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10-K
KEY ENERGY SERVICES INC filed this Form 10-K on 02/28/2018
Entire Document
 

RESULTS OF OPERATIONS
Consolidated Results of Operations
The following tables set forth consolidated results of operations and financial information by operating segment and other selected information for the periods indicated. The period from December 16 to December 31, 2016 (Successor Company) and the period from January 1 to December 15, 2016 (Predecessor Company) are distinct reporting periods as a result of our emergence from bankruptcy on December 15, 2016. References in these results of operations to the change and the percentage change combine the Successor Company and Predecessor Company results for the year ended December 31, 2016 in order to provide some comparability of such information to the years ended December 31, 2017 and December 31, 2015. While this combined presentation is not presented according to generally accepted accounting principles in the United States (“GAAP”) and no comparable GAAP measure and are presented, management believes that providing this financial information is the most relevant and useful method for making comparisons to the years ended December 31, 2017 and December 31, 2015.
 
Successor
 
 
Predecessor
 
 
 
 
 
(a)
 
(b)
 
 
(c)
 
(a) - (b) - (c)
 
 
 
Year Ended December 31, 2017
 
Period from December 16, 2016 through December 31, 2016
 
 
Period from January 1, 2016 through December 15, 2016
 
Change
 
% Change
REVENUES
$
436,165

 
$
17,830

 
 
$
399,423

 
$
18,912

 
5
 %
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
Direct operating expenses
332,332

 
16,603

 
 
362,825

 
(47,096
)
 
(12
)%
Depreciation and amortization expense
84,542

 
3,574

 
 
131,296

 
(50,328
)
 
(37
)%
General and administrative expenses
115,284

 
6,501

 
 
163,257

 
(54,474
)
 
(32
)%
Impairment expense
187

 

 
 
44,646

 
(44,459
)
 
(100
)%
Operating loss
(96,180
)
 
(8,848
)
 
 
(302,601
)
 
215,269

 
(69
)%
Reorganization items, net
1,501

 

 
 
(245,571
)
 
247,072

 
(101
)%
Interest expense, net of amounts capitalized
31,797

 
1,364

 
 
74,320

 
(43,887
)
 
(58
)%
Other (income) loss, net
(7,187
)
 
32

 
 
(2,443
)
 
(4,776
)
 
198
 %
Loss before income taxes
(122,291
)
 
(10,244
)
 
 
(128,907
)
 
16,860

 
(12
)%
Income tax (expense) benefit
1,702

 

 
 
(2,829
)
 
4,531

 
(160
)%
NET LOSS
$
(120,589
)
 
$
(10,244
)
 
 
$
(131,736
)
 
$
21,391

 
(15
)%
Years Ended December 31, 2017 and 2016
Revenues
Our revenues for the year ended December 31, 2017 increased $18.9 million, or 4.5%, to $436.2 million from $417.3 million for the combined year ended December 31, 2016, due to an increase in spending from our customers as they reacted to improving commodity prices. Internationally, we had lower revenue as a result of the sale our operations in Mexico, a decrease in activity in Russia and the sale during the third quarter of 2017 of our Russian operations. See “Segment Operating Results — Years Ended December 31, 2017 and 2016 below for a more detailed discussion of the change in our revenues.
Direct operating expenses
Our direct operating expenses decreased $47.1 million, or 12.4%, to $332.3 million (76.2% of revenues) for the year ended December 31, 2017, compared to $379.4 million (90.9% of revenues) for the combined year ended December 31, 2016. The decrease is partially related to a $21.0 million gain on the sale of certain assets and a decrease in employee compensation costs, fuel expense and repair and maintenance expense as we took steps to reduce our cost structure. See “Segment Operating Results — Years Ended December 31, 2017 and 2016 below for a more detailed discussion of the change in our direct operating expenses.
Depreciation and amortization expense
Depreciation and amortization expense decreased $50.3 million, or 37.3%, to 84.5 million (19.4% of revenues) for the year ended December 31, 2017, compared to $134.9 million (32.3% of revenues) for the combined year ended December 31, 2016. The decrease is primarily attributable to the reduction of property, plant and equipment due to the implementation of fresh start accounting in the fourth quarter of 2016.

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