Press release from Marketwire
Total Energy Services Inc. Announces Q2 2012 Results and Capital Budget Increase
Tuesday, August 14, 2012
Total Energy Services Inc. Announces Q2 2012 Results and Capital Budget Increase 10:49 EDT Tuesday, August 14, 2012CALGARY, ALBERTA--(Marketwire - Aug. 14, 2012) - Total Energy Services Inc. (TSX:TOT) ("Total Energy" or the "Company"), announces its consolidated financial results for the three and six-month periods ending June 30, 2012. Financial Highlights($000's except per share data)Three Months Ended June 30Six Months Ended June 30(unaudited)(unaudited)20122011% Change20122011% ChangeRevenue$ 54,332$ 62,159(13)%$ 155,781$ 147,2646%Operating Earnings (1)3,7789,760(61)%37,43636,2063%EBITDA (1)9,12015,501(41)%49,25548,6921%Cashflow (1)9,55015,308(38)%49,65548,5092%Net Income3,2506,392(49)%27,71125,22210%Per Share Data (Diluted) (2)EBITDA (1)$0.29$0.44(34)%$1.41$1.401%Cashflow (1)$0.300.39(23)%$1.421.401%Net Earnings$0.100.20(50)%$0.850.7710%June 30Dec. 312012 (unaudited)2011 (audited)% ChangeFinancial PositionTotal Assets$ 451,245$ 434,6174%Long-Term Debt, Convertible Debentures and Obligations Under Finance Leases (excluding current portion)64,76463,8531%Working Capital (3)111,476120,786(8)%Net Debt (4)NilNiln/mShareholders' Equity292,248275,3216%Shares Outstanding (000's)Basic30,99031,375(1)%Diluted (2)34,66935,261(2)%Notes 1 through 4 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 June 30, 2012 reflect the earlier arrival of spring break-up as compared to 2011 and prolonged wet weather conditions throughout much of Western Canada that delayed the commencement of summer drilling programs. Total Energy's Contract Drilling Services division achieved 20% utilization during the second quarter of 2012, recording 277 operating days (spud to release), compared to 407 operating days, or 32% utilization during the second quarter of 2011. Revenue per operating day realized during the second quarter of 2012 increased 16% compared to the second quarter of 2011 due primarily to improved pricing. The Rentals and Transportation Services division achieved a utilization rate on major rental equipment of 36% during the second quarter of 2012 as compared to a 52% utilization rate during the second quarter of 2011. The Gas Compression Services division generated revenues of $26.3 million for the three months ended June 30, 2012 compared to $28.6 million for the second quarter of 2011. At June 30, 2012 the Gas Compression Services division had a fabrication sales backlog of approximately $28.8 million compared to $48.3 million at June 30, 2011 and $29.3 million at March 31, 2012. At June 30, 2012 approximately 28,500 horsepower of compression equipment was on rent compared to 22,700 horsepower on rent at June 30, 2011. The gas compression rental fleet operated at an average utilization rate of 83% during the first six months of 2012 as compared to 78% for the same period in 2011.During the second quarter, Total Energy declared a quarterly dividend of $0.05 per share to shareholders of record on June 29, 2012. This dividend was paid on July 31, 2012. During the first half of 2012, Total Energy repurchased 632,500 common shares at an average price of $15.49 (including commissions) pursuant to its normal course issuer bid.OutlookWet weather conditions throughout Western Canada, combined with continued global economic uncertainty and resulting financial market and commodity price volatility, have negatively impacted industry activity levels going into the third quarter of 2012. Some Canadian oil and natural gas exploration and production companies have recently indicated that they will take a more cautious approach to their capital spending plans for the remainder of 2012 relative to initial budgets.Despite near term market uncertainty and volatility, current commodity prices, particularly oil prices, continue to support activity levels that are presently reasonably strong compared to historical levels. In light of current activity levels, the Rentals and Transportation Services division's recent expansion into North Dakota and the Company's entry into the natural gas process equipment business through the establishment of Spectrum Process Systems, Total Energy has increased its 2012 capital expenditure budget by $19.2 million to $77.3 million. Included in this 33% increase is $18.2 million for the addition of approximately 500 pieces of new rental equipment in the Rentals and Transportation Services division. Upon delivery of this equipment, which is expected by year end, the Company's fleet of rental equipment will increase by 5% to approximately 9,700 pieces from 9,200 pieces currently. Also included is $1.0 million to equip a new 20,000 square foot manufacturing facility currently under construction for Spectrum. Spectrum is scheduled to put this leased facility into service by the fourth quarter of 2012. Total Energy intends to finance its 2012 capital expenditure budget from cash on hand.Representatives of Bidell Gas Compression will be travelling to Queensland, Australia later this month to introduce the NOMAD™ to the Australian market. Bidell, in cooperation with SkillsTech Australia, Queensland's largest technical training institute, will be showcasing the specially engineered Australian version of the Company's patented large horsepower mobile compression unit at SkillsTech Australia's Acacia Ridge Training Centre during the week of August 20, 2012. Following this event, the NOMAD™ unit on display will be put into service with an Australian coal seam gas producer.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, $111.5 million of positive working capital (including $61.9 million, or $2.00 per share, of cash) and no net debt as at June 30, 2012. Total Energy's $35 million operating facility is currently fully available and undrawn. The Company's balance sheet strength provides significant capacity and flexibility to pursue further growth opportunities that may arise.Conference CallAt 2:30 p.m. MST today, Total Energy will conduct a conference call to discuss its second 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 August 21, 2012.Selected Financial InformationSelected financial information relating to the three and six-month periods ended June 30, 2012 and 2011 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 second quarter report.Condensed Consolidated Statements of Financial Position(in thousands of Canadian dollars)June 30,December 31,20122011(unaudited)(audited)AssetsCurrent assets:Cash and cash equivalents$61,880$35,658Accounts receivable55,07694,556Inventory36,25337,147Income taxes receivable-118Prepaid expenses and deposits2,0271,795155,236169,274Property, plant and equipment291,956261,290Goodwill4,0534,053$451,245$434,617Liabilities & Shareholders' EquityCurrent liabilities:Accounts payable and accrued liabilities$29,912$41,556Deferred revenue5,7143,064Income taxes payable4,013-Dividends payable1,5501,255Current portion of obligations under finance leases2,5712,61343,76048,488Obligations under finance leases2,8892,763Convertible debentures61,87561,090Deferred tax liability50,47346,955Shareholders' equity:Share capital77,62377,917Contributed surplus3,0252,472Equity portion of convertible debenture4,6014,601Retained earnings206,999190,331292,248275,321$451,245$434,617Condensed Interim Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars except per share amounts)Three months ended June 30Six months ended June 302012201120122011(unaudited)(unaudited)(unaudited)(unaudited)Revenue$54,332$62,159$155,781$147,264Cost of services38,32340,39691,25784,631Selling, general and administration6,4206,41614,83014,041Share-based compensation553458931678Depreciation5,2585,12911,32711,708Results from operating activities3,7789,76037,43636,206Gain on sale of property, plant and equipment84612492778Finance costs(1,240)(1,382)(2,529)(2,571)Net income before income taxes2,6228,99035,39934,413Current income tax expense2,823394,17083Deferred income tax (recovery) expense(3,451)2,5593,5189,108Total income tax (recovery) expense(628)2,5987,6889,191Net income and total comprehensive income for the period$3,250$6,392$27,711$25,222Earnings per shareBasic earnings per share$0.10$0.20$0.89$0.80Diluted earnings per share$0.10$0.20$0.85$0.77Condensed Interim Consolidated Statements of Cash Flows(in thousands of Canadian dollars)Three months ended June 30Six months ended June 302012201120122011(unaudited)(unaudited)(unaudited)(unaudited)Cash provided by (used in):Operations:Net income for the period$3,250$6,392$27,711$25,222Add (deduct) items not affecting cash:Depreciation5,2585,12911,32711,708Share-based compensation553458931678Gain on sale of property, plant and equipment(84)(612)(492)(778)Finance costs1,2401,3822,5292,571Current income tax expense2,823394,17083Deferred income tax (recovery) expense(3,451)2,5593,5189,108Income taxes paid(39)(39)(39)(83)9,55015,30849,65548,509Changes in non-cash working capital items:Accounts receivable44,43516,33939,480(587)Inventory(907)(574)894(3,715)Prepaid expenses and deposits93(461)(232)35Accounts payable and accrued liabilities(8,558)(9,672)(7,122)(5,523)Deferred revenue8083,5872,6504,83645,42124,52785,32543,555Investments:Purchase of property, plant and equipment(17,179)(10,860)(41,421)(15,790)Proceeds on disposal of property, plant and equipment7212,3291,7473,538Changes in non-cash working capital items4201,226(4,186)1,666(16,038)(7,305)(43,860)(10,586)Financing:Issuance of convertible debenture, net of issue costs---65,927Repayment of long-term debt---(72,500)Repayment of obligations under finance leases(852)(788)(1,743)(1,809)Dividends to shareholders(1,566)(1,257)(2,820)(2,518)Issuance of common shares5124661,197948Repurchase of common shares(6,262)(1,412)(9,797)(1,412)Interest paid(155)(43)(2,080)(1,238)(8,323)(3,034)(15,243)(12,602)Change in cash and cash equivalents21,06014,18826,22220,367Cash and cash equivalents, beginning of period40,8206,40735,658228Cash and cash equivalents, end of period$61,880$20,595$61,880$20,595Segmented 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 and process equipment. Amounts presented in the following tables are in thousands of Canadian dollars.As at and for the three months ended June 30, 2012 (unaudited) As at and for the three months endedContract DrillingRentals and TransportationGas CompressionJune 30, 2012ServicesServicesServicesOther(1)TotalRevenue$5,935$22,093$26,304$-$54,332Cost of services4,88011,58221,865(4)38,323Selling, general and administration6713,0891,3981,2626,420Share-based compensation---553553Depreciation6353,65895785,258Results from (used in) operating activities(251)3,7642,084(1,819)3,778Gain (loss) on sale of property, plant and equipment(15)102(3)-84Finance costs(253)(583)(69)(335)(1,240)Net income (loss) before income taxes(519)3,2832,012(2,154)2,622Goodwill-2,5141,539-4,053Total assets90,476215,12991,13754,503451,245Total liabilities16,40648,36223,11371,116158,997Capital expenditures$2,323$10,185$4,652$19$17,179As at and for the three months ended June 30, 2011 (unaudited) As at and for the three months endedContract DrillingRentals and TransportationGas CompressionJune 30, 2011ServicesServicesServicesOther(1)TotalRevenue$7,514$26,047$28,598$-$62,159Cost of services4,81911,25924,318-40,396Selling, general and administration6673,4401,4128976,416Share-based compensation---458458Depreciation8693,435813125,129Results from operating activities1,1597,9132,055(1,367)9,760Gain (loss) on sale of property, plant and equipment(8)174446-612Finance costs(254)(592)(152)(384)(1,382)Net income before income taxes8977,4952,349(1,751)8,990Goodwill-2,5141,539-4,053Total assets74,007191,26878,47626,572370,323Total liabilities14,30832,66922,61563,371132,963Capital expenditures$3,596$4,716$2,547$1$10,860As at and for the six months ended June 30, 2012 (unaudited) As at and for the six months endedContract DrillingRentals and TransportationGas CompressionJune 30, 2012ServicesServicesServicesOther(1)TotalRevenue$27,114$71,441$57,226$-$155,781Cost of services14,80728,85447,600(4)91,257Selling, general and administration1,7967,6542,8732,50714,830Share-based compensation---931931Depreciation2,2847,1661,8572011,327Results from operating activities8,22727,7674,896(3,454)37,436Gain on sale of property, plant and equipment44269179-492Finance costs(506)(1,157)(193)(673)(2,529)Net income before income taxes7,76526,8794,882(4,127)35,399Goodwill-2,5141,539-4,053Total assets90,476215,12991,13754,503451,245Total liabilities16,40648,36223,11371,116158,997Capital expenditures$7,289$20,137$12,181$1,814$41,421As at and for the six months ended June 30, 2011 (unaudited) As at and for the six months endedContract DrillingRentals and TransportationGas CompressionJune 30, 2011ServicesServicesServicesOther(1)TotalRevenue$25,096$70,942$51,226$-$147,264Cost of services14,79326,30043,538-84,631Selling, general and administration1,4597,8832,6342,06514,041Share-based compensation---678678Depreciation2,5777,5641,5422511,708Results from operating activities6,26729,1953,512(2,768)36,206Gain on sale of property, plant and equipment7190581-778Finance costs(466)(1,179)(279)(647)(2,571)Net income before income taxes5,80828,2063,814(3,415)34,413Goodwill-2,5141,539-4,053Total assets74,007191,26878,47626,572370,323Total liabilities14,30832,66922,61563,371132,963Capital expenditures$5,279$6,857$3,651$3$15,790(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 and process 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.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.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) 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.