Independence Contract Drilling, Inc. Reports Financial Results For The Second Quarter Ended June 30, 2020
Independence Contract Drilling, Inc. Reports Financial Results For The Second Quarter Ended June 30, 2020 |
[04-August-2020] |
HOUSTON, Aug. 4, 2020 /PRNewswire/ -- INDEPENDENCE CONTRACT DRILLING, INC. (the "Company" or "ICD") (NYSE: ICD) today reported financial results for the three months ended June 30, 2020. Second Quarter 2020 Highlights
In the second quarter of 2020, the Company reported revenues of $21.4 million, a net loss of $10.1 million, or $2.52 per share, adjusted net loss (defined below) of $11.0 million, or $2.73 per share, and adjusted EBITDA (defined below) of $4.0 million. These results compare to revenues of $52.9 million, a net loss of $12.9 million, or $3.40 per share, adjusted net loss of $5.5 million, or $1.45 per share, and adjusted EBITDA of $12.8 million in the second quarter of 2019, and revenues of $38.5 million, a net loss of $28.2 million, or $7.53 per share, an adjusted net loss of $10.6 million, or $2.82 per share, and adjusted EBITDA of $5.1 million in the first quarter of 2020. Chief Executive Officer Anthony Gallegos commented, "Oil and gas demand destruction caused by the COVID-19 pandemic impacted the U.S. land rig count and as a result our operating rig count declined dramatically throughout the quarter. Nevertheless, cost initiatives favorably impacted the quarter, permitting us to lower operating costs to below $13,000 per day and to expand our operating margins in spite of the historic decline in operating activity. Efforts to expand our liquidity profile during the quarter were also successful, as we increased our cash balances and expanded our financial liquidity to over $40 million. Although forward visibility is very limited, we expect the third quarter to be the trough for ICD's operating rig count, and continue to work constructively with existing and potential new customers on opportunities for late third quarter and fourth quarter reactivations." Quarterly Operational Results In the second quarter of 2020, the Company's marketed fleet operated at 32% utilization and recorded 834 revenue days, compared to 84% utilization and 2,330 revenue days in the second quarter of 2019, and 66% utilization and 1,738 revenue days in the first quarter of 2020. Operating revenues in the first quarter of 2020 totaled $21.4 million, compared to $52.9 million in the second quarter of 2019 and $38.5 million in the first quarter of 2020. Included in operating revenues were $2.2 million of early termination revenue recognized during the quarter. Excluding the impacts from early termination revenue, revenue per day in the second quarter of 2020 was $19,741, compared to $20,868 in the second quarter of 2019 and $19,823 in the first quarter of 2020. Operating costs in the second quarter of 2020 totaled $14.1 million, compared to $37.5 million in the second quarter of 2019 and $30.2 million in the first quarter of 2020. Fully burdened operating costs were $12,741 per day in the second quarter of 2020, compared to $14,155 in the second quarter of 2019 and $14,648 in the first quarter of 2020. Excluding the impact from early termination revenues and decommissioning costs, fully burdened rig operating margins in the second quarter of 2020 were $7,000 per day, compared to $6,713 per day in the second quarter of 2019 and $5,175 per day in the first quarter of 2020. Sequential improvements were primarily the result of cost reduction initiatives that impacted the entire second quarter of 2020, as well as favorable group and workers compensation insurance items. Selling, general and administrative expenses in the second quarter of 2020 were $3.5 million (including $0.3 million of non-cash stock-based compensation), compared to $3.0 million (including $0.4 million of non-cash stock-based compensation) in the second quarter of 2019 and $3.8 million (including $0.6 million of non-cash stock-based compensation) in the first quarter of 2020. Sequential decreases in selling, general and administrative expenses were associated with cost cutting initiatives that impacted the entire second quarter, offset by furlough costs and professional fees associated with the various amendments to the Company's existing term loan facility and merger consideration payment schedule and related matters of $1.0 million. Drilling Operations Update The Company exited the second quarter of 2020 with six rigs earning revenues under drilling contracts. The Company expects its operating rig count to reach a trough at three to four rigs during the third quarter of 2020, with current rig reactivation opportunities existing for reactivations late during the third quarter of 2020 and the fourth quarter of 2020. The Company's backlog of drilling contracts with original terms of six months or longer was $14.9 million as of June 30, 2020, representing 2.24 rig years of activity. Approximately 84% of this backlog is expected to be realized during the remainder of 2020. Capital Expenditures and Liquidity Update Cash outlays for capital expenditures in the second quarter of 2020, net of asset sales and recoveries, was $2.6 million, including payments of $2.1 million for prior period deliverables. As of June 30, 2020, the Company had cash on hand of $17.4 million, an undrawn revolving line of credit with availability of $9.2 million based upon eligible accounts receivable, $130 million principal amount outstanding under its term loan, and $10 million outstanding under a loan issued under the Payroll Protection Program ("PPP") under the CARES Act. The term loan includes a committed $15 million accordion that remains undrawn. During the quarter, the Company instituted an at-the-market ("ATM") common stock offering with a maximum approved offering amount of $11 million. During the second quarter of 2020, the Company issued 1,192,566 shares of common stock pursuant to this program at a weighted average gross selling price of $6.15 per share, resulting in gross proceeds to the Company of $7.3 million. During the second quarter, the Company amended its term loan to permit in the future the one-time payment of one quarters' interest on a payment-in-kind ("PIK") basis, as well as extended the payment terms on approximately $2.9 million of certain merger consideration payments until June 30, 2022 that were originally scheduled for payment during the second quarter of 2020. Conference Call Details A conference call for investors will be held today, August 4, 2020, at 11:00 a.m. Central Time (12:00 p.m. Eastern Time) to discuss the Company's second quarter 2020 results. The call can be accessed live over the telephone by dialing (855) 239-3115 or for international callers, (412) 542-4125. A replay will be available shortly after the call and can be accessed by dialing (877) 344-7529 or for international callers, (412) 317-0088. The passcode for the replay is 10146504. The replay will be available until August 11, 2020. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto the Company's website at www.icdrilling.com in the Investor Relations section. A replay of the webcast will also be available for approximately 30 days following the call. About Independence Contract Drilling, Inc. Independence Contract Drilling provides land-based contract drilling services for oil and natural gas producers in the United States. The Company constructs, owns and operates a fleet of pad-optimal ShaleDriller rigs that are specifically engineered and designed to accelerate its clients' production profiles and cash flows from their most technically demanding and economically impactful oil and gas properties. For more information, visit www.icdrilling.com. Forward-Looking Statements This news release contains certain forward-looking statements within the meaning of the federal securities laws. Words such as "anticipated," "estimated," "expected," "planned," "scheduled," "targeted," "believes," "intends," "objectives," "projects," "strategies" and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to Independence Contract Drilling's operations are based on a number of expectations or assumptions which have been used to develop such information and statements but which may prove to be incorrect. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by management of Independence Contract Drilling. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of the Company's Annual Report on Form 10-K, filed with the SEC and the information included in subsequent amendments and other filings. These forward-looking statements are based on and include our expectations as of the date hereof. Independence Contract Drilling does not undertake any obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or which Independence Contract Drilling becomes aware of, after the date hereof.
The following table provides various financial and operational data for the Company's operations for the three months ending June 30, 2020 and 2019 and March 31, 2020, and the six months ending June 30, 2020 and 2019. This information contains non-GAAP financial measures of the Company's operating performance. The Company believes this non-GAAP information is useful because it provides a means to evaluate the operating performance of the Company on an ongoing basis using criteria that are used by our management. Additionally, it highlights operating trends and aids analytical comparisons. However, this information has limitations and should not be used as an alternative to operating income (loss) or cash flow performance measures determined in accordance with GAAP, as this information excludes certain costs that may affect the Company's operating performance in future periods.
Non-GAAP Financial Measures Adjusted net (loss) income, EBITDA and adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. In addition, adjusted EBITDA is consistent with how EBITDA is calculated under our credit facility for purposes of determining our compliance with various financial covenants. We define "adjusted net (loss) income" as net (loss) income before: asset impairment, net; (gain) loss on disposition of assets, net; intangible revenue; severance and merger-related expenses; and other adjustments. We define "EBITDA" as earnings (or loss) before interest, taxes, depreciation, and amortization, and we define "adjusted EBITDA" as EBITDA before stock-based compensation, non-cash asset impairments, gains or losses on disposition of assets, and other non-recurring items added back to, or subtracted from, net income for purposes of calculating EBITDA under our credit facilities. Neither adjusted net (loss) income, EBITDA or adjusted EBITDA is a measure of net income as determined by U.S. generally accepted accounting principles ("GAAP"). Management believes adjusted net (loss) income, EBITDA and adjusted EBITDA are useful because they allow our stockholders to more effectively evaluate our operating performance and compliance with various financial covenants under our credit facility and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure or non-recurring, non-cash transactions. We exclude the items listed above from net income (loss) in calculating adjusted net (loss) income, EBITDA and adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. None of adjusted net (loss) income, EBITDA or adjusted EBITDA should be considered an alternative to, or more meaningful than, net income (loss), the most closely comparable financial measure calculated in accordance with GAAP, or as an indicator of our operating performance or liquidity. Certain items excluded from adjusted net (loss) income, EBITDA and adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's return on assets, cost of capital and tax structure. Our presentation of adjusted net (loss) income, EBITDA and adjusted EBITDA should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of adjusted net (loss) income, EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures of other companies.
INVESTOR CONTACTS: Independence Contract Drilling, Inc.
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Company Codes: NYSE:ICD |
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