31/10/2014 14:37:44 Free Membership Login

Key Energy Services Generated Third Quarter 2012 Income from Continuing Operations of $0.15 per Diluted Share

Date : 11/01/2012 @ 3:00AM
Source : PR Newswire (US)
Stock : Key Energy Services, Inc. (KEG)
Quote : 3.28  0.0 (0.00%) @ 1:30PM
Key Energy Services share price Chart

Key Energy Services Generated Third Quarter 2012 Income from Continuing Operations of $0.15 per Diluted Share

Key Energy Services (NYSE:KEG)
Historical Stock Chart

2 Years : From Oct 2012 to Oct 2014

Click Here for more Key Energy Services Charts.
Key Energy Services Generated Third Quarter 2012 Income from Continuing Operations of $0.15 per Diluted Share

HOUSTON, Oct. 31, 2012 /PRNewswire/ -- Key Energy Services, Inc. (NYSE: KEG) reported third quarter 2012 consolidated revenues of $490.9 million, generating income from continuing operations of $22.1 million, or $0.15 per share. Second quarter 2012 consolidated revenues were $516.0 million with income from continuing operations of $31.5 million, or $0.21 per share.

On a consolidated basis, the Company recorded a net loss of $38.1 million, or $0.25 per share. This includes a loss of $60.2 million, or $0.40 per share, associated with the sale of the Argentina business, reflected in discontinued operations. Second quarter 2012 consolidated net income was $29.0 million, or $0.19 per share, which includes a loss from discontinued operations of $2.5 million, or $0.02 per share.

The following table sets forth summary data from continuing operations for the third quarter 2012 and prior comparable quarterly periods.


 Three Months Ended (unaudited) 


 September 30, 2012 


 June 30, 2012 


 September 30, 2011 


 (in millions, except per share amounts) 







Revenues

$            490.9


$     516.0


$            468.5

Income attributable to Key

$              22.1


$       31.5


$              46.5

Diluted earnings per share attributable to Key

$              0.15


$       0.21


$              0.31

EBITDA

$            101.3


$     114.7


$            123.5

U.S. Segment

Third quarter 2012 U.S. revenues were $397.8 million, down 7.8% compared to $431.6 million in the second quarter. Operating income was $60.1 million, or 15.1% of revenue, compared to $82.5 million, or 19.1% of revenue, in the second quarter 2012.

During the third quarter, Fluids Management Services revenues declined 15.1%, Coiled Tubing Services revenues declined 7.9%, and revenues from the frac stack and well testing businesses declined 35.8% sequentially due to lower activity and pricing. Combined, these businesses account for approximately 84% of the decline in U.S. revenues.

International Segment

Third quarter 2012 international revenues were $93.0 million, up 10.3% compared to prior quarter revenues of $84.4 million. Operating income was $19.4 million, or 20.8% of revenues. Second quarter 2012 operating income was $16.1 million, or 19.1% of revenues. The improvement in third quarter results was driven largely by higher activity in Mexico.

General and Administrative Expenses

General and Administrative (G&A) expenses were $53.6 million, or 10.9% of revenues. Second quarter 2012 G&A expenses were $58.1 million, or 11.3% of revenues. The decline in third quarter G&A expenses was primarily due to the reversal of previously accrued bonus compensation.

Capital Expenditures and Liquidity

Key's consolidated cash balance at September 30, 2012 was $38.3 million compared to $28.3 million at June 30, 2012. Capital expenditures were $90.4 million during the third quarter 2012 and $399.7 million through September 30, 2012.

Total debt at September 30, 2012 was $904.0 million compared to total debt of $874.5 million at June 30, 2012. At the end of the quarter, there was $271 million available under the Company's $550 million senior secured credit facility. Net debt to total capitalization at the end of the third quarter 2012 was 39.8%.

Overview and Outlook

Commenting on the results, Key's Chairman, President and Chief Executive Officer, Dick Alario, stated, "Our U.S. results were negatively impacted by continued activity declines in natural gas markets, and we began to experience the effects of reduced customer spending in oil markets. Our international segment generated improved results as we continued to take advantage of opportunities to grow and increase profitability in Latin America and the Middle East."

Alario continued, "Regarding our fourth quarter outlook, we anticipate U.S. activity will trend lower through year end, driven by continued reductions in customer spending and typical year end seasonality. We expect fourth quarter U.S. revenues to decline approximately 6% to 8% and operating income margins to drop approximately 200 to 250 basis points compared to the third quarter. We believe fourth quarter international revenues will increase approximately 5% compared to the third quarter with approximately 100 to 200 basis points of sequential operating income margin improvement."

Conference Call Information

As previously announced, Key management will host a conference call to discuss its third quarter 2012 financial results on Thursday, November 1, 2012 at 10:00 a.m. CDT. To access the call in the U.S. and Canada dial 888-794-4637. International callers should dial 660-422-4879. All callers should ask for the "Key Energy Services Conference Call" or provide the access code 32988824. The conference call will also be available live via the internet. To access the webcast, go to www.keyenergy.com and select "Investor Relations."  

A telephonic replay of the conference call will be available on Thursday, November 1, 2012, beginning approximately two hours after the completion of the conference call and will remain available for one week.  To access the replay, call 855-859-2056 or 800-585-8367. The access code for the replay is 32988824. The replay will also be accessible at www.keyenergy.com under "Investor Relations" for a period of at least 90 days.

Re-casted Prior Period Financial Results from Continuing Operations

Key has recast certain prior period financial information to reflect its results from continuing operations, which exclude the Argentine operations. This recasted financial information is available on Key's website at www.keyenergy.com under "Investor Relations".

Consolidated Statements of Operations (in thousands, except per share amounts, unaudited):




 Three Months Ended 


 Nine Months Ended 




 September 30, 


 June 30, 


 September 30, 


 September 30, 


 September 30, 




2012


2012


2011


2012


2011













REVENUES


$           490,851


$  515,997


$         468,542


$      1,493,599


$      1,247,493













COSTS AND EXPENSES:












Direct operating expenses


335,799


343,996


285,804


991,292


795,053


Depreciation and amortization expense


52,947


52,452


41,708


156,588


120,047


General and administrative expenses


53,567


58,081


59,063


172,566


159,861

Operating income


48,538


61,468


81,967


173,153


172,532














Loss on early extinguishment of debt


-


-


-


-


46,451


Interest expense, net of amounts capitalized


13,962


13,730


10,554


39,574


30,003


Other, net


(1,529)


(1,380)


590


(3,938)


(9,932)

Income from continuing operations before tax


36,105


49,118


70,823


137,517


106,010














Income tax expense


(12,915)


(17,419)


(25,077)


(49,147)


(36,706)

Income from continuing operations


23,190


31,699


45,746


88,370


69,304














Loss from discontinued operations, net of tax


(60,209)


(2,454)


(2,308)


(93,568)


(8,218)

Net income (loss)


(37,019)


29,245


43,438


(5,198)


61,086














Income (loss) attributable to noncontrolling interest


1,075


204


(730)


665


(1,027)

INCOME (LOSS) ATTRIBUTABLE TO KEY


$           (38,094)


$    29,041


$           44,168


$           (5,863)


$           62,113













Earnings (loss) per share attributable to Key:












Basic and diluted


$               (0.25)


$       0.19


$              0.30


$             (0.04)


$              0.43













Weighted average shares outstanding:












Basic


151,105


151,087


147,722


151,108


144,274


Diluted


151,110


151,100


148,088


151,124


144,713

























Income from continuing operations 

attributable to Key:






















Income from continuing operations


$            23,190


$    31,699


$           45,746


$           88,370


$           69,304


Income (loss) attributable to noncontrolling interest


1,075


204


(730)


665


(1,027)


Income from continuing operations attributable to Key


$            22,115


$    31,495


$           46,476


$           87,705


$           70,331













Earnings per share from continuing operations attributable to Key:






















Basic and diluted  


$                0.15


$       0.21


$              0.31


$              0.58


$              0.49

























Loss from discontinued operations, net of tax:


$           (60,209)


$    (2,454)


$           (2,308)


$          (93,568)


$           (8,218)













Loss per share from discontinued operations:












Basic and diluted


$               (0.40)


$      (0.02)


$             (0.01)


$             (0.62)


$             (0.06)

Condensed Consolidated Balance Sheets (in thousands):



 September 30, 2012
(Unaudited) 


 December 31,
2011 











ASSETS









Current assets:





Cash and cash equivalents

$           38,332


$           35,443


Other current assets

589,715


504,777


Current assets held for sale

-


60,343

Total current assets

628,047


600,563






Property and equipment, net

1,443,930


1,197,300

Goodwill

625,938


622,773

Other assets, net

122,008


155,601

Non-current assets held for sale

-


22,883






TOTAL ASSETS

$      2,819,923


$      2,599,120






LIABILITIES AND EQUITY









Current liabilities:





Accounts payable

$         100,441


$           71,736


Other current liabilities

208,105


175,877


Current liabilities associated with assets held for sale

-


41,890

Total current liabilities

308,546


289,503






Long-term debt, less current portion

903,250


773,975

Other non-current liabilities

338,542


321,011






Equity

1,269,585


1,214,631






TOTAL LIABILITIES AND EQUITY

$      2,819,923


$      2,599,120

Consolidated Cash Flow Data (in thousands, unaudited):






 Nine Months Ended 


 September 30,  


 September 30,  


2012


2011





Net cash provided by operating activities

$         252,794


$         103,002

Net cash used in investing activities

(387,732)


(413,742)

Net cash provided by financing activities

141,162


268,098

Effect of exchange rates on cash

(3,335)


5,332





Net increase (decrease) in cash and cash equivalents

2,889


(37,310)

Cash and cash equivalents, beginning of period

35,443


56,628

Cash and cash equivalents, end of period

$           38,332


$           19,318

Segment Revenue and Operating Income from continuing operations (in thousands, except for percentages, unaudited):



 Three Months Ended 









 September 30, 


 June 30, 


 September 30, 









2012


2012


2011







Revenues













 U.S. Operations:













Rig Services


$           201,453


$         208,765


$         192,018







Fluid Management Services


82,140


96,716


102,498







Coiled Tubing Services


52,442


56,929


60,304







Fishing & Rental Services


61,779


69,236


56,969







 Total U.S. Operations


397,814


431,646


411,789




















International Operations


93,037


84,351


56,753







Consolidated Total


$           490,851


$         515,997


$         468,542



































 Three Months Ended 



 September 30, 


 % of 


 June 30, 


 % of 


 September 30, 


 % of 



2012


 Revenues 


2012


 Revenues 


2011


 Revenues 

Operating Income













 U.S. Operations


$            60,136


15.1%


$           82,497


19.1%


$         106,207


25.8%

 International Operations


19,359


20.8%


16,116


19.1%


12,337


21.7%

 Functional Support


(30,957)


 n/a 


(37,145)


 n/a 


(36,577)


 n/a 

Consolidated Total


$            48,538


9.9%


$           61,468


11.9%


$           81,967


17.5%





























 Nine Months Ended 











 September 30, 


 September 30, 











2012


2011









Revenues













 U.S. Operations:













Rig Services


$           613,600


$         531,312









Fluid Management Services


276,700


291,096









Coiled Tubing Services


162,351


171,478









Fishing & Rental Services


201,782


115,262









 Total U.S. Operations


1,254,433


1,109,148






















 International Operations


239,166


138,345









Consolidated Total


$        1,493,599


$      1,247,493





































 Nine Months Ended 







 September 30, 


 % of 


 September 30, 


 % of 







2012


 Revenues 


2011


 Revenues 





Operating Income 













 U.S. Operations


$           234,091


18.7%


$         251,056


22.6%





 International Operations


45,843


19.2%


24,471


17.7%





 Functional Support


(106,781)


 n/a 


(102,995)


 n/a 





Consolidated Total


$           173,153


11.6%


$         172,532


13.8%





Following is a reconciliation of income from continuing operations attributable to Key as presented in accordance with United States generally accepted accounting principles (GAAP) to EBITDA from continuing operations as required under Regulation G of the Securities Exchange Act of 1934.

Reconciliations of income from continuing operations to EBITDA (in thousands, except for percentages, unaudited):



 Three Months Ended 



 September 30, 


 June 30, 


 September 30, 



2012


2012


2011

Income from continuing operations 


$           23,190


$           31,699


$           45,746

Income tax expense


12,915


17,419


25,077

(Income) loss attributable to noncontrolling
   interest, excluding depreciation and
   amortization


(1,683)


(596)


397

Interest expense, net of amounts capitalized


13,962


13,730


10,554

Interest income


(12)


(7)


(1)

Depreciation and amortization


52,947


52,452


41,708








EBITDA


$         101,319


$         114,697


$         123,481








    % of revenues


20.6%


22.2%


26.4%








Revenues


$         490,851


$         515,997


$         468,542

"EBITDA" is defined as income or loss from continuing operations attributable to Key before interest, taxes, depreciation, and amortization.

"EBITDA" is a non-GAAP measure that is used as supplemental financial measures by the Company's management and directors and by external users of the Company's financial statements, such as investors, to assess:

  • The financial performance of the Company's assets without regard to financing methods, capital structure or historical cost basis;
  • The ability of the Company's assets to generate cash sufficient to pay interest on its indebtedness;
  • The Company's operating performance and return on invested capital as compared to those of other companies in the well services industry, without regard to financing methods and capital structure; and
  • The Company's operating trends underlying the items that tend to be of a non-recurring nature.

EBITDA has limitations as analytical tools 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 excludes 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 Key's 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 Key's 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;
  • Other companies in Key's industry may calculate EBITDA differently than Key does, limiting its usefulness as a comparative measure; and
  • EBITDA is a different calculation from earnings before interest, taxes, depreciation and amortization as defined for purposes of the financial covenants in the Company's senior secured credit facility, and therefore should not be relied upon for assessing compliance with covenants.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements as to matters that are not of historic fact are forward-looking statements. These forward-looking statements are based on Key's current expectations, estimates and projections about Key, its industry, its management's beliefs and certain assumptions made by management, and include statements regarding future operational and activity expectations, and anticipated financial performance in the fourth quarter of 2012. No assurance can be given that such expectations, estimates or projections will prove to have been correct. Whenever possible, these "forward-looking statements" are identified by words such as "expects," "believes," "anticipates" and similar phrases.

Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, but not limited to:  risks that Key will be unable to achieve its financial and operational projections, including quarterly projections of revenue and/or operating income margins (whether for Key as a whole or for geographic regions and/or business segments individually); risks that market fundamentals in the U.S. could further deteriorate or worsen beyond current expectations and/or that Key could experience further unexpected declines in activity and demand for its rig service, fluid management service, coiled tubing service, and fishing and rental service businesses; risks affecting Key's international operations, including risks related to growth in Mexico, other risks affecting Key's operations in Russia, and risks associated with expanding operations in Colombia, Oman and Bahrain; risks associated with the recently completed sale of Key's Argentine operations, including risk that Key may be unable to achieve the benefits contemplated under the transaction; risks, in responding to changing or declining market conditions, that Key may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed and used in Key's businesses; risks relating to compliance with environmental, health and safety laws and regulations, as well as actions by governmental and regulatory authorities; risks relating to changes in the demand for or the price of oil and natural gas; risks that Key may not be able to execute its capital expenditure program and/or that any such capital expenditure investments, if made, will not generate adequate returns; and other risks affecting Key's ability to maintain or improve operations, including its ability to maintain prices for services under market pricing pressures, weather risks, and the impact of potential increases in general and administrative expenses.

Because such statements involve risks and uncertainties, many of which are outside of Key's control, Key's actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Other important risk factors that may affect Key's business, results of operations and financial position are discussed in its most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and in other Securities and Exchange Commission filings. Unless otherwise required by law, Key also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. However, readers should review carefully reports and documents that Key files periodically with the Securities and Exchange Commission.

About Key Energy Services
Key Energy Services is the largest onshore, rig-based well servicing contractor based on the number of rigs owned. Key provides a complete range of well intervention services and has operations in all major onshore oil and gas producing regions of the continental United States and internationally in Mexico, Colombia, the Middle East and Russia. 

Contact:
Gary Russell, Investor Relations
713-651-4434  

SOURCE Key Energy Services, Inc.

Copyright 2012 PR Newswire



Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

NYSE and AMEX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

1 site:2 in 141031 14:37