Basic Energy Services, Inc. (NYSE: BAS) (“Basic” or the “Company”) today
announced its financial and operating results for the second quarter
ended June 30, 2019.
SECOND QUARTER 2019 HIGHLIGHTS
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Reported revenue of $189.8 million, net loss of $27.8 million and loss
per share of $1.02;
-
Increased Adjusted EBITDA1 by 14.7% to $16.5 million, as
compared to the first quarter of 2019, and generated cash from
operations of $11.3 million;
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Cash and cash equivalents totaled $53.7 million at June 30, 2019, with
no amount drawn on the ABL facility;
-
Midstream water disposal volumes increased 4% sequentially to a record
10.0 million barrels, 32% of which were delivered via pipeline; and
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Targeted cost cutting resulted in significant margin expansion, with
Completion & Remedial segment leading those improvements with direct
margins of 24%, up from 17% in the first quarter.
Second quarter 2019 revenue decreased 3.7% sequentially to
$189.8 million from $197.2 million in the first quarter of 2019. In the
second quarter of 2018, Basic generated $253.4 million in revenue.
For the second quarter of 2019, Basic reported a net loss of $27.8
million, or a loss of $1.02 per basic and diluted share. This result is
compared to a net loss of $27.5 million, or a loss of $1.02 per basic
and diluted share for the first quarter of 2019, and a net loss of $40.1
million, or a loss of $1.51 per basic and diluted share in the second
quarter of 2018.
Adjusted EBITDA1 was $16.5 million or 8.7% of revenues for
the second quarter of 2019, compared to $14.4 million, or 7.3% of
revenues in the first quarter of 2019. In the second quarter of 2018,
Basic generated Adjusted EBITDA1 of $27.0 million, or 10.6%
of revenues. Among others, adjustments to EBITDA in the second quarter
of 2019 include professional fees related to due diligence for an
unsuccessful M&A transaction of $1.2 million. Please refer to
"Supplemental Non-GAAP Financial Measures" below for further explanation
and a full reconciliation of Adjusted EBITDA.
As of June 30, 2019, the Company had total liquidity of $114.0 million,
which included cash and cash equivalents of $53.7 million and borrowing
capacity under its undrawn senior secured revolving credit facility of
$60.3 million.
Roe Patterson, President and CEO, stated, “While revenues contracted by
almost 4% sequentially, we are pleased to have improved margins by 140
basis points and increased Adjusted EBITDA1 by 15% from the
first quarter of this year. Aggressive cost cutting resulted in a
greater than 600 basis point increase in margins for Completion &
Remedial Services, with our Pumping Services Division leading the
segment in margin improvement. Additionally, while weakness in water
logistics related to lower completions and flowback activity impacted
our business, the Company posted a record for water disposal volumes of
10 million barrels, an increase of 12% over year ago levels. Margins
expanded in most of our businesses, and G&A contracted by $1 million
from the prior quarter. Despite a weakening environment over the latter
part of the quarter, our recent strategic realignment and continued
efforts over the last several months to streamline operations and cut
costs is resulting in a significant improvement in direct margins. We do
not expect current commodity prices to foster increases in our
customers' capital spending for the second half of 2019 as energy
companies strive to operate within their own cash flow constraints.
Therefore, we expect these current activity levels to continue into the
third quarter, followed by typical seasonality in the fourth quarter
with shorter daylight hours and greater potential for disruptions due to
weather.
"We have worked diligently to maintain capital flexibility, as we
continue to moderate our capital spending plan to match the updated
market outlook. As a result, we now expect capital expenditures in 2019
to total $58 million, a decrease year-over-year of 34% and down from the
$69 million expected at the end of the first quarter of 2019. As we
noted in May, we anticipate that growth capital will be spent
judiciously on long-lived water midstream assets and ancillary equipment
to support 24-hour rig packages, which offer the highest potential
return to the Company.
"Based on our updated outlook for the year, we expect to generate
Adjusted EBITDA1 of $62 to $67 million, which excludes $13.5
million of non-cash stock compensation expense and previously disclosed
non-recurring items of $2.2 million. Under the current capital plan, we
forecast a 2019 year-end cash balance of approximately $50 million, with
our ABL remaining undrawn. For the second half of 2019, projected
operating cash flows will cover our planned capital expenditures, and we
expect to have reduced our debt by approximately $21 million from year
end 2018 levels,” concluded Patterson.
Second Quarter 2019 Business Segment Results
Well Servicing
Well Servicing revenues were $58.2 million during the second quarter of
2019, a decrease of 3.9% sequentially from $60.5 million in the prior
quarter. The decrease was primarily due to decreased utilization,
particularly in June, offset in part by slightly increased pricing. Well
Servicing revenues were $63.3 million in the second quarter of 2018.
Severe weather and holidays negatively impacted Well Servicing revenues
by approximately $3.5 million in the second quarter of 2019.
The Well Servicing weighted average rig count was 308 at June 30, 2019,
down from 310 at March 31, 2019 and June 30, 2018. Rig hours were
155,200 in the second quarter of 2019, down 6% compared to 165,000 hours
in the first quarter of 2019 and down 15% from 181,600 hours in the
second quarter of last year. Rig utilization was 70% in the second
quarter of 2019, down from 74% in the first quarter of 2019 and down
from 82% in the second quarter of 2018. The Company averaged 19 24-hour
service rig rental equipment packages working for the second quarter of
2019. At the end of July 2019, the Company averaged 18 active equipment
packages. During the second quarter of 2018, the Company averaged 24
active equipment packages. Revenue for the rental equipment portion of a
24-hour package is recorded in our Completion & Remedial Services
segment.
Revenue per well servicing rig hour was up 2% to $375 in the second
quarter of 2019 compared to $367 in the previous quarter and up 8% from
$348 reported in the second quarter of 2018.
Segment profit in the second quarter of 2019 was $13.1 million, a
decrease of 1% compared to $13.3 million in the prior quarter, and a
decrease of 13% from $15.1 million during the second quarter of 2018.
Segment profit margin was 23% in the second quarter of 2019, up from
22%, due largely to the effect of the payroll tax reset in the first
quarter of 2019 and continued cost cutting. In the second quarter of
2018, segment profit margin was 24% of segment revenue.
Water Logistics
Water Logistics revenue in the second quarter of 2019 was $51.0 million,
compared to $55.6 million in the prior quarter. During the second
quarter of 2018, this segment generated $59.7 million in revenue.
Weather and holidays negatively impacted Water Logistics revenues by
$1.3 million in the second quarter of 2019.
The weighted average number of fluid services trucks decreased to 814
during the second quarter of 2019, compared to 818 during the first
quarter of 2019 and 903 during the second quarter of 2018. Trucking
demand has decreased as increasing volumes of fluids are moving through
pipelines, a significantly lower-cost alternative for our customers.
Truck hours of 403,200 during the second quarter of 2019 represented a
decrease of 5% from the 424,100 generated in the first quarter of 2019
and a decrease of 17% compared to 486,800 in the same period in 2018.
Total pipeline water volumes disposed at Basic-owned saltwater disposal
wells ("Basic SWDs") increased 4% to 3.2 million barrels during the
second quarter of 2019 compared to 3.1 million barrels during the first
quarter of 2019. Pipeline disposal volumes to Basic SWDs in the Permian
Basin remained constant at 58% of total water disposal volumes in the
Permian Basin in the second quarter of 2019 compared to the first
quarter of 2019 and up from 39% in the second quarter of 2018.
Segment profit in the second quarter of 2019 decreased by 15% to $15.5
million, compared to a profit of $18.3 million in the first quarter of
2019. Segment profit margin decreased sequentially by approximately 250
basis points to 30% due to lower demand related to decreased production
activity and lower flowback volumes during the quarter. Segment profit
in the same period in 2018 was $15.7 million, or 26% of segment revenue.
Completion & Remedial Services
Completion & Remedial Services revenue increased 2% to $78.1 million in
the second quarter of 2019 from $76.8 in the prior quarter. The increase
in revenue was primarily due to a slight increase in coiled tubing and
pumping services. In the second quarter of 2018, this segment generated
$126.9 million in revenue. Weather negatively impacted revenues by
$2.1 million in the second quarter of 2019.
At June 30, 2019, Basic had approximately 479,000 hydraulic horsepower
(“HHP”), down 10,000 from the previous quarter and down from 517,000 at
June 30, 2018. Weighted average HHP for the second quarter of 2019
decreased to 486,000 from first quarter of 2019 levels of 503,000. The
decrease in horsepower was mainly caused by the moving of pumps from the
Pumping Services Division to well service operations to support 24-hour
rig packages.
Segment profit in the second quarter of 2019 increased to $18.4 million
compared to $13.4 million in the prior quarter. Segment margin for the
second quarter of 2019 increased over 600 basis points to 24% compared
to 17% during the previous quarter. The increase in segment gross profit
was due to the ongoing margin expansion initiatives commenced in the
first quarter of 2019, which included significant cost cutting and
streamlining of operations and field offices. These improvements
resulted in incremental margins of over 400% for the segment from the
first quarter. During the second quarter of 2018, segment gross profit
was $26.4 million, or 21% of segment revenue.
Other Services
During the first quarter of 2019, Basic created an "Other Services"
segment, which combines its former Contract Drilling segment with its
manufacturing entity. This change was effective January 1, 2019, and
retrospectively for all periods presented. Other Services revenue
decreased by 39.2% to $2.6 million during the second quarter of 2019
from $4.3 million in the prior quarter. The decrease was related to
decreased demand in the Company's manufacturing line of business. During
the second quarter of 2018, after giving effect to Basic's realigned
segments, this segment generated $3.5 million in revenue. Basic marketed
nine drilling rigs during the second quarter and eleven during the first
quarter of 2019. Revenue per drilling day in the second quarter of 2019
was up 3% to $24,900, compared to $24,200 in the previous quarter, and
down 3% from $25,700 in the second quarter of 2018.
Rig operating days during the second quarter of 2019 decreased by 22% to
90 compared to 115 in the prior quarter, resulting in rig utilization of
11% during the second quarter of 2019 compared to 12% during the prior
quarter. In the comparable period in 2018, rig operating days were 91,
resulting in a utilization rate of 9%.
Other Services segment loss in the second quarter of 2019 was $0.3
million compared to profits of $0.3 million in the prior quarter and
$0.3 million in the second quarter of 2018. Segment margin loss for the
second quarter of 2019 was 13.2% compared to segment margin profit of 8%
in the prior quarter. Last year in the comparable period, segment margin
was 7%. The margin decline is mainly due to decreased revenues in the
manufacturing line of business within the segment. Contract drilling
stand-alone margins were 20% in the second quarter of 2019, flat with
the first quarter of 2019 and down from 25% in the second quarter of
2018.
General & Administrative Expense
Reported general and administrative (“G&A”) expense decreased to $34.8
million in the second quarter of 2019 compared to $35.5 million in the
first quarter of 2019 and down from $51.5 million in the second quarter
of 2018. Non-cash stock compensation, included in G&A, was $3.3 million
for the second quarter of 2019, consistent with $3.3 million in the
first quarter of 2019. Second quarter 2018 non-cash stock compensation,
included in G&A, was $9.6 million. Excluding non-cash stock compensation
and nonrecurring professional fees related to due diligence for
unsuccessful M&A activities of $1.2 million, G&A for the second quarter
of 2019 decreased $1.0 million from the previous quarter, with further
annualized cost reductions expected for the remainder of 2019.
Interest Expense
Net interest expense for the second quarter of 2019 was $10.4 million,
which included interest on Basic’s Senior Secured Notes, the ABL
facility, capital leases and other financings. Net interest expense in
the first quarter of 2019 was $10.5 million, and $12.7 million in the
second quarter of 2018.
Income Taxes
Tax benefit for the second quarter of 2019 was $28,000. The effective
tax benefit rate was 0% in the second quarter of 2019 compared to of
6.3% in the prior quarter. The tax benefit of $0.3 million in the second
quarter of 2018 translated into an effective tax benefit rate of 1%.
During the first quarter of 2019, Basic filed an amended 2007 federal
tax return under Sections 172(b)(1)(C) and 172(f) of the Internal
Revenue Code of 1986, as amended, which allowed the Company to carryback
workers’ compensation expenses in years we had Net Operating Losses
("NOL") for up to 10 years. The Company carried back approximately $5.3
million of expense to 2007, which allowed Basic to claim a refund of
$1.9 million of 2007 taxes. The net effect of this transaction was a tax
benefit and a reduction of our NOL of $1.9 million in the quarter ended
March 31, 2019.
As of June 30, 2019, the Company had approximately $843.5 million of NOL
carryforwards for federal income tax purposes. The Company provides a
valuation allowance when it is more likely than not that some portion of
the deferred tax assets will not be realized. As of June 30, 2019, a
valuation allowance of $184.0 million was recorded against the Company's
net deferred tax assets for all jurisdictions that are not expected to
be realized.
Cash and Total Liquidity
As of June 30, 2019, the Company had total liquidity of $114.0 million,
which included cash and cash equivalents of $53.7 million and borrowing
capacity under the ABL facility of $60.3 million. The Company was
undrawn on the ABL facility at the end of the second quarter of 2019.
Basic reported cash and cash equivalents of $63.8 million and
availability under the ABL facility of $66.2 million at March 31, 2019,
and reported cash and cash equivalents of $30.8 million and availability
under its prior ABL facility of $14.7 million at June 30, 2018.
During the first half of 2019, cash provided by operations was
$11.3 million, compared to cash provided by operations of $25.1 million
in the comparable period in 2018. Basic used $21.5 million to decrease
accounts payable in the first half of 2019, compared to $6.8 million
provided by increasing accounts payable in the first half of 2018. Cash
used in investing activities was $28.4 million in the first half of
2019, compared to cash used in investing activities of $30.7 million in
the first half of 2018. Cash used in financing activities during the
first half of 2019 was $19.5 million compared to cash used in financing
activities of $2.8 million in the same period of 2018. Payments on
capital leases during the six months ended June 30, 2019 were $17.3
million, compared to payments on capital leases of $27.1 million in the
comparative period of 2018.
Share Repurchase Plan
On May 31, 2019, Basic announced that its Board of Directors had
authorized the repurchase of up to $5.0 million of common stock in the
open market. This authorization expires on June 4, 2020, and the timing
and actual number of shares repurchased will depend on a variety of
factors, including the stock price, corporate and regulatory
requirements and other market and economic conditions. The share
repurchase program may be suspended or discontinued as determined by the
Board of Directors. As of June 30, 2019, Basic had repurchased 596,194
shares for a total of $1.3 million.
Capital Expenditures
Total capital expenditures during the second quarter of 2019 were
approximately $18.3 million, including $1.4 million for capital leases,
and an increase in accounts payable related to capital expenditures of
approximately $2.3 million. Additionally, we booked $2.3 million in
proceeds from dispositions during the quarter, partially offsetting our
cash capital expenditures. We currently anticipate 2019 capital
expenditures of approximately $58 million, including approximately
$22 million of expansion capital, of which $8 million will be funded by
capital leases and other financings. The focus of our expansion capital
will be strengthening our position in the growing and attractive water
disposal midstream services line of business. Approximately 65% of our
2019 growth capital is expected to be allotted to long-lived water
midstream infrastructure projects. These projects are expected to
continue delivering improvements in disposal water volumes, Basic SWD
utilization and high margin contribution as oil production and residual
water disposal demand in our operating areas continues to increase.
Conference Call
Further details are provided in the presentation for our quarterly
conference call to review the second quarter 2019 results, available in
the investor relations section of our corporate website. The Company
will host a conference call to discuss its second quarter 2019 results
on Thursday, August 1, 2019, at 9:00 a.m. Eastern Time (8:00 a.m.
Central Time). To access the call, please dial (412) 902-0003 and ask
for the “Basic Energy Services” call at least 10 minutes prior to the
start time. The conference call will also be broadcast live via the
Internet and can be accessed through the investor relations section of
the Company's corporate website, www.basicenergyservices.com.
A telephonic replay of the conference call will be available until
August 8, 2019, and may be accessed by calling (201) 612-7415 and using
pass code 13691698#. A webcast archive will be available at www.basicenergyservices.com
shortly after the call and will be accessible for approximately 30 days.
About Basic Energy Services
Basic Energy Services provides well site services essential to
maintaining production from the oil and gas wells within its operating
areas. The Company’s operations are managed regionally and are
concentrated in major United States onshore oil-producing regions
located in Texas, New Mexico, Oklahoma, Arkansas, Kansas, Louisiana,
Wyoming, North Dakota, California and Colorado. Our operations are
focused in liquids-rich basins that have historically exhibited strong
drilling and production economics in recent years. Specifically, we have
a significant presence in the Permian Basin, Powder River Basin, and the
Bakken, Eagle Ford, and Denver-Julesburg shales. We provide our services
to a diverse group of over 2,000 oil and gas companies. Additional
information on Basic Energy Services is available on the Company’s
website at www.basicenergyservices.com.
Safe Harbor Statement
This release includes forward-looking statements and projections, made
in reliance on the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are not
statements of historical fact and reflect Basic’s current views about
future events. The words "believe," "estimate," "expect," "anticipate,"
"project," "intend," "seek," "could," "should," "may," "potential" and
similar expressions are intended to identify forward-looking statements.
However, the absence of these words does not mean that the statements
are not forward-looking. Although Basic believes the expectations
reflected in its forward-looking statements are reasonable and are based
on reasonable assumptions and estimates, certain risks and uncertainties
could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this release and
the presentation. These risks and uncertainties include, without
limitation, our ability to successfully execute, manage and integrate
acquisitions, reductions in our customers’ capital budgets, our own
capital budget, limitations on the availability of capital or higher
costs of capital and volatility in commodity prices for crude oil and
natural gas. Additional important risk factors that could cause actual
results to differ materially from expectations are disclosed in Item 1A
of the Company’s most recent Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission. While Basic makes
these statements and projections in good faith, neither Basic nor its
management can guarantee that the transactions will be consummated or
that anticipated future results will be achieved. Any forward-looking
statement speaks only as of the date on which such statement is made and
Basic assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking
statements made by Basic, whether as a result of new information, future
events, or otherwise, except as required by applicable law.
1Adjusted EBITDA and EBITDA are not measures determined
in accordance with United States generally accepted accounting
principles (“GAAP”). See “Supplemental Non-GAAP Financial Measures”
below for further explanation and reconciliations to the most
directly comparable financial measures calculated and presented in
accordance with GAAP.
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Basic Energy Services, Inc.
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Consolidated Statements of Operations and Other Financial Data
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(in thousands, except per share amounts)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2019
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2018
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2019
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2018
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(Unaudited)
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(Unaudited)
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Income Statement Data:
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Revenues:
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Completion & Remedial Services
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$
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78,061
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$
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126,948
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$
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154,895
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$
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244,545
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Well Servicing
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58,168
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63,268
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|
|
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118,683
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120,219
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Water Logistics
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51,031
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59,679
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|
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106,632
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116,188
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Other Services
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|
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2,587
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|
|
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3,474
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|
|
|
6,839
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|
|
|
7,082
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Total revenues
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189,847
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253,369
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387,049
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488,034
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Expenses:
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Completion & Remedial Services
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59,660
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100,528
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123,092
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190,187
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Well Servicing
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45,047
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48,200
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92,243
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94,712
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Water Logistics
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35,529
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44,008
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72,828
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84,931
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Other Services
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2,929
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3,223
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6,843
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7,445
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General and administrative(a)
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34,803
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51,460
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70,325
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92,468
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Depreciation and amortization
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28,991
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31,161
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56,489
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61,396
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(Gain) loss on disposal of assets
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342
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1,921
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|
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1,797
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3,700
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Total expenses
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|
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207,301
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280,501
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423,617
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534,839
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Operating loss
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(17,454
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)
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(27,132
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)
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(36,568
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)
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(46,805
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)
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Other income (expense):
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Interest expense
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(10,518
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)
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(12,806
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)
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|
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(21,274
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)
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|
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(24,089
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)
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Interest income
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|
|
115
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|
|
|
60
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|
|
|
360
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|
|
|
87
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Other income
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|
|
52
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|
|
|
102
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|
|
|
350
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|
|
441
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Loss before income taxes
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|
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(27,805
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)
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(39,776
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)
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(57,132
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)
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(70,366
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)
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Income tax benefit (expense)
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|
|
28
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|
|
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(278
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)
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1,879
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(219
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)
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Net loss
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$
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(27,777
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)
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$
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(40,054
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)
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$
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(55,253
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)
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$
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(70,585
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)
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Loss per share of common stock:
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Basic share
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$
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(1.02
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)
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$
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(1.51
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)
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$
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(2.04
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)
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$
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(2.67
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)
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Diluted share
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$
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(1.02
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)
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$
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(1.51
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)
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$
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(2.04
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)
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$
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(2.67
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)
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Other Financial Data:
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EBITDA1
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$
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11,589
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$
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4,131
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|
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$
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20,271
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$
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15,032
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Adjusted EBITDA1
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16,478
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|
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26,976
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30,825
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50,261
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Capital expenditures:
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|
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Property and equipment
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$
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14,474
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$
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16,286
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$
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33,359
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$
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31,698
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Capital leases
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1,444
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7,726
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7,588
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11,047
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As of
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June 30,
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December 31,
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2019
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2018
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|
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(Unaudited)
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(Audited)
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Balance Sheet Data:
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Cash and cash equivalents
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$
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53,714
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$
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90,300
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Net property and equipment
|
|
|
429,689
|
|
448,801
|
Total assets
|
|
|
701,823
|
|
761,777
|
Total long-term debt
|
|
|
316,806
|
|
322,701
|
Total stockholders' equity
|
|
|
169,096
|
|
219,428
|
1Adjusted EBITDA and EBITDA are not measures determined in
accordance with United States generally accepted accounting
principles (“GAAP”). See “Supplemental Non-GAAP Financial Measures”
below for further explanation and reconciliations to the most
directly comparable financial measures calculated and presented in
accordance with GAAP.
|
(a) Includes approximately $3,330,000 and $9,626,000 of non-cash
compensation for the three months ended June 30, 2019 and 2018,
respectively, and $6,604,000 and $16,424,000 for the six months
ended June 30, 2019 and 2018, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
2019
|
|
|
|
2018
|
|
Segment Data:
|
|
(Unaudited)
|
|
|
|
|
Completion & Remedial Services
|
|
|
|
|
|
|
|
|
Total hydraulic horsepower (HHP)
|
|
|
479,000
|
|
|
|
517,000
|
|
|
|
479,000
|
|
|
|
520,000
|
|
Total frac HHP
|
|
|
344,500
|
|
|
|
410,000
|
|
|
|
344,500
|
|
|
|
411,000
|
|
Coiled tubing units
|
|
|
17
|
|
|
|
18
|
|
|
|
17
|
|
|
|
18
|
|
Rental and fishing tool stores
|
|
|
15
|
|
|
|
16
|
|
|
|
15
|
|
|
|
16
|
|
Segment profits as a percent of revenue
|
|
|
24
|
%
|
|
|
21
|
%
|
|
|
21
|
%
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
Water Logistics
|
|
|
|
|
|
|
|
|
Weighted average number of fluid service trucks
|
|
|
814
|
|
|
|
903
|
|
|
|
816
|
|
|
|
932
|
|
Truck hours (000's)
|
|
|
403.2
|
|
|
|
486.8
|
|
|
|
827.3
|
|
|
|
966.4
|
|
Pipeline volumes (000's)
|
|
|
3,170
|
|
|
|
2,064
|
|
|
|
6,220
|
|
|
|
3,615
|
|
Segment revenues (000's)
|
|
$
|
51,031
|
|
|
$
|
59,679
|
|
|
$
|
106,632
|
|
|
$
|
116,188
|
|
Segment profits as a percent of revenue
|
|
|
30
|
%
|
|
|
26
|
%
|
|
|
32
|
%
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
Well Servicing
|
|
|
|
|
|
|
|
|
Weighted average number of rigs
|
|
|
308
|
|
|
|
310
|
|
|
|
309
|
|
|
|
310
|
|
Rig hours (000's)
|
|
|
155.2
|
|
|
|
181.6
|
|
|
|
320.2
|
|
|
|
350.1
|
|
Rig utilization rate
|
|
|
70
|
%
|
|
|
82
|
%
|
|
|
72
|
%
|
|
|
79
|
%
|
Revenue per rig hour, excluding manufacturing
|
|
$
|
375
|
|
|
$
|
348
|
|
|
$
|
371
|
|
|
$
|
343
|
|
Well servicing rig profit per rig hour
|
|
$
|
85
|
|
|
$
|
83
|
|
|
$
|
83
|
|
|
$
|
73
|
|
Segment profits as a percent of revenue
|
|
|
23
|
%
|
|
|
24
|
%
|
|
|
22
|
%
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
Other Services
|
|
|
|
|
|
|
|
|
Weighted average number of rigs
|
|
|
9
|
|
|
|
11
|
|
|
|
10
|
|
|
|
11
|
|
Rig operating days
|
|
|
90
|
|
|
|
91
|
|
|
|
205
|
|
|
|
266
|
|
Drilling utilization rate
|
|
|
11
|
%
|
|
|
9
|
%
|
|
|
12
|
%
|
|
|
13
|
%
|
Revenue per day (000's)
|
|
$
|
24.9
|
|
|
$
|
25.7
|
|
|
$
|
24.5
|
|
|
$
|
20.1
|
|
Segment profits as a percent of revenue
|
|
|
(13
|
)%
|
|
|
7
|
%
|
|
|
0
|
%
|
|
|
(5
|
)%
|
Contract Drilling profits as a percent of revenue
|
|
|
20
|
%
|
|
|
25
|
%
|
|
|
20
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
This earnings release contains references to the non-GAAP financial
measure of earnings (net income) before interest, which includes losses
on debt extinguishment, taxes, depreciation and amortization, or
“EBITDA.” This earnings release also contains references to the non-GAAP
financial measure of earnings (net income) before interest, taxes,
depreciation and amortization, the gain or loss on disposal of assets,
non-cash stock compensation, contemplated deal costs, executive bonus
payments, strategic consulting and realignment costs, costs for a
withdrawn bond offering, bad debt, executive retirement costs, and
professional fees for tax consulting, or “Adjusted EBITDA.” EBITDA and
Adjusted EBITDA should not be considered in isolation or as a substitute
for operating income, net income or loss, cash flows provided by
operating, investing and financing activities, or other income or cash
flow statement data prepared in accordance with GAAP. However, the
Company believes EBITDA and Adjusted EBITDA are useful supplemental
financial measures used by its management and directors and by external
users of its financial statements, such as investors, to assess:
-
The financial performance of its assets without regard to financing
methods, capital structure or historical cost basis;
-
The ability of its assets to generate cash sufficient to pay interest
on its indebtedness; and
-
Its operating performance and return on invested capital as compared
to those of other companies in the well servicing industry, without
regard to financing methods and capital structure.
EBITDA and Adjusted EBITDA each have limitations as an analytical tool
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 and Adjusted EBITDA exclude 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 its 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, its 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; and
-
Other companies in its industry may calculate EBITDA differently than
Basic does, limiting its usefulness as a comparative measure.
In addition to each of the limitations with respect to EBITDA noted
above, the limitations to using Adjusted EBITDA as an analytical tool
include:
-
Adjusted EBITDA does not reflect Basic’s gain or loss on disposal of
assets;
-
Adjusted EBITDA does not reflect Basic’s non-cash stock compensation;
-
Adjusted EBITDA does not reflect Basic’s professional fees related to
tax recovery during the six months ended June 30, 2019;
-
Adjusted EBITDA does not reflect Basic’s one-time costs incurred for
contemplated mergers and acquisitions that we did not pursue during
the six months ended June 30, 2019; and one-time costs for a withdrawn
bond offering during the six months ended June 30, 2018;
-
Adjusted EBITDA does not reflect Basic’s executive bonus expense for
2017 that was approved by the Compensation Committee of the Board of
Directors and paid during the six months ended June 30, 2018;
-
Adjusted EBITDA does not reflect Basic's strategic consulting fees
during the six months ended June 30, 2018;
-
Adjusted EBITDA does not reflect the write-off of certain bad debt
related to a single customer incurred during the six months ended June
30, 2018;
-
Adjusted EBITDA does not reflect Basic's accrual for expected Texas
state sales tax audit settlement accrued during the six months ended
June 30, 2018;
-
Adjusted EBITDA does not reflect payments for executive retirements
during the six months ended June 30, 2018;
-
Other companies in the industry may calculate Adjusted EBITDA
differently than Basic does, limiting its usefulness as a comparative
measure.
The following table presents a reconciliation of net loss to EBITDA
(unaudited, in thousands):
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
2019
|
|
|
|
2018
|
|
Reconciliation of Net Loss to EBITDA:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(27,777
|
)
|
|
$
|
(40,054
|
)
|
|
$
|
(55,253
|
)
|
|
$
|
(70,585
|
)
|
Income tax benefit
|
|
$
|
(28
|
)
|
|
|
278
|
|
|
|
(1,879
|
)
|
|
|
219
|
|
Net interest expense
|
|
$
|
10,403
|
|
|
|
12,746
|
|
|
|
20,914
|
|
|
|
24,002
|
|
Depreciation and amortization
|
|
$
|
28,991
|
|
|
|
31,161
|
|
|
|
56,489
|
|
|
|
61,396
|
|
EBITDA
|
|
$
|
11,589
|
|
|
$
|
4,131
|
|
|
$
|
20,271
|
|
|
$
|
15,032
|
|
|
|
|
|
|
|
|
|
|
The following table presents a reconciliation of net loss to Adjusted
EBITDA (unaudited, in thousands):
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
2019
|
|
|
|
2018
|
|
Reconciliation of Net Loss to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(27,777
|
)
|
|
$
|
(40,054
|
)
|
|
$
|
(55,253
|
)
|
|
$
|
(70,585
|
)
|
Income tax benefit
|
|
|
(28
|
)
|
|
|
278
|
|
|
|
(1,879
|
)
|
|
|
219
|
|
Net interest expense
|
|
|
10,403
|
|
|
|
12,746
|
|
|
|
20,914
|
|
|
|
24,002
|
|
Depreciation and amortization
|
|
|
28,991
|
|
|
|
31,161
|
|
|
|
56,489
|
|
|
|
61,396
|
|
(Gain) loss on disposal of assets
|
|
|
342
|
|
|
|
1,921
|
|
|
|
1,797
|
|
|
|
3,700
|
|
Non cash stock compensation
|
|
|
3,330
|
|
|
|
6,036
|
|
|
|
6,604
|
|
|
|
12,834
|
|
Contemplated deal costs
|
|
|
1,217
|
|
|
|
—
|
|
|
|
1,217
|
|
|
|
—
|
|
Professional fees
|
|
|
—
|
|
|
|
—
|
|
|
|
936
|
|
|
|
—
|
|
Audit related state sales and use tax
|
|
|
—
|
|
|
|
5,983
|
|
|
|
—
|
|
|
|
5,983
|
|
One-time executive compensation costs
|
|
|
—
|
|
|
|
3,855
|
|
|
|
—
|
|
|
|
5,459
|
|
Bad debt
|
|
|
—
|
|
|
|
3,100
|
|
|
|
—
|
|
|
|
3,100
|
|
Costs for withdrawn bond offering
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,753
|
|
Strategic consulting and realignment
|
|
|
—
|
|
|
|
1,950
|
|
|
|
—
|
|
|
|
2,400
|
|
Adjusted EBITDA
|
|
$
|
16,478
|
|
|
$
|
26,976
|
|
|
$
|
30,825
|
|
|
$
|
50,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents a reconciliation of projected 2019 net loss
to Adjusted EBITDA and full year 2018 Adjusted EBITDA (unaudited, in
thousands):
|
2019
|
|
2018
|
|
Outlook
|
|
Actual
|
Reconciliation of Net Loss to Adjusted EBITDA:
|
|
|
|
Net loss
|
$ (111,000) ~ (106,000)
|
|
$
|
(144,597)
|
Income tax (benefit) expense
|
~ (1,879)
|
|
227
|
Net interest expense
|
~ 41,400
|
|
45,489
|
Depreciation and amortization
|
~ 114,200
|
|
126,417
|
(Gain) loss on disposal of assets
|
~ 3,400
|
|
(2,598)
|
Non cash stock compensation
|
~13,500
|
|
23,426
|
Loss on extinguishment of debt
|
—
|
|
26,429
|
Audit-related state sales and use tax
|
—
|
|
5,983
|
Contemplated deal costs
|
~ 1,220
|
|
1,753
|
Other non-recurring & special items
|
~ 1,000
|
|
14,443
|
Adjusted EBITDA
|
$ 62,000 ~ 67,000
|
|
$
|
96,972
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190731006036/en/
Copyright Business Wire 2019