CALGARY, ALBERTA--(Marketwire - March 1, 2012) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.
The news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release.
Strad Energy Services Ltd., ("Strad" or the "Company") (TSX:SDY), a North America-focused, energy services company, today announced its financial results for the three and 12 months ended December 31, 2011. In early 2012, Strad announced the sale of its Production Services business. For 2011, the Company is reporting the results from the Production Services business as discontinued operations. On that basis, comparative results have been restated to reflect the impact of operations that have been classified as discontinued during 2011. Refer to note 18 of the audited consolidated financial statements of Strad for the year ended December 31, 2011. All amounts are stated in Canadian dollars unless otherwise noted.
SELECTED FINANCIAL AND OPERATIONAL HIGHLIGHTS:
- Fourth quarter and 2011 EBITDA(1) from continuing operations of $17.2 million and $52.3 million, a 142% and 121% increase, respectively, compared with $7.1 million and $23.7 million for the same periods in 2010;
- Including discontinued operations, fourth quarter and 2011 revenue of $78.7 million and $254.2 million, and fourth quarter and 2011 EBITDA(1) of $18.5 million and $56.9 million;
- Capital expenditures of $21.0 million, net of disposals, in the fourth quarter. Total capital expenditures of $79.7 million in 2011 for continuing operations;
- Continued deployment of assets to high growth resource plays in the United States (U.S.). United States 2011 revenues of $63.9 million increased 113% compared with 2010. Total gross capital assets based in the U.S. now comprise 48% of total Company gross capital assets compared with 35% at the end of 2010;
- Ongoing success in the development of new products, including solids control and waste management, composite matting and satellite communications equipment with $21.2 million spent on new products in 2011;
- Total funded debt to trailing EBITDA ratio of 0.7 at the end of 2011; and
- Accretive divestiture of Production Services Division in January 2012 for consideration of $17.4 million aimed at streamlining the Company's focus on core competencies.
Notes:
(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous Generally Accepted Accounting Principles in Canada ("GAAP"); see "Non-IFRS Measures Reconciliation" in this press release.
"Strad's 2011 results marked an all time high for the Company thanks to our commitment to growing not only our asset base but also our level of integration with our customers. This facilitated year-end EBITDA that eclipsed 2010 levels by more than 120 percent," said Henry van der Sloot, Chief Executive Officer of Strad. "2011 was an excellent year from a strategic perspective as our focus on operational flexibility yielded positive returns against an altering industry backdrop. With natural gas prices remaining at depressed levels and oil and natural gas liquids pricing remaining more robust, Strad was able to quickly and effectively adjust by re-deploying its assets regionally to higher activity resource plays focused on these commodity types. This operational flexibility is a key differentiator for Strad and one that we continue to emphasize as we move forward."
"Our focus in 2012 will remain on drill-site infrastructure and product innovation," said Andy Pernal, President of Strad. "We were recently able to sharpen our Company's focus with the accretive divestiture of our Production Services division. In late 2011, we officially launched Strad Innovations - an R&D focused group that is charged with enhancing our current suite of products, developing new customer solutions, and responding to broader technological opportunities presented by the industry."
FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2011
Effective January 1, 2011, Strad began reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"). Prior year comparative amounts were changed to reflect results as if Strad had always prepared its financial results using IFRS. Please see additional discussion regarding IFRS later in this news release.
With the divestiture of the Production Services business, Strad will be reporting operational and financial results for its core drill-site infrastructure business along geographic lines with a separate segment for product sales. Product Sales are comprised of Strad manufactured products sold to external customers, third party equipment sales to existing customers, and sales of equipment from Strad's existing fleet to customers. Results are segmented between Canadian Operations, U.S. Operations and Product Sales to better distinguish between the Company's core operating business and product sales, which can vary widely on a quarter to quarter basis.
SELECTED FINANCIAL AND OPERATING HIGHLIGHTS
($000's, except per share amounts)
| Three months ended December 31, | Years ended December 31, | |||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| Revenue from continuing operations | 62,098 | 27,462 | 188,272 | 89,484 | ||||
| EBITDA from continuing operations (1) | 17,169 | 7,068 | 52,309 | 23,737 | ||||
| Per share ($), basic | 0.47 | 0.27 | 1.43 | 1.11 | ||||
| Per share ($), diluted | 0.47 | 0.24 | 1.41 | 0.98 | ||||
| Net income (loss) from continuing operations (2) | 7,661 | 1,818 | 19,827 | 5,997 | ||||
| Per share ($), basic | 0.21 | 0.07 | 0.54 | 0.28 | ||||
| Per share ($), diluted | 0.21 | 0.06 | 0.54 | 0.26 | ||||
| Funds from operations from continuing operations (3) | 16,057 | 7,536 | 49,943 | 23,994 | ||||
| Per share ($), basic | 0.44 | 0.28 | 1.36 | 1.12 | ||||
| Per share ($), diluted | 0.43 | 0.25 | 1.35 | 0.99 | ||||
| Capital Expenditures from continuing operations (4) | 21,039 | 11,661 | 79,695 | 40,345 | ||||
| Total assets | 227,111 | 191,468 | 227,111 | 191,468 | ||||
| Long term debt(5) | 26,782 | 5,282 | 26,782 | 5,282 | ||||
| Total long term liabilities | 40,448 | 15,744 | 40,448 | 15,744 | ||||
| Common Shares - end of period | 37,246,384 | 37,246,384 | 37,246,384 | 37,246,384 | ||||
| Weighted average Common Shares | ||||||||
| basic | 36,692,058 | 26,487,929 | 36,692,058 | 21,405,667 | ||||
| diluted | 36,919,005 | 29,980,913 | 36,997,563 | 24,252,939 | ||||
FINANCIAL POSITION AND RATIOS
| December 31, | |||
| ($000's except ratios) | 2011 | 2010 | |
| Working Capital (6) | 16,629 | 33,575 | |
| Funded Debt (7) | 36,734 | 1,528 | |
| Cash | - | 8,416 | |
| Total Assets | 227,111 | 191,468 | |
| Funded Debt to EBITDA(7) | 0.7 | 0.1 | |
Notes:
(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".
(2) Net income (loss) from continuing operations excludes income attributable to the non-controlling interests.
(3) Funds from operations is cash flow from operating activities before changes in working capital. Funds from operations is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".
(4) Includes assets acquired under finance lease and intangible assets.
(5) Excluding current portion; includes long term portion of finance lease obligations and convertible debentures.
(6) Working capital is calculated as current assets less current liabilities. See "Non-IFRS Measures Reconciliation".
(7) Funded debt includes bank indebtedness plus current and long-term portion of debt plus current and long-term obligations under finance lease plus convertible debentures less cash. EBITDA is based on trailing twelve months. See "Non-IFRS Measures Reconciliation".
SEGMENTED INFORMATION
For the years ended December 31,
($000's, except per share amounts)
| Three months ended December 31, | Years ended December 31, | |||||||||
| ($000's) | 2011 | 2010 | % chg. | 2011 | 2010 | % chg. | ||||
| Canadian Operations | ||||||||||
| Revenue | 19,182 | 10,995 | 74.5 | 58,021 | 37,414 | 55.1 | ||||
| EBITDA (1) | 6,672 | 4,393 | 51.9 | 21,845 | 14,569 | 49.9 | ||||
| EBITDA % | 34.8 | % | 40.0 | % | 37.7 | % | 38.9 | % | ||
| Capital Expenditures (2) | 7,902 | 5,345 | 30,895 | 14,525 | ||||||
| Gross Capital Assets | 83,453 | 54,894 | 83,453 | 54,894 | ||||||
| Total Assets | 108,818 | 80,231 | 108,818 | 80,231 | ||||||
| U.S. Operations | ||||||||||
| Revenue | 21,883 | 8,200 | 166.9 | 63,860 | 30,002 | 112.9 | ||||
| EBITDA (1) | 8,851 | 3,016 | 193.5 | 24,712 | 9,449 | 161.5 | ||||
| EBITDA % | 40.4 | % | 36.8 | % | 38.7 | % | 31.5 | % | ||
| Capital Expenditures (2) | 12,147 | 6,183 | 46,813 | 25,382 | ||||||
| Gross Capital Assets | 77,601 | 29,363 | 77,601 | 29,363 | ||||||
| Total Assets | 91,717 | 39,636 | 91,717 | 39,636 | ||||||
| Product Sales | ||||||||||
| Revenue | 21,033 | 8,268 | 154.4 | 66,391 | 22,068 | 200.8 | ||||
| EBITDA (1) | 2,625 | 281 | 834.2 | 9,123 | 2,606 | 250.1 | ||||
| EBITDA % | 12.5 | % | 3.4 | % | 13.7 | % | 11.8 | % | ||
| Capital Expenditures (2) | 703 | 24 | 924 | 130 | ||||||
| Corporate | ||||||||||
| EBITDA(1) | (979 | ) | (622 | ) | 57.4 | (3,371 | ) | (2,887 | ) | 16.8 |
| Capital Expenditures (2) | 287 | 109 | 1,063 | 308 | ||||||
| Total EBITDA from continuing operations | 17,169 | 7,068 | 142.9 | 52,309 | 23,737 | 120.4 | ||||
| Total Capital Expenditures (2) | 21,039 | 11,661 | 79,695 | 40,345 | ||||||
| Return on Average Total Assets (3) | 36.3 | % | 27.5 | % | 33.9 | % | 28.4 | % | ||
Notes:
(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".
(2) Includes assets acquired under finance lease. Segmented information does not include capital expenditures for the corporate and product sales segments of Strad as they are minimal. Capital expenditures are net of rental asset disposals.
(3) Return on average total assets is not a recognized measure under IFRS or previous GAAP; see "Non-IFRS Measures Reconciliation".
RESULTS OF OPERATIONS
The exceptional revenue and EBITDA results from continuing operations for the year ended December 31, 2011, are due to the successful execution of Strad's 2010 and 2011 capital programs. During the year, Strad increased its 2011 capital expenditure program to $86.5 million (from $66.5 million), of which $79.7 million was deployed in continuing operations by December 31, 2011. Fourth quarter and 2011 EBITDA from continuing operations were $17.2 million and $52.3 million, a 142% and 121% increase, respectively, compared with $7.1 million and $23.7 million for the same periods in 2010. Had Production Services not been reclassified as discontinued operations for 2011, fourth quarter and full year EBITDA would have been $18.5 million and $56.9 million, respectively.
With the divestiture of the Production Services business, Strad now reports its results between Canadian Operations, U.S. Operations and Product Sales. As is indicated below, results were favourable in all three areas. The growing trend towards horizontal drilling and multi-stage fracing, in both the U.S. and Canada, has continued to drive demand in all three business segments. Industry's shift toward these more technologically complex initiatives has translated into a growing requirement for turn-key solutions providers that offer integrated, technologically- advanced, and complete solutions. Strad continues to benefit from this by focusing its resources on client integration and product innovation. Strad's capital resources are distributed evenly between its U.S. Operations and Canadian Operations, as the Company views this as an important diversifier of overall risk.
Consolidated revenue generated from continuing operations for the year ended December 31, 2011, increased 110% to $188.3 million compared with $89.5 million for the same period in 2010. Higher equipment and service utilization, additional capital expenditures and increased product sales contributed to the significant increase in revenue compared with 2010. Had Production Services not been reclassified as discontinued operations for 2011, fourth quarter and full year revenue would have been $78.7 million and $254.2 million, respectively.
Canadian Operations
Revenues generated by the Company's Canadian Operations segment for the year ended December 31, 2011, increased 55% to $58.0 million versus $37.4 million for the same period in 2010. The increase is primarily due to capital additions to the surface equipment fleet during 2011 and the second half of 2010. During 2011, the Canadian Operations segment added $30.9 million of capital additions with $7.9 million being added in the fourth quarter.
U.S. Operations
Revenue generated by U.S. Operations for the year ended December 31, 2011, increased 113% to $63.9 million from $30.0 million for the same period in 2010. The increase is due to $46.8 million in capital additions to the surface equipment fleet during 2011. The increase is also due to higher utilization rates during 2011 in the North Dakota Bakken resource play, continued focus on expanding the customer base and market share in the U.S. and increased traction from new product deployment including solids control and waste management, communications and composite mats.
Strad also made further in-roads into the American market this year by opening regional offices in Houston, Texas and Pittsburgh, Pennsylvania. By establishing a presence in these two regions, Strad aims to capture increased market share by locating in key-decision making and operational centres. This remains part of the Company's ongoing efforts to position itself as a North American-focused services provider.
Product Sales
Revenue generated by the Company's Product Sales segment for the year ended December 31, 2011, was $66.4 million compared with $22.1 million in 2010. Product sales are comprised of in-house manufactured products sold to external customers, third party equipment sales to existing customers, and sales of equipment from Strad's existing fleet to customers.
Sale of Production Services
On January 13, 2012, Strad announced the sales of its Production Services Division. The sale was comprised of two separate transactions with the successful purchasers led by employees of the Company. The combined consideration received on the sale of the Division was $17.4 million which was comprised of $13.1 million in cash, $3.0 million in Promissory Notes, and $1.3 million in the assumption of long term debt. In 2011, the Division contributed $4.6 million in EBITDA, excluding any allocation of corporate overhead. The Company recorded a total loss from discontinued operations of $29.9 million for the year ended December 31, 2011, compared with income of $1.3 million for the same period in 2010. Included in the loss in 2011, is an impairment of goodwill and intangible assets of $24.6 million recognized on the announcement of the Company's intent to dispose of the Production Services Division. With the sale, the Company expects a significant improvement in reported margins and an increased focus on its most profitable business segment.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2011, Strad's principal sources of liquidity include working capital of $16.6 million, a decrease of $16.9 million compared with December 31, 2010, a syndicated banking facility of $100.0 million consisting of a $15.0 million operating facility of which $5.6 million was drawn; and a revolving facility of $85.0 million of which $23.5 million was drawn as of December 31, 2011.
OUTLOOK
Industry conditions remained strong in the fourth quarter, despite ongoing concerns regarding the global macro- economic picture and its potential effect on the North American economy. In the WCSB (Western Canadian Sedimentary Basin), drilling utilization of 54.8% for the fourth quarter of 2011 was up from 49% in the fourth quarter of last year; well permits for the fourth quarter of 2011 increased 15% over the fourth quarter of 2010; and average well depth continued to grow with the number reaching 1,862 metres in 2011 versus 1,679 metres in 2010, an increase of nearly 11%. Positive industry-specific indicators were also present in the United States where the annual rig count increased by nearly 18% over year end 2010 levels. U.S. land well permitting levels also increased with the 2011 total rising 5% from 2010. It is estimated that approximately 65% of U.S. land-based drilling is focused on oil and natural gas liquids.
Low dry natural gas pricing continues to shape exploration activity with industry players shifting their budgets towards those plays that offer exposure to oil and natural gas liquids. In keeping with this trend, Strad has deployed the majority of its asset base to these more active market segments. Overall, demand for Strad's services remained robust throughout 2011, which was reflected in a year over year EBITDA increase of 120%, net of the Company's divested Production Services business. Management anticipates drilling activity to remain steady for the foreseeable future and intends to focus the majority of its resources on the more profitable oil and natural gas liquids segment.
The trend towards horizontal drilling and multi-stage fracing continued on both sides of the border where the industry continued to access both unconventional resource plays and mature conventional plays. In 2011, 58% of U.S. rig activity was focused on horizontal drilling techniques, compared with 56% in 2010. In Canada, 56% of total wells drilled in 2011 were horizontal, compared with 41% in 2010. This shifting focus towards horizontal drilling and multi-stage fracing has allowed Strad to leverage the corresponding demand for greater amounts of equipment at individual sites and the expertise that these increasingly complex operations present. This was ultimately reflected in Strad's 2011 revenue per rig results. On a year over year basis, Strad's revenue per rig in Canada increased from $293,000 to $476,000; while the U.S. saw similar gains, rising from $454,000 in 2010 to $691,000 in 2011. In 2011, Strad equipment and services supported 28% of Canadian active rigs, whereas in the U.S. the Company supported 5% of the active rig count. This percentage in Canada was in line with 2010 levels but increased in the U.S. That said, more rigs were active in 2011 highlighting the increasing reliance of exploration companies on Strad's suite of products and services. In 2011, Strad supported 118 rigs in Canada and 92 in the United States versus 95 and 43, respectively, in 2010.
Associated with this increase in horizontal drilling is the greater attention being paid to the environmental and safety issues associated with these operations. Management remains cognizant of the market opportunity this represents for the Company and has acted proactively over the past year to deploy a host of new product offerings including composite matting, communication systems, and solids control and waste management solutions. Due in part to the successful market acceptance of these new products, the Company officially launched Strad Innovations in the fourth quarter. Strad Innovations streamlines the company's current R&D efforts and focuses a dedicated team on new product development, customer solutions, and business development related activities. Strad Innovations is already in the advanced stages of several new product offerings, including those targeted at meeting the growing focus on frac-water storage and usage. Management views this new initiative as an important catalyst for future revenue streams and is anticipating going to market by mid-2012.
Capital expenditures for the year, totalled $30.9 million in Canada and $46.8 million in the U.S., which represented year over year increases of 113% and 84%, respectively. Strad continues to deploy its capital on a roughly equal basis between its U.S. and Canadian Operations with its $72.0 million capital program for 2012. The Company recently unveiled an additional 20,000 square feet of manufacturing and design facilities in Nisku, Alberta, doubling its manufacturing capacity. The Company views its strong manufacturing capabilities as an important differentiator that allows it to mitigate risk by increasing its capability to scale its asset offerings up or down as industry conditions dictate.
From a macro-level perspective, Management remains aware of the continuing market volatility and its potential to undermine North American crude and natural gas liquids pricing. As such, flexibility and the ability to adjust quickly to fluctuating market conditions remains a key focus for the Company. Management believes this need for flexibility is best served by maintaining a strong balance sheet and nimble operations. The Company remains well capitalized through strong cash flows and funds raised during its initial public offering in November, 2010. Management views funded debt to EBITDA as an important tool in the prudent management of its balance sheet and intends to continue carefully allocating capital. At December 31, 2011, the funded debt to EBITDA ratio for continuing operations was 0.7.
NON-IFRS MEASURES RECONCILIATION
Certain supplementary measures in this Press Release do not have any standardized meaning as prescribed under IFRS and previous GAAP and, therefore, are considered non-IFRS measures. These measures are described and presented in order to provide shareholders and potential investors with additional information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent IFRS or previous GAAP measure. However, they should not be used as an alternative to IFRS or previous GAAP, because they may not be consistent with calculations of other companies. These measures are further explained below.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS and previous GAAP. Management believes that in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed or how the results are taxed. EBITDA is calculated as net income from continuing operations plus interest, taxes, depreciation and amortization, non-controlling interest, loss on disposal of property, plant and equipment, finance costs, loss on foreign exchange, less gain on foreign exchange and gain on disposal of property, plant and equipment. Segmented EBITDA is based upon the same calculation for defined business segments, which are comprised of Canadian Operations, U.S. Operations, Product Sales and Corporate.
Funds from operations are cash flow from operating activities excluding changes in working capital. It is a supplemental measure to gauge performance of the Company before non-cash items. Working capital is calculated as current assets minus current liabilities. Working capital is used by Management to gauge what banking facilities are available for reinvestment in the business.
Return on average total assets for the year ended December 31, 2011, is calculated as year to date EBITDA divided by the average of total assets over 2011, including a three month lag. The three month lag represents the time between the purchase of capital assets and when they are deployed in the field and earning revenue. In 2011, the return on average total assets calculation was adjusted to include total Company assets, where as prior calculations included total drilling services assets only.
Funded debt is calculated as bank indebtedness plus current and long-term portion of debt plus current and long- term portion of finance lease obligations less cash.
Reconciliation of EBITDA and Funds from Operations
Reconciliation of non-IFRS measures
($000's)
| Three Months Ended | |||||||||||
| December 31 | Year Ended December 31, | ||||||||||
| 2011 | 2010(1 | ) | 2011 | 2010(1 | ) | 2009 | |||||
| (unaudited | ) | (unaudited | ) | ||||||||
| Net income from continuing ops | 7,661 | 1,818 | 19,827 | 5,997 | (7,146 | ) | |||||
| Add: | |||||||||||
| Depreciation and amortization | 5,713 | 3,010 | 19,198 | 10,577 | 8,032 | ||||||
| Finance costs | - | 13 | - | 35 | - | ||||||
| (Gain)/loss on disposal of PP&E | (96 | ) | (5 | ) | (185 | ) | (98 | ) | 60 | ||
| Share-based payments | 117 | 435 | 643 | 558 | 250 | ||||||
| Non-controlling interest | 543 | 76 | 1,373 | 715 | - | ||||||
| Deferred income tax (recovery) | 1,499 | 1,654 | 7,291 | 3,962 | (2,258 | ) | |||||
| Interest expense | 620 | 535 | 1,796 | 2,248 | 1,591 | ||||||
| Funds from operations | 16,057 | 7,536 | 49,943 | 23,994 | 529 | ||||||
| Add: | |||||||||||
| (Gain)/loss on foreign exchange | 52 | 529 | (262 | ) | 637 | 92 | |||||
| Income tax expense (recovery) | 1,177 | (562 | ) | 3,271 | (336 | ) | (636 | ) | |||
| Amortization of deferred charges | - | - | - | - | 130 | ||||||
| Subtotal | 17,286 | 7,503 | 52,952 | 24,295 | 115 | ||||||
| Deduct: | |||||||||||
| Share-based payments | 117 | 435 | 643 | 558 | 250 | ||||||
| EBITDA | 17,169 | 7,068 | 52,309 | 23,737 | (135 | ) | |||||
| Reconciliation of quarterly non-IFRS measures | ||||||||
| ($000's) | ||||||||
| Three Months Ended | ||||||||
| (unaudited) | ||||||||
| Dec. 31, 2011 | Sept. 30, 2011 | Jun. 30, 2011 | Mar. 31, 2011 | |||||
| Net income from continuing operations | 7,661 | 7,327 | 3,609 | 1,230 | ||||
| Add: | ||||||||
| Depreciation and amortization | 5,713 | 5,215 | 4,611 | 3,660 | ||||
| Finance costs | - | - | - | |||||
| (Gain)/loss on disposal of PP&E | (96 | ) | 52 | (130 | ) | (11 | ) | |
| (Gain)/loss on foreign exchange | 52 | (916 | ) | 300 | 302 | |||
| Non-controlling interest | 543 | 497 | (210 | ) | 543 | |||
| Income tax expense/(recovery) | 1,177 | 2,074 | - | 20 | ||||
| Deferred income tax expense | 1,499 | 2,748 | 1,832 | 1,212 | ||||
| Interest expense | 620 | 487 | 486 | |||||
| EBITDA | 17,169 | 17,484 | 10,498 | 7,158 | ||||
Notes:
(1) 2010 amounts are presented in accordance with IFRS.
Reconciliation of quarterly non-IFRS measures
($000's)
| Three Months Ended | ||||||||
| (unaudited) | ||||||||
| Dec. 31, 2010 (1 | ) | Sept. 30, 2010 (1 | ) | Jun. 30, 2010 (1 | ) | Mar. 31, 2010 (1 | ) | |
| Net income from continuing operations | 1,818 | 2,646 | 386 | 1,147 | ||||
| Add: | ||||||||
| Depreciation and amortization | 3,010 | 2,724 | 2,528 | 2,318 | ||||
| Finance costs | 13 | 22 | - | - | ||||
| (Gain)/loss on disposal of PP&E | (5 | ) | (42 | ) | (48 | ) | (2 | ) |
| (Gain)/loss on foreign exchange | 529 | (211 | ) | 185 | 134 | |||
| Non-controlling interest | 76 | 445 | (20 | ) | 214 | |||
| Income tax expense/(recovery) | (562 | ) | (829 | ) | 336 | 719 | ||
| Deferred income tax expense/(recovery) | 1,654 | 2,510 | (128 | ) | (74 | ) | ||
| Interest expense | 535 | 733 | 538 | 442 | ||||
| EBITDA | 7,068 | 7,998 | 3,777 | 4,898 | ||||
Notes:
(1) 2010 amounts are presented in accordance with IFRS.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements and information contained in this Press Release constitute forward-looking statements. More particularly, this Press Release contains forward-looking statements concerning future capital expenditures of the Company, demand for the Company's products and services, pricing of the Company's products and services, introduction of new products and services, and expected exploration and production industry activity. These statements relate to future events or to the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.
The use of any of the words "expect", "plan", "continue", "estimate", "anticipate", "potential", "targeting", "intend", "could", "might", "should", "believe", "may", "predict", or "will" and similar expressions are inte nded to identify forward-looking information or statements. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this Press Release. The forward- looking information and statements included in this Press Release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and 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 information or statements. These factors include, but are not limited to, such things as the impact of general industry conditions, fluctuation of commodity prices, industry competition, availability of qualified personnel and management, stock market volatility and timely and cost effective access to sufficient capital from internal and external sources. The risks outlined above should not be construed as exhaustive. Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this Press Release. All of the forward-looking statements of the Company contained in this Press Release are expressly qualified, in their entirety, by this cautionary statement. Except as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking information or statements, whether the result of new information, future events or otherwise.
YEAR END 2011 EARNINGS CONFERENCE CALL
Strad Energy Services Ltd. has scheduled a conference call to begin promptly at 9:00 a.m. MDT on Friday, March 2, 2012.
The conference call dial in numbers are 1-866-226-1798 or 1-416-340-2219.
The conference call will also be accessible via webcast at: www.stradenergy.com
A replay of the call will be available approximately one hour after the conference call ends until Friday, March 9th, 2012. To access the replay, call 1-800-408-3053 or 1-905-694-9451, followed by pass code 8480644.
Strad Energy Services Ltd.
Consolidated Statement of Financial Position
As at December 31, 2011, 2010 and January 1, 2010
| (in thousands of Canadian dollars) | As at December 31, | As at December 31, | As at January 1, | ||||
| 2011 | 2010 | 2010 | |||||
| $ | $ | $ | |||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | - | 8,416 | - | ||||
| Trade receivables | 49,466 | 41,700 | 18,547 | ||||
| Inventories | 7,950 | 15,171 | 17,935 | ||||
| Prepaids and deposits | 4,263 | 2,887 | 981 | ||||
| Current portion of note receivable | 1,352 | - | - | ||||
| Income taxes receivable | - | 241 | 195 | ||||
| 63,031 | 68,415 | 37,658 | |||||
| Non-current assets | |||||||
| Property, plant and equipment | 126,439 | 70,128 | 40,810 | ||||
| Intangible assets | 2,752 | 11,446 | 14,856 | ||||
| Note receivable | 683 | - | - | ||||
| Goodwill | 17,277 | 36,004 | 36,004 | ||||
| Deferred income taxes | 2,873 | 5,475 | 2,447 | ||||
| 213,055 | 191,468 | 131,775 | |||||
| Assets of disposal group classified as held for sale | 14,056 | - | - | ||||
| Total assets | 227,111 | 191,468 | 131,775 | ||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Bank indebtedness | 5,570 | - | 13,249 | ||||
| Accounts payable and accrued liabilities | 30,812 | 26,755 | 13,081 | ||||
| Deferred revenue | 2,245 | 3,387 | 119 | ||||
| Current portion of long-term debt | - | - | 3,587 | ||||
| Current portion of obligations under finance lease | 4,383 | 4,662 | 3,957 | ||||
| Income taxes payable | 3,392 | 36 | - | ||||
| 46,402 | 34,840 | 33,993 | |||||
| Non-current liabilities | |||||||
| Long-term debt | 23,500 | - | 11,214 | ||||
| Obligations under finance lease | 3,282 | 5,282 | 5,765 | ||||
| Deferred income tax liabilities | 13,666 | 10,462 | 5,281 | ||||
| Other long-term liabilities | - | - | 278 | ||||
| 86,850 | 50,584 | 56,531 | |||||
| Liabilities of disposal group classified as held for sale | 6,988 | - | - | ||||
| Total liabilities | 93,838 | 50,584 | 56,531 | ||||
| Equity | |||||||
| Equity attributable to owners of the parent | |||||||
| Share capital | 157,042 | 157,071 | 99,091 | ||||
| Contributed surplus | 3,017 | 2,221 | 1,661 | ||||
| Accumulated other comprehensive loss | (585 | ) | (832 | ) | - | ||
| Deficit | (28,260 | ) | (18,235 | ) | (25,544 | ) | |
| 131,214 | 140,225 | 75,208 | |||||
| Non-controlling interests | 2,059 | 659 | 36 | ||||
| Total equity | 133,273 | 140,884 | 75,244 | ||||
| Total liabilities and equity | 227,111 | 191,468 | 131,775 |
Strad Energy Services Ltd.
Consolidated Statement of Income
For the year ended December 31, 2011 and 2010
| (in thousands of Canadian dollars) | ||||||||
| 2011 | 2010 | |||||||
| $ | $ | |||||||
| Continuing operations | ||||||||
| Revenue | 188,272 | 89,484 | ||||||
| Expenses | ||||||||
| Operating expenses | 106,417 | 48,099 | ||||||
| Depreciation | 17,785 | 8,974 | ||||||
| Amortization of intangible assets | 1,413 | 1,603 | ||||||
| Finance costs | - | 35 | ||||||
| Selling, general administration | 28,903 | 17,090 | ||||||
| Share-based payments | 643 | 558 | ||||||
| (Gain) on disposal of property, plant and equipment | (185 | ) | (98 | ) | ||||
| Foreign exchange (gain) loss | (262 | ) | 637 | |||||
| Interest expense | 1,796 | 2,248 | ||||||
| Income before income tax from continuing operations | 31,762 | 10,338 | ||||||
| Income tax | 10,562 | 3,626 | ||||||
| Net income from continuing operations for the year | 21,200 | 6,712 | ||||||
| (Loss) income from discontinued operations, net of tax | (29,852 | ) | 1,312 | |||||
| Net (loss) income for the year | (8,652 | ) | 8,024 | |||||
| Net (loss) income attributable to: | ||||||||
| Owners of the parent | (10,025 | ) | 7,309 | |||||
| Non-controlling interests | 1,373 | 715 | ||||||
| (8,652 | ) | 8,024 | ||||||
| Earnings per share from continuing operations attributable to the equity owners of the Company: | ||||||||
| Basic | $ | 0.54 | $ | 0.28 | ||||
| Diluted | $ | 0.54 | $ | 0.26 | ||||
| (Loss) earnings per share from discontinued operations attributable to the equity owners of the Company: | ||||||||
| Basic | $ | (0.81 | ) | $ | 0.06 | |||
| Diluted | $ | (0.81 | ) | $ | 0.05 | |||
| (Loss) earnings per share from total operations attributable to the equity owners | ||||||||
| of the Company: | ||||||||
| Basic | $ | (0.27 | ) | $ | 0.34 | |||
| Diluted | $ | (0.27 | ) | $ | 0.30 | |||
Strad Energy Services Ltd.
Consolidated Statement of Comprehensive Income
For the year ended December 31, 2011 and 2010
| (in thousands of Canadian dollars) | |||||
| 2011 | 2010 | ||||
| $ | $ | ||||
| Net (loss) income for the year | (8,652 | ) | 8,024 | ||
| Other comprehensive (loss) | |||||
| Cumulative translation adjustment | 274 | (924 | ) | ||
| Total other comprehensive (loss) | 274 | (924 | ) | ||
| Comprehensive (loss) income for the year | (8,378 | ) | 7,100 | ||
| Comprehensive (loss) income attributable to: | |||||
| Owners of the parent | (9,778 | ) | 6,477 | ||
| Non-controlling interests | 1,400 | 623 | |||
| (8,378 | ) | 7,100 |
Strad Energy Services Ltd.
Consolidated Statement of Cash Flow
For the year ended December 31, 2011 and 2010
| (in thousands of Canadian dollars) | ||||||
| 2011 | 2010 | |||||
| $ | $ | |||||
| Cash flow provided by (used in) | ||||||
| Operating activities | ||||||
| Net income for the year | (8,652 | ) | 8,024 | |||
| Adjustments for: | ||||||
| Depreciation and amortization | 22,802 | 14,710 | ||||
| Finance costs | - | 35 | ||||
| Deferred income tax | 7,123 | 3,469 | ||||
| Share-based payments | 796 | 558 | ||||
| Interest expense | 1,943 | 2,350 | ||||
| Gain on disposal of property, plant and equipment | (222 | ) | (129 | ) | ||
| Loss on sale of investment in subsidiary | 10,460 | - | ||||
| Loss on fair value adjustment of assets classified as held for sale | 19,888 | - | ||||
| Changes in items of non-cash working capital | (13,091 | ) | (6,184 | ) | ||
| Net cash generated from operating activities | 41,047 | 22,833 | ||||
| Investing activities | ||||||
| Purchase of property, plant and equipment | (74,583 | ) | (40,233 | ) | ||
| Proceeds from sale of property, plant and equipment | 995 | 1,096 | ||||
| Purchase of intangible assets | (768 | ) | (267 | ) | ||
| Proceeds from sale of investment in subsidiary | 6,000 | - | ||||
| Net cash used in investing activities | (68,356 | ) | (39,404 | ) | ||
| Financing activities | ||||||
| Proceeds on issuance of long-term debt | 61,000 | - | ||||
| Repayment of debt | (37,500 | ) | (14,801 | ) | ||
| Repayment of finance lease obligations (net) | (6,168 | ) | (2,203 | ) | ||
| Conversion of convertible debentures | - | (35 | ) | |||
| Proceeds on issuance of shares | - | 57,782 | ||||
| Share issuance costs | (147 | ) | - | |||
| Repayment of shareholder loan | 118 | - | ||||
| Interest expense | (1,943 | ) | (2,350 | ) | ||
| Net cash generated from financing activities | 15,360 | 38,393 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (2,242 | ) | (157 | ) | ||
| (Decrease) increase in cash and cash equivalents | (14,191 | ) | 21,665 | |||
| Cash and cash equivalents - beginning of year | 8,416 | (13,249 | ) | |||
| Cash and cash equivalents - end of year | (5,775 | ) | 8,416 | |||
| Cash and cash equivalents - included in liabilities of disposal group | (205 | ) | - | |||
| Cash and cash equivalents - end of year | (5,570 | ) | 8,416 | |||
| Cash paid for income tax | - | - | ||||
ABOUT STRAD ENERGY SERVICES LTD.
Strad is a North American energy services company that focuses on providing oilfield solutions to the oil and natural gas industry. Strad focuses on providing complete customer solutions in drilling-related oilfield equipment for producers active in unconventional resource plays.
Strad is headquartered in Calgary, Alberta, Canada. Strad is listed on the Toronto Stock Exchange under the trading symbol "SDY".
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this Press Release.
Contact Information:
Henry van der Sloot
Chief Executive Officer
(403) 249-7336
(403) 232-6901 (FAX)
hvandersloot@stradenergy.com
Strad Energy Services Ltd.
Andy Pernal
President
(403) 775-9202
Fax: (403) 232-6901 (FAX)
apernal@stradenergy.com
www.stradenergy.com