OREANDA-NEWS. September 01, 2011. Integra reported a mixed set of 1H11 financial results today (31 Aug) which came in below our and consensus estimates on EBITDA, but significantly exceeded expectations on net income, reported the press-centre of ATON.
 
Revenue increased by 8.5% to USD 457mn which was in line with our estimates and slightly below consensus.
 
EBITDA margin unexpectedly dropped by 2.4 ppts YoY to 12.3%, below our and consensus estimates. Increased transportation, fuel and tax expenses had a negative impact on EBITDA margin. Another factor that pressured margins in the formation evaluation segment was unfavorable weather conditions in spring.
 
The net income result came as a total surprise: USD 17.8mn in 1H11 vs a USD 30.4mn loss in 1H10. The reason could be found in recognition of a USD 25mn deferred tax asset from tax losses accumulated by Integra Drilling. Exclusion of the tax benefit gives us an adjusted net loss of USD 12.1mn which is significantly higher than our and consensus estimates.
 
Bottom line
The results are weak in our view and we expect an initial negative reaction from the market. At the same time we remind readers that Integra announced the acquisition of SIAM for USD 76mn just before the report’s publication. We expect management to provide positive comments on the acquisition during conference call, which should provide some support to the stock’s price, in our view.