Tesco Corporation Reports Fourth Quarter 2015 Results and Announces Suspension of Dividend
- Revenues declined to $52.2 million as a result of challenging market conditions
- Adjusted EBITDA was $(2.0) million, or 3.8% of revenue
- The quarter ended with cash of $51.5 million and no debt
- Reported diluted EPS was a loss of $2.00 and adjusted EPS was a loss of $0.33
- Restructuring programs to date expected to yield $50 million of annualized savings
- Dividend suspension will improve 2016 cash flow by $8 million
HOUSTON, March 1, 2016 -- Tesco Corporation ("Tesco" or the "Company") (NASDAQ: TESO) today reported fourth quarter and full-year 2015 financial and operating results as well as the Board of Director's decision to suspend the quarterly dividend.
Fourth Quarter Operating Results
Fernando Assing, Tesco's Chief Executive Officer, commented, "We continue to position our business under the assumption that the market will remain lower for longer. Consistent with our commitment of sustainability through the current market cycle, we implemented additional global restructuring actions in the fourth quarter that are expected to produce annualized savings of approximately $10 million, bringing our expected total annualized savings from restructuring to $50 million. These actions are designed to lower our cost structure and better match current market activity.
"Our near-term objective is to become cash flow neutral at the bottom of this downturn and to use our safety record, our service and product quality and our technology to gain additional market acceptance and market share. We continue to adapt our business models to create a more sustainable and competitive company."
In line with this cash preservation objective, the Board of Directors has decided to suspend Tesco's quarterly dividend as part of a broader plan of reducing costs, working capital, and capital expenditures. By suspending what has been a $0.05 per share quarterly dividend, Tesco will preserve approximately $8 million cash annually.
Tesco reported revenue of $52.2 million for the fourth quarter ended December 31, 2015, down from $61.4 million, or 15%, in the third quarter of 2015 and down from $134.5 million, or 61%, in the fourth quarter of 2014. The sequential decline in revenue was primarily from lower activity and revenues in North America and Latin America for our rental and AMSS offerings.
Tesco reported a net loss of $78.1 million, or $(2.00) per diluted share, for the fourth quarter ended December 31, 2015. Our adjusted net loss for the quarter was $13.4 million, or $(0.33) per diluted share, excluding special items, consisting of a several large non-cash charges related to the full impairment of goodwill, additional inventory reserves, write-off of deferred tax assets and increased bad debt reserves, coupled with additional restructuring costs, significant foreign exchange losses due to a strong U.S. dollar and exit costs related to the sale of our Venezuelan operations. This compares to a reported net loss of $19.9 million, or $(0.51) per diluted share, in the third quarter of 2015, and a net loss of $2.1 million, or $(0.05) per diluted share, for the fourth quarter of 2014. Adjusted net loss in the third quarter of 2015 was $12.5 million, or $(0.32) per diluted share, and adjusted net income in the fourth quarter of 2014 was $4.8 million, or $0.12 per diluted share.
Adjusted EBITDA was $(2.0) million for the fourth quarter of 2015 compared to adjusted EBITDA of $(1.0) million in the third quarter of 2015. Sequential adjusted EBITDA decrementals were approximately 11% on nearly 15% revenue decline, highlighting the positive impact of cost reductions and restructuring. Adjusted operating loss during the fourth quarter was $11.6 million which excludes the impact of $55.7 million of non-cash charges related to goodwill, inventory and bad debt plus additional restructuring costs, Venezuela exit costs and significant foreign exchange losses.
The following information was filed by Tesco Corp (TESO) on Tuesday, March 1, 2016 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.