Logan International Inc.
TSX : LII

Logan International Inc.

March 30, 2012 09:00 ET

Logan International Reports 2011 Fourth Quarter and Annual Results

CALGARY, ALBERTA--(Marketwire - March 30, 2012) -

(All reported figures are in US dollars unless otherwise noted)

Logan International Inc. (TSX:LII) ("Logan" or the "Company") today announced results for the three months and year ended December 31, 2011. Revenues in the fourth quarter were $37.3 million as compared to revenues of $31.8 million in the fourth quarter of 2010. Net earnings from continuing operations were $1.6 million, or $0.05 per diluted share, as compared to net earnings from continuing operations of $2.1 million, or $0.06 per diluted share, in last year's fourth quarter. This year's fourth quarter Modified EBITDA (a non-GAAP measure) as defined in the financial table below, decreased to $7.2 million from $7.7 million in last year's fourth quarter.

Revenues for the year ended December 31, 2011were $135.5 million as compared to $108.6 million for the year ended December 31, 2010. For 2011, the Company reported earnings from continuing operations of $8.9 million, or $0.26 per diluted share, as compared to $10.3 million or $0.32 per diluted share for the year ended December 31, 2010. Modified EBITDA for the year ended December 31, 2011 increased to $29.7 million from $29.2 million in the year ended December 31, 2010.

The Company completed two acquisitions during this year's fourth quarter. Therefore, the fourth quarter and year end 2011 results include these acquisitions from the respective acquisition dates and are compared to the pre-acquisition historical results of the Company in 2010. Additionally, Logan completed two acquisitions in 2010 and the Company's 2011 results include the full year results for these two acquisitions as compared to the 2010 results which include partial year operations for the two acquisitions in 2010.

David Barr, President and Chief Executive Officer, stated "Our fourth quarter provided a mixture of good news and disappointing news. Our fishing tool business continued to exceed our expectations; order flow, backlog and revenue all point to strong industry fundamentals and excellent execution by the management. The newly-acquired Kline Oilfield Equipment and Scope Production Development entities each generated positive returns relative to our expectations for the quarter. Dennis Tool made progress both in the introduction of its radial bearing product line and in its pursuit of new international customers. In 2012, we expect the fishing tool business to remain strong (Logan Oil Tools), the PDC insert business to recover gradually (Dennis Tool) and our newly-acquired businesses to continue to report solid operating results (Kline Oilfield Equipment and Scope Production Developments)."

Mr. Barr continued, "Unfortunately, Logan Completion Systems' operating results disappointed us - we learned that certain well conditions require modifications to the MultiStim tool and installation procedures and we were distracted from our day-to-day "non-MultiStim" business. We have since replaced certain members of the senior management team; we have strengthened the MultiStim product and field installation procedures and we have re-emphasized our conventional completions day-to-day business. However, we do not expect a meaningful financial turnaround until our third quarter."

Recent highlights include:

  • During the fourth quarter we completed the acquisition of Kline Oilfield Equipment, Inc. and Scope Production Development Ltd.
  • We recently completed the acquisition of Xtend Energy Services Inc.
  • We negotiated and placed a $95 million senior credit facility with a group of three banks.

Selected Consolidated Financial Information

(in thousands of US dollars, except per share data)

Three months ended December 31, Twelve months ended December 31,
2011 2010 2011 2010
Revenue $ 37,261 $ 31,815 $ 135,491 $ 108,591
Net income (loss) from continuing operations $ 1,594 $ 2,136 $ 8,901 $ 10,251
Earnings (loss) per share from continuing operations:
Basic $ 0.05 $ 0.06 $ 0.27 $ 0.37
Diluted $ 0.05 $ 0.06 $ 0.26 $ 0.32
EBITDA(1) $ 5,283 $ 5,183 $ 23,889 $ 22,467
EBITDA - modified(1) $ 7,234 $ 7,674 $ 29,657 $ 29,194
December 31,
2011 2010
Working Capital $ 40,188 $ 23,169
Total Assets $ 213,557 $ 210,804
Debt(2) $ 25,335 $ 38,611
Shareholders' Equity $ 143,625 $ 127,962

Note: On March 1, 2010, the merger between Destiny Resource Services Corp ("Destiny") and Logan Holdings, Inc. ("Logan") (the "Destiny Merger") was completed as a reverse takeover. Accordingly, the results of operations for the years ended December 31, 2011 and 2010 include the results of the Logan operations for the entire period. In addition, the purchase of Source Energy Tool Services Inc. ("Source") was completed on April 30, 2010 and the purchase of Complete Oil Tools Inc. ("Complete") was completed with an effective date of July 31, 2010 and, accordingly, the Company's year ended December 31, 2010 operating results include eight months of Source and five months of Complete. Effective July 29, 2011, the Company sold essentially all of the assets of its front-end seismic services segment and as a result Destiny's results of operations for the years ended December 31, 2011 and 2010 are presented as discontinued operations. The purchase of Kline Oilfield Services, Inc. ("Kline") was completed on October 1, 2011, and the purchase of Scope Production Developments ("Scope") was completed on November 1, 2011, and, accordingly, the Company's year ended December 31, 2011 operating results include three months of Kline and two months of Scope.

  1. The MD&A presents: (a) EBITDA as earnings before finance cost, taxes, depreciation and amortization ("EBITDA"), and (b) Modified EBITDA as EBITDA before contingent consideration related to the Source Acquisition transaction, transaction fees, certain acquisition accounting adjustments, share-based compensation payments and severance costs. Neither of these measurements should be considered an alternative to, or more meaningful than, "net earnings from continuing operations" or "cash flow from operating activities" as determined in accordance with IFRS as an indicator of the Company's financial performance. EBITDA and Modified EBITDA do not have standardized definitions as prescribed by IFRS and; therefore, the Company's presentation of these measurements may not conform to similar presentations by other companies. Management calculates EBITDA and Modified EBITDA each period and evaluates the Company's operating performance based on these measurements. Management believes that Modified EBITDA, which eliminates significant non-cash or non-recurring items of revenue or cost, more accurately presents the results of the Company's ongoing operations and its ability to generate the cash required to finance future growth, acquisitions and capital investments.
Three months ended December 31, Year ended December 31,
2011 2010 2011 2010
Net income (loss) from continuing operations $ 1,594 $ 2,136 $ 8,901 $ 10,251
Addbacks:
Depreciation and amortization 2,389 1,970 8,438 6,151
Finance cost 200 207 1,235 912
Income tax expense 1,100 870 5,315 5,153
EBITDA 5,283 5,183 23,889 22,467
Adjustments:
Contingent compensation expense ΓÇÆ 1,984 1,994 1,984
Acquisition accounting adjustments 249 ΓÇÆ 249 ΓÇÆ
Transaction fees 676 ΓÇÆ 751 2,271
Share-based payments 740 507 2,488 1,832
Severance costs 286 ΓÇÆ 286 640
Modified EBITDA $ 7,234 7,674 $ 29,657 $ 29,194

EBITDA and Modified EBITDA are provided as measures of the Company's operating performance without regard to financing decisions, share-based compensation payments, age and cost of equipment used and income tax impacts, all of which are factors that are not controlled at the operating management level. The transaction fees included above relate to professional and other fees incurred in connection with the acquisitions in 2010 and 2011. Severance costs relate to amounts paid to terminated employees related to the acquisitions. The acquisition accounting adjustments related to the increase or step-up in cost basis of inventories acquired in a business acquisition. The share-based compensation payments relate to non-cash share-based compensation expense which includes an accelerated recognition of non-cash share-based payments in 2010 due to the Destiny Merger.

  1. Includes bank and other borrowed debt and capital leases.

Forward-Looking Statements

This press release contains forward-looking statements. These statements relate to future events or future performance of Logan International. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect Logan International's current views with respect to certain events and are subject to certain risks, uncertainties and assumptions. Although Logan International believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Many factors could cause Logan International's actual results, performance, or achievements to materially differ from those described in this press release. Readers are referred to Logan International's Annual Information Form filed on http://www.sedar.comwww.sedar.com which identifies significant risk factors which could cause actual results to differ from those contained in the forward-looking statements. Should one or more risks or uncertainties materialize or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this press release. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. These statements speak only as of the date of this press release. Logan International does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein in any jurisdiction.

Contact Information

  • Logan International Inc.
    David Barr
    Chief Executive Officer
    403-930-6810 Calgary or 281-617-5300 Houston

    Logan International Inc.
    Larry Keister
    Chief Financial Officer
    403-930-6810 Calgary or 832-386-2534 Houston