Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the key Energy services Q4, 2019 earnings call.
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Oh, no again, the conference or what's your speaker today, Katherine Hargus Senior Vice President Chief Administrative Officer Central California Secretary. Thank you. Please go ahead.
Thank you Chris and thank you all for joining key energy services for fourth quarter and full year 2019 financial results Conference call. This call includes forward looking statement a number of factors that could cause actual results to differ materially from the expectations expressed in this call including <unk>.
Doctors discussed in our 2018 form 10-K, and other reports most recently filed with the FTC, which are available on our website at Www key energy Dot Com. This call May also include references to non-GAAP financial measures. Please refer to our previously posted earnings release, which can be found on our web.
For a reconciliation of any non-GAAP financial measures provided in this call to the comparable GAAP financial measures for reference our general Investor presentation is available on Keith Web site at key energy Dotcom under the Investor Relations tab on the call. This morning, as Marshall Dodson, Keith interim CEO.
No and CFO I'm now going to turn the call over to Marshall based effort and good morning, everyone joining todays call.
Workover in fourth quarter results I want to touch on our recently completed out of court restructuring.
The process such as this is never good are easy I'm pleased with keys capital structure coming out of it and how old worst stakeholders work constructively through the process.
Significantly reduce keys leverage that improved our liquidity position it or I believe well situated to pursuing achieve or operational and strategic objectives as well as to navigate the uncertainty we in our industry face today.
I would like to thank the employees as key let's start with it should continue to deliver great and say service to our customers throughout both our restructuring as well as our internal realignment I'd also like to take our customers and vendors who have worked with us.
It was a difficult time, Turkey, well the industry's no facing new and difficult challenges I believe we're well positioned both financially and with the team would have a place to take more.
Turning to our fourth quarter results I will say at the outset their messy and impacted not only about a financial restructuring were undergoing but also our internal realignment to approve our cost structure and concentrated key on those markets, where we have the right conditions for financial success.
Our revenues for the fourth quarter came in at 85.1 billion down 21.4 million from the third quarter was about 11.4 million of that decline being due to our exit of certain markets.
The news in the markets, where we began 2020 operating in were 81.9 billion for the fourth quarter.
49 team as compared to 91.8 million in the third quarter 2019.
Excluding the impacts from more realignment that are going in revenues was due to normal seasonal factors as well as our customers completing their budget you had a year and are slowing their activity in response to market conditions. Our net loss for the fourth quarter was 30.2 million as compared to a net loss of 25.5 million into third quarter within adjusted negative.
I was just 3 million in the fourth quarter 2019.
This represented a decline of course 7 billion from the 3.7 million of negative adjusted EBITDA generated in the third cool.
The negative adjusted EBITDA for the fourth quarter 49 team is also burden by 5 million dollar charge taken in the quarter for ongoing litigation well. This charge resulted in negative EBITDA for the fourth quarter ahead of it or results benefited by the actions to reduce our cost structure and concentrate operations in markets with better conditions or results.
In the fourth quarter on the whole also benefited from better labor efficiencies comparative third quarter by reduction in order to cost some of which will be caught up on in early 2020.
For the fourth quarter <unk> rig services segment generated revenues of 53.2 million as compared to third quarter 2013 revenues of 64.5 million.
On the 11.3 billion quarter on quarter revenue to Cohen 6.4 million out it was due to the closure of certain locations with the remainder of the decline being due to fourth quarter activity reductions due to seasonal factors and customers woman or stopping programs towards year end.
Revenues from locations that we enter 2020 operating out of were 50.7 million in the fourth quarter 2019 55.5 million in the third quarter 29 case.
Averaged 132.
Rigs working in the fourth quarter versus an average of 156 rigs working in the third quarter rig hours were approximately 115000 hours in the fourth quarter 2019 with completion activity accounted for about 13% of those rig hours.
24 hour average rig count fell 2.6 to 8.4 ever during the fourth quarter as compared to 11 average rigs in the third quarter with most of that 24 hour rate decline kind of coming from our internal realignment.
Revenue per rig hour increased 2% to $463 an hour in the fourth quarter for $454 an hour the third quarter largely due to geographic in job mix is overall pricing was stable in the fourth quarter 29 team.
Operating income was 2.8 million with adjusted EBITDA was 8.5 million in the fourth quarter 2019, as compared to operating income of 2.8 million and adjusted EBITDA of 8.4 million in the third quarter 2019.
Our results benefited from better efficiency with labor and the exit of certain markets margins also benefited by about 200 basis points of adjusted EBITDA margin get into different some repair and maintenance costs.
Mortgage will be impacted in the first quarter 2020 by the usual unemployment tax impact of around a million at our house dollars for about 200 basis points of margin. We also expect around 100 basis points of an impact from our NIM as we catch up from Q4.
Well January started slow as expected in February was affected by weather activity was it was picking up in March two stood at this point to say what the impact of the recent decline in oil prices will have on the remainder of Q1 or 2020.
Revenues in our fluid management services segment were 15.2 million in the fourth quarter down from 18.29 in the third quarter, what's a little over half that decline coming from our internal realignment.
Truck hours, so 216900 hours in the fourth quarter 2019.
Operating income was 8.5 million and adjusted EBITDA was 2.2 million in the fourth quarter 49 days as compared to an operating losses point Fourmillion as adjusted EBITDA of 1.4 million in the third quarter 20 to 30.
The quarter a quarter improvement was due largely due to the a total realignment and the deferral of certain repair and maintenance activities from the seasonally slow fourth quarter into the first quarter.
Revenue for truck hours, a $130 per hour in the fourth quarter compared to $125 an hour third quarter.
Revenues in our fishing <unk> rental segment or 11 billion as compared to third quarter 2013 revenues of 14.1 million lower completion activity in or central marketplace and in the Permian Basin made up most of the quarter on quarter revenue decline.
The operating loss increased to 2.8 billion as compared to the operating loss of 1.7 million in the third quarter largely result of losses on asset sales. However, adjusted EBITDA of 1.4 million in the fourth quarter was pretty flat as compared to adjusted EBITDA grew 1.6 million in the third quarter 29 team did a reduction in labor costs in our announcement.
Our fishing <unk> rental footprint, what was largely unchanged with the operational realignment, we undertook in the fourth quarter.
Oh, well tubing services segment generated revenues of 5.8 million as compared to 9.7 million in the third quarter or average number of working larger units from 2.9 from 2.5 average units in the third quarter as we realigned our business as well as the overall softness in completion activity in the fourth quarter.
Operating income improved to 1.3 million in the fourth quarter adjusted EBITDA point 8 million as compared to an operating loss was 1.5 million negative adjusted EBITDA of point Threemillion as a result of the reduction in labor cost and improve labor efficiency due to the operational realignment.
Jay for the third quarter, 2019 was 25.3 million as compared to 21.4 million in the third quarter 29 team.
Today for the fourth quarter 2019 included a gain of 2.7 million on the reversals equity based compensation, three and a half related severance costs and 4 million and costs associated with the company's restructuring efforts Jay for the fourth quarter also includes a charge of 5 million associated with ongoing litigation.
Excluding these items DNA for the fourth quarter was 15 at a half million.
Jay for the third quarter 2019 was 21.4 billion included 1.2 million equity based compensation, our DNA run rate today is around 16 million a quarter.
Depreciation expense was 13.8 million in the fourth quarter 2019, as compared to 14.6 million in the third quarter of 29 team.
We expect depreciation expense to be around 10 million a quarter 20 twond.
Interest expense for the fourth quarter, Tony 19 was 9.4 million as compared to 8.4 million is a third quarter of 29 team.
As we announced on October 31st we did not make our scheduled 7.8 million dollar October interest payment to our target Blenders and also did not make the $9.1 million interest payment due in January.
With the completion of our restructuring the company's term loan that was reduced from 243.1 billion to 51.2 million today with an interest rate of LIBOR plus 10 in a quarter, if we're paying cash or if we elect to paying kind over the first two years ago on our interest cost is LIBOR plus 12 in a quarter.
Given the uncertainty in the market today, I expect that will elect to pick the interest for 20 Twond.
Cash flow used in operations was 12.3 million in the fourth quarter, Tony 19, and $29 million for the full year 2019 capital expenditures were 1.8 million for the fourth quarter 2019, and 18.3 million for the full year 2019.
We also had 6.2 million of proceeds from asset sales in the fourth quarter and 14.6 million over the full year 2019.
Our capital expenditures net of asset sales were 3.7 million for the full year for United team.
We also entered into financing leases 1.8 million for light duty vehicles in 2019.
Our capital spending for 2020 is still under review I expect it will seek to minimize our capex and keep it is minimal as possible.
As of December 30, Onest 2019 get under strictly cash of 14.4 million. This compares to total liquidity at September Thirtyth, Tony 19 of 38, and a half million.
Just kind of 22.6 million unrestricted cash and $15.9 million borrowing capacity at that time under the ABL facility.
On March six 2020 at the close of our restructuring transactions, we had unrestricted cash of 31.6 million with availability under the company's ABL facility at 13.6 million for total liquidity or 45.2 million.
In connection with the restructuring we reduced the size of our ABL facility down to 70 million. Our new term loan contains one financial maintenance covenants, requiring that we maintain a minimum liquidity of $10 million.
With our restructuring behind us as well as our internal realignment I believe that way are well positioned to navigate will be more challenging market in the months to calm today the outlook for all demand prices in spending by our customers as more unknowns that at all but a handful of times in the past two.
Early now to say, what all the impacts will be but with our restructured balance sheet experienced leaders and our team a great employees working hard to deliver say for that cloud service to our customers are ready to meet and overcoming the challenges ahead.
Operator. This concludes our prepared remarks, thank you.
Ladies and gentlemen, this concludes todays conference call. Thank you for participating and you may now disconnect.