FORT WORTH, Texas, April 24, 2014 /PRNewswire/ -- Basic Energy
Services, Inc. (NYSE: BAS) ("Basic") today announced its financial
and operating results for the first quarter ended March 31, 2014.
FIRST QUARTER 2014 HIGHLIGHTS
Revenue rose 9% to $336.8 million
in the first quarter of 2014 from $308.0
million in the fourth quarter of 2013 and increased 11% from
$304.4 million in the first quarter
of 2013.
Basic reported a net loss of $1.9
million, or $0.05 per basic
and diluted share, for the first quarter of 2014, compared to a net
loss of $7.4 million, or $0.18 per basic and diluted share, reported in
the fourth quarter of 2013. In the first quarter of 2013,
Basic reported a net loss of $8.8
million, or $0.22 per basic
and diluted share.
Adjusted EBITDA increased 10% to $65.4
million, or 19% of revenue, in the first quarter of 2014
compared to $59.5 million, or 19% of
revenue, in the fourth quarter of 2013. In the first quarter
of 2013, Basic generated Adjusted EBITDA of $51.5 million, or 17% of revenue. Adjusted
EBITDA is defined as net income before interest, taxes,
depreciation and amortization, and the net gain or loss from the
disposal of assets. EBITDA and Adjusted EBITDA, which are not
measures determined in accordance with United States generally accepted accounting
principles ("GAAP"), are defined and reconciled in note 3 under the
accompanying financial tables.
Roe Patterson, Basic's President and Chief Executive Officer,
stated, "Our first quarter results continued to benefit from the
strong activity that began in the fourth quarter of 2013.
Healthy oil prices, and relatively stable natural gas prices, drove
demand for our services across our footprint. Nowhere was this
impact more prevalent than in the Permian Basin, where oil directed
drilling rig counts rose significantly during the first
quarter.
"Overall, our activity levels continued to gain momentum as the
first quarter progressed. The adverse winter weather conditions
experienced earlier in the quarter subsided and we experienced
higher utilization rates in late February and March. In particular,
our completion and remedial services segment, especially
stimulation services, showed marked improvement as we experienced a
busy calendar of activity during March.
"Our first quarter segment profit margin continued to benefit
from the cost reduction initiatives we put in place in early 2013,
slightly offset by the annual reset of payroll taxes at the
beginning of the year. Pricing across our service lines remained
stable during the first quarter, and we offset some wage increases
by raising prices in certain lines of business in our busier
markets. Excess service capacity is still an issue in most areas.
We remain cautiously optimistic that as activity levels continue to
improve throughout 2014 and into 2015, improving utilization rates
will create an environment where prices can move higher.
"We expect our second quarter revenue to be up 5% to 6%
sequentially as we anticipate demand for our services to benefit
from increased customer spending aided by better weather and longer
daylight hours. Segment profit margins will benefit from
increased revenue levels and we would expect that our well
servicing and fluid services margins would return to levels we
achieved in the third quarter of 2013 or higher, as the impact of
the payroll tax reset subsides after the first quarter. With the
improving completions environment, we would expect our completion
and remedial services margins to continue to improve as we go
through 2014.
"Our previously announced capital budget for 2014 was
$215 million, with approximately
$85 million dedicated mainly to
expansion of our fluid services and completion and remedial
services business lines. We will dedicate most of the approximately
$19 million we received in the first
quarter from the sale of our inland workover barges for additional
expansion projects in 2014, resulting in a revised 2014 capital
expenditure budget and expansion portion of $234 million and $104
million, respectively."
Business Segment Results
Completion and Remedial Services
Completion and remedial services revenue rose 11% to
$137.5 million in the first quarter
of 2014 from $123.4 million in the
prior quarter. The sequential increase in revenue was mainly
due to increased activity levels for pressure pumping and coiled
tubing services, as well as improvements due to seasonal
factors. In the first quarter of 2013, this segment generated
$118.4 million in revenue.
Segment profit in the first quarter of 2014 increased to
$51.0 million compared to
$43.7 million in the prior
quarter. Segment margin for the first quarter of 2014 was
37%, rising from 35% in the prior quarter. The sequential increase
was due to higher utilization for our pumping services and coiled
tubing operations. In addition, we were able to realize
slight rate increases for stimulation services which allowed us to
recoup operating expense increases. During the first quarter of
2013, segment profit was $39.4
million, or 33% of revenue.
As of March 31, 2014, Basic had
approximately 301,000 hydraulic horsepower (hhp), increasing from
297,000 hhp at the end of the previous quarter and up slightly from
292,000 hhp as of March 31, 2013.
Well Servicing
Well servicing revenues grew 11% to $92.9
million during the first quarter of 2014 compared to
$84.0 million in the prior quarter,
primarily attributable to the uptick in activity levels in the
Permian Basin and Mid-Continent as well as improvements due to
seasonal factors. In the first quarter of 2013, well servicing
revenues were $87.7 million.
Revenues from the Taylor manufacturing operations were $2.2 million in the first quarter of 2014,
declining from $3.4 million in the
fourth quarter of 2013 and $3.7
million in the first quarter of 2013.
At March 31, 2014, the well
servicing rig count was 421, down from 425 at the end of the prior
quarter. The weighted average number of well servicing rigs
was 425 during the first quarter of 2014, flat with the fourth
quarter of 2013 and the first quarter of 2013. Rig hours
increased 9% to 217,400 in the first quarter of 2014, compared to
199,400 in the previous quarter, and rose 3% from 210,800 in the
comparable quarter of last year. Rig utilization was 73% in the
first quarter of 2014, compared to 66% in the prior quarter and 69%
in the first quarter of 2013.
Excluding revenues associated with the Taylor manufacturing
operations, revenue per rig hour was $417 in the first quarter of 2014, rising 3% from
$404 in the fourth quarter 2013 and
up 5% from $399 in the first quarter
of 2013. Revenues per rig hour increased due to higher levels of
barge rig activity in the first quarter of 2014, as well as pricing
increases in certain geographic areas.
Segment profit in the first quarter of 2014 rose to $23.2 million from $22.5
million in the prior quarter and from $22.7 million in the same period in 2013.
Segment profit from the Taylor manufacturing operations was
$134,000 in the first quarter of 2014
compared to $624,000 in the prior
quarter and $516,000 in the first
quarter of 2013. In the first quarter of 2014, segment profit
margins were 25%, declining from 27% in the prior quarter, mainly
due to the annual reset of payroll taxes and an increase in
insurance costs, and down from 26% in the first quarter of 2013.
Excluding the Taylor manufacturing operations, segment profit
margins were 25% in the first quarter of 2014, compared to 27% in
the fourth quarter of 2013 and 26% in the first quarter of
2013.
At the end of the first quarter of 2014, we sold four inland
barge workover rigs, and related equipment, for approximately
$19 million. We expect that the
divestiture of these assets will have negligible impact on revenue
and earnings for 2014 as we deploy these proceeds into higher
margin service lines.
Fluid Services
Fluid services revenue rose 6% to $92.8
million in the first quarter of 2014 from $87.8 million in the prior quarter. The
sequential increase in revenue was mainly due to increased
utilization of hot oiling equipment and salt water disposals, as
well as the contribution from additional equipment added during the
quarter. During the first quarter of 2013, this segment
generated $84.3 million in
revenue.
Truck hours rose 5% to 607,200 during the first quarter of 2014,
up from 579,400 in the fourth quarter of 2013 and from 555,600 in
the first quarter of 2013. The weighted average number of
fluid services trucks rose 2% to 1,006 during the first quarter of
2014, increasing by 20 trucks from the weighted average truck count
of 986 during the fourth quarter of 2013. The weighted
average number of fluid services trucks was 963 in the first
quarter of 2013.
The average revenue per fluid service truck increased 4% to
$92,000 in the first quarter of 2014
from $89,000 in the fourth quarter of
2013. In the comparable quarter of 2013, average revenue per fluid
truck was $88,000. Average
revenue per service truck rose due to an increase in truck
utilization.
Segment profit in the first quarter of 2014 was $26.1 million, or 28% of revenue, compared to
$25.5 million, or 29% of revenue, in
the prior quarter and $26.5 million,
or 31% of revenue, in the same period in 2013. The sequential
increase in segment profit was due to the increased utilization of
our fleet, which was slightly offset by the annual reset of payroll
taxes at the beginning of the year and increased insurance which
resulted in a 160 basis point impact on segment margin.
Contract Drilling
Contract drilling revenue was $13.5
million during the first quarter of 2014, up 6% from
$12.8 million in the prior quarter
and down 3% from $14.0 million in the
comparable quarter in 2013. Basic operated 12 drilling
rigs during the first quarter of 2014, the same number of rigs as
in the previous quarter and in the first quarter of 2013.
Revenue per drilling day in the first quarter of 2014 was
$16,500, rising slightly from
$16,400 in the previous quarter and
remaining flat with the first quarter of 2013.
Rig operating days during the first quarter of 2014 increased 5%
to 821 compared to 781 days in the prior quarter, resulting in rig
utilization of 76% during the first quarter of 2014 compared to 71%
during the prior quarter. In the comparable period in 2013, rig
operating days were 850, producing a utilization of 79%.
Segment profit in the first quarter of 2014 was $4.4 million, down slightly from $4.5 million in the prior quarter and
$4.8 million in the first quarter of
2013. Segment margin of 32% declined sequentially from 35% in
the prior quarter due to higher repair and maintenance costs.
Last year in the comparable period, segment margin was
34%.
G&A Expense
General and administrative ("G&A") expense in the first
quarter of 2014 was $39.6 million, or
12% of revenue. The prior quarter's G&A was $37.0 million, or 12% of revenue. The sequential
increase was due mainly to the annual reset of payroll taxes and
increased incentive compensation costs. G&A expense was
$42.0 million in the first quarter of
2013, or 14% of revenue. The year-over-year decline in G&A was
due to the expense controls instituted during 2013 and lower bad
debt expense.
Tax Benefit
Basic's tax benefit for the first quarter of 2014 was
$600,000, compared to a benefit of
$4.6 million in the fourth quarter of
2013 and a benefit of $7.4 million in
the first quarter of 2013. The tax benefit in the first
quarter of 2014 translated into an effective tax benefit rate of
24%, compared to the prior quarter's effective tax benefit rate of
39% and the first quarter of 2013's effective tax benefit rate of
46%. The lower benefit rate is due to the impact of permanent
differences on a low pre-tax net loss amount.
Cash and Total Liquidity
On March 31, 2014, Basic had cash
and cash equivalents of approximately $117
million, an increase from $112
million at December 31, 2013
and $81 million on March 31, 2013. At the end of the first
quarter of 2014, total liquidity was approximately $329 million, which included $212 million of availability under Basic's
$250 million revolving credit
facility.
Capital Expenditures
Total capital expenditures during the first quarter of 2014,
including capital leases of $3.9
million, were approximately $37.0
million, comprised of $16.9
million for expansion projects, $18.3
million for sustaining and replacement projects and
$1.8 million for other
projects. Expansion capital spending included $11.3 million for the Completion and Remedial
Services segment, $5.2 million for
the Fluid Services segment and $400,000 for the Well Servicing segment.
Other capital expenditures are mainly for facilities and IT
infrastructure.
Conference Call
Basic will host a conference call to discuss its first quarter
2014 results on Friday, April 25,
2014, at 9:00 a.m. Eastern
Time (8:00 a.m.
Central). To access the call, please dial (480) 629-9692 and
ask for the "Basic Energy Services" call at least 10 minutes prior
to the start time. The conference call will also be broadcast
live via the Internet and can be accessed through the investor
relations section of Basic's corporate website,
www.basicenergyservices.com.
A telephonic replay of the conference call will be available
until May 9, 2014 and may be accessed
by calling (303) 590-3030 and using the pass code 4676660#. A
webcast archive will be available at www.basicenergyservices.com
shortly after the call and will be accessible for approximately 30
days.
About Basic Energy Services
Basic Energy Services provides well site services essential to
maintaining production from the oil and gas wells within its
operating area. The company employs more than 5,500 employees
in more than 100 service points throughout the major oil and gas
producing regions in Texas,
Louisiana, Oklahoma, New
Mexico, Arkansas,
Kansas, and the Rocky Mountain and
Appalachian regions.
Additional information on Basic Energy Services is available on
the Company's website at www.basicenergyservices.com.
Safe Harbor Statement
This release includes forward-looking statements and
projections, made in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Basic has
made every reasonable effort to ensure that the information and
assumptions on which these statements and projections are based are
current, reasonable, and complete. However, a variety of
factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in
this release, including (i) changes in demand for Basic's services
and any related material impact on its pricing and utilizations
rates, (ii) Basic's ability to execute, manage and integrate
acquisitions successfully, (iii) changes in Basic's expenses,
including labor or fuel costs and financing costs, and (iv)
regulatory changes. Additional important risk factors that
could cause actual results to differ materially from expectations
are disclosed in Item 1A of Basic's Form 10-K for the year ended
December 31, 2013 and subsequent Form
10-Qs filed with the SEC. While Basic makes these statements
and projections in good faith, neither Basic nor its management can
guarantee that anticipated results will be achieved. Basic
assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking
statements made by Basic, whether as a result of new information,
future events, or otherwise.
Contacts:
|
Alan
Krenek,
|
|
Chief Financial
Officer
|
|
Basic Energy
Services, Inc.
|
|
817-334-4100
|
|
|
|
Jack Lascar/Sheila
Stuewe
|
|
Dennard ▪ Lascar
Associates
|
|
713-529-6600
|
-Tables to Follow-
Basic Energy
Services, Inc.
|
Consolidated
Statements of Operations, Comprehensive Income and Other Financial
Data
|
(in thousands,
except per share amounts)
|
|
|
|
|
|
Three
Months
|
|
Ended March
31,
|
|
2014
|
|
2013
|
Income Statement
Data:
|
(Unaudited)
(Unaudited)
|
Revenues:
|
|
|
|
Completion and remedial services
|
$
137,485
|
|
$
118,361
|
Well
servicing
|
92,912
|
|
87,675
|
Fluid
Services
|
92,835
|
|
84,330
|
Contract
drilling
|
13,524
|
|
13,985
|
|
|
|
|
Total
revenues
|
336,756
|
|
304,351
|
|
|
|
|
Expenses:
|
|
|
|
Completion and remedial services
|
86,480
|
|
79,008
|
Well
servicing
|
69,759
|
|
65,002
|
Fluid
services
|
66,782
|
|
57,874
|
Contract
drilling
|
9,166
|
|
9,164
|
General
and administrative (1)
|
39,559
|
|
41,957
|
Depreciation and amortization
|
51,705
|
|
49,781
|
(Gain)/loss on disposal of assets
|
(679)
|
|
1,089
|
|
|
|
|
Total
expenses
|
322,772
|
|
303,875
|
|
|
|
|
Operating income
|
13,984
|
|
476
|
|
|
|
|
Other income
(expense):
|
|
|
|
Interest
expense
|
(16,859)
|
|
(16,808)
|
Interest
income
|
13
|
|
17
|
Other
income
|
366
|
|
162
|
Loss from
continuing operations before income taxes
|
(2,496)
|
|
(16,153)
|
Income tax
benefit
|
589
|
|
7,375
|
Net
loss
|
$
(1,907)
|
|
$
(8,778)
|
|
|
|
|
Earnings per
share of common stock:
|
|
|
|
Basic
|
$
(0.05)
|
|
$
(0.22)
|
|
|
|
|
Diluted
|
$
(0.05)
|
|
$
(0.22)
|
|
|
|
|
|
|
|
|
Other
Financial Data:
|
|
|
|
EBITDA
(2)
|
$
66,055
|
|
$
50,419
|
Adjusted EBITDA
(2)
|
65,376
|
|
51,508
|
Capital
expenditures:
|
|
|
|
Acquisitions, net of cash acquired
|
-
|
|
16,464
|
Property
and equipment
|
33,106
|
|
39,873
|
|
As
of
|
|
March
31,
|
|
March
31,
|
|
2014
|
|
2013
|
Balance
Sheet Data:
|
(unaudited)
(unaudited)
|
Cash and cash
equivalents
|
$
116,627
|
|
$
81,489
|
Net property
and equipment
|
892,460
|
|
951,854
|
Total
assets
|
1,525,015
|
|
1,573,959
|
Total long-term
debt
|
840,143
|
|
847,297
|
Total
stockholders' equity
|
344,123
|
|
364,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
March
31,
|
|
Three months
ended
December
31,
|
|
2014
|
|
2013
|
|
2013
|
|
|
|
|
|
|
|
|
Segment
Data:
|
(Unaudited)
|
|
(Unaudited)
|
Completion and
Remedial Services
|
|
|
|
|
|
|
|
|
Segment Profits as a
percent of revenue
|
|
37.1%
|
|
|
33.2%
|
|
|
35.4%
|
|
|
|
|
|
|
|
|
|
Well
Servicing
|
|
|
|
|
|
|
|
|
Weighted average
number of rigs
|
|
425
|
|
|
425
|
|
|
425
|
Rig hours
(000's)
|
|
217.4
|
|
|
210.8
|
|
|
199.4
|
Rig utilization
rate
|
|
72.6%
|
|
|
69.4%
|
|
|
65.6%
|
Revenue per rig hour,
excluding manufacturing
|
$
|
417
|
|
$
|
399
|
|
$
|
404
|
Well servicing rig
profit per rig hour
|
$
|
106
|
|
$
|
108
|
|
$
|
113
|
Segment profits as a
percent of revenue
|
|
24.9%
|
|
|
25.9%
|
|
|
26.8%
|
|
|
|
|
|
|
|
|
|
Fluid
Services
|
|
|
|
|
|
|
|
|
Weighted average
number of fluid service trucks
|
|
1,006
|
|
|
963
|
|
|
986
|
Truck hours
(000's)
|
|
607.2
|
|
|
555.6
|
|
|
579.4
|
Revenue per fluid
services truck (000's)
|
$
|
92
|
|
$
|
88
|
|
$
|
89
|
Segment profits per
fluid services truck (000's)
|
$
|
26
|
|
$
|
27
|
|
$
|
26
|
Segment profits as a
percent of revenue
|
|
28.1%
|
|
|
31.4%
|
|
|
29.0%
|
|
|
|
|
|
|
|
|
|
Contact
Drilling
|
|
|
|
|
|
|
|
|
Weighted average
number of rigs
|
|
12
|
|
|
12
|
|
|
12
|
Rig operating
days
|
|
821
|
|
|
850
|
|
|
781
|
Revenue per
day
|
$
|
16,500
|
|
$
|
16,500
|
|
$
|
16,400
|
Drilling rig profit
per day
|
$
|
5,300
|
|
$
|
5,700
|
|
$
|
5,800
|
Segment profits as a
percent of revenue
|
|
32.2%
|
|
|
34.5%
|
|
|
35.2%
|
|
|
(1)
|
Includes
approximately $3,569,000 and $2,817,000 of non-cash compensation
expense for the three months ended March 31, 2014 and 2013,
respectively.
|
|
|
(2)
|
This earnings release
contains references to the non-GAAP financial measure of earnings
(net income) before interest, taxes, depreciation and amortization,
or "EBITDA." This earnings release also contains references
to the non-GAAP financial measure of earnings (net income) before
interest, taxes, depreciation, amortization, and the gain or loss
on disposal of assets, or "Adjusted EBITDA." EBITDA and
Adjusted EBITDA should not be considered in isolation or as a
substitute for operating income, net income or loss, cash flows
provided by operating, investing and financing activities, or other
income or cash flow statement data prepared in accordance with
GAAP. However, Basic believes EBITDA and Adjusted EBITDA are
useful supplemental financial measures used by its management and
directors and by external users of its financial statements, such
as investors, to assess:
|
|
|
•
|
The financial
performance of its assets without regard to financing methods,
capital structure or historical cost basis;
|
•
|
The ability of its
assets to generate cash sufficient to pay interest on its
indebtedness; and
|
•
|
Its operating
performance and return on invested capital as compared to those of
other companies in the well servicing industry, without regard to
financing methods and capital structure.
|
|
|
EBITDA and Adjusted
EBITDA each have limitations as an analytical tool and should not
be considered an alternative to net income, operating income, cash
flow from operating activities or any other measure of financial
performance or liquidity presented in accordance with GAAP. EBITDA
and Adjusted EBITDA exclude some, but not all, items that affect
net income and operating income, and these measures may vary among
other companies. Limitations to using EBITDA as an analytical tool
include:
|
|
•
|
EBITDA does not
reflect its current or future requirements for capital expenditures
or capital commitments;
|
•
|
EBITDA does not
reflect changes in, or cash requirements necessary to service
interest or principal payments on, its debt;
|
•
|
EBITDA does not
reflect income taxes;
|
•
|
Although depreciation
and amortization are non-cash charges, the assets being depreciated
and amortized will often have to be replaced in the future, and
EBITDA does not reflect any cash requirements for such
replacements; and
|
•
|
Other companies in
its industry may calculate EBITDA differently than Basic does,
limiting its usefulness as a comparative measure.
|
|
|
In addition to each
of the limitations with respect to EBITDA noted above, the
limitations to using Adjusted EBITDA as an analytical tool
include:
|
•
|
Adjusted EBITDA does
not reflect Basic's gain or loss on disposal of assets;
|
•
|
Other companies in
our industry may calculate Adjusted EBITDA differently than Basic
does, limiting its usefulness as a comparative measure.
|
|
|
The following table
presents a reconciliation of net income to EBITDA, which is the
most comparable GAAP performance measure, for each of the periods
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Loss to EBITDA:
|
(Unaudited)
|
|
Net loss
|
$
|
(1,907)
|
|
$
|
(8,778)
|
|
Income tax
benefit
|
|
(589)
|
|
|
(7,375)
|
|
Net interest
expense
|
|
16,846
|
|
|
16,791
|
|
Depreciation and
amortization
|
|
51,705
|
|
|
49,781
|
|
EBITDA
|
$
|
66,055
|
|
$
|
50,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
presents a reconciliation of net income to "Adjusted EBITDA," which
means our EBITDA excluding the gain or loss on disposal of
assets:
|
|
Three months ended
March 31,
|
|
2014
|
|
2013
|
Reconciliation of
Net Loss to Adjusted EBITDA:
|
(Unaudited)
|
Net loss
|
$
|
(1,907)
|
|
$
|
(8,778)
|
Income
tax benefit
|
|
(589)
|
|
|
(7,375)
|
Net
interest expense
|
|
16,846
|
|
|
16,791
|
Depreciation and amortization
|
|
51,705
|
|
|
49,781
|
Loss
(gain) on disposal of assets
|
|
$
(679)
|
|
|
$
1,089
|
Adjusted
EBITDA
|
$
|
65,376
|
|
$
|
51,508
|
SOURCE Basic Energy Services, Inc.