Basic Energy Services, Inc. (NYSE: BAS) (“Basic” or the
“Company”) today announced its financial and operating results for
the second quarter ended June 30, 2019.
SECOND QUARTER 2019 HIGHLIGHTS
- Reported revenue of $189.8 million, net
loss of $27.8 million and loss per share of $1.02;
- Increased Adjusted EBITDA1 by 14.7% to
$16.5 million, as compared to the first quarter of 2019, and
generated cash from operations of $11.3 million;
- Cash and cash equivalents totaled $53.7
million at June 30, 2019, with no amount drawn on the ABL
facility;
- Midstream water disposal volumes
increased 4% sequentially to a record 10.0 million barrels,
32% of which were delivered via pipeline; and
- Targeted cost cutting resulted in
significant margin expansion, with Completion & Remedial
segment leading those improvements with direct margins of 24%, up
from 17% in the first quarter.
Second quarter 2019 revenue decreased 3.7% sequentially to
$189.8 million from $197.2 million in the first quarter of
2019. In the second quarter of 2018, Basic generated
$253.4 million in revenue.
For the second quarter of 2019, Basic reported a net loss of
$27.8 million, or a loss of $1.02 per basic and diluted share. This
result is compared to a net loss of $27.5 million, or a loss of
$1.02 per basic and diluted share for the first quarter of 2019,
and a net loss of $40.1 million, or a loss of $1.51 per basic and
diluted share in the second quarter of 2018.
Adjusted EBITDA1 was $16.5 million or 8.7% of revenues for the
second quarter of 2019, compared to $14.4 million, or 7.3% of
revenues in the first quarter of 2019. In the second quarter of
2018, Basic generated Adjusted EBITDA1 of $27.0 million, or 10.6%
of revenues. Among others, adjustments to EBITDA in the second
quarter of 2019 include professional fees related to due diligence
for an unsuccessful M&A transaction of $1.2 million.
Please refer to "Supplemental Non-GAAP Financial Measures" below
for further explanation and a full reconciliation of Adjusted
EBITDA.
As of June 30, 2019, the Company had total liquidity of $114.0
million, which included cash and cash equivalents of $53.7 million
and borrowing capacity under its undrawn senior secured revolving
credit facility of $60.3 million.
Roe Patterson, President and CEO, stated, “While revenues
contracted by almost 4% sequentially, we are pleased to have
improved margins by 140 basis points and increased Adjusted EBITDA1
by 15% from the first quarter of this year. Aggressive cost cutting
resulted in a greater than 600 basis point increase in margins for
Completion & Remedial Services, with our Pumping Services
Division leading the segment in margin improvement. Additionally,
while weakness in water logistics related to lower completions and
flowback activity impacted our business, the Company posted a
record for water disposal volumes of 10 million barrels, an
increase of 12% over year ago levels. Margins expanded in most of
our businesses, and G&A contracted by $1 million from the prior
quarter. Despite a weakening environment over the latter part of
the quarter, our recent strategic realignment and continued efforts
over the last several months to streamline operations and cut costs
is resulting in a significant improvement in direct margins. We do
not expect current commodity prices to foster increases in our
customers' capital spending for the second half of 2019 as energy
companies strive to operate within their own cash flow constraints.
Therefore, we expect these current activity levels to continue into
the third quarter, followed by typical seasonality in the fourth
quarter with shorter daylight hours and greater potential for
disruptions due to weather.
"We have worked diligently to maintain capital flexibility, as
we continue to moderate our capital spending plan to match the
updated market outlook. As a result, we now expect capital
expenditures in 2019 to total $58 million, a decrease
year-over-year of 34% and down from the $69 million expected at the
end of the first quarter of 2019. As we noted in May, we anticipate
that growth capital will be spent judiciously on long-lived water
midstream assets and ancillary equipment to support 24-hour rig
packages, which offer the highest potential return to the
Company.
"Based on our updated outlook for the year, we expect to
generate Adjusted EBITDA1 of $62 to $67 million, which excludes
$13.5 million of non-cash stock compensation expense and previously
disclosed non-recurring items of $2.2 million. Under the current
capital plan, we forecast a 2019 year-end cash balance of
approximately $50 million, with our ABL remaining undrawn. For the
second half of 2019, projected operating cash flows will cover our
planned capital expenditures, and we expect to have reduced our
debt by approximately $21 million from year end 2018 levels,”
concluded Patterson.
Second Quarter 2019 Business Segment Results
Well Servicing
Well Servicing revenues were $58.2 million during the
second quarter of 2019, a decrease of 3.9% sequentially from $60.5
million in the prior quarter. The decrease was primarily due to
decreased utilization, particularly in June, offset in part by
slightly increased pricing. Well Servicing revenues were $63.3
million in the second quarter of 2018. Severe weather and holidays
negatively impacted Well Servicing revenues by approximately $3.5
million in the second quarter of 2019.
The Well Servicing weighted average rig count was 308 at June
30, 2019, down from 310 at March 31, 2019 and June 30, 2018. Rig
hours were 155,200 in the second quarter of 2019, down 6% compared
to 165,000 hours in the first quarter of 2019 and down 15% from
181,600 hours in the second quarter of last year. Rig utilization
was 70% in the second quarter of 2019, down from 74% in the first
quarter of 2019 and down from 82% in the second quarter of 2018.
The Company averaged 19 24-hour service rig rental equipment
packages working for the second quarter of 2019. At the end of July
2019, the Company averaged 18 active equipment packages. During the
second quarter of 2018, the Company averaged 24 active equipment
packages. Revenue for the rental equipment portion of a 24-hour
package is recorded in our Completion & Remedial Services
segment.
Revenue per well servicing rig hour was up 2% to $375 in the
second quarter of 2019 compared to $367 in the previous quarter and
up 8% from $348 reported in the second quarter of 2018.
Segment profit in the second quarter of 2019 was $13.1 million,
a decrease of 1% compared to $13.3 million in the prior
quarter, and a decrease of 13% from $15.1 million during the second
quarter of 2018. Segment profit margin was 23% in the second
quarter of 2019, up from 22%, due largely to the effect of the
payroll tax reset in the first quarter of 2019 and continued cost
cutting. In the second quarter of 2018, segment profit margin was
24% of segment revenue.
Water Logistics
Water Logistics revenue in the second quarter of 2019 was $51.0
million, compared to $55.6 million in the prior quarter. During the
second quarter of 2018, this segment generated $59.7 million in
revenue. Weather and holidays negatively impacted Water Logistics
revenues by $1.3 million in the second quarter of 2019.
The weighted average number of fluid services trucks decreased
to 814 during the second quarter of 2019, compared to 818 during
the first quarter of 2019 and 903 during the second quarter of
2018. Trucking demand has decreased as increasing volumes of fluids
are moving through pipelines, a significantly lower-cost
alternative for our customers. Truck hours of 403,200 during the
second quarter of 2019 represented a decrease of 5% from the
424,100 generated in the first quarter of 2019 and a decrease of
17% compared to 486,800 in the same period in 2018.
Total pipeline water volumes disposed at Basic-owned saltwater
disposal wells ("Basic SWDs") increased 4% to 3.2 million barrels
during the second quarter of 2019 compared to 3.1 million
barrels during the first quarter of 2019. Pipeline disposal volumes
to Basic SWDs in the Permian Basin remained constant at 58% of
total water disposal volumes in the Permian Basin in the second
quarter of 2019 compared to the first quarter of 2019 and up from
39% in the second quarter of 2018.
Segment profit in the second quarter of 2019 decreased by 15% to
$15.5 million, compared to a profit of $18.3 million in the first
quarter of 2019. Segment profit margin decreased sequentially by
approximately 250 basis points to 30% due to lower demand related
to decreased production activity and lower flowback volumes during
the quarter. Segment profit in the same period in 2018 was
$15.7 million, or 26% of segment revenue.
Completion & Remedial Services
Completion & Remedial Services revenue increased 2% to
$78.1 million in the second quarter of 2019 from $76.8 in the
prior quarter. The increase in revenue was primarily due to a
slight increase in coiled tubing and pumping services. In the
second quarter of 2018, this segment generated $126.9 million in
revenue. Weather negatively impacted revenues by $2.1 million
in the second quarter of 2019.
At June 30, 2019, Basic had approximately 479,000 hydraulic
horsepower (“HHP”), down 10,000 from the previous quarter and down
from 517,000 at June 30, 2018. Weighted average HHP for the second
quarter of 2019 decreased to 486,000 from first quarter of 2019
levels of 503,000. The decrease in horsepower was mainly caused by
the moving of pumps from the Pumping Services Division to well
service operations to support 24-hour rig packages.
Segment profit in the second quarter of 2019 increased to
$18.4 million compared to $13.4 million in the prior quarter.
Segment margin for the second quarter of 2019 increased over 600
basis points to 24% compared to 17% during the previous quarter.
The increase in segment gross profit was due to the ongoing margin
expansion initiatives commenced in the first quarter of 2019, which
included significant cost cutting and streamlining of operations
and field offices. These improvements resulted in incremental
margins of over 400% for the segment from the first quarter. During
the second quarter of 2018, segment gross profit was $26.4 million,
or 21% of segment revenue.
Other Services
During the first quarter of 2019, Basic created an "Other
Services" segment, which combines its former Contract Drilling
segment with its manufacturing entity. This change was effective
January 1, 2019, and retrospectively for all periods presented.
Other Services revenue decreased by 39.2% to $2.6 million
during the second quarter of 2019 from $4.3 million in the prior
quarter. The decrease was related to decreased demand in the
Company's manufacturing line of business. During the second quarter
of 2018, after giving effect to Basic's realigned segments, this
segment generated $3.5 million in revenue. Basic marketed nine
drilling rigs during the second quarter and eleven during the first
quarter of 2019. Revenue per drilling day in the second quarter of
2019 was up 3% to $24,900, compared to $24,200 in the previous
quarter, and down 3% from $25,700 in the second quarter of
2018.
Rig operating days during the second quarter of 2019 decreased
by 22% to 90 compared to 115 in the prior quarter, resulting in rig
utilization of 11% during the second quarter of 2019 compared to
12% during the prior quarter. In the comparable period in 2018, rig
operating days were 91, resulting in a utilization rate of 9%.
Other Services segment loss in the second quarter of 2019 was
$0.3 million compared to profits of $0.3 million in the prior
quarter and $0.3 million in the second quarter of 2018. Segment
margin loss for the second quarter of 2019 was 13.2% compared to
segment margin profit of 8% in the prior quarter. Last year in the
comparable period, segment margin was 7%. The margin decline is
mainly due to decreased revenues in the manufacturing line of
business within the segment. Contract drilling stand-alone margins
were 20% in the second quarter of 2019, flat with the first quarter
of 2019 and down from 25% in the second quarter of 2018.
General & Administrative Expense
Reported general and administrative (“G&A”) expense
decreased to $34.8 million in the second quarter of 2019 compared
to $35.5 million in the first quarter of 2019 and down from
$51.5 million in the second quarter of 2018. Non-cash stock
compensation, included in G&A, was $3.3 million for the second
quarter of 2019, consistent with $3.3 million in the first quarter
of 2019. Second quarter 2018 non-cash stock compensation, included
in G&A, was $9.6 million. Excluding non-cash stock
compensation and nonrecurring professional fees related to due
diligence for unsuccessful M&A activities of $1.2 million,
G&A for the second quarter of 2019 decreased $1.0 million from
the previous quarter, with further annualized cost reductions
expected for the remainder of 2019.
Interest Expense
Net interest expense for the second quarter of 2019 was $10.4
million, which included interest on Basic’s Senior Secured Notes,
the ABL facility, capital leases and other financings. Net interest
expense in the first quarter of 2019 was $10.5 million, and $12.7
million in the second quarter of 2018.
Income Taxes
Tax benefit for the second quarter of 2019 was $28,000. The
effective tax benefit rate was 0% in the second quarter of 2019
compared to of 6.3% in the prior quarter. The tax benefit of $0.3
million in the second quarter of 2018 translated into an effective
tax benefit rate of 1%.
During the first quarter of 2019, Basic filed an amended 2007
federal tax return under Sections 172(b)(1)(C) and 172(f) of the
Internal Revenue Code of 1986, as amended, which allowed the
Company to carryback workers’ compensation expenses in years we had
Net Operating Losses ("NOL") for up to 10 years. The Company
carried back approximately $5.3 million of expense to 2007, which
allowed Basic to claim a refund of $1.9 million of 2007 taxes. The
net effect of this transaction was a tax benefit and a reduction of
our NOL of $1.9 million in the quarter ended March 31, 2019.
As of June 30, 2019, the Company had approximately $843.5
million of NOL carryforwards for federal income tax purposes. The
Company provides a valuation allowance when it is more likely than
not that some portion of the deferred tax assets will not be
realized. As of June 30, 2019, a valuation allowance of $184.0
million was recorded against the Company's net deferred tax assets
for all jurisdictions that are not expected to be realized.
Cash and Total Liquidity
As of June 30, 2019, the Company had total liquidity of $114.0
million, which included cash and cash equivalents of $53.7 million
and borrowing capacity under the ABL facility of $60.3 million. The
Company was undrawn on the ABL facility at the end of the second
quarter of 2019.
Basic reported cash and cash equivalents of $63.8 million and
availability under the ABL facility of $66.2 million at March
31, 2019, and reported cash and cash equivalents of $30.8 million
and availability under its prior ABL facility of $14.7 million
at June 30, 2018.
During the first half of 2019, cash provided by operations was
$11.3 million, compared to cash provided by operations of
$25.1 million in the comparable period in 2018. Basic used
$21.5 million to decrease accounts payable in the first half
of 2019, compared to $6.8 million provided by increasing accounts
payable in the first half of 2018. Cash used in investing
activities was $28.4 million in the first half of 2019, compared to
cash used in investing activities of $30.7 million in the first
half of 2018. Cash used in financing activities during the first
half of 2019 was $19.5 million compared to cash used in financing
activities of $2.8 million in the same period of 2018. Payments on
capital leases during the six months ended June 30, 2019 were $17.3
million, compared to payments on capital leases of $27.1 million in
the comparative period of 2018.
Share Repurchase Plan
On May 31, 2019, Basic announced that its Board of Directors had
authorized the repurchase of up to $5.0 million of common stock in
the open market. This authorization expires on June 4, 2020, and
the timing and actual number of shares repurchased will depend on a
variety of factors, including the stock price, corporate and
regulatory requirements and other market and economic conditions.
The share repurchase program may be suspended or discontinued as
determined by the Board of Directors. As of June 30, 2019, Basic
had repurchased 596,194 shares for a total of
$1.3 million.
Capital Expenditures
Total capital expenditures during the second quarter of 2019
were approximately $18.3 million, including $1.4 million
for capital leases, and an increase in accounts payable related to
capital expenditures of approximately $2.3 million.
Additionally, we booked $2.3 million in proceeds from dispositions
during the quarter, partially offsetting our cash capital
expenditures. We currently anticipate 2019 capital expenditures of
approximately $58 million, including approximately
$22 million of expansion capital, of which $8 million will be
funded by capital leases and other financings. The focus of our
expansion capital will be strengthening our position in the growing
and attractive water disposal midstream services line of business.
Approximately 65% of our 2019 growth capital is expected to be
allotted to long-lived water midstream infrastructure projects.
These projects are expected to continue delivering improvements in
disposal water volumes, Basic SWD utilization and high margin
contribution as oil production and residual water disposal demand
in our operating areas continues to increase.
Conference Call
Further details are provided in the presentation for our
quarterly conference call to review the second quarter 2019
results, available in the investor relations section of our
corporate website. The Company will host a conference call to
discuss its second quarter 2019 results on Thursday, August 1,
2019, at 9:00 a.m. Eastern Time (8:00 a.m. Central Time). To access
the call, please dial (412) 902-0003 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 the
Company's corporate website, www.basicenergyservices.com.
A telephonic replay of the conference call will be available
until August 8, 2019, and may be accessed by calling (201) 612-7415
and using pass code 13691698#. 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 areas. The Company’s operations are managed regionally
and are concentrated in major United States onshore oil-producing
regions located in Texas, New Mexico, Oklahoma, Arkansas, Kansas,
Louisiana, Wyoming, North Dakota, California and Colorado. Our
operations are focused in liquids-rich basins that have
historically exhibited strong drilling and production economics in
recent years. Specifically, we have a significant presence in the
Permian Basin, Powder River Basin, and the Bakken, Eagle Ford, and
Denver-Julesburg shales. We provide our services to a diverse group
of over 2,000 oil and gas companies. 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. Forward-looking
statements are not statements of historical fact and reflect
Basic’s current views about future events. The words "believe,"
"estimate," "expect," "anticipate," "project," "intend," "seek,"
"could," "should," "may," "potential" and similar expressions are
intended to identify forward-looking statements. However, the
absence of these words does not mean that the statements are not
forward-looking. Although Basic believes the expectations reflected
in its forward-looking statements are reasonable and are based on
reasonable assumptions and estimates, certain risks and
uncertainties could cause actual results to differ materially from
the projections, anticipated results or other expectations
expressed in this release and the presentation. These risks and
uncertainties include, without limitation, our ability to
successfully execute, manage and integrate acquisitions, reductions
in our customers’ capital budgets, our own capital budget,
limitations on the availability of capital or higher costs of
capital and volatility in commodity prices for crude oil and
natural gas. Additional important risk factors that could cause
actual results to differ materially from expectations are disclosed
in Item 1A of the Company’s most recent Annual Report on Form 10-K
and other filings with the Securities and Exchange Commission.
While Basic makes these statements and projections in good faith,
neither Basic nor its management can guarantee that the
transactions will be consummated or that anticipated future results
will be achieved. Any forward-looking statement speaks only as of
the date on which such statement is made and 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, except as required by applicable law.
1Adjusted EBITDA and EBITDA are not measures determined in
accordance with United States generally accepted accounting
principles (“GAAP”). See “Supplemental Non-GAAP Financial Measures”
below for further explanation and reconciliations to the most
directly comparable financial measures calculated and presented in
accordance with GAAP.
Basic Energy
Services, Inc. Consolidated Statements of Operations and
Other Financial Data (in thousands, except per share
amounts) Three Months Ended June 30, Six
Months Ended June 30, 2019
2018 2019 2018
(Unaudited) (Unaudited) Income Statement
Data: Revenues: Completion & Remedial Services $ 78,061 $
126,948 $ 154,895 $ 244,545 Well Servicing 58,168 63,268 118,683
120,219 Water Logistics 51,031 59,679 106,632 116,188 Other
Services 2,587 3,474 6,839
7,082 Total revenues 189,847
253,369 387,049 488,034
Expenses: Completion & Remedial Services 59,660 100,528 123,092
190,187 Well Servicing 45,047 48,200 92,243 94,712 Water Logistics
35,529 44,008 72,828 84,931 Other Services 2,929 3,223 6,843 7,445
General and administrative(a) 34,803 51,460 70,325 92,468
Depreciation and amortization 28,991 31,161 56,489 61,396 (Gain)
loss on disposal of assets 342 1,921
1,797 3,700 Total expenses 207,301
280,501 423,617 534,839 Operating loss (17,454 ) (27,132 ) (36,568
) (46,805 ) Other income (expense): Interest expense (10,518 )
(12,806 ) (21,274 ) (24,089 ) Interest income 115 60 360 87 Other
income 52 102 350
441 Loss before income taxes (27,805 ) (39,776 ) (57,132 )
(70,366 ) Income tax benefit (expense) 28 (278
) 1,879 (219 ) Net loss $ (27,777 ) $ (40,054
) $ (55,253 ) $ (70,585 ) Loss per share of common stock: Basic
share $ (1.02 ) $ (1.51 ) $ (2.04 ) $ (2.67 ) Diluted share $ (1.02
) $ (1.51 ) $ (2.04 ) $ (2.67 )
Other Financial Data:
EBITDA1 $ 11,589 $ 4,131 $ 20,271 $ 15,032 Adjusted EBITDA1 16,478
26,976 30,825 50,261 Capital expenditures: Property and equipment $
14,474 $ 16,286 $ 33,359 $ 31,698 Capital leases 1,444 7,726 7,588
11,047
As of June 30, December 31,
2019 2018 (Unaudited) (Audited)
Balance Sheet
Data: Cash and cash equivalents $ 53,714 $ 90,300 Net property
and equipment 429,689 448,801 Total assets 701,823 761,777 Total
long-term debt 316,806 322,701 Total stockholders' equity 169,096
219,428 1Adjusted EBITDA and EBITDA are not measures determined in
accordance with United States generally accepted accounting
principles (“GAAP”). See “Supplemental Non-GAAP Financial Measures”
below for further explanation and reconciliations to the most
directly comparable financial measures calculated and presented in
accordance with GAAP. (a) Includes approximately $3,330,000 and
$9,626,000 of non-cash compensation for the three months ended June
30, 2019 and 2018, respectively, and $6,604,000 and $16,424,000 for
the six months ended June 30, 2019 and 2018, respectively.
Three months ended June 30, Six
months ended June 30, 2019
2018 2019 2018
Segment Data: (Unaudited) Completion &
Remedial Services Total hydraulic horsepower (HHP) 479,000
517,000 479,000 520,000 Total frac HHP 344,500 410,000 344,500
411,000 Coiled tubing units 17 18 17 18 Rental and fishing tool
stores 15 16 15 16 Segment profits as a percent of revenue 24 % 21
% 21 % 22 %
Water Logistics Weighted average number
of fluid service trucks 814 903 816 932 Truck hours (000's) 403.2
486.8 827.3 966.4 Pipeline volumes (000's) 3,170 2,064 6,220 3,615
Segment revenues (000's) $ 51,031 $ 59,679 $ 106,632 $ 116,188
Segment profits as a percent of revenue 30 % 26 % 32 % 27 %
Well Servicing Weighted average number of rigs 308 310 309
310 Rig hours (000's) 155.2 181.6 320.2 350.1 Rig utilization rate
70 % 82 % 72 % 79 % Revenue per rig hour, excluding manufacturing $
375 $ 348 $ 371 $ 343 Well servicing rig profit per rig hour $ 85 $
83 $ 83 $ 73 Segment profits as a percent of revenue 23 % 24 % 22 %
21 %
Other Services Weighted average number of rigs 9
11 10 11 Rig operating days 90 91 205 266 Drilling utilization rate
11 % 9 % 12 % 13 % Revenue per day (000's) $ 24.9 $ 25.7 $ 24.5 $
20.1 Segment profits as a percent of revenue (13 )% 7 % 0 % (5 )%
Contract Drilling profits as a percent of revenue 20 % 25 % 20 % 20
%
Supplemental Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
This earnings release contains references to the non-GAAP
financial measure of earnings (net income) before interest, which
includes losses on debt extinguishment, 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 and amortization, the
gain or loss on disposal of assets, non-cash stock compensation,
contemplated deal costs, executive bonus payments, strategic
consulting and realignment costs, costs for a withdrawn bond
offering, bad debt, executive retirement costs, and professional
fees for tax consulting, 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,
the Company 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;
- Adjusted EBITDA does not reflect
Basic’s non-cash stock compensation;
- Adjusted EBITDA does not reflect
Basic’s professional fees related to tax recovery during the six
months ended June 30, 2019;
- Adjusted EBITDA does not reflect
Basic’s one-time costs incurred for contemplated mergers and
acquisitions that we did not pursue during the six months ended
June 30, 2019; and one-time costs for a withdrawn bond offering
during the six months ended June 30, 2018;
- Adjusted EBITDA does not reflect
Basic’s executive bonus expense for 2017 that was approved by the
Compensation Committee of the Board of Directors and paid during
the six months ended June 30, 2018;
- Adjusted EBITDA does not reflect
Basic's strategic consulting fees during the six months ended June
30, 2018;
- Adjusted EBITDA does not reflect the
write-off of certain bad debt related to a single customer incurred
during the six months ended June 30, 2018;
- Adjusted EBITDA does not reflect
Basic's accrual for expected Texas state sales tax audit settlement
accrued during the six months ended June 30, 2018;
- Adjusted EBITDA does not reflect
payments for executive retirements during the six months ended June
30, 2018;
- Other companies in the industry may
calculate Adjusted EBITDA differently than Basic does, limiting its
usefulness as a comparative measure.
The following table presents a reconciliation of net loss to
EBITDA (unaudited, in thousands):
Three months ended June 30, Six months
ended June 30, 2019
2018 2019
2018 Reconciliation of Net Loss to EBITDA: Net loss $
(27,777 ) $ (40,054 ) $ (55,253 ) $ (70,585 ) Income tax benefit $
(28 ) 278 (1,879 ) 219 Net interest expense $ 10,403 12,746 20,914
24,002 Depreciation and amortization $ 28,991 31,161
56,489 61,396 EBITDA $ 11,589
$ 4,131 $ 20,271 $ 15,032
The following table presents a reconciliation of net loss to
Adjusted EBITDA (unaudited, in thousands):
Three months ended June 30, Six months
ended June 30, 2019
2018 2019 2018
Reconciliation of Net Loss to Adjusted EBITDA: Net loss $
(27,777 ) $ (40,054 ) $ (55,253 ) $ (70,585 ) Income tax benefit
(28 ) 278 (1,879 ) 219 Net interest expense 10,403 12,746 20,914
24,002 Depreciation and amortization 28,991 31,161 56,489 61,396
(Gain) loss on disposal of assets 342 1,921 1,797 3,700 Non cash
stock compensation 3,330 6,036 6,604 12,834 Contemplated deal costs
1,217 — 1,217 — Professional fees — — 936 — Audit related state
sales and use tax — 5,983 — 5,983 One-time executive compensation
costs — 3,855 — 5,459 Bad debt — 3,100 — 3,100 Costs for withdrawn
bond offering — — — 1,753 Strategic consulting and realignment
— 1,950 — 2,400
Adjusted EBITDA $ 16,478 $ 26,976 $ 30,825 $ 50,261
The following table presents a reconciliation of projected 2019
net loss to Adjusted EBITDA and full year 2018 Adjusted EBITDA
(unaudited, in thousands):
2019 2018 Outlook Actual
Reconciliation of Net Loss to Adjusted EBITDA: Net loss $ (111,000)
~ (106,000) $ (144,597) Income tax (benefit) expense ~ (1,879) 227
Net interest expense ~ 41,400 45,489 Depreciation and amortization
~ 114,200 126,417 (Gain) loss on disposal of assets ~ 3,400 (2,598)
Non cash stock compensation ~13,500 23,426 Loss on extinguishment
of debt — 26,429 Audit-related state sales and use tax — 5,983
Contemplated deal costs ~ 1,220 1,753 Other non-recurring &
special items ~ 1,000 14,443 Adjusted EBITDA $ 62,000 ~ 67,000 $
96,972
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190731006036/en/
Trey StolzVP Investor RelationsBasic Energy Services,
Inc.817-334-4100
Basic Energy Services (NYSE:BAS)
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