Tesco Earnings Hit By Restructuring Costs

Tesco Earnings Hit By Restructuring Costs
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Tesco released the earnings results from its first fiscal quarter before opening bell this morning. The company posted adjusted losses of 8 cents per share or $3.3 million on $91.7 million in revenue. Analysts had been looking for losses of 1 cent per share on $99.34 million in revenue. In last year’s first quarter, Tesco reported earnings of 21 cents per share and $121.4 million in revenue.

Key metrics from Tesco’s earnings report

Net losses were 21 cents per share or $8.3 million, compared to net losses of 5 cents per share or $2.1 million in the previous quarter and net earnings of 8 cents per share or $3.3 million in the same quarter of last year.

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Tesco took 13 cents per share in charges related to its restructuring efforts. The energy services provider expects to see about $25 million in annualized savings from its cost cutting efforts. The company said its restructuring efforts limited adjusted operating margins to 27%, while revenues fell 32% sequentially.

Tesco’s earnings by segment

Top Drive revenues declined 22.7% to $50 million year over year. Tesco sold 14 Top Drive units, compared to 20 units sold in the first quarter of last year. The company’s Tubular Services segment fell 26.5% year over year to $41.7 million. Other segments recorded a revenue increase year over year, coming in at$2.9 million this year compared to $2.5 million in last year’s first quarter.

Tesco said its North American rig count is beginning to stabilize but emphasized that there is still “significant” downside risk. During the second quarter, the company expects to ship about 10 to 12 Top Drive units and see revenue in its Tubular Services segment decline due to a lower average North America rig count.

“Despite the current headwinds, we have continued to implement the strategy we outlined last year,” Tesco CEO Fernando Assing said in a statement. “We have been successful in developing relationships with international rig builders that should provide more top drive booking opportunities as the market recovers.”

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