Key Energy Services Inc. (KEG) filed Quarterly Report for the period ended 2012-03-31.
Key Energy Svcs has a market cap of $2.12 billion; its shares were traded at around $12.11 with a P/E ratio of 13.4 and P/S ratio of 1.2.
Highlight of Business Operations:Our revenues for the three months ended March 31, 2012 increased $122.4 million, or 33.6%, to $486.8 million from $364.4 million for the three months ended March 31, 2011 mostly due to continued strong demand for our services, improved pricing and overall economic conditions as well as both domestic and international expansion. See Segment Operating Results Three Months Ended March 31, 2012 and 2011 below for a more detailed discussion of the change in our revenues.
Our direct operating expenses increased $63.5 million, to $311.5 million (64.0% of revenues), for the three months ended March 31, 2012, compared to $248.0 million (68.1% of revenues) for the three months ended March 31, 2011. The increase was a direct result of activity increases in our business and rising labor costs. Fuel and supply costs have also increased compared to the first quarter of the prior year due to rising prices.
General and administrative expenses increased $11.3 million, to $60.9 million (12.5% of revenues), for the three months ended March 31, 2012, compared to $49.6 million (13.6% of revenues) for the three months ended March 31, 2011. The increase was primarily due to increased employee compensation and benefit costs.
We recorded income tax expense of $18.8 million on pre-tax income from continuing operations of $52.3 million in the first quarter of 2012, compared to an income tax benefit of $9.2 million on a pre-tax loss of $26.0 million in the first quarter of 2011. Our effective tax rate on continuing operations was 36.0% for the three months ended March 31, 2012, compared to 35.4% for the three months ended March 31, 2011. Our effective tax rates for the periods differ from the U.S. statutory rate of 35% due to a number of factors, including the mix of profit and loss between various taxing jurisdictions and the impact of permanent items that affect book income but do not affect taxable income.
Operating expenses for Functional Support, which represent expenses associated with managing our U.S. and International operating segments, increased $4.9 million, or 14.7%, to $38.7 million (7.9% of consolidated revenues) for the three months ended March 31, 2012 compared to $33.7 million (9.3% of consolidated revenues) for the same period in 2011. The increase in costs primarily relates to higher employee compensation associated with the vesting of performance units and related taxes. Professional fees also increased due to higher consulting and legal fees.
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