Key Energy Services (KEG) Sees Wider-than-Expected Q2 Loss
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Key Energy Services (NYSE: KEG) provided the following updates for the second quarter 2014:
Key expects to report a second quarter 2014 loss in the range of $0.14 – $0.15, excluding goodwill and asset impairments and utilizing an effective tax rate of approximately 29%. (The Street is looking for breakeven loss.) Additionally:
- Key expects its consolidated revenue to be down approximately 2% compared to the first quarter 2014; additionally, the Company expects its U.S. segment revenue to be approximately flat on a sequential basis as its production-driven businesses outside of California did not see sufficient activity increases to offset lower activity in California.
- The Company expects to record a $30 - $35 million pre-tax charge for goodwill and other assets impairments related to its operations in Russia.
- Pre-tax expenses of approximately $5 million were incurred in connection with the previously disclosed Foreign Corrupt Practices Act investigations.
- Redeployment and make-ready pre-tax costs of approximately $2 million were incurred in association with the previously disclosed movement of rigs from Mexico to the U.S.
- Pre-tax severance costs of approximately $1 million were incurred in association with headcount reductions, primarily in Mexico.
- Capital expenditures were $41 million during the second quarter 2014; total debt at June 30, 2014 was $719 million and the Company paid $45 million towards its $550 million senior secured credit facility leaving $461 million undrawn.
- Including an estimated goodwill and other assets impairments pre-tax charge of $30 - $35 million, Key expects to report a second quarter 2014 loss in the range of $0.35 - $0.38.
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