Parker Drilling Reports 2019 Second Quarter Results
HOUSTON, August 5, 2019 - Parker Drilling Company (NYSE: PKD) today announced results for the second quarter ended June 30, 2019, which included a net income of $4.6 million, or diluted earnings of $0.31 per share on revenues of $156.0 million. Second quarter Adjusted EBITDA was $37.8 million (1).
Gary Rich, the Company’s President and CEO, said, “Our second quarter results, as demonstrated by our positive net income and strong Adjusted EBITDA, is a testament to our strong operational execution, ability to capture additional opportunities and improved balance sheet.
“In our rental tools business, our International rentals segment benefited from whipstock sales and continued demand for tubular running services, in particular our proprietary casing running tool. Our U.S. rental tools segment performed admirably in the second quarter in spite of the U.S. land rig count continuing to decline. Despite this softness, the U.S. offshore market continues to show modest signs of strength, and we are confident in our ability to perform well in both the U.S. land and offshore markets this year.
“In our drilling services business, our ongoing shift to more capital efficient and increasingly profitable operating activities supported the second quarter results. We also benefited from ongoing O&M activities and improving rig utilization, in both our U.S. (lower 48) drilling and International and Alaska drilling segments, as rigs returned to service in the inland barge and Mexico markets.
“Despite current market softness in the U.S., our diversified global exposure, ability to adjust capex spending, and improved capital structure provide us the ability to execute on profitable projects and deliver solid returns.”

Second Quarter Review
Revenues were $156.0 million and $157.4 million for the second and first quarter, respectively. Operating gross margin, excluding depreciation and amortization expense (gross margin) was $43.4 million and $36.5 million for the second and first quarter, respectively.
Rental Tools Services
For the Company’s rental tools services business, which is comprised of the U.S. rental tools and international rental tools segments, revenues were $75.1 million and $73.7 million for the second and first quarter, respectively. Gross margin was $30.6 million and $29.5 million for the second and first quarter, respectively. Gross margin as a percentage of revenues was 40.8 percent and 40.1 percent for the second and first quarter, respectively.
U.S. Rental Tools
U.S. rental tools segment revenues were $52.9 million and $52.6 million for the second and first quarter, respectively. Gross margin was $27.7 million and $29.0 million for the second and first quarter, respectively. Our second quarter revenues were primarily driven by customer activity in U.S. land and offshore shelf rentals.
International Rental Tools
International rental tools segment revenues were $22.2 million and $21.1 million for the second and first quarter, respectively. Gross margin was $2.9 million and $0.5 million for the second and first quarter, respectively. Our second quarter revenues were primarily driven by well construction, well intervention services and surface and tubular services.

(1) 
Adjusted EBITDA is a non-GAAP financial measure. See the reconciliation and table of net income/(loss) to EBITDA and Adjusted EBITDA later in this release for more information on non-GAAP financial measures.





Drilling Services
For the Company’s drilling services business, which is comprised of the U.S. (lower 48) drilling and International & Alaska drilling segments, revenues were $80.9 million and $83.7 million for the second and first quarter, respectively. Gross margin was $12.8 million and $7.0 million for the second and first quarter, respectively. Gross margin as a percentage of revenues was 15.8 percent, and 8.3 percent for the second and first quarter, respectively.
U.S. (Lower 48) Drilling
U.S. (lower 48) drilling segment revenues were $12.5 million and $6.6 million for the second and first quarter, respectively. Gross margin was $2.6 million for the second quarter and a loss of $0.7 million for the first quarter. Our second quarter revenues were primarily driven by our inland barge rig fleet and operations and management (“O&M”) revenue.
International & Alaska Drilling
International & Alaska drilling segment revenues were $68.5 million and $77.1 million for the second and first quarter, respectively. Gross margin were $10.2 million and $7.7 million for the second and first quarter, respectively. Our second quarter revenues were primarily driven by O&M revenue and revenue from Company-owned rigs in Sakhalin Island, Russia, Mexico and the Kurdistan region of Iraq.
Consolidated
General and administrative expense was $5.6 million for the 2019 second quarter. Total liquidity at the end of the quarter, exclusive of $2.0 million restricted cash, was $163.9 million, consisting of $139.1 million in unrestricted cash and cash equivalents and $24.8 million available under the Company’s credit facility.
Capital expenditures in the second quarter were $25.1 million, primarily related to the Company’s Rentals Tools Services business.





Conference Call
Parker Drilling has scheduled a conference call for 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Tuesday, August 6, 2019, to review second quarter results. The call will be available by telephone by dialing (+1) (412) 902-0003 and asking for the Parker Drilling Second Quarter Conference Call. The call can also be accessed through the Investor Relations section of the Company’s website. A replay of the call can be accessed on the Company’s website for 12 months and will be available by telephone through August 13, 2019 at (+1) (201) 612-7415, conference ID 13692051#.
Cautionary Statement
This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). All statements contained in this Form 10-Q, other than statements of historical facts, are forward-looking statements for purposes of these provisions. In some cases, you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “outlook,” “may,” “should,” “plan,” “seek,” “forecast,” “target,” “will,” and “would” or similar words. Forward-looking statements are based on certain assumptions and analyses we make in light of our experience and perception of historical trends, current conditions, expected future developments, and other factors we believe are relevant. Although we believe our assumptions are reasonable based on information currently available, those assumptions are subject to significant risks and uncertainties, many of which are outside our control. Each forward-looking statement speaks only as of the date of this Form 10-Q, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You should be aware that certain events could have a material adverse effect on our business, results of operations, financial condition, and cash flows. For more information about such events, see “Risk Factors” described in Item 1A. of the Company’s Annual Report filed on Form 10-K, and the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2019, along with additional risk factors described from time to time in our SEC filings.

This news release contains non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable U.S. Generally Accepted Accounting Principles (GAAP) financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided in the following tables.
Company Description
Parker Drilling provides drilling services and rental tools to the energy industry. The Company's Drilling Services business serves operators through the use of Parker-owned and customer-owned rig fleets in select U.S. and international markets, specializing in remote and harsh environment regions. The Company's Rental Tools Services business supplies premium equipment and well services to operators on land and offshore in the U.S. and international markets. More information about Parker Drilling can be found on the Company's website at www.parkerdrilling.com.

Contact: Nick Henley, Director, Investor Relations, (+1) (281) 406-2082, nick.henley@parkerdrilling.com.







PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
 
 
 
 
 
 
Successor
 
 
Predecessor
 
June 30,
2019
 
 
December 31,
2018
 
(Unaudited)
 
 
 
ASSETS
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
139,099

 
 
 
$
48,602

 
Restricted cash
2,024
 
 
 
 
10,389
 
 
Accounts and notes receivable, net of allowance for bad debts
162,718
 
 
 
 
136,437
 
 
Rig materials and supplies
19,360
 
 
 
 
36,245
 
 
Other current assets
25,234
 
 
 
 
35,231
 
 
Total current assets
348,435
 
 
 
 
266,904
 
 
Property, plant and equipment, net of accumulated depreciation
304,978
 
 
 
 
534,371
 
 
Intangible assets, net
16,558
 
 
 
 
4,821
 
 
Deferred income taxes
4,618
 
 
 
 
2,143
 
 
Other non-current assets
33,322
 
 
 
 
20,175
 
 
Total assets
$
707,911

 
 
 
$
828,414

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS EQUITY
 
 
Current liabilities:
 
 
 
 
Debtor in possession financing
$

 
 
 
$
10,000

 
Accounts payable and accrued liabilities
121,245
 
 
 
 
75,063
 
 
Accrued income taxes
5,021
 
 
 
 
3,385
 
 
Total current liabilities
126,266
 
 
 
 
88,448
 
 
Long-term debt
211,132
 
 
 
 
 
 
Other long-term liabilities
16,801
 
 
 
 
11,544
 
 
Long-term deferred tax liability
4,554
 
 
 
 
510
 
 
Commitments and contingencies
 
 
 
 
Total liabilities not subject to compromise
358,753
 
 
 
 
100,502
 
 
Liabilities subject to compromise
 
 
 
 
600,996
 
 
Total liabilities
358,753
 
 
 
 
701,498
 
 
Stockholders' equity:
 
 
 
 
Predecessor preferred stock
 
 
 
 
500
 
 
Predecessor common stock
 
 
 
 
1,398
 
 
Predecessor capital in excess of par value
 
 
 
 
766,347
 
 
Predecessor accumulated other comprehensive income (loss)
 
 
 
 
(6,879)
 
 
Successor common stock
150
 
 
 
 
 
 
Successor capital in excess of par value
344,519
 
 
 
 
 
 
Successor accumulated other comprehensive income (loss)
(152)
 
 
 
 
 
 
Retained earnings (accumulated deficit)
4,641
 
 
 
 
(634,450)
 
 
Total stockholders’ equity
349,158
 
 
 
 
126,916
 
 
Total liabilities and stockholders’ equity
$
707,911

 
 
 
$
828,414

 






PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
 
 
 
Successor
 
 
Predecessor
 
Three Months Ended June 30,
 
 
Three Months Ended June 30,
 
Three Months Ended March 31,
 
2019
 
 
2018
 
2019
Revenues
$
156,031

 
 
 
$
118,603

 
 
$
157,397

 
Expenses:
 
 
 
 
 
 
Operating expenses
112,649
 
 
 
 
91,634
 
 
 
120,871
 
 
Depreciation and amortization
20,391
 
 
 
 
27,136
 
 
 
25,102
 
 
 
133,040
 
 
 
 
118,770
 
 
 
145,973
 
 
Total operating gross margin (loss)
22,991
 
 
 
 
(167)
 
 
 
11,424
 
 
General and administrative expense
(5,610)
 
 
 
 
(8,288)
 
 
 
(8,147)
 
 
Gain (loss) on disposition of assets, net
(53)
 
 
 
 
(478)
 
 
 
384
 
 
Reorganization items
(962)
 
 
 
 
 
 
 
 
(92,977)
 
 
Total operating income (loss)
16,366
 
 
 
 
(8,933)
 
 
 
(89,316)
 
 
Other income (expense):
 
 
 
 
 
 
Interest expense
(7,663)
 
 
 
 
(11,197)
 
 
 
(274)
 
 
Interest income
374
 
 
 
 
30
 
 
 
8
 
 
Other
(644)
 
 
 
 
(1,191)
 
 
 
(10)
 
 
Total other income (expense)
(7,933)
 
 
 
 
(12,358)
 
 
 
(276)
 
 
Income (loss) before income taxes
8,433
 
 
 
 
(21,291)
 
 
 
(89,592)
 
 
Income tax expense
3,792
 
 
 
 
1,586
 
 
 
656
 
 
Net income (loss)
4,641
 
 
 
 
(22,877)
 
 
 
(90,248)
 
 
Less: Predecessor preferred stock dividend
 
 
 
 
907
 
 
 
 
 
Net income (loss) available to common stockholders
$
4,641

 
 
 
$
(23,784)

 
 
$
(90,248)

 
Basic earnings (loss) per common share:
$
0.31

 
 
 
$
(2.56)

 
 
$
(9.63)

 
Diluted earnings (loss) per common share:
$
0.31

 
 
 
$
(2.56)

 
 
$
(9.63)

 
Number of common shares used in computing earnings per share:
 
 
 
 
 
 
Basic
15,044,739
 
 
 
 
9,292,224
 
 
 
9,368,322
 
 
Diluted
15,044,739
 
 
 
 
9,292,224
 
 
 
9,368,322
 
 










PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
 
 
 
 
 
 
Successor
 
 
Predecessor
 
Three Months Ended June 30,
 
 
Three Months Ended March 31,
 
Six Months Ended June 30,
 
2019
 
 
2019
 
2018
Revenues
$
156,031

 
 
 
$
157,397

 
 
$
228,278

 
Expenses:
 
 
 
 
 
 
Operating expenses
112,649
 
 
 
 
120,871
 
 
 
183,168
 
 
Depreciation and amortization
20,391
 
 
 
 
25,102
 
 
 
55,685
 
 
 
133,040
 
 
 
 
145,973
 
 
 
238,853
 
 
Total operating gross margin (loss)
22,991
 
 
 
 
11,424
 
 
 
(10,575)
 
 
 
 
 
 
 
 
 
General and administrative expense
(5,610)
 
 
 
 
(8,147)
 
 
 
(14,489)
 
 
Gain (loss) on disposition of assets, net
(53)
 
 
 
 
384
 
 
 
(135)
 
 
Reorganization items
(962)
 
 
 
 
(92,977)
 
 
 
 
 
Total operating income (loss)
16,366
 
 
 
 
(89,316)
 
 
 
(25,199)
 
 
Other income (expense):
 
 
 
 
 
 
Interest expense
(7,663)
 
 
 
 
(274)
 
 
 
(22,437)
 
 
Interest income
374
 
 
 
 
8
 
 
 
53
 
 
Other
(644)
 
 
 
 
(10)
 
 
 
(900)
 
 
Total other income (expense)
(7,933)
 
 
 
 
(276)
 
 
 
(23,284)
 
 
Income (loss) before income taxes
8,433
 
 
 
 
(89,592)
 
 
 
(48,483)
 
 
Income tax expense
3,792
 
 
 
 
656
 
 
 
3,190
 
 
Net income (loss)
4,641
 
 
 
 
(90,248)
 
 
 
(51,673)
 
 
Less: Predecessor preferred stock dividend
 
 
 
 
 
 
 
1,813
 
 
Net income (loss) available to common stockholders
$
4,641

 
 
 
$
(90,248)

 
 
$
(53,486)

 
Basic earnings (loss) per common share:
$
0.31

 
 
 
$
(9.63)

 
 
$
(5.77)

 
Diluted earnings (loss) per common share:
$
0.31

 
 
 
$
(9.63)

 
 
$
(5.77)

 
Number of common shares used in computing earnings per share:
 
 
 
 
 
 
Basic
15,044,739
 
 
 
 
9,368,322
 
 
 
9,271,759
 
 
Diluted
15,044,739
 
 
 
 
9,368,322
 
 
 
9,271,759
 
 








PARKER DRILLING COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Dollars in Thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Successor
 
 
Predecessor
 
 
 
Three Months Ended June 30,
 
 
Three Months Ended June 30,
 
Three Months Ended March 31,
 
 
 
2019
 
 
2018
 
2019
Revenues:
 
 
 
 
 
 
 
U.S. rental tools
 
$
52,936
 
 
 
$
42,083
 
 
$
52,595
 
International rental tools
 
22,155
 
 
 
19,935
 
 
21,109
 
Total rental tools services
 
75,091
 
 
 
62,018
 
 
73,704
 
U.S. (lower 48) drilling
 
12,479
 
 
 
3,283
 
 
6,627
 
International and Alaska drilling
 
68,461
 
 
 
53,302
 
 
77,066
 
Total drilling services
 
80,940
 
 
 
56,585
 
 
83,693
 
Total revenues
 
156,031
 
 
 
118,603
 
 
157,397
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
U.S. rental tools
 
25,267
 
 
 
19,326
 
 
23,591
 
International rental tools
 
19,224
 
 
 
19,344
 
 
20,575
 
Total rental tools services
 
44,491
 
 
 
38,670
 
 
44,166
 
U.S. (lower 48) drilling
 
9,923
 
 
 
4,686
 
 
7,327
 
International and Alaska drilling
 
58,235
 
 
 
48,278
 
 
69,378
 
Total drilling services
 
68,158
 
 
 
52,964
 
 
76,705
 
Total operating expenses
 
112,649
 
 
 
91,634
 
 
120,871
 
 
 
 
 
 
 
 
 
Operating gross margin (loss), excluding depreciation and amortization:
 
 
 
 
 
U.S. rental tools
 
27,669
 
 
 
22,757
 
 
29,004
 
International rental tools
 
2,931
 
 
 
591
 
 
534
 
Total rental tools services
 
30,600
 
 
 
23,348
 
 
29,538
 
U.S. (lower 48) drilling
 
2,556
 
 
 
(1,403)
 
 
(700)
 
International and Alaska drilling
 
10,226
 
 
 
5,024
 
 
7,688
 
Total drilling services
 
12,782
 
 
 
3,621
 
 
6,988
 
Total operating gross margin (loss), excluding depreciation and amortization
 
43,382
 
 
 
26,969
 
 
36,526
 
Depreciation and amortization
 
(20,391)
 
 
 
(27,136)
 
 
(25,102)
 
Total operating gross margin (loss)
 
$
22,991
 
 
 
$
(167)
 
 
$
11,424
 







PARKER DRILLING COMPANY AND SUBSIDIARIES
ADJUSTED EBITDA
(Dollars in Thousands)
(Unaudited)
 
 
 
 
 
Successor
 
 
Predecessor
 
 
Three Months Ended
 
 
Three Months Ended
 
 
June 30, 2019
 
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
Net income (loss) available to common stockholders
 
$
4,641

 
 
 
$
(90,248)

 
 
$
(43,073)

 
 
$
(71,857)

 
 
$
(23,784)

 
Interest expense
 
7,663
 
 
 
 
274
 
 
 
8,778
 
 
 
11,350
 
 
 
11,197
 
 
Income tax expense
 
3,792
 
 
 
 
656
 
 
 
2,235
 
 
 
2,371
 
 
 
1,586
 
 
Depreciation and amortization
 
20,391
 
 
 
 
25,102
 
 
 
24,340
 
 
 
27,520
 
 
 
27,136
 
 
Predecessor preferred stock dividend
 
 
 
 
 
 
 
 
 
 
 
906
 
 
 
907
 
 
EBITDA
 
36,487
 
 
 
 
(64,216)
 
 
 
(7,720)
 
 
 
(29,710)
 
 
 
17,042
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Loss on impairment
 
 
 
 
 
 
 
 
6,708
 
 
 
43,990
 
 
 
 
 
(Gain) loss on disposition of assets, net
 
53
 
 
 
 
(384)
 
 
 
1,598
 
 
 
(9)
 
 
 
478
 
 
Pre-petition restructuring charges (1)
 
 
 
 
 
 
 
 
11,411
 
 
 
7,724
 
 
 
2,685
 
 
Reorganization items
 
962
 
 
 
 
92,977
 
 
 
9,789
 
 
 
 
 
 
 
 
Interest income
 
(374)
 
 
 
 
(8)
 
 
 
(15)
 
 
 
(23)
 
 
 
(30)
 
 
Other
 
644
 
 
 
 
10
 
 
 
414
 
 
 
709
 
 
 
1,191
 
 
Adjusted EBITDA (1) (2)
 
$
37,772

 
 
 
$
28,379

 
 
$
22,185

 
 
$
22,681

 
 
$
21,366

 

(1)
Pre-petition restructuring charges have been allocated to the respective period in which the expense was incurred. Accordingly adjusted EBITDA will differ from what was reported previously.
(2)
We believe Adjusted EBITDA is an important measure of operating performance because it allows management, investors, and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), remeasurement of foreign currency transactions, tax consequences, impairment and other special items. Special items include items impacting operating expenses that management believes detract from an understanding of normal operating performance. Management uses Adjusted EBITDA as a supplemental measure to review current period operating performance and period to period comparisons. Our Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner. EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. Generally Accepted Accounting Principles (GAAP), and should not be considered in isolation or as an alternative to operating income or loss, net income or loss, cash flows provided by or used in operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.






PARKER DRILLING COMPANY AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EARNINGS PER SHARE
(Dollars in Thousands, except Per Share)
(Unaudited)
 
 
 
 
 
 
 
Successor
 
 
Predecessor
 
 
 
Three Months Ended June 30,
 
 
Three Months Ended June 30,
 
Three Months Ended March 31,
 
 
 
2019
 
 
2018
 
2019
Net income (loss) available to common stockholders
 
$
4,641

 
 
 
$
(23,784)

 
 
$
(90,248)

 
Diluted earnings (loss) per common share
 
$
0.31

 
 
 
$
(2.56)

 
 
$
(9.63)

 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
Net adjustments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income (loss) available to common stockholders (1)
 
$
4,641

 
 
 
$
(23,784)

 
 
$
(90,248)

 
Adjusted diluted earnings (loss) per common share (1)
 
$
0.31

 
 
 
$
(2.56)

 
 
$
(9.63)

 

(1)
We believe Adjusted net income (loss) available to common stockholders and Adjusted diluted earnings (loss) per common share are useful financial measures for investors to assess and understand operating performance for period to period comparisons. Management views the adjustments to Net income (loss) available to common stockholders and Diluted earnings (loss) per common share to be items outside of the Company’s normal operating results. Adjusted net income (loss) available to common stockholders and Adjusted diluted earnings (loss) per common share are not measures of financial performance under GAAP, and should not be considered in isolation or as an alternative to Net income (loss) available to common stockholders or Diluted earnings (loss) per common share.