CALGARY, Alberta, May 01, 2018 (GLOBE NEWSWIRE) -- New West Energy Services Inc. (TSX VENTURE:NWE), an oil and gas and environmental services company focused on Western Canada, today announced its financial results for the eight months ended December 31, 2017.
CHANGE IN FINANCIAL YEAR-END
NWE has changed its financial year-end from April 30 to December 31 to better conform with other similar energy services companies in the industry and to line up the company’s quarterly filings with more traditional quarters.
Consequently, NWE is reporting audited financial results for an eight-month transition period from May 1, 2017 to December 31, 2017 with a twelve-month comparative period from May 1, 2016 to April 30, 2017, as well as quarterly results for a two-month transition period from November 1, 2017 to December 31, 2017 with a three-month comparative period from February 1, 2017 to April 30, 2017. Readers should be cautioned that the transition and comparative periods not only relate to a difference in the number of months but, in the case of the eight-month transition period, does not include the winter months of January to March, which is typically is one of the company’s most active periods.
Going forward, NWE will use a customary quarterly reporting calendar based on a December 31 financial year-end, with fiscal quarters ending on the last day in March, June, September and December each year.
FINANCIAL HIGHLIGHTS
Gerry E. Kerkhoff, President and Chief Executive Officer of NWE stated, “New West is coming off a very active winter season with continued top line growth. Our drilling services equipment was at near full utilization, we secured larger projects in completions and production with some of the most active producers in the Duvernay and Montney plays and are increasingly recognized as one of the most reliable fluid transportation companies in the region.”
Mr. Kerkhoff continued, “Our rapid revenue growth in 2017, however, came with some expected growing pains. Particularly, our gross margin was depressed due to certain non-recurring expenses, higher than normal repair and maintenance expenses associated with the fluid hauling equipment acquired in March 2017 and a greater reliance on low margin third party contractors needed to complete larger projects.”
Mr. Kerkhoff concluded, “In 2018, we expect to complete major equipment repairs that will increase our revenue generating units by approximately 45% and anticipate continued revenue growth and improvements in gross margin as equipment costs normalize, service rates increase due to stronger demand and we bring more revenue generating units into service, reducing our reliance on third party contractors.”
Revenue was $13,383,615 in the eight months ended December 31, 2017 compared to $11,927,912 in the twelve months ended April 30, 2017, and $3,671,672 in the two months ended December 31, 2017 compared to $4,876,588 in the three months ended April 30, 2017.
This significant improvement reflects increased activity and equipment utilization across all drilling, completions and production sectors.
Gross margin was 17% in the eight months ended December 31, 2017 compared to 23% in the twelve months ended April 30, 2017, and NWE operated at a near break-even gross margin in the two months ended December 31, 2017 compared to a gross margin of 23% in the three months ended April 30, 2017.
This decrease in gross margin is due in part to roughly $490,000 of non-recurring expenses incurred by the vacuum truck and fluid transportation services division in November and December 2017, including approximately: $150,000 in major repair expenses associated with the fluid hauling equipment acquired in March 2017; $150,000 in auction related expenses incurred in respect of the sale of approximately $1.1 million of equipment; and, $190,000 in respect of provincial sales taxes levied by the Province of British Columbia resulting from an audit. Gross margin was also negatively impacted by higher fuel and labour costs and a greater reliance on low margin third party contractors.
General and administrative expenses were $2,478,715 in the eight months ended December 31, 2017 compared to $2,949,944 in the twelve months ended April 30, 2017, and $721,841 in the two months ended December 31, 2017 compared to $752,642 in the three months ended April 30, 2017.
This increase was mainly due to expenses associated with the hiring of personnel to meet increased demand, and the establishment of operations in Grande Prairie, servicing the completions and production sectors.
| For the two months ended December 31, | For the three months ended April 30, | ||||||||||||||||
| 2017 | 2017 | ||||||||||||||||
| Vacuum Truck & Fluid Transportation Services | Environmental Services | Corporate | Total | Vacuum Truck & Fluid Transportation Services | Environmental Services | Corporate | Total | ||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||
| Revenue | 2,841,146 | 830,526 | - | 3,671,672 | 3,837,133 | 1,039,455 | - | 4,876,588 | |||||||||
| Direct costs | 2,993,173 | 626,358 | - | 3,619,531 | 3,034,928 | 727,687 | - | 3,762,615 | |||||||||
| Gross margin | (152,027 | ) | 204,168 | - | 52,141 | 802,205 | 311,768 | - | 1,113,973 | ||||||||
| G & A expenses | 417,734 | 251,317 | 52,790 | 721,841 | 283,796 | 361,276 | 107,570 | 752,642 | |||||||||
| Share base pmts | - | - | 92,538 | 92,538 | - | - | 276,740 | 276,740 | |||||||||
| Finance charges | 112,897 | 9,256 | 20,271 | 142,424 | 199,146 | 13,861 | 39,348 | 252,355 | |||||||||
| Depreciation | 266,362 | - | - | 266,362 | 407,641 | - | - | 407,641 | |||||||||
| Disposal of assets | 1,167,918 | - | - | 1,167,918 | - | - | - | - | |||||||||
| Net loss before tax | (2,116,938 | ) | (56,405 | ) | (165,599 | ) | (2,338,942 | ) | (88,378 | ) | (63,369 | ) | (423,658 | ) | (575,405 | ) | |
| Total assets | 12,713,646 | 1,164,457 | 42,179 | 13,920,282 | 14,569,579 | 1,094,911 | 149,016 | 15,813,506 | |||||||||
| EBITDAC* | (229,761 | ) | (47,149 | ) | (52,790 | ) | (329,700 | ) | 518,409 | (49,508 | ) | (107,570 | ) | 361,331 | |||
| For the eight months ended December 31, | For the twelve months ended April 30, | ||||||||||||||||
| 2017 | 2017 | ||||||||||||||||
| Vacuum Truck & Fluid Transportation Services | Environmental Services | Corporate | Total | Vacuum Truck & Fluid Transportation Services | Environmental Services | Corporate | Total | ||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||
| Revenue | 10,025,549 | 3,358,066 | - | 13,383,615 | 8,328,756 | 3,599,156 | - | 11,927,912 | |||||||||
| Direct costs | 8,876,817 | 2,285,518 | - | 11,162,335 | 6,784,347 | 2,451,885 | - | 9,236,232 | |||||||||
| Gross margin | 1,148,732 | 1,072,548 | - | 2,221,280 | 1,544,409 | 1,147,271 | - | 2,691,680 | |||||||||
| G & A expenses | 1,344,646 | 917,926 | 216,143 | 2,478,715 | 1,139,606 | 1,378,828 | 431,510 | 2,949,944 | |||||||||
| Share base pmts | - | - | 356,067 | 356,067 | - | - | 276,740 | 276,740 | |||||||||
| Finance charges | 443,991 | 34,354 | 102,618 | 580,963 | 342,809 | 17,091 | 76,173 | 436,073 | |||||||||
| Deprecation | 1,170,421 | - | - | 1,170,421 | 1,364,747 | - | - | 1,364,747 | |||||||||
| Disposal of assets | 1,247,131 | - | - | 1,247,131 | - | - | - | - | |||||||||
| Net loss before tax | (3,057,457 | ) | 120,268 | (674,828 | ) | (3,612,017 | ) | (1,302,753 | ) | (248,648 | ) | (784,423 | ) | (2,335,824 | ) | ||
| Total assets | 12,713,646 | 1,164,457 | 42,179 | 13,920,282 | 14,569,579 | 1,094,911 | 149,016 | 15,813,506 | |||||||||
| EBITDAC | 144,086 | 154,622 | (216,143 | ) | 82,565 | 404,803 | (231,557 | ) | (431,510 | ) | (258,264 | ) | |||||
* Normalized EBITDAC is earnings from continuing operations before interest, taxes, depreciation, amortization and share-based payments and is a measure of NWE’s operating profitability. The calculation is further adjusted to normalize EBITDAC by removing any non-reoccurring transactions that are not in the normal course of operations.
** Copies of NWE’s financial statements, MD&A and other public filings are available under the company’s profile on SEDAR at www.sedar.com.
Contact:
Gerry E. Kerkhoff
New West Energy Services Inc.
President & Chief Executive Officer
Phone - 403.984.9798 or 1.888.977.2327 (BEAR)
Fax - 403.984.9799
Email - gkerkhoff@newwestenergyservices.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this news release may constitute “forward-looking information” within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information and financial outlook. Forward-looking information is identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations or future actions. Forward-looking information in this news release includes, without limitation, statements with respect to: the use of proceeds of its loans; the use of the acquired equipment; planned changes in NWE’s business and revenues; the competitive environment in which NWE operates; and the assessment of future plans and operations. Actual events or results may differ materially. The forward-looking information in this news release is based on assumptions which includes, but is not limited to: NWE realizing the expected benefits of its loans and acquired equipment; the general state of the economy and the oil and gas industry not worsening; NWE not losing any key personnel; NWE sustaining or increasing their level of revenues and EBITDAC NWE growing its businesses long term and managing its growth; NWE complying with existing regulations and not becoming subject to more stringent regulations; and, NWE’s insurance being sufficient to cover losses that may occur as a result of its operations. The forward-looking information in this news release is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause results to differ from current expectations include, but are not limited to: failure to realize the expected benefits of its loans and acquired equipment; potential undisclosed liens associated with the acquired equipment; NWE’s results being dependent upon the general state of the economy and the oil and gas industry; NWE being dependent on key personnel, the loss of which could harm its business; NWE may not be able to sustain or increase their revenues or EBITDAC; NWE may be unable to grow its business long term or to manage any growth; NWE may be unable to integrate the acquired equipment into its business; competition in NWE’s markets may lead to reduced revenues and EBITDAC; NWE may fail to comply with existing regulations or become subject to more stringent regulations; NWE’s insurance may be insufficient to cover losses that may occur as a result of NWE’s operations; the market price of NWE’s common shares will fluctuate; and, there is a possibility of dilution of existing holders of NWE’s common shares due to future financings or acquisitions. Although NWE has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements in this news release, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of NWE. Accordingly, readers should not place undue reliance on the forward-looking information in this news release. The forward-looking information is made as of the date of this news release, and NWE does not assume any obligation to publicly update or revise such forward-looking information to reflect new information, subsequent or otherwise, except as may be required by applicable law. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.