Winalta Announces Third Quarter Results 2013

CALGARY, Nov. 15, 2013 /CNW/ - Winalta Inc. ("Winalta" or the "Company") is pleased to announce results for the three months ended September 30, 2013 (the Period). Revenues of $4.0 million were up 13% or $0.4 million over the three months ended September 30, 2012 (Comparative Period). EBITDA of $1.6 million and EBITDA margins of 41% for the Period showed improvement of 24% and 10%, respectively. Net Income loss of $59 thousand remained consistent with the Comparative Period but included a one-time bad debt expense of $59 thousand

Utilization of Company owned assets was up 48% from the Comparative Period. The improved asset utilization was offset by a 37% decrease in third party revenue in combination with Winalta's recently implemented summer and winter pricing. Administrative costs decreased $72 thousand and included a one-time bad debt expense of $59 thousand

Winalta deployed its second, third and fourth Integrated Wellsite Systems (IWS), monthly throughout the quarter. Deployment of the IWS units added initial mobilization and related costs that contributed to a majority of the $292 thousand increase in direct expenses over the Comparative Period.

"With $5 million of equipment purchased and deployed in the third quarter of the $9.5 million purchased this year; Winalta is executing on its plan of entering the SAGD pad drilling space, be it with IWS units or conventional Wellsites. The full impact of the shift towards SAGD pad work will be most significantly felt in the summer of 2014 and beyond." Says Austin Fraser, President, Winalta Inc.

Quarter End Highlights

  • Revenue rose $0.4 million or 13%
  • EBITDA improved $0.3 million or 24%
  • SG&A decreased 7% or $72 thousand, including one-time bad debt expense of $59 thousand

Selected Financial Information
(Thousands of Canadian dollars, except for per share amounts)

               
  Three Months Ended   Nine Months Ended
  September 30,
2013
  September 30,
2012
  September 30,
2013
  September 30,
2012
Revenue 3,999   3,553   12,333   14,529
Net Earnings (59)   (140)   262   1,532
Earnings per share and diluted earnings per share 0.00   0.00   0.00   0.04
EBITDA1 1,644   1,330   5,242   6,081
EBITDA per share 0.04   0.03   0.13   0.15
Dividends paid 403   401   1,210   1,202
1EBITDA is defined as net earnings from continuing operations before interest and finance costs, income taxes, depreciation and amortization. EBITDA does not have a standardized meaning and is therefore not likely to be comparable with similar measures used by other issuers. However, Winalta calculates EBITDA consistently from period to period. While EBITDA is not considered an alternative to net earnings in measuring performance, it is a key measure used by the Company and its investors. The Company believes EBITDA assists investors in assessing Winalta's performance on a consistent basis without regard to financing costs, taxes and depreciation which, can vary significantly from period to period for reasons not directly related to operations.

Revenue
The Company saw a $0.4 million or 13% increase in revenues over the Comparative Period. Utilization of Company owned assets increased 48% from the Comparative Period.   This was offset by both decreases in average daily charge rates across all four rental lines and a 37% decrease in third party equipment rentals with customers electing to bill direct for catering and other support equipment.

Actual rental days for Wellsite units increased by 58% over the Comparative Period.  Increases in actual rental days are attributed to Winalta's summer and winter pricing strategy, continued strong marketing efforts and an expanding customer base. The increase in utilization was partial offset by a decrease in the average daily charge rate, which was expected as a result of both the summer pricing program and move towards a focus on customers working in full year SAGD drilling.

Utilization of Drill Camps decreased to 26% as compared to 45% for the Comparative Period.  The Company has revisited its marketing plan focusing on increasing utilization for its camps.  Pricing in the Drill Camp market for 2013 has been very competitive with downward pressure on day rates which affected both utilization and daily charge rates.

For the nine months ending September 30, 2013, the Company saw a decrease in revenue of $2.2 million over the nine months ending September 30, 2012.  Company owned assets showed a 2% decrease in utilization over the comparable nine-month period in 2012 and a reduction of 46% in third party rentals.  Winalta showed an increase in actual rental days of 13% for Wellsites but a decrease of 33% for Drill Camps and 7% for Dedicated Geo-Labs.

 
Revenue Drivers Q3 2013 versus Q3 2012              
      % Increase   2013   2012  
               
Fleet size     17%   368   315  
Utilization     38%   47%   34%  
             

Fleet Expansion
The Company's fleet has increased by 25 Wellsite units, 12 Dedicated Geo-Lab units and 4 IWS units from September 30, 2012.  For the three months ending September 30, 2013, the fleet increased by 8 Wellsite units and 3 IWS units.  The Company remains on schedule with its planned 2013 build program for Wellsite units and Integrated Wellsite Systems.  The Company has completed its 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
Direct operating costs increased by $292 thousand over the Comparative Period. These increases were experienced in additional hauling costs of $286 thousand, which is billable back to customer, increases in IWS servicing of $128 thousand and growth in service staff wages of $84 thousand. These increases were offset by a $243 thousand decrease in third party rentals expenses.  The first deployment of the IWS units caused increases in mobilization costs, the number of service staff and costs related directly to IWS setup and servicing.

For the nine months ending September 30, 2013, the Company decreased its direct operating costs by $856 thousand.  The Company continues to manage its direct costs and has realized a decrease of $1.49million in third party costs.

Administrative Costs
For the Period, administrative costs were $902 thousand, down $72 thousand from the Comparative Period but included a bad debt expense of $59 thousand.  A reduction in professional fees of $124 thousand was offset by increases of $60 thousand in marketing costs and $34 thousand in salaries due to severance.

For the nine months ending September 30, 2013, administrative costs were reduced against the comparable nine months period by $385 thousand to $2.6 million. Reductions were achieved in rent by $170 thousand; professional costs by $158 thousand and salaries by $8 thousand.  These improvements were offset by increases in bad debt expense of $59 thousand and marketing costs of $46 thousand.

Depreciation and Amortization
Depreciation and amortization was $1.47 million for the Period as compared to $1.28 million for the Comparative Period.  The increase in depreciation and amortization expense reflects the acquisition of $10.9 million of equipment in the trailing 12 months.

For the nine months ending September 30, 2013, depreciation and amortization was $4.2 million as compared to $3.7 million for the nine months ending September 30, 2012.

Interest Expense
Interest expense was $207 thousand as compared to $187 thousand for the Comparative Period.  The increase in interest expense was the result of the Company financing the purchases of 4 IWS.

Outlook
As a result of the Company's expanded rental fleet and introduction of the IWS, management has a positive outlook for the remainder of 2013 and early 2014, with expected quarter-over-quarter revenue and corresponding EBITDA increases.

Winalta has confirmed contracts with four clients for the rental of 6 IWS units. These long term agreements are a new focus for Winalta as in 2012 the Company had no long term agreements. Demand for, and utilization of, Wellsite units continued to increase through out the quarter and actual days rented exceeded each month of the third quarter of 2012.  This activity is expected to continue in the fourth quarter of 2013 and into the beginning of 2014.

During the third quarter, the Company continued to see strong interest and demand for the IWS.  At September 30, 2013, the Company had delivered 4 IWS units and has commitments for an additional 2 IWS to be deployed in the fourth quarter.  The Company continues to pursue other opportunities to deploy IWS units in the SAGD pad and multilateral drilling space.  The IWS are designed for pad drilling and given the full year operations of many pad operations; these IWS units will provide a steadier stream of revenue in 2014 as compared to traditional Wellsite units.

The Company has seen a decrease in demand across the market for 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, and increasing market awareness in relation to price and strategy. For the remainder of the year, Winalta anticipates that Drill Camp rentals will begin to strengthen compared to the third quarter. Revenue and utilization are anticipated to gain momentum as new Drill Camps are deployed and utilization in the last quarter of 2013 is expected to increase as a result of these changes.

Consistent with its 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 strength of future expected financial results is based on previously announced new contracts, an expanded focus on marketing and higher levels of visibility in new product development. Winalta's entrance into the SAGD and multilateral drilling space is expected to create steadier revenue streams and decrease historical seasonality.

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.

Forward-looking information

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
winalta@winaltainc.com

Profil de l'entreprise

Winalta Inc.

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