Pure Energy Services Ltd. announces record Q4 2011 results, record annual 2011 results and declaration of Q2 2012 dividend
CALGARY, March 14, 2012 /CNW/ - Pure Energy Services Ltd. ("Pure" or "the Corporation") (TSX: PSV) is pleased to announce its financial and operating results for the three and twelve-month periods ended December 31, 2011. The financial results presented and all comparative information have been prepared in accordance with International Financial Reporting Standards ("IFRS"). For more information on the Corporation's transition to IFRS refer to the "Changes in Accounting Policies - Adoption of IFRS" section of this news release. Unless otherwise indicated, references in this news release to "$" or "Dollars" are to Canadian dollars.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Three months ended December 31, | Year ended December 31, | |||||||||||
($000's, except per share amounts) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||
Continuing operations | ||||||||||||
Revenue | $ | 78,883 | $ | 55,128 | 43% | $ | 245,820 | $ | 175,673 | 40% | ||
Gross margin | $ | 27,897 | $ | 17,316 | 61% | $ | 76,048 | $ | 47,000 | 62% | ||
Gross margin % | 35% | 31% | 13% | 31% | 27% | 15% | ||||||
SG&A expenses (1) | $ | 7,431 | $ | 6,379 | 16% | $ | 24,610 | $ | 22,452 | 10% | ||
EBITDAS (2) | $ | 20,466 | $ | 10,937 | 87% | $ | 51,438 | $ | 24,548 | 110% | ||
Net Earnings | $ | 9,389 | $ | 4,416 | 113% | $ | 21,625 | $ | 5,217 | 315% | ||
Per share: | ||||||||||||
Basic | $ | 0.39 | $ | 0.19 | 105% | $ | 0.89 | $ | 0.22 | 305% | ||
Diluted | $ | 0.37 | $ | 0.18 | 106% | $ | 0.87 | $ | 0.21 | 314% | ||
Funds flow from operations (2) | $ | 20,124 | $ | 10,532 | 91% | $ | 50,235 | $ | 22,042 | 128% | ||
Capital expenditures (3) | $ | 14,766 | $ | 5,095 | 190% | $ | 48,032 | $ | 15,873 | 203% |
(1) | Selling, general and administrative expenses are herein referred to as SG&A expenses |
(2) | Refer to "Non-IFRS Measures" section |
(3) | Capital expenditures represent purchases of property and equipment (excluding finance lease additions) and purchases of intangible assets. |
($000's) | December 31, 2011 |
December 31, 2010 |
Change | |||
Property and equipment | $ | 125,162 | $ | 87,885 | 42% | |
Total assets | $ | 196,713 | $ | 158,209 | 24% | |
Working capital net of long-term debt | $ | 1,939 | $ | 4,685 | (59%) |
BUSINESS OVERVIEW
Pure is a publicly traded oilfield services company that provides well completion and production related services to oil and natural gas exploration and production companies in western Canada and certain regions in the United States ("US"). The Corporation's shares trade on the Toronto Stock Exchange under the symbol PSV.
The Corporation's continuing operations are divided into three separate operating segments: Canadian Completion Services ("CCS"), US Completion Services ("USCS") and Corporate Administration ("Corporate"). The CCS segment conducts operations in the Western Canadian Sedimentary Basin ("WCSB") through its two operating divisions: Wireline and Frac Flowback. The USCS segment conducts the majority of its operations in the Rocky Mountain, North Dakota and Appalachian Basin regions of the US with field bases in those regions in the following states: Colorado, Wyoming, North Dakota and Pennsylvania. Similar to Canada, the US operations are conducted through its two operating divisions: Wireline and Frac Flowback. The Corporate segment is a cost centre which includes corporate administration and other costs not specifically attributable to the CCS and USCS segments. Operations for both the CCS and USCS segments are impacted by seasonality, with the CCS segment typically experiencing higher activity levels in the winter months and the USCS segment experiencing higher activity levels in the non winter months.
During 2010, the Corporation sold its drilling rig and drilling equipment rental divisions. As a result of these transactions, the financial results of these two divisions (which previously comprised the Corporation's Drilling segment) have been reflected as discontinued operations for the three and twelve-month periods ended December 31, 2010.
Q4 2011 AND YEAR END 2011 HIGHLIGHTS FROM CONTINUING OPERATIONS
Pure achieved record revenue and EBITDAS during Q4 2011 of $78.9 million and $20.5 million, respectively, reflecting strong operating results from both its Canadian and US operations. The Corporation experienced strong demand for its services, driven by robust prices for oil and natural gas liquids as well as the shift from vertical to horizontal drilling.
Pure exited 2011 in a strong financial position with working capital net of long-term debt of $1.9 million at December 31. The Corporation had drawn debt (excluding finance lease liabilities) of approximately $19 million at December 31, 2011 from its aggregate bank credit facilities of $67 million.
During Q4 2011, there were 3,726 wells drilled in the WCSB, which was slightly lower than the 4,038 wells drilled during Q4 2010 (source: Nickles Energy Group). However, the number of horizontal wells (which are typically more service intensive) increased from 37% of total wells drilled in Q4 2010 to 58% in Q4 2011. Rig counts in all of Pure's US operating areas increased on a quarter over quarter basis, with the most dramatic increase occurring in North Dakota where average active rig counts rose from 139 in Q4 2010 to 187 in Q4 2011. Rig counts increased at a more moderate pace in the three other US states where Pure has a significant field presence: Colorado, Wyoming and Pennsylvania.
Consolidated revenue, gross margin, EBITDAS and net earnings improved from Q4 2010 to Q4 2011 as follows:
- Revenue increased 43% from $55.1 million to $78.9 million.
- Gross margin increased 61% from $17.3 million to $27.9 million. On a percentage basis, margins improved from 31% to 35%.
- EBITDAS improved 87% from $10.9 million to $20.5 million.
- Net earnings improved 113% from $4.4 million to $9.4 million.
For the 2011 year, Pure also posted record financial results as consolidated revenue, gross margin, EBITDAS and net earnings improved significantly over 2010 as follows:
- Revenue increased 40% from $175.7 million to $245.8 million.
- Gross margin increased 62% from $47.0 million to $76.0 million. On a percentage basis, margins improved from 27% to 31%.
- EBITDAS improved 110% from $24.5 million to $51.4 million.
- Net earnings improved 315% from $5.2 million to $21.6 million.
During calendar 2011, Pure continued to build on its geographic diversity, as the US operations accounted for a record 42% of total revenue. The Corporation was also successful in meeting staffing challenges on both sides of the border as all new equipment added in 2011 was crewed in a timely manner.
Pure spent $48 million of its planned $60 million capital expenditure program in 2011 with part of the $12 million shortfall due to supplier delays. The majority of the unspent amount has been carried over and included in the approved 2012 capital expenditure budget of $53 million. The planned 2011 capital expenditure program included the manufacture of 18 Frac Flowback units (12 to be deployed in Canada and 6 in the US). Of these units, 13 were received in 2011, 4 were received during Q1 2012 and the remaining unit was cancelled. Pure also modified 6 Frac Flowback units in its Canadian fleet in 2011 by equipping them with automation, and/or other equipment, in order to handle the flowback of liquefied petroleum gas ("LPG") used in certain fracturing operations.
The capital expenditure budget for 2012 includes approximately $30 million of capital spending for Pure's Wireline division (Canada and US) and approximately $23 million for its Frac Flowback division (Canada and US). The Wireline division's 2012 capital program includes the construction of 8 new Wireline units (all for the US), along with additional logging, fiber optic sensing and high pressure tools and equipment. The Frac Flowback division's 2012 capital program includes the addition of 15 high pressure units (including the 4 units carried over from the 2011 capital expenditure program) plus the purchase of auxiliary equipment such as high pressure pipe, storage tanks and line heaters.
DIVIDENDS
As a result of the growth in Pure's funds flow from operations, combined with a strong balance sheet, the Corporation's Board of Directors approved the implementation of a dividend policy in Q4 2011, providing for the payment of a quarterly dividend. The initial quarterly dividend payment of $0.09 per share was paid on February 15, 2012 to shareholders of record at the close of business on January 31, 2012.
On March 13, 2012, the Corporation's Board of Directors approved a quarterly dividend of $0.09 per share to be paid on May 15, 2012 to shareholders of record at the close of business on April 30, 2012. These dividends are eligible dividends for Canadian tax purposes.
The annualized dividend amount of approximately $8.8 million (based on the 24.4 million shares outstanding at March 13, 2012) represents 17% of the calendar 2011 funds flow from operations generated by Pure.
OUTLOOK
Pure's management remains cautiously optimistic about industry activity levels in its Canadian operating areas and certain US operating areas for 2012. Drilling activity related to oil and natural gas liquids continues to be strong in Canada and the US given the strong prices for these commodities. This, together with the shift to more completion intensive horizontal drilling, has served to offset some of the reduced drilling and completion activity related to "dry" natural gas caused by low prices for this commodity. The 2012 capital budgets initially announced by Canadian oil and gas producers indicated that the aggregate 2012 capital spending for western Canada would be consistent with 2011 levels. However, some of the natural gas weighted producers have since cut back their capital budgets to reduce spending on "dry" natural gas drilling projects. Several large US based producers have also recently announced cutbacks to natural gas programs. Pure's management continues to closely monitor activity levels in all of the Corporation's operating areas and has identified approximately $10 million of the planned $53 million of capital expenditures for 2012 that can be postponed to later in 2012 or to 2013 if a material reduction in activity levels occurs.
Pure's primary areas of focus for 2012 are as follows:
- Continuing to build the Corporation's operational infrastructure in the US. During 2011, Pure focused on expanding existing operating locations and establishing new operating areas. In the second half of 2011, new Wireline bases were established in Fort Lupton, Colorado and Oklahoma City, Oklahoma. For 2012, a major focus will be on establishing a strong client base in these new areas, including increasing sales and marketing efforts and increasing the local staff complements.
- The recruitment and retention of staff to support the Corporation's growth. Pure continues to invest significant efforts in its "Superior Value" program which includes increased training and education programs for field and support staff to address the important personnel issues of recruitment, retention, leadership and succession planning. In addition, retention bonus programs, wage adjustments and other compensation plans were implemented during 2011.
- Evaluating acquisition opportunities in Canada and the US. Pure will evaluate potential acquisition opportunities that provide business synergies with the Corporation's core service lines and/or the establishment of new core operating areas.
- Evaluating opportunities for organic growth into new geographic markets, particularly in the US.
RESULTS OF CONTINUING OPERATIONS
Financial Summary by Segment
The break-down of consolidated financial results by segment for the three-month periods, and the years ended December 31, 2011 and 2010 is as follows:
Three months ended December 31, 2011 | ||||||||
($000's) | CCS | USCS | Corporate | Consolidated | ||||
Revenue | $ | 44,454 | $ | 34,429 | $ | - | $ | 78,883 |
Operating expenses | 28,485 | 22,501 | - | 50,986 | ||||
Gross margin | $ | 15,969 | $ | 11,928 | $ | - | $ | 27,897 |
Gross margin % | 36% | 35% | -% | 35% | ||||
SG&A expenses | 3,345 | 2,669 | 1,417 | 7,431 | ||||
EBITDAS | $ | 12,624 | $ | 9,259 | $ | (1,417) | $ | 20,466 |
Three months ended December 31, 2010 | ||||||||
($000's) | CCS | USCS | Corporate | Consolidated | ||||
Revenue | $ | 38,440 | $ | 16,688 | $ | - | $ | 55,128 |
Operating expenses | 24,628 | 13,184 | - | 37,812 | ||||
Gross margin | $ | 13,812 | $ | 3,504 | $ | - | $ | 17,316 |
Gross margin % | 36% | 21% | -% | 31% | ||||
SG&A expenses | 2,983 | 1,944 | 1,452 | 6,379 | ||||
EBITDAS | $ | 10,829 | $ | 1,560 | $ | (1,452) | $ | 10,937 |
Year ended December 31, 2011 | ||||||||
($000's) | CCS | USCS | Corporate | Consolidated | ||||
Revenue | $ | 142,983 | $ | 102,837 | $ | - | $ | 245,820 |
Operating expenses | 101,149 | 68,623 | - | 169,772 | ||||
Gross margin | $ | 41,834 | $ | 34,214 | $ | - | $ | 76,048 |
Gross margin % | 29% | 33% | -% | 31% | ||||
SG&A expenses | 11,734 | 8,023 | 4,853 | 24,610 | ||||
EBITDAS | $ | 30,100 | $ | 26,191 | $ | (4,853) | $ | 51,438 |
Year ended December 31, 2010 | ||||||||
($000's) | CCS | USCS | Corporate | Consolidated | ||||
Revenue | $ | 114,749 | $ | 60,924 | $ | - | $ | 175,673 |
Operating expenses | 82,438 | 46,235 | - | 128,673 | ||||
Gross margin | $ | 32,311 | $ | 14,689 | $ | - | $ | 47,000 |
Gross margin % | 28% | 24% | -% | 27% | ||||
SG&A expenses | 10,774 | 6,068 | 5,610 | 22,452 | ||||
EBITDAS | $ | 21,537 | $ | 8,621 | $ | (5,610) | $ | 24,548 |
DISCUSSION OF SEGMENT RESULTS - CONTINUING OPERATIONS
Canadian Completion Services ("CCS") Segment
Three months ended December 31, | Year ended December 31, | |||||||||
($000's) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||
Revenue | ||||||||||
Wireline (1) | $ | 24,042 | $ | 22,258 | 8% | $ | 81,099 | $ | 71,458 | 13% |
Frac Flowback (2) | 20,412 | 16,182 | 26% | 61,884 | 43,291 | 43% | ||||
$ | 44,454 | $ | 38,440 | 16% | $ | 142,983 | $ | 114,749 | 25% | |
Gross margin | ||||||||||
Wireline (1) | $ | 8,141 | $ | 7,128 | 14% | $ | 20,428 | $ | 18,065 | 13% |
Frac Flowback (2) | 7,828 | 6,684 | 17% | 21,406 | 14,246 | 50% | ||||
$ | 15,969 | $ | 13,812 | 16% | $ | 41,834 | $ | 32,311 | 29% | |
Gross margin % | ||||||||||
Wireline (1) | 34% | 32% | 6% | 25% | 25% | -% | ||||
Frac Flowback (2) | 38% | 41% | (7%) | 35% | 33% | 6% | ||||
36% | 36% | -% | 29% | 28% | 4% | |||||
SG&A expenses | $ | 3,345 | $ | 2,983 | 12% | $ | 11,734 | $ | 10,774 | 9% |
EBITDAS | $ | 12,624 | $ | 10,829 | 17% | $ | 30,100 | $ | 21,537 | 40% |
Average units during the period (3) | ||||||||||
Wireline (1), (4) | 65.5 | 70.0 | (6%) | 67.8 | 70.5 | (4%) | ||||
Frac Flowback (2), (5) | 69.5 | 69.0 | 1% | 69.4 | 68.2 | 2% | ||||
Total | 135.0 | 139.0 | (3%) | 137.2 | 138.7 | (1%) | ||||
Number of jobs / days | ||||||||||
Wireline - jobs (1), (4) | 3,018 | 3,000 | 1% | 10,093 | 9,733 | 4% | ||||
Frac Flowback - days (2) | 4,035 | 3,177 | 27% | 12,430 | 10,181 | 22% | ||||
Total | 7,053 | 6,177 | 14% | 22,523 | 19,914 | 13% |
(1) | The CCS Wireline division includes the following primary services: electric line, slickline, swabbing and specialty logging. The electric line and slickline services generate approximately 80% of annual revenue in this division. |
(2) | The Frac Flowback division was formerly described as the well testing division. |
(3) | Average unit count figures reflect the average number of units in the CCS fleet that are operating or parked. Average unit count figures exclude units that have been decommissioned. |
(4) | Wireline units consist of electric line and slickline units. Wireline jobs are from these units only (and exclude jobs from the other service lines in the Wireline division). At December 31, 2011, the CCS Wireline fleet consisted of 64 Wireline units. |
(5) | At December 31, 2011, the CCS Frac Flowback fleet consisted of 71 Frac Flowback units. During 2011, CCS added 7 new units, transferred 4 units to USCS and sold/decommissioned 1 unit. |
Pure operates the largest Frac Flowback fleet and one of the largest Wireline fleets in the WCSB. With a large capacity of high pressure equipment, CCS has taken advantage of the high levels of drilling activity in emerging resource plays as well as conventional oil plays.
The number of wells drilled (rig released) in western Canada during Q4 2011 decreased by 8% on a quarter over quarter basis (3,726 wells drilled in Q4 2011 compared to 4,038 drilled in Q4 2010). However, the number of horizontal wells climbed from 37% of the total wells drilled in Q4 2010 to 58% in Q4 2011.
CCS recorded record revenue during Q4 2011 of $44.5 million, representing a 16% increase over the $38.4 million recorded in Q4 2010. This increase was driven primarily by the quarter over quarter revenue growth in the Frac Flowback division of 26% resulting from the higher equipment utilization rates in that division. Average revenue per job in the Frac Flowback division was consistent on a quarter over quarter basis, reflecting increased pricing in Q4 2011 offset by a change in job mix as work in central and southern Alberta (which has a lower associated revenue per job) increased as a percentage of total jobs completed.
The gross margin percentage for the Frac Flowback division in Q4 2011 of 38% was 3% lower than the 41% margins realized in Q4 2010. This reflected significant training expenses incurred during the current quarter for the new hires required for the busier workloads expected for the 2011/2012 winter season and also for the new Frac Flowback units received in Q4 2011 and Q1 2012. Wage increases and bonus programs implemented during 2011 also impacted margins.
The Wireline division, which is geared more towards vertical well drilling, producing wells and well abandonments, recorded an 8% increase in quarter over quarter revenue reflecting increased pricing in the current period. Wireline gross margins were 34% in Q4 2011, slightly ahead of the 32% margins recorded in Q4 2010. The improved margins reflected pricing increases, partially offset by increased employee wages.
SG&A expenses during Q4 2011 of $3.3 million were 7.5% of revenue. This was an improvement from Q4 2010 where SG&A expenses were 7.8% of revenue.
In calendar 2011, a total of 12,884 wells were drilled (rig released) in western Canada, representing a 6% increase over the 12,109 wells drilled in 2010. The number of horizontal wells, as a percentage of total wells drilled, increased significantly from 41% in 2010 to 55% in 2011. The shift to horizontal drilling had a positive impact on CCS' calendar 2011 revenue (particularly for the Frac Flowback division), as total CCS revenue in 2011 of $143.0 million was 25% higher than the $114.7 million recorded for calendar 2010.
Frac Flowback revenue was up 43% in calendar 2011 reflecting increased pricing and increased job counts on a year over year basis. Gross margins for 2011 of 35% were slightly better than the 33% reported in calendar 2010 as higher prices were offset by increased wages and training costs.
Wireline division revenue increased 13% in calendar 2011, reflecting improved pricing and a slightly increased job count. Wireline gross margins for 2011 of 25% were in line with 2010 margins as the increased pricing was offset by increased wages and increased costs associated with a larger operating infrastructure.
SG&A expenses for calendar 2011 of $11.7 were $1.0 million higher than the prior year, and reflected the higher activity levels in the current year. However, on a percentage of sales basis, SG&A improved from 9.4% in calendar 2010 to 8.2% in 2011.
US Completion Services ("USCS") Segment
Three months ended December 31, | Year ended December 31, | |||||||||
($000's) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||
Revenue | ||||||||||
Wireline | $ | 10,251 | $ | 5,741 | 79% | $ | 30,575 | $ | 22,030 | 39% |
Frac Flowback (1) | 24,178 | 10,947 | 121% | 72,262 | 38,894 | 86% | ||||
$ | 34,429 | $ | 16,688 | 106% | $ | 102,837 | $ | 60,924 | 69% | |
Gross margin | ||||||||||
Wireline | $ | 1,779 | $ | 357 | 398% | $ | 4,920 | $ | 3,438 | 43% |
Frac Flowback (1) | 10,149 | 3,147 | 222% | 29,294 | 11,251 | 160% | ||||
$ | 11,928 | $ | 3,504 | 240% | $ | 34,214 | $ | 14,689 | 133% | |
Gross margin % | ||||||||||
Wireline | 17% | 6% | 183% | 16% | 16% | -% | ||||
Frac Flowback (1) | 42% | 29% | 45% | 41% | 29% | 41% | ||||
35% | 21% | 67% | 33% | 24% | 38% | |||||
SG&A expenses | $ | 2,669 | $ | 1,944 | 37% | $ | 8,023 | $ | 6,068 | 32% |
EBITDAS | $ | 9,259 | $ | 1,560 | 494% | $ | 26,191 | $ | 8,621 | 204% |
Average units during the period (2) | ||||||||||
Wireline (3) | 19.0 | 17.0 | 12% | 17.6 | 12.7 | 39% | ||||
Frac Flowback (1), (4) | 50.0 | 42.0 | 19% | 45.8 | 39.9 | 15% | ||||
Total | 69.0 | 59.0 | 17% | 63.4 | 52.6 | 21% | ||||
Number of jobs / days | ||||||||||
Wireline - jobs | 1,154 | 813 | 42% | 3,459 | 3,099 | 12% | ||||
Frac Flowback - days (1) | 3,370 | 2,155 | 56% | 11,642 | 8,539 | 36% | ||||
Total | 4,524 | 2,968 | 52% | 15,101 | 11,638 | 30% |
(1) | The Frac Flowback division was formerly described as the well testing division. |
(2) | Average unit count figures reflect the average number of units in the USCS fleet that are operating or parked. Average unit count figures exclude units that have been decommissioned. |
(3) | The USCS Wireline fleet consists solely of electric line units. At December 31, 2011 the USCS Wireline fleet consisted of 19 Wireline units. |
(4) | At December 31, 2011, the USCS Frac Flowback fleet consisted of 53 Frac Flowback units. During 2011, USCS added 6 new units and received 4 units transferred from CCS. |
Drilling rig counts during Q4 2011 and calendar 2011 increased over the comparable periods in all of USCS' operating areas including North Dakota, the Rocky Mountains (Colorado and Wyoming) and the Appalachian Basin (Pennsylvania). These increased activity levels led to higher equipment utilization for both the Frac Flowback and Wireline divisions in Q4 2011 compared to Q4 2010. The higher equipment count and improved pricing in 2011 also contributed to the increased revenue. Record revenues were achieved for the USCS segment in calendar 2011. In addition, record gross margins and EBITDAS were achieved for the USCS segment in both Q4 2011 and calendar 2011.
The Frac Flowback division posted Q4 2011 revenue of $24.2 million, which was more than double the $10.9 million recorded in Q4 2010. All operating areas recorded increased revenue compared to Q4 2010, reflecting increased equipment utilization (with days worked up 56% and Frac Flowback units up 19%) and significantly improved pricing. Gross margins for the division were a robust 42% during Q4 2011 (compared to 29% in Q4 2010) reflecting higher pricing. During 2011, Frac Flowback operations continued to face shortages of local personnel to crew equipment, particularly in North Dakota and Pennsylvania. USCS management implemented recruitment and training programs to attract local candidates in these areas and retention programs to retain existing employees to address and minimize the impact of this issue.
Wireline division revenue in Q4 2011 of $10.3 million was 79% higher than the $5.7 million in revenue recognized in Q4 2010. The increased revenue was due to higher equipment utilization in the current quarter (with job count up 42% and unit count up 12%) combined with improved pricing. Wireline gross margin percentages improved from 6% in Q4 2010 to 17% in the current quarter. The lower margins in the prior year reflected a lack of client diversification, as the two largest clients significantly reduced their workloads during that quarter. Wireline margins in Q4 2011 were negatively impacted by start-up costs related to new bases in Fort Lupton, Colorado and Oklahoma City, Oklahoma.
SG&A expenses increased by $0.7 million from Q4 2010 to Q4 2011 reflecting the significantly increased activity levels. However, on a percentage of revenue basis, SG&A improved from 11.6% in Q4 2010 to 7.8% in Q4 2011.
On a year over year basis, USCS revenue improved from $60.9 million recognized in calendar 2010 to $102.8 million in 2011 (a 69% increase). Most of the increase was driven by the Frac Flowback division which posted an 86% increase in revenue reflecting significant increases in pricing, combined with higher utilization rates and a larger equipment fleet.
Blended gross margins for the USCS segment improved from 24% in calendar 2010 to 33% in calendar 2011 reflecting the significant improvement in Frac Flowback margins (41% in 2011 compared to 29% in 2010). Wireline division margins of 16% in calendar 2011, were consistent with those achieved in 2010, and were negatively impacted by start-up costs of the new operating bases combined with significant costs to deploy crews to North Dakota (which has a shortage of experienced wireline personnel) from other operating areas.
SG&A expenses for calendar 2011 of $8.0 million were significantly higher than the $6.1 million of SG&A recognized in 2010 and reflected increased sales, administrative and management staff in response to the segment's growth. On a percentage of sales basis, SG&A improved from 10.0% in 2010 to 7.8% in 2011.
OTHER EXPENSES (INCOME) - CONTINUING OPERATIONS
Three months ended December 31, | Year ended December 31, | ||||||||||
($000's) | 2011 | 2010 | Change | 2011 | 2010 | Change | |||||
Stock-based compensation | $ | 446 | $ | 145 | 208% | $ | 1,567 | $ | 642 | 144% | |
Depreciation and amortization | $ | 4,289 | $ | 3,706 | 16% | $ | 15,475 | $ | 13,074 | 18% | |
Finance costs (1) | $ | 290 | $ | 341 | (15%) | $ | 1,064 | $ | 2,592 | (59%) | |
Other expenses (income) (2) | $ | 1,010 | $ | 585 | 73% | $ | (875) | $ | (415) | (111%) |
(1) | Finance costs include interest on long-term debt and operating loans. |
(2) | Other expenses (income) include foreign exchange (gains) losses and (gains) losses on sale of property and equipment. |
Depreciation and Amortization Expense
Depreciation and amortization expense increased from $3.7 million in Q4 2010 to $4.3 million in Q4 2011. This increase reflected an increase in the average net book values of property and equipment from $86.8 million in Q4 2010 to $120.9 million in Q4 2011. A significant portion of the Q4 2011 additions to property and equipment (total of $14.8 million) occurred late in the quarter and therefore had little associated depreciation expense. Depreciation expense for calendar 2011 increased by 18% over 2010, also reflecting an increase in average net book values of property and equipment.
Finance Costs
Finance costs of $0.3 million in Q4 2011 were consistent with finance costs recognized in Q4 2010, reflecting similar levels of average total debt (i.e. bank debt plus finance lease liabilities). Total debt averaged $35.0 million in Q4 2010 compared to $32.0 million in Q4 2011. The calendar 2011 finance costs of $1.1 million were significantly lower than the $2.6 million recorded in calendar 2010. This reflected lower average total debt amounts in 2011 of $24.2 million compared to an average for 2010 of $51.7 million. The large year over year debt reduction partially reflects the sale of the drilling rig division effective October 1, 2010 for net proceeds of $33.5 million.
Other Expenses (Income)
Other expenses in Q4 2011 were primarily comprised of $1.0 million in foreign exchange losses recognized by Pure's wholly-owned US subsidiary, Pure Energy Services (USA), Inc. ("Pure USA"), on Canadian dollar denominated term debt owing to the parent. Repayment terms were formalized for this debt on August 1, 2011. As a result of the formalized repayment plan, foreign exchange gains or losses related to this debt are no longer deferred through accumulated other comprehensive income ("AOCI") and commencing August 1, 2011, were recognized in net earnings. The Q4 2011 foreign exchange losses recorded by Pure USA resulted from a weakening of the US dollar relative to the Canadian dollar from September 30, 2011 (where 1 USD = $1.048 CDN) to December 31, 2011 (where 1 USD = $1.017 CDN).
For calendar 2011, Pure recorded other income of $0.9 million which reflected $1.0 million in net foreign exchange gains from the above noted Canadian dollar debt owing by Pure USA to the parent. In calendar 2010, Pure recorded other income of $0.4 million, reflecting $0.6 million in net gains recognized on the sale of property and equipment during the year.
INCOME TAX EXPENSE - CONTINUING OPERATIONS
Pure recorded total income tax expense for the year ended December 31, 2011 of $12.6 million on net earnings before income taxes of $34.2 million, resulting in a blended Canadian/US effective income tax rate of approximately 37%. The US and Canadian jurisdictions have effective income tax rates of approximately 40% and 34% respectively when including the impact of expenses not deductible for tax purposes.
As at year end December 31, 2011, the Corporation had non-capital losses and deferred expense pools available to reduce future taxable income in Canada and the US of approximately $50 million and $41 million, respectively.
RESULTS OF DISCONTINUED OPERATIONS
Three months ended Dec 31, | Year ended Dec 31, | |||||||
($000's) | 2011 | 2010 | 2011 | 2010 | ||||
Revenue | $ | - | $ | 10 | $ | - | $ | 21,668 |
Operating expenses | - | 24 | - | 17,159 | ||||
Gross margin | - | (14) | - | 4,509 | ||||
SG&A expenses | - | 93 | - | 1,011 | ||||
Depreciation and amortization | - | 12 | - | 2,109 | ||||
Impairment of property held for sale | - | - | - | 613 | ||||
Other expenses (income) | - | (74) | - | (223) | ||||
Earnings (loss) before income taxes | - | (45) | - | 999 | ||||
Deferred income tax expense | - | 1 | - | 251 | ||||
Net Earnings (loss) | $ | - | $ | (46) | $ | - | $ | 748 |
Effective October 1, 2010, the Corporation sold its drilling rig division assets and operations to a private investment group for net proceeds of $33.5 million. Effective April 20, 2010, the drilling equipment rentals division was sold to an industry peer in exchange for the peer's US Wireline operations. As a result of the sale of these two divisions (which formerly comprised the Corporation's Drilling segment), the related financial results have been classified as discontinued operations for the three and twelve-month periods ended December 31, 2010.
SELECTED THREE YEAR OPERATING RESULTS
Years ended December 31, | ||||||
($000's, except per share amounts) | 2011-IFRS | 2010-IFRS | 2009-GAAP | |||
Continuing operations | ||||||
Revenue | $ | 245,820 | $ | 175,673 | $ | 94,969 |
Net earnings (loss) | 21,625 | 5,217 | (12,278) | |||
Basic earnings (loss) per share | 0.89 | 0.22 | (0.61) | |||
Diluted earnings (loss) per share | 0.87 | 0.21 | (0.61) | |||
Total operations | ||||||
Revenue | $ | 245,820 | $ | 197,341 | $ | 135,927 |
Net earnings (loss) | 21,625 | 5,965 | (28,144) | |||
Basic earnings (loss) per share | 0.89 | 0.25 | (1.40) | |||
Diluted earnings (loss) per share | 0.87 | 0.24 | (1.40) | |||
As at December 31, | ||||||
2011-IFRS | 2010-IFRS | 2009-GAAP | ||||
Total assets | $ | 196,713 | $ | 158,209 | $ | 183,759 |
Total long-term liabilities | 18,515 | 10,889 | 47,948 | |||
Cash dividends declared per share | 0.09 | - | - |
2011 versus 2010
Revenue and net earnings from continuing operations improved significantly from 2010 to 2011 reflecting the continuing recovery in drilling and completion activity levels in the Corporation's Canadian and US operating areas due in part to strengthening oil prices. The development of many emerging resource plays on both sides of the border, combined with the shift to increased horizontal well drilling increased the demand for Pure's services, particularly for the Frac Flowback division. The resulting higher overall equipment utilization combined with improved pricing and an increased equipment fleet led to the year over year growth in revenue of $70 million.
Total assets increased by $38.5 million from December 31, 2010 to December 31, 2011 primarily reflecting the year over year increase in net book value of property and equipment of $37.3 million. In response to the increased activity levels, Pure added $51.0 million in property and equipment (including finance leases and net of equipment disposal proceeds) during 2011.
Total long-term liabilities increased by $7.6 million, reflecting increases in long-term debt from the Corporation's 2011 capital expenditure program.
2010 versus 2009
Revenues and net earnings from continuing operations increased significantly from 2009 to 2010 reflecting a recovery in drilling and completion activity levels in Canada and the US and related recoveries in Pure's equipment utilization rates and pricing for services. A portion of the increased revenues relate to having a full year of operating results from Canadian Sub-Surface Energy Services Corp., which was acquired in June 2009.
The decline in total assets from $183.8 million at December 31, 2009 to $158.2 million at December 31, 2010 primarily reflects the sale of the drilling rig division which had a net book value of property and equipment at December 31, 2009 of $43.7 million. The net proceeds from disposal of $33.5 million were used to pay down debt. Funds flow from continuing operations during 2010 of $22.0 million was used to finance the capital expenditures from continuing operations of $15.9 million and pay down debt.
The decline in total long-term liabilities from $47.9 million at December 31, 2009 to $10.9 million at December 31, 2010 primarily reflects the pay down of long-term debt of $33.5 million from proceeds of the drilling rig division disposal.
Adjustments made on transition to IFRS (see "Changes in Accounting Policies" below) also affected the reported carrying amounts of various assets and liabilities at January 1, 2010 and December 31, 2010, as well as the reported net earnings for the year ended December 31, 2010. Detailed information on these changes can be found in Note 24 to the audited consolidated financial statements for the years ended December 31, 2011 and 2010.
SUMMARY OF QUARTERLY RESULTS (1)
2011 | 2010 | ||||||||
($000's, except per share amounts) | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
Continuing operations | |||||||||
Revenue | 78,883 | 65,088 | 40,877 | 60,972 | 55,128 | 45,996 | 32,402 | 42,147 | |
Gross margin | 27,897 | 21,746 | 6,197 | 20,208 | 17,316 | 13,804 | 4,753 | 11,127 | |
Gross margin % | 35% | 33% | 15% | 33% | 31% | 30% | 15% | 26% | |
SG&A expenses | 7,431 | 5,928 | 5,289 | 5,962 | 6,379 | 5,558 | 5,509 | 5,006 | |
EBITDAS | 20,466 | 15,818 | 908 | 14,246 | 10,937 | 8,246 | (756) | 6,121 | |
Net earnings (loss) | 9,389 | 8,297 | (3,020) | 6,959 | 4,416 | 3,166 | (3,571) | 1,206 | |
Earnings (loss) per share | |||||||||
Basic | 0.39 | 0.34 | (0.12) | 0.29 | 0.19 | 0.13 | (0.15) | 0.05 | |
Diluted | 0.37 | 0.33 | (0.12) | 0.28 | 0.18 | 0.13 | (0.15) | 0.05 | |
Funds flow from operations | 20,124 | 15,473 | 716 | 13,922 | 10,532 | 7,631 | (1,508) | 5,387 | |
Discontinued operations | |||||||||
Net earnings (loss) | - | - | - | - | (46) | (165) | (468) | 1,427 | |
Total operations | |||||||||
Earnings (loss) per share | |||||||||
Basic | 0.39 | 0.34 | (0.12) | 0.29 | 0.18 | 0.13 | (0.17) | 0.11 | |
Diluted | 0.37 | 0.33 | (0.12) | 0.28 | 0.18 | 0.12 | (0.17) | 0.11 |
(1) | The periods in 2010 have been adjusted to reflect the reclassification of balances related to the discontinued drilling rig, drilling equipment rental and well fracturing operations. |
Pure's business is seasonal in nature with Canadian operations experiencing a slow-down in activity in Q2 of each year due to spring break-up in western Canada, and US operations typically experiencing slower activity in the colder winter months. In addition, the business is cyclical as a result of industry activity levels that are highly correlated to oil and natural gas prices which affect the cash flow of the Corporation's customers and their ability to obtain debt and equity financing.
As a result of the global financial crisis that commenced during the fall of 2008 and continued through 2009, oil and natural gas prices were significantly reduced and Pure's customers faced limited access to capital markets. The resulting drop in activity levels during 2009 led to reduced revenues and net earnings for the Corporation during 2009, and through early 2010. Improved commodity prices (particularly for oil and natural gas liquids) during 2010 and continuing through 2011, in combination with an increased access to capital and increased cash flows for Pure's customers, led to improved activity levels for Pure, in the later quarters of 2010 and through 2011. This in turn led to increased revenues and net earnings during those periods.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2011, Pure's working capital exceeded long-term debt by $1.9 million, which was a $3.0 million improvement from the September 30, 2011 amount. The improvement during Q4 2011 primarily reflected funds flow from operations of $20.1 million, offset by capital expenditures of $16.7 million (of which $2.0 million related to finance leases).
For calendar 2011, Pure expended approximately $48 million (excluding finance leases) of the $60 million capital expenditure program planned for the year. The remainder of the capital program has been substantially carried over and included as part of the 2012 capital expenditure program. The 2011 capital expenditures included:
- 13 high pressure Frac Flowback units plus progress payments for an additional 4 units (such units received in Q1 2012)
- Frac Flowback auxiliary equipment (including line heaters, storage tanks and high pressure pipe)
- Costs to automate and equip 6 Canadian Frac Flowback units to handle flowback of LPG used in certain fracturing operations
- Electric line tools and equipment
- Fiber optic equipment
The Corporation has the following operating lease commitments, purchase commitments and debt commitments over the next five years:
Payments for years ending December 31, | ||||||||||||
Contractual Obligations | After | |||||||||||
($000's) | Total | 2012 | 2013 | 2014 | 2015 | 2015 | ||||||
Long-term debt obligations (1) | $ | 22,672 | $ | 4,157 | $ | 5,942 | $ | 4,753 | $ | 2,897 | $ | 4,923 |
Purchase commitments (2) | 15,505 | 13,471 | 1,017 | 1,017 | - | - | ||||||
Operating leases | 28,689 | 6,289 | 5,757 | 4,974 | 4,040 | 7,629 | ||||||
Total contractual obligations | $ | 66,866 | $ | 23,917 | $ | 12,716 | $ | 10,744 | $ | 6,937 | $ | 12,552 |
(1) | Long-term debt obligations represent balances outstanding at December 31, 2011. |
(2) | Purchase commitments represent commitments made by the Corporation to third party suppliers for future purchases of equipment as of December 31, 2011. |
At December 31, 2011, the Corporation had aggregate credit facilities from its Canadian and US lenders of approximately $67 million (Canada - $45 million plus US - $22 million). The Canadian credit facilities include a $20 million operating loan and a $25 million, three year extendible revolving loan which is scheduled to mature on September 30, 2014.
The US credit facilities include a USD $5 million, three year revolving facility that matures on September 30, 2014 combined with a USD $17 million equipment financing facility. The equipment financing facility revolves until September 30, 2012, at which time any outstanding amounts on the facility are converted to a term loan which is repayable over a five year period.
The debt covenants for both the Canadian and US credit facilities are calculated on a consolidated basis in accordance with the terms of the respective credit agreements. Pure was in compliance with all of its debt covenants at December 31, 2011.
The Corporation believes that its available credit facilities, combined with funds flow from operations, will provide sufficient capital resources to fund the 2012 capital expenditure program and ongoing operations. The current global economic concerns (including the sluggish US economy and the sovereign debt issues in several European countries) could have a negative impact on market confidence, which in turn could potentially lower the demand for energy products as well as the Corporation's services and also reduce the Corporation's access to capital. Pure's management continues to monitor and control its capital and operational spending programs in response to these market conditions.
SHARE CAPITAL
As at March 13, 2012, the Corporation had 24.4 million shares outstanding and 1.9 million options outstanding, of which 0.6 million were vested.
CHANGES IN ACCOUNTING POLICIES
Adoption of IFRS
Effective January 1, 2011, the Corporation commenced preparing its financial statements in accordance with IFRS. For periods ending prior to that date, the Corporation prepared its financial statements in accordance with Canadian GAAP. The adoption of IFRS has not had a material impact on the Corporation's operations and strategic decisions. The Corporation's IFRS accounting policies are provided in Note 3 to the audited consolidated financial statements for the years ended December 31, 2011 and 2010. In addition, Note 24 to the audited consolidated financial statements for the years ended December 31, 2011 and 2010 provides the following reconciliations between the Corporation's 2010 Canadian GAAP results and the 2010 IFRS results: the consolidated statements of financial position as at January 1, 2010, and December 31, 2010; and the consolidated statements of net earnings (loss), comprehensive income (loss) and cash flows for the year ended December 31, 2010
RISKS AND UNCERTAINTIES
A complete discussion of risks faced by the Corporation may be found under "Risk Factors" in the Corporation's Annual Information Form dated March 13, 2012 which is available under the Corporation's profile at www.sedar.com.
NON-IFRS MEASURES
EBITDAS and funds flow from operations do not have standardized meanings prescribed by IFRS. Management believes that, in addition to net earnings, EBITDAS is a useful supplemental measure. EBITDAS is provided as a measure of operating performance without reference to financing decisions, depreciation, income tax or stock-based compensation impacts, which are not controlled at the operating management level. Investors should be cautioned that EBITDAS should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Corporation's performance. The Corporation's method of calculating EBITDAS may differ from that of other entities and accordingly may not be comparable to measures used by other entities. See section titled "Reconciliation of EBITDAS to Net Earnings" below.
Funds flow from operations is defined as cash from operating activities before changes in non-cash working capital, as presented on the Corporation's statement of cash flows. Funds flow from operations is a measure that provides investors with additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations. Funds flow from operations does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures provided by other entities.
RECONCILIATION OF EBITDAS TO NET EARNINGS - CONTINUING OPERATIONS
Three months ended Dec 31, | Year ended Dec 31, | ||||||||
($000's) | 2011 | 2010 | 2011 | 2010 | |||||
Earnings before income taxes | $ | 14,431 | $ | 6,160 | $ | 34,207 | $ | 8,655 | |
Add: Depreciation and amortization | 4,289 | 3,706 | 15,475 | 13,074 | |||||
Finance costs (1) | 290 | 341 | 1,064 | 2,592 | |||||
Other expenses (income) (2) | 1,010 | 585 | (875) | (415) | |||||
Stock-based compensation | 446 | 145 | 1,567 | 642 | |||||
EBITDAS | $ | 20,466 | $ | 10,937 | $ | 51,438 | $ | 24,548 |
(1) | Finance costs include interest on long-term debt and operating loans. |
(2) | Other expenses (income) include foreign exchange (gains) losses and (gains) losses on sale of property and equipment. |
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements and other information that are based on the Corporation's current expectations, estimates, projections and assumptions made by management in light of its experience and perception of historical trends, current conditions, anticipated future developments and other factors believed by management to be relevant.
All statements and other information contained in this document that address expectations or projections about the future are forward-looking statements. Some of the forward-looking statements may be identified by words such as "may", "would", "could", "will", "intends", "targets", "expects", "believes", "plans", "anticipates", "estimates", "continues", "maintains", "projects", "indicates", "outlook", "proposed", "objective" and other similar expressions. These statements speak only as of the date of this document. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed in the "Risks and Uncertainties" section in the most recent Annual Information Form, Information Circular, quarterly reports, material change reports and news releases. The Corporation cannot assure investors that actual results will be consistent with the forward-looking statements and readers are cautioned not to place undue reliance on them. The forward-looking statements are provided as of the date of this document and, except as required pursuant to applicable securities laws and regulations, the Corporation assumes no obligation to update or revise such statements to reflect new events or circumstances.
The forward-looking statements and information contained in this document reflect several major factors, expectations and assumptions of the Corporation, including without limitation, that the Corporation will continue to conduct its continuing operations in a manner substantially consistent with past operations; the general continuance of current or, if applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) taxation, royalty and regulatory regimes; certain presumptions relating to the prices of the Corporation's services and its costs of services; certain commodity prices and other cost assumptions; certain conditions regarding oil and natural gas supply, demand and storage in North America; the continued availability of adequate debt and/or equity financing and cash flow from the Corporation's operations to fund its capital and operating requirements as needed; and the extent of its liabilities. Many of these factors, expectations and assumptions are based on management's knowledge and experience in the industry and on public disclosure of industry participants and analysts relating to anticipated exploration and development programs of oil and natural gas producers, the effect of changes to regulatory, taxation and royalty regimes, expected active rig counts and industry equipment utilization in the WCSB and the Corporation's US operating regions and other matters. The Corporation believes that the material factors, expectations and assumptions reflected in the forward-looking statements and information are reasonable; however, no assurances can be given that these factors, expectations and assumptions will prove to be correct.
In particular, this document contains forward-looking information pertaining to the following: ability to manage costs in response to industry activity levels; success of marketing programs; amount and timing of capital expenditure programs; ability to move equipment within operating locations; availability of debt financing and ability to renew the Corporation's existing credit facilities at acceptable terms; supply and demand for oilfield services and industry activity levels; oil, natural gas liquids and natural gas prices; oil and natural gas drilling activity; treatment under governmental royalty programs or regimes; collection of accounts receivable; operating risk liability; expectations regarding market prices and costs for the Corporation's services and the impact of these changes on gross margins; expansion of services and operations in Canada and the US; the integration of assets and personnel from acquisitions; long-term debt net of working capital levels; the amount and timing of the Corporation's capital expenditure programs: the amount and timing of recognition of income tax recoveries, income tax losses and deferred expense pools; future customer work; expected levels of the Corporation's sales, general and administrative expenses; ability to crew equipment; availability of local employees for the Corporation's field operations; and competitive conditions.
Consolidated Statements of Financial Position
($000's) (Unaudited) |
As at December 31, 2011 |
As at December 31, 2010 |
As at January 1, 2010 |
|||
Assets | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 999 | $ | 4,599 | $ | 1,986 |
Trade and other receivables | 53,037 | 37,748 | 23,829 | |||
Inventories | 2,628 | 2,523 | 2,887 | |||
Deposits and prepaid expenses | 2,028 | 1,741 | 2,002 | |||
Current assets of discontinued operations | - | 63 | 446 | |||
58,692 | 46,674 | 31,150 | ||||
Non-Current Assets | ||||||
Property and equipment | 125,162 | 87,885 | 116,091 | |||
Property and equipment held for sale | - | - | 6,266 | |||
Intangible assets | 647 | - | - | |||
Deferred tax assets | 12,212 | 23,650 | 26,380 | |||
$ | 196,713 | $ | 158,209 | $ | 179,887 | |
Liabilities and Shareholders' Equity | ||||||
Current Liabilities | ||||||
Operating loan | $ | 4,912 | $ | 3,194 | $ | - |
Trade and other payables | 29,169 | 22,358 | 15,275 | |||
Current portion of long-term debt | 4,157 | 5,488 | 3,308 | |||
Current liabilities of discontinued operations | - | 60 | 110 | |||
38,238 | 31,100 | 18,693 | ||||
Non-Current Liabilities | ||||||
Long-term debt | 18,515 | 10,889 | 49,658 | |||
56,753 | 41,989 | 68,351 | ||||
Shareholders' Equity | ||||||
Share capital | 122,686 | 121,156 | 120,913 | |||
Contributed surplus | 5,952 | 4,904 | 4,344 | |||
Accumulated other comprehensive income (loss) | (350) | (2,084) | - | |||
Retained earnings (deficit) | 11,672 | (7,756) | (13,721) | |||
139,960 | 116,220 | 111,536 | ||||
$ | 196,713 | $ | 158,209 | $ | 179,887 |
Consolidated Statements of Net Earnings
($000's) | Three months ended December 31, |
Year ended December 31, |
||||||
(Unaudited) | 2011 | 2010 | 2011 | 2010 | ||||
Revenue | $ | 78,883 | $ | 55,128 | $ | 245,820 | $ | 175,673 |
Operating expenses | 50,986 | 37,812 | 169,772 | 128,673 | ||||
Gross margin | 27,897 | 17,316 | 76,048 | 47,000 | ||||
Selling, general and administrative | 7,431 | 6,379 | 24,610 | 22,452 | ||||
Stock-based compensation | 446 | 145 | 1,567 | 642 | ||||
Depreciation and amortization | 4,289 | 3,706 | 15,475 | 13,074 | ||||
Finance costs | 290 | 341 | 1,064 | 2,592 | ||||
Other expenses (income) | 1,010 | 585 | (875) | (415) | ||||
Earnings before income taxes | 14,431 | 6,160 | 34,207 | 8,655 | ||||
Income Taxes | ||||||||
Current tax recovery | - | - | - | (150) | ||||
Deferred tax expense | 5,042 | 1,744 | 12,582 | 3,588 | ||||
5,042 | 1,744 | 12,582 | 3,438 | |||||
Net Earnings from Continuing Operations | 9,389 | 4,416 | 21,625 | 5,217 | ||||
Net Earnings (loss) from Discontinued Operations | - | (46) | - | 748 | ||||
Net Earnings | $ | 9,389 | $ | 4,370 | $ | 21,625 | $ | 5,965 |
Earnings per share from continuing operations | ||||||||
Basic | $ | 0.39 | $ | 0.19 | $ | 0.89 | $ | 0.22 |
Diluted | 0.37 | 0.18 | 0.87 | 0.21 | ||||
Earnings per share from discontinued operations | ||||||||
Basic | $ | - | $ | - | $ | - | $ | 0.03 |
Diluted | - | - | - | 0.03 | ||||
Earnings Per Share | ||||||||
Basic | $ | 0.39 | $ | 0.19 | $ | 0.89 | $ | 0.25 |
Diluted | 0.37 | 0.18 | 0.87 | 0.24 |
Consolidated Statements of Comprehensive Income
|
||||||||
($000's) |
Three months ended December 31, |
Year ended December 31, |
||||||
(Unaudited) | 2011 | 2010 | 2011 | 2010 | ||||
Net Earnings | $ | 9,389 | $ | 4,370 | $ | 21,625 | $ | 5,965 |
Other comprehensive income (loss) items: | ||||||||
Currency translation adjustment on foreign operations | (927) | (1,238) | 476 | (2,084) | ||||
Deferred income tax recovery | 85 | - | 1,205 | - | ||||
Foreign exchange realized in net earnings | - | - | 53 | - | ||||
(842) | (1,238) | 1,734 | (2,084) | |||||
Comprehensive Income | $ | 8,547 | $ | 3,132 | $ | 23,359 | $ | 3,881 |
Consolidated Statements of Cash Flows
($000's) |
Three months ended December 31, |
Year ended December 31, |
||||||
(Unaudited) | 2011 | 2010 | 2011 | 2010 | ||||
Operating Activities | ||||||||
Net earnings from continuing operations | $ | 9,389 | $ | 4,416 | $ | 21,625 | $ | 5,217 |
Non-cash items from continuing operations | ||||||||
Stock-based compensation | 1,567 | 3,706 | 1,567 | 642 | ||||
Depreciation and amortization | 15,475 | 145 | 15,475 | 13,074 | ||||
Impairment of property and equipment held for sale | - | 89 | - | 89 | ||||
Loss (gain) on sale of property and equipment | (11) | 398 | 162 | (588) | ||||
Unrealized foreign exchange (gain) loss | 969 | 34 | (1,176) | 20 | ||||
Deferred income tax expense | 5,042 | 1,744 | 12,582 | 3,588 | ||||
20,124 | 10,532 | 50,235 | 22,042 | |||||
Changes in non-cash working capital balances | (12,116) | (1,164) | (12,116) | (11,769) | ||||
Net operating cash flows from continuing operations | 19,641 | 9,368 | 38,119 | 10,273 | ||||
Net operating cash flows from discontinued operations | - | 3,829 | - | 7,505 | ||||
Net Operating Cash Flows | 19,641 | 13,197 | 38,119 | 17,778 | ||||
Investing Activities | ||||||||
Purchases of property and equipment | (14,119) | (5,095) | (47,385) | (15,873) | ||||
Purchases of intangible assets | (647) | - | (647) | - | ||||
Proceeds from sale of property and equipment | 1,800 | 437 | 3,138 | 7,663 | ||||
Business acquisition | - | - | - | (2,367) | ||||
Changes in non-cash working capital balances | (1,389) | 746 | 1,495 | (224) | ||||
Discontinued operations | - | 33,666 | - | 32,571 | ||||
Net Investing Cash Flows | (14,355) | 29,754 | (43,399) | 21,770 | ||||
Financing Activities | ||||||||
Proceeds from operating loans | (4,960) | (4,275) | 1,718 | 3,194 | ||||
Proceeds from long-term debt | 7,815 | - | 17,790 | 12,329 | ||||
Repayment of long-term debt | (11,987) | (36,641) | (18,765) | (52,340) | ||||
Issue of share capital, net of share issuance costs | 157 | 117 | 1,011 | 161 | ||||
Discontinued operations | - | 11 | - | (76) | ||||
Net Financing Cash Flows | (8,975) | (40,788) | 1,754 | (36,732) | ||||
Increase (decrease) in Cash and Cash Equivalents | (3,689) | 2,163 | (3,526) | 2,816 | ||||
Effect of translation on foreign currency cash and cash equivalents | (166) | (125) | (74) | (203) | ||||
Cash and Cash Equivalents, Beginning of Year | 4,854 | 2,561 | 4,599 | 1,986 | ||||
Cash and Cash Equivalents, End of Year | $ | 999 | $ | 4,599 | $ | 999 | $ | 4,599 |
Cash interest paid | $ | 277 | $ | 704 | $ | 1,057 | $ | 2,497 |
Cash taxes paid | $ | - | $ | - | $ | - | $ | 3 |
Cash taxes refunded | $ | - | $ | - | $ | 657 | $ | - |
Kevin Delaney
Chief Executive Officer
E-mail: [email protected]
Chris Martin
Chief Financial Officer
E-mail: [email protected]
Address: 10th Floor, 333 - 11th Avenue S.W.
Calgary, AB
T2R 1L9
Phone: (403) 262-4000
Fax: (403) 262-4005
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