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Tesco Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: TESO

Also, we will use certain non-GAAP measures. The earnings release issued this morning contains an explanation and a reconciliation of these measures to GAAP measures, and we refer you to that release for additional information.

Now on to our second quarter results. We reported net income and EPS in Q2 of $13.1 million or $0.34 per share on $136.7 million of revenue compared to $14.4 million of net income or $0.37 per share in Q1 on $152.4 million of revenue. Operating income increased during the quarter to $24.6 million, up from operating income of $19 million for Q1. Operating margins increased to 18% for Q2 as compared to 12% in Q1. This quarter's results include a $13.3 million pretax gain on the sale of CASING DRILLING business, which is included in the aforementioned operating income. When the results are adjusted for the gain from the sale of CASING DRILLING, as well as other one-off items, which we will discuss shortly, operating income would have been $14.7 million or 10.7% OI margin and then EPS would have been $0.22.

We ended the quarter with a backlog of 41 units with a potential revenue value of $57.3 million. Today, our backlog stands at 42 units. The sale of CASING DRILLING is the second quarter -- excuse me, the sale of CASING DRILLING in the second quarter opens a new chapter in the history of TESCO. We have created excellent organic top line growth over the recent years and have struggled at times with one-off costs as we have grown internationally. With the focus traded as a result of the CASING DRILLING sale, our go-forward strategy will have in its core an obsession with execution excellence. This focus, coupled with our innovative culture, should provide a solid foundation to deliver new products, improving operating results and ultimately long-term value for our shareholders.

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