HOUSTON, Nov. 3, 2020 /PRNewswire/ -- Independence
Contract Drilling, Inc. (the "Company" or "ICD") (NYSE: ICD) today
reported financial results for the three months ended September 30, 2020.
Third quarter 2020 Highlights
- Net loss of $15.2 million, or
$2.67 per share.
- Adjusted net loss, as defined below, of $15.5 million, or $2.73 per share.
- Adjusted EBITDA loss, as defined below, of $0.5 million.
- Net debt, excluding finance leases and net of deferred
financing costs, of $118.3
million.
- Marketed fleet utilization of 17%.
- Fully burdened margin of $3,923
per day.
In the third quarter of 2020, the Company reported revenues of
$10.2 million, a net loss of
$15.2 million, or $2.67 per share, adjusted net loss (defined
below) of $15.5 million, or
$2.73 per share, and adjusted EBITDA
loss (defined below) of $0.5
million. These results compare to revenues of
$45.1 million, a net loss of
$10.5 million, or $2.80 per share, adjusted net loss of
$7.9 million, or $2.09 per share, and adjusted EBITDA of
$7.7 million in the third quarter of
2019, and revenues of $21.4 million,
a net loss of $10.1 million, or
$2.52 per share, an adjusted net loss
of $11.0 million, or $2.73 per share, and adjusted EBITDA of
$4.0 million in the second quarter of
2020.
Chief Executive Officer Anthony
Gallegos commented, "Undoubtedly, our third quarter results
reflected the full effects of the unprecedented destruction in oil
and gas demand caused by the COVID-19 pandemic. However, ICD
also began to reassemble the pieces during the third quarter.
We are a leader in the Haynesville and East Texas natural gas plays, and this is
paying dividends as improving natural gas commodity pricing drove
incremental demand and rig reactivations for us late in the
quarter. As a result, we exceeded expectations with respect
to drilling rig contracting activity and overall cost control
during the quarter. Also, we continued to advance our
drilling optimization initiatives, and on the ESG front I am very
pleased that six of our eight rigs operating today are using or
planning to use our ShaleDriller rigs' dual fuel
capabilities. Lastly, we improved our liquidity profile by
completing our $11 million ATM
offering, raising the final $3.6
million proceeds during the third quarter, and exited the
quarter with total financial liquidity of $39 million, including $18.8 million in cash.
Operationally, we exited the third quarter with six rigs
drilling and I am pleased to announce we have since reactivated two
additional rigs that are now operating representing a 33% increase
in our contracted rig count since June 30th. Looking forward,
based upon improving natural gas prices and stabilized to improving
oil prices, as well as our current identified opportunity set, we
expect to reactivate additional rigs during the remainder of the
year and into the first half of 2021."
Quarterly Operational Results
In the third quarter of 2020, the Company's marketed fleet
operated at 17% utilization and recorded 460 revenue days, compared
to 76% utilization and 1,943 revenue days in the third quarter of
2019, and 32% utilization and 834 revenue days in the second
quarter of 2020.
Operating revenues in the third quarter of 2020 totaled
$10.2 million, compared to
$45.1 million in the third quarter of
2019 and $21.4 million in the second
quarter of 2020. Included in operating revenues were
$1.2 million and $2.2 million of early termination revenue
recognized during the third and second quarters of 2020,
respectively. Excluding the impacts from early termination
revenue, revenue per day in the third quarter of 2020 was
$18,078, compared to $20,559 in the third quarter of 2019 and
$19,741 in the second quarter of
2020. Sequential declines in revenue per day were driven by
the expiration of higher-dayrate legacy contracts during the
quarter and a higher proportion of rigs drilling at prevailing spot
dayrates.
Operating costs in the third quarter of 2020 totaled
$8.7 million, compared to
$34.2 million in the third quarter of
2019 and $14.1 million in the second
quarter of 2020. Fully burdened operating costs were
$14,155 per day in the third quarter
of 2020, compared to $14,914 in the
third quarter of 2019 and $12,741 in
the second quarter of 2020. Sequential increases in operating
costs per day were driven by inefficiencies associated with reduced
operating days during the third quarter of 2020 as well as one-time
items benefiting costs during the second quarter of 2020.
Excluding the impact from early termination revenues and
decommissioning and reactivation costs, fully burdened rig
operating margins in the third quarter of 2020 were $3,923 per day, compared to $5,645 per day in the third quarter of 2019 and
$7,000 per day in the second quarter
of 2020.
Selling, general and administrative expenses in the third
quarter of 2020 were $2.8 million
(including $0.7 million of non-cash
stock-based compensation), compared to $3.8
million (including $0.6
million of non-cash stock-based compensation) in the third
quarter of 2019 and $3.5 million
(including $0.3 million of non-cash
stock-based compensation) in the second quarter of 2020.
Sequential decreases in selling, general and administrative
expenses were associated with cost cutting initiatives that
impacted the entire third quarter.
Drilling Operations Update
The Company exited the third quarter of 2020 with six rigs
earning revenues under drilling contracts. As of October 31, 2020, the Company has reactivated two
additional rigs that commenced operations. The Company's
backlog of drilling contracts with original terms of six months or
longer was $12.7 million as of
September 30, 2020, representing 2.22 rig years of
activity. Approximately 56% of this backlog is expected to be
realized during the remainder of 2020.
Capital Expenditures and Liquidity Update
Cash outlays for capital expenditures in the third quarter of
2020 were $0.6 million, offset by
asset sales and recoveries of $1.4
million.
As of September 30, 2020, the Company had cash on hand of
$18.8 million, an undrawn revolving
line of credit with availability of $5.2
million based upon eligible accounts receivable,
$130 million principal amount
outstanding under its term loan, and $10
million outstanding under a loan issued under the Payroll
Protection Program ("PPP") under the CARES Act. The term loan
includes a committed $15 million
accordion that remains undrawn.
During the third quarter of 2020, the Company completed its
at-the-market ("ATM") common stock offering and issued 1,163,611
shares of common stock pursuant to this program at a weighted
average gross selling price of $3.13
per share, resulting in gross proceeds to the Company of
$3.6 million.
Conference Call Details
A conference call for investors will be held today,
November 3, 2020, at 11:00 a.m. Central
Time (12:00 p.m. Eastern Time)
to discuss the Company's third quarter 2020 results.
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
10148733. The replay will be available until November 10, 2020.
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)
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
September 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
18,813
|
|
|
$
|
5,206
|
|
Accounts receivable,
net
|
9,316
|
|
|
35,834
|
|
Inventories
|
1,162
|
|
|
2,325
|
|
Assets held for
sale
|
1,700
|
|
|
8,740
|
|
Prepaid expenses and
other current assets
|
3,725
|
|
|
4,640
|
|
Total current
assets
|
34,716
|
|
|
56,745
|
|
Property, plant and
equipment, net
|
418,557
|
|
|
457,530
|
|
Other long-term
assets, net
|
2,444
|
|
|
2,726
|
|
Total
assets
|
$
|
455,717
|
|
|
$
|
517,001
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Liabilities
|
|
|
|
Current portion of
long-term debt (1)
|
$
|
3,141
|
|
|
$
|
3,685
|
|
Accounts
payable
|
3,595
|
|
|
22,674
|
|
Accrued
liabilities
|
10,438
|
|
|
16,368
|
|
Merger consideration
payable to an affiliate
|
—
|
|
|
3,022
|
|
Current portion of
contingent consideration
|
—
|
|
|
2,814
|
|
Total current
liabilities
|
17,174
|
|
|
48,563
|
|
Long-term debt
(2)
|
143,440
|
|
|
134,941
|
|
Merger consideration
payable to an affiliate
|
2,902
|
|
|
—
|
|
Deferred income taxes,
net
|
568
|
|
|
652
|
|
Other long-term
liabilities
|
1,912
|
|
|
1,249
|
|
Total
liabilities
|
165,996
|
|
|
185,405
|
|
Stockholders'
equity
|
|
|
|
Common stock, $0.01 par
value, 50,000,000 shares authorized; 6,245,298 and 3,876,196 shares
issued, respectively, and 6,166,720 and 3,812,050 shares
outstanding, respectively
|
62
|
|
|
38
|
|
Additional paid-in
capital
|
517,540
|
|
|
505,831
|
|
Accumulated
deficit
|
(223,968)
|
|
|
(170,426)
|
|
Treasury stock, at cost, 78,589 shares and 64,146 shares,
respectively
|
(3,913)
|
|
|
(3,847)
|
|
Total stockholders'
equity
|
289,721
|
|
|
331,596
|
|
Total liabilities and
stockholders' equity
|
$
|
455,717
|
|
|
$
|
517,001
|
|
|
(1) As of
September 30, 2020 and December 31, 2019, current portion
of long-term debt includes $3.1 million and $3.7 million,
respectively, of finance lease obligations.
|
|
(2) As of
September 30, 2020 and December 31, 2019, long-term debt
includes $6.3 million and $7.5 million, respectively, of long-term
finance lease obligations. As of September 30, 2020,
long-term debt also includes $10.0 million related to the PPP
Loan.
|
INDEPENDENCE
CONTRACT DRILLING, INC.
Unaudited
(in thousands,
except par value and share data)
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
10,224
|
|
|
$
|
45,073
|
|
|
$
|
21,381
|
|
|
$
|
70,099
|
|
|
$
|
158,310
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
Operating
costs
|
8,663
|
|
|
34,246
|
|
|
14,095
|
|
|
52,987
|
|
|
111,032
|
|
Selling, general and
administrative
|
2,796
|
|
|
3,755
|
|
|
3,544
|
|
|
10,101
|
|
|
11,308
|
|
Severance and
merger-related expenses
|
—
|
|
|
320
|
|
|
—
|
|
|
1,076
|
|
|
2,688
|
|
Depreciation and
amortization
|
10,767
|
|
|
11,154
|
|
|
11,055
|
|
|
33,338
|
|
|
33,838
|
|
Asset impairment,
net
|
—
|
|
|
1,966
|
|
|
—
|
|
|
16,619
|
|
|
9,839
|
|
(Gain) loss on
disposition of assets, net
|
(326)
|
|
|
265
|
|
|
(836)
|
|
|
(1,208)
|
|
|
3,503
|
|
Other
expense
|
—
|
|
|
122
|
|
|
—
|
|
|
—
|
|
|
377
|
|
Total costs and
expenses
|
21,900
|
|
|
51,828
|
|
|
27,858
|
|
|
112,913
|
|
|
172,585
|
|
Operating
loss
|
(11,676)
|
|
|
(6,755)
|
|
|
(6,477)
|
|
|
(42,814)
|
|
|
(14,275)
|
|
Interest
expense
|
(3,554)
|
|
|
(3,560)
|
|
|
(3,654)
|
|
|
(10,812)
|
|
|
(10,913)
|
|
Loss before income
taxes
|
(15,230)
|
|
|
(10,315)
|
|
|
(10,131)
|
|
|
(53,626)
|
|
|
(25,188)
|
|
Income tax (benefit)
expense
|
(31)
|
|
|
232
|
|
|
(11)
|
|
|
(84)
|
|
|
590
|
|
Net loss
|
$
|
(15,199)
|
|
|
$
|
(10,547)
|
|
|
$
|
(10,120)
|
|
|
$
|
(53,542)
|
|
|
$
|
(25,778)
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(2.67)
|
|
|
$
|
(2.80)
|
|
|
$
|
(2.52)
|
|
|
$
|
(11.91)
|
|
|
$
|
(6.82)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
5,703
|
|
|
3,770
|
|
|
4,018
|
|
|
4,495
|
|
|
3,780
|
|
INDEPENDENCE
CONTRACT DRILLING, INC.
Unaudited
(in thousands,
except par value and share data)
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
Net loss
|
$
|
(53,542)
|
|
|
$
|
(25,778)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities
|
|
|
|
Depreciation and
amortization
|
33,338
|
|
|
33,838
|
|
Asset impairment,
net
|
16,619
|
|
|
9,839
|
|
Stock-based
compensation
|
1,554
|
|
|
1,385
|
|
(Gain) loss on
disposition of assets, net
|
(1,208)
|
|
|
3,503
|
|
Deferred income
taxes
|
(84)
|
|
|
590
|
|
Amortization of
deferred financing costs
|
709
|
|
|
610
|
|
Bad debt expense
(recovery)
|
16
|
|
|
(42)
|
|
Changes in operating
assets and liabilities
|
|
|
|
Accounts
receivable
|
26,985
|
|
|
9,265
|
|
Inventories
|
(7)
|
|
|
(586)
|
|
Prepaid expenses and
other assets
|
660
|
|
|
3,330
|
|
Accounts payable and
accrued liabilities
|
(17,948)
|
|
|
(8,786)
|
|
Net cash provided by
operating activities
|
7,092
|
|
|
27,168
|
|
Cash flows from
investing activities
|
|
|
|
Purchases of
property, plant and equipment
|
(12,688)
|
|
|
(34,974)
|
|
Proceeds from the
sale of assets
|
2,445
|
|
|
7,806
|
|
Proceeds from
insurance claims
|
—
|
|
|
1,000
|
|
Collection of
principal on note receivable
|
145
|
|
|
—
|
|
Net cash used in
investing activities
|
(10,098)
|
|
|
(26,168)
|
|
Cash flows from
financing activities
|
|
|
|
Borrowings under
Revolving Credit Facility
|
11,038
|
|
|
2,511
|
|
Repayments under
Revolving Credit Facility
|
(11,038)
|
|
|
(5,077)
|
|
Borrowings under PPP
Loan
|
10,000
|
|
|
—
|
|
Proceeds from
issuance of common stock
|
10,978
|
|
|
—
|
|
Common stock issuance
costs
|
(721)
|
|
|
(177)
|
|
Purchase of treasury
stock
|
(66)
|
|
|
(328)
|
|
RSUs withheld for
taxes
|
(79)
|
|
|
—
|
|
Financing costs paid
under Term Loan Facility
|
—
|
|
|
(5)
|
|
Financing costs paid
under Revolving Credit Facility
|
—
|
|
|
(22)
|
|
Payments for finance
lease obligations
|
(3,499)
|
|
|
(1,003)
|
|
Net cash provided by
(used in) financing activities
|
16,613
|
|
|
(4,101)
|
|
Net increase
(decrease) in cash and cash equivalents
|
13,607
|
|
|
(3,101)
|
|
Cash and cash
equivalents
|
|
|
|
Beginning of
period
|
5,206
|
|
|
12,247
|
|
End of
period
|
$
|
18,813
|
|
|
$
|
9,146
|
|
|
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
Supplemental
disclosure of cash flow information
|
|
|
|
Cash paid during the
period for interest
|
$
|
10,275
|
|
|
$
|
10,496
|
|
Supplemental
disclosure of non-cash investing and financing
activities
|
|
|
|
Change in property,
plant and equipment purchases in accounts payable
|
$
|
(7,488)
|
|
|
$
|
(1,320)
|
|
Additions to
property, plant and equipment through finance leases
|
$
|
3,326
|
|
|
$
|
2,181
|
|
Extinguishment of
finance lease obligations from sale of assets classified as finance
leases
|
$
|
(1,504)
|
|
|
$
|
(141)
|
|
Transfer of assets
from held and used to held for sale
|
$
|
—
|
|
|
$
|
(5,327)
|
|
Transfer from
inventory to fixed assets
|
$
|
—
|
|
|
$
|
(357)
|
|
The following table provides various financial and operational
data for the Company's operations for the three months ending
September 30, 2020 and 2019 and June 30, 2020, and the
nine months ending September 30, 2020 and 2019. 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Number of marketed
rigs end of period (1)
|
29
|
|
|
29
|
|
|
29
|
|
|
29
|
|
|
29
|
|
Rig operating days
(2)
|
460
|
|
|
1,943
|
|
|
834
|
|
|
3,032
|
|
|
7,001
|
|
Average number of
operating rigs (3)
|
5.0
|
|
|
21.1
|
|
|
9.2
|
|
|
11.1
|
|
|
25.6
|
|
Rig utilization
(4)
|
17
|
%
|
|
76
|
%
|
|
32
|
%
|
|
38
|
%
|
|
85
|
%
|
Average revenue per
operating day (5)
|
$
|
18,078
|
|
|
$
|
20,559
|
|
|
$
|
19,741
|
|
|
$
|
19,536
|
|
|
$
|
20,738
|
|
Average cost per
operating day (6)
|
$
|
14,155
|
|
|
$
|
14,914
|
|
|
$
|
12,741
|
|
|
$
|
14,049
|
|
|
$
|
14,034
|
|
Average rig margin
per operating day
|
$
|
3,923
|
|
|
$
|
5,645
|
|
|
$
|
7,000
|
|
|
$
|
5,487
|
|
|
$
|
6,704
|
|
|
(1) Marketed
rigs exclude idle rigs that will not be reactivated until upgrades
or conversions are complete.
|
|
(2) 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.
|
|
(3) 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.
|
|
(4) Rig
utilization is calculated as rig operating days divided by the
total number of days our marketed drilling rigs are available
during the applicable period.
|
|
(5) 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 (i)
out-of-pocket costs paid by customers of $0.8 million, $4.8 million
and $2.7 million during the three months ended September 30,
2020 and 2019, and June 30, 2020, respectively, and $7.5
million and $11.2 million during the nine months ended
September 30, 2020 and 2019, respectively, (ii) revenues
associated with the amortization of intangible revenue acquired in
the Sidewinder merger of $1.1 million during the nine months ended
September 30, 2019, and (iii) early termination revenues of
$1.2 million, $0.3 million and $2.2 million during the three months
ended September 30, 2020 and 2019, and June 30, 2020,
respectively, and $3.3 million and $0.8 million during the nine
months ended September 30, 2020 and 2019, respectively.
The three and nine months ended September 30, 2020 and the
three months ended September 30, 2019 and June 30, 2020
did not include any intangible revenue.
|
|
(6) 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 paid by customers of $0.8
million, $4.8 million and $2.7 million during the three months
ended September 30, 2020 and 2019, and June 30, 2020,
respectively, and $7.5 million and $11.2 million during the nine
months ended September 30, 2020 and 2019, respectively, (ii)
overhead costs expensed due to reduced rig upgrade activity of $0.5
million, $0.2 million and $0.4 million during the three months
ended September 30, 2020 and 2019, and June 30, 2020,
respectively, and $1.5 million and $1.3 million during the nine
months ended September 30, 2020 and 2019, respectively, (iii)
new crew training costs of $0.1 million during the three months
ended September 30, 2019 and $0.2 million and $0.1
million during the nine months ended September 30, 2020 and
2019, respectively, (iv) rig de-commissioning costs associated with
stacking deactivated rigs of $0.2 million, $0.1 million and $0.3
million during the three months ended September 30, 2020 and
2019, and June 30, 2020, respectively, and $0.5 million and
$0.2 million during the nine months ended September 30, 2020
and 2019, respectively, and (v) rig reactivation costs of $0.8
million during the three and nine months ended September 30,
2020.
|
Non-GAAP Financial Measures
Adjusted net (loss) income, 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
"adjusted net (loss) income" as net (loss) income before: asset
impairment, net; (gain) loss on disposition of assets, net;
intangible revenue; severance and merger-related expenses; and
other adjustments. 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 facilities. Neither adjusted net (loss) income, 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) income, 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) income, 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) income,
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) income, 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) income, 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) income, 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)
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2020
|
|
2019
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
|
Amount
|
|
Per
Share
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(15,199)
|
|
|
$
|
(2.67)
|
|
|
$
|
(10,547)
|
|
|
$
|
(2.80)
|
|
|
$
|
(10,120)
|
|
|
$
|
(2.52)
|
|
|
$
|
(53,542)
|
|
|
$
|
(11.91)
|
|
|
$
|
(25,778)
|
|
|
$
|
(6.82)
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment, net
(1)
|
—
|
|
|
—
|
|
|
1,966
|
|
|
0.52
|
|
|
—
|
|
|
—
|
|
|
16,619
|
|
|
3.70
|
|
|
9,839
|
|
|
2.60
|
|
(Gain) loss on
disposition of assets, net (2)
|
(326)
|
|
|
(0.06)
|
|
|
265
|
|
|
0.07
|
|
|
(836)
|
|
|
(0.21)
|
|
|
(1,208)
|
|
|
(0.27)
|
|
|
3,503
|
|
|
0.93
|
|
Intangible revenue
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,079)
|
|
|
(0.28)
|
|
Severance and
merger-related expenses (4)
|
—
|
|
|
—
|
|
|
320
|
|
|
0.09
|
|
|
—
|
|
|
—
|
|
|
1,076
|
|
|
0.24
|
|
|
2,688
|
|
|
0.71
|
|
Other
expense
|
—
|
|
|
—
|
|
|
122
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377
|
|
|
0.10
|
|
Adjusted net
loss
|
$
|
(15,525)
|
|
|
$
|
(2.73)
|
|
|
$
|
(7,874)
|
|
|
$
|
(2.09)
|
|
|
$
|
(10,956)
|
|
|
$
|
(2.73)
|
|
|
$
|
(37,055)
|
|
|
$
|
(8.24)
|
|
|
$
|
(10,450)
|
|
|
$
|
(2.76)
|
|
Reconciliation of Net Loss to EBITDA and Adjusted
EBITDA:
|
(Unaudited)
|
|
(Unaudited)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2020
|
|
2019
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(15,199)
|
|
|
$
|
(10,547)
|
|
|
$
|
(10,120)
|
|
|
$
|
(53,542)
|
|
|
$
|
(25,778)
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
(31)
|
|
|
232
|
|
|
(11)
|
|
|
(84)
|
|
|
590
|
|
Interest
expense
|
3,554
|
|
|
3,560
|
|
|
3,654
|
|
|
10,812
|
|
|
10,913
|
|
Depreciation and
amortization
|
10,767
|
|
|
11,154
|
|
|
11,055
|
|
|
33,338
|
|
|
33,838
|
|
Asset impairment, net
(1)
|
—
|
|
|
1,966
|
|
|
—
|
|
|
16,619
|
|
|
9,839
|
|
EBITDA
|
(909)
|
|
|
6,365
|
|
|
4,578
|
|
|
7,143
|
|
|
29,402
|
|
(Gain) loss on
disposition of assets, net (2)
|
(326)
|
|
|
265
|
|
|
(836)
|
|
|
(1,208)
|
|
|
3,503
|
|
Stock-based
compensation
|
694
|
|
|
582
|
|
|
290
|
|
|
1,554
|
|
|
1,385
|
|
Intangible revenue
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,079)
|
|
Severance and
merger-related expenses (4)
|
—
|
|
|
320
|
|
|
—
|
|
|
1,076
|
|
|
2,688
|
|
Other
expense
|
—
|
|
|
122
|
|
|
—
|
|
|
—
|
|
|
377
|
|
Adjusted
EBITDA
|
$
|
(541)
|
|
|
$
|
7,654
|
|
|
$
|
4,032
|
|
|
$
|
8,565
|
|
|
$
|
36,276
|
|
|
(1) We did not
record any asset impairment during the third quarter of 2020.
In the first quarter of 2020, we recorded an asset impairment of
$16.6 million to reflect the remaining assets on rigs removed from
our marketed fleet, as well as certain other component equipment,
inventory and assets held for sale. In the third quarter of
2019, we impaired 100% of the goodwill recorded in connection with
the Sidewinder Merger.
|
|
(2) In the
third and second quarters of 2020, we recorded a gain on the
disposition of miscellaneous drilling equipment. In the third
quarter of 2019, we recorded a loss on the disposition of
miscellaneous drilling equipment.
|
|
(3) In the
first and second quarters of 2019, we amortized intangible revenue
related to unfavorable contract liability acquired in the
Sidewinder merger.
|
|
(4) Severance
and merger-related expenses were recorded in the third quarter of
2019 primarily comprised of severance, professional fees and other
Sidewinder merger-related expenses. Severance expenses of
$1.1 million were recorded in the first quarter of 2020 in
connection with our cost reduction measures instituted in response
to the COVID-19 pandemic and current deteriorating market
conditions. We did not record any severance expense during
the second or third quarter of 2020.
|
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.