Press release from Marketwire
Total Energy Services Inc. Announces Q1 2012 Results
Tuesday, May 15, 2012
Total Energy Services Inc. Announces Q1 2012 Results10:06 EDT Tuesday, May 15, 2012CALGARY, ALBERTA--(Marketwire - May 15, 2012) - Total Energy Services Inc. ("Total Energy" or the "Company") (TSX:TOT) announces its consolidated financial results for the three months ending March 31, 2012. Financial Highlights($000's except per share data)Three Months Ended March 31(unaudited)20122011% ChangeRevenue$101,449$85,10519%Operating Earnings (1)33,65826,44627%EBITDA (1)40,13533,19121%Cashflow (1)40,10533,20121%Net Income24,46118,83030%Per Share Data (Diluted) (2)EBITDA (1)$1.14$0.9718%Cashflow (1)1.14$0.9718%Net Earnings0.72$0.5726%Mar. 31Dec. 312012 (unaudited)2011 (audited)% ChangeFinancial PositionTotal Assets$461,518$434,6176%Long-Term Debt, Convertible Debentures and Obligations Under Finance Leases (excluding current portion)64,28563,8531%Working Capital (3)130,233120,7868%Net Debt (4)NilNiln/mShareholders' Equity295,745275,3217%Shares Outstanding (000's)Basic31,32031,375n/mDiluted (2)35,10635,261n/mNotes 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 months ended March 31, 2012 represent record quarterly financial results for the Company. These results were achieved despite the earlier arrival of spring breakup relative to the prior year, which negatively impacted equipment utilization for the quarter.Total Energy's Contract Drilling Services division achieved 66% utilization during the first quarter of 2012, recording 903 operating days (spud to release) with a fleet of 15 rigs, compared to 979 operating days, or 78% utilization, during the first quarter of 2011 with a fleet of 14 rigs. Revenue per operating day increased 31% for the first quarter of 2012 relative to the prior year comparable period due primarily to improved pricing. The Rentals and Transportation Services division achieved a utilization rate on major rental equipment of 67% during the first quarter of 2012 as compared to a 74% utilization rate during the first quarter of 2011. The Gas Compression Services division generated revenues of $30.9 million for the three months ended March 31, 2012 compared to $22.6 million for the same period in 2011, an increase of 37%. This division exited the first quarter of 2012 with a $29.3 million backlog of fabrication sales orders as compared to $33.9 million at March 31, 2011. At March 31, 2012, approximately 25,000 horsepower of compression equipment was on rent compared to 21,200 horsepower on rent at March 31, 2011. The gas compression rental fleet operated at an average utilization rate of 83% for the first quarter of 2012 as compared to 74% during the first quarter of 2011.During the first quarter, Total Energy declared a quarterly dividend of $0.05 per share to shareholders of record on March 30, 2012. This dividend was paid on April 30, 2012.OutlookDespite ongoing global economic uncertainty and financial market volatility, Western Canadian industry activity levels were strong during the first quarter of 2012 until the arrival of spring break-up in early March. While activity levels have decreased during spring break-up as expected, current indications are that drilling activity in Western Canada should be relatively strong during the upcoming summer drilling season with a continued focus on oil and natural gas liquids programs due to weak natural gas prices. During the second quarter, the Rentals and Transportation Services division will open its 20th branch location in North Dakota. This location will further increase Total Energy's exposure to light oil activity and represents the Company's first permanent location outside of Canada. The Gas Compression Services division continues to focus on increasing its share of all facets of the Canadian natural gas compression market. A custom-engineered model of the NOMAD™ has just recently arrived in Australia and the Company is excited by the opportunity to introduce this patented mobile compression technology to the Australian market. Total Energy is also pleased to announce its entry into the natural gas process equipment business. This business line, which will complement the Company's Gas Compression Services division, will be based in Calgary and operate as Spectrum Process Systems Inc. under the leadership of Kelly Mantei. Mr. Mantei is a professional engineer who has been employed by the Gas Compression Services division since 2002 and brings a strong technical and sales background to the General Manager position. Spectrum is expected to commence operations during the second half of 2012.Total Energy's financial condition remains solid with a long-term debt (including convertible debentures) to long-term debt plus equity ratio of 0.19 to 1.0, $130.2 million of positive working capital (including $40.8 million, or $1.30 per share, of cash) and no net debt as at March 31, 2012. 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, of which $24.2 million has been expended to March 31, 2012. The Company's balance sheet strength provides significant capacity and flexibility to pursue further growth opportunities that may arise despite challenging equity market conditions.Conference CallAt 2:30 p.m. MST today, Total Energy will conduct a conference call to discuss its first 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 (877) 440-9795. Those who are unable to listen to the call live may listen to a recording of it by calling (800) 408-3053 (passcode 6971499). The recording will be available until May 22, 2012.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 month period ended March 31, 2012 and 2011 is attached to this news release. This information should be read in conjunction with the condensed unaudited interim 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 first quarter report.Condensed Interim Consolidated Statements of Financial Position(in thousands of Canadian dollars)March 31,December 31,20122011(unaudited)(audited)AssetsCurrent assets:Cash and cash equivalents$40,820$35,658Accounts receivable99,51194,556Inventory35,34637,147Income taxes receivable-118Prepaid expenses and deposits2,1201,795177,797169,274Property, plant and equipment279,668261,290Goodwill4,0534,053$461,518$434,617Liabilities & Shareholders' EquityCurrent liabilities:Accounts payable and accrued liabilities$37,367$41,556Deferred revenue4,9063,064Income taxes payable1,229-Dividends payable1,5661,255Current portion of obligations under finance leases2,4962,61347,56448,488Obligations under finance leases2,8122,763Convertible debentures61,47361,090Deferred tax liability53,92446,955Shareholders' equity:Share capital77,77577,917Contributed surplus2,6252,472Equity portion of convertible debenture4,6014,601Retained earnings210,744190,331295,745275,321$461,518$434,617Condensed Interim Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars except per share amounts) Three months ended March 31,20122011(unaudited)(unaudited)Revenue$101,449$85,105Cost of services52,93444,235Selling, general and administration8,4107,625Share-based compensation378220Depreciation6,0696,579Results from operating activities33,65826,446Gain on sale of property, plant and equipment408166Finance costs(1,289)(1,189)Net income before income taxes32,77725,423Current income tax expense1,34744Deferred income tax expense6,9696,549Total income tax expense8,3166,593Net income and total comprehensive income for the period24,46118,830Earnings per shareBasic earnings per share$0.78$0.60Diluted earnings per share$0.72$0.57Condensed Interim Consolidated Statements of Cash Flows(in thousands of Canadian dollars)Three months ended March 31,20122011(unaudited)(unaudited)Cash provided by (used in):Operations:Net income for the period$24,461$18,830Add (deduct) items not affecting cash:Depreciation6,0696,579Share-based compensation378220Gain on sale of property, plant and equipment(408)(166)Finance costs1,2891,189Current income tax expense1,34744Deferred income tax expense6,9696,549Income taxes paid-(44)40,10533,201Changes in non-cash working capital items:Accounts receivable(4,955)(16,926)Inventory1,801(3,141)Prepaid expenses and deposits(325)496Accounts payable and accrued liabilities1,4364,149Deferred revenue1,8421,24939,90419,028Investments:Purchase of property, plant and equipment(24,242)(4,930)Proceeds on disposal of property, plant and equipment1,0261,209Changes in non-cash working capital items(4,606)440(27,822)(3,281)Financing:Issuance of convertible debenture, net of issue costs-65,927Repayment of long-term debt-(72,500)Repayment of obligations under finance leases(891)(1,021)Dividends to shareholders(1,254)(1,261)Issuance of common shares685482Repurchase of common shares(3,535)-Interest paid(1,925)(1,195)(6,920)(9,568)Change in cash and cash equivalents5,1626,179Cash and cash equivalents, beginning of period35,658228Cash and cash equivalents, end of period$40,820$6,407Segmented 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 March 31, 2012 (unaudited)Contract Drilling ServicesRentals and Transportation ServicesGas Compression Services Other(1) TotalRevenue$21,179$49,348$30,922$-$101,449Cost of services9,92717,27225,73552,934Selling, general and administration1,1254,5651,4751,2458,410Share-based compensation---378378Depreciation1,6493,508900126,069Results from operating activities8,47824,0032,812(1,635)33,658Gain on sale of property, plant and equipment59167182-408Finance costs(253)(574)(124)(338)(1,289)Net income before income taxes8,28423,5962,870(1,973)32,777Goodwill-2,5141,539-4,053Total assets98,477245,46189,47728,103461,518Total liabilities19,09656,74123,37866,558165,773Capital expenditures$4,966$9,952$7,529$1,795$24,242As at and for the three months ended March 31, 2011 (unaudited)Contract Drilling ServicesRentals and Transportation ServicesGas Compression Services Other(1) TotalRevenue$17,582$44,895$22,628$-$85,105Cost of services9,97415,04119,220-44,235Selling, general and administration7924,4431,2221,1687,625Share-based compensation---220220Depreciation1,7084,129729136,579Results from operating activities5,10821,2821,457(1,401)26,446Gain on sale of property, plant and equipment1516135-166Finance costs(212)(587)(127)(263)(1,189)Net income before income taxes4,91120,7111,465(1,664)25,423Goodwill-2,5141,539-4,053Total assets83,120202,37672,6648,626366,786Total liabilities18,72837,28717,92160,133134,069Capital expenditures$1,683$2,141$1,104$2$4,930 (1) 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.