CALGARY, ALBERTA--(Marketwired - April 19, 2013) - ENSECO ENERGY SERVICES CORP ("Enseco" or the "Company") (TSX VENTURE:ENS) is pleased announce its financial results for the nine months ended December 31, 2012.
Please note that the corporation changed its year end to December 31 and these results are for a nine month period only.
SELECT ANNUAL INFORMATION
| Nine months | Twelve months | Twelve months | Twelve months | |||||||||
| ended | ended | ended | ended | |||||||||
| In thousands | December 31 | March 31 | March 31 | March 31 | ||||||||
| of dollars | 2012 | 2012 | 2011 | 2010² | ||||||||
| Revenue | $ | 49,212 | $ | 78,927 | $ | 66,199 | $ | 32,169 | ||||
| Adjusted gross margin 1 | $ | 17,237 | $ | 28,993 | $ | 21,645 | $ | 5,104 | ||||
| GM % | 35.0 | % | 36.7 | % | 32.7 | % | 15.9 | % | ||||
| EBITDAS 1 | $ | 4,373 | $ | 13,683 | $ | 7,564 | $ | (2,503 | ) | |||
| EBITDAS % | 8.9 | % | 17.3 | % | 11.4 | % | (7.8 | %) | ||||
| Net income (loss) | $ | (4,207 | ) | $ | 4,013 | $ | (3,016 | ) | $ | (15,017 | ) | |
| Earnings per share - basic | $ | (0.19 | ) | $ | 0.20 | $ | (0.18 | ) | $ | (0.22 | ) | |
| Earnings per share - diluted | $ | (0.19 | ) | $ | 0.19 | $ | (0.18 | ) | $ | (0.22 | ) | |
| Cash flow before changes in working capital | $ | 4,231 | $ | 13,542 | $ | 7,564 | $ | (3,816 | ) | |||
| Cash flow from operating activities | $ | 6,515 | $ | 10,992 | $ | 6,635 | $ | (8,812 | ) | |||
| Property, plant and equipment | $ | 45,757 | $ | 49,519 | $ | 52,232 | $ | 50,266 | ||||
| Total assets | $ | 62,757 | $ | 70,491 | $ | 76,433 | $ | 72,222 | ||||
| Long term portion of debt | $ | 18,164 | $ | 19,975 | $ | 18,160 | $ | 22,313 |
- See definition within the Non-IFRS M easures section of this press release.
- Enseco transitioned to IFRS on April 1, 2010. Annual information provided for the twelve months ended March 31, 2010 is presented in accordance with previous Canadian GAAP prior to transition to IFRS.
- For the nine months end ing December 31, 2012, revenue of $49 million had decreased from $79 million from the prior t welve month period ending March 31, 2012, and from $54 million for the comparable nine months ending December 31, 2011.
- Gross margin was 35% for the nine months ending December 31, 2012 as compared to 36.7% for the twelve months endin g March 31, 2012 and 36.6% for the comparable nine month period one year ago. Enseco was a ble to maintain its gross margins due to increased efficiencies.
- Carrying costs of the Company's indebtedness have decreased fro m 8.5% to 5.0%. The Company continues to m ake positive strides towards reducing its debt ye ar over year.
HIGHLIGHTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2012
Enseco achieved the following results for the nine months ended December 31, 2012.
- Enseco's motor repair facility is now at full efficiency. The motor repair facility is able to service 80% of Enseco's motor fleet greatly reducing reliance on third party service providers and repair costs while increasing fleet efficiency and availability.
- Enseco continues to manufacture and standardize in-house MWD equipment, resulting in robust, durable, and reliable equipment with quality controlled components. Enseco is able to offer negative pulse, positive pulse, and Electro-Magnetic MWD technology to ensure the proper drilling solution in every environment.
- The training facility in Clairmont, Alberta is now operational, providing training and education to ensure that staff is trained to operate safely in all environments while using highly specialized and up-to-date equipment. The new facility also will help to review and improve internal procedures and processes for operating and safety before changes are made in the field.
- Enseco's USA Directional drilling division has provided services to its clients since 2009. One rig that Enseco was assigned to has been ranked 44 th out of 4,855 rigs reporting in the USA and received recognition from Rig Data as one of the top 1% of all USA rigs for footage drilled and average wells per day in 2012.
- Enseco has recently invested in two additional high pressure 1,440 psi pressure vessels and three storage tanks. These additions will continue to increase service capacity and quality while reducing rental costs.
- Debt reduction over the past few years continues to provide benefits throughout the Company. This has increased the Company's profitability and aided in the Company's ability to make strategic asset purchases.
RESULTS FROM OPERATIONS
As a result of changing the year end from March to December, comparison of the nine months ended December 31, 2012 to the prior twelve months ended March 31, 2012 would not be beneficial. January to March is historically Enseco's strongest quarter and an assessment of the Company's annual information without the inclusion of January to March results would not be meaningful or representative when compared to the prior full twelve month period. To assist the reader in understanding and assessing changes and trends as they relate to the financial and operational results of the Company, the nine months ended December 31, 2011 has been included for comparative purposes. The twelve months ended March 31 2012 results have also been included for reference.
| Three months | Three months | Nine months | Nine months | Twelve months | ||||||||
| ended | ended | ended | ended | ended | ||||||||
| December 31 | December 31 | December 31 | December 31 | March 31 | ||||||||
| In thousands of dollars | 2012 | 2011 | 2012 | 2011 | 2012 | |||||||
| Revenue | $ | 16,126 | $ | 21,537 | $ | 49,212 | $ | 54,427 | $ | 78,927 | ||
| Adjusted gross margin 1 | $ | 5,666 | $ | 8,313 | $ | 17,237 | $ | 19,954 | $ | 28,993 | ||
| EBITDAS 1 | $ | 1,880 | $ | 4,375 | $ | 4,373 | $ | 9,146 | $ | 13,683 | ||
| Net income (loss) before tax | $ | (672 | ) | $ | 1,615 | $ | (3,064 | ) | $ | 1,731 | $ | 4,104 |
| Per common share - basic | $ | (0.03 | ) | $ | 0.08 | $ | (0.17 | ) | $ | 0.09 | $ | 0.20 |
| Per common share - diluted | $ | (0.04 | ) | $ | 0.08 | $ | (0.17 | ) | $ | 0.09 | $ | 0.19 |
| Deferred taxes included in cash flow before | ||||||||||||
| changes in non-cash working capital items | $ | 251 | $ | - | $ | 1,143 | $ | - | $ | - | ||
| Cash flow, before changes in non-cash working | ||||||||||||
| capital items 1 | $ | 1,738 | $ | 4,479 | $ | 4,231 | $ | 9,098 | $ | 13,542 | ||
| Cash flow from/(used in), operating activities | $ | 322 | $ | 1,033 | $ | 6,515 | $ | 7,773 | $ | 10,992 | ||
| 1 See definition within the Non-IFRS Measures section of this press release. | ||||||||||||
OUTLOOK
Capital spending will be minimized and management's focus will be on improving service delivery, cost management and improving utilization and sales.
Enseco is currently increasing its sales presence both in Canada and the USA to better position itself for 2013.
USA Production Testing efforts have resulted in an extension of work from a major client as well as the attraction of new clients, diversifying our client base.
Enseco continues to develop strategies for the growth of all four divisions, balancing directional drilling and production testing revenues as well as USA and Canadian revenues to provide maximum utilization of its resources.
Management continues to carefully monitor industry activity levels in North America to ensure equipment and manpower are positioned to provide sustainable equipment utilization rates given the current volatility in commodity prices, increased competition and decreased activity levels.
Enseco is pleased with the implementation of its corporate capital and operations strategy, which has resulted in service quality, rental reduction and cost monitoring improvements.
With the engineering improvements and reductions in rebuild times now available through Enseco's motor repair facility, it is expected that the Company's rental requirements and repair costs will continue to remain low even as activity grows. The motor repair facility was able to repair 50% of the motor fleet through most of the quarter and increased its ability to 80% by year end.
Management believes that activity levels in Canada will continue to be constrained throughout much of 2013, but are cautiously optimistic that they will be able to improve the adjusted gross margin and EBITDAS through continued engineering improvements, internal repairs, and reduction of reliance on rental equipment.
The Company expects increased activity from its USA operations based on indications from Enseco's clients.
FILINGS
Enseco has filed with Canadian securities regulatory authorities its audited consolidated financial statements for the nine months ending December 31, 2012 and accompanying management's discussion and analysis ("MD&A"). These filings are available under Enseco's SEDAR profile at www.sedar.com .
ABOUT ENSECO ENERGY SERVICES CORP.
Enseco is a premier supplier of directional drilling, production testing and frac flowback services operating throughout the Western Canadian Sedimentary Basin and select markets in the United States, Our corporate office is located in Calgary and sales offices are located in both Calgary and Denver. Enseco is led by an experienced management team with a focus on continued value creation through accretive acquisitions and organic growth.
FORWARD LOOKING DISCLAIMER
Certain information and statements contained in this press release constitute forward-looking information, including, but not limited to: statements concerning Enseco's future business strategy, marketing and other plans; expectations regarding future revenues, gross margins, EBITDAS, cash flow, improved efficiencies, cost reductions, expectations regarding the benefits to be obtained from Enseco's training facility; plans to enhance service capability and quality; expectations regarding future rental and repair costs, and other financial results; plans to increase the Company's sales presence; expectations regarding resource play drilling activity levels and drilling programs; general industry and operating conditions, expectations regarding future utilization rates and demand for the Company's services; future geographical and product focus; future capital expenditures. 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. Readers should review the cautionary statement respecting forward-looking information that appears below. All of the forward looking statements of the Company contained in this press release are expressly qualified, in their entirety, by this cautionary statement.
The information and statements contained in this press release that are not historical facts are forward- looking statements. Forward-looking statements (often, but not always, identified by the use of words such as "seek", "plan", "continue", "estimate", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "expect", "m ay", "anticipate" or "will" and similar expressions ) may include plans, expectations, opinions, or guidance that are not statements of fact. Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward- looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by oil and gas producers and explorers), the credit risk to which the Company is exposed in the conduct of its business, fluctuations in prevailing commodity prices or currency and interest rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of the Company's various business divisions to access equipment (including parts) and new technologies and to maintain relationships with key suppliers, the ability of the Company's various business divisions to attract and maintain key personnel and other qualified employees, various environmental risks to which the Company's business divisions are exposed in the conduct of their operations, inherent risks associated with the conduct of the businesses in which the Company's business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities.
Forward-looking information concerning the nature and timing of growth within the various business divisions is based on the current budget of the Company (which is subject to change), factors that affected the historical growth of such business divisions, sources of historic growth opportunities, anticipated capital expenditures, and expectations relating to future economic and operating conditions. Forward- looking information concerning the future competitive position of the Company's business divisions is based upon the current competitive environment in which those business divisions operate, expectations relating to future economic and operating conditions, current and announced build programs and other expansion plans of other organizations that operate in the energy service business. Forward-looking information concerning the financing of future business activities is based upon the financing sources on which the Company has historically relied and expectations relating to future economic and operating conditions. Forward-looking information concerning future economic and operating conditions is based upon historical economic and operating conditions, opinions of third-party analysts respecting anticipated economic and operating conditions.
With respect to forward-looking statements contained in this press release, Enseco has made assumptions regarding commodity prices and royalty regimes, availability of skilled labour, timing and amount of capital expenditures, future foreign exchange rates, interest rates, the impact of increasing competition, conditions in general economic and financial markets, effects of regulation by governmental agencies, and future operating costs.
Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on Enseco's future operations and such information may not be appropriate for other purposes. Enseco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Enseco will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of in this press release and Enseco disclaims any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
NON-IFRS MEASURES
EBITDAS means earnings before interest, taxes, depreciation and amortization, and stock-based compensation and is equal to earnings before income taxes from continuing operations plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, unrealized foreign exchange loss, and loss on sale of equipment. Adjusted gross margin from continuing operations equals gross margin, plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, impairment loss/recovery, and loss on sale of equipment. Cash flow means cash flows provided by continuing operations before changes in non-cash working capital items.
EBITDAS, adjusted gross margin from continuing operations, and cash flows from continuing operations before changes in non-cash working capital items are not recognized measures under International Financial Reporting Standards ("IFRS"). Management believes that in addition to net losses, EBITDAS and cash flows, are useful supplemental measures as they provide an indication of the results generated by the Company's primary business activities prior to consideration of how those activities are financed, amortized or how the results are taxed in various jurisdictions as well as the cash generated by the Company's primary business activities. Readers should be cautioned, however, that EBITDAS and cash flows from continuing operations before changes in non-cash working capital items should not be construed as an alternative to net losses determined in accordance with IFRS as an indicator of Enseco's performance. Enseco's method of calculating operating losses, EBITDAS and cash flows from continuing operations before changes in non-cash working capital items may differ from other organizations and, accordingly, such measures may not be comparable to measures used by other organizations. For reconciliation to the appropriate IFRS measure, see our MD&A.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
