Market Overview

Frank's International N.V. Announces Second Quarter 2019 Results

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HOUSTON, Aug. 06, 2019 (GLOBE NEWSWIRE) -- Frank's International N.V. (NYSE:FI) (the "Company" or "Frank's") today reported financial and operational results for the three and six months ended June 30, 2019. 

Second Quarter 2019 Financial Highlights

  • Revenue for the quarter totaled $155.7 million, an improvement from the prior quarter of 8% and from the prior year quarter of 18%.
  • Net loss of $15.2 million for the quarter, which reflected an improvement of nearly 50% from the first quarter.
  • Adjusted EBITDA for the quarter was $17.2 million, up 78% in comparison to the first quarter of 2019 results of $9.7 million, and up 57% compared to $11.0 million for the second quarter of 2018.
  • Incremental margins year-to-date are 34% in comparison to the first half of 2018.
  • Tubular Running Services demonstrated strong revenue growth of 9% sequentially and 16% over the prior year. Strong fall through resulted in a sequential 6% adjusted EBITDA margin gain, yielding a 24% margin for the quarter.
  • Tubulars segment sequential revenue growth of 20%.

"Our second quarter results exceeded expectations as we capitalized on increasing activity in the offshore markets, particularly in the U.S. Gulf of Mexico and West Africa. The relentless focus of our team on best serving the needs of our customers through industry leading technological differentiation has allowed us to gain market share and take advantage of increasing market activity, which is driving the improving financial results," said Michael Kearney, the Company's Chairman, President and Chief Executive Officer.

"This spring, Frank's was presented the 2019 Hart's E&P Meritorious Engineering award in recognition of our patented Collar Load Support System for Stands. This is yet another example of our commitment to provide technology solutions that increase well construction efficiency and improve well integrity for our customers.  Most importantly, the Collar Load Support System removes both our employees as well as those of our customers from the red zone on the rig floor, reinforcing our paramount emphasis on safety. I want to congratulate all our employees involved in making this product a success."   

"We continue to maintain our full year 2019 view of significant revenue growth and increased margins across all of our business segments. Our international operations will drive much of the improvement coupled with activity increases in the North America offshore market. Frank's remains well positioned to continue to show improving results in the recovering offshore market, with innovative and unique product and service offerings which focus on solving our customers' complex drilling and completion challenges," concluded Mr. Kearney.

Financial measures not presented in accordance with U.S. generally accepted accounting principles ("GAAP") are defined and reconciled to their most directly comparable GAAP measures below. Please see "Use of Non-GAAP Financial Measures" and the reconciliations to the nearest comparable GAAP measures.

Segment Results

Tubular Running Services

Tubular Running Services revenue was $106.6 million for the second quarter of 2019, compared to $98.1 million in the first quarter of 2019, and $91.5 million for the second quarter of 2018. The increase in sequential revenue was primarily driven by increased customer activity in West Africa, the U.S. Gulf of Mexico, the Caribbean and Asia Pacific.  In addition, the U.S. onshore TRS business continued its upward revenue trend for the twelfth consecutive quarter despite declining rig counts.  

Segment adjusted EBITDA for the second quarter of 2019 was $25.4 million, or 23.8% of revenue, compared to $17.7 million, or 18.1% of revenue, for the first quarter of 2019 and $18.9 million, or 20.6% of revenue, for the second quarter of 2018. The sequential increase in margin growth was primarily a result of regional mix in the offshore markets and lower manufacturing costs.

Tubulars

Tubulars revenue for the second quarter of 2019 was $22.3 million, compared to $18.7 million for the first quarter of 2019, and $17.0 million for the second quarter of 2018. Improvements from the first quarter of 2019 were generally attributable to increased demand for Tubular products in the U.S. Gulf of Mexico as well as a large customer order in Mexico. Drilling tools revenue also continued to experience growth through further customer adoption of the Company's VERSAFLO™ technology which provides differentiated casing and drill pipe flowback and circulation control compared to other products in the market.    

Segment adjusted EBITDA for the second quarter of 2019 was $3.9 million, or 17.6% of revenue, compared to $4.1 million, or 22.0% of revenue, for the first quarter of 2019 and $3.3 million, or 19.5% of revenue for the second quarter of 2018.

Cementing Equipment

Cementing Equipment revenue was $26.7 million in the second quarter of 2019, compared to $27.7 million in the first quarter of 2019 and $23.5 million for the second quarter of 2018. The sequential decline was in line with expectations due to the timing of certain completions work and some international project delays.  This was partially offset by increased demand and margin improvement in the U.S. Gulf of Mexico. The U.S. onshore market also maintained activity levels sequentially, despite declining rig counts. The Company continues to expect further international expansion in this segment during the second half of the year.

Segment adjusted EBITDA for the second quarter of 2019 was $3.0 million, or 11.3% of revenue, compared to $3.8 million, or 13.7% of revenue, for the first quarter of 2019 and $4.2 million, or 17.6% of revenue, for the second quarter of 2018. The decline was due to the aforementioned lower international revenue in addition to certain targeted investment in personnel and facilities preparing for future international expansion.

Capital Expenditures, Liquidity and Cash Flow

Cash expenditures related to property, plant and equipment and intangibles were $9.1 million for the second quarter of 2019. The Company expects total capital expenditures of approximately $40 million for 2019, with the majority of spending related to new technologically advanced tools and equipment to meet customer demand.

As of June 30, 2019, the Company's consolidated cash, cash equivalents and short-term investments was $172.1 million compared to $172.0 million as of the prior quarter end. Total debt outstanding was $2.1 million as of June 30, 2019 compared to $3.9 million as of the prior quarter. Liquidity at June 30, 2019 was $237.3 million, including cash, cash equivalents and short-term investments, as well as $65.2 million available under the Company's Credit Facility. For the first time since the third quarter of 2017, the Company returned to a positive Free Cash Flow position amounting to $3.3 million due to improved operational results and working capital management.

Conference Call

The Company will host a conference call to discuss second quarter 2019 results on Tuesday, August 6, 2019 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). Participants may join the conference call by dialing (888) 771-4371 or (847) 585-4405. The conference access code is 48818535. To listen via live webcast, please visit the Investor Relations section of the Company's website, www.franksinternational.com. A presentation will also be posted on the Company's website prior to the conference call.

An audio replay of the conference call will be available approximately two hours after the conclusion of the call and will remain available for seven days. It can be accessed by dialing (888) 843-7419 or (630) 652-3042. The conference call replay access code is 48818535#. The replay will also be available in the Investor Relations section of the Company's website approximately two hours after the conclusion of the call and remain available for a period of approximately 90 days.

About Frank's International

Frank's International N.V. is a global oil services company that provides a broad and comprehensive range of highly engineered tubular running services, tubular fabrication, and specialty well construction and well intervention solutions with a focus on complex and technically demanding wells. Founded in 1938, Frank's has approximately 3,100 employees and provides services to leading exploration and production companies in both onshore and offshore environments in approximately 50 countries on six continents. The Company's common stock is traded on the NYSE under the symbol "FI." Additional information is available on the Company's website, www.franksinternational.com.

Contact:

Erin Fazio – Investor Relations
Erin.Fazio@franksintl.com
713-231-2515

 
FRANK'S INTERNATIONAL N.V.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                   
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
  2019   2019   2018   2019   2018
Revenue:                  
Services $ 127,091     $ 115,406     $ 105,746     $ 242,497     $ 197,094  
Products 28,563     29,002     26,339     57,565     50,560  
Total revenue 155,654     144,408     132,085     300,062     247,654  
                   
Operating expenses:                  
Cost of revenue, exclusive of depreciation and amortization                  
Services (1) 85,785     83,239     74,088     169,024     145,050  
Products (1) 23,475     20,128     18,798     43,603     36,427  
General and administrative expenses (1) 34,026     35,411     32,787     69,437     64,883  
Depreciation and amortization 23,913     25,242     28,862     49,155     57,162  
Severance and other charges, net 815     455     1,115     1,270     2,369  
Loss on disposal of assets 154     227     217     381     452  
Operating loss (12,514 )   (20,294 )   (23,782 )   (32,808 )   (58,689 )
                   
Other income (expense):                  
Tax receivable agreement ("TRA") related adjustments 220         (1,171 )   220     (4,112 )
Other income, net 669     529     2,033     1,198     1,593  
Interest income, net 426     768     609     1,194     1,553  
Mergers and acquisition expense                 (58 )
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