unaffected by unusual or non-recurring items. Our
computations of adjusted net loss, EBITDA and adjusted EBITDA may
not be comparable to other similarly titled measures of other
companies.
Reconciliation of
Net Loss to Adjusted Net Loss:
|
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
March 31,
2017
|
|
December 31,
2017
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(4,146)
|
|
$(0.11)
|
|
$(6,269)
|
|
$(0.17)
|
|
$(5,745)
|
|
$(0.15)
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
Asset
impairments, net (1)
|
(35)
|
|
-
|
|
129
|
|
0.01
|
|
994
|
|
0.03
|
(Gain)
loss on disposition of assets, net (2)
|
(82)
|
|
-
|
|
828
|
|
0.02
|
|
104
|
|
-
|
Adjusted net
loss
|
$
(4,263)
|
|
$(0.11)
|
|
$(5,312)
|
|
$(0.14)
|
|
$(4,647)
|
|
$(0.12)
|
|
|
Reconciliation of
Net Loss to EBITDA and Adjusted EBITDA:
|
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
March 31,
2017
|
|
December 31,
2017
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(4,146)
|
|
$
(6,269)
|
|
$
(5,745)
|
Add back:
|
|
|
|
|
|
Income
tax (benefit) expense
|
(49)
|
|
46
|
|
177
|
Interest
expense
|
943
|
|
630
|
|
895
|
Depreciation and amortization
|
6,591
|
|
6,256
|
|
6,724
|
Asset
impairments, net (1)
|
(35)
|
|
129
|
|
994
|
EBITDA
|
3,304
|
|
792
|
|
3,045
|
(Gain)
loss on disposition of assets, net (2)
|
(82)
|
|
828
|
|
104
|
Stock-based compensation
|
644
|
|
1,012
|
|
528
|
Adjusted
EBITDA
|
$
3,866
|
|
$
2,632
|
|
$
3,677
|
|
|
(1)
|
In the first quarter
of 2018, we recorded a $208 thousand recovery of impairment expense
as a result of the decision to hold and use certain buildings and
property previously held for sale, offset by the impairment of
certain buildings of $173 thousand. In the first quarter of
2017, we recorded a $0.1 million, or $0.01 per share, non-cash
impairment representing the estimated damage to the mast of one of
our rigs, net of insurance recoveries. In the fourth quarter of
2017, we recorded a $1.0 million, or $0.03 per share, non-cash
impairment of certain held for sale assets.
|
|
|
(2)
|
In the first quarter
of 2017, we recorded a loss on disposition of assets of $0.8
million, or $0.02 per share, primarily due to non-cash disposal of
equipment in connection with the upgrade to 7,500 psi mud
systems.
|
INVESTOR CONTACTS:
Independence
Contract Drilling, Inc.
E-mail inquiries to:
Investor.relations@icdrilling.com
Phone inquiries: (281) 598-1211
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SOURCE Independence Contract Drilling, Inc.