HOUSTON, TX--(Marketwired - Nov 17, 2015) - Aly Energy Services, Inc. ("Aly Energy") (
Revenues for the first nine months of 2015 decreased 17.1% to $23.1 million as compared to $27.9 million for the first nine months of 2014, and Adjusted EBITDA decreased 87.8% in the first nine months of 2015 to $1.0 million compared to $7.9 million for the first nine months of 2014. EBITDA and Adjusted EBITDA are non-GAAP financial measures that are not necessarily comparable from one company to another. Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation and amortization, certain non-cash items, such as stock compensation expense, bad debt expense, and fair value adjustments, and certain non-routine items, including transaction costs. Management believes that Adjusted EBITDA is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the Company's normal operating results. For a reconciliation of Adjusted EBITDA to net income, please see the tables at the end of this release.
Aly Energy reported net loss available to common stockholders for the first nine months of 2015 of approximately $4.5 million, after preferred stock dividends and accretion aggregating to approximately $0.4 million, as compared to net income available to common stockholders of approximately $1.8 million, after preferred stock dividends and accretion aggregating to approximately $0.3 million for the same period in 2014.
The 48.6% decrease in revenues in the third quarter is due primarily to the sharp decline in oil prices and activity within the oilfield services industry subsequent to September 30, 2014. Day rates and the number of revenue generating days, which is a reflection of the utilization of our equipment, for our core products each declined approximately 20-30% during the three and nine months ended September 30, 2015, as compared to the three and nine months ended September 30, 2014.
During 2015, we decreased headcount and reduced overall direct and indirect wage rates. In addition, third party expenses declined significantly as our owned inventory of equipment was sufficient to meet the demand for our services. The increase in operating expenses as a percentage of revenues for the nine months ended September 30, 2015, as compared to the same period last year was due primarily to the impact of aggressively cutting prices to retain market share, which reduced revenue at a faster rate than we were able to implement offsetting cost reductions. Although we have reduced operating expenses 42% in the third quarter of 2015, as compared to the same period last year, we continue to pursue cost reduction initiatives in order to strengthen profitability.
Outlook
As we enter the fourth quarter of 2015, oil prices remain depressed and we expect further reductions in the rig count. Although it is customary to experience declines in activity in the fourth quarter due to the holidays and the exhaustion of our customers' annual spending budgets, we believe the declines this year may be even more pronounced as operators extend holiday breaks and aggressively cut end-of-year spending. Although we believe we will begin to see increases in activity next year, we do not anticipate any material improvement in prices until the second half of 2016.
Management Comment
Micki Hidayatallah, Aly Energy's Chairman and Chief Executive Officer, said: "Our team has responded proactively and decisively to retain existing customers, attract new ones and align our cost structure at both the field and corporate levels with the realities of the current market. In the third quarter, we began to benefit from the cost reductions we implemented earlier in the year. Our Adjusted EBITDA margin for the third quarter was 11%, which was significantly higher than in the first half of the year when we essentially broke even and nearly three times higher than the 4% margin generated for the first nine months of the year. It is notable that on a recurring run rate basis we achieved our target Adjusted EBITDA margin of 12%, and we believe we can maintain this level of profitability in the fourth quarter with further cost control initiatives.
"Turning to liquidity, we were successful in raising $3.35 million from the sale of Common Stock in the third quarter, and were able to amend the terms of the Senior Secured Debt to provide for greater financial flexibility. The net proceeds from the offering were used to reduce debt by $3.4 million, including a regularly scheduled payment of $1.5 million on our Senior Secured Debt at the end of the quarter and a prepayment of $1.9 million made on October 13, 2015. After giving effect to the prepayment, we had $800 thousand of cash available for operations, and at the end of the third quarter we had no borrowings on our $1.0 million Revolving Line of Credit.
"Importantly, all scheduled principal payments have been deferred on the Term Debt until March 31, 2017, so we do not have any impending debt maturities. Combined with our cost reduction initiatives, we have sufficient liquidity to fulfill our service mission to customers, and we will endeavor to review financing options to enhance our liquidity, reduce debt and identify bolt-on acquisitions that meet our strategic objectives.
"That we have been able to retain market share and preserve profitability is a testament to our business strategy of offering differentiated solutions to the market, superior value and uncompromised service."
About Aly Energy
Aly Energy Services and its subsidiaries provide equipment and services essential to the drilling and development of oil and gas resources, including mud delivery, solids control, fluid management, and directional drilling and measurement-while-drilling services. The Company serves the Permian Basin (in Texas and New Mexico), Eagle Ford Shale, Utica Shale, Marcellus Shale, Woodford Shale, Granite Wash, Mississippian Lime, and Tuscaloosa Marine Shale.
Forward-Looking Statements
This press release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding Aly Energy's business, financial condition, results of operations and prospects. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this press release.
Although forward-looking statements in this press release reflect the good faith judgment of our management, such statements can only be based on facts and factors that our management currently knows. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, demand for oil and natural gas drilling services in the areas and markets in which Aly Energy operates, competition, obsolescence of products and services, the ability to obtain financing to support operations, environmental and other casualty risks, and the effect of government regulation.
Further information about the risks and uncertainties that may affect our business are set forth in our most recent filings on Form 10-K (including without limitation in the "Risk Factors" section) and in our other SEC filings and publicly available documents. We urge readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Aly Energy undertakes no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this press release.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Components of EBITDA: | ||||||||||||||||
| Net Income/(Loss) | $ | (1,033 | ) | $ | 1,112 | $ | (4,043 | ) | $ | 2,118 | ||||||
| Non-GAAP Adjustments: | ||||||||||||||||
| Depreciation and Amortization | 1,702 | 1,345 | 5,067 | 3,409 | ||||||||||||
| Interest Expense, Net | 459 | 376 | 1,404 | 891 | ||||||||||||
| Income Tax Expense/(Benefit) | (921 | ) | 621 | (2,336 | ) | 1,387 | ||||||||||
| EBITDA | $ | 207 | $ | 3,454 | $ | 92 | $ | 7,805 | ||||||||
| Adjustments to EBITDA: | ||||||||||||||||
| Stock-Based Compensation Expense | - | - | 100 | - | ||||||||||||
| Bad Debt Expense | 176 | 37 | 320 | 94 | ||||||||||||
| Fair Value Adjustments to Contingent Payment Liability | (270 | ) | (270 | ) | (580 | ) | (183 | ) | ||||||||
| (Gain)/Loss on Disposal | 213 | 16 | 209 | 16 | ||||||||||||
| Non-Recurring Expenses | 460 | 19 | 815 | 138 | ||||||||||||
| Adjusted EBITDA | $ | 786 | $ | 3,256 | $ | 956 | $ | 7,870 | ||||||||
| ALY ENERGY SERVICES, INC. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (in thousands, except shares) | ||||||||||
| September 30, 2015 | December 31, 2014 | |||||||||
| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Current Assets | ||||||||||
| Cash and Cash Equivalents | $ | 2,739 | $ | 2,050 | ||||||
| Accounts Receivable, Net of Allowance for Doubtful Accounts of $440 and $178, as of September 30, 2015 and December 31, 2014, respectively | 4,816 | 11,053 | ||||||||
| Unbilled Receivables | 654 | 2,479 | ||||||||
| Inventory | 294 | 431 | ||||||||
| Deferred Tax Assets | 283 | 57 | ||||||||
| Prepaid Expenses and Other Current Assets | 313 | 757 | ||||||||
| Total Current Assets | 9,099 | 16,827 | ||||||||
| Property and Equipment, Net | 54,958 | 56,484 | ||||||||
| Intangible Assets, Net | 8,929 | 10,475 | ||||||||
| Goodwill | 11,407 | 11,407 | ||||||||
| Deferred Loan Costs, Net | 485 | 768 | ||||||||
| Other Assets | 34 | 12 | ||||||||
| Total Assets | $ | 84,912 | $ | 95,973 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current Liabilities | ||||||||||
| Accounts Payable | $ | 1,716 | $ | 4,628 | ||||||
| Accounts Payable - Affiliates | - | 590 | ||||||||
| Accrued Expenses | 2,112 | 2,453 | ||||||||
| Deferred Tax Liabilities | 6 | 58 | ||||||||
| Current Portion of Long-Term Debt | 2,611 | 6,758 | ||||||||
| Current Portion of Contingent Payment Liability | 792 | 876 | ||||||||
| Total Current Liabilities | 7,237 | 15,363 | ||||||||
| Long-Term Debt, Net of Current Portion | 23,446 | 23,455 | ||||||||
| Contingent Payment Liability, Net of Current Portion | 875 | 2,233 | ||||||||
| Deferred Tax Liabilities | 10,048 | 12,136 | ||||||||
| Other Long-Term Liabilities | 35 | 28 | ||||||||
| Total Liabilities | 41,641 | 53,215 | ||||||||
| Commitments and Contingencies (See Note 5) | - | - | ||||||||
| Aly Operating Redeemable Preferred Stock, $0.01 par value, 4,000,000 shares authorized, issued and outstanding at September 30, 2015 and December 31, 2014 | 4,579 | 4,382 | ||||||||
| Aly Centrifuge Redeemable Preferred Stock, $0.01 par value, 15,000 shares authorized, 9,252 shares issued and outstanding as of September 30, 2015 and December 31, 2014 | 9,818 | 9,584 | ||||||||
| 14,397 | 13,966 | |||||||||
| Stockholders' Equity | ||||||||||
| Common Stock, $0.001 par value, 200,000,000 shares authorized, 6,707,039 shares issued, and 6,706,814 shares outstanding as of September 30, 2015 and 200,000,000 shares authorized, 5,511,341 issued and 5,511,116 outstanding as of December 31, 2014 | 7 | 6 | ||||||||
| Treasury Stock, 225 Shares at Cost | (2 | ) | (2 | ) | ||||||
| Additional Paid-In-Capital | 29,042 | 24,917 | ||||||||
| Retained Earnings | (173 | ) | 3,871 | |||||||
| Total Stockholders' Equity | 28,874 | 28,792 | ||||||||
| Total Liabilities and Stockholders' Equity | $ | 84,912 | $ | 95,973 | ||||||
| ALY ENERGY SERVICES, INC. | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (in thousands, except shares and per share data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Revenues | $ | 6,936 | $ | 13,491 | $ | 23,080 | $ | 27,851 | |||||||||
| Expenses: | |||||||||||||||||
| Operating Expenses | 4,382 | 7,607 | 15,616 | 14,566 | |||||||||||||
| Depreciation and Amortization | 1,702 | 1,345 | 5,067 | 3,409 | |||||||||||||
| Selling, General and Administrative Expenses | 2,347 | 2,430 | 7,372 | 5,480 | |||||||||||||
| Total Expenses | 8,431 | 11,382 | 28,055 | 23,455 | |||||||||||||
| Operating Income/(Loss) | (1,495 | ) | 2,109 | (4,975 | ) | 4,396 | |||||||||||
| Interest Expense, Net | 459 | 376 | 1,404 | 891 | |||||||||||||
| Income/(Loss) Before Income Tax | (1,954 | ) | 1,733 | (6,379 | ) | 3,505 | |||||||||||
| Income Tax Expense/(Benefit) | (921 | ) | 621 | (2,336 | ) | 1,387 | |||||||||||
| Net Income/(Loss) | (1,033 | ) | 1,112 | (4,043 | ) | 2,118 | |||||||||||
| Preferred Stock Dividends | 175 | 141 | 528 | 297 | |||||||||||||
| Accretion of Preferred Stock, Net | (32 | ) | (34 | ) | (97 | ) | (24 | ) | |||||||||
| Net Income/(Loss) Available to Common Stockholders | $ | (1,176 | ) | $ | 1,005 | $ | (4,474 | ) | $ | 1,845 | |||||||
| Basic Net Income/(Loss) per Common Share | $ | (0.21 | ) | $ | 0.18 | $ | (0.79 | ) | $ | 0.37 | |||||||
| Diluted Net Income/(Loss) per Common Share | $ | (0.21 | ) | $ | 0.18 | $ | (0.79 | ) | $ | 0.37 | |||||||
| Basic Average Common Shares Outstanding | 5,659,390 | 5,469,346 | 5,649,636 | 5,012,258 | |||||||||||||
| Diluted Average Common Shares Outstanding | 5,659,390 | 5,969,346 | 5,649,636 | 5,280,181 | |||||||||||||
| ALY ENERGY SERVICES, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (in thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Nine Months Ended September 30, | ||||||||||
| 2015 | 2014 | |||||||||
| Cash Flows from Operating Activities | ||||||||||
| Net Income/(Loss) | $ | (4,043 | ) | $ | 2,118 | |||||
| Adjustments to Reconcile Net Income/(Loss) to Net Cash Provided by Operating Activities | ||||||||||
| Depreciation and Amortization of Property and Equipment | 3,521 | 2,416 | ||||||||
| Amortization of Deferred Loan Costs | 311 | 203 | ||||||||
| Amortization of Intangible Assets | 1,546 | 993 | ||||||||
| Stock-Based Compensation | 100 | - | ||||||||
| Bad Debt Expense | 320 | 94 | ||||||||
| Fair Value Adjustments to Contingent Payment Liability | (580 | ) | (183 | ) | ||||||
| Loss on Disposal of Asset | 209 | 16 | ||||||||
| Deferred Taxes | (2,366 | ) | (31 | ) | ||||||
| Changes in Operating Assets and Liabilities | ||||||||||
| Accounts Receivable | 5,917 | (4,636 | ) | |||||||
| Unbilled Receivables | 1,825 | (1,741 | ) | |||||||
| Inventory | 138 | (198 | ) | |||||||
| Prepaid Expenses and Other Assets | 422 | (990 | ) | |||||||
| Accounts Payable | (2,912 | ) | 1,403 | |||||||
| Accounts Payable - Affiliates | - | (821 | ) | |||||||
| Accrued Expenses and Other Liabilities | (334 | ) | 2,443 | |||||||
| Net Cash Provided by Operating Activities | 4,074 | 1,086 | ||||||||
| Cash Flows from Investing Activities | ||||||||||
| Purchase of Property and Equipment | (1,353 | ) | (10,245 | ) | ||||||
| Disposal of Property and Equipment | 216 | - | ||||||||
| Cash Paid for United Acquisition, Net of Cash Acquired | - | (15,063 | ) | |||||||
| Cash Acquired from Acquisition of Evolution Guidance Systems | - | 167 | ||||||||
| Net Cash Used in Investing Activities | (1,137 | ) | (25,141 | ) | ||||||
| Cash Flows from Financing Activities | ||||||||||
| Proceeds from Issuance of Common Stock, Net of Transaction Cost | 3,872 | 9,110 | ||||||||
| Proceeds from Borrowing on Debt | - | 28,069 | ||||||||
| Payment of Contingent Consideration | (862 | ) | - | |||||||
| Repayment of Debt | (5,223 | ) | (14,079 | ) | ||||||
| Payment of Deferred Loan Costs | (35 | ) | - | |||||||
| Financing Costs | - | (485 | ) | |||||||
| Net Cash Provided by/(Used in) Financing Activities | (2,248 | ) | 22,615 | |||||||
| Net Increase/(Decrease) in Cash and Cash Equivalents | 689 | (1,440 | ) | |||||||
| Cash and Cash Equivalents, Beginning of Period | 2,050 | 1,440 | ||||||||
| Cash and Cash Equivalents, End of Period | 2,739 | $ | - | |||||||
Contact Information:
Contact:
Alya Hidayatallah
Chief Financial Officer
Aly Energy Services, Inc.
713-333-4000