Press release from Marketwire
Total Energy Services Inc. Announces 2011 Results
Wednesday, March 14, 2012
Total Energy Services Inc. Announces 2011 Results11:22 EDT Wednesday, March 14, 2012CALGARY, ALBERTA--(Marketwire - March 14, 2012) - Total Energy Services Inc. (TSX:TOT) ("Total Energy" or the "Company") announces its consolidated financial results for the three and twelve-month periods ending December 31, 2011. Financial Highlights ($000's except per share data)Three Months Ended Dec. 31Twelve Months Ended Dec. 31(unaudited)(audited)20112010% Change20112010% ChangeRevenue$ 96,936$ 72,56534%$ 332,082$ 224,52448%Operating Earnings (1)31,20619,32062%96,23347,903101%EBITDA (1)38,60824,05760%122,03467,59681%Cashflow (1)37,25124,96749%120,78071,50869%Net Income23,44113,33276%69,26632,926110%Per Share Data (Diluted) (2)EBITDA (1)$ 1.10$ 0.7547%$ 3.49$ 2.1562%Cashflow (1)1.060.7836%3.462.2752%Net Earnings0.690.4264%2.081.0598%Dec. 31Dec. 312011 (audited)2010 (audited)% ChangeFinancial PositionTotal Assets $ 434,617$ 342,83427%Long-Term Debt, Convertible Debentures and Obligations Under Finance Leases66,46678,717(16)%Working Capital (3)120,78664,44687%Net Debt (4)nil5,026n/mShareholders' Equity 275,321209,84531%Shares Outstanding (000's)Basic31,37531,425n/mDiluted (2)35,26132,09610%Notes 1 through 4 please refer to the Notes to the Financial Highlights set forth at the end of this release.Total Energy's results for the three and twelve months ended December 31, 2011 represent record fourth quarter and annual financial results for the Company, driven by higher activity levels in all three business divisions.Total Energy's Contract Drilling Services division achieved 62% utilization during the fourth quarter of 2011, recording 801 operating days (spud to release) with a fleet of 14 rigs, compared to 743 operating days, or 58% utilization, during the fourth quarter of 2010 with the same fleet. Revenue per operating day increased 28% for the fourth quarter of 2011 relative to the prior year comparable period due primarily to improved pricing. For the twelve months ended December 31, 2011, the Contract Drilling Services division achieved 3,042 operating days (60% utilization), compared to 2,714 operating days (53% utilization) for 2010. The Rentals and Transportation Services division achieved a utilization rate on major rental equipment of 72% during the fourth quarter of 2011 as compared to a 69% utilization rate during the fourth quarter of 2010. For 2011, rental equipment utilization averaged 68% as compared to 56% for 2010. The Gas Compression Services division generated revenues of $33.0 million for the three months ended December 31, 2011 compared to $22.9 million for the same period in 2010, an increase of 44%. For 2011, revenues increased by 73% to $112.8 million compared to $65.1 million in 2010. The Gas Compression Services division exited 2011 with a $33.6 million backlog of fabrication sales orders as compared to $31.9 million at December 31, 2010. At December 31, 2011, approximately 25,300 horsepower of compression equipment was on rent compared to 21,200 horsepower on rent at December 31, 2010. The gas compression rental fleet operated at an average utilization rate of 78% for 2011 as compared to 73% for 2010.During the fourth quarter, Total Energy declared a quarterly dividend of $0.04 per share to shareholders of record on December 31, 2011. This dividend was paid on January 31, 2012.OutlookDespite ongoing global economic and financial market uncertainty, Western Canadian industry activity levels were strong during 2011, increasingly driven by activity targeting oil and liquids rich natural gas. Current indications are that Western Canadian oil and natural gas producers' aggregate capital spending plans for 2012 are comparable to 2011 although with low natural gas prices, the focus on oil and liquids rich gas targets is expected to continue. Total Energy's 15th drilling rig was put into service in January 2012 and utilization of Total Energy's drilling rig fleet has been strong through the current winter drilling season. High levels of drilling, completion and production activity is contributing to strong demand for equipment and services provided by the Rentals and Transportation Services division. The Gas Compression Services division continues to focus on increasing its share of all facets of the Canadian natural gas compression market. Continued demand for the NOMAD™ line of patented mobile natural gas compression in Canada and the introduction of a custom-engineered model of the NOMAD™ to the Australian market in the second quarter of 2012 is expected to benefit this division despite challenging North American natural gas prices.Total Energy's financial condition continues to strengthen with a long-term debt (including convertible debentures) to long-term debt plus equity ratio of 0.20 to 1.0, $120.8 million of positive working capital and no net debt as at December 31, 2011. Total Energy's $35 million operating facility is currently fully available and undrawn.Total Energy's current 2012 capital expenditure budget is $58.1 million. $18.7 million has been allocated to the Gas Compression Services division, including $15.0 million for expansion of the gas compression rental fleet. $17.2 million has been allocated to the Rentals and Transportation division for the construction of approximately 220 pieces of rental equipment and the replacement and upgrade of five heavy trucks, which will bring Total Energy's fleet to approximately 9,200 rental pieces and 105 heavy trucks with an average age of three years. A portion of this new equipment, including the Company's proprietary Apollo™ modular fluid containment systems, will support this division's current expansion into the North Dakota market. $16.7 million will be directed to Total Energy's Contract Drilling Services division for the construction of a sixteenth rig (with completion scheduled for the fourth quarter of 2012) and for $6.2 million of rig upgrades and ancillary equipment. $5.5 million has been budgeted for capital maintenance spending in all divisions. Cashflow from operations and, if necessary, Total Energy's existing credit facility will be used to finance the 2012 capital expenditure budget, which budget is subject to further change depending on industry conditions and business opportunities.Conference CallAt 2:30 p.m. MST today, Total Energy will conduct a conference call to discuss its fourth 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) 335-4959. 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 March 21, 2012.Dividend IncreaseTotal Energy's Board of Directors has determined to increase the Company's quarterly dividend by $0.01 per share to $0.05 per common share beginning for the quarter ending March 31, 2012. This equates to an annual dividend of $0.20 per common share. Total Energy's dividend policy is consistent with its primary objective of building sustainable shareholder value, as measured on a diluted per share basis. In particular, Total Energy's dividend policy recognizes the cyclical nature of the Canadian energy services industry and is intended not to impair the Company's ability to continue to finance substantial future growth on reasonable terms, particularly during periods when access to debt or equity markets may be restricted or impaired.Annual Meeting of ShareholdersShareholders and other interested persons are invited to attend the annual meeting of Shareholders which will commence at 10:00 a.m. (Calgary time) on Tuesday May 22, 2012 at the Calgary Petroleum Club, 319 - 5th Avenue S.W., Calgary, Alberta. Selected Financial InformationSelected financial information relating to the three and twelve-month periods ended December 31, 2011 and 2010 is attached to this press release. This information should be read in conjunction with the 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 Company's 2011 annual report.Consolidated Statements of Financial Position(in thousands of Canadian dollars)December 31,December 31,20112010(audited)(audited)AssetsCurrent assets:Cash and cash equivalents$35,658$228Accounts receivable94,55670,983Inventory37,14733,488Income taxes receivable118118Prepaid expenses and deposits1,7951,818169,274106,635Property, plant and equipment261,290232,146Goodwill4,0534,053$434,617$342,834Liabilities & Shareholders' EquityCurrent liabilities:Accounts payable and accrued liabilities41,55628,353Deferred revenue3,0643,334Dividends payable1,2551,257Current portion of long-term debt-6,042Current portion of obligations under finance leases2,6133,20348,48842,189Long-term debt-66,458Convertible debenture61,090-Obligations under finance leases2,7633,014Deferred tax liability46,95521,328Shareholders' equity:Share capital77,91776,268Contributed surplus2,4721,769Equity portion of convertible debenture4,601-Retained earnings190,331131,808275,321209,845$434,617$342,834Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars except per share amounts)Three months endedYear endedDecember 31December 312011201020112010(unaudited)(unaudited)(audited)(audited)Revenue$96,936$72,565$332,082$224,524Expenses:Cost of services51,87540,466182,231129,813Selling, general and administration7,7926,94528,95925,698Share-based compensation3144341,3601,289Depreciation5,7495,40023,29919,821Results from operating activities31,20619,32096,23347,903Gain (loss) on disposal of property, plant and equipment1,653(663)2,502(128)Finance costs(1,358)(874)(5,280)(3,332)Net income before income taxes31,50117,78393,45544,443Current income tax expense18187112235Deferred income tax expense8,0424,26424,07711,282Total income tax expense8,0604,45124,18911,517Net income and total comprehensive income for the period23,44113,33269,26632,926Retained earnings, beginning of period170,844119,733131,808103,114Dividends(1,256)(1,257)(5,032)(4,050)Repurchase and cancellation of common shares in excess of stated common share capital(2,698)-(5,711)(182)Retained earnings, end of period$190,331$131,808$190,331$131,808Earnings per share :Basic$0.75$0.43$2.20$1.07Diluted$0.69$0.42$2.08$1.05Consolidated Statements of Cash Flows(in thousands of Canadian dollars)Three months endedYear endedDecember 31December 312011201020112010(unaudited)(unaudited)(audited)(audited)Cash provided by (used in):Operations:Net income for the period$23,441$13,332$69,266$32,926Add (deduct) items not affecting cash:Depreciation5,7495,40023,29919,821Share-based compensation3144341,3601,289(Gain) loss on disposal of property, plant and equipment(1,653)663(2,502)128Finance costs1,3588745,2803,332Current income tax expense18187112235Deferred income tax expense8,0424,26424,07711,282Income taxes (paid) received(18)(187)(112)2,49537,25124,967120,78071,508Changes in non-cash working capital items:Accounts receivable(7,063)(18,083)(23,573)(48,443)Inventory2,851(5,869)(3,659)(4,693)Prepaid expenses and deposits1,314545(48)172Accounts payable and accrued liabilities4,4826,9314,41314,902Deferred revenue(7,936)2,050(270)36830,89910,54197,64333,814Investments:Purchase of property, plant and equipment(24,300)(6,373)(55,647)(28,001)DC Energy Services LP acquisition---(31,093)Proceeds on disposal of property, plant and equipment4,6301,0958,7393,621Changes in non-cash working capital items4,037(2,935)8,021253(15,633)(8,213)(38,887)(55,220)Financing:Issuance of convertible debenture, net of issue costs--65,927-Advances under long-term debt-(1,225)-66,182Repayment of long-term debt--(72,500)(17,500)Repayment of obligations under finance leases(1,132)(795)(3,874)(2,540)Payment of dividends(1,255)(932)(5,034)(3,668)Issuance of common shares1,2651,7942,2132,377Repurchase of common shares(3,234)-(6,861)(239)Interest paid18(942)(3,197)(3,109)Decrease in bank indebtedness---(19,869)(4,338)(2,100)(23,326)21,634Change in cash and cash equivalents10,92822835,430228Cash and cash equivalents, beginning of period24,730-228-Cash and cash equivalents, end of period$35,658$228$35,658$228Segmented InformationThe Company operates in three main industry segments, which are substantially in one geographic segment. These segments are Contract Drilling Services, which includes the contracting of drilling equipment and the provision of labour required to operate the equipment, Rentals and Transportation Services, which includes the rental and transportation of equipment used in drilling, completion and production operations and Gas Compression Services, which includes the fabrication, sale, rental and servicing of natural gas compression equipment.As at and for the three months ended December 31, 2011 (unaudited)Contract Drilling ServicesRentals and Transportation ServicesGas Compression Services Other (2) TotalRevenue$ 18,066$ 45,858$ 33,012$ -$ 96,936Cost of services8,55916,33226,984-51,875Selling, general and administration1,0304,1291,6449897,792Share-based compensation---314314Depreciation1,3793,475881145,749Results from operating activities7,09821,9223,503(1,317)31,206Gain/(loss) on sale of property, plant and equipment211,6293-1,653Finance costs(253)(591)(152)(362)(1,358)Net income before income taxes6,86622,9603,354(1,679)31,501Goodwill-2,5141,539-4,053Total assets91,122227,72882,16033,607434,617Total liabilities19,37054,31819,38366,225159,296Capital expenditures$ 5,107$ 16,473$ 2,542$ 178$ 24,300As at and for the three months ended December 31, 2010 (unaudited)Contract Drilling ServicesRentals and Transportation ServicesGas Compression Services Other (2) TotalRevenue$ 13,066$ 36,578$ 22,921$ -$ 72,565Cost of services7,65213,90718,910(3)40,466Selling, general and administration6403,9741,3949376,945Share-based compensation---434434Depreciation1,3313,37568685,400Results from operating activities3,44315,3221,931(1,376)19,320Gain/(loss) on sale of property, plant and equipment-(664)1-(663)Finance costs(160)(572)(98)(44)(874)Net income before income taxes3,28314,0861,834(1,420)17,783Goodwill-2,5141,539-4,053Total assets78,267188,38072,9653,222342,834Total liabilities11,17719,62617,43984,747132,989Capital expenditures$ 950$ 3,565$ 1,855$ 3$ 6,373As at and for the year ended December 31, 2011 (audited)Contract Drilling ServicesRentals and Transportation ServicesGas Compression Services Other (2) TotalRevenue$ 59,436$ 159,820$ 112,826$ -$ 332,082Cost of services31,31156,52594,395-182,231Selling, general and administration3,32415,9235,6424,07028,959Share-based compensation---1,3601,360Depreciation5,42414,5703,2535223,299Results from operating activities19,37772,8029,536(5,482)96,233Gain/(loss) on sale of property, plant and equipment281,900574-2,502Finance costs(973)(2,367)(584)(1,356)(5,280)Net income before income taxes18,43272,3359,526(6,838)93,455Goodwill-2,5141,539-4,053Total assets91,122227,72882,16033,607434,617Total liabilities19,37054,31819,38366,225159,296Capital expenditures$ 14,075$ 32,933$ 8,409$ 230$ 55,647As at and for the year ended December 31, 2010 (audited)Contract Drilling ServicesRentals and Transportation ServicesGas Compression Services Other (2) TotalRevenue$ 41,127$ 118,259$ 65,138$ -$ 224,524Cost of services27,43250,30951,960112129,813Selling, general and administration2,15915,4194,1803,94025,698Share-based compensation---1,2891,289Depreciation4,71212,7792,3003019,821Results from operating activities6,82439,7526,698(5,371)47,903Gain/(loss) on sale of property, plant and equipment-(440)312-(128)Finance costs(574)(2,267)(366)(125)(3,332)Net income before income taxes6,25037,0456,644(5,496)44,443Goodwill-2,5141,539-4,053Total assets78,267188,38072,9653,222342,834Total liabilities11,17719,62617,43984,747132,989Capital expenditures (1)$ 3,840$ 15,412$ 8,719$ 30$ 28,001(1) Excludes the acquisition of DC Energy Services LP.(2) Other includes the Company's corporate activities, accretion of convertible debentures and obligations pursuant to long-term credit facilities.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 Highlights(1) Operating 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. (2) Per share data (diluted) and the number of common shares outstanding on a diluted basis includes the impact of the approximate 3.1 million common shares issuable upon the entire conversion of the $69 million principal amount of convertible debentures issued by the Company in February 2011. (3) Working capital equals current assets minus current liabilities. (4) 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) 216-3921ORMark KearlTotal Energy Services Inc.Vice-President Finance and Chief Financial Officer(403) firstname.lastname@example.orgThe Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.