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)
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Three Months Ended |
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Nine Months Ended |
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September
30,
2013 |
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September
30,
2012 |
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September
30,
2013 |
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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.
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Revenue Drivers Q3
2013 versus Q3 2012 |
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% Increase |
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2013 |
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2012 |
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Fleet size |
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17% |
|
368 |
|
315 |
Utilization |
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38% |
|
47% |
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34% |
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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.