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Tesco Corp. Reports Operating Results (10-Q)

August 07, 2009 | About:

Tesco Corp. (TESO) filed Quarterly Report for the period ended 2009-06-30.

Tesco Corp. has a market cap of $354.9 million; its shares were traded at around $9.45 with a P/E ratio of 7.3 and P/S ratio of 0.7.

Highlight of Business Operations:

Operating (Loss) Income for the three months ended June 30, 2009 was a loss of $7.2 million, compared to income of $17.0 million in the three months ended June 30, 2008, a decrease of $24.2 million, or 142%. This decrease is primarily due to lower revenues in all of our segments, decreased margins due to severe pricing pressures associated with the current economic environment, a $1.8 million impairment of fixed assets held for sale, $1.6 million in increased legal fees associated with ongoing litigation, $1.6 million in severance costs and a $0.5 million loss recognized on the sale of operating assets, as discussed further below.

Net (Loss) Income for the three months ended June 30, 2009 was a loss of $3.6 million, compared to income of $12.7 million in the same period in 2008, a decrease of $16.3 million, or 128%. This decrease is primarily due to decreased operating income as discussed above and a $1.8 million decrease in foreign exchange losses (gains), partially offset by a $0.8 million decrease in interest expense and a $9.1 million decrease in income tax expense, as discussed below.

RevenuesRevenues for the three months ended June 30, 2009 decreased $10.9 million, or 28%, to $27.9 million as compared to the same period in 2008. This was primarily due to a $15.6 million decrease in our conventional Tubular Services business, partially offset by a $4.7 million increase in our proprietary service offerings. The decrease in our conventional revenues is due to our continued focus to shift our customers to our proprietary product offerings and a 75% decline in our business in North America over the past 12 months. Our conventional business is primarily conducted in North America and is directly tied to the rig count which has sharply declined over the past 12 months. The increase in our proprietary business is primarily due to our shift from conventional offerings and a $2.2 million increase in the sales of proprietary equipment and accessories. This is offset by a decrease in MCLRS revenues from $2.4 million to $0.3 million for the three months ended June 30, 2009 compared to the same period last year due to a reduction in the number of MCLRS projects that were in progress during the three months ended June 30, 2009.

Operating IncomeTubular Services operating income for the three months ended June 30, 2009 decreased $5.2 million to a $1.7 million loss compared to income of $3.5 million for the same period in 2008, primarily due to the decrease in revenues described above, a $1.8 million impairment of fixed assets held for sale and $0.2 million in severance costs recorded during the current period. During the three months ended June 30, 2009, we made the decision to sell certain Tubular Services operating assets located in North America within the

Operating IncomeCASING DRILLINGs operating loss for the three months ended June 30, 2009 was $4.9 million compared to $3.5 million last year primarily due to the decrease in revenues as described above, a loss on the sale of operating assets in the amount of $0.5 million, a $0.6 million provision for bad debts and $0.1 million in severance costs incurred during the three months ended June 30, 2009. Operating margins declined from a loss of 46% last year to a loss of 180% in the current period.

Corporate and Other Expenses primarily consist of the corporate level general and administrative expenses and certain operating level selling and marketing expenses. Corporate and Others operating loss for the three months ended June 30, 2009 increased $2.3 million to $8.9 million, compared to $6.6 million for the same period in 2008. This increase is primarily due a $1.6 million increase in legal fees associated with ongoing litigation and $0.6 million in severance costs incurred during the three months ended June 30, 2009, partially offset by decreased employee benefit costs and other corporate expenses from the same period in 2008.

Read the The complete ReportTESO is in the portfolios of John Keeley of Keeley Fund Management.

Rating: 3.5/5 (2 votes)

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