Basic generated a net loss of
Adjusted EBITDA (defined as net income before interest, taxes,
depreciation and amortization, excluding the 2009 goodwill impairment charge)
for the first quarter of 2009 was
In accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," Basic concluded that the goodwill
previously recorded in its well servicing, fluid services and completion and
remedial services segments was impaired in its entirety, and accordingly,
recorded a pre-tax goodwill impairment charge of
Basic recognized an effective tax benefit rate of 19.9% in the first
quarter of 2009 compared to a tax rate of 37.4% in the first quarter of 2008.
The low effective tax rate in the first quarter of 2009 was primarily due to
"We matched price competition in each of our businesses to protect market share and our current labor force. Rates declined from 10% to 30% in our various service lines. Labor and related costs, by far the biggest component of our cost structure, were pushed down as we reduced our workforce by 18%, strictly limited overtime and reduced wages and salaries throughout the company. Those cost reductions and our other efforts to streamline the operations however won't be fully reflected in our earnings until the third quarter.
"Demand for maintenance and workover services, particularly in the oil-related markets, will likely improve gradually over the next several quarters so we have not dismantled our extensive service base and our experienced workforce to match the activity levels experienced in the first quarter. We continue to evaluate each of our local markets to gauge our ability to achieve acceptable profitability in a more normal market environment and are stepping back from those markets which are hyper-competitive or may require substantially higher sustained gas prices than we foresee prevailing in the near term.
"Despite the challenging operating environment, we improved our solid
financial position during the quarter. Our cash balance increased by
"As we have seen over the last six months, one of the main challenges
facing our industry is access to capital. In order to improve our financial
flexibility, we completed an amendment to our credit agreement on
"As we look forward for the remainder of 2009, we expect that operating conditions will improve moderately due to seasonal factors and somewhat higher maintenance activity. Based on what we have seen through the date of this release, we now expect that our second quarter revenues will be five to seven percent below what we reported in the first quarter of 2009. As we have in the past, we will continue to report our monthly operating data and provide updates on what we are seeing in our markets."
Business Segment Results
Well servicing revenues declined approximately 39% to
Revenue per well servicing rig hour declined to
Well servicing segment profit in the first quarter of 2009 was
Fluid services revenue in first quarter of 2009 was
Average revenue per fluid services truck declined 28% to
Completion & Remedial Services
Completion and remedial services revenues during the first quarter of 2009
Contract drilling revenues declined to
Basic operated nine drilling rigs during the first quarter of 2009, the same as in the first quarter last year and in the fourth quarter of 2008.
During the first quarter of 2009, Basic's total capital expenditures,
including capital leases and excluding acquisitions, were approximately
During 2009, Basic plans to spend a total of approximately
Share Repurchase Program Update
During the first quarter of 2009, Basic repurchased 819,627 shares of its
common stock at an average price of
For more information, please visit Basic's website at http://www.basicenergyservices.com.
Basic will host a conference call to discuss its first quarter 2009
A telephonic replay of the conference call will be available until
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. Basic has made every reasonable effort to ensure that the
information and assumptions on which these statements and projections are
based are current, reasonable, and complete. However, a variety of factors
could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this release, including
(i) changes in demand for our services and any related material impact on our
pricing and utilizations rates, (ii) Basic's ability to execute, manage and
integrate acquisitions successfully and (iii) changes in our expenses,
including labor or fuel costs and financing costs. Additional important risk
factors that could cause actual results to differ materially from expectations
are disclosed in Item 1A of Basic's Form 10-K for the year ended
Alan Krenek, Chief Financial Officer Basic Energy Services, Inc. 432-620-5510 Jack Lascar/Sheila Stuewe DRG&E / 713-529-6600 -Tables to Follow- Basic Energy Services, Inc. Consolidated Statements of Operations, Comprehensive Income and Other Financial Data (in thousands, except per share amounts) Three Months Ended March 31, 2009 2008 Income Statement Data: (Unaudited) Revenues: Well servicing $48,814 $80,519 Fluid services 64,977 71,399 Completion and remedial services 37,259 68,458 Contract drilling 3,638 9,497 Total revenues 154,688 229,873 Expenses: Well servicing 36,917 48,466 Fluid services 44,587 46,433 Completion and remedial services 25,894 35,788 Contract drilling 3,269 7,060 General and administrative (1) 29,079 25,852 Depreciation and amortization 32,737 28,032 (Gain) loss on disposal of assets 865 225 Goodwill Impairment 204,096 - Total expenses 377,444 191,856 Operating income (loss) (222,756) 38,017 Other income (expense): Interest expense (5,736) (7,349) Interest income 220 701 Other income (expense) 134 38 Income (loss) from continuing operations before income taxes (228,138) 31,407 Income tax benefit (expense) 45,313 (11,751) Net income (loss) $(182,825) $19,656 Earnings (loss) per share of common stock: Basic $(4.57) $0.48 Diluted $(4.57) $0.47 Other Financial Data: EBITDA (2) $(189,885) $66,087 Adjusted EBITDA (2) 14,211 66,087 Capital expenditures: Acquisitions, net of cash acquired 1,150 26,858 Property and equipment 13,784 18,427 As of March 31, March 31, 2009 2008 Balance Sheet Data: (unaudited) Cash and cash equivalents $142,861 $100,174 Net property and equipment 735,304 649,987 Total assets 1,092,449 1,187,377 Total long-term debt 457,217 410,179 Total stockholders' equity 407,186 545,751 Three months Ended March 31, Segment Data: 2009 2008 Well Servicing Weighted average number of rigs 414 392 Rig hours (000's) 132.3 202.5 Rig utilization rate 44.7% 72.2% Revenue per rig hour $369 $398 Well servicing rig profit per rig hour $90 $158 Segment profits as a percent of revenue 24.4% 39.8% Fluid Services Weighted average number of fluid services trucks 814 644 Revenue per fluid services truck (000's) $80 $111 Segment profits per fluid services truck (000's) $25 $39 Segment profits as a percent of revenue 31.4% 35.0% Completion and Remedial Services Segment profits as a percent of revenue 30.5% 47.7% Contract Drilling Weighted average number of rigs 9 9 Rig operating days 248 645 Revenue per day $14,700 $14,700 Drilling rig profit per day $1,500 $3,800 Segment profits as a percent of revenue 10.1% 25.7%
(1) Includes approximately
(2) This earnings release contains references to the non-GAAP financial measure of earnings (net income) before interest, taxes, depreciation and amortization, or "EBITDA." 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, Basic believes EBITDA is a useful supplemental financial measure 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 our 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 has 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 excludes 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. The following table presents a reconciliation of net income to EBITDA, which is the most comparable GAAP performance measure, for each of the periods indicated: Three months Ended March 31, 2009 2008 Reconciliation of Net Income (Loss) to EBITDA: (Unaudited) Net income (loss) $(182,825) $19,656 Income taxes (45,313) 11,751 Net interest expense 5,516 6,648 Depreciation and amortization 32,737 28,032 EBITDA $(189,885) $66,087 The following table presents a reconciliation of net income to "Adjusted EBITDA," which means our EBITDA excluding the goodwill impairment charge in 2009: Three months Ended March 31, 2009 2008 Reconciliation of Net Income (Loss) to Adjusted EBITDA: (Unaudited) Net income (loss) $(182,825) $19,656 Goodwill impairment 204,096 - Income taxes (45,313) 11,751 Net interest expense 5,516 6,648 Depreciation and amortization 32,737 28,032 Adjusted EBITDA $14,211 $66,087
We believe Adjusted EBITDA is useful for management and investors in connection with comparisons of EBITDA excluding the items represented by the goodwill impairment charges in 2009.
Chief Financial Officer of
Jack Lascar or Sheila Stuewe,
both of DRG&E, +1-713-529-6600, for
Web Site: http://www.basicenergyservices.com