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 November 3, 2015 - 9:14 AM EST
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Frank’s International N.V. Announces Third Quarter 2015 Results

  • Third quarter revenue and Adjusted EBITDA were $239.9 million and $73.3 million, respectively, representing a 30.6% EBITDA margin
  • Activity levels in the quarter were stable in U.S. Offshore; declined in U.S. Land and the International segment, particularly in West Africa
  • Delivered record Tubular Sales revenue and Adjusted EBITDA of $62.4 million and $16.0 million, respectively
  • Generated positive free cash flow of $62.0 million, the ninth consecutive quarter of positive free cash flow

HOUSTON, Nov. 03, 2015 (GLOBE NEWSWIRE) -- Frank’s International N.V. (NYSE:FI) (the “Company”) today reported revenues of $239.9 million, and income from continuing operations of $24.1 million for the three months ended September 30, 2015. Diluted earnings per share for the third quarter were $0.11. Adjusted EBITDA for the third quarter was $73.3 million or 30.6% of revenue while free cash flow from operations totaled $62.0 million (See Adjusted EBITDA and free cash flow non-GAAP reconciliations included in this release).

President and CEO Gary Luquette commented, “Our focus as a company continues to center around controlling what we can control in the face of a challenging business climate. Revenues for the quarter were down in both services segments, but the benefits of our cost cutting actions and manufacturing improvements began to take hold in the U.S. Services and Tubular Sales segment margins. Activity levels were mixed during the quarter as we saw a steady Gulf of Mexico business offset by a weaker than expected International business, specifically West Africa. The International business segment margins were disproportionately impacted as the decrease in revenues outpaced our cost saving initiatives in the segment, which we expect to more fully realize in the next few quarters.”

“While business conditions continued to deteriorate in the quarter, the Frank’s team continued to serve our customers’ needs by delivering record sales in our Tubular Sales segment and holding or growing market share in our core U.S. and International areas. The outlook remains uncertain as we move towards the end of 2015 and into 2016, but further downside risk in the near term can be expected as commodity prices remain low and further capital spending cuts are anticipated.”

“Even in the face of a difficult macro environment, our strategy remains the same. We will control what we can control and offer our customers advanced technology that will further reduce their operational costs and place a premium on safe operations. Our strong balance sheet and business optimization initiatives will provide the framework for Frank’s to emerge from the down cycle a leaner company poised to take advantage of the opportunity to continue to expand our footprint in new and existing markets around the globe.”

Third Quarter 2015 Results

  • Revenue was $239.9 million, down 5.7% compared to the second quarter of 2015, and down 19.0% year-over-year
    • International Services revenue was $103.1 million, down 16.0% compared to the second quarter of 2015, and down 28.1% year-over-year
    • U.S. Services revenue was $74.4 million, down 5.1% compared to the second quarter of 2015, and down 33.6% year-over-year
    • Tubular Sales revenue was $62.4 million, up 17.2% compared to the second quarter of 2015, and up 53.3% year-over-year
  • Adjusted EBITDA totaled $73.3 million with an Adjusted EBITDA margin of 30.6%
  • Diluted earnings per share were $0.11, with weighted average shares outstanding of 209 million

Segment Results

International Services

International Services revenue from external sales was $103.1 million in the third quarter of 2015, down 16.0% compared to the second quarter of 2015, and down 28.1% compared to the third quarter of 2014. Year-over-year and sequential results were impacted by decreased activity by customers due to the lower commodity price environment, which drove customers to reduce spending, defer projects and request additional price concessions.

Segment Adjusted EBITDA for the third quarter of $39.2 million, or 38.0% of revenue, was down 29.2% compared to the second quarter of 2015, and down 40.1% compared to the third quarter of 2014. Adjusted EBITDA margin decreased sequentially due to lower volumes and price discounts, partially offset by lower compensation and supply costs.

U.S. Services

U.S. Services revenue from external sales was $74.4 million in the third quarter of 2015, down 5.1% compared to the second quarter of 2015, and down 33.6% compared to the third quarter of 2014.

For the third quarter, land revenue within the U.S. Services segment of $21.7 million was down 15.2% compared to the second quarter of 2015, and down 53.3% compared to the third quarter of 2014. Sequential and year-over-year revenue declines were driven by lower activity and pricing discounts, partially offset by an increase in market share.

Offshore revenue within the U.S. Services segment of $52.7 million for the third quarter was roughly flat compared to the second quarter of 2015, and down 19.8% compared to the third quarter of 2014. Revenue held up as a result of customers moving past operational delays, partially offset by the impact from loop currents.

Segment Adjusted EBITDA for the third quarter of $18.2 million, or 24.4% of revenue, was up 9.0% compared to the second quarter of 2015, and down 60.3% compared to the third quarter of 2014. Adjusted EBITDA and Adjusted EBITDA margin increased from the second quarter due to increased activity primarily in the U.S. offshore market.

Tubular Sales

Tubular Sales revenue from external sales was $62.4 million in the third quarter of 2015, up 17.2% compared to the second quarter of 2015, and up 53.3% compared to the third quarter of 2014. Revenue increased sequentially due to favorable volumes from contracted and spot market opportunities.

Segment Adjusted EBITDA for the third quarter of $16.0 million, or 25.6% of revenue, was up 100.4% compared to the second quarter of 2015, and up 71.1% compared to the third quarter of 2014. Sequential improvement in EBITDA margin was due to higher volumes, favorable business mix and cost rationalization actions in the manufacturing unit.

Total pipe and connector inventory decreased $34.6 million from December 31, 2014 to $150.4 million at September 30, 2015.

Deferred revenue decreased $17.7 million from December 31, 2014 to $58.4 million at September 30, 2015.

Capital Expenditures and Balance Sheet

Capital expenditures were $17.5 million for the third quarter of 2015; year to date 2015 capital expenditures were $88.3 million. The Company’s consolidated cash balance at September 30, 2015, was $507.1 million compared to $489.4 million at December 31, 2014. At September 30, 2015 there was $94.2 million of unused capacity under the Company’s $100.0 million credit facility, net of outstanding letters of credit.

Dividends

On November 2, 2015, the Board of Managing Directors of the Company (the “Management Board”), with the approval from the Board of Supervisory Directors of the Company (the “Supervisory Board”), and jointly with the Management Board, (the “Boards”), declared a cash dividend of $0.15 per share (subject to applicable Dutch dividend withholding tax), payable on December 15, 2015 to all common stockholders of record as of November 27, 2015, as part of its regular quarterly cash dividend program. The Company has paid dividends on our common stock of $69.6 million, or an aggregate of $0.45 per common share, during the nine months ended September 30, 2015. Future declarations of dividends and their record and payment dates, if any, are subject to the final determination of the Boards.

Conference Call

The Company will host a conference call to discuss third quarter results on Tuesday, November 3, 2015 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 40913038. To listen via live web cast, 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 40913038. 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 approximately 90 days.

Forward Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company’s future business strategy and prospects for growth, cash flows and liquidity, financial strategy, budget, projections and operating results, the amount, nature and timing of capital expenditures, the availability and terms of capital, the level of activity in the oil and gas industry, volatility of oil and gas prices, which have declined significantly in recent prices, unique risks associated with offshore operations, political, economic and regulatory uncertainties in international operations, the ability to develop new technologies and products, the ability to protect intellectual property rights, the ability to employ and retain skilled and qualified workers, the level of competition in the Company’s industry and other guidance. These statements are based on certain assumptions made by the Company based on management’s experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the factors discussed or referenced in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 that will be filed with the SEC. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

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 services to leading exploration and production companies in both offshore and onshore environments, with a focus on complex and technically demanding wells. Founded in 1938, Frank’s has over 4,000 employees and provides services in approximately 60 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.

Use of Non-GAAP Financial Measures

This news release and the accompanying schedules include the non-GAAP financial measures of free cash flow, Adjusted EBITDA, segment Adjusted EBITDA, and Adjusted EBITDA margin, which may be used periodically by management when discussing the Company’s financial results with investors and analysts. The accompanying schedules of this news release provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with GAAP. Free cash flow, Adjusted EBITDA, segment Adjusted EBITDA, and Adjusted EBITDA margin are presented because management believes these metrics provide additional information relative to the performance of the Company’s business. These metrics are commonly employed by financial analysts and investors to evaluate the operating and financial performance of the Company from period to period and to compare it with the performance of other publicly traded companies within the industry. You should not consider free cash flow, Adjusted EBITDA, segment Adjusted EBITDA, and Adjusted EBITDA margin in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Because free cash flow, Adjusted EBITDA, segment Adjusted EBITDA, and Adjusted EBITDA margin may be defined differently by other companies in the Company’s industry, the Company’s presentation of free cash flow, Adjusted EBITDA, segment Adjusted EBITDA, and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

The Company defines free cash flow as net cash provided by operating activities less capital expenditures. The Company defines Adjusted EBITDA as income from continuing operations before net interest income or expense, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on sale of assets, foreign currency gain or loss, stock-based compensation, other non-cash adjustments and unusual charges. The Company uses free cash flow and Adjusted EBITDA to assess its financial performance because it allows the Company to compare its operating performance on a consistent basis across periods by removing the effects of its capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and items outside the control of the Company’s management team (such as income tax rates). The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.

Please see the accompanying financial tables for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures.

          
 FRANK'S INTERNATIONAL N.V. 
 CONSOLIDATED STATEMENTS OF INCOME 
 (In thousands, except per share data) 
 (Unaudited) 
          
          
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30,
  2015   2015   2014   2015   2014 
 Revenues:          
 Equipment rentals and services $  176,553  $  201,282  $  254,047  $  610,240  $  706,698 
 Products    63,330     53,022     42,136     161,384     126,914 
 Total revenue    239,883     254,304     296,183     771,624     833,612 
          
 Operating expenses:          
 Cost of revenues, exclusive of          
 depreciation and amortization          
 Equipment rentals and services    72,389     76,692     97,919     242,681     271,939 
 Products    34,174     33,060     23,237     90,081     75,527 
 General and administrative expenses    66,929     73,797     65,220     210,523     196,431 
 Depreciation and amortization    29,032     27,710     23,254     80,743     66,342 
 Severance and other charges    1,186     1,049     -     14,208     - 
 Change in value of contingent          
  consideration    (1,532)    -     -     (1,532)    - 
 Loss (gain) on sale of assets    (1,392)    687     280     (521)    193 
 Operating income    39,097     41,309     86,273     135,441     223,180 
          
 Other income (expense):          
 Other income    918     971     1,483     2,976     6,772 
 Interest income (expense), net    173     (31)    (13)    150     23 
 Foreign currency gain (loss)    (5,329)    (2,767)    (526)    (6,563)    (526)
 Total other income (expense)    (4,238)    (1,827)    944     (3,437)    6,269 
          
 Income before income tax expense    34,859     39,482     87,217     132,004     229,449 
 Income tax expense    10,771     10,629     19,777     32,662     51,598 
          
 Net income    24,088     28,853     67,440     99,342     177,851 
 Net income attributable to          
 noncontrolling interest    7,523     8,023     20,094     27,668     53,426 
 Net income attributable to          
 Frank's International N.V.    16,565     20,830     47,346     71,674     124,425 
 Preferred stock dividends    -     (2)    -     (2)    (1)
 Net income available to          
 Frank's International N.V.          
  common shareholders $  16,565  $  20,828  $  47,346  $  71,672  $  124,424 
          
 Earnings per common share:          
 Basic $  0.11  $  0.14  $  0.31  $  0.46  $  0.81 
 Diluted $  0.11  $  0.14  $  0.31  $  0.46  $  0.80 
          
 Weighted average common shares          
 outstanding:          
 Basic    154,813     154,344     153,923     154,502     153,659 
 Diluted    209,349     209,114     207,934     209,052     207,751 
                    

 

 
 FRANK'S INTERNATIONAL N.V. 
 SELECTED OPERATING SEGMENT DATA 
 (In thousands) 
 (Unaudited) 
          
          
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30,
  2015   2015   2014   2015   2014 
Revenue         
International Services$103,076  $122,640  $143,330  $349,918  $391,371 
U.S. Services 74,417   78,418   112,149   262,120   321,468 
Tubular Sales 62,390   53,246   40,704   159,586   120,773 
Total Revenue$239,883  $254,304  $296,183  $771,624  $833,612 
          
Segment Adjusted EBITDA:         
International Services$39,157  $55,311  $65,359  $146,752  $165,260 
U.S. Services 18,190   16,684   45,796   79,767   132,643 
Tubular Sales 15,985   7,978   9,343   27,082   28,028 
Total 73,332   79,973   120,498   253,601   325,931 
Corporate and other 12   31   6   37   6 
Total Adjusted EBITDA$73,344  $80,004  $120,504  $253,638  $325,937 
                    

 

 
 FRANK'S INTERNATIONAL N.V. 
 SELECTED BALANCE SHEET AND CASH FLOW DATA 
 (In thousands) 
 (Unaudited) 
     
   September 30,   December 31, 
   2015   2014 
Cash and cash equivalents $507,053  $489,354 
Working capital  840,220   900,280 
Property, plant and equipment, net  643,313   580,142 
Total assets  1,736,144   1,758,681 
Total debt  247   304 
Series A preferred stock  705   705 
Total stockholders' equity  1,224,691   1,211,990 
Noncontrolling interest  241,223   260,546 
Total equity  1,465,914   1,472,536 
     
 
  Nine Months Ended
  September 30,
   2015   2014 
     
Net cash provided by operating activities $295,387  $273,927 
Net cash used in investing activities  (163,966)  (125,073)
Net cash used in financing activities  (117,240)  (82,849)
   14,181   66,005 
Effect of exchange rate changes on cash activities 3,518   (2,564)
Increase in cash and cash equivalents $17,699  $63,441 
     
Capital expenditures $88,296  $124,187 
         

 

 
 FRANK'S INTERNATIONAL N.V. 
 NON-GAAP FINANCIAL MEASURES AND RECONCILIATION 
 ($ in thousands) 
 (Unaudited) 
           
 ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN RECONCILIATION 
           
  Three Months Ended Nine Months Ended
  September 30, June 30, September 30, September 30,
   2015   2015   2014   2015   2014 
           
Revenues  $239,883  $254,304  $296,183  $771,624  $833,612 
           
           
Income from continuing operations $24,088  $28,853  $67,440  $99,342  $177,851 
Interest (income) expense, net  (173)  31   13   (150)  (23)
Income tax expense  10,771   10,629   19,777   32,662   51,598 
Depreciation and amortization  29,032   27,710   23,254   80,743   66,342 
Loss (gain) on sale of assets  (1,392)  687   280   (521)  193 
Foreign currency loss  5,329   2,767   526   6,563   526 
Stock-based compensation expense  6,035   8,278   9,214   22,323   29,450 
Severance and other charges  1,186   1,049   -   14,208   - 
Change in value of contingent consideration  (1,532)  -   -   (1,532)  - 
Adjusted EBITDA  $73,344  $80,004  $120,504  $253,638  $325,937 
           
 Adjusted EBITDA margin   30.6%  31.5%  40.7%  32.9%  39.1%
           
 SEGMENT ADJUSTED EBITDA RECONCILIATION 
           
  Three Months Ended Nine Months Ended
  September 30, June 30, September 30, September 30,
   2015   2015   2014   2015   2014 
Segment Adjusted EBITDA:          
International Services $39,157  $55,311  $65,359  $146,752  $165,260 
U.S. Services  18,190   16,684   45,796   79,767   132,643 
Tubular Sales  15,985   7,978   9,343   27,082   28,028 
Total  73,332   79,973   120,498   253,601   325,931 
Corporate and other  12   31   6   37   6 
Adjusted EBITDA Total  73,344   80,004   120,504   253,638   325,937 
Interest income (expense), net  173   (31)  (13)  150   23 
Income tax expense  (10,771)  (10,629)  (19,777)  (32,662)  (51,598)
Depreciation and amortization  (29,032)  (27,710)  (23,254)  (80,743)  (66,342)
(Loss) gain on sale of assets  1,392   (687)  (280)  521   (193)
Foreign currency loss  (5,329)  (2,767)  (526)  (6,563)  (526)
Stock-based compensation expense  (6,035)  (8,278)  (9,214)  (22,323)  (29,450)
Severance and other charges  (1,186)  (1,049)  -   (14,208)  - 
Change in value of contingent consideration  1,532   -   -   1,532   - 
Income from continuing operations $24,088  $28,853  $67,440  $99,342  $177,851 
           
 FREE CASH FLOW RECONCILIATION 
           
  Three Months Ended Nine Months Ended
  September 30, June 30, September 30, September 30,
   2015   2015   2014   2015   2014 
Net cash provided by operating activities $79,475  $115,783  $111,982  $295,387  $273,927 
Less: Capital expenditures  17,453   26,972   46,465   88,296   124,187 
Free cash flow  $62,022  $88,811  $65,517  $207,091  $149,740 
                     

 

 
 FRANK'S INTERNATIONAL N.V. 
 EARNINGS PER SHARE CALCULATIONS 
 (In thousands, except per share amounts) 
 (Unaudited) 
          
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30,
  2015   2015   2014   2015   2014 
 Numerator - Basic          
 Income from continuing operations $  24,088  $  28,853  $  67,440  $  99,342  $  177,851 
 Less: Net income attributable to         
 noncontrolling interest    (7,523)    (8,023)    (20,094)    (27,668)    (53,426)
 Less: Preferred stock dividends    -     (2)    -     (2)    (1)
 Net income available to         
 common shareholders $  16,565  $  20,828  $  47,346  $  71,672  $  124,424 
          
 Numerator - Diluted          
 Income from continuing operations         
 attributable to common shareholders $  16,565  $  20,828  $  47,346  $  71,672  $  124,424 
 Add: Net income attributable to         
 noncontrolling interest (1)    5,911     7,664     16,335     23,513     42,671 
 Add: Preferred stock dividends    -     2     -     2     1 
 Dilutive net income available         
 to common shareholders $  22,476  $  28,494  $  63,681  $  95,187  $  167,096 
          
 Denominator          
 Basic weighted average common shares    154,813     154,344     153,923     154,502     153,659 
 Exchange of noncontrolling interest         
 for common stock    52,976     52,976     52,976     52,976     52,976 
 Restricted stock units    1,559     1,789     1,035     1,573     1,116 
 Stock to be issued pursuant to employee stock purchase plan    1     5     -      1     -  
 Diluted weighted average common shares    209,349     209,114     207,934     209,052     207,751 
          
 Earnings per common share:          
 Basic $  0.11  $  0.14  $  0.31  $  0.46  $  0.81 
 Diluted $  0.11  $  0.14  $  0.31  $  0.46  $  0.80 
    
 __________________          
 (1)  Adjusted for the additional tax expense         
  upon the assumed conversion of the          
  Preferred Stock $  1,612  $  359  $  3,759  $  4,155  $  10,755 
                    

 

Contacts:
Blake Holcomb, Director – Investor Relations
blake.holcomb@franksintl.com
713-231-7463

Caroline Mansur – Interim Director, Communications and External Affairs
caroline.mansur@franksintl.com
713-231-2527

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Source: GlobeNewswire (November 3, 2015 - 9:14 AM EST)

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