Hyduke announces third quarter 2011 financial results

EDMONTON, Nov. 14, 2011 /CNW/ - Hyduke Energy Services Inc. (TSX: HYD), announced operating results for the three and nine months ended September 30, 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 include the following:

  • Revenue for the quarter ended September 2011 of $19.4 million is up 11% over the prior quarter and revenue for the nine months ended September 2011 has increased 11% over the prior year.
  • Gross profit for the quarter ended September 2011 of $7.1 million is up 30% over the prior quarter and gross profit for the nine months ended September 2011 has increased 63% over the prior year.
  • EBITDAS of $1.0 million for the current quarter and $2.1 million for the year to date.
  • Liquidity remains strong with current ratio at 1.86 to 1.00
  • Debt to equity ratio remains strong at .04 to 1.00

A summary of those results is as follows:

Selected Income Statement Information Three Months Ended Nine Months Ended
($000's, except per share data) Sept 30
2011
June 30
2011
Sept 30
2010
Sept 30
2011
Sept 30
2010
           
Revenue 19,390 17,513 17,823 55,119 29,456
Gross profit 2,776 2,138 578 7,131 4,384
Gross profit (%) 14.3% 12.2% 3.2% 12.9% 8.8%
EBITDAS 1,038 472 (1,072) 2,125 257
Net income (loss) 408 53 (1,314) 615 (867)
Income (loss) per share-basic ($) 0.017 0.002 (0.06) 0.025 (0.038)
Income (loss) per share-diluted $ 0.017 0.002 (0.06) 0.025 (0.037)

Current quarter revenue increased $1.6 million (8.8%) over the same period in the prior year and increased by $1.9 million (10.7%) over the prior quarter.  The $1.6 million increased activity levels over the same period in the prior year is due in general to increased demand for services in Canada and primarily to a $2.0 million increased demand for services and supplies in the distribution segment.  The change from the previous quarter is primarily due to a $1.5 million increase in distribution segment revenue.  On a year to date basis, revenue for the nine months ended September 30, 2011 increased $5.3 million (10.6%) over the prior year.

Current quarter gross profit increased $2.2 million (380.2%) over the same period in the prior year and increased $0.6 million (29.8%)  over the prior quarter.  Current quarter gross profit percentages of 14.3% increased 2.1% point improvement over the prior quarter and represents a 11.1% point improvement over the prior year.  The improvement over the prior year reflects improvements in gross margin percentages in a number of operating segments.  The improvements are related to more robust demand in Canada (resulting in less pricing pressure) and improvements in manufacturing performance through the introduction of lean manufacturing concepts.  We expect this trend to continue throughout 2011 and are aggressively working to get gross profit percentages in the 15% to 20% range.

Current quarter EBITDAS increased $2.1 million (202%) over the same period in the prior year and increased $0.6 million (122%) over the prior quarter.  Year to date EBITDAS increased $1.9 million (726%) to $2.1 million.

Current quarter net income increased $0.4 million over the prior quarter and increased $1.7 million over the same period in the prior year. Year to date net income increased approximately $1.5 million over the prior year.

Selected Financial Position Information As At
($000's, except ratios) September 30
2011
December 31
2010
December 31
2009
Total assets 52,595 44,368 38,795
Total current assets 37,988 29,332 26,862
Total liabilities 22,675 15,113 10,900
Total current liabilities 20,450 12,717 9,213
Total bank indebtedness 1,558 1,631 Nil
Total interest bearing debt 1,200 1,550 1,823
Total shareholders' equity 29,920 29,255 27,894
Current ratio (current assets divided by current liabilities) 1.86 to 1.00 2.31 to 1.00 2.92 to 1.00
Debt to equity ratio (interest bearing debt divided by shareholders' equity) 0.04 to 1.00 0.05 to 1.00 0.07 to 1.00

Total assets of $52.6 million as at September 30, 2011, represents an increase of $8.2 million or 19% from December 31, 2010 and is due primarily to an increase in current assets.  Total current asset increase of $8.7 million relates primarily to an increase in trade and other receivables of $5.4 million and an increase in unbilled revenue of $1.7 million.

Total liabilities of $22.7 million as at September 30, 2011 represents an increase of $7.6 million or 50% from December 31, 2010 and is due primarily to an increase in current liabilities.  Total current liabilities increase of $7.7 million relates primarily to an increase in trade and other payables of $1.4 million and an increase in unearned revenue of $6.3 million.

Net working capital (current assets less current liabilities) of $17.5 million as at September 30, 2011 represents an increase of $0.9 million or 6% from December 31, 2010.

Total bank indebtedness of $1.6 million remained relatively unchanged and reflects aggressive managing of available working capital.

The Company continues to maintain a strong current working capital ratio at 1.86 to 1.00 and a small debt to equity ratio of 0.04 to 1.00.  The strong balance sheet will allow management the ability to access additional working capital in order to meet increased activity levels.

OUTLOOK
Industry expectations for Western Canada for 2012 continues to show the strength experienced to date in 2011.  The Canadian Association of Oilwell Drilling Contractors (CAODC) have forecasted the number of wells to be drilled (on a completion basis) for 2012 to be 12,672 which is a slightly higher than the revised expectations for 2011 of 12,555 wells in Western Canada. 

More importantly, the industry expects a significant increase in new rig builds for use in Western Canada during 2012.  The industry expects the number of rigs in 2012 to increase approximately 4% to 840 rigs. The equipment added to the fleet will be for larger, heavier rigs with a capacity to drill long reach directional wells.  Although Hyduke looks to benefit from the increase in size of the Western Canadian fleet, Hyduke will continue 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 and benefit from the international relationships its has developed during the downturn.

Recent successes from Hyduke's sales and marketing team will result in continued increase in volume and proportion of its international revenue.  In July, Hyduke was awarded a $16.3 million turn-key project from an international customer which has begun in Q3 and will be completed in the second quarter of 2012.  Hyduke has also recently announced that it was awarded a $32 million two rig turn-key project for a South American customer and will be completed in the next nine months.

The increased levels of industry activity being experienced in 2011, the higher forecast for the 2012 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 is very proud of its accomplishment in enduring the industry downturn and returning to profitability.  We are confident that 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 allow this positive trend to continue into 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.

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 
Veronica Dutchak, CA
Interim Chief Financial Officer
(780) 955-0355

 


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