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Press release from Marketwire

Total Energy Services Inc. Announces 2012 Results

Tuesday, March 12, 2013

Total Energy Services Inc. Announces 2012 Results10:10 EDT Tuesday, March 12, 2013CALGARY, ALBERTA--(Marketwire - March 12, 2013) - 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, 2012. Financial Highlights($000's except per share data)Three Months Ended Dec. 31Twelve Months Ended Dec. 31(unaudited)(audited)20122011% Change20122011% ChangeRevenue$ 78,404$ 96,936(19)%$ 307,702$ 332,082(7)%Operating Earnings (1)14,80631,206(53)%65,22196,233(32)%EBITDA (1)21,74338,608(44)%91,076122,034(25)%Cashflow (1)22,11037,251(41)%91,949120,780(24)%Net Income10,52523,441(55)%47,69269,266(31)%Per Share Data (Diluted) (2)EBITDA (1)$ 0.63$ 1.10(43)%$ 2.62$ 3.49(25)%Cashflow (1)0.641.06(40)%2.653.46(23)%Net Earnings0.340.69(51)%1.492.08(28)%Dec. 31Dec. 312012 (audited)2011 (audited)% ChangeFinancial PositionTotal Assets$ 476,591$ 434,61710%Long-Term Debt, Convertible Debentures and Obligations Under Finance Leases67,93766,4662%Working Capital (3)90,708120,786(25)%Net Debt (4)nilnilnilShareholders' Equity306,069275,32111%Shares Outstanding (000's)Basic30,60031,375(2)%Diluted (2)34,30035,261(3)%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, 2012 reflect a more challenging industry environment that began following a record first quarter for the Company. Continued weakness in North American natural gas prices and widening oil price differentials in Western Canada contributed to lower drilling and completion activity during the second half of 2012 compared to the second half of 2011.Total Energy's Contract Drilling Services division achieved 42% utilization during the fourth quarter of 2012, recording 603 operating days (spud to release) with a fleet of 15 rigs, compared to 801 operating days, or 62% utilization, during the fourth quarter of 2011 with a fleet of 14 rigs. Revenue per operating day decreased 6% for the fourth quarter of 2012 relative to the prior year comparable period due primarily to lower pricing. For the twelve months ended December 31, 2012, the Contract Drilling Services division achieved 2,460 operating days (44% utilization), compared to 3,042 operating days (60% utilization) for 2011. The Rentals and Transportation Services division achieved a utilization rate on major rental equipment of 41% during the fourth quarter of 2012 as compared to a 72% utilization rate during the fourth quarter of 2011. For 2012, rental equipment utilization averaged 47% as compared to 68% for 2011. The Gas Compression Services division generated revenues of $33.9 million for the three months ended December 31, 2012 compared to $33.0 million for the same period in 2011, an increase of 3%. For 2012, revenues increased by 8% to $121.3 million compared to $112.8 million in 2011. The Gas Compression Services division exited 2012 with a $34.5 million backlog of fabrication sales orders as compared to $33.6 million at December 31, 2011. At December 31, 2012, approximately 31,700 horsepower of compression equipment was on rent compared to 25,300 horsepower on rent at December 31, 2011. The gas compression rental fleet operated at an average utilization rate of 87% and 84% for the three and twelve month periods ended December 31, 2012, respectively, as compared to 78% for the same periods in 2011.During the fourth quarter, Total Energy declared a quarterly dividend of $0.05 per share to shareholders of record on December 31, 2012. This dividend was paid on January 31, 2013.OutlookWestern Canadian drilling activity started out somewhat slowly during the first part of January 2013. However, drilling activity levels steadily increased and have generally been at or above the five year average since mid-January. With ongoing weak natural gas prices, producers continue to focus their drilling, completion and production activities towards oil and natural gas liquids prospects. In the context of continued global economic uncertainty and unique commodity price challenges facing Canadian producers, the Company remains focused on the quality and efficiency of existing operations and the disciplined deployment of capital. In that regard, Total Energy is pleased to announce that Gerry Crawford was recently appointed Vice President, Field Services. Mr. Crawford has been with Total Energy since 1998 and had previously served as General Manager of the Company's Rentals and Transportation Services division.Total Energy's previously announced preliminary 2013 capital expenditure plan of $32.7 million provides the Company with significant financial flexibility to pursue additional investment opportunities that may arise. Despite uncertain markets, Total Energy continues to strategically invest in the long term growth of its existing business divisions. The recently completed $14.0 million acquisition of a well-established process equipment fabrication business increases Total's exposure to large North American and international liquids and natural gas infrastructure projects. Total Energy will continue to pursue investment opportunities that will generate acceptable returns on capital.Total Energy's financial condition remains strong with a long-term debt (including convertible debentures) to long-term debt plus equity ratio of 0.18 to 1.0, $90.7 million of positive working capital and no net debt as at December 31, 2012. Total Energy's $35 million operating facility is currently fully available and undrawn.Conference CallAt 2:30 p.m. MST today, Total Energy will conduct a conference call and webcast to discuss its fourth quarter financial results. Daniel Halyk, President & Chief Executive Officer, will host the conference call. The call is open to Shareholders and all other interested persons. A live webcast of the conference call will be accessible on Total's website at www.totalenergy.ca by selecting "Webcasts". Persons wishing to join the conference call live may do so by calling (866) 696-5910 or (416) 340-2217. Those who are unable to listen to the call live may listen to a recording of it on Total Energy's website. A recording of the conference call will also be available until March 19, 2013 by dialing (800) 408-3053 (passcode 8257802). Annual Meeting of ShareholdersShareholders and other interested persons are invited to attend the annual meeting of Shareholders which will commence at 10:00 a.m. (Calgary time) on Wednesday, May 22, 2013 at the Calgary Petroleum Club, 319 - 5th Avenue S.W., Calgary, Alberta. Selected Financial InformationSelected financial information relating to the three and twelve-month periods ended December 31, 2012 and 2011 is attached to this news release. This information should be read in conjunction with the consolidated financial statements of Total Energy and the attached notes to the consolidated financial statements and management's discussion and analysis to be issued in due course and reproduced in the Company's 2012 annual report. Consolidated Statements of Financial Position(in thousands of Canadian dollars)December 31,December 31,20122011(audited)(audited)AssetsCurrent assets:Cash and cash equivalents$ 50,052$ 35,658Accounts receivable63,51194,556Inventory33,24037,147Income taxes receivable-118Prepaid expenses and deposits2,5471,795149,350169,274Property, plant and equipment323,188261,290Goodwill4,0534,053$ 476,591$ 434,617Liabilities & Shareholders' EquityCurrent liabilities:Accounts payable and accrued liabilities$ 32,523$ 41,556Deferred revenue6,9713,064Dividends payable1,5301,255Income taxes payable15,098-Current portion of obligations under finance leases2,5202,61358,64248,488Obligations under finance leases2,7232,763Convertible debentures62,69461,090Deferred tax liability46,46346,955Shareholders' equity:Share capital76,89077,917Contributed surplus5,1602,472Equity portion of convertible debenture4,6014,601Retained earnings219,418190,331306,069275,321$ 476,591$ 434,617Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars except per share amounts)Three months endedYear endedDecember 31,December 31,2012201120122011(unaudited)(unaudited)(audited)(audited)Revenue$ 78,404$ 96,936$ 307,702$ 332,082Expenses:Cost of services49,48551,875187,311182,231Selling, general and administration6,8097,79228,40328,959Share-based compensation1,0423143,0651,360Depreciation6,2625,74923,70223,299Results from operating activities14,80631,20665,22196,233Gain on disposal of property, plant and equipment6751,6532,1532,502Finance income24876878161Finance costs(1,489)(1,434)(5,797)(5,441)Net income before income taxes14,24031,50162,45593,455Income tax expense (recovery)Current5,7301815,255112Deferred(2,015)8,042(492)24,077Total income tax expense3,7158,06014,76324,189Net income and total comprehensive income for the period10,52523,44147,69269,266Retained earnings, beginning of period211,558170,844190,331131,808Dividends(1,530)(1,256)(6,180)(5,032)Repurchase and cancellation of common shares in excess of stated common share capital(1,135)(2,698)(12,425)(5,711)Retained earnings, end of period$ 219,418$ 190,331$ 219,418$ 190,331Earnings per share :Basic$ 0.34$ 0.75$ 1.54$ 2.20Diluted$ 0.34$ 0.69$ 1.49$ 2.08Consolidated Statements of Cash Flows(in thousands of Canadian dollars)Three months endedYear ended December 31,December 31, 2012201120122011(unaudited)(unaudited)(audited)(audited)Cash provided by (used in):Operations:Net Income for the period$ 10,52523,441$ 47,692$ 69,266Add (deduct) items not affecting cash:Depreciation6,2625,74923,70223,299Share-based compensation1,0423143,0651,360Gain on disposal of property, plant and equipment(675)(1,653)(2,153)(2,502)Finance income(248)(76)(878)(161)Finance costs1,4891,4345,7975,441Current income tax expense5,7301815,255112Deferred income tax expense(2,015)8,042(492)24,077Income taxes (paid)-(18)(39)(112)22,11037,25191,949120,780Changes in non-cash working capital items:Accounts receivable(5,300)(7,063)31,045(23,573)Finance lease receivable1,610---Inventory1,6142,8513,907(3,659)Prepaid expenses and deposits2061,314(752)(48)Accounts payable and accrued liabilities2,0554,482(5,551)4,413Deferred revenue3,363(7,936)3,907(270)25,65830,899124,50597,643Investments:Purchase of property, plant and equipment(29,074)(24,300)(89,365)(55,647)Proceeds on disposal of property, plant and equipment2,7664,6308,9738,739Changes in non-cash working capital items(703)4,037(2,603)8,021(27,011)(15,633)(82,995)(38,887)Financing:Issuance of convertible debenture, net of issue costs---65,927Advances under long-term debt---(72,500)Repayment of obligations under finance leases(688)(1,132)(3,188)(3,874)Payment of dividends(1,535)(1,255)(5,905)(5,034)Issuance of common shares11,2651,1982,213Repurchase of common shares(1,393)(3,234)(15,027)(6,861)Interest paid(374)18(4,194)(3,197)(3,989)(4,338)(27,116)(23,326)Change in cash and cash equivalents(5,342)10,92814,39435,430Cash and cash equivalents, beginning of period55,39424,73035,658228Cash and cash equivalents, end of period$ 50,052$ 35,658$ 50,052$ 35,658Segmented 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.As at and for the three months ended December 31, 2012 (unaudited)Contract DrillingRentals and TransportationGas CompressionServicesServicesServicesOther(1)TotalRevenue$ 12,773$ 31,725$ 33,906$ -$ 78,404Cost of services7,36215,12126,999349,485Selling, general and administration7703,6191,8096116,809Share-based compensation---1,0421,042Depreciation1,2413,8611,0461146,262Results from operating activities3,4009,1244,052(1,770)14,806Gain on sale of property, plant and equipment15325335-675Finance income--80168248Finance costs(253)(579)(178)(479)(1,489)Net income before income taxes3,1628,8704,289(2,081)14,240Goodwill-2,5141,539-4,053Total assets100,758225,655102,56547,613476,591Total Liabilities20,22044,17023,02083,112170,522Capital expenditures$ 5,495$ 11,361$ 1,574$ 10,644$ 29,074As at and for the three months ended December 31, 2011 (unaudited)Contract DrillingRentals and TransportationGas CompressionServicesServicesServicesOther(1)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 on sale of property, plant and equipment211,6293-1,653Finance Income---7676Finance costs(253)(591)(152)(438)(1,434)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 year ended December 31, 2012 (audited)ContractRentals andGasAs at and for the year endedDrillingTransportationCompressionDecember 31, 2012ServicesServicesServicesOther(1)TotalRevenue$ 52,669$ 133,729$ 121,304-$ 307,702Cost of services29,68558,00599,621-187,311Selling, general and administration3,32614,5796,3104,18828,403Share-based compensation---3,0653,065Depreciation4,84514,8143,90014323,702Results from operating activities14,81346,33111,473(7,396)65,221Gain on sale of property, plant and equipment807341,339-2,153Finance income--272606878Finance costs(1,013)(2,319)(632)(1,833)(5,797)Net income before income taxes13,88044,74612,452(8,623)62,455Goodwill-2,5141,539-4,053Total assets100,758225,655102,56547,613476,591Total liabilities20,22044,17023,02083,112170,522Capital expenditures$ 17,928$ 42,907$ 16,046$ 12,484$ 89,365As at and for the year ended December 31, 2011 (audited)ContractRentals andGasAs at and for the year endedDrillingTransportationCompressionDecember 31, 2011ServicesServicesServicesOther(1)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 on sale of property, plant and equipment281,900574-2,502Finance income---161161Finance costs(973)(2,367)(584)(1,517)(5,441)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$ 55,647(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 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 minus finance income. EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to net income before income taxes plus finance costs plus depreciation minus finance income. 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. Reconciliations of these non-IFRS measures to the most directly comparable IFRS measure are outlined below.(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: The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. Contact Information: Total Energy Services Inc.Daniel HalykPresident & Chief Executive Officer(403) 216-3921Total Energy Services Inc.Mark KearlVice-President Finance and Chief Financial Officer(403) 216-3920investorrelations@totalenergy.cawww.totalenergy.ca