From PRNewswire
Forbes Energy Services Ltd. (TSX: FRB) (collectively with its subsidiaries, the "Company"), in connection with the recently announced consent solicitation of the 11% Senior Secured Notes due 2015 issued by two of its subsidiaries, is releasing the following selected financial information today.
The Company is benefiting from strengthened activity across all of its markets, particularly in South Texas. This activity has allowed the industry, and the Company, to implement gradual customer price increases beginning in the first quarter of 2010. John Crisp, the President and Chief Executive Officer of Forbes Energy Services Ltd., stated, "These increases have now allowed the Company to establish a more normalized gross margin."
Mr. Crisp further stated, "Beginning in the second quarter most Company employees were granted rate increases in response to these improving industry conditions and tighter labor markets. Even with these increased costs, the Company has been able to retain the majority of the customer price increases in the form of expanded margins as it realigned its revenues and costs."
Gross revenues for the months of April and May 2010 are approximately $24 million and $27 million, respectively. Once all the numbers are finalized, the Company expects June 2010 revenues to be in line with May. The Company estimates adjusted EBITDA for the second quarter will be in excess of $10.5 million as compared with adjusted EBITDA for the first quarter of 2010 of $5 million. It is anticipated that U.S. operations will contribute approximately 80% of the second quarter adjusted EBITDA with Mexico contributing the balance.
Accounts receivable as of May 31, 2010 amounted to $73 million as compared to December 31, 2009 accounts receivable of $53 million. The May 31, 2010 balance was comprised of approximately $51 million from the United States and $22 million from Mexico. This resulted in Days Sales Outstanding ("DSO") of 68 and 71 in the United States as of December 31, 2009 and May 31, 2010, respectively, and days sales outstanding of 243 and 187 in Mexico as of December 31, 2009 and May 31, 2010, respectively.
The United States DSO reflects the rapid ramp-up in revenues from December through May. Future months should see the United States DSO begin to decline, more in line with industry averages.
The new management team in Mexico has implemented new systems to ensure timely billings to Pemex, which we believe will begin to improve our DSO. Although the new team has developed a closer working relationship with Pemex and now better understands the billing process, Mexico DSO will continue to lag behind those in the United States due to the extended approval and billing process required by Pemex.
During 2009 and, to a lesser degree, the first quarter of 2010, the Company provided additional working capital to Mexico. Since mid-March, with the new billing processes.