Hyduke Announces Third Quarter Fiscal 2014 Financial Results
NISKU, AB, Nov. 11, 2014 /CNW/ - Hyduke Energy Services Inc. (HYD - TSX), announced operating results for the three and nine month periods ended September 30, 2014. 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 current quarter of $12.6 million up $1.0 million from the prior quarter.
- Gross profit for the current quarter of $1.2 million down from $2.4 million in the prior quarter.
- Gross profit percentage for the current quarter of 9.3% reflects a decrease of 11.1 basis points from the prior quarter.
- Net loss from continuing operations for the current quarter of $1.6 million.
- Loss per share (basic) for the current quarter of $0.060.
- EBITDAS for continuing operations for the current quarter of ($1.8) million.
- During the quarter the Company continued its restructuring through the consolidation of its operations and reducing its presence in leased facilities, reducing the level of aged inventory and settling all legal claims against the Company
- Liquidity remains positive with current ratio at 1.94 to 1.00 with cash and cash equivalents increasing to $6.4 million.
- Debt to equity ratio remains low at 0.30 to 1.00
Selected Statement of Comprehensive Income Information |
Three Months Ended |
||
($000's, except per share data) |
Sept 30 2014 |
June 30 2014 |
Sept 30 2013 (Restated) |
Total revenue – continuing operations |
12,630 |
11,585 |
17,423 |
Gross profit – continuing operations |
1,176 |
2,363 |
3,036 |
Gross profit (%) |
9.3% |
20.4% |
17.4% |
EBITDAS – continuing operations |
(1,813) |
216 |
1,261 |
Profit (loss) – continuing operations |
(1,613) |
(27) |
682 |
Profit (loss) |
(1,816) |
(1,491) |
(317) |
Profit (loss) per share – basic ($) |
(0.060) |
(0.061) |
(0.013) |
Profit (loss) per share – diluted ($) |
(0.059) |
(0.061) |
(0.013) |
Third quarter 2014 revenues of $12.6 million increased $1.0 million (9%) from the prior quarter due to the seasonal activity of drilling and well service contractors in Western Canada.
Third quarter 2014 gross profit (refer to NON-IFRS MEASURES) of $1.2 million decreased $1.2 million (50%) from the prior quarter and was due to the liquidation of aged inventory at minimal margins and the reduction of net book value of remaining aged inventory.
Third quarter 2014 EBITDAS (refer to NON-IFRS MEASURES) was ($1.8) million, a $2.0 million decrease from the prior quarter. This is a result of a decrease in gross margin percentage.
Third quarter 2014 loss from continuing operations of $1.8 million represents a decrease of $0.3 million from the prior quarter.
Selected Financial Position Information |
||
($000's, except ratios) |
Sept 30 2014 |
December 31 2013 |
Total assets |
42,373 |
44,300 |
Total current assets |
29,572 |
30,417 |
Total cash and short term deposits |
6,441 |
2,228 |
Total liabilities |
15,514 |
17,497 |
Total current liabilities |
15,262 |
16,654 |
Total bank indebtedness |
- |
- |
Total interest bearing debt |
7,973 |
8,433 |
Total equity |
26,859 |
26,804 |
Current ratio (current assets divided by current liabilities) |
1.94 to 1:00 |
1.83 to 1.00 |
Debt to equity ratio (interest bearing debt divided by shareholders' equity) |
0.30 to 1.00 |
0.31 to 1.00 |
At September 30, 2014 Hyduke maintained a strong balance sheet as measured by liquidity (current ratio of 1.94 to 1.00) and debt to equity (ratio of 0.30 to 1.00)
Total assets of $42.4 million as at September 30, 2014 represents a decrease of $1.9 million (4%) from December 31, 2013 and is due primarily to the collection of accounts receivable and a reduction in inventory offset by an increase in cash.
Total liabilities of $15.5 million as at September 30, 2014 represents a decrease of $2.0 million (11%) from December 31, 2013. Total current liabilities decrease of $1.4 million relates primarily to a decrease in accounts payable of $1.5 million due to a decline in business activity.
OUTLOOK
Hyduke continues to proceed with the major restructuring and simplification of its business as has been announced in previous reporting periods. The long-term objective is to emerge as a more focused organization providing a true value proposition to its three key stakeholders – customers, employees and capital providers.
Hyduke shut down its money-losing well service rig manufacturing business over two years ago and redoubled its pursuit of international markets for "turnkey drilling solutions" or international rig packages. In doing so, it alienated its domestic customer base and negatively affected its various subsidiary businesses. It was a costly decision that led to customer delays and resulted in difficult collections on international contracts. Around the same time Hyduke lost its API designation which precluded it from selling structural elements abroad. The recertification process is underway.
Over the last six months the company has shut down its "Rockbully" line of horizontal boring equipment for river and road crossing, its large vehicle painting business, its Nisku machine shop, and its U.S. rig manufacturing expansion in Houston, Texas. Hyduke intends to exit its mobile crane service and inspection divisions and absorb its air business and metal mart into the main facility in Nisku.
At one point last year Hyduke's former executive management concluded that its oilfield machining division in Calgary was not core to its future success. After reviewing the operation and its potential, Hyduke has withdrawn this business from the sale process and will continue to operate it safely and efficiently.
Hyduke has reduced its facilities leasing costs by over one million dollars per year. The company no longer has any rental or lease agreements from former or current directors of the Company.
The new Hyduke now looks at customers, suppliers and employees as partners. Pat of that commitment is cleaning up all outstanding litigation to the greatest degree possible. To that end, the company has settled a decade old wrongful dismissal suit, a decade old personal injury suit as well as a number of claims and counter claims lodged by customers and Hyduke. The company has only one outstanding legal claim left with regard to equipment commissioning work performed in Russia. There have been efforts made to move that claim to arbitration as soon as possible.
The company has finished its major senior management transition program and is pleased with the caliber of new people it has been able to attract. Smart and dedicated partners will make the difference to the company's future success. Hyduke is committed to creating a safe, progressive and nurturing environment to enable employee development. Management anticipates that any further drop in oil prices will only create opportunities for Hyduke to enhance its workforce and improve its workplace safety, quality and productivity initiatives.
While forecasters like the Petroleum Services Association of Canada and the Canadian Association of Petroleum Producers on October 29, 2014 predicted there will be some reduction in drilling activity in Canada in 2015 because of reduced oil prices and flat natural gas prices, the equipment required to drill the new types of extended-reach horizontal wells continues to evolve. Over the past few years a new generation of drilling rig has been designed to satisfy the needs of this new marketplace. Hyduke is confident that it will be well positioned to assist its clients as required.
Moving forward, Hyduke will be concentrating on three core areas;
- Industrial supply and distribution focused on the drilling and service rig industry with operations in Nisku, Lloydminster and Red Deer, Alberta.
- Drilling and service rig components manufacturing and assembly based out of Nisku, Alberta
- High quality oilfield machining services based out of Calgary, Alberta
Hyduke will pursue any and all opportunities to develop and grow these three business units. There will be a concentration on organic growth with an open attitude towards complimentary acquisitions.
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
Trading on the TSX under the symbol "HYD," Hyduke Energy Services Inc. is a supplier of equipment and services to the oil and gas drilling and well servicing industry.
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: Patrick Ross, President & Chief Executive Officer, (780) 955-0355; Veronica Dutchak, CA, Chief Financial Officer, (780) 955-0355
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