HOUSTON, Aug. 4, 2021 /PRNewswire/ -- Independence
Contract Drilling, Inc. (the "Company" or "ICD") (NYSE: ICD) today
reported financial results for the three months ended
June 30, 2021.
Second quarter 2021 Highlights
- Net loss, as defined below, of $14.9
million, or $2.22 per
share.
- Adjusted net loss, as defined below, of $14.6 million, or $2.18 per share.
- Adjusted EBITDA loss, as defined below, of $0.4 million, representing an 82% sequential
improvement from the first quarter of 2021.
- Net debt, excluding finance leases and net of deferred
financing costs, of $134.6
million.
- Marketed fleet utilization of 49%, representing a 14%
sequential improvement from the first quarter of 2021.
- Fully burdened margin of $3,162
per day, representing a 13% sequential improvement from the first
quarter of 2021.
In the second quarter of 2021, the Company reported revenues of
$19.8 million, a net loss of
$14.9 million, or $2.22 per share, adjusted net loss (defined
below) of $14.6 million, or
$2.18 per share, and adjusted EBITDA
loss (defined below) of $0.4
million. These results compare to revenues of
$21.4 million, a net loss of
$10.1 million, or $2.52 per share, 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, and revenues of $15.5 million,
a net loss of $16.0 million, or
$2.58 per share, an adjusted net loss
of $16.4 million, or $2.64 per share, and adjusted EBITDA loss of
$2.0 million in the first quarter of
2021.
Chief Executive Officer Anthony
Gallegos commented, "Second quarter 2021 played out very
much as we anticipated as our operations continued their forward
momentum across all fronts. We continued to break drilling records
for our customers, expanded our ESG efforts, and reactivated
additional 300 series rigs. We exited the second quarter with 13
rigs operating, and our 14th and 15th rigs, both 300 series,
reactivating shortly thereafter in July. Of these 15 rigs,
six are 300 series. Reactivations were completed on time and
on budget.
On the dayrate front, our strategy of focusing on shorter term
contracts until dayrates fully recover continued to pay
dividends. Second quarter renewals and reactivations, along
with another eight rigs scheduled to re-rate throughout the third
quarter, are expected to drive sequential revenue per day increases
through the remainder of the year. Strong cost control also
continued during the quarter, with further expected improvements to
come as our operating rig base increases. We also continued
to make progress on the ESG front. All ICD rigs are dual-fuel
enabled and utility-grid hi-line electric power capable, and 64% of
our rigs during the second quarter utilized these carbon reducing
features.
Looking forward, we continue to expect increasing demand for all
of our rigs across our operating basins, in particular our 300
series rigs and in the Haynesville where strong natural gas
prices and outlooks coupled with fewer qualified drilling
contractors is driving increasing demand for ICD rigs. Based
upon current conversations with our customers, we expect there is
further utilization upside for ICD during the remainder of the year
with stronger demand at year end and in 2022 as our customers
continue efforts to replace and increase production against a
backdrop of improving fundamentals and depleting DUC
inventories."
Quarterly Operational Results
In the second quarter of 2021, operating days increased
sequentially by over 15% compared to the first quarter of
2021. The Company's marketed fleet operated at 49%
utilization and recorded 1,077 revenue days, compared to 834
revenue days in the second quarter of 2020, and 929 revenue days in
the first quarter of 2021. The Company currently expects
operating days in the third quarter of 2021 to increase
sequentially by approximately 18% compared to the second quarter of
2021.
Operating revenues in the second quarter of 2021 totaled
$19.8 million, compared to
$21.4 million in the second quarter
of 2020 and $15.5 million in the
first quarter of 2021. Revenue per day in the second quarter
of 2021 was $16,514, compared to
$19,741 in the second quarter of 2020
and $15,465 in the first quarter of
2021. The sequential increase quarter over quarter in revenue
per day was driven by higher dayrates on contract renewals and one
rig coming off a standby rate.
Operating costs in the second quarter of 2021 totaled
$17.0 million, compared to
$14.1 million in the second quarter
of 2020 and $14.5 million in first
quarter of 2021. Operating costs during the second quarter of
2021 included $0.2 million associated
with the reactivation of two rigs compared to $1.1 million during the first quarter of
2021. There were no reactivation costs during the second
quarter of 2020. Fully burdened operating costs were
$13,352 per day in the second quarter
of 2021, compared to $12,741 in the
second quarter of 2020 and $12,663 in
the first quarter of 2021. Sequential increases in operating
costs per day were driven primarily by one rig reactivating off of
standby status.
Excluding the impact from reactivation costs, fully burdened rig
operating margins in the second quarter of 2021 were $3,162 per day, compared to $7,000 per day in the second quarter of 2020 and
$2,802 per day in the first quarter
of 2021. The Company currently expects operating margins in
the third quarter of 2021 to increase sequentially by approximately
20% compared to the second quarter of 2021 driven primarily by
favorable dayrate momentum and cost efficiencies associated with a
larger operating rig base. Based upon recently signed
contracts and contract renewals and continuing cost efficiencies,
further sequential improvements in margin per day are expected to
occur during the fourth quarter of 2021 as well.
Selling, general and administrative expenses in the second
quarter of 2021 were $4.1 million
(including $0.9 million of non-cash
compensation), compared to $3.5
million (including $0.3
million of non-cash compensation) in the second quarter of
2020 and $3.7 million (including
$0.7 million of non-cash
compensation) in the first quarter of 2021. The sequential
increase in cash selling, general and administrative expenses was
primarily due to increased onboarding and training costs.
Drilling Operations Update
The Company exited the second quarter with 13 operating rigs and
with two additional rigs reactivating in July 2021. Overall, the Company's operating rig
count averaged 11.8 rigs during the quarter. Based on current
customer inquiries, the Company expects to reactivate several
additional rigs during the remainder of the year. The
Company's backlog of drilling contracts with original terms of six
months or longer was $14.8 million as
of June 30, 2021. This backlog excludes rigs
operating on shorter term pad-to-pad drilling contracts. All
of this backlog is expected to be realized during the remainder of
2021.
Capital Expenditures and Liquidity Update
Cash outlays for capital expenditures in the second quarter of
2021 were $2.6 million, offset by
asset sales and recoveries of $0.1
million.
As of June 30, 2021, the Company had cash on hand of
$6.0 million, an undrawn revolving
line of credit with availability of $11.3
million based upon eligible accounts receivable,
$132.8 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. The Company applied for full
forgiveness of the PPP loan during the second quarter of 2021.
During the second quarter of 2021, the Company completed its
at-the-market ("ATM") common stock offering with a maximum approved
offering amount of $2.2
million. During the second quarter, the Company issued
an aggregate of 445,557 shares of common stock pursuant to this
program at a weighted average gross selling price of $3.48 per share, resulting in gross proceeds to
the Company of $1.5 million.
During the second quarter, the Company also sold 282,800 shares
pursuant to the terms of its equity line of credit at a weighted
average gross selling price of $3.80
per share, resulting in total gross proceeds to the Company of
$1.1 million.
Conference Call Details
A conference call for investors will be held today, August 4, 2021, at 11:00
a.m. Central Time (12:00 p.m. Eastern
Time) to discuss the Company's second quarter 2021
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
10158631. The replay will be available until August 11, 2021.
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.
Certain Defined Terms
Pad Optimal SuperSpec Rig is defined as an AC powered rig with
minimum 20,000ft racking capacity, 1500HP+ drawworks, 750,000#
hookload, 3 high pressure pumps, 4 engines and omni-directional
walking system. Such rigs also include dual fuel, hi-line power and
drilling optimization software options.
300 Series Rigs are defined as a Pad Optimal SuperSpec rig with the
following additional characteristics: 25,000ft+ racking capacity,
hi-torque top drives, and 1,000,000# hookload option.
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
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
6,032
|
|
$
|
12,279
|
Accounts receivable,
net
|
|
|
14,062
|
|
|
10,023
|
Inventories
|
|
|
1,077
|
|
|
1,038
|
Assets held for
sale
|
|
|
507
|
|
|
—
|
Prepaid expenses and
other current assets
|
|
|
2,308
|
|
|
4,102
|
Total current
assets
|
|
|
23,986
|
|
|
27,442
|
Property, plant and
equipment, net
|
|
|
368,733
|
|
|
382,239
|
Other long-term
assets, net
|
|
|
3,006
|
|
|
3,528
|
Total
assets
|
|
$
|
395,725
|
|
$
|
413,209
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current portion of
long-term debt (1)
|
|
$
|
13,642
|
|
$
|
7,637
|
Accounts
payable
|
|
|
10,245
|
|
|
4,072
|
Accrued
liabilities
|
|
|
10,860
|
|
|
10,723
|
Current portion of
merger consideration payable to an affiliate
|
|
|
2,902
|
|
|
—
|
Total current
liabilities
|
|
|
37,649
|
|
|
22,432
|
Long-term debt
(2)
|
|
|
133,825
|
|
|
137,633
|
Merger consideration
payable to an affiliate
|
|
|
—
|
|
|
2,902
|
Deferred income taxes,
net
|
|
|
572
|
|
|
505
|
Other long-term
liabilities
|
|
|
2,733
|
|
|
2,704
|
Total
liabilities
|
|
|
174,779
|
|
|
166,176
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Common stock, $0.01 par
value, 50,000,000 shares authorized; 7,322,515 and 6,254,396 shares
issued, respectively, and 7,243,937 and 6,175,818 shares
outstanding, respectively
|
|
|
72
|
|
|
62
|
Additional paid-in
capital
|
|
|
522,777
|
|
|
517,948
|
Accumulated
deficit
|
|
|
(297,990)
|
|
|
(267,064)
|
Treasury stock, at
cost, 78,578 shares and 78,578 shares, respectively
|
|
|
(3,913)
|
|
|
(3,913)
|
Total stockholders'
equity
|
|
|
220,946
|
|
|
247,033
|
Total liabilities and
stockholders' equity
|
|
$
|
395,725
|
|
$
|
413,209
|
|
|
(1)
|
As of
June 30, 2021 and December 31, 2020, current
portion of long-term debt includes $3.6 million and $3.4 million,
respectively, of finance lease obligations. As of
June 30, 2021 and December 31, 2020, current
portion of long-term debt also includes $10.0 million and $4.3
million, respectively, related to the PPP Loan. The Company
applied for full forgiveness of the PPP Loan during the second
quarter of 2021.
|
|
|
(2)
|
As of
June 30, 2021 and December 31, 2020, long-term
debt includes $3.2 million and $4.6 million, respectively, of
long-term finance lease obligations. As of
December 31, 2020, long-term debt also includes $5.7
million related to the PPP Loan. The Company applied for full
forgiveness of the PPP Loan during the second quarter of
2021.
|
INDEPENDENCE
CONTRACT DRILLING, INC.
Unaudited
(in thousands,
except par value and share data)
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
19,817
|
|
$
|
21,381
|
|
$
|
15,542
|
|
$
|
35,359
|
|
$
|
59,875
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
costs
|
|
|
17,040
|
|
|
14,095
|
|
|
14,541
|
|
|
31,581
|
|
|
44,324
|
Selling, general and
administrative
|
|
|
4,075
|
|
|
3,544
|
|
|
3,686
|
|
|
7,761
|
|
|
7,305
|
Severance
expense
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,076
|
Depreciation and
amortization
|
|
|
9,516
|
|
|
11,055
|
|
|
9,989
|
|
|
19,505
|
|
|
22,571
|
Asset impairment,
net
|
|
|
250
|
|
|
—
|
|
|
43
|
|
|
293
|
|
|
16,619
|
Loss (gain) on
disposition of assets, net
|
|
|
31
|
|
|
(836)
|
|
|
(435)
|
|
|
(404)
|
|
|
(882)
|
Total costs and
expenses
|
|
|
30,912
|
|
|
27,858
|
|
|
27,824
|
|
|
58,736
|
|
|
91,013
|
Operating
loss
|
|
|
(11,095)
|
|
|
(6,477)
|
|
|
(12,282)
|
|
|
(23,377)
|
|
|
(31,138)
|
Interest
expense
|
|
|
(3,773)
|
|
|
(3,654)
|
|
|
(3,709)
|
|
|
(7,482)
|
|
|
(7,258)
|
Loss before income
taxes
|
|
|
(14,868)
|
|
|
(10,131)
|
|
|
(15,991)
|
|
|
(30,859)
|
|
|
(38,396)
|
Income tax expense
(benefit)
|
|
|
33
|
|
|
(11)
|
|
|
34
|
|
|
67
|
|
|
(53)
|
Net loss
|
|
$
|
(14,901)
|
|
$
|
(10,120)
|
|
$
|
(16,025)
|
|
$
|
(30,926)
|
|
$
|
(38,343)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(2.22)
|
|
$
|
(2.52)
|
|
$
|
(2.58)
|
|
$
|
(4.78)
|
|
$
|
(9.87)
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
6,714
|
|
|
4,018
|
|
|
6,215
|
|
|
6,466
|
|
|
3,884
|
INDEPENDENCE
CONTRACT DRILLING, INC.
Unaudited
(in thousands,
except par value and share data)
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(30,926)
|
|
$
|
(38,343)
|
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
19,505
|
|
|
22,571
|
Asset impairment,
net
|
|
|
293
|
|
|
16,619
|
Stock-based
compensation
|
|
|
1,217
|
|
|
860
|
Gain on disposition of
assets, net
|
|
|
(404)
|
|
|
(882)
|
Interest expense
(non-cash)
|
|
|
2,828
|
|
|
—
|
Deferred income
taxes
|
|
|
67
|
|
|
(53)
|
Amortization of
deferred financing costs
|
|
|
558
|
|
|
431
|
Bad debt
expense
|
|
|
—
|
|
|
149
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(4,039)
|
|
|
22,622
|
Inventories
|
|
|
(39)
|
|
|
(16)
|
Prepaid expenses and
other assets
|
|
|
2,209
|
|
|
1,319
|
Accounts payable and
accrued liabilities
|
|
|
3,862
|
|
|
(16,258)
|
Net cash (used in)
provided by operating activities
|
|
|
(4,869)
|
|
|
9,019
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
|
(4,295)
|
|
|
(12,126)
|
Proceeds from the
sale of assets
|
|
|
739
|
|
|
1,002
|
Collection of
principal on note receivable
|
|
|
—
|
|
|
145
|
Net cash used in
investing activities
|
|
|
(3,556)
|
|
|
(10,979)
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Borrowings under
Revolving ABL Credit Facility
|
|
|
9
|
|
|
11,038
|
Repayments under
Revolving ABL Credit Facility
|
|
|
(8)
|
|
|
(11,038)
|
Borrowings under PPP
Loan
|
|
|
—
|
|
|
10,000
|
Proceeds from
issuance of common stock through at-the-market facility, net of
issuance costs
|
|
|
1,993
|
|
|
6,801
|
Proceeds from
issuance of common stock under purchase agreement
|
|
|
1,949
|
|
|
—
|
Purchase of treasury
stock
|
|
|
—
|
|
|
(66)
|
RSUs withheld for
taxes
|
|
|
(11)
|
|
|
(79)
|
Payments for finance
lease obligations
|
|
|
(1,754)
|
|
|
(2,506)
|
Net cash provided by
financing activities
|
|
|
2,178
|
|
|
14,150
|
Net (decrease)
increase in cash and cash equivalents
|
|
|
(6,247)
|
|
|
12,190
|
Cash and cash
equivalents
|
|
|
|
|
|
|
Beginning of
period
|
|
|
12,279
|
|
|
5,206
|
End of
period
|
|
$
|
6,032
|
|
$
|
17,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
3,406
|
|
$
|
7,021
|
Supplemental
disclosure of non-cash investing and financing
activities
|
|
|
|
|
|
|
Change in property,
plant and equipment purchases in accounts payable
|
|
$
|
2,171
|
|
$
|
(7,412)
|
Additions to
property, plant and equipment through finance leases
|
|
$
|
632
|
|
$
|
2,434
|
Extinguishment of
finance lease obligations from sale of assets classified as finance
leases
|
|
$
|
—
|
|
$
|
(599)
|
Transfer of assets
from held and used to held for sale
|
|
$
|
(550)
|
|
$
|
—
|
The following table provides various financial and operational
data for the Company's operations for the three months ended
June 30, 2021 and 2020 and March 31, 2021 and
the six months ended June 30, 2021 and 2020. 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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of marketed
rigs end of period (1)
|
|
|
24
|
|
|
|
29
|
|
|
|
24
|
|
|
|
24
|
|
|
|
29
|
|
Rig operating days
(2)
|
|
|
1,077
|
|
|
|
834
|
|
|
|
929
|
|
|
|
2,006
|
|
|
|
2,572
|
|
Average number of
operating rigs (3)
|
|
|
11.8
|
|
|
|
9.2
|
|
|
|
10.3
|
|
|
|
11.1
|
|
|
|
14.1
|
|
Rig utilization
(4)
|
|
|
49
|
%
|
|
|
32
|
%
|
|
|
43
|
%
|
|
|
46
|
%
|
|
|
49
|
%
|
Average revenue per
operating day (5)
|
|
$
|
16,514
|
|
|
$
|
19,741
|
|
|
$
|
15,465
|
|
|
$
|
16,028
|
|
|
$
|
19,796
|
|
Average cost per
operating day (6)
|
|
$
|
13,352
|
|
|
$
|
12,741
|
|
|
$
|
12,663
|
|
|
$
|
13,033
|
|
|
$
|
14,030
|
|
Average rig margin
per operating day
|
|
$
|
3,162
|
|
|
$
|
7,000
|
|
|
$
|
2,802
|
|
|
$
|
2,995
|
|
|
$
|
5,766
|
|
|
|
(1)
|
Marketed rigs exclude
idle rigs that will not be reactivated unless market conditions
materially improve.
|
|
|
(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 $2.0 million, $2.7 million
and $1.2 million during the three months ended
June 30, 2021 and 2020, and March 31, 2021,
respectively, and $3.2 million and $6.8 million during the six
months ended June 30, 2021 and 2020, respectively, and
(ii) early termination revenues of $2.2 million during the three
and six months ended June 30, 2020. The three and six months
ended June 30, 2021 and the three months ended March 31, 2021 did
not include any early termination 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 $2.0 million, $2.7
million and $1.2 million during the three months ended
June 30, 2021 and 2020, and March 31, 2021,
respectively, and $3.2 million and $6.8 million during the six
months ended June 30, 2021 and 2020, respectively; (ii)
overhead costs expensed due to reduced rig upgrade activity of $0.4
million, $0.4 million and $0.5 million during the three months
ended June 30, 2021 and 2020, and
March 31, 2021, respectively, and $0.8 million and $1.0
million during the six months ended June 30, 2021 and
2020, respectively; (iii) rig reactivation costs, inclusive of new
crew training costs, of $0.2 million, zero and $1.1 million during
the three months ended June 30, 2021 and 2020, and
March 31, 2021, respectively, and $1.3 million and zero
during the six months ended June 30, 2021 and 2020,
respectively; and (iv) rig decommissioning costs associated with
stacking deactivated rigs of $0.1 million, $0.3 million and zero
during the three months ended June 30, 2021 and 2020 and March 31,
2021, respectively, and $0.1 million and $0.3 million during the
six months ended June 30, 2021 and 2020, respectively.
|
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
|
|
Six Months
Ended
|
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2021
|
|
2020
|
|
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
|
Amount
|
|
Per Share
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(14,901)
|
|
$
|
(2.22)
|
|
$
|
(10,120)
|
|
$
|
(2.52)
|
|
$
|
(16,025)
|
|
$
|
(2.58)
|
|
$
|
(30,926)
|
|
$
|
(4.78)
|
|
$
|
(38,343)
|
|
$
|
(9.87)
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment, net
(1)
|
|
|
250
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
0.01
|
|
|
293
|
|
|
0.04
|
|
|
16,619
|
|
|
4.28
|
Loss (gain) on
disposition of assets, net (2)
|
|
|
31
|
|
|
—
|
|
|
(836)
|
|
|
(0.21)
|
|
|
(435)
|
|
|
(0.07)
|
|
|
(404)
|
|
|
(0.06)
|
|
|
(882)
|
|
|
(0.23)
|
Severance expense
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,076
|
|
|
0.28
|
Adjusted net
loss
|
|
$
|
(14,620)
|
|
$
|
(2.18)
|
|
$
|
(10,956)
|
|
$
|
(2.73)
|
|
$
|
(16,417)
|
|
$
|
(2.64)
|
|
$
|
(31,037)
|
|
$
|
(4.80)
|
|
$
|
(21,530)
|
|
$
|
(5.54)
|
Reconciliation of
Net Loss to EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
June 30,
|
|
March 31,
|
|
|
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
|
2021
|
|
2020
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(14,901)
|
|
$
|
(10,120)
|
|
$
|
(16,025)
|
|
|
$
|
(30,926)
|
|
$
|
(38,343)
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
|
33
|
|
|
(11)
|
|
|
34
|
|
|
|
67
|
|
|
(53)
|
Interest
expense
|
|
|
3,773
|
|
|
3,654
|
|
|
3,709
|
|
|
|
7,482
|
|
|
7,258
|
Depreciation and
amortization
|
|
|
9,516
|
|
|
11,055
|
|
|
9,989
|
|
|
|
19,505
|
|
|
22,571
|
Asset impairment, net
(1)
|
|
|
250
|
|
|
—
|
|
|
43
|
|
|
|
293
|
|
|
16,619
|
EBITDA
|
|
|
(1,329)
|
|
|
4,578
|
|
|
(2,250)
|
|
|
|
(3,579)
|
|
|
8,052
|
Loss (gain) on
disposition of assets, net (2)
|
|
|
31
|
|
|
(836)
|
|
|
(435)
|
|
|
|
(404)
|
|
|
(882)
|
Stock-based and
non-cash deferred compensation cost
|
|
|
929
|
|
|
290
|
|
|
673
|
|
|
|
1,602
|
|
|
860
|
Severance expense
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
1,076
|
Adjusted
EBITDA
|
|
$
|
(369)
|
|
$
|
4,032
|
|
$
|
(2,012)
|
|
|
$
|
(2,381)
|
|
$
|
9,106
|
|
|
(1)
|
During the second
quarter of 2021, we impaired a damaged piece of drilling equipment
for $0.3 million, net of insurance recoveries. We did not
record any asset impairment during the second quarter of
2020. In the first quarter of 2021, we recorded an asset
impairment of $43 thousand related to the pending sale of one of
our field location facilities. In the first quarter of 2020,
we recorded an asset impairment of $16.6 million on rigs removed
from our marketed fleet, as well as certain other component
equipment, inventory and assets held for sale.
|
|
|
(2)
|
In the second quarter
of 2021 and 2020, and the first quarter of 2021, we recorded a
loss, gain and gain, respectively, on the disposition of
miscellaneous drilling equipment in the respective
quarter.
|
|
|
(3)
|
Severance expense of
$1.1 million was recorded in the first quarter of 2020 in
connection with our cost reduction measures instituted in response
to the COVID-19 pandemic and deteriorating market
conditions.
|
INVESTOR CONTACTS:
Independence Contract Drilling, Inc.
E-mail inquiries to: Investor.relations@icdrilling.com
Phone inquiries: (281) 598-1211
View original content to download
multimedia:https://www.prnewswire.com/news-releases/independence-contract-drilling-inc-reports-financial-results-for-the-second-quarter-ended-june-30-2021-and-additional-rig-reactivations-301347950.html
SOURCE Independence Contract Drilling, Inc.