Frank's International (FI) Misses Q3 EPS by 2c, Revenues Miss

November 3, 2020 7:13 AM EST
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Frank's International (NYSE: FI) reported Q3 EPS of ($0.10), $0.02 worse than the analyst estimate of ($0.08). Revenue for the quarter came in at $84.4 million versus the consensus estimate of $89.52 million.

Third Quarter 2020 Financial Highlights

  • Third quarter net loss of $27.8 million, a 19% improvement compared to the prior quarter.
  • Third quarter revenue of $84.4 million with strong performance in the Tubulars segment partially offsetting declines in the Tubular Running Services segment related to drilling activity declines quarter over quarter.
  • Adjusted EBITDA of ($1.0) million improving from the prior quarter reflecting incremental margin improvement predominately driven by continued realization of cost reduction measures.
  • Third quarter cash flows from operating activities of $21.2 million and free cash flow generation of $15.7 million driven by continued cost reductions, tax refunds and working capital improvements.
  • Year over year cost reductions expected to exceed 25% of total cost base and reflect savings of approximately $60 million of indirect and SG&A support costs.
  • Repeat winner of 2020 World Oil Award for Health, Safety, Environmental/Sustainable Development Offshore Award for its SKYHOOK® Wireless Cement Line Make Up Device, with an additional two tools finalists in award categories.

“Our third quarter results continued to reflect the effects of the historic industry downturn created by the Covid-19 pandemic this year. Despite the unprecedented and historic customer spending reductions, this quarter’s performance demonstrated our ability to operate more efficiently while delivering high quality solutions to our customers. Our revenue was resilient in the quarter benefiting from strong results in our Tubulars segment that partially offset the effect of drilling activity declines on our Tubular Running Services segment. From a cost perspective, we continued to focus on things within our control, and our cost reduction efforts enabled us to improve adjusted EBITDA despite challenging market conditions. Our efforts to permanently realign the support cost structure of our business are continuing to take hold. The actions we have taken this year, while difficult, have reduced our indirect cost structure by more than $50 million permanently,” said Michael Kearney, the Company’s Chairman, President and Chief Executive Officer.

“We also believe there will be more savings to harvest in 2021 as we implement our new enterprise resource planning (“ERP”) information system, and we will continue to be laser focused on further improving our already strong balance sheet. Our cost control efforts, operational efficiency, capital expenditure controls, and working capital improvements all contributed to another quarter of strong free cash flow generation.”

Mr. Kearney continued, “As we turn our attention to the fourth quarter, we continue to see an improving revenue backdrop from the current depressed levels. We expect near-term activity levels to be driven by the return of rigs to the marketplace, the start-up of previously delayed work, and the commencement of certain projects scheduled to begin during the fourth quarter. We see these trends continuing into 2021 and believe next year will provide for stronger overall financial results.

“On the technology front, the Frank’s International SKYHOOK® Wireless Cement Line Make Up Device was recently named the winner of the 2020 World Oil Awards in the category of “Best Health, Safety, Environment/Sustainable Development – Offshore.” This tool eliminates the need for hands-on intervention of cementing line make-ups high in the derrick, which increases efficiency and eliminates the dangerous potential for falls and dropped objects. In addition to this achievement, Frank’s had two additional technologies, the iCAM® Connection Analyzed Make-up System, and the BRUTE-FORCETM System, also honored as award finalists.

“Frank’s continues to generate value for our customers by offering technological solutions that safely reduce the time to drill, case, cement and complete wells. As a recent example, Frank’s deployed 1000-Ton Drilling Slips on behalf of a major operator in the Caribbean. These Drilling Slips feature a unique design that enables tripping and drilling at optimal speeds, increased reliability under high current and rig heave conditions, and resistance to slip crush. The operator noted a decrease in drill pipe connection times leading to overall program time and cost savings, as well as a reduction of red zone personnel, as a direct result of incorporating this technology.

“These awards and nominations demonstrate our commitment to safety and efficiency by bringing innovative tools to the marketplace for our customers, as well as reflect the environmental, social and governance centric values of the company,” concluded Mr. Kearney.

For earnings history and earnings-related data on Frank's International (FI) click here.

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