Key Energy Confirms Fourth Quarter and Fiscal 2002 Results and Comments On Market Conditions
BUSINESS WIRE - August 20, 2002 08:05
MIDLAND, Texas, Aug 20, 2002 (BUSINESS WIRE) -- Key Energy Services, Inc. (NYSE: KEG) announced today its operating results for the June 2002 quarter and fiscal year ended June 30, 2002.
Actual results were in line with estimates previously announced on July 15, 2002.
Revenues for the quarter ended June 30, 2002 were approximately $169.7 million. EBITDA for the June 2002 quarter, which is defined to exclude certain unusual items and extraordinary charges related to early debt retirement, totaled approximately $29.9 million. Net income for the June 2002 quarter, excluding certain unusual items and before extraordinary charges related to early debt retirement, was approximately $169,000, or $0.00 per diluted share. Revenues for the fiscal year ended June 30, 2002 were approximately $802.6 million. EBITDA for the fiscal year ended June 30, 2002, which is defined to exclude certain unusual items and extraordinary charges related to early debt retirement, totaled approximately $198.0 million. Earnings per diluted share for the fiscal year ended June 30, 2002, excluding certain unusual items and before extraordinary charges related to early debt retirement, were $0.44. Net loss and loss per diluted share for the June 2002 quarter (including the unusual items and extraordinary charges) were approximately $5.9 million and $0.05, respectively. Net income and earnings per diluted share for the fiscal year ended June 30, 2002 (including the unusual items and extraordinary charges) were approximately $38.1 million and $0.35, respectively.
Current market conditions have improved modestly since the end of June 2002. Since the July 4th holiday, weekly rig hours are currently averaging approximately 43,000 per week compared to approximately 42,000 during much of the June 2002 quarter. For the month ending July 31, 2002, the Company recorded 186,200 total rig hours versus 170,555 for June, with the month of July having one extra working day. Pricing has remained stable relative to the June 2002 quarter.
In July 2002, Key completed the acquisition of Q Services for 17.2 million shares of common stock and approximately $74 million in assumed debt, net of working capital, and closed a new $150 million revolving credit facility. In addition, the Company received an upgrade in its corporate credit rating to 'BB' from 'BB-' from Standard & Poors.
As previously announced, the Company recorded three unusual expense items in the June 2002 quarter: (i) an approximately $1.5 million pre-tax write-off of accounts receivable from one of the Company's prior workers' compensation carriers that was placed into receivership; (ii) an approximately $1.0 million pre-tax expense for consolidation and severance costs incurred in connection with a reduction in workforce implemented in the Company's Argentina operation and the consolidation of the Company's finance and administrative functions in Midland, Texas; and (iii) an approximately $7.0 million pre-tax adjustment to the Company's estimated accrual for workers compensation costs. Collectively, these items reduced the Company's earnings per share for the quarter and year ended June 30, 2002 by $0.05 per diluted share.
Commenting on the year, Francis D. John, Chairman and CEO, stated, "The Company had a very successful year despite the declining activity levels. Strong earnings and cash flow allowed the Company to greatly strengthen its balance sheet by reducing its net funded debt to approximately $367 million from $469 million at June 30, 2001. Concurrent with the Company's ongoing debt reduction program, Key increased capital spending during the year to approximately $89 million which included the refurbishment of 183 well service and drilling rigs, the purchase of 166 heavy oilfield service vehicles and outfitting five special well service rig packages for deployment in Egypt. During the year, the Company spent $7.9 million on technology initiatives, including the installation of 20 prototype data gathering devices on certain selected well service rigs. These initiatives will be expanded over the next two years with the installation of computers and wireless communication on the majority of the Company's working service rigs and oilfield service trucks. The Company believes this technology will greatly improve safety, internal operating efficiencies, as well as benefit our customers with improved productivity."
Mr. John concluded, "We believe Key and the industry will experience modest improvement in activity levels through the balance of calendar 2002 with stronger demand returning in calendar 2003. We are very pleased with the progress of the consolidation and integration of Q Services and expect that the majority of actions necessary to achieve the estimated $10 million annual cost savings will be implemented by the end of calendar 2002." |
