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Press release from CNW Group

Hyduke Announces Fiscal 2012 Third Quarter Financial Results

Wednesday, November 14, 2012

Hyduke Announces Fiscal 2012 Third Quarter Financial Results17:29 EST Wednesday, November 14, 2012NISKU, AB, Nov. 14, 2012 /CNW/ - Hyduke Energy Services Inc. (HYD - TSX), announced operating results for the three and nine months ended September 30, 2012.  Hyduke's Financial Statements and Management's Discussion and Analysis have been filed with regulators and are available at www.hyduke.com and at www.sedar.com.Highlights include the following:Revenue for the nine months of $87.6 million is up $32.5 million or 59% over the prior year.International revenue for the nine months of $40.4 million is up $32.4 million or 409% over the prior year.International revenue represents 46% of total revenue year to date in 2012.Gross profit for the nine months of $11.6 million is up $4.4 million or 62% over the prior year.EBITDAS for the nine months of $4.7 million is up $2.7 million over the prior year.Profit for the nine months of $2.1 million is up $1.4 million over the prior year.Profit per share (basic) for the nine months of $0.09 is up $0.06 per share over the prior year.Liquidity remains strong with current ratio at 1.93 to 1.00Debt to equity ratio remains strong at 0.26 to 1.00A summary of those results is as follows:Selected Statement of Comprehensive Income InformationThree Months EndedNine Months Ended($000's, except per share data)Sept 302012June 302012Sept 302011Sept 302012Sept 302011      Revenues25,64028,81719,39087,63655,119International revenue9,66813,9502,21140,3557,921Gross profit3,0053,2712,77611,5817,131Gross profit (%)11.7%11.4%14.3%13.8%12.9%EBITDAS8936251,0344,6952,125Profit61224082,058615Profit per share-basic ($)0.0030.0010.0170.090.03Profit per share-diluted ($)0.0020.0010.0170.080.03Steady Canadian activity combined with continued success internationally has resulted in an increase in current year revenue of 59% over the prior year.  The Company's international business development efforts were successful again with 46% of total revenues being generated outside of Canada.Strong sales growth combined with a slight improvement in gross profit percentage resulted in an increase in gross profit of $4.4 million or 62% over the prior year.  The company continues to emphasize margin improvement and is currently implementing lean manufacturing and improved project management practices.EBITDAS of $4.7 million in the current year reflects an increase of $2.7 million over the prior year and is due to an increase in revenue levels and slightly improved gross profit percentages.Profit year to date of $2.1 million reflects an improvement of $1.4 million over the prior year.Selected Financial Position  Information ($000's, except ratios)September 30 2012December 31 2011December 31 2010Total assets75,80155,52944,368Total current assets60,77340,72029,332Total liabilities42,74024,47615,113Total current liabilities31,54121,91512,717Total bank indebtedness1,358Nil1,631Total interest bearing debt13,7601,1491,550Total equity33,16031,05329,255    Current ratio (current assets divided by current liabilities)1.93 to 1.001.86 to 1.002.31 to 1.00Debt to equity ratio (interest bearing debt divided by shareholders' equity)0.26 to 1.000.04 to 1.000.05 to 1.00Hyduke continues to experience a very strong balance sheet as measured by liquidity (current ratio of 1.93 to 1.00) and debt to equity (ratio of 0.26 to 1.00).  While total debt increased since December 2011 in response to working capital requirements, $5 million of the debt at quarter end has been repaid as a result of delivering two turn-key rig packages and receiving milestone payments on these contracts thereby reducing the debt to equity ratio even further.Total assets of $75.8 million as at September 30, 2012 represents an increase of 36.5% or $20.3 million from December 31, 2011 and is due primarily to an increase in current assets.  Total current asset increase of $20.1 million relates primarily to an increase in unbilled revenue of $16.8 million and accounts receivable of $8.4 million offset by a decrease in cash and short-term deposits of $4.8 million.Subsequent to quarter end, upon successful delivery of two international turn key projects, the Company received milestone payments of $19 million in accordance with the contract.Total liabilities of $42.6 million as at September 30, 2012 represent an increase of 74.2% or $18.2 million from December 31, 2011.  Total current liabilities increase of $9.6 million relates primarily to an increase in trade and other payables of $3.8 million, an increase in project financing of $5.0 million and an increase in bank indebtedness of $1.4 million.As of November 9, 2012, Hyduke repaid in full the project financing of $5.0 million.OUTLOOK Industry expectations for western Canada for the remainder of 2012 and 2013 are expected to be slightly reduced compared to activity experienced in the first half of 2012 and 2011.  The Canadian Association of Oilwell Drilling Contractors (CAODC) have forecast the number of wells to be drilled (on a completion basis) for 2013 to be 10,409 which is a 6% reduction from the latest forecast for 2012.  The Petroleum Services Association of Canada (PSAC) have forecast the number of wells to be drilled (on a rig released basis) for 2013 to be 11,400 which is consistent with the latest forecast for 2012.  Continued low natural gas pricing is the primary factor impacting these historically low levels of activity.It is expected that new rig builds for use in western Canada during 2013 will be minimal. Hyduke continues to actively market its products and services to international markets in the Russian Federation, India, South America, North Africa, Middle East, Asia-Pacific and Latin America.  While the project decision making cycle is longer on international work, active quoting continues on a significant number of international opportunities.  In 2011, Hyduke was successful in winning over $50 million in turn-key equipment and services contracts for international customers.  It is expected that the volume and proportion of international revenues will continue as these international relationships are further developed.The steady levels of industry activity forecast for 2013 and the increase in the activity in Hyduke's international sector will have far reaching effects in the Hyduke consolidated group of companies.  Not only will the manufacturing segments of the organization benefit, but a positive impact will be felt in the Life Cycle Management businesses such as repair and maintenance, inspections and certification, and consumables.  The Company will continue to focus on increasing market share through marketing Hyduke's Life Cycle Management and Single Source Supplier platforms to customers.  These platforms benefit customers by offering continued support throughout the useful life of their equipment and by offering a wide array of consistent, reliable services from a single source.Hyduke recognizes that it must continue to focus on all aspects of its operations in order to maximize its return and prepare itself for future industry declines.  Operationally, we continue to focus on cost control, realizing on vertical integration opportunities and prudent cash management and investment.  Specifically, we have identified a need for improved manufacturing efficiencies on larger projects and are very active implementing lean manufacturing concepts onto the manufacturing floor.Hyduke has now experienced seven profitable quarters in a row and we are expecting the remainder of 2012 and 2013 to continue this trend.  We are confident that the strong efforts of our sales and marketing team, management's continued focus fulfilling its strategic plan, a continued focus on improving margins through lean manufacturing initiatives and accessing low cost manufacturing in Texas, and the dedication of our employee base to customer service and satisfaction will position the company well in the future. Forward Looking StatementsThis report contains certain forward-looking statements under the heading "Outlook" and elsewhere concerning future events or the Company's operations, anticipated financial performance, business prospects and strategies of Hyduke.  Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "expect", "plan", "intend" or similar words suggesting future outcomes or outlooks on, without limitation, estimates of business activity, supply and demand for the Company's products, the estimated amounts and timing of capital expenditures, anticipated future debt levels, or other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance.  Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties both general and specific that may cause actual future results to differ materially from those contemplated and contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur.  These factors may affect anticipated earnings or assets and include, but are not limited to: industry activity levels, market liquidity, customer credit risk, competition, oil and gas prices, product liability, fixed price contracts, development of new products, uninsured and underinsured losses, access to additional financing, source of supply of raw material and third party components, availability of key personnel, agreements and contracts, government regulations, foreign exchange exposure, interest rate risk, international scope of operations, environmental health and safety regulations and Hyduke's anticipation of and success in managing the risks implied by the foregoing.  The Company cautions that the foregoing list of important factors is not exhaustive.  The Company believes that the expectations reflected in the forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon.  The forward-looking statements in this report speak only as of the date of this report.  Hyduke undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities legislation.About HydukeHyduke is an integrated oilfield services company with over thirty years experience in the manufacture, repair and distribution of oilfield equipment and supplies in Canada and worldwide.  Hyduke specializes in providing customized, integrated solutions to the drilling and well service industries including:Turn-Key Equipment - drilling rig and service rig packages including in-house design, engineering and drafting, major component procurement and overall project management;Life Cycle Management - inspection, certification, service, repair and supply services throughout the operating life of the drilling or well service rig; andSingle Source Supply - providing new capital equipment, repair and maintenance on existing capital equipment and supply of operating consumables.The Company operates its businesses through a number of subsidiaries operating in four segments:ManufacturingThe Manufacturing segment includes the design, manufacture, refurbishment and repair of land-based drilling rigs, well service and workover rigs, drilling support equipment and well service and workover support equipment.DistributionThe Distribution segment includes the procurement and distribution of spare parts, equipment components, operating supplies and pneumatic controls to the drilling and well service industries.Truck Mounted EquipmentThe Truck Mounted Equipment segment includes the distribution, service and repair of truck-mounted cranes, winches and dump boxes.Other ServicesThe Other Services segment includes the inspection and certification of drilling rig and well service equipment, the design, manufacture and distribution of cased hole and overburden drilling downhole tools, custom and production machining services, industrial sandblasting and painting, and corporate head office expenses.The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this News Release. SOURCE: Hyduke Energy Services Inc.For further information: Gordon R. McCormack, CA President and Chief Executive Officer (780) 955-0355 Veronica Dutchak, CA Chief Financial Officer (780) 955-0355