FRANK'S INTERNATIONAL N.V. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - FRANK'S INTERNATIONAL N.V.	a8-k111213pr.htm

Exhibit 99.1



		Frank’s International N.V.
		10260 Westheimer Rd, Suite 700
		Houston, Texas 77042



PRESS RELEASE		FOR IMMEDIATE RELEASE

FRANK’S INTERNATIONAL N.V. ANNOUNCES

THIRD QUARTER 2013 RESULTS

November 12, 2013 - Houston, Texas - Frank’s International N.V. (NYSE: FI) (the “Company” or “FI”) today reported revenues of $270.1 million and net income from continuing operations of $59.5 million for the three months ended September 30, 2013. Diluted earnings per share was $0.29 with weighted average shares outstanding of 190.4 million. Adjusted EBITDA was $101.3 million, which includes a non-cash bad debt expense of $8.0 million.

Third quarter results were negatively impacted by $2.4 million, or $0.01 per diluted share, in nonrecurring charges related to the Company’s recent initial public offering (“IPO”), as well as an $8.0 million, or $0.04 per diluted share, increase in bad debt expense in FI’s Latin American region. The Tubular Sales segment, formerly our Pipe and Products segment, was adversely affected by an increase in deferred revenue relating primarily to one customer’s paid, but undelivered order.

“Frank’s continues to be well positioned in our key markets and our outlook for the company is strong. We strive to maintain or increase market share where it makes financial sense,” said D. Keith Mosing, Frank’s International’s Chairman, Chief Executive Officer and President. “We see continued increases in offshore rig counts globally, especially in the ultra-deep water segment which is more complex and technically demanding. For our onshore markets, rig counts are decreasing leading to a more competitive environment with increased pricing pressure. Lastly, we believe our Tubular Sales business is positioned for strong growth as customers are looking at development opportunities for 2014.

“As we look towards the end of the year, we expect our annual revenues to be flat when compared to our record year in 2012, in which we grew 43 percent. Increases in offshore drilling activity that we had anticipated for the third and fourth quarters along with declines in our U.S. onshore business have lowered our expectations for the near-term.”

Third Quarter 2013 Results


•	Revenue was $270.1 million, down 7.8% compared to the second quarter of 2013 but up 1.4% compared to the third quarter of 2012


◦	Services revenue was $228.1 million, down 2.8% compared to the second quarter of 2013 and up 0.9% compared to the third quarter of 2012


◦	Products revenue was $42.0 million, down 27.9% compared to the second quarter of 2013 and up 3.9% compared to the third quarter of 2012


•	Adjusted EBITDA totaled $101.3 million


•	Adjusted EBITDA margin was 37.5%


•	Net Income from continuing operations was $59.5 million

Adjusted EBITDA and Adjusted EBITDA margin, which are financial measures not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), are defined and reconciled to their most directly comparable GAAP financial measures below. Adjusted EBITDA and segment data discussed below do not include income from discontinued operations.

Segment Results

International Services

International Services revenue from external sales was $121.7 million in the third quarter of 2013, up 0.7% compared to the second quarter of 2013 and up 5.0% compared to the third quarter of 2012. Year-over-year revenue growth reflects an expanded presence in new locations and increased demand for services from existing customers.

Segment Adjusted EBITDA of $48.8 million was down 10.4% compared to the second quarter of 2013 and down 12.9% compared to the third quarter of 2012. Segment Adjusted EBITDA was down year-over-year mainly due to higher compensation expense and $8.0 million in bad debt expense in Latin America, which were partly offset by the growth in revenue.

Segment Adjusted EBITDA margin for the third quarter was 40.1% of external revenue.

U.S. Services

U.S. Services revenue from external sales was $108.1 million in the third quarter of 2013, down 6.5% compared to the second quarter of 2013 and down 3.7% compared to the third quarter of 2012. Lower onshore rig counts contributed to lower year-over-year and sequential results.

Segment Adjusted EBITDA of $47.2 million was down 20.6% compared to the second quarter of 2013 and down 17.4% compared to the third quarter of 2012. Segment Adjusted EBITDA decreased primarily due to higher compensation related costs and a reduction in revenue.

Segment Adjusted EBITDA margin for the third quarter was 43.7% of external revenue.

Tubular Sales

Tubular Sales revenue from external sales was $40.3 million in the third quarter of 2013, down 28.7% compared to the second quarter of 2013 and up 5.3% compared to the third quarter of 2012. Year-over-year revenue growth was due primarily to an increase in pipe sales in deep water markets. Results were impacted by an increase in deferred revenue due to delays in delivery associated with one customer.

Segment Adjusted EBITDA was $5.3 million down 62.0% compared to the second quarter of 2013 and up 116.6% compared to the third quarter of 2012. The year-over-year increase was attributable to higher revenue levels, partly offset by increases in the cost of pipe.

Segment Adjusted EBITDA margin for the third quarter was 13.2% of external revenue.

Capital Expenditures and Balance Sheet

Capital expenditures were $39.3 million during the third quarter of 2013 and $126.8 million for the nine months ended September 30, 2013. The Company’s consolidated cash balance at September 30, 2013 was $449.5 million compared to $106.0 million at June 30, 2013. Total debt at September 30, 2013 was $0.6 million compared to total debt of $423.2 million at June 30, 2013. At the end of the third quarter of 2013, there was $200.0 million of unused capacity under the Company’s $100.0 million multi-year and $100.0 million one-year credit facilities. Debt to total capitalization at the end of the third quarter of 2013 was 0% as compared to 43.5% at the end of the second quarter of 2013.

Initial Public Offering

Frank's International completed its IPO on August 14, 2013. The Company sold 34,500,000 shares of common stock, including 4,500,000 shares of common stock pursuant to the underwriters' option to purchase additional shares, at an offering price of $22.00 per share. After deducting underwriting discounts and commissions and offering expenses, FI received net proceeds of approximately $711.5 million. The Company used a portion of the proceeds from its IPO to repay in full the outstanding notes payable to FWW B.V. and expects to use the remainder for general corporate purposes.

Dividends

The Board of Directors of the Company has declared that the Company will pay a cash dividend of $0.075 per share (subject to applicable Dutch dividend withholding tax) on December 19, 2013 to all common stockholders of record as of November 29, 2013 as part of its regular quarterly cash dividend program. Future declarations of dividends and their record and payment dates are subject to the final determination of the Company’s Board of Directors.

Election of New Board Members

The Company held a special meeting of its common and preferred shareholders on November 6, 2013. At the Special Meeting, the Company’s shareholders elected Gary P. Luquette and Michael C. Kearney to serve on the Company’s board of supervisory directors for a term of office expiring at the Company’s 2014 annual meeting of shareholders. Both have been appointed to the audit committee.

Conference Call

The Company will host a conference call to discuss third quarter results on Wednesday, November 13, 2013 at 10:30 a.m. Central Time (11:30 a.m. Eastern Time). Participants may join the conference call by dialing (855) 674-1399 (for U.S. and Canada) or (386) 218-2315 (International). The conference access code is 93241902 for all participants. To listen via live web cast, please visit the Investor Relations section of the Company's website, www.franksinternational.com.

An audio replay of the conference call will be available approximately two hours after the conclusion of the call and will remain available for seven days. It can be accessed by dialing (855) 859-2056 (for U.S. and Canada) or (404) 537-3406 (International). The conference call replay access code is 93241902 for all participants. The replay will also be available in the Investor Relations section of the Company’s website approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.

Forward Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company's future business strategy and prospects for growth, cash flows and liquidity, financial strategy, budget, projections and operating results, the amount, nature and timing of capital expenditures, the availability and terms of capital, the level of activity in the oil and gas industry, volatility of oil and gas prices, unique risks associated with offshore operations, political, economic and regulatory uncertainties in international operations, the ability to develop new technologies and products, the ability to protect intellectual property rights, the ability to employ and retain skilled and qualified workers, the level of competition in the Company's industry and other guidance. These statements are based on certain assumptions made by the Company based on management's experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the factors discussed or referenced in the "Risk Factors" section of the Company's prospectus filed with the SEC on August 9, 2013. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Frank’s International

Frank’s International N.V. is a global oil services company that provides a broad and comprehensive range of highly engineered tubular services to leading exploration and production companies in both offshore and onshore environments, with a focus on complex and technically demanding wells. Founded in 1938, Frank’s has over 4,100 employees and provides services in approximately 60 countries on six continents. The Company’s common stock is traded on the NYSE under the symbol “FI.” Additional information is available on the Company’s web site, www.franksinternational.com.

Use of Non-GAAP Financial Measures

This news release and the accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA and Adjusted EBITDA margin, which may be used periodically by management when discussing the Company's financial results with investors and analysts. The accompanying schedules of this news release provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with GAAP. Adjusted EBITDA and Adjusted EBITDA margin are presented because management believes these metrics provide additional information relative to the performance of the Company’s business. These metrics are commonly employed by financial analysts and investors to evaluate the operating and financial performance of the Company from period to period and to compare it with the performance of other publicly traded companies within the industry. You should not consider Adjusted EBITDA and Adjusted EBITDA margin in isolation or as a substitute for analysis of the

Company’s results as reported under GAAP. Because Adjusted EBITDA and Adjusted EBITDA margin may be defined differently by other companies in the Company’s industry, the Company’s presentation of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

The Company defines Adjusted EBITDA as income from continuing operations before net interest income or expense, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on sale of assets, foreign currency gain or loss and other non-cash adjustments. The Company uses Adjusted EBITDA to assess its financial performance because it allows the Company to compare its operating performance on a consistent basis across periods by removing the effects of its capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and items outside the control of the Company's management team (such as income tax rates). The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.

Contacts:

John Sinders, Senior Vice President, Finance & Investor Relations

john.sinders@franksintl.com

713-231-2441

Thomas Dunavant, Investor Relations Manager

thomas.dunavant@franksintl.com

713-358-7343



FRANK'S INTERNATIONAL N.V.
COMBINED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

	Three Months Ended							Nine Months Ended
	September 30,		June 30,			September 30,		September 30,			September 30,
	2013		2013			2012		2013			2012
Revenues:
Equipment rentals and services	$	228,069	$	234,649		$	225,937	$	668,582		$	647,307
Products	42,033		58,326			40,470		127,068			116,883
Total revenue	270,102		292,975			266,407		795,650			764,190

Operating expenses:
Cost of revenues, exclusive of
depreciation and amortization
Equipment rentals and services	86,932		85,895			74,444		248,104			222,418
Products	23,862		32,226			33,063		72,481			83,367
General and administrative expenses	64,104		51,987			46,524		160,016			134,005
Depreciation and amortization	19,887		19,013			16,827		56,593			48,480
(Gain) loss on sale of assets	124		(79		)	36		68			141
Operating income	75,193		103,933			95,513		258,388			275,779

Other income (expense):
Other income	1,128		5,280			3,228		8,535			6,655
Interest income (expense), net	170		(461		)	112		(493		)	305
Foreign currency gain (loss)	3,161		(1,688		)	80		(2,114		)	418
Total other income (expense)	4,459		3,131			3,420		5,928			7,378
Income from continuing operations
before income tax expense	79,652		107,064			98,933		264,316			283,157
Income tax expense	20,185		6,081			8,634		32,569			24,028
Income from continuing operations	59,467		100,983			90,299		231,747			259,129
Income from discontinued operations	—		40,887			1,251		42,635			5,590
Net income	59,467		141,870			91,550		274,382			264,719
Net income attributable to
noncontrolling interests	18,653		36,507			23,483		74,005			67,900
Net income attributable to
Frank's International N.V.	$	40,814	$	105,363		$	68,067	$	200,377		$	196,819

Basic earnings per common share
Continuing operations	$	0.30	$	0.63		$	0.56	$	1.35		$	1.62
Discontinued operations	—		0.26			0.01		0.25			0.03
Total	$	0.30	$	0.89		$	0.57	$	1.60		$	1.65

Diluted earnings per common share
Continuing operations	$	0.29	$	0.63		$	0.53	$	1.33		$	1.52
Discontinued operations	—		0.26			—		0.18			0.02
Total	$	0.29	$	0.89		$	0.53	$	1.51		$	1.54

Weighted average number of common
shares outstanding:
Basic	137,024		119,024			119,024		125,090			119,024
Diluted	190,435		119,024			172,000		178,211			172,000



FRANK'S INTERNATIONAL N.V.
SELECTED OPERATING SEGMENT DATA
(In thousands)
(Unaudited)

	Three Months Ended							Nine Months Ended
	September 30,			June 30,		September 30,		September 30,		September 30,
	2013			2013		2012		2013		2012
Revenue
International Services	$	121,680		$	120,872	$	115,847	$	353,041	$	339,370
U.S. Services	108,126			115,612		112,286		321,295		315,589
Pipe and Products	40,296			56,491		38,274		121,314		109,231
Total	$	270,102		$	292,975	$	266,407	$	795,650	$	764,190

Segment Adjusted EBITDA:
International Services	$	48,752		$	54,423	$	55,957	$	153,134	$	165,872
U.S. Services	47,215			59,486		57,178		149,494		149,213
Pipe and Products	5,338			14,054		2,464		25,893		16,051
Corporate and other	(33		)	184		5		3		(81		)
Total	$	101,272		$	128,147	$	115,604	$	328,524	$	331,055



FRANK'S INTERNATIONAL N.V
SELECTED BALANCE SHEET AND CASH FLOW DATA
(In thousands)
(Unaudited)

	September 30,			December 31,
	2013			2012
Cash and cash equivalents	$	449,522		$	152,945
Working capital	770,929			114,808
Property, plant and equipment, net	473,885			426,500
Total assets	1,507,248			1,107,961
Total short-term debt	486			329,793
Total long-term debt	96			146,138
Series A preferred stock	705			705
Total stockholders' equity	1,046,423			332,902
Noncontrolling interest	225,085			114,086
Total equity	1,271,508			446,988


	Nine Months Ended
	September 30,
	2013			2012

Net cash provided by operating activities	$	240,157		$	251,323
Net cash used in investing activities	(79,621		)	(141,649		)
Net cash provided by (used in) financing activities	133,478			(91,408		)
	294,014			18,266
Effect of exchange rate changes on cash activities	2,563			(1,561		)
Increase in cash and cash equivalents	$	296,577		$	16,705

Capital Expenditures	$	126,763		$	136,605



FRANK'S INTERNATIONAL N.V.
NON-GAAP FINANCIAL MEASURES
($ In thousands)
(Unaudited)

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN RECONCILIATION

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,		September 30,
	2013			2013			2012			2013		2012

Revenues	$	270,102		$	292,975		$	266,407		$	795,650	$	764,190

Income from continuing operations	$	59,467		$	100,983		$	90,299		$	231,747	$	259,129
Interest income (expense), net	(170		)	461			(112		)	493		(305		)
Depreciation and amortization	19,887			19,013			16,827			56,593		48,480
Income tax expense	20,185			6,081			8,634			32,569		24,028
(Gain) loss on sale of assets	124			(79		)	36			68		141
Foreign currency (gain) loss	(3,161		)	1,688			(80		)	2,114		(418		)
Stock based compensation	2,520			—			—			2,520		—
IPO transaction-related costs	2,420			—			—			2,420		—
Adjusted EBITDA	$	101,272		$	128,147		$	115,604		$	328,524	$	331,055

Adjusted EBITDA margin	37.5%			43.7%			43.4%			41.3%		43.3%



ADJUSTED SEGMENT EBITDA RECONCILIATION

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2013			2013			2012			2013			2012
Segment Adjusted EBITDA:
International Services	$	48,752		$	54,423		$	55,957		$	153,134		$	165,872
U.S. Services	47,215			59,486			57,178			149,494			149,213
Pipe and Products	5,338			14,054			2,464			25,893			16,051
Corporate and other	(33		)	184			5			3			(81		)
Adjusted EBITDA Total	101,272			128,147			115,604			328,524			331,055
Interest income (expense), net	170			(461		)	112			(493		)	305
Income tax expense	(20,185		)	(6,081		)	(8,634		)	(32,569		)	(24,028		)
Depreciation and amortization	(19,887		)	(19,013		)	(16,827		)	(56,593		)	(48,480		)
Gain (loss) on sale of assets	(124		)	79			(36		)	(68		)	(141		)
Foreign currency gain (loss)	3,161			(1,688		)	80			(2,114		)	418
Stock based compensation	(2,520		)	—			—			(2,520		)	—
IPO transaction-related costs	(2,420		)	—			—			(2,420		)	—
Income from continuing
operations	$	59,467		$	100,983		$	90,299		$	231,747		$	259,129

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FRANK'S INTERNATIONAL N.V. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 12, 2013

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