CALGARY, ALBERTA--(Marketwired - May 8, 2013) -
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 American-focused, energy services company, today announced its financial results for the three months ended March 31, 2013. All amounts are stated in Canadian dollars unless otherwise noted.
SELECTED FINANCIAL AND OPERATIONAL HIGHLIGHTS:
- First quarter EBITDA(1) from continuing operations of $10.7 million decreased 33% compared to $16.0 million for the same period in 2012, and increased 39% compared to fourth quarter 2012 EBITDA of $7.7 million;
- First quarter revenue from continuing operations of $44.7 million, a 21% decrease compared to $56.3 million for the same period in 2012;
- Successful restructuring of Strad's U.S. Operations resulted in an EBITDA(1) margin increase to 32% in the first quarter compared to 15% in the fourth quarter of 2012;
- Capital expenditures were $2.7 million in the first quarter;
- Total funded debt(2)to trailing EBITDA ratio of 1.5 to 1 at the end of the first quarter of 2013; and
- First quarter earnings per share from continuing operations of $0.03, a 79% decrease from $0.14 for the same period in 2012.
Notes:
| (1) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS; see "Non-IFRS Measures Reconciliation". |
| (2) | Funded debt includes bank indebtedness plus current and long-term portion of debt plus current and long-term obligations under finance lease less cash. EBITDA is based on trailing twelve months. See "Non-IFRS Measures Reconciliation". |
"The first quarter of 2013 saw North American drilling activity down in comparison to the prior year quarter. The slower pace of drilling activity in Canada and continued restrained customer spending in many of our markets has impacted equipment utilization levels in comparison to levels from one year ago. On a positive note, revenue and EBITDA both increased sequentially from the fourth quarter of 2012 despite this challenging environment." said Andy Pernal, President and CEO of Strad. "We focused on maintaining strong EBITDA margins for the quarter and had significant improvement in the U.S. with only a slight reduction in Canada from the fourth quarter of 2012 . These results confirm our ability to maintain operational flexibility and scale our business in the face of a changing operating environment."
"The success we experienced in restructuring our U.S. operations was ultimately reflected in U.S. EBITDA margins of 32%, which represented a significant increase from 15% in the fourth quarter," said Greg Duerr, Chief Financial Officer of Strad. "The reduction in U.S. staffing levels and exiting non-core resource plays in Texas enabled us to eliminate fixed costs going forward. We took cost out of the business without impacting our ability to grow in our core markets and believe we have established a U.S. operating base that will contribute to more stable margins going forward."
| FIRST QUARTER FINANCIAL HIGHLIGHTS | |||||||
| Three months ended March 31, | |||||||
| ($000's, except per share amounts) | 2013 | 2012 | % chg. | ||||
| Revenue from continuing operations | 44,723 | 56,301 | (21 | ) | |||
| EBITDA from continuing operations (1) | 10,659 | 15,981 | (33 | ) | |||
| EBITDA as a % of revenue | 24 | % | 28 | % | |||
| Per share ($), basic | 0.29 | 0.44 | (34 | ) | |||
| Per share ($), diluted | 0.29 | 0.42 | (31 | ) | |||
| Net income from continuing operations (2) | 1,063 | 5,123 | (79 | ) | |||
| Per share ($), basic | 0.03 | 0.14 | (79 | ) | |||
| Per share ($), diluted | 0.03 | 0.14 | (79 | ) | |||
| Funds from continuing operations (3) | 10,752 | 14,638 | (27 | ) | |||
| Per share ($), basic | 0.29 | 0.40 | (28 | ) | |||
| Per share ($), diluted | 0.29 | 0.39 | (26 | ) | |||
| Capital expenditures from continuing operations (4) | 2,665 | 23,360 | (89 | ) | |||
| Total assets | 226,563 | 228,993 | (1 | ) | |||
| Return on Average Total Assets (5) | 18 | % | 30 | % | |||
| Long-term debt(6) | 55,500 | 37,500 | 48 | ||||
| Total long-term liabilities | 66,729 | 54,120 | 23 | ||||
| Common shares - end of period ('000's) | 37,251 | 37,246 | |||||
| Weighted average common shares | |||||||
| basic | 36,533 | 36,713 | |||||
| diluted | 37,344 | 37,617 | |||||
Notes:
| (1) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS; see "Non-IFRS Measures Reconciliation". |
| (2) | Net income 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; see "Non-IFRS Measures Reconciliation". |
| (4) | Includes assets acquired under finance lease and purchases of intangible assets. Capital expenditures are net of rental asset disposals. |
| (5) | Return on average total assets is not a recognized measure under IFRS; see "Non-IFRS Measures Reconciliation". |
| (6) | Excluding current portion. |
| FINANCIAL POSITION AND RATIOS | ||
| As at March 31, | ||
| ($000's except ratios) | 2013 | 2012 |
| Working capital (1) | 19,143 | 23,180 |
| Funded debt (2) | 63,150 | 54,487 |
| Total assets | 226,563 | 228,993 |
| Funded debt to EBITDA(2) | 1.5 | 0.9 |
Notes:
| (1) | Working capital is calculated as current assets less current liabilities. See "Non-IFRS Measures Reconciliation". |
| (2) | Funded debt includes bank indebtedness plus current and long-term portion of debt plus current and long-term obligations under finance lease less cash. EBITDA is based on trailing twelve months. See "Non-IFRS Measures Reconciliation". |
FIRST QUARTER RESULTS
Strad reported a decrease in revenue and EBITDA of 21% and 33%, respectively, during the three months ended March 31, 2013, compared to the same period in 2012. Lower activity levels in the Marcellus region, lower drilling activity in the WCSB, as well as increased competition and pricing pressure in the Bakken region, were the main reasons for the reduction in revenue year-over-year.
Strad's Canadian Operations reported lower revenue and EBITDA during the three months ended March 31, 2013, compared to the same period in 2012. Decreased revenue and EBITDA were a result of reduced drilling activity in the WCSB and lower pricing compared to the first quarter of 2012. Drilling activity at the beginning of the first quarter was down 11% on a year-over-year basis and, on average, activity for the full quarter was down 8% on a year-over-year basis.
First quarter revenue and EBITDA results from Strad's U.S. Operations continued to be affected by lower utilization levels in the Marcellus resource play in Pennsylvania. Overall rig counts in the Marcellus during the first quarter declined 32% from first quarter 2012 levels, resulting in lower utilization rates for Strad's equipme nt and matting fleet as well as increased pricing pressure. During the first quarter, Strad's U.S. Operations were also impacted by increased competition in North Dakota which resulted in modest pricing pressure and utilization declines.
Despite lower drilling rig utilization in Pennsylvania and increased competition in North Dakota, Strad's U.S. Operations first quarter EBITDA margin increased to 32% from 15% in the fourth quarter of 2012. This significant increase in EBITDA margin is due to the implementation of management's restructuring plan to re-align the U.S. Operations cost structure with current market conditions.
During the first quarter, Strad added $0.2 million of capital assets in Canada and $2.1 million in the U.S. For the three months ended March 31, 2013, Strad has spent $2.7 million of its budgeted $15.0 million capital program. Strad continues to invest in equipment which is in high demand in both Canada and the U.S.
| RESULTS OF OPERATIONS | ||||||
| Canadian Operations | ||||||
| Three months ended March 31, | ||||||
| ($000's) | 2013 | 2012 | % chg. | |||
| Revenue | 17,742 | 21,826 | (19 | ) | ||
| EBITDA (1) | 4,794 | 7,373 | (35 | ) | ||
| EBITDA % | 27 | % | 34 | % | ||
| Capital expenditures (2) | 197 | 10,363 | (98 | ) | ||
| Gross capital assets | 108,199 | 93,273 | 16 | |||
| Total assets | 108,133 | 109,123 | (1 | ) | ||
Notes:
| (1) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS; see "Non-IFRS Measures Reconciliation". EBITDA excludes Restructuring Expenses. |
| (2) | Includes assets acquired under finance lease and purchases of intangible assets. Capital expenditures are net of rental asset disposals. |
Revenue generated for the three months ended March 31, 2013, decreased 19% to $17.7 million versus $21.8 million for the same period in 2012. First quarter 2013 revenue decreased primarily as a result of lower drilling activity in the WCSB at the start of the winter drilling season. Drilling activity averaged 8% below 2012 levels during the first quarter. Lower drilling activity resulted in decreased surface equipment, matting and drill pipe rental revenue during the first quarter compared to 2012. However, the impact of lower drilling activity was partially offset by cold weather in March which delayed spring break-up and extended the winter drilling season. Although the extended winter drilling season has increased the utilization of surface equipment, the colder weather has delayed the deployment of mats.
EBITDA for the three months ended March 31, 2013, of $4.8 million, decreased 35% compared to $7.4 million for the same period in 2012. EBITDA as a percentage of revenue for the three months ended March 31, 2013, was 27% compared to 34% for the same period in 2012. This decrease is primarily due to lower rental revenue.
| U.S. Operations | ||||||
| Three months ended March 31, | ||||||
| ($000's) | 2013 | 2012 | % chg. | |||
| Revenue | 13,979 | 20,913 | (33 | ) | ||
| EBITDA (1) | 4,506 | 7,448 | (40 | ) | ||
| EBITDA % | 32 | % | 36 | % | ||
| Capital expenditures (2) | 2,148 | 12,825 | (83 | ) | ||
| Gross capital assets | 106,014 | 88,967 | 19 | |||
| Total assets | 112,512 | 108,618 | 4 | |||
Notes:
| (1) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS; see "Non-IFRS Measures Reconciliation". EBITDA excludes Restructuring Expenses. |
| (2) | Includes assets acquired under finance lease and purchases of intangible assets. Capital expenditures are net of rental asset disposals. |
Revenue for the three months ended March 31, 2013, decreased 33% to $14.0 million from $20.9 million for the same period in 2012. The decrease was a result of the overall reduction in drilling activity in the U.S., which was most pronounced in Pennsylvania's Marcellus resource play where overall rig counts declined 32% from first quarter 2012 levels. As a result, Strad's U.S. Operations experienced lower surface equipment and matting utilization rates and reduced pricing as customers continued to focus on other oil and natural gas liquids rich resource plays. During 2012, Strad refocused its operations accordingly, however the overall reduction in drilling has impacted first quarter revenue levels. First quarter revenue was also impacted by increased competition in North Dakota which resulted in modest pricing pressure and lower utilization rates. North Dakota continued to be the most active region for Strad's U.S. Operations despite increased competition.
EBITDA for the three months ended March 31, 2013, decreased 40% to $4.5 million compared to $7.4 million for the same period in 2012. The decrease in EBITDA is due to the previously mentioned reduction in overall asset utilization rates and pricing pressure in the Marcellus, pricing pressure in the Bakken and a shift in product mix. EBITDA as a percentage of revenue for the three months ended March 31, 2013, was 32% compared to 36% for the same period in 2012 and 15% for the fourth quarter of 2012. Sequentially, EBITDA as a percentage of revenue increased significantly from the prior quarter due to the successful implementation of management's restructuring plan which re-aligned the U.S. Operations cost structure with the current market conditions. Due to the timing and successful execution of management's plan, Strad's U.S. Operations was able to realize the benefits of a reduced cost structure earlier than anticipated.
| Product Sales | ||||||
| Three months ended March 31, | ||||||
| ($000's) | 2013 | 2012 | % chg. | |||
| Revenue | 13,002 | 13,562 | (4 | ) | ||
| EBITDA (1) | 2,352 | 2,038 | 15 | |||
| EBITDA % | 18 | % | 15 | % | ||
| Capital expenditures (2) | 203 | 172 | 18 | |||
| Total assets | 1,724 | 6,527 | (74 | ) | ||
Notes:
| (1) | Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS; see "Non-IFRS Measures Reconciliation". EBITDA excludes Restructuring Expenses. |
| (2) | Includes assets acquired under finance lease and purchases of intangible assets. |
Revenue for the three months ended March 31, 2013, decreased 4% to $13.0 million from $13.6 million for the same period in 2012 resulting primarily from lower matting sales. This was largely due to lower demand for matting prior to spring break-up in Canada as Exploration & Production ("E&P") companies remained cautious with capital spending during the first quarter.
Product Sales are comprised of in-house manufactured products sold to external customers, first party equipment sales to existing customers, and sales of equipment from Strad's existing fleet to customers. Product Sales revenues tend to fluctuate quarter-to-quarter depending on customer demand and manufacturing capacity dedicated to external sales.
EBITDA for the three months ended March 31, 2013, of $2.4 million, increased slightly by 15% compared to $2.0 million for the same period in 2012. The increase in EBITDA is due to slightly higher margins on matting sales and manufacturing sales to external customers. The Company also implemented cost reductions in the first quarter in the Manufacturing unit to better match the cost structure with current and expected activity levels. EBITDA as a percentage of revenue for the three months ended March 31, 2013, was 18% compared to 15% for the same period in 2012. EBITDA as a percentage of revenue will vary from quarter-to-quarter depending on the mix of sales as first party equipment sales and sales of equipment from Strad's existing fleet are at lower margins compared to sales of in-house manufactured products.
OUTLOOK
Overall industry conditions during the first quarter deteriorated slightly on a year-over-year basis as a result of lower North American drilling activity compared to the first quarter of 2012. Lower drilling activity was due to continued low natural gas prices, fluctuating commodity prices and oil transportation bottlenecks in the WCSB which resulted in regional oil price discounts. All of these factors have impacted operating cash flows of exploration and production ("E&P") companies, resulting in reduced capital spending during the first quarter.
In the WCSB, active drilling rigs in the first quarter of 2013 averaged 496 compared with 540 for the same period in 2012, an 8% decline. In the United States, drilling rig activity levels varied by region. Following Strad's operational restructuring, the majority of Strad's U.S. fleet now operates in the Bakken and Marcellus resource plays. The active rig count in the Bakken averaged 191 rigs in the first quarter of 2013, down 7% from 206 in the prior year period. A decline was also evident in the gas-weighted Marcellus play, where the active rig count averaged 92 during the first quarter of 2013, down 32% from 135 in the prior year period. On a sequential basis, rig counts in the Bakken and Marcellus remained essentially level with the fourth quarter of 2012, down 3% and up 1%, respectively.
Strad's Canadian business was impacted by a slower ramp-up in the winter drilling season as well as a delayed spring break-up. Management expects the Company's matting business to experience typical seasonal increase s in demand during the second quarter as spring break-up and associated wet weather arrives. However, the level of snowpack across much of Alberta and Saskatchewan and the expected significant melt could prolong spring break - up in the WCSB. Looking ahead towards the remainder of 2013, management has adopted a prudent approach towards Strad's Canadian operational spending, whereby the Company's capital budgeting will be largely determined by E&P capital spending.
Despite an overall drop in industry activity within Strad's target markets of the Marcellus and Bakken, the Company was able to restore EBITDA margins to 32% during the first quarter due to the successful implementation of management's restructuring plan. This represents a significant increase from 15% EBITDA margins experienced during the fourth quarter of 2012 and is indicative of the Company's ability to flexibly scale its operations in parallel with demand. The cost reductions anticipated have been fully reflected in first quarter results and further reductions from these levels are not expected. With a restructured U.S. cost-base and continued strong presence, management remains confident in the long-term potential of both its Bakken and Marcellus focused operations.
Capital expenditures during the first quarter totaled $2.7 million, with the majority of this capital deployed in the U.S. This represents a year-over-year decline of 89%, which is a byproduct of the continued absorption of investments made during 2012 as well as a response to moderating activity levels in key markets. Strad also introduced its new 45,000 barrel EcoPond™ tank, which was successfully tested in the U.S. during the first quarter. With similar industry conditions expected for the remainder of 2013, Strad intends to apply its free cash flow to a combination of capital expenditures and debt reduction on a quarter-by-quarter basis. This approach to spending will enable the Company to selectively target key areas for growth, while maintaining its current dividend, and facilitate its plan to pay down a portion of its debt in 2013.
As Strad progresses through 2013, management remains aware of the persistent uncertainty facing the E&P sector in North America. In light of this, Strad continues to adopt a balanced approach to strategic planning where near-term caution does not compromise the long-term growth potential in its current target markets. Management continues to believe that its diversification strategy across geographic, commodity and product lines is paramount to achieving stable long term growth and offers the Company significant flexibility by maintaining exposure to a range of opportunities.
| LIQUIDITY AND CAPITAL RESOURCES | |||
| ($000's) | March 31, 2013 | December 31, 2012 | |
| Current assets | 50,532 | 50,010 | |
| Current liabilities | 31,389 | 36,982 | |
| Working capital (1) | 19,143 | 13,028 | |
| Banking facilities | |||
| Operating facility | 3,166 | 2,488 | |
| Syndicated revolving facility | 55,500 | 55,500 | |
| Total facility borrowings | 58,666 | 57,988 | |
| Total available facilities | 110,000 | 110,000 | |
| Unused borrowing capacity | 51,334 | 52,012 | |
| (1) | Working capital is calculated as current assets less current liabilities. See "Non-IFRS Measures Reconciliation". |
At March 31, 2013, working capital was $19.1 million compared to $13.0 million at December 31, 2012. The change in working capital is consistent with the modest change in revenue from the fourth quarter of 2012 to the first quarter of 2013. Funds from operations for the three months ended March 31, 2013, increased to $10.8 million compared to $8.1 million for the three months ended December 31, 2012. During the first quarter of 2013, Strad spent $2.7 million on capital additions compared to $11.4 million for the three months ended December 31, 2012. Management monitors funds from operations and the timing of capital additions to ensure adequate capital resources are available to fund Strad's capital program.
The Company's syndicated banking facility consists of an operating facility with a maximum principal amount of $15.0 million CAD and $10.0 million USD, and an $85.0 million revolving facility, both of which are subject to certain limitations on accounts receivable, inventory and net book value of fixed assets and are secured by a general security agreement over the Company's assets. The syndicated banking facility bears interest at bank prime plus a variable rate, which is dependent on the Company's funded debt to EBITDA ratio.
Based on the Company's funded debt to EBITDA ratio of 1.5 to 1 at the end of the first quarter of 2013, the interest rate on the syndicated banking facility is bank prime plus 1.25% on prime rate advances and at the prevailing rate plus a stamping fee of 2.25% on bankers' acceptances. For the three months ended March 31, 2013, the overall effective rates on the operating facility and revolving facility were 4.03% and 3.46%, respectively. As of March 31, 2013, $3.2 million was drawn on the operating facility and $55.5 million was drawn on the revolving facility. Payments on the revolving facility are interest only.
As at March 31, 2013, the Company was in compliance with all of the syndicated banking facility covenants.
NON-IFRS MEASURES RECONCILIATION
Certain supplementary measures in this MD&A do not have any standardized meaning as prescribed under IFRS 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 measure. However, they should not be used as an alternative to IFRS, 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. 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, finance fees, taxes, depreciation and amortization, non-controlling interest, loss on disposal of property, plant and equipment, loss on foreign exchange, loss on assets held for sale, restructuring charges, impairment loss, 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.
Annualized return on average total assets for the three months ended March 31, 2013, is calculated as annualized year-to-date EBITDA divided by the average of total assets over the fourth quarter of 2012, 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 2012, the return on average total assets calculation was adjusted to include total Company assets, whereas 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
($000's)
| Three Months Ended March 31, | |||
| 2013 | 2012 | ||
| Net income from continuing operations | 1,063 | 5,123 | |
| Add: | |||
| Depreciation and amortization | 7,626 | 6,253 | |
| Loss on disposal of PP&E | 586 | 35 | |
| Loss on disposal of assets held for sale | 158 | - | |
| Non-controlling interest | - | 520 | |
| Share-based payments | 188 | 249 | |
| Deferred income tax expense | 345 | 1,956 | |
| Financing fees | 72 | 58 | |
| Interest expense | 714 | 444 | |
| Funds from operations | 10,752 | 14,638 | |
| Add: | |||
| (Gain)/loss on foreign exchange | (121 | ) | 401 |
| Current income tax expense | 216 | 1,191 | |
| Subtotal | 10,847 | 16,230 | |
| Deduct: | |||
| Share-based payments | 188 | 249 | |
| EBITDA | 10,659 | 15,981 | |
| Reconciliation of quarterly non-IFRS measures | ||||||||
| ($000's) | ||||||||
| Three months ended | ||||||||
| (unaudited) | ||||||||
| Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | |||||
| Net income from continuing operations | 1,063 | (3,490 | ) | 2,937 | 2,772 | |||
| Add: | ||||||||
| Depreciation and amortization | 7,626 | 7,667 | 7,362 | 7,003 | ||||
| Loss/(gain) on disposal of PP&E | 586 | 226 | 22 | (11 | ) | |||
| Loss on disposal of assets held for sale | 158 | - | - | - | ||||
| (Gain)/loss on foreign exchange | (121 | ) | (195 | ) | 510 | (32 | ) | |
| Non-controlling interest | - | - | 22 | (187 | ) | |||
| Current income tax expense/(recovery) | 216 | (13 | ) | 788 | (104 | ) | ||
| Deferred income tax expense/(recovery) | 345 | (3,804 | ) | (528 | ) | 748 | ||
| Interest expense | 714 | 739 | 854 | 638 | ||||
| Restructuring expense | - | 4,129 | - | - | ||||
| Impairment loss | - | 2,350 | - | - | ||||
| Finance fees | 72 | 66 | 63 | 58 | ||||
| EBITDA | 10,659 | 7,675 | 12,030 | 10,885 | ||||
| Communications operating loss | - | 679 | 610 | 556 | ||||
| EBITDA (Adjusted) | 10,659 | 8,354 | 12,640 | 11,441 | ||||
| Three months ended | ||||||||
| (unaudited) | ||||||||
| Mar. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2011 | Jun. 30, 2011 | |||||
| Net income from continuing operations | 5,123 | 7,661 | 7,325 | 3,569 | ||||
| Add: | ||||||||
| Depreciation and amortization | 6,253 | 5,713 | 5,214 | 4,611 | ||||
| Loss/(gain) on disposal of PP&E | 35 | (96 | ) | 52 | (119 | ) | ||
| Loss/(gain) on foreign exchange | 401 | 52 | (915 | ) | 329 | |||
| Non-controlling interest | 520 | 543 | 497 | (210 | ) | |||
| Current income tax expense | 1,191 | 1,177 | 2,074 | - | ||||
| Deferred income tax expense | 1,956 | 1,499 | 2,749 | 1,832 | ||||
| Interest expense | 444 | 620 | 457 | 486 | ||||
| Finance fees | 58 | - | 31 | - | ||||
| EBITDA | 15,981 | 17,169 | 17,484 | 10,498 | ||||
| Communications operating loss | 167 | 213 | 179 | 358 | ||||
| EBITDA (Adjusted) | 16,148 | 17,382 | 17,663 | 10,856 | ||||
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, debt, dividends, demand for the Company's products and services, drilling activity in North America, pricing of the Company's products and services, introduction of new products and services, manufacturing capacity to meet anticipated demand for the Company's products, 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 intended 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.
This press release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, nor shall there be any sale of securities mentioned in this press release in any state in the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
FIRST QUARTER EARNINGS CONFERENCE CALL
Strad Energy Services Ltd. has scheduled a conference call to begin promptly at 8:00 a.m. MT on Thursday, May 9, 2013.
The conference call dial in numbers are 1-888-340-9642 or 416-340-9531
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 Thursday, May 16th, 2013, at 11:59pm ET. To access the replay, call 1-800-408-3053 or 1-905-694-9451, followed by pass code 8544215.
| Strad Energy Services Ltd. | ||||
| Interim Consolidated Statement of Financial Position | ||||
| (Unaudited) | ||||
| As at March 31, | As at December 31, | |||
| (in thousands of Canadian dollars) | 2013 | 2012 | ||
| $ | $ | |||
| Assets | ||||
| Current assets | ||||
| Trade receivables | 34,808 | 33,418 | ||
| Inventories | 11,322 | 12,022 | ||
| Prepaids and deposits | 2,183 | 2,379 | ||
| Current portion of notes receivable | 673 | 665 | ||
| Income taxes receivable | 1,546 | 1,526 | ||
| 50,532 | 50,010 | |||
| Assets held for sale | 2,728 | 4,728 | ||
| Non-current assets | ||||
| Property, plant and equipment | 152,627 | 157,042 | ||
| Intangible assets | 2,650 | 2,721 | ||
| Notes receivable | 557 | 729 | ||
| Goodwill | 17,277 | 17,277 | ||
| Deferred income tax assets | 192 | 198 | ||
| Total assets | 226,563 | 232,705 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Bank indebtedness | 3,166 | 2,488 | ||
| Accounts payable and accrued liabilities | 19,577 | 24,244 | ||
| Deferred revenue | - | 160 | ||
| Current portion of obligations under finance lease | 2,987 | 2,735 | ||
| Note payable | 1,016 | 1,492 | ||
| Dividend payable | 2,049 | 2,050 | ||
| Restructuring provision | 2,594 | 3,813 | ||
| 31,389 | 36,982 | |||
| Non-current liabilities | ||||
| Long-term debt | 55,500 | 55,500 | ||
| Obligations under finance lease | 1,497 | 2,285 | ||
| Deferred income tax liabilities | 9,732 | 9,279 | ||
| Total liabilities | 98,118 | 104,046 | ||
| Equity | ||||
| Share capital | 117,467 | 117,462 | ||
| Contributed surplus | 11,174 | 11,016 | ||
| Accumulated other comprehensive loss | (843 | ) | (1,451 | ) |
| Retained earnings | 647 | 1,632 | ||
| Total equity | 128,445 | 128,659 | ||
| Total liabilities and equity | 226,563 | 232,705 | ||
| Strad Energy Services Ltd. | ||||
| Interim Consolidated Statement of Income | ||||
| For the three months ended March 31, 2013 and 2012 | ||||
| (Unaudited) | ||||
| (in thousands of Canadian dollars, except per share amounts) | ||||
| 2013 | 2012 | |||
| $ | $ | |||
| Continuing operations | ||||
| Revenue | 44,723 | 56,301 | ||
| Expenses | ||||
| Operating expenses | 26,231 | 31,900 | ||
| Depreciation | 7,187 | 5,888 | ||
| Amortization of intangible assets | 439 | 365 | ||
| Selling, general administration | 7,645 | 8,171 | ||
| Share-based payments | 188 | 249 | ||
| Loss on disposal of property, plant and equipment | 586 | 35 | ||
| Foreign exchange (gain) loss | (121 | ) | 401 | |
| Finance fees | 72 | 58 | ||
| Interest expense | 714 | 444 | ||
| Loss on assets held for sale | 158 | - | ||
| Income before income tax from continuing operations | 1,624 | 8,790 | ||
| Income tax | 561 | 3,147 | ||
| Net income from continuing operations for the period | 1,063 | 5,643 | ||
| (Loss) from discontinued operations, net of tax | - | (307 | ) | |
| Net income for the period | 1,063 | 5,336 | ||
| Net income attributable to: | ||||
| Owners of the parent | 1,063 | 4,816 | ||
| Non-controlling interests | - | 520 | ||
| 1,063 | 5,336 | |||
| Earnings per share from continuing operations attributable to the equity owners of the Company: | ||||
| Basic | $0.03 | $0.14 | ||
| Diluted | $0.03 | $0.14 | ||
| Earnings per share from discontinued operations attributable to the equity owners of the Company: | ||||
| Basic | $0.00 | ($0.01 | ) | |
| Diluted | $0.00 | ($0.01 | ) | |
| Earnings per share from total operations attributable to the equity owners of the Company: | ||||
| Basic | $0.03 | $0.13 | ||
| Diluted | $0.03 | $0.13 | ||
| Strad Energy Services Ltd. | ||||||
| Interim Consolidated Statement of Comprehensive Income | ||||||
| For the three months ended March 31, 2013 and 2012 | ||||||
| (Unaudited) | ||||||
| (in thousands of Canadian dollars) | ||||||
| 2013 | 2012 | |||||
| $ | $ | |||||
| Net income for the period | 1,063 | 5,336 | ||||
| Other comprehensive income (loss) | ||||||
| Items that may be reclassified subsequently to net income | ||||||
| Cumulative translation adjustment | 608 | (1,100 | ) | |||
| Total other comprehensive income (loss) | 608 | (1,100 | ) | |||
| Comprehensive income for the period | 1,671 | 4,236 | ||||
| Comprehensive income attributable to: | ||||||
| Owners of the parent | 1,671 | 3,826 | ||||
| Non-controlling interests | - | 410 | ||||
| 1,671 | 4,236 | |||||
| Strad Energy Services Ltd. | |||||
| Interim Consolidated Statement of Cash Flow | |||||
| For the three months ended March 31, 2013 and 2012 | |||||
| (Unaudited) | |||||
| (in thousands of Canadian dollars) | |||||
| 2013 | 2012 | ||||
| $ | $ | ||||
| Cash flow provided by (used in) | |||||
| Operating activities | |||||
| Net income for the period | 1,063 | 5,336 | |||
| Adjustments for: | |||||
| Depreciation and amortization | 7,626 | 6,253 | |||
| Deferred income tax | 345 | 1,956 | |||
| Share-based payments | 188 | 52 | |||
| Interest expense | 714 | 444 | |||
| Finance fees | 72 | 58 | |||
| Loss on disposal of property, plant and equipment | 586 | 35 | |||
| Loss/impairment on sale of investment in subsidiary | - | 441 | |||
| Loss on disposal of assets held for sale | 158 | - | |||
| Changes in items of non-cash working capital | (6,442 | ) | (9,560 | ) | |
| Net cash generated from operating activities | 4,310 | 5,015 | |||
| Investing activities | |||||
| Purchase of property, plant and equipment | (2,138 | ) | (22,785 | ) | |
| Proceeds from sale of property, plant and equipment | 695 | 125 | |||
| Purchase of intangible assets | (363 | ) | (136 | ) | |
| Proceeds on sale of subsidiaries | - | 7,129 | |||
| Purchase of assets held for sale | (40 | ) | - | ||
| Proceeds from sale of assets held for sale | 1,842 | - | |||
| Purchase of non-controlling interest | - | (2,660 | ) | ||
| Cash settlement on stock option exercises | (30 | ) | - | ||
| Changes in items of non-cash working capital | (430 | ) | (2,369 | ) | |
| Net cash used in investing activities | (464 | ) | (20,696 | ) | |
| Financing activities | |||||
| Proceeds on issuance of long-term debt | 2,000 | 14,000 | |||
| Repayment of long-term debt | (2,000 | ) | - | ||
| Repayment of finance lease obligations (net) | (536 | ) | (863 | ) | |
| Repayment of shareholder loan | - | 271 | |||
| Interest paid on debt | (714 | ) | (444 | ) | |
| Finance fees | (72 | ) | (58 | ) | |
| Payment of dividends | (2,048 | ) | - | ||
| Net cash (used) generated from financing activities | (3,370 | ) | 12,906 | ||
| Effect of exchange rate changes on cash and cash equivalents | (1,154 | ) | (1,123 | ) | |
| Decrease in cash and cash equivalents | (678 | ) | (3,898 | ) | |
| Cash and cash equivalents (including bank indebtedness) - beginning of year | (2,488 | ) | (5,570 | ) | |
| Cash and cash equivalents - end of year | (3,166 | ) | (9,468 | ) | |
| Cash and cash equivalents - included in liabilities of disposal group | - | (205 | ) | ||
| Cash and cash equivalents (including bank indebtedness) - end of year | (3,166 | ) | (9,673 | ) | |
| Cash paid for income tax | 235 | 4,389 | |||
ABOUT STRAD ENERGY SERVICES LTD.
Strad is a North American energy services company that focuses on providing well-site infrastructure and activation solutions to the oil and natural gas industry. Strad focuses on providing complete customer solutions in well-site- 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".
Contact Information:
Andy Pernal
President and Chief Executive Officer
(403) 775-9202
(403) 232-6901 (FAX)
apernal@stradenergy.com
Strad Energy Services Ltd.
Greg Duerr
Chief Financial Officer
(403) 705-4333
(403) 232-6901 (FAX)
gduerr@stradenergy.com
www.stradenergy.com