MATRRIX Announces Third Quarter 2013 Results

CALGARY, Nov. 22, 2013 /CNW/ - MATRRIX Energy Technologies Inc. ("MATRRIX" or the "Corporation") (TSXV: MXX) announces financial results for the third quarter 2013.

HIGHLIGHTS OF MATRRIX THIRD QUARTER 2013 (COMPARED WITH THIRD QUARTER 2012)

  • The Corporation's concurrent job capacity was 23 directional and horizontal drilling systems ("Systems") during the quarter with 19 Systems in Canada and 4 Systems in the United States.
  • Achieved overall record quarterly revenue in Q3 of $8,077,086 up 153% from $3,186,625.
  • The Canadian operations had a year over year 46% increase in job capacity to 19 Systems in Q3 2013 up from 13 Systems in Q3 2012 and achieved record revenue of $6,142,789, an increase of 135% from $2,614,211.  The increase was primarily the result of a 146% increase in operating1 days to 573 days from 233 days which was offset by a 4% decrease in average day rates to $10,730 from $11,220.
  • US deployment of Systems in both the Niobrara and Utica areas throughout Q3 2013 generated $1,506,387 revenue.
  • US performance motor drilling revenue decreased 25% to $427,910 from $572,413 in Q3 2012 as a result of a key customer in that market reducing activity in the quarter.
  • Gross margin percentage of 21%, down from 42% primarily resulting from US fixed startup costs, higher US and Canadian operating costs.
  • EBITDA of $579,787 down 13% from $670,025 primarily resulting from gross margin reduction and increased US fixed startup costs.
  • The Corporation maintained a strong balance sheet with $4,339,364 of cash and cash equivalents at September 30, 2013 and working capital of $8,753,662.
  • MATRRIX expects capital expenditures of approximately $2,000,000 during the remainder of 2013 for the purchase of additional horizontal and directional drilling related equipment resulting in a total of approximately $4,300,000 for 2013.

HIGHLIGHTS OF MATRRIX FIRST NINE MONTHS OF 2013 (COMPARED WITH FIRST NINE MONTHS OF 2012)

  • Achieved record revenue in the first nine months of 2013 of $17,629,742 up 80% from $9,785,349.
  • The Canadian operations achieved record revenue of $14,213,173 an increase of 66% compared to 2012 of $8,564,533. The increase was primarily a result of a 77% increase in operating1 days to 1,307 days from 738 days, which was offset by a 6% decrease in average day rates to $10,839 from $11,556.
  • The US directional and horizontal drilling operations achieved revenue of $2,163,322 in its first nine months of operations.
  • US performance motor drilling revenue increased 3% to $1,253,248 from $1,220,816.
  • Gross margin percentage of 23% down from 31% primarily resulting from US fixed startup costs and higher US and Canadian operating costs in Q3.
  • EBITDA of $137,689 down 86% from $962,336 primarily resulting from gross margin reduction and US fixed startup costs.

FINANCIAL SUMMARY HIGHLIGHTS

                         
    Three Months Ended     Nine Months Ended    
    September 30, 2013   September 30, 2012   % Change   September 30, 2013   September 30, 2012   % Change
Revenue   $8,077,086   $3,186,625   153%   $17,629,742   $9,785,349   80%
EBITDA  (i) $579,787   $670,025   -13%   $137,689   $962,336   -86%
EBITDA per share                        
  Basic   $0.02   $0.02   nm   $0.00   $0   -86%
  Diluted   $0.02   $0.02   nm   $0.00   $0   -86%
Net income   ($29,491)   $279,937.52   -111%   ($1,495,732)   ($89,537)   1571%
Net income/(loss) per share                        
  Basic   $0.00   $0.01   -100%   ($0.05)   $0.00   -100%
  Diluted   $0.00   $0.01   -100%   ($0.05)   $0.00   -100%
                         
Weighted Average diluted shares   32,184,638   32,037,508   nm   32,182,100   $31,558,462   2%
                         
                         
As at September 30, 2013 and December 31, 2012           September 30, 2013   December 31, 2012   % Change
Working capital               $8,753,662   $10,375,669   -16%
Total assets               $29,303,163   $29,474,785   -1%
Long-term debt               $ Nil   $ Nil   nm
Shareholders' equity               $24,821,986   $25,867,864   -4%
Common shares outstanding               $32,184,638   $32,151,638   nm
nm - not meaningful                        
                         

At the date of this press release, MATRRIX has a total of 23 directional and horizontal systems available for deployment in the Western Canadian Sedimentary Basin ("WCSB") and the US. The customer base in Canada expanded through Q3 with customers having a mix of oil and/or liquids rich focused capital programs.  Customers remain cautious about their capital spending; however, there is market optimism for increased spending levels into 2014 and 2015.  Additionally, with potentially large field developments as a result of the proposed west coast LNG terminals, there may be increased incremental investment into the WCSB in 2014 and beyond. MATRRIX is focused on building customer relationships and increasing its customer base with operators active in areas with oil and/or liquids rich opportunities and strong capital expenditure programs with MATRRIX having readily available resources to fund incremental growth in 2014 and beyond.

The Corporation continued its performance drilling operations in Texas (Permian area) and continues to look to expand operations in this region. MATRRIX commenced expansion of its directional and horizontal drilling business into the US with operations in the Niobrara and Utica areas. Management has reviewed its US directional and horizontal drilling strategy and is focusing its directional and horizontal drilling operations in the Permian along with its existing performance drilling operations to increase operational efficiencies.  In the short term, this adjustment of strategy will negatively impact current revenue and growth in the US.  The Corporation has transferred one System back to Canada in expectation of increased Q1 2014 Canadian activity.

President Richard Ryan stated, "As demonstrated by record revenues in the quarter, we continue to build a strong reputation and loyal Client base. As part of an ongoing focus on healthy operational and financial results, we will assess and adjust where necessary. While Canadian operations is performing very well, we have adjusted our US focus to the Permian Basin. To date, MATRRIX US Permian operations have yielded the best opportunities and financial results within our US business. This focus will affect the Company's overall results in Q4, yielding a pause in quarter over quarter revenue growth. This move will set us up for continued year over year overall Company growth in 2014, along with an associated improvement to overall financial metrics.

The Corporation's financial statements and management's discussion and analysis for the three and nine months ended September 30, 2013 will be available on SEDAR at www.sedar.com.

The Corporation's President and CFO will be attending the second annual AltaCorp/ATB Energy Services and Infrastructure Conference in Toronto, Canada from January 14-16, 2014.

NON-GAAP MEASURES

This press release contains references to EBITDA and gross margin. These financial measures are not measures that have any standardized meaning prescribed by IFRS and are therefore referred to as a non-GAAP measure. The non-GAAP measures used by the Corporation may not be comparable to similar measures used by other companies.

(i) EBITDA is defined as "income (loss) before interest, taxes, business acquisition transaction costs, reverse takeover adjustments, depreciation, stock based compensation expense, gains on disposal of property and equipment and foreign exchange." Management believes that in addition to net and total comprehensive income (loss), EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation's principal business activities prior to consideration of how these activities are financed, how the results are taxed in various jurisdictions, or how the results are effected by the accounting standards associated with the Corporation's stock based compensation plan.

                                 
    Three Months Ended       Nine Months Ended    
    September 30, 2013   September 30, 2012   % Change   September 30, 2013   September 30, 2012   % Change
Income before income taxes and
interest & other income
  $ (119,350)   $ 253,002   147%   $ (1,871,041)   $ (251,046)   -645%
Depreciation     578,306     335,085   73%     1,633,983     820,668   99%
Share based payments     112,482     98,971   14%     333,791     360,951   -8%
Foreign exchange loss     8,349     (17,032)   -149%     40,956     31,762   29%
EBITDA   $ 579,787   $ 670,026   13%   $ 137,689   $ 962,335   -86%
                                 
                           

(ii) Gross margin is defined as "gross profit from services revenue before stock based compensation and depreciation". Gross margin is a measure that provides shareholders and potential investors additional information regarding the Corporation's cash generating operating performance. Management utilizes this measure to assess the Corporation's operating performance.

                                 
    Three Months Ended       Nine Months Ended    
    September 30, 2013   September 30, 2012   % Change   September 30, 2013   September 30, 2012   % Change
Revenue   $ 8,077,086   $ 3,186,625   153%   $ 17,629,742   $ 9,785,349   80%
Direct operating expenses   $ 6,378,081   $ 1,844,900   246%   $ 13,635,047   $ 6,712,190   103%
Gross margin (1)   $ 1,699,005   $ 1,341,725   27%   $ 3,994,694   $ 3,073,159   30%
Gross margin %     21%     42%   -50%     23%     31%   -28%
                                 
                               

MATRRIX is engaged in the acquisition and supply of horizontal and directional drilling technologies for the oil and gas industry in Canada and the US.

FORWARD-LOOKING INFORMATION

This press release contains certain statements or disclosures relating to MATRRIX that are based on the expectations of MATRRIX as well as assumptions made by and information currently available to MATRRIX which may constitute forward-looking information under applicable securities laws. In particular, this press release contains forward-looking information related to: customer capital spending; expectations and assumptions regarding increased spending levels in into 2014 and 2015; potentially large field developments as a result of the proposed west coast LNG terminals leading to expected incremental investment into the WCSB in 2014 and beyond; the Corporation's ability to continue to build and maintain customer relationships and increasing its customer base with operators active in areas with oil and/or liquids rich opportunities and strong capital expenditure programs; the Corporation's ability to identify and procure readily available resources to fund incremental growth in 2014 and beyond; strategy to focus its US directional and horizontal operations in the Permian along with its existing performance motor drilling operations to increase operational efficiencies; adjustment of US strategy will negatively impact current and expected quarter over quarter revenue and growth in the US in the short term; adjustment of the corporations US strategy which is intended to help the Corporation achieve year over year overall company growth for 2014, along with an improvement in overall financial metrics. Such forward-looking information involves material assumptions and known and unknown risks and uncertainties, certain of which are beyond MATRRIX's control.  Many factors could cause the performance or achievement by MATRRIX to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking information. MATRRIX's documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. MATRRIX disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

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.


1 MATRRIX calculates a stand-by or partial operating day as 0.5 day of an operating day. 

 

 

SOURCE: MATRRIX Energy Technologies Inc.

For further information:

Richard Ryan
President & Chief Executive Officer
MATRRIX Energy Technologies Inc.
Tel: (403)  984-5062

Imran Gulam
Vice President Finance & CFO
MATRRIX Energy Technologies Inc.
Tel: (403)  984-5075


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