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Tesco Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: TESO

I will get into this in more detail after Bob summarizes the financial results. Bob?

Robert L. Kayl

Thank you, Julio. I will discuss our second quarter 2012 operating results by business segment and then give some comments on our corporate and research and engineering expense.

Starting with Top Drive. Revenue totaled $90.1 million for the quarter, 15% higher than the same period last year but down 12% sequentially from prior quarter. The decrease from prior quarter is primarily a result of the lower number of Top Drive units sold, mostly associated with the lack of production of our ESI model, which was recalled in the first quarter due to gearbox supply chain issues. We sold 34 units for the quarter compared to 39 units in Q1 and 24 units in Q2 2011. Of the 34 units sold for the quarter, there were 33 new units and 1 used unit from our rental fleet. Of the 39 units sold in Q1, 35 were new units and 4 were used units. With the 33 new units delivered to customers in Q2, we ended the quarter with a backlog of 41 Top Drive units with a potential value of $57.3 million.

During Q2, we continued to see moderate Top Drive sales activity, and today, our Top Drive backlog stands at 42 units with several sales pending. We do not include a sale in our backlog until the contract is signed and we have received a nonrefundable deposit, if required by the contract. With that, 8 ESI units dropped from the backlog as a result of cancellations. Top Drive rental revenue was $33.9 million in Q2, down slightly from $34.6 million in Q1 and $34.7 million in Q2 2011. The decrease from Q1 was due to a decrease in the number of operating days. Currently, our fleet of rental Top Drive stands at 130 units, the same as at the end of Q1 2012. At quarter end, we were in the process of adding 7 new units to our Top Drive rental fleet.

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