Tesco (TESO) Misses Q2 EPS by 14c

Tesco (NASDAQ: TESO) reported Q2 EPS of ($0.21), $0.14 worse than the analyst estimate of ($0.07). Revenue for the quarter came in at $74.5 million versus the consensus estimate of $75.94 million.

Fernando Assing, TESCO's Chief Executive Officer, commented, "While we expected the second quarter of 2015 results to be negatively impacted by continued market weakness, the severity of the rig count decline and pricing in North America exceeded our expectations. In the second quarter, we took additional restructuring actions with an after-tax cost of $2.2 million, especially in our international markets, to lower our cost structure and better match current market activity. We are still projecting a slow recovery in commodity prices and related drilling activity for the remainder of 2015 and into 2016. Accordingly we are taking additional restructuring steps in the third quarter to reduce operating losses and improve cash generation."

Outlook

While North America rig count showed indications of hitting bottom during the second quarter of 2015, recent declines in commodity prices below $50 a barrel add uncertainty to levels of drilling activity in the second half of 2015 and 2016. International rig count is still expected to continue to decline slightly over the rest of the year. Requests for additional pricing concessions in North America have slowed with some additional requests for moderate pricing concessions from international customers continuing. The Company expects to incur an additional operating loss before restructuring charges in the third quarter of 2015.

The Company will remain focused on generating positive free cash flow during the second half of 2015 through spending controls and working capital reductions. The Company will continue to assess the timing of additional share repurchases under the remaining authorization of $73 million against market outlook and other investment opportunities.

For earnings history and earnings-related data on Tesco (TESO) click here.

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