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Tesco Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 4, 2012 05:25PM
Tesco Corp. (TESO) filed Quarterly Report for the period ended 2012-03-31. Tesco Corp has a market cap of $579.6 million; its shares were traded at around $14.86 with a P/E ratio of 20.9 and P/S ratio of 1.1. Tesco Corp had an annual average earning growth of 18.5% over the past 10 years.
Highlight of Business Operations:Top Drive sales revenue — The increase in revenue for the three months ended March 31, 2012 compared to the same period in 2011 is due to an increase in the number of new units sold.
Top Drive operating income — The increase in Top Drive operating income for the three months ended March 31, 2012 as compared to the same period in 2011 is due to higher revenue for Top Drive sales, rental services, and after-market sales and services discussed above. This increase was significantly offset due to an increase in warranty expense of $3.9 million specifically associated with the gearbox housing issue for our new ESI model.
The increase in Tubular Services revenue for the three months ended March 31, 2012 compared to the same period in 2011 is due to increased demand for tubular services. A significant amount of current U.S. drilling activity is in shale formations that require directional and horizontal drilling techniques, which we believe are good applications for our proprietary service offerings. In addition, increased domestic and international demand for our tubular services, both proprietary and conventional, has resulted in new jobs at more favorable pricing terms. For the three months ended March 31, 2012 revenue related to our MCLRS proprietary tubular services increased $0.8 million compared to the same period in 2011, as revenue for the three months ended March 31, 2011 was minimal due to the market conditions resulting from the Deepwater Horizon explosion, the temporary Gulf of Mexico drilling moratorium and the resulting negative impact on the deepwater drilling permitting process. Tubular Services revenue for the three months ended March 31, 2012 included $1.8 million of revenue for CDS equipment sales while no CDS equipment sales were made during the same period in 2011.
We are an Alberta, Canada corporation. We conduct business and are taxed on profits earned in a number of jurisdictions around the world. Our income tax rate is based on the laws and rates in effect in the countries in which our operations are conducted or in which we are considered a resident for income tax purposes. Our effective tax rate, which is income tax expense as a percentage of pre-tax earnings, decreased for the three months ended March 31, 2012 compared to the same period in 2011 due to the fluctuating mix of pre-tax earnings in the various tax jurisdictions in which we operate around the world.
Investing Activities – Net cash used for investing activities was $17.0 million during the three months ended March 31, 2012 compared to $7.8 million during the same period of 2011. During the three months ended March 31, 2012 and 2011, we used $17.9 million and $8.1 million of cash, respectively, for capital expenditures, and sales from operating assets provided $0.8 million and $0.3 million of cash, respectively. Our capital expenditures increased by $9.7 million or 119% during the three months ended March 31, 2012 as compared to same period of 2011 to meet projected demand for our products and services.
Stocks Discussed: TESO,