Press release from CNW Group
Hyduke announces fiscal 2013 first quarter financial results
Tuesday, May 14, 2013
Hyduke announces fiscal 2013 first quarter financial results17:30 EDT Tuesday, May 14, 2013
TSX Symbol: HYD
NISKU, AB, May 14, 2013 /CNW/ - Hyduke Energy Services Inc. (HYD - TSX), announced operating results for the three months ended March 31, 2013. 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:
- Completion of significant international rig projects combined with a decrease in capital spending on new rig equipment in Canada have resulted in significant declines in revenue in the current quarter over the prior year as follows:
- Revenue of $17.1 million is down $16.1 million or 28%
- Revenue from international markets of $5.3 million is down $11.4 million or 68%
- Revenue from Canadian markets of $11.8 million is down $4.6 million or 28%
- International revenue continues to be a significant portion of total revenue at 31%
- Houston operations continue to be developed and a growing Houston area customer base is resulting in growing revenue generation
- Gross profit for the current quarter of $2.0 million is up $1.0 million or 100% over the fourth quarter of last year
- Gross profit percentage for the current quarter of 11.8% is up 6.6 percentage points over the fourth quarter of last year
- Successful completion and delivery of a turn-key drilling rig package for an international customer.
- Liquidity remains strong with current ratio at 3.41 to 1.00.
- Debt to equity ratio remains strong at 0.27 to 1.00.
- During the quarter, Hyduke has continued a restructuring of the company that includes changes to the Board of Directors, changes to the Executive Management and changes to our business operations. These changes are undertaken with the objective of strengthening our strategic focus at the Board level and to strengthen the decision making at our operational level.
A summary of Fiscal 2013 first quarter results is as follows:
Selected Statement of
Comprehensive Income Information
|Three Months Ended|
|($000's, except per share data)||
|Gross profit (%)||11.8%||5.2%||16.0%|
|Profit (loss) per share-basic ($)||(0.018)||(0.052)||0.082|
|Profit (loss) per share-diluted ($)||(0.018)||(0.052)||0.081|
Total revenue and international revenue have decreased significantly due to the completion of three large international turn-key drilling rig packages during the second half of 2012 and into the first quarter of 2013. In addition to the completion of these three large projects, the activity and capital spending by drilling and well service contractors in Western Canada has slowed and is showing in reduced Canadian revenues.
Current quarter gross profit of $2.0 million increased $0.9 million (88%) over the fourth quarter of fiscal 2012 and decreased $3.3 million (62%) over the same period in the prior year. Gross profit percentage of 11.8% increased 6.6 percentage points over the fourth quarter of fiscal 2012 but decreased 4.2 percentage points over the same period in the prior year. Decreased revenue contributed the majority of the decrease on gross profit dollars and the fluctuation in gross profit percentages is primarily related to fluctuations in cost estimates on large projects from period to period.
Negative EBITDAS and loss for the quarter is due to reduced levels of revenue and a reduction in gross profit percentage.
The Company initiated significant changes to the Company's governance, senior management and business operations. Additions to the Board of Directors, changes to senior management and a restructuring of the Company's business operations will result in improved focus on our strategic plan, more consistent and improved decision making and significant cost savings.
The Company continues to be committed to invest in key areas of the business, namely, sales and marketing, engineering and design and project management.
The Company has initiated significant cost reductions in the second quarter in response to the slowdown in business activity.
|Selected Financial Position Information||As At|
|($000's, except ratios)||
|Total current assets||37,503||43,066||40,720|
|Total current liabilities||10,998||16,111||21,915|
|Total bank indebtedness||903||1,200||nil|
|Total interest bearing debt||8,616||8,669||1,149|
|Current ratio (current assets divided by current liabilities)||3.41 to 1.00||2.67 to 1.00||1.86 to 1.00|
|Debt to equity ratio (interest bearing debt divided by shareholders' equity)||0.27 to 1.00||0.27 to 1.00||0.04 to 1.00|
The Company balance sheet position remains strong with a current ratio at 3.41 to 1.00 and a debt to equity ratio of 0.27 to 1.00.
Canadian Market Development - we are actively focusing on strengthening existing relationships with our core Canadian customers and are being pro-active in developing new relationships with customers we want to do more business with. While expectations for 2013 are modest, expect to see more sales resources deployed into servicing the Canadian market and an increase in Hyduke's Canadian market share. Industry expectations for western Canada for 2013 are expected to be slightly lower than activity experienced in 2012. 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 6% lower than 2012 activity. Continued uncertainty over commodity prices combined with 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 and that most new capital projects will come from outside Canada during 2013.
International Market Development - Hyduke continues to achieve success in the international market. Our Canadian know-how and quality is valued in international markets and the Hyduke team is doing a good job in developing an extensive international network of potential customers. Hyduke continues to actively market its products and services to international markets in the Russian Federation, India, South America, North Africa, Middle East and Asia-Pacific. While the project decision making cycle is longer on international work, active quoting continues on a significant number of international opportunities.
Low Canadian industry activity forecast for 2013 and low expectations for significant new equipment will have a downward effect on domestic revenue in 2013. Continued development of Hyduke's international sector will have far reaching effects in the Hyduke consolidated group of companies. International projects tend to be larger, more turn-key in nature and have significant benefits throughout the Hyduke group of companies due to the integrative nature of the Hyduke's business model. 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 is focused on promoting it's unique 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. Additionally, the Company is well positioned to take advantage a lower cost manufacturing environment in Houston. Management is actively implementing reductions in selling, general and administrative costs and is restructuring a number of its facilities.
We are confident that the strong efforts of our sales and marketing team, management's continued focus fulfilling its strategic plan and the dedication of our employee base to customer service and satisfaction will position the company well in the future.
Forward Looking Statements
This 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.
Hyduke 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; and
- Single 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:
Manufacturing: The Manufacturing segment includes the design, manufacture, refurbishment and repair of land-based drilling rigs, well service and workover rigs, drilling support equipment, well service and workover support equipment and the distribution, service and repair of truck-mounted equipment.
Distribution: The Distribution segment includes the procurement and distribution of spare parts, equipment components, operating supplies and pneumatic controls to the drilling and well service industries.
Other Services: The 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.
Corporate Services: The Corporate Services segment includes costs for management and administration, sales and marketing, accounting and finance and engineering and drafting services provided to all Hyduke operating segments.
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
Veronica Dutchak, CA
Chief Financial Officer