Winalta Announces Second Quarter Results 2013
CALGARY, Aug. 23, 2013 /CNW/ - Winalta Inc. ("Winalta" or the "Company") announces results for the three months ended June 30, 2013 (the Period). Revenues of $1.5 million were down $0.5 million over the three months ended June 30, 2012 (Comparative Period). Net Income loss of $1.4 million showed a $0.2 million improvement over the Comparative Period.
A very wet April and May delayed mobilization of Company equipment which accounted for approximately half of the decreased revenue with the remaining reduction in revenue derived from lower margin Third party equipment rentals.
Quarter End Highlights
- Net loss reduced by $200 thousand
- G&A expenses were down $208 thousand, a decrease of 19%
- Interest expense was down $66 thousand, a decrease of 26%
- Delivery and installation of the first Integrated Wellsite System (IWS)
Selected Financial Information
(Thousands of Canadian dollars, except for per share amounts)
|Three Months Ended||Six Months Ended|
|June 30, 2013||June 30, 2012||June 30, 2013||June 30, 2012|
|Earnings per share and diluted earnings per share||(0.04)||(0.04)||0.01||0.04|
|EBITDA per share||(0.00)||(0.00)||0.09||0.12|
The Company saw a decrease in revenues from the Comparative Period. Demand for the Company's assets remains solid; however, industry activity levels were down from the Comparative Period due to extreme wet weather conditions in Q2. These weather conditions restricted the Company's customers from executing on their drilling programs as sites were not accessible. As well, extended road bans were put into place which impacted drilling activity as equipment could not be moved to designated sites. The Company saw a decrease of 17% in utilization of Company owned assets from the Comparative Period but saw a strengthening in demand for its assets in the last month of Q2 2013. There was also a significant decrease in third party camp equipment rentals as third party suppliers are tending to bypass the Company and invoice directly. Third party rental equipment was also impacted by the decrease in Winalta's utilization rates. Third party rental equipment, which tends to have a lower margin, is complementary to the Company's units and is directly affected by the Company's utilization, so as utilization decreases so does the need for complementary products.
Actual rental days for Wellsite units increased by 9% over the Comparative Period. Some of the increases in utilization can be attributed to the Company's new summer and winter, pricing strategy and continued strong marketing. The increase in utilization was partial offset by a modest decrease in the average daily charge rate, which was expected with the summer pricing program. The summer winter pricing strategy is expected to help increase third quarter utilization.
Utilization of Camp units was 5% as compared to 16% for the Comparative Period. The Company has revisited its marketing plan focusing on increasing utilization for its camps. Winalta has made the necessary personnel changes to support the marketing plan.
For the six months ending June 30, 2013, the Company saw a decrease in revenue of $2.6 million over the six months ending June 30, 2012. Company owned assets had a decrease in utilization of 13% over the comparable six month period in 2012 and a reduction of 48% in third party rentals. The Company saw a decrease in actual rental days for its equipment of 1% for Wellsites, 27% for Dedicated Geo-Labs and 29% for Camps.
|Revenue Drivers Q2 2013 versus Q2 2012|
The Company's fleet has increased by 26 Wellsite units, 14 Dedicated Geo-Lab units and 1 IWS from June 30, 2012. For the three months ending June 30, 2013, the fleet increased by 10 Wellsite units and 1 IWS. The Company remains on schedule with its planned 2013 build program for Wellsite units and Integrated Wellsite Systems. The Company has completed the build program for Dedicated Geo-Lab units. The Company's build program is part of its strategy to continually renew the fleet.
Direct Operating Costs
For the Period the Company decreased its direct operating costs by $116 thousand over the Comparative Period. The decrease is attributed to a reduction in seasonal service staff and third party rentals.
For the six months ending June 30, 2013, the Company decreased its direct operating costs by $1.15 million. The Company continues to manage its direct costs and has realized a decrease of $1.16million in third party costs.
General and Administrative
For the Period, administrative costs were $865 thousand, down $208 thousand from the Comparative Period. Reductions occurred in salaries and benefits, office rent, operating costs, restructuring costs and professional fees. The Company has continued to focus on cost control.
For the six months ending June 30, 1013, administrative costs were $1.74 million, a reduction of $313 thousand from the six months ending June 30, 2012.
Depreciation and Amortization
Depreciation and amortization was $1.38 million for the Period as compared to $1.25 million for the Comparative Period. The increase in depreciation and amortization expense reflects the acquisition of $7.8 million of equipment in the trailing 12 months.
For the six months ending June 30, 2013, depreciation and amortization was $2,709 thousand as compared to $2,464 thousand for the six months ending June 30, 2012.
Interest expense was $190 thousand as compared to $256 thousand for the Comparable Period. The decrease in interest expense was the result of the Company renegotiating its financing facility to more favorable terms.
Demand for and utilization of Wellsite units began to increase in June and actual days rented exceeded June 2012. This activity is expected to continue, based on inquiries and verbal commitments for units, and should translate into stronger utilization going into the second half of 2013.
In the second quarter, the Company implemented a summer and winter pricing strategy which improved utilization rates for Wellsites. The Company continues to see demand for its products for the balance of 2013. In anticipation of an expected increase in demand and to service our customers with the appropriate combination of equipment, the Company is continuing to expand the fleet of oilfield Wellsite units and Integrated Wellsite Systems (IWS). Consistent with the business plan, the Company continues to look at ways to decrease lower margin third party revenue and replace that revenue with its own fleet of equipment.
The Company has seen a decrease in demand for its Drill Camps. Measures have been taken, which include the addition of sales personnel to focus on increasing the utilization of this portion of the Company's fleet. Utilization in the second half of 2013 is expected to increase as a result of these changes.
The Company successfully delivered its first IWS at the end of June 2013. Initial feedback from customers has been positive. The Company has also signed two additional long term service agreements with delivery of the IWS units in Q3 2013. The second IWS unit was delivered at the beginning of July 2013 and the third IWS unit was delivery in August 2013. Each IWS unit is expected to be utilized for approximately 300 days per year. These IWS units will provide a steadier stream of revenue in 2014 as compared to traditional Wellsite units.
The Company continues to pursue a number of other opportunities in the SAGD pad and multilateral drilling space where the IWS is ideally suited.
Winalta Oilfield Rentals, specializes in innovative and high-quality modular buildings for the Western Canadian Oil and Gas Industry. Winalta's rental fleet is comprised of single-unit Wellsites, Integrated Wellsite Systems (IWS), Dedicated Geo Labs, and Drill Camps.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Certain information set forth in this press release, including management's assessment of the potential for increased cash flows, continued growth of the Company's rental fleet, demand and utilization for the Company's rental units, the Company's pricing strategy, the impact of the Company's expansion into IWS and the Company's expectation regarding the status of the economy and its impact on the Company, may constitute forward-looking statements. By their nature, forward-looking statements involve material assumptions and are subject to numerous risks and uncertainties, including with respect to market and economic conditions and their impact on the Company's business, some of which, are beyond the Company's control. Readers are cautioned not to place undue reliance on the forward-looking statements as the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and actual results, performance or outcomes could materially differ from those expressed or implied in such forward-looking statements and accordingly, no assurance can be given that any of the events anticipated by forward looking statements will transpire or occur, or if any of them do so, what benefit Winalta will derive therefrom. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.
SOURCE Winalta Inc.For further information:
Austin Fraser, President
Phone: (403) 826-5701
David Hopley, CFO
Phone: (780) 469-0143