HOUSTON, July 29, 2015 /PRNewswire/ -- Key Energy
Services, Inc. (NYSE: KEG) reported second quarter 2015
consolidated revenues of $197.5
million and a pre-tax GAAP loss of $96.1 million, or $0.42 per share. The results for the second
quarter include:
- a pre-tax loss of $21.4 million,
or $0.10 per share, related to a
pending sale and the associated impairment of our assets in
Oman;
- pre-tax costs of $8.4 million, or
$0.04 per share, related to the
previously disclosed Foreign Corrupt Practices Act ("FCPA")
investigations;
- a pre-tax loss of $2.1 million,
or $0.01 per share, on the sale of
certain U.S. assets; and
- pre-tax costs of $1.1 million due
to severance.
Excluding these items, the Company reported a pre-tax loss of
$63.1 million, or $0.27 per share. First quarter 2015 consolidated
revenues were $267.8 million with a
pre-tax GAAP loss of $91.1 million,
or $0.39 per share. The results for
the first quarter include a pre-tax charge of $21.7 million, or $0.09 per share, for a true-up to the impairment
charge recorded in the fourth quarter 2014 associated with the
Coiled Tubing Services segment, pre-tax costs of $18.0 million, or $0.08 per share, related to the FCPA
investigations, a pre-tax charge of $4.0
million, or $0.02 per share,
for a reserve associated with the receivable from the Company's
2012 sale of its' Argentine business, pre-tax costs of $3.3 million, or $0.01 per share, due to severance and a pre-tax
charge of $2.2 million, or
$0.01 per share, related to assets
destroyed in Mexico. Excluding
these items, the Company reported a pre-tax loss of $41.9 million, or $0.18 per share.
Overview and Outlook
Key's Chairman and Chief Executive Officer, Dick Alario, stated, "The second quarter
presented heightened challenges in the U.S. market as reduced
customer activity and competitive pressures drove utilization and
pricing lower. Also, severe weather disruptions in some of our
largest U.S. regions further compounded the decline in activity
during the quarter. Our U.S. production-related activity continued
to perform better than the broader indicators associated with
new-well completion. Although activity decline rates were lower
than we experienced in the first quarter, pricing was worse than
expected as competitive pressures intensified during the
quarter.
"We made progress during the quarter as it relates to the exit
of international markets outside of North
America. We believe we are near the finalization of a sale
of our business in Oman and
believe that we will have substantially exited these markets by the
end of 2015.
"Looking forward, recent weakness in oil prices has brought a
fresh wave of uncertainty around future commodity prices and the
associated economics required to support drilling and completion
activities. We believe this enhances the potential for a greater
shift in spending by our customers toward production maintenance
which is Key's core competency. We continue to diversify our U.S.
revenue base as a result of focusing on the mix of customers and
markets where we add the most value. In addition, we continue to
identify opportunities to improve Key's organizational and cost
structure.
"As previously announced, we successfully refinanced our
revolving credit facility through a combination of an asset-based
revolving credit facility and a term loan facility. Given what
appears to be a more prolonged low oil price environment, we expect
to spend less than $20 million on
capital expenditures during the second half of 2015. We believe a
replenished balance sheet, combined with the capital expenditure
reduction and materially lower FCPA investigation costs, should
provide Key with sufficient liquidity to emerge a stronger company
on the other side of this cycle."
The following table sets forth summary data for the second
quarter 2015 and prior comparable quarterly periods:
|
|
Three Months
Ended (unaudited)
|
|
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
|
(in
millions, except per share amounts)
|
Revenues
|
|
$
|
197.5
|
|
|
$
|
267.8
|
|
|
$
|
350.6
|
|
Net loss
|
|
(65.4)
|
|
|
(59.7)
|
|
|
(52.2)
|
|
Diluted loss per
share
|
|
(0.42)
|
|
|
(0.39)
|
|
|
(0.34)
|
|
Adjusted
EBITDA*
|
|
(8.6)
|
|
|
0.6
|
|
|
33.6
|
|
|
* Adjusted
EBITDA does not exclude costs incurred in connection with the
Company's on-going FCPA investigations.
|
U.S. Results
Second quarter 2015 U.S. Rig Services revenues of $93.3 million were down 22.8% as compared to the
first quarter. Second quarter operating loss was $4.1 million, or -4.4% of revenue, compared to
first quarter operating income of $8.0
million, or 6.6% of revenue. Second quarter results include
a loss on sale of assets of $2.1
million and severance of $0.5
million; excluding these losses, operating loss was
$1.5 million, or -1.6% of revenue.
Second quarter operating loss also included costs associated with
the relocation of rigs from outside the U.S. of $1.0 million. Total rig hours were down 14%
sequentially and competitive pressures drove pricing down more than
expected, declining approximately 10% sequentially.
Second quarter 2015 Fluid Management Services revenues of
$39.2 million were down 22.8% as
compared to the first quarter. Second quarter operating loss was
$0.1 million, or -0.2% of revenue,
compared to first quarter operating income of $1.5 million, or 2.9% of revenue. Sequential
revenue declines were driven by our continued shift away from
unprofitable oilfield water hauling and toward a saltwater
disposal-centric business model, which helped offset a sequential
pricing decline of approximately 5%.
Second quarter 2015 Fishing & Rental Services revenues of
$28.1 million were down 34.1% as
compared to the first quarter. Second quarter operating loss was
$6.6 million, or -23.4% of revenue,
compared to first quarter operating loss of $0.1 million, or -0.1% of revenue. The segment's
services associated with new-well completions, namely pipe and frac
equipment rentals, were the primary factors in the decline in
revenue and operating income.
Second quarter 2015 Coiled Tubing Services revenues of
$21.6 million were down 30.3% as
compared to the first quarter. Second quarter operating loss was
$4.1 million, or -18.9% of revenue.
First quarter operating loss was $23.8
million, or -76.8% of revenue, and includes a pre-tax
impairment charge of $21.7 million as
a true-up to the estimated goodwill impairment charge recorded in
the fourth quarter of 2014. Excluding the goodwill impairment
charges, first quarter operating loss was $2.1 million, or -6.8% of revenues. Coiled Tubing
Services revenues decreased significantly as activity tied to
new-well completions, and associated pricing for completion
services, continued to decline during the second quarter. Pricing
decline of approximately 10% was somewhat offset by cost
controls.
International Segment
Second quarter 2015 International revenues were $15.3 million, down 32.0% as compared to first
quarter 2015 revenues of $22.5
million. Second quarter operating loss was $28.9 million, or -188.5% of revenues, compared
to first quarter operating loss of $9.6
million, or -42.7% of revenues. During the second quarter,
the Company made substantive progress on the sale of assets in
Oman and recorded an impairment of
$21.4 million associated with the
disposition.
General and Administrative
Expenses
General and Administrative (G&A) expenses were $50.7 million for the second quarter compared to
$67.6 million in the prior quarter.
Second quarter G&A expenses include $8.4
million in costs associated with the FCPA investigations and
$0.2 million of severance. The
sequential decline can primarily be attributed to the reduction in
costs associated with the FCPA investigations and severance.
Excluding the FCPA investigation costs and severance, G&A
expenses declined $5.8 million
sequentially.
Capital Expenditures and Balance Sheet
Capital expenditures were $14
million during the second quarter 2015. Key's consolidated
cash balance at June 30, 2015 was
$225.5 million compared to
$35.9 million at March 31, 2015. Total debt at June 30, 2015 was $964.2
million compared to total debt of $778.3 million at March
31, 2015. During the second quarter, the Company replaced
its $400.0 million senior secured
credit facility with a $100.0 million
asset-based revolving credit facility due February 28, 2020 and a $315.0 million term loan facility due
June 1, 2020. At the end of the
second quarter, there was $269.9 of
total liquidity available to the Company. Net debt to total
capitalization at June 30, 2015 was
38.9%.
Conference Call Information
As previously announced, Key management will host a conference
call to discuss its second quarter 2015 financial results on
Thursday, July 30, 2015 at
10:00 a.m. CDT. Callers from the U.S.
and Canada should dial
888-794-4637 to access the call. International callers should dial
660-422-4879. All callers should ask for the "Key Energy Services
Conference Call" or provide the access code 75968132. The
conference call will also be available live via the internet. To
access the webcast, go to www.keyenergy.com and select
"Investor Relations."
A telephonic replay of the conference call will be available on
Thursday, July 30, 2015, beginning
approximately two hours after the completion of the conference call
and will remain available for one week. To access the replay, call
855-859-2056 or 800-585-8367. The access code for the replay is
75968132. The replay will also be accessible at
www.keyenergy.com under "Investor Relations" for a period of
at least 90 days.
Quarterly rig and truck hours have been posted on Key's website;
to access the file, go to www.keyenergy.com and select
"Investor Relations."
Consolidated
Statements of Operations (in thousands, except per share amounts,
unaudited):
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
REVENUES
|
|
$
|
197,496
|
|
|
$
|
267,799
|
|
|
$
|
350,595
|
|
|
$
|
465,295
|
|
|
$
|
706,736
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
Direct operating
expenses
|
|
158,841
|
|
|
204,530
|
|
|
262,883
|
|
|
363,371
|
|
|
521,185
|
|
Depreciation and
amortization expense
|
|
45,896
|
|
|
47,211
|
|
|
52,184
|
|
|
93,107
|
|
|
103,279
|
|
General and
administrative expenses
|
|
50,710
|
|
|
67,644
|
|
|
57,881
|
|
|
118,354
|
|
|
110,747
|
|
Impairment
expense
|
|
21,352
|
|
|
21,700
|
|
|
28,687
|
|
|
43,052
|
|
|
28,687
|
|
Operating
loss
|
|
(79,303)
|
|
|
(73,286)
|
|
|
(51,040)
|
|
|
(152,589)
|
|
|
(57,162)
|
|
Interest expense, net
of amounts capitalized
|
|
17,058
|
|
|
13,342
|
|
|
13,426
|
|
|
30,400
|
|
|
26,980
|
|
Other (income) loss,
net
|
|
(248)
|
|
|
4,432
|
|
|
(2,733)
|
|
|
4,184
|
|
|
(2,802)
|
|
Loss before tax
income taxes
|
|
(96,113)
|
|
|
(91,060)
|
|
|
(61,733)
|
|
|
(187,173)
|
|
|
(81,340)
|
|
Income tax
benefit
|
|
30,734
|
|
|
31,384
|
|
|
9,537
|
|
|
62,118
|
|
|
17,245
|
|
NET
LOSS
|
|
$
|
(65,379)
|
|
|
$
|
(59,676)
|
|
|
$
|
(52,196)
|
|
|
$
|
(125,055)
|
|
|
$
|
(64,095)
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.42)
|
|
|
$
|
(0.39)
|
|
|
$
|
(0.34)
|
|
|
$
|
(0.80)
|
|
|
$
|
(0.42)
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
156,347
|
|
|
154,816
|
|
|
153,496
|
|
|
155,586
|
|
|
153,157
|
|
Condensed
Consolidated Balance Sheets (in thousands):
|
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
225,481
|
|
|
$
|
27,304
|
|
|
Other current
assets
|
|
295,897
|
|
|
406,491
|
|
Total current
assets
|
|
521,378
|
|
|
433,795
|
|
Property and
equipment, net
|
|
1,137,534
|
|
|
1,235,258
|
|
Goodwill
|
|
561,039
|
|
|
582,739
|
|
Other assets,
net
|
|
69,827
|
|
|
70,971
|
|
TOTAL
ASSETS
|
|
$
|
2,289,778
|
|
|
$
|
2,322,763
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
44,566
|
|
|
$
|
77,631
|
|
|
Other current
liabilities
|
|
113,373
|
|
|
164,227
|
|
Total current
liabilities
|
|
157,939
|
|
|
241,858
|
|
Long-term
debt
|
|
961,080
|
|
|
737,691
|
|
Other non-current
liabilities
|
|
233,861
|
|
|
285,151
|
|
Equity
|
|
936,898
|
|
|
1,058,063
|
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
|
2,289,778
|
|
|
$
|
2,322,763
|
|
Consolidated Cash
Flow Data (in thousands, unaudited):
|
|
|
|
Six Months
Ended
|
|
|
June 30,
2015
|
|
June 30,
2014
|
Net cash provided by
(used in) operating activities
|
|
$
|
(1,198)
|
|
|
$
|
107,268
|
|
Net cash used in
investing activities
|
|
(22,130)
|
|
|
(60,040)
|
|
Net cash provided by
(used in) financing activities
|
|
221,216
|
|
|
(52,005)
|
|
Effect of exchange
rates on cash
|
|
289
|
|
|
(81)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
198,177
|
|
|
(4,858)
|
|
Cash and cash
equivalents, beginning of period
|
|
27,304
|
|
|
28,306
|
|
Cash and cash
equivalents, end of period
|
|
$
|
225,481
|
|
|
$
|
23,448
|
|
Segment Revenue
and Operating Income (in thousands, except for percentages,
unaudited):
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
93,253
|
|
|
$
|
120,822
|
|
|
$
|
169,980
|
|
|
$
|
214,075
|
|
|
$
|
334,731
|
|
Fluid Management
Services
|
|
39,178
|
|
|
50,755
|
|
|
62,087
|
|
|
89,933
|
|
|
123,675
|
|
Coiled Tubing
Services
|
|
21,609
|
|
|
31,017
|
|
|
43,108
|
|
|
52,626
|
|
|
87,603
|
|
Fishing & Rental
Services
|
|
28,142
|
|
|
42,690
|
|
|
49,340
|
|
|
70,832
|
|
|
102,550
|
|
International
|
|
15,314
|
|
|
22,515
|
|
|
26,080
|
|
|
37,829
|
|
|
58,177
|
|
Consolidated
Total
|
|
$
|
197,496
|
|
|
$
|
267,799
|
|
|
$
|
350,595
|
|
|
$
|
465,295
|
|
|
$
|
706,736
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
$
|
(4,132)
|
|
|
$
|
8,000
|
|
|
$
|
22,961
|
|
|
$
|
3,868
|
|
|
$
|
47,303
|
|
Fluid Management
Services
|
|
(59)
|
|
|
1,476
|
|
|
958
|
|
|
1,417
|
|
|
3,305
|
|
Coiled Tubing
Services
|
|
(4,083)
|
|
|
(23,822)
|
|
|
(582)
|
|
|
(27,905)
|
|
|
5,556
|
|
Fishing & Rental
Services
|
|
(6,574)
|
|
|
(56)
|
|
|
803
|
|
|
(6,630)
|
|
|
3,633
|
|
International
|
|
(28,871)
|
|
|
(9,611)
|
|
|
(36,846)
|
|
|
(38,482)
|
|
|
(47,337)
|
|
Functional
Support
|
|
(35,584)
|
|
|
(49,273)
|
|
|
(38,334)
|
|
|
(84,857)
|
|
|
(69,622)
|
|
Consolidated
Total
|
|
$
|
(79,303)
|
|
|
$
|
(73,286)
|
|
|
$
|
(51,040)
|
|
|
$
|
(152,589)
|
|
|
$
|
(57,162)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) % of Revenues
|
|
|
|
|
|
|
|
|
|
|
U.S. Rig
Services
|
|
(4.4)%
|
|
|
6.6%
|
|
|
13.5%
|
|
|
1.8%
|
|
|
14.1%
|
|
Fluid Management
Services
|
|
(0.2)%
|
|
|
2.9%
|
|
|
1.5%
|
|
|
1.6%
|
|
|
2.7%
|
|
Coiled Tubing
Services
|
|
(18.9)%
|
|
|
(76.8)%
|
|
|
(1.4)%
|
|
|
(53.0)%
|
|
|
6.3%
|
|
Fishing & Rental
Services
|
|
(23.4)%
|
|
|
(0.1)%
|
|
|
1.6%
|
|
|
(9.4)%
|
|
|
3.5%
|
|
International
|
|
(188.5)%
|
|
|
(42.7)%
|
|
|
(141.3)%
|
|
|
(101.7)%
|
|
|
(81.4)%
|
|
Consolidated
Total
|
|
(40.2)%
|
|
|
(27.4)%
|
|
|
(14.6)%
|
|
|
(32.8)%
|
|
|
(8.1)%
|
|
Following is a reconciliation of net loss as presented in
accordance with United States
generally accepted accounting principles (GAAP) to EBITDA and
Adjusted EBITDA as required under Regulation G of the Securities
Exchange Act of 1934.
Reconciliations of
EBITDA and Adjusted EBITDA to net loss (in thousands, except for
percentages, unaudited):
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
Net loss
|
|
$
|
(65,379)
|
|
|
$
|
(59,676)
|
|
|
$
|
(52,196)
|
|
Income tax
benefit
|
|
(30,734)
|
|
|
(31,384)
|
|
|
(9,537)
|
|
Interest expense, net
of amounts capitalized
|
|
17,058
|
|
|
13,342
|
|
|
13,426
|
|
Interest
income
|
|
(25)
|
|
|
(15)
|
|
|
(30)
|
|
Depreciation and
amortization
|
|
45,896
|
|
|
47,211
|
|
|
52,184
|
|
EBITDA
|
|
$
|
(33,184)
|
|
|
$
|
(30,522)
|
|
|
$
|
3,847
|
|
%
of revenues
|
|
(16.8)%
|
|
|
(11.4)%
|
|
|
1.1%
|
|
|
|
|
|
|
|
|
Severance
costs
|
|
1,104
|
|
|
3,286
|
|
|
1,043
|
|
Impairment
expense
|
|
21,352
|
|
|
21,700
|
|
|
28,687
|
|
Allowance for
collectibility of notes receivable
|
|
—
|
|
|
3,950
|
|
|
—
|
|
Loss on assets
destroyed in Mexico
|
|
—
|
|
|
2,160
|
|
|
—
|
|
Loss on sales of
certain assets
|
|
2,127
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA*
|
|
$
|
(8,601)
|
|
|
$
|
574
|
|
|
$
|
33,577
|
|
%
of revenues
|
|
(4.4)%
|
|
|
0.2%
|
|
|
9.6%
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
197,496
|
|
|
$
|
267,799
|
|
|
$
|
350,595
|
|
|
* Adjusted
EBITDA does not exclude costs incurred in connection with the
Company's on-going FCPA investigations.
|
|
Three Months Ended
June 30, 2015
|
|
U.S. Rig
Services
|
|
Fluid
Management
Services
|
|
Coiled
Tubing
Services
|
|
Fishing and
Rental
Services
|
|
International
|
|
Functional
Support
|
|
Total
|
Net income
(loss)
|
$
|
(4,066)
|
|
|
$
|
(41)
|
|
|
$
|
(4,074)
|
|
|
$
|
(6,574)
|
|
|
$
|
(28,942)
|
|
|
$
|
(21,682)
|
|
|
$
|
(65,379)
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
(30,758)
|
|
|
(30,734)
|
|
Interest expense, net
of amounts capitalized
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,058
|
|
|
17,058
|
|
Interest
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19)
|
|
|
(6)
|
|
|
(25)
|
|
Depreciation and
amortization
|
14,975
|
|
|
6,525
|
|
|
5,841
|
|
|
8,982
|
|
|
6,507
|
|
|
3,066
|
|
|
45,896
|
|
EBITDA
|
$
|
10,909
|
|
|
$
|
6,484
|
|
|
$
|
1,767
|
|
|
$
|
2,408
|
|
|
$
|
(22,430)
|
|
|
$
|
(32,322)
|
|
|
$
|
(33,184)
|
|
%
of revenues
|
11.7%
|
|
|
16.6%
|
|
|
8.2%
|
|
|
8.6%
|
|
|
(146.5)%
|
|
|
—%
|
|
|
(16.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
costs
|
466
|
|
|
11
|
|
|
76
|
|
|
116
|
|
|
428
|
|
|
7
|
|
|
1,104
|
|
Impairment
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,352
|
|
|
—
|
|
|
21,352
|
|
Loss on sale of
certain assets
|
2,155
|
|
|
(502)
|
|
|
(10)
|
|
|
471
|
|
|
13
|
|
|
—
|
|
|
2,127
|
|
Adjusted
EBITDA*
|
$
|
13,530
|
|
|
$
|
5,993
|
|
|
$
|
1,833
|
|
|
$
|
2,995
|
|
|
$
|
(637)
|
|
|
$
|
(32,315)
|
|
|
$
|
(8,601)
|
|
%
of revenues
|
14.5%
|
|
|
15.3%
|
|
|
8.5%
|
|
|
10.6%
|
|
|
(4.2)%
|
|
|
—%
|
|
|
(4.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
93,253
|
|
|
$
|
39,178
|
|
|
$
|
21,609
|
|
|
$
|
28,142
|
|
|
$
|
15,314
|
|
|
$
|
—
|
|
|
$
|
197,496
|
|
|
* Adjusted
EBITDA does not exclude costs incurred in connection with the
Company's on-going FCPA investigations.
|
"EBITDA" is defined as income or loss attributable to Key
before interest, taxes, depreciation, and amortization.
"Adjusted EBITDA" is EBITDA as further adjusted for certain
non-recurring or extraordinary items such as loss on debt
extinguishment, certain other gains or losses, asset retirements
and impairments, and certain non-recurring transaction or other
costs.
EBITDA and Adjusted EBITDA are non-GAAP measures that are
used as supplemental financial measures by the Company's management
and directors and by external users of the Company's financial
statements, such as investors, to assess:
- The financial performance of the Company's assets without
regard to financing methods, capital structure or historical cost
basis;
- The ability of the Company's assets to generate cash
sufficient to pay interest on its indebtedness;
- The Company's operating performance and return on invested
capital as compared to those of other companies in the well
services industry, without regard to financing methods and capital
structure; and
- The Company's operating trends underlying the items that
tend to be of a non-recurring nature.
EBITDA and Adjusted EBITDA have limitations as analytical
tools 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 and Adjusted EBITDA as an analytical tool include:
- EBITDA and Adjusted EBITDA do not reflect Key's current or
future requirements for capital expenditures or capital
commitments;
- EBITDA and Adjusted EBITDA do not reflect changes in, or
cash requirements necessary to service, interest or principal
payments on Key's debt;
- EBITDA and Adjusted EBITDA do 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 and Adjusted EBITDA do not
reflect any cash requirements for such replacements;
- Other companies in Key's industry may calculate EBITDA and
Adjusted EBITDA differently than Key does, limiting their
usefulness as a comparative measure; and
- EBITDA and Adjusted EBITDA are a different calculation from
earnings before interest, taxes, depreciation and amortization as
defined for purposes of the financial covenants in the Company's
senior secured credit facility, and therefore should not be relied
upon for assessing compliance with covenants.
Forward-Looking Statements
This press release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Any statements as to matters that are not of historic fact
are forward-looking statements. These forward-looking statements
are based on Key's current expectations, estimates and projections
about Key, its industry, its management's beliefs and certain
assumptions made by management, and include statements regarding
estimated capital expenditures, future operational and activity
expectations, international growth, and anticipated financial
performance for 2015. No assurance can be given that such
expectations, estimates or projections will prove to have been
correct. Whenever possible, these "forward-looking statements" are
identified by words such as "expects," "believes," "anticipates"
and similar phrases.
Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and are subject
to certain risks, uncertainties and assumptions that are difficult
to predict, including, but not limited to: risks that Key
will be unable to achieve its financial, capital expenditure and
operational projections, including quarterly and annual projections
of revenue and/or operating income and risks that Key's
expectations regarding future activity levels, customer demand, and
pricing stability may not materialize (whether for Key as a whole
or for geographic regions and/or business segments individually);
risks that fundamentals in the U.S. oil and gas markets may not
yield anticipated future growth in Key's businesses, or could
further deteriorate or worsen from the recent market
declines, and/or that Key could experience further unexpected
declines in activity and demand for its rig service, fluid
management service, coiled tubing service, and fishing and rental
service businesses; risks relating to Key's ability to implement
technological developments and enhancements; risks relating to
compliance with environmental, health and safety laws and
regulations, as well as actions by governmental and regulatory
authorities; risks relating to compliance with the FCPA and
anti-corruption laws, including risks related to increased costs in
connection with FCPA investigations; risks regarding the timing or
conclusion of the FCPA investigations, including the risk of fines
or penalties imposed by government agencies for violations of the
FCPA; risks affecting Key's international operations, including
risks affecting Key's ability to execute its plans to withdraw from
its international markets outside North
America, including Oman;
risks related to the relocation of Key's rigs and other ancillary
equipment from Colombia and
Ecuador to the United States; risks that Key may be
unable to achieve the benefits expected from acquisition and
disposition transactions; risks that Key may be unable to achieve
the benefits expected from the sale of assets in Oman; and risks associated with integration of
the acquired operations into Key's operations; risks, in responding
to changing or declining market conditions, that Key may not be
able to reduce, and could even experience increases in, the costs
of labor, fuel, equipment and supplies employed and used in Key's
businesses; risks relating to changes in the demand for or the
price of oil and natural gas; risks that Key may not be able to
execute its capital expenditure program and/or that any such
capital expenditure investments, if made, will not generate
adequate returns; risks that Key may not have sufficient liquidity;
and other risks affecting Key's ability to maintain or improve
operations, including its ability to maintain prices for services
under market pricing pressures, weather risks, and the impact of
potential increases or the benefit of potential decreases in
general and administrative expenses.
Because such statements involve risks and uncertainties, many
of which are outside of Key's control, Key's actual results and
performance may differ materially from the results expressed or
implied by such forward-looking statements. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. Other important risk factors that
may affect Key's business, results of operations and financial
position are discussed in its most recently filed Annual Report on
Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K and in other Securities and Exchange Commission
filings. Unless otherwise required by law, Key also disclaims any
obligation to update its view of any such risks or uncertainties or
to announce publicly the result of any revisions to the
forward-looking statements made here. However, readers should
review carefully reports and documents that Key files periodically
with the Securities and Exchange Commission.
About Key Energy Services
Key Energy Services is the largest onshore, rig-based well
servicing contractor based on the number of rigs owned. Key
provides a complete range of well intervention services and has
operations in all major onshore oil and gas producing regions of
the continental United States and
internationally in Mexico,
Colombia, Ecuador, the Middle
East and Russia.
Contact:
West Gotcher
713-757-5539
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/key-energy-services-reports-second-quarter-2015-earnings-300120953.html
SOURCE Key Energy Services, Inc.