Analyst Note| Preston Caldwell |
While Frank's reported revenue down 2% sequentially in the first quarter, adjusted EBITDA jumped 44%, with margins increasing to 7% from 4.8% in the prior quarter. The 2% sequential revenue decline was driven entirely by the Tubulars segment; geographically, it was driven by a 3% decline in international revenue, while U.S. revenue bumped up 1% owing to higher U.S. shale activity. The strong bottom-line improvement was due primarily to positive mix shifts, along with ongoing cost cuts. Frank's continues to guide for strong improvement in results for the remainder of 2021, especially driven by higher offshore drilling activity. Our fair value estimate and narrow moat rating are unchanged.