Letter from the President & CEO
In last year’s annual report, we unveiled a new company values statement. It revealed four core values that serve as a compass to guide the continuous improvement of our organization: Empowering Our Employees, Doing the Right Thing, Demonstrating Resilience and Delivering Every Time.
Translating these words into action has meant finding better ways to do the things we’ve always done, as well as embracing new and innovative practices. We will continue to build upon the momentum we’ve established through this refinement of our corporate philosophy.
In September, the addition of Jan Kees van Gaalen as Chief Financial Officer moved the company to an even higher level of capital discipline, stewardship and prudence. The efforts and leadership of our new CFO have resulted not only in a stronger balance sheet, but also in a more defined and disciplined capital deployment philosophy. Our emphasis on streamlining SG&A expenses has yielded an overall cost reduction in this area of approximately 10%, and our continued focus on maximizing shareholder returns was evidenced, in part, by a $150 million stock buyback program.
We are proud of the efforts our people have made.
Perhaps the most vivid illustration of our progress was shown by our overall performance during a year that started strong but saw a softening in demand throughout the third and fourth quarters:
- Consolidated revenue increased 36% year over year, reaching $2.2 billion. Our adjusted net income was $54 million, or $0.81 per share. Adjusted EBITDA increased 117% to $283.7 million.
- We continued to fund our capital expenditure program with cash from operations.
- We also generated $66.3 million of free cash flow, part of which was used to purchase more than 2.4 million shares of C&J common stock.
- The improvements made over the last 12 months — and the resulting positive impact on our financial performance — put us in a favorable position to make additional advances in the coming year.
In 2018, we demonstrated a commitment to establish a world-class organization by focusing on five key areas that represent the foundation for our future success: People, Safety, Finance, Ethics & Compliance and Operations.
PEOPLE. An empowered workforce is essential to driving performance, boosting morale and delivering optimum service. We will continue to develop future leaders within the company to ensure that the progress we make today will transition to capable hands in the future. We firmly believe that our legacy rests not only in the infrastructure and assets we accumulate, but also in the caliber of our next generation of leaders.
SAFETY. Nothing is more important than the health, safety and well-being of our team members, our customers and the communities in which we operate. Guided by the belief that “even one injury is too many,” C&J beat our three major safety goals for 2018, achieving (1) the lowest Total Recordable Incident Rate in company history (0.82), (2) a reduction in Hand Injury Rate and (3) a reduction in Motor Vehicle Incident Rate.
FINANCE. We’ve made considerable improvements — and our financial strength will continue to be a priority in the year ahead. As we grow, we will continue to focus on improving processes and practices, with the end goal of finding better, smarter and more effective ways to deliver positive, sustainable results for our shareholders and employees.
ETHICS & COMPLIANCE. Our core value of Doing the Right Thing is a simple statement, but it implies so much — from striving to set the standard for ethics, to maintaining integrity and transparency in our business dealings, to upholding uncompromising standards for safety, to ensuring compliance across all business lines, to aiming for sustainability and environmental responsibility in all we do.
OPERATIONS. We will continue to leverage our leadership positions across C&J service lines. In 2018, our stronger positions and improved infrastructure resulted in an increase in projects from top-tier operators with longer commitments and multiwell pad engagements. This has enabled us to reduce downtime and operate more profitably. In the year ahead, we will continue our efforts to “deliver every time” by finding innovative ways to improve performance, operational efficiencies, quality and profitability wherever there is an opportunity to do so.
We are proud of the efforts our people have made to improve our organization through our core values.
In 2019, we move forward with purpose as we strive to set new benchmarks for performance and growth. While we will look for advances and innovation across all lines of business, we will not lose sight of our touchstones: Empowering Our Employees, Doing the Right Thing, Demonstrating Resilience and Delivering Every Time. The more we uphold our values, the more they will uplift us.
President, Chief Executive Officer, and Director