HYDUKE ANNOUNCES FIRST QUARTER 2011 FINANCIAL RESULTS

EDMONTON, June 13, 2011 /CNW/ - Hyduke Energy Services Inc. (TSX: HYD), announced operating results for the three months ended March 31, 2011.  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 for the first quarter of 2011 include the following:

  • Revenue of $18.2 million are up 10% over the prior year
  • Gross Profit increased $2.7 million (555% over the prior quarter)
  • Net income per share of 1 cents
  • EBITDAS of $0.6 million for the quarter
  • International revenues represent 22% of total revenue
  • Liquidity remains strong with current ratio at 2.10 to 1.00
  • Debt to equity ratio remains strong at .05 to 1.00

FINANCIAL OVERVIEW AND OVERALL PERFORMANCE

Selected Financial Position Information As At
($000's, except ratios) March 31
2011
December 31
2010
December 31
2009
Total assets 47,079 44,368 38,795
Total current assets 32,254 29,332 26,862
Total liabilities 17,650 15,113 10,900
Total current liabilities 15,348 12,717 9,213
Total bank indebtedness 1,693 1,631 Nil
Total interest bearing debt 1,445 1,550 1,823
Total shareholders' equity 29,429 29,255 27,894
Current ratio (current assets divided by current liabilities) 2.10 to 1.00 2.31 to 1.00 2.92 to 1.00
Debt to equity ratio (interest bearing debt divided by shareholders' equity) 0.05 to 1.00 0.05 to 1.00 0.07 to 1.00

Total assets of $47.1 million as at March 31, 2011, represents an increase of $2.7 million or 6.1% from December 31, 2010 and is due primarily to an increase in current assets.  Total current asset increase of $2.9 million relates primarily to an increase in unbilled revenue of $3.0 million due to the timing of payments on long-term contracts.

Total liabilities of $17.6 million as at March 31, 2011, represents an increase of $2.5 million (16.8%) from December 31, 2010 and is due primarily to an increase in current liabilities.  Total current liabilities increase of $2.6 million relates primarily to an increase in trade payables due to increased activity levels.

Net working capital (current assets less current liabilities) of $16.9 million as at March 31, 2011 represents an increase of $0.3 million or 1.8% from December 31, 2010 and is due primarily to unbilled revenue increasing $3.0 million offset by trade payables increasing $2.5 million.

Total bank indebtedness of $1.7 million remained relatively unchanged and reflects aggressive managing of available working capital.

The Company continues to maintain a strong current working capital ratio at 2.10 to 1.00 and a small debt to equity ratio of 0.05 to 1.00.  The strong balance sheet will allow management the ability to access additional working capital in order to meet increased activity levels.

Selected Quarterly Financial Information Fiscal Year Ended December 31
($000's, except per share data) 2011 - Q1
IFRS
2010 - Q4
IFRS
2010 - Q3
IFRS
2010 - Q2
IFRS
         
Revenue 18,216 16,154 17,823 15,447
Gross profit1 2,217 (487) 566 1,392
Gross profit (%) 12.2% (3.0%) 3.2% 9.0%
Adjusted gross profit1 2,403 55 1,008 1,583
Adjusted gross profit (%) 13.2% 0.3% 5.7% 10.3%
EBITDAS 1 585 (2,011) (1,083) 131
Adjusted EBITDAS1 570 (1,776) (598) 131
Net income (loss) 154 (1,770) (1,314) (182)
Earnings (loss) per share - basic ($) 0.006 (0.07) (0.06) (0.02)
Earnings (loss) per share - diluted $ 0.006 (0.07) (0.06) (0.02)

Selected Quarterly Financial Information Fiscal Year Ended December 31
($000's, except per share data) 2010 - Q1
IFRS
2009 - Q4
CGAAP
2009 - Q3
CGAAP
2009 - Q2
CGAAP
         
Revenue 16,546 15,929 7,258 6,892
Gross profit1 2,414 2,235 (274) (299)
Gross profit (%) 14.6% 14.0% (3.8%) (4.3%)
Adjusted gross profit1 2,608 2,420 547 (88)
Adjusted gross profit (%) 15.8% 15.2% 7.5% (1.3%)
EBITDAS 1 1,163 431 (1,581) (1,728)
Adjusted EBITDAS1 1,163 920 (966) (1,728)
Net income (loss) 630 30 (1,398) (1,452)
Earnings (loss) per share - basic ($) 0.029 0.001 (0.064) (0.066)
Earnings (loss) per share - diluted $ 0.029 0.001 (0.064) (0.066)

1Gross profit, Adjusted gross profit, EBITDAS and Adjusted EBITDAS are non-IFRS measures and are defined elsewhere under Non-IFRS Measures.

OVERALL PERFORMANCE
Current quarter revenue increased $2.1 million (13%) over the prior quarter and increased $1.7 million (10%) over the same period in the prior year.  The increase is primarily due to improved activity levels of drilling and well service in Western Canada.  The increased activity levels have resulted in increased demand for new equipment, services and supplies.

Current quarter gross profit increased $2.7 million (555%) over the prior quarter and was consistent with the same period in the prior year.  The Company continues to focus attention on improving gross profit results in its manufacturing business units.  Beginning in Q1, the Company implemented lean manufacturing initiatives and strengthened project management processes.  Gross profit percentages improved in the current quarter to 12.2% from a negative 3% gross profit percentage realized in the previous quarter.

Current quarter EBITDAS increased $2.6 million over the prior quarter and is primarily due to the improvement in gross profits realized.

Current quarter net income increased $1.9 million over the prior quarter and is primarily due to the improvement in gross profits realized.

OUTLOOK
Industry expectations for Western Canada for 2011 are expected to be stronger than activity experienced in 2010.  The Canadian Association of Oilwell Drilling Contractors (CAODC) have forecast the number of wells to be drilled (on a completion basis) for 2011 to be 13,128 which is an improvement of approximately 20%.  The Petroleum Services Association of Canada (PSAC) have forecast the number of wells to be drilled (on a rig released basis) for 2011 to be 12,950, which represents a slight increase over 2010.  There is an increasing focus on oil based drilling as natural gas prices remain low.

It is expected that new rig builds for use in Western Canada during 2011 will be sporadic and management believes that continued diversification into international markets will provide overall revenue growth.  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 2009 and 2010, Hyduke saw its international revenues representing a significant portion of its total revenues.  It is expected that the volume and proportion of international revenue will continue as these international relationships are further developed.

The increased levels of industry activity experienced in Q1 and forecast for the remainder of 2011 are also anticipated to result in a positive impact on Hyduke's Life Cycle Management businesses such as repair and maintenance, inspections and certification, and consumables.  Additionally, the Company continues 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.

Management recognizes that we continue to operate in a weak natural gas driven market here in Western Canada.  Continued weakness in the general economy and weakness in natural gas pricing will require a continued focus on cost control in both capital and operating budgets for companies in our industry sector.  Management is prepared for these challenging conditions.  We are very actively developing markets outside of Western Canada and expect to build upon our historical successes.  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 floor.  Hyduke's strong working capital position and low debt load in relation to equity will be a influencing factor in allowing the Company to pursue viable financing alternatives.

Hyduke continues to be confident that its strategic plan considers current and expected market conditions and that strategic growth will continue to be achieved through increased products and services and increased penetration into international markets.

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.

About Hyduke
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 and well service and workover support 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.

Truck Mounted Equipment
The Truck Mounted Equipment segment includes the distribution, service and repair of truck-mounted cranes, winches and dump boxes.

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, heavy duty equipment collision repair and corporate head office.



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 
Dennis Rendflesh, CA
Chief Financial Officer
(780) 955-0355


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