Bri-Chem Announces 2018 Third Quarter Financial Results
14 Novembre 2018 - 1:26AM
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE U.S.
Bri-Chem Corp. (“Bri-Chem” or “Company”) (TSX:
BRY), a leading North American oilfield chemical
distribution and blending company, is pleased to announce its third
quarter financial results.
In $'000s |
For the three months endedSeptember 30, |
Change |
For the nine months endedSeptember 30, |
Change |
(except per share amounts) |
|
2018 |
|
|
2017 |
|
$ |
% |
|
2018 |
|
|
2017 |
|
$ |
% |
Revenue |
$ |
31,159 |
|
$ |
30,542 |
|
$ |
617 |
|
2 |
% |
$ |
93,731 |
|
$ |
88,293 |
|
$ |
5,438 |
|
6 |
% |
|
|
|
|
|
|
|
|
|
Adjusted Operating income/(loss) (1) |
|
1,047 |
|
|
1,935 |
|
|
(888 |
) |
(46 |
%) |
|
1,311 |
|
|
4,227 |
|
|
(2,916 |
) |
(69 |
%) |
Adjusted EBITDA(2) |
|
1,376 |
|
|
2,337 |
|
|
(961 |
) |
(41 |
%) |
|
1,870 |
|
|
5,158 |
|
|
(3,288 |
) |
64 |
% |
Adjusted EBITDA as a percentage of revenue |
|
4 |
% |
|
8 |
% |
|
- |
|
|
|
2 |
% |
|
6 |
% |
|
- |
|
|
Adjusted Net earnings/(loss) (3) |
|
353 |
|
|
921 |
|
|
(568 |
) |
62 |
% |
|
(920 |
) |
|
1,352 |
|
|
(2,272 |
) |
168 |
% |
Net earnings/(loss) |
$ |
61 |
|
$ |
921 |
|
$ |
(860 |
) |
93 |
% |
$ |
(3,785 |
) |
$ |
1,352 |
|
$ |
(5,137 |
) |
380 |
% |
Per Share Data (Diluted) |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
0.06 |
|
$ |
0.10 |
|
$ |
(0.03 |
) |
(31 |
%) |
$ |
0.08 |
|
$ |
0.22 |
|
$ |
(0.14 |
) |
64 |
% |
Adjusted Net earnings/(loss) |
$ |
0.01 |
|
$ |
0.04 |
|
$ |
(0.02 |
) |
62 |
% |
$ |
(0.04 |
) |
$ |
0.06 |
|
$ |
(0.10 |
) |
169 |
% |
Net earnings/(loss) |
$ |
0.00 |
|
$ |
0.04 |
|
$ |
(0.04 |
) |
93 |
% |
$ |
(0.16 |
) |
$ |
0.06 |
|
$ |
(0.21 |
) |
380 |
% |
Shares Outstanding |
|
|
|
|
|
|
|
|
Basic |
|
23,932,981 |
|
|
23,632,981 |
|
|
|
|
23,932,981 |
|
|
23,632,981 |
|
|
|
Diluted |
|
23,932,981 |
|
|
23,962,981 |
|
|
|
|
23,932,981 |
|
|
23,962,981 |
|
|
|
Financial Position |
|
|
|
|
|
|
|
|
Total Assets |
$ |
80,469 |
|
$ |
61,251 |
|
$ |
19,218 |
|
31 |
% |
|
|
|
|
Working Capital |
|
20,589 |
|
|
14,513 |
|
|
6,076 |
|
42 |
% |
|
|
|
|
Long-term debt |
|
8,425 |
|
|
143 |
|
|
8,282 |
|
5792 |
% |
|
|
|
|
Shareholders Equity |
|
25,305 |
|
|
28,282 |
|
|
(2,977 |
) |
(11 |
%) |
|
|
|
|
(1) Represents operating income before financing costs, foreign
exchange, and income taxes and adjusted for restructuring charges,
share-based payments and lost margin on one-time sales of product
below cost (See page 15 for a further explanation of this non-IFRS
measure).(2) Represents earnings before interest, taxes,
depreciation, amortization, impairment and restructuring charges,
share-based payments and lost margin on one-time sales of product
below cost (See page 15 for a further explanation of this non-IFRS
measure).(3) Represents net earnings adjusted for one-time sales
below cost and restructuring costs, net of tax. (See page 15 for a
further explanation of this non-IFRS measure).
Q3 HIGHLIGHTS
Key Q3 2018 & YTD highlights include:
- Bri-Chem generated consolidated revenue of $31.2 million, an
increase of 2% from the third quarter in 2017, resulting primarily
from higher business activity levels in three of our four North
American business segments;
- Sales from the USA fluids distribution division increased 23%
and the USA and Canadian blending divisions increased 12% and 21%
respectively over the third quarter of 2017. Revenue decreased by
28% in the Canadian fluids distribution as a result of a slow
starting and wet summer drilling program which resulted in lower
demand for drilling fluids products;
- Adjusted EBITDA for the third quarter was $1.4 million versus
$2.3 million in the comparable period in 2017. This decline is
mainly due to the decrease in Canadian fluids distribution sales in
Q3 and additional operational costs required to support the
increased business demand throughout our USA drilling fluids
distribution division;
- Adjusted operating earnings was $1.0 million for the three
months ended September 30, 2018 compared to operating earnings of
$1.9 million in Q3 2017, representing a $0.9 million decrease;
- Bri-Chem reported adjusted net earnings of $0.4 million or
$0.01 earnings per share diluted compared to net earnings of $0.921
million or $0.04 earnings per share diluted in 2017.
- Working capital, as at September 30, 2018, was $20.6 million
compared to $24.3 million at December 31, 2017. The Company’s
current ratio (defined as current assets divided by current
liabilities) was 1.44 to 1 compared to 1.56 to 1 as at December 31,
2017.
Summary for the three and nine months ended
September 30, 2018:
During Q3 2018, drilling activity levels
remained stable in the United States as the USA rig count averaged
1,051 rigs operating, while Canada experienced a wet summer
drilling program, particularly in the month of September.
Bri-Chem’s Q3 2018 consolidated revenues from its North American
oil and gas drilling fluids distribution, blending and packaging
businesses was $31.2 million compared to $30.5 million in the same
prior period in 2017, while the Company had sales of $93.7 million
for the nine months of 2018 compared to $88.3 million for the same
nine month period of 2017. This revenue increase is a result
of an increase in drilling fluid demand in the United States, while
Western Canadian activity levels declined due to unfavourable
weather conditions and overall Canadian oil and gas industry
uncertainty.
Bri-Chem's Canadian drilling fluids distribution
division generated sales of $8.6 million and $24.2 million for the
three and nine months ended September 30, 2018, compared to sales
of $12.0 million and $35.1 million over the comparable periods in
2017. Q3 2018 and year to date sales were lower as many
customers were adequately stocked and the industry experienced a
significantly wet summer drilling program, particularly in the
month of September which experienced unusually wet weather
throughout Alberta, resulting in many rigs sitting idle during that
period. The number of wells drilled in Western Canada for the
three month period ended September 30, 2018 was 1,880, representing
a decrease of 2.5% over the comparable quarter in 2017.
Bri-Chem’s United States drilling fluids distribution division
generated sales of $16.8 million and $53.4 million for the three
month and nine months ended September 30, 2018, compared to
revenues of $13.7 million and $38.7 million in the comparable
periods of 2017, representing increases of 23% and 38%
respectively.
Bri-Chem’s Canadian drilling fluids blending and
packaging division generated sales of $4.2 million and $11.2
million for the three and nine months ended September 30, 2018
compared to the prior year same period sales of $3.4 million and
$11.3 million respectively, representing a 21% increase quarter
over quarter and a 1% decrease year over year. The Q3
increase relates to customers requiring more production chemicals,
which resulted in more blending of those products during the
quarter. Year over year, sales for the division have remained
consistent. Bri-Chem’s USA fluids blending and
packaging division, generated sales of $1.6 million and $5.0
million for the three and nine month periods ended September 30,
2018, compared to $1.4 million and $3.2 million for the comparable
periods in 2017 as the division has seen customer growth with the
return of well abandonment work in California.
Adjusted operating earnings this quarter was
$0.755 million compared with operating earnings of $1.9 million in
the third quarter of 2017. Adjusted EBITDA was $1.4 million and
$1.9 million for the three and nine months ended September 30, 2018
compared to $2.3 million and $5.2 million in the same comparable
prior year periods; decreases of $0.96 million quarter over quarter
and $3.3 million year over year. The third quarter adjusted EBITDA
as a percentage of sales was 4% compared to 8% from the prior year
quarter. This decrease in quarter over quarter adjusted EBITDA is
mainly attributed to lower sales in the Canadian fluids
distribution division as the industry experienced a decrease in rig
activity during the quarter due to wet weather conditions
experienced in Western Canada and additional operational costs
required to support the increased business demand throughout our
USA drilling fluids distributions. The Company had
non-adjusted net earnings of $0.061 million for the quarter ended
September 30, 2018 compared to net earnings of $0.921 million in
the same prior year period. Adjusting for one-time sales
below cost and restructuring costs, adjusted net earnings was
$0.353 million for the third quarter while the adjusted net loss
was $0.920 million for the first nine months of 2018.
OUTLOOK
In Canada, despite overall improvement in
commodity price levels during 2018, a lack of consistent market
access has impacted drilling activity during the third quarter of
2018 and has caused oil price differentials to widen significantly.
Looking to 2019, PSAC has forecasted 6,600 wells to be drilled in
2019, which represents a 5% reduction over 2018’s forecast. In
addition, many Canadian companies are strategically shifting
capital, curtailing volumes, shutting in production and delaying
completion of recently drilled crude oil wells due to lack of
market access for its oil, regulatory uncertainty, lack of fiscal
competitiveness and stressed pipeline takeaway capacity. Our USA
operations remains steady and we expect oil and gas drilling
activity levels to stay consistent for the remainder of 2018 and
into 2019. We will aim to stay focused on our strategy, maintain
our market share and seek to increase margins in the near term.
About Bri-Chem
Bri-Chem has established itself, through a
combination of strategic acquisitions and organic growth, as the
North American industry leader for wholesale distribution and
blending of oilfield drilling, completion, stimulation and
production chemical fluids. We sell, blend, package and distribute
a full range of drilling fluid products from 27 strategically
located warehouses throughout Canada and the United States.
Additional information about Bri-Chem is available at www.sedar.com
or at Bri-Chem's website at www.brichem.com.
To receive Bri-Chem news updates send your email to
ir@brichem.com.
For further information, please contact:
Jason
TheissBri-Chem Corp.CFOT: (780)
571-8587E: jtheiss@brichem.com |
|
|
|
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