Press release from Marketwire
Total Energy Services Inc. Announces Q3 2011 Results
Wednesday, November 09, 2011
Total Energy Services Inc. Announces Q3 2011 Results09:17 EST Wednesday, November 09, 2011CALGARY, ALBERTA--(Marketwire - Nov. 9, 2011) - Total Energy Services Inc. (TSX:TOT) ("Total Energy" or the "Company"), announces its consolidated financial results for the three and nine-month periods ending September 30, 2011. Financial Highlights ($000's except per share data)Three Months Ended Sept 30Nine Months Ended Sept 30(Unaudited)(Unaudited)20112010% Change20112010% ChangeRevenue$87,882$56,06057%$235,146$151,95955%Operating Earnings (1)28,82112,157137%65,02728,583128%EBITDA (1)34,73417,092103%83,42643,53992%Cashflow (1)35,02019,85376%83,52946,54179%Net Income20,6037,910160%45,82519,594134%Per Share Data (Diluted)EBITDA (1)$0.98$0.5481%$2.38$1.3971%Cashflow (1)0.990.6357%2.391.4960%Net Earnings0.610.25144%1.380.63119%Sept 30Dec. 312011 (Unaudited)2010 (Audited)% ChangeFinancial PositionTotal Assets$404,154$342,83418%Long-Term Debt, Convertible Debentures and Obligations Under Finance Leases66,15278,717(16)%Working Capital (2)108,37564,44668%Net Debt (3)-5,026n/mShareholders' Equity254,791209,84521%Shares Outstanding (000's)Basic31,35031,425n/mDiluted35,21632,09610%Notes 1 through 3 please refer to the Notes to the Financial Highlights set forth at the end of this release.Total Energy's financial results for the three months ended September 30, 2011 represent record third quarter financial results, driven by higher activity levels in all three divisions. Continued strengthening of equipment utilization and pricing in the Contract Drilling Services and the Rentals and Transportation Services divisions contributed to the substantial increase in third quarter revenue, EBITDA, cashflow and net earnings as compared to the prior year.Total Energy's Contract Drilling Services division achieved 66% utilization during the third quarter of 2011, recording 855 operating days (spud to release) with a fleet of 14 rigs, compared to 623 operating days, or 48% utilization during the third quarter of 2010 with the same fleet. Revenue per operating day realized during the third quarter of 2011 increased 29% compared to the third quarter of 2010 due primarily to improved pricing. The Rentals and Transportation Services division achieved a utilization rate on major rental equipment of 74% during the third quarter of 2011 as compared to a 57% utilization rate during the third quarter of 2010. The Gas Compression Services division generated revenues of $28.6 million for the three months ended September 30, 2011 compared to $18.0 million for the third quarter of 2010. At September 30, 2011 the Gas Compression Services division had a fabrication backlog of approximately $40.3 million compared to a backlog of $22.2 million as at September 30, 2010. At September 30, 2011 approximately 21,700 horsepower of compression equipment was on rent compared to 18,900 horsepower on rent at September 30, 2010. The gas compression rental fleet operated at an average utilization rate of 78% during the first nine months of 2011 as compared to 74% for the same period in 2010.During the third quarter, Total Energy declared a quarterly dividend of $0.04 per share to shareholders of record on September 30, 2011. This dividend was paid on October 31, 2011.Total Energy is reporting its financial results in accordance with International Financial Reporting Standards ("IFRS") effective January 1, 2011. A description of the impact of the implementation of IFRS on the Company's financial results is contained in the Company's Unaudited Interim Consolidated Financial Statements and related Management Discussion and Analysis as at and for the three and nine months ended September 30, 2011, which documents will be filed with regulators and available on SEDAR in due course.OutlookDespite volatile financial market conditions, current indications are that the upcoming winter drilling season will be very active. Contributing to the strong demand for the equipment and services provided by Total Energy are relatively strong oil and natural gas liquids prices and pent-up demand arising from unusually wet weather conditions in Western Canada during the second quarter that delayed the commencement of summer drilling and completion activity.Delivery of equipment being constructed pursuant to Total Energy's $71.3 million 2011 capital expenditure program is underway. Completion of Rig 15 is expected in the next few weeks and such rig has been contracted for the upcoming winter drilling season. With the addition of approximately 1,000 pieces of rental equipment and 12 heavy trucks (net of dispositions), the Rentals and Transportation Services division's equipment fleet will increase by approximately 13% going into 2012 as compared to the beginning of 2011. With strong demand for this division's equipment and services, as evidenced by third quarter equipment utilization in line with historical winter utilization levels, such equipment additions are necessary to service existing demand. Total Energy's Gas Compression Services division, Bidell Gas Compression, continues to expand its product and service capabilities. Subsequent to September 30, 2011, Bidell received an order for a 6,500 horsepower compression package, the largest horsepower package order ever received. Bidell also recently established a full service parts and service branch in Medicine Hat, Alberta and currently operates out of 10 locations throughout Alberta, British Columbia and Saskatchewan. Total Energy recently received a Canadian patent for its proprietary NOMAD ™ mobile gas compression and demand for this product continues to strengthen with approximately 60 units now sold or in service under rental contracts. Currently, approximately 60% of Bidell's compression rental fleet (measured on a horsepower basis) consists of NOMAD ™ units, with utilization of such rental units at 100%. Construction of an Australian NOMAD™ is underway with delivery to Australia expected during the first quarter of 2012.Total Energy's financial position remains strong with a long-term debt (including $69 million of principal amount of convertible debentures) to long-term debt plus equity ratio of 0.21 to 1.0 and no net debt as at September 30, 2011. The Company's $35 million secured bank facility is currently fully available and unutilized.Conference CallAt 2:30 p.m. MST today, Total Energy will conduct a conference call to discuss its third quarter financial results. Daniel Halyk, President & Chief Executive Officer, will host the conference call. The call is open to Shareholders and all other interested persons. If you wish to participate, call (800) 355-4959. Those who are unable to listen to the call live may listen to a recording of it by calling (800) 408-3053 (passcode 1387560). The recording will be available until November 16, 2011.Selected Financial InformationSelected financial information relating to the three and nine-month periods ended September 30, 2011 and 2010 is attached to this news release. This information should be read in conjunction with the unaudited consolidated financial statements of Total Energy and the attached notes to the consolidated financial statements and management's discussion and analysis to be issued in due course and reproduced in the Corporation's third quarter report.Consolidated Statements of Financial Position(in thousands of Canadian dollars)September 30,December 31,20112010(unaudited)AssetsCurrent assets:Cash and cash equivalents$24,730$228Accounts receivable87,49370,983Inventory39,99833,488Income taxes receivable118118Prepaid expenses and deposits3,1091,818155,448106,635Property, plant and equipment244,653232,146Goodwill4,0534,053$404,154$342,834Liabilities & Shareholders' EquityCurrent liabilities:Accounts payable and accrued liabilities$32,04428,353Deferred revenue11,0003,334Dividends payable1,2541,257Current portion of long-term debt-6,042Current portion of obligations under finance leases2,7753,20347,07342,189Long-term debt-66,458Obligations under finance leases2,6703,014Convertible debentures60,707-Deferred tax liability38,91321,328Shareholders' equity:Share capital76,80376,268Contributed surplus2,5431,769Equity portion of convertible debenture4,601-Retained earnings170,844131,808254,791209,845$404,154$342,834Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars except per share amounts)Three months endedNine months endedSeptember 30September 302011201020112010(unaudited)(unaudited)(unaudited)(unaudited)Revenue$87,882$56,060$235,146$151,959Expenses:Cost of services45,72532,354130,35689,347Selling, general and administration7,1266,37321,16718,753Share-based compensation3682411,046855Depreciation5,8424,93517,55014,421Results from operating activities28,82112,15765,02728,583Gain on sale of property, plant and equipment71-849535Finance costs(1,351)(882)(3,922)(2,458)Net income before income taxes27,54111,27561,95426,660Current income tax expense11-9448Deferred income tax expense6,9273,36516,0357,018Total income tax expense6,9383,36516,1297,066Net income and total comprehensive income for the period20,6037,91045,82519,594Retained earnings, beginning of period153,337112,936131,808103,114Dividends(1,254)(931)(3,776)(2,793)Repurchase and cancellation of common shares(1,842)(182)(3,013)(182)in excess of stated common share capitalRetained earnings, end of period$170,844$119,733$170,844$119,733Earnings per share :Basic$0.65$0.25$1.46$0.64Diluted$0.61$0.25$1.38$0.63Consolidated Statements of Cash Flows(in thousands of Canadian dollars)Three months endedNine months endedSeptember 30September 302011201020112010(unaudited)(unaudited)(unaudited)(unaudited)Cash provided by (used in):Operations:Net income for the period$20,603$7,910$45,825$19,594Add (deduct) items not affecting cash:Depreciation5,8424,93517,55014,421Share-based compensation3682411,046855Gain on sale of property, plant and equipment(71)-(849)(535)Finance costs1,3518823,9222,458Current income tax expense11-9448Future income tax expense6,9273,36516,0357,018Income taxes paid(11)2,520(94)2,68235,02019,85383,52946,541Changes in non-cash working capital items:Accounts receivable(15,923)(20,134)(16,510)(30,360)Inventory(2,795)3,117(6,510)1,176Prepaid expenses and deposits(1,397)(1,060)(1,362)(373)Accounts payable and accrued liabilities5,454(7,450)(69)7,971Deferred revenue2,8305557,666(1,682)23,189(5,119)66,74423,273Investments:Purchase of property, plant and equipment(15,557)(12,591)(31,347)(21,628)DC Energy Services LP acquisition---(31,093)Proceeds on disposal of property, plant and equipment5713624,1092,526Changes in non-cash working capital items2,3181,4043,9843,188(12,668)(10,825)(23,254)(47,007)Financing:Advances under long-term debt-16,225-67,407Issuance of convertible debenture, net of issue costs--65,927-Repayment of long-term debt--(72,500)(17,500)Repayment of obligations under capital leases(933)(677)(2,742)(1,745)Dividends to shareholders(1,254)(931)(3,776)(2,793)Dividends payable(7)1(3)57Issuance of common shares-280948583Repurchase of common shares(2,215)(239)(3,627)(239)Interest paid(1,977)(816)(3,215)(2,167)Decrease in bank indebtedness---(19,869)(6,386)13,843(18,988)23,734Change in cash and cash equivalents4,135(2,101)24,502-Cash and cash equivalents, beginning of period20,5952,101228-Cash and cash equivalents, end of period$24,730$-$24,730$-Segmented InformationThe Company operates in three main industry segments, which are substantially in one geographic segment. These segments are Contract Drilling Services, which includes the contracting of drilling equipment and the provision of labour required to operate the equipment, Rentals and Transportation Services, which includes the rental and transportation of equipment used in drilling, completion and production operations and Gas Compression Services, which includes the fabrication, sale, rental and servicing of natural gas compression equipment.As at and for the three months ended September 30, 2011 (unaudited)ContractRentals andGasDrillingTransportationCompressionServicesServicesServicesOther(1)TotalRevenue$16,274$43,020$28,588$-$87,882Cost of services7,95913,89323,873-45,725Selling, general and administration8353,9111,3641,0167,126Share-based compensation---368368Depreciation1,4683,531830135,842Results from operating activities6,01221,6852,521(1,397)28,821Gain (loss) on sale of property, plant and equipment-81(10)-71Finance costs(254)(597)(153)(347)(1,351)Net income before income taxes5,75821,1692,358(1,744)27,541Goodwill-2,5141,539-4,053Total assets81,418205,77387,61229,351404,154Total liabilities17,29039,36727,68765,019149,363Capital expenditures$3,689$9,603$2,216$49$15,557As at and for the three months ended September 30, 2010 (unaudited)ContractRentals andGasDrillingTransportationCompressionServicesServicesServicesOther(1)TotalRevenue$9,171$28,862$18,027$-$56,060Cost of services6,22711,91314,214-32,354Selling, general and administration5263,4021,0281,4176,373Share-based compensation---241241Depreciation1,0923,25458184,935Results from operating activities1,32610,2932,204(1,666)12,157Gain (loss) on sale of property, plant and equipment-----Finance costs(149)(604)(98)(31)(882)Net income before income taxes1,1779,6892,106(1,697)11,275Goodwill-2,5141,539-4,053Total assets73,119178,48366,0501,037318,689Total liabilities13,82734,97513,68060,665123,147Capital expenditures$978$7,734$3,879$-$12,591As at and for the nine months ended September 30, 2011 (unaudited)ContractRentals andGasDrillingTransportationCompressionServicesServicesServicesOther(1)TotalRevenue$41,370$113,962$79,814$-$235,146Cost of services22,75240,19367,411-130,356Selling, general and administration2,29411,7943,9983,08121,167Share-based compensation---1,0461,046Depreciation4,04511,0952,3723817,550Results from operating activities12,27950,8806,033(4,165)65,027Gain on sale of property, plant and equipment7271571-849Finance costs(720)(1,776)(432)(994)(3,922)Net income before income taxes11,56649,3756,172(5,159)61,954Goodwill-2,5141,539-4,053Total assets81,418205,77387,61229,351404,154Total liabilities17,29039,36727,68765,019149,363Capital expenditures$8,968$16,460$5,867$52$31,347As at and for the nine months ended September 30, 2010 (unaudited)ContractRentals andGasDrillingTransportationCompressionServicesServicesServicesOther(1)TotalRevenue$28,061$81,681$42,217$-$151,959Cost of services19,78036,40233,05011589,347Selling, general and administration1,51911,4452,7863,00318,753Share-based compensation---855855Depreciation3,3819,4041,6142214,421Results from operating activities3,38124,4304,767(3,995)28,583Gain on sale of property, plant and equipment-224311-535Finance costs(414)(1,695)(268)(81)(2,458)Net income before income taxes2,96722,9594,810(4,076)26,660Goodwill-2,5141,539-4,053Total assets73,119178,48366,0501,037318,689Total liabilities13,82734,97513,68060,665123,147Capital expenditures (2)$2,890$11,847$6,864$27$21,628(1) Other includes the Company's corporate activities, accretion of convertible debentures and obligations pursuant to long-term credit facilities. (2) Excludes the acquisition of DC Energy Services LP on January 15, 2010.Total Energy Services Inc. is a growth oriented energy services corporation involved in contract drilling services, rentals and transportation services and the fabrication, sale, rental and servicing of natural gas compression equipment. The common shares of Total Energy are listed and trade on the TSX under the symbol TOT. Notes to Financial HighlightsOperating earnings means results from operating activities and is equal to net income before income taxes minus gain on sale of property, plant and equipment plus finance costs. EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to net income before income taxes plus finance costs plus depreciation. Cashflow means cash provided by operations before changes in non-cash working capital items. Operating earnings, EBITDA and cashflow are not recognized measures under IFRS. Management believes that in addition to net income, operating earnings, EBITDA and cashflow 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 without consideration of the timing of the monetization of non-cash working capital items. Readers should be cautioned, however, that operating earnings, EBITDA and cashflow should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of Total Energy's performance. Total Energy's method of calculating operating earnings, EBITDA and cashflow may differ from other organizations and, accordingly, operating earnings, EBITDA and cashflow may not be comparable to measures used by other organizations. Working capital equals current assets minus current liabilities. Net Debt equals long-term debt plus obligations under finance leases plus convertible debentures plus current liabilities minus current assets. Certain statements contained in this press release, including statements which may contain words such as "could", "should", "expect", "believe", "will" and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Total Energy to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market for oil and natural gas and related products and services, political and economic conditions, the demand for products and services provided by Total Energy, Total Energy's ability to attract and retain key personnel and other factors. Reference should be made to Total Energy's most recently filed Annual Information Form and other public disclosures (available at www.sedar.com ) for a discussion of such risks and uncertainties.FOR FURTHER INFORMATION PLEASE CONTACT: Daniel HalykTotal Energy Services Inc.President & Chief Executive Officer(403) firstname.lastname@example.orgORMark KearlTotal Energy Services Inc.Vice-President Finance and Chief Financial Officer(403) email@example.comThe Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.