CALGARY, Nov. 7, 2018
/CNW/ - Pason Systems Inc. (TSX: PSI) announced today its 2018
third quarter results.
Performance Data
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017 (Restated)
|
|
Change
|
2018
|
|
2017 (Restated)
|
|
Change
|
(CDN 000s, except per
share data)
|
($)
|
|
($)
|
|
(%)
|
|
($)
|
|
($)
|
|
(%)
|
|
Revenue
|
82,344
|
|
64,576
|
|
28
|
|
224,428
|
|
179,417
|
|
25
|
|
Net Income
(1)
|
24,386
|
|
7,404
|
|
229
|
|
42,224
|
|
20,176
|
|
109
|
|
|
Per share – basic
(1)
|
0.29
|
|
0.08
|
|
228
|
|
0.50
|
|
0.24
|
|
106
|
|
|
Per share – diluted
(1)
|
0.28
|
|
0.08
|
|
227
|
|
0.49
|
|
0.24
|
|
105
|
|
EBITDA
(2)
|
44,633
|
|
25,493
|
|
75
|
|
100,467
|
|
70,012
|
|
43
|
|
|
As a % of
revenue
|
54.2
|
|
39.5
|
|
1,470
|
bps
|
44.8
|
|
39.0
|
|
574
|
bps
|
Adjusted EBITDA
(2)
|
42,473
|
|
26,158
|
|
62
|
|
106,684
|
|
70,427
|
|
51
|
|
|
As a % of
revenue
|
51.6
|
|
40.5
|
|
1,107
|
bps
|
47.5
|
|
39.3
|
|
828
|
bps
|
Funds flow from
operations
|
36,039
|
|
19,896
|
|
81
|
|
97,833
|
|
59,765
|
|
64
|
|
|
Per share –
basic
|
0.42
|
|
0.23
|
|
80
|
|
1.15
|
|
0.71
|
|
63
|
|
|
Per share –
diluted
|
0.42
|
|
0.23
|
|
80
|
|
1.14
|
|
0.70
|
|
62
|
|
Cash from operating
activities
|
31,809
|
|
15,128
|
|
110
|
|
83,770
|
|
69,160
|
|
21
|
|
Free cash flow
(2)
|
26,880
|
|
11,002
|
|
144
|
|
68,919
|
|
59,141
|
|
17
|
|
Capital
expenditures
|
4,858
|
|
5,371
|
|
(10)
|
|
15,426
|
|
11,604
|
|
33
|
|
Working
capital
|
234,771
|
|
190,518
|
|
23
|
|
234,771
|
|
190,518
|
|
23
|
|
Total
assets
|
429,684
|
|
398,926
|
|
8
|
|
429,684
|
|
398,926
|
|
8
|
|
Total long-term
debt
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Cash dividends
declared
|
0.18
|
|
0.17
|
|
6
|
|
0.52
|
|
0.51
|
|
2
|
|
Shares outstanding
end of period (#000's)
|
85,431
|
|
84,916
|
|
1
|
|
85,431
|
|
84,916
|
|
1
|
|
(1)
|
As disclosed in Note
2 to the consolidated financial statements, the Company identified
an immaterial non-cash re-classification error with respect to a
component of its deferred income tax expense associated with
accounting for the deferred tax on its net investment in foreign
operations related to an inter-company financing. The
reclassification is between the deferred tax provision in the
statement of operations and foreign currency translation reserve in
equity. This adjustment has been corrected on a retrospective
basis with all prior period comparative figures being
restated.
|
(2)
|
Non-IFRS financial
measures are defined in the Management's Discussion and Analysis
section.
|
Q3 2018 vs Q3 2017
The Company generated consolidated revenue of $82.3 million in the third quarter of 2018, an
increase of 28% from the same period in 2017. In the US operations,
industry activity increased by 12% while market share increased to
61% from 59%. In Canada, industry
activity was comparable while market share decreased to 85% from
88%. The International business unit saw increases in activity in
each of the Company's major markets. In the Argentinian
business unit, the increase in activity was partially offset by the
weakness in the Argentinian peso.
Consolidated adjusted EBITDA increased to $42.5 million in the third quarter, an increase
of 62% from the same period in 2017. For the nine-month period,
consolidated adjusted EBITDA was $106.7
million, an increase of 51% over the 2017 comparative
period. Increases in revenue in all operating segments, combined
with significant operating leverage, led to the improvement in this
key measure.
The Company recorded net income of $24.4
million ($0.28 per share) in
the third quarter of 2018, compared to net income of $7.4 million ($0.08
per share) recorded in the same period in 2017. Net income was
positively impacted from the increased level of activity, increased
market share in the US operations, and reduction in depreciation
expense.
President's Message
Pason achieved strong results in the third quarter of 2018 and
our teams continue to perform very well in all geographies. We
generated revenue of $82.3 million in
the period, an increase of 28% compared to the same quarter last
year. The main drivers of revenue growth were increased drilling
activity and market share gains in the
United States, and higher activity levels in all
of Pason's international markets.
Adjusted EBITDA was $42.5 million
for the quarter, an increase of 62%. Adjusted EBITDA as a
percentage of revenue was 52% compared to 41% one year ago. The
drivers of this improvement were the significant increase in
revenue with high incremental margins. Pason recorded net income
for the quarter of $24.4 million
($0.28 per share) compared to
$7.4 million ($0.08 per share) in the prior year quarter.
Capital expenditures for the quarter were $4.9 million and free cash flow was $26.9 million. At September 30, 2018, our working capital position
stood at $235 million, including cash
and short-term investments of $184
million. There is no debt on our balance sheet. We are
maintaining our quarterly dividend at $0.18 share.
At the beginning of this year, we began reporting our revenue
along five product categories to better reflect the changing nature
of Pason's business as follows:
- Drilling Data contains all products and services
associated with acquiring, displaying, storing, and delivering
drilling data. Revenue in this segment increased 32% in the third
quarter compared to the prior year period and accounted for 51% of
our total revenue. The increase was driven by a 12% increase in
total US land drilling activity and US market share gains from 59%
to 61%. Drilling industry days and segment revenue in Canada were flat. Internationally, drilling
activity increased in all major markets.
- Mud Management & Safety includes products
such as the Pit Volume Totalizer (PVT), Gas Analyzer, Hazardous Gas
Alarm, and the Electronic Choke Actuator. In the third quarter, Mud
Management & Safety generated 27% of total revenue.
- Communications includes satellite and terrestrial
Internet bandwidth, Wireless Rigsite, VoIP and Intercom services
and accounted for 9% of total revenue. Revenue in this segment is
showing lower growth because of the transition from satellite to
terrestrial bandwidth with lower pricing and better user experience
for customers.
- Drilling Intelligence bundles Pason's product
offerings targeted at enabling our customers' drilling optimization
and automation efforts. It contains products such as autodrillers,
abbl Directional Advisor®, the ExxonMobil Drilling Advisory System®
and Pivot, a pipe oscillation system for improving slide drilling.
Drilling Intelligence is our highest growth segment as revenue
increased 73% in the third quarter compared to the prior year and
accounted for 9% of our total revenue. Our level of confidence in
the successful commercialization of new drilling intelligence
products continues to grow. There currently are over 150 drilling
rig installations of new Drilling Intelligence software in
North America.
- Analytics & Other includes our Verdazo
Discovery Analytics product suite, various reports, and other
revenue streams. This segment is not as directly correlated to
drilling activity and accounted for 4% of revenue.
We have increased our investment in R&D and IT in the first
nine months of 2018 compared to the previous year period with a
focus on machine learning algorithms, particularly in Drilling
Intelligence and Mud Management & Safety. Our capital
expenditures will be relatively modest going forward with a larger
portion of development efforts focused on software and analytics.
We intend to spend up to $25 million
in capital expenditures in 2018 and up to $30 million in 2019. Our highly capable and
flexible IT and communications platform can host additional new
Pason and third-party software at the rigsite and in the Cloud.
From a macro perspective, the oil market continued to tighten in
the third quarter. Despite continued strong production from the US
and increasing output from OPEC countries, we had seen a further
draw in global inventories and an increase in oil prices. The
tightening supply and demand balance was driven by accelerating
decline rates in the international production base and by the
reduction in exports from Venezuela and Iran.
In the United States there are
concerns for industry activity in the coming few quarters given
take-away constraints across several basins, especially in the
Permian in Texas and New Mexico. However, we have not yet seen any
signs of a slowdown and we expect activity levels to plateau,
rather than decline significantly. It is expected that the Permian
takeaway constraints will be addressed in the next 12-18
months.
In Canada, we expect activity
in the upcoming winter drilling season to be somewhat lower than
last year. We continue to be concerned about the medium-term
outlook for Canadian oil and gas as the ongoing crude oil and
natural gas takeaway capacity issues, and price differentials,
continue to create an environment of extreme caution for Canadian
E&P companies.
In aggregate, we expect drilling activity in Pason's core
markets to be largely flat in 2019 compared to 2018. Our market
positions remain strong, and we expect to be able to deliver growth
through higher product adoption going forward. We are the service
provider of choice for many leading operators and drilling
contractors with Pason equipment installed on over 65% of all
active land drilling rigs in the Western Hemisphere. We continue to
be very well-positioned to participate in the industry's recovery
and growth.
(signed)
Marcel Kessler
President and Chief Executive Officer
November 7, 2018
Management's Discussion and Analysis
The following discussion and analysis has been prepared by
management as of November 7, 2018, and is a review of the
financial condition and results of operations of Pason Systems Inc.
(Pason or the Company) based on International Financial Reporting
Standards (IFRS) and should be read in conjunction with the
consolidated financial statements and accompanying notes.
Certain information regarding the Company contained herein may
constitute forward-looking statements under applicable securities
laws. Such statements are subject to known or unknown risks and
uncertainties that may cause actual results to differ materially
from those anticipated or implied in the forward-looking
statements.
All financial measures presented in this report are expressed in
Canadian dollars unless otherwise indicated.
Additional IFRS Measures
In its interim condensed consolidated financial statements, the
Company uses certain additional IFRS measures. Management believes
these measures provide useful supplemental information to
readers.
Funds flow from operations
Management believes that funds flow from operations, as reported
in the Consolidated Statements of Cash Flows, is a useful
additional measure as it represents the cash generated during the
period, regardless of the timing of collection of receivables and
payment of payables. Funds flow from operations represents the cash
flow from continuing operations, excluding non-cash items. Funds
flow from operations is defined as net income adjusted for
depreciation and amortization expense, non-cash, stock-based
compensation expense, deferred taxes, and other non-cash items
impacting operations.
Cash from operating activities
Cash from operating activities is defined as funds flow from
operations adjusted for changes in working capital items.
Non-IFRS Financial Measures
These definitions are not recognized measures under IFRS, and
accordingly, may not be comparable to measures used by other
companies. These Non-IFRS measures provide readers with additional
information regarding the Company's ability to generate funds to
finance its operations, fund its research and development and
capital expenditure program, and pay dividends.
Revenue per EDR day
Revenue per EDR day is defined as the daily revenue generated
from all products that the Company has on rent on a drilling rig
that has the Company's base EDR installed. This metric provides a
key measure on the Company's ability to increase production
adoption and evaluate product pricing.
EBITDA
EBITDA is defined as net income before interest expense, income
taxes, stock-based compensation expense, depreciation and
amortization expense, and gains on disposal of investments.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA, adjusted for foreign
exchange, impairment of property, plant, and equipment,
restructuring costs, and other items which the Company does not
consider to be in the normal course of continuing operations.
Management believes that EBITDA and Adjusted EBITDA are useful
supplemental measures as they provide an indication of the results
generated by the Company's principal business activities prior to
the consideration of how these results are taxed in multiple
jurisdictions, how the results are impacted by foreign exchange or
how the results are impacted by the Company's accounting policies
for equity-based compensation plans.
Free cash flow
Free cash flow is defined as cash from operating activities plus
proceeds on disposal of property, plant, and equipment, less
capital expenditures (including changes to non-cash working capital
associated with capital expenditures), and deferred development
costs. This metric provides a key measure on the Company's ability
to generate cash from it's principal business activities after
funding the capital expenditure program, and provides an indication
of the amount of cash available to finance, among other items, the
Company's dividend and other investment opportunities.
Overall Performance
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
(000s)
|
($)
|
|
($)
|
|
(%)
|
|
($)
|
|
($)
|
|
(%)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
Data
|
42,090
|
|
31,889
|
|
32
|
|
114,805
|
|
88,974
|
|
29
|
|
|
Mud Management and
Safety
|
22,299
|
|
19,288
|
|
16
|
|
62,863
|
|
53,225
|
|
18
|
|
|
Communications
|
7,504
|
|
6,567
|
|
14
|
|
21,413
|
|
18,440
|
|
16
|
|
|
Drilling
Intelligence
|
7,111
|
|
4,099
|
|
73
|
|
16,066
|
|
11,313
|
|
42
|
|
|
Analytics and
Other
|
3,340
|
|
2,733
|
|
22
|
|
9,281
|
|
7,465
|
|
24
|
|
Total
revenue
|
82,344
|
|
64,576
|
|
28
|
|
224,428
|
|
179,417
|
|
25
|
|
The Pason Electronic Drilling Recorder (EDR) remains the
Company's primary product. The EDR provides a complete system of
drilling data acquisition, data networking, and drilling management
tools and reports at both the wellsite and at customer offices. The
EDR is the base product from which all other wellsite
instrumentation products are linked. By linking these products, a
number of otherwise redundant elements such as data processing,
display, storage, and networking are eliminated. This ensures
greater reliability and a more robust system of instrumentation for
the customer.
EDR rental day performance for Canada and the
United States is reported below:
Pason Electronic
Drilling Recorder (EDR) Rental Days
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
|
#
|
|
#
|
|
(%)
|
|
#
|
|
#
|
|
(%)
|
|
Canada
|
16,100
|
|
16,900
|
|
(5)
|
|
45,500
|
|
49,900
|
|
(9)
|
|
United
States
|
57,500
|
|
49,500
|
|
16
|
|
164,700
|
|
128,500
|
|
28
|
|
Total revenue increased 28% and 25% for the three and nine
months ending September 2018, over
the same period in 2017. This increase is attributable to an
increase in revenue per EDR day in all three operating segments
combined with an increase in the activity in the US operating
segment.
Industry activity in the US market increased 12% in the third
quarter of 2018 compared to the corresponding period in 2017, while
third quarter Canadian industry activity was consistent in the
third quarter of 2018 compared to the corresponding period in 2017.
US EDR days increased by 16% in the third quarter of 2018 compared
to the corresponding period in 2017, while third quarter Canadian
EDR days, which includes non-oil and gas-related activity,
decreased 5% from 2017 levels.
In the third quarter of 2018, the Pason EDR was installed on 61%
of the land rigs in the US market compared to 59% during the same
time period of 2017.
In the third quarter of 2018, the Pason EDR was installed on 85%
of the land rigs in the Canadian market compared to 88% during the
same period of 2017. For the purposes of market share, the Company
uses the number of EDR days billed and oil and gas drilling days as
reported by accepted industry sources.
Revenue generated from the Company's other wellsite
instrumentation products was largely driven by the increase in
drilling activity in the US market combined with increases in the
adoption of certain EDR peripherals, most notably the alarms and
sensors, and an increase in revenue from the Company's drilling
intelligence products.
For the third quarter of 2018, the Company saw an increase in
activity in all major regions of the International operating
segment with the largest increases in Australia and Argentina.
Discussion of Operations
United States Operations
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
(000s)
|
($)
|
|
($)
|
|
(%)
|
|
($)
|
|
($)
|
|
(%)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
Data
|
29,640
|
|
20,888
|
|
42
|
|
80,311
|
|
56,630
|
|
42
|
|
|
Mud Management and
Safety
|
15,274
|
|
12,763
|
|
20
|
|
43,153
|
|
34,352
|
|
26
|
|
|
Communications
|
4,099
|
|
3,458
|
|
19
|
|
11,997
|
|
9,443
|
|
27
|
|
|
Drilling
Intelligence
|
3,774
|
|
2,266
|
|
67
|
|
8,827
|
|
5,723
|
|
54
|
|
|
Analytics and
Other
|
1,382
|
|
1,303
|
|
6
|
|
4,267
|
|
3,691
|
|
16
|
|
Total
revenue
|
54,169
|
|
40,678
|
|
33
|
|
148,555
|
|
109,839
|
|
35
|
|
Rental services
and local administration
|
18,317
|
|
17,130
|
|
7
|
|
52,657
|
|
47,642
|
|
11
|
|
Depreciation and
amortization
|
4,200
|
|
4,151
|
|
1
|
|
12,128
|
|
13,322
|
|
(9)
|
|
Segment gross
profit
|
31,652
|
|
19,397
|
|
63
|
|
83,770
|
|
48,875
|
|
71
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue per EDR day -
USD
|
716
|
|
647
|
|
694
|
|
648
|
Revenue per EDR day -
CAD
|
936
|
|
809
|
|
893
|
|
847
|
Revenue from the US operations increased by 33% in the third
quarter of 2018 over the 2017 comparable period (28% when measured
in USD). For the first nine months of 2018, revenue increased 35%
compared to the prior period (37% when measured in USD).
Industry activity in the US market increased by 12% in the third
quarter of 2018 over the 2017 comparable period. For the first nine
months of 2018, industry activity increased by 19% compared to the
prior period. US market share was 61% for the third quarter of 2018
compared to 59% during the same period of 2017. For the first
nine months of 2018, US market share was 61% compared to 57% during
the same period of 2017. The increase in market share is driven by
market share growth in key US regions combined with changes in the
mix of active customers.
EDR rental days increased by 16% in the third quarter of 2018
over the 2017 comparable period. Revenue per EDR day increased to
US$716 in the third quarter of 2018,
an increase of US$69 over the same
period in 2017. The increase in revenue per EDR day was driven by
higher adoption of certain peripheral products and selective price
increases on certain products.
Revenue per EDR day for the first nine months of 2018 was
US$694, an increase of US$46 from the same period of 2017.
Rental services and local administration increased by 7% in the
third quarter of 2018 over the 2017 comparative period (6% when
measured in USD). For the first nine months of 2018, rental
services and local administration increased 11% over the 2017
comparative period (15% when measured in USD). The increase in
operating costs is attributable higher field staff levels and
higher direct costs to support additional activity.
Depreciation expense increased by 1% in the third quarter of
2018 over the 2017 comparative period. For the first nine months of
2018, depreciation expense decreased 9% over the 2017 comparative
period.
Segment gross profit increased by $12.3
million or 63% in the third quarter of 2018 over the 2017
comparative period. For the first nine months of 2018, segment
gross profit was $83.8
million. This represents an increase of 71% over the
2017 comparative period.
Canadian Operations
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
(000s)
|
($)
|
|
($)
|
|
(%)
|
|
($)
|
|
($)
|
|
(%)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
Data
|
7,804
|
|
7,763
|
|
1
|
|
21,904
|
|
22,365
|
|
(2)
|
|
|
Mud Management and
Safety
|
5,333
|
|
5,366
|
|
(1)
|
|
14,956
|
|
15,475
|
|
(3)
|
|
|
Communications
|
3,028
|
|
2,869
|
|
6
|
|
8,303
|
|
8,222
|
|
1
|
|
|
Drilling
Intelligence
|
2,869
|
|
1,414
|
|
103
|
|
6,104
|
|
4,192
|
|
46
|
|
|
Analytics and
Other
|
981
|
|
908
|
|
8
|
|
2,837
|
|
2,532
|
|
12
|
|
Total
revenue
|
20,015
|
|
18,320
|
|
9
|
|
54,104
|
|
52,786
|
|
2
|
|
Rental services
and local administration
|
6,046
|
|
6,473
|
|
(7)
|
|
19,510
|
|
17,826
|
|
9
|
|
Depreciation and
amortization
|
3,900
|
|
6,053
|
|
(36)
|
|
12,508
|
|
17,632
|
|
(29)
|
|
Segment gross
profit
|
10,069
|
|
5,794
|
|
74
|
|
22,086
|
|
17,328
|
|
27
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue per EDR day -
CAD
|
1,191
|
|
1,041
|
|
1,133
|
|
1,010
|
Canadian drilling activity in the third quarter of 2018 was flat
relative to the same period in 2017. The level of activity during
the quarter was affected by weather-related issues during
September. For the first nine months of 2018, drilling activity
decreased by 6% compared to the same period in 2017. Rig activity
reflected the challenging industry outlook and takeaway capacity
issues in the WCSB.
Canadian segment revenue increased by 9% in the third quarter of
2018 over the 2017 comparative period. For the first nine months of
2018, revenue increased by 2% compared to the prior period.
Canadian market share was 85% for the third quarter of 2018
compared to 88% during the same period of 2017. For the first nine
months of 2018, Canadian market share was 86% compared to 89%
during the same period of 2017.
EDR rental days decreased 5% in the third quarter of 2018
compared to 2017. On a year-to-date basis EDR rental days decreased
9% over 2017 levels. Revenue per EDR day increased by $150 to $1,191
during the third quarter of 2018 compared to 2017. For the first
nine months of 2018, revenue per EDR day increased by $123 to $1,133. The
increase is driven by higher adoption of certain EDR peripherals
and the successful introduction of drilling intelligence
products.
Rental services and local administration decreased by 7% in the
third quarter of 2018 relative to the same period in 2017. For the
first nine months of 2018, rental services and local administration
increased 9% compared to the same period in 2017. The increase is
due to repair costs and other direct field costs incurred primarily
in the first two quarters of 2018.
Depreciation and amortization expense decreased by 36% in the
third quarter of 2018 over the 2017 comparative period. The
decrease is a result of lower capital programs since 2014 and a
drop in amortization expense of previously deferred research and
development costs as fewer project costs are being capitalized for
accounting purposes.
Segment gross profit for the third quarter of 2018 increased 74%
to $10.1 million in the third quarter
of 2018 compared to $5.8 million in
segment gross profit in the 2017 comparative period.
International Operations
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
(000s)
|
($)
|
|
($)
|
|
(%)
|
|
($)
|
|
($)
|
|
(%)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling
Data
|
4,646
|
|
3,238
|
|
43
|
|
12,590
|
|
9,979
|
|
26
|
|
|
Mud Management and
Safety
|
1,692
|
|
1,159
|
|
46
|
|
4,754
|
|
3,398
|
|
40
|
|
|
Communications
|
377
|
|
240
|
|
57
|
|
1,113
|
|
775
|
|
44
|
|
|
Drilling
Intelligence
|
468
|
|
419
|
|
12
|
|
1,135
|
|
1,398
|
|
(19)
|
|
|
Analytics and
Other
|
977
|
|
522
|
|
87
|
|
2,177
|
|
1,242
|
|
75
|
|
Total
revenue
|
8,160
|
|
5,578
|
|
46
|
|
21,769
|
|
16,792
|
|
30
|
|
Rental services
and local administration
|
4,434
|
|
4,317
|
|
3
|
|
13,882
|
|
13,282
|
|
5
|
|
Depreciation and
amortization
|
804
|
|
980
|
|
(18)
|
|
2,663
|
|
3,026
|
|
(12)
|
|
Segment gross
profit
|
2,922
|
|
281
|
|
940
|
|
5,224
|
|
484
|
|
979
|
|
Drilling activity increased in the Company's major international
markets, although the majority of the absolute gains were seen in
Australia, Argentina, and the Andean region. The increase
in activity in Argentina was
offset by a weaker Argentinian peso compared to the prior year.
Revenue in the International segment increased by 46% in the
third quarter of 2018 compared to the same period in 2017. For the
first nine months of 2018, revenue increased by 30% compared to the
prior period.
Rental services and local administration expenses increased by
3% in the third quarter of 2018 compared to the same period in
2017. For the first nine months of 2018, rental services and local
administration expense increased by 5% compared to the prior
period.
Depreciation expense decreased by 18% in the third quarter of
2018 compared to the same period in 2017.
Segment gross profit was $2.9
million for the third quarter of 2018, an improvement from
the $0.3 million profit recorded in
the corresponding period in 2017. For the first nine months of
2018, segment gross profit was $5.2
million compared to $0.5
million in 2017.
Corporate Expenses
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
(000s)
|
($)
|
|
($)
|
|
(%)
|
|
($)
|
|
($)
|
|
(%)
|
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
6,711
|
|
6,945
|
|
(3)
|
|
19,687
|
|
19,083
|
|
3
|
|
Corporate
services
|
4,363
|
|
3,553
|
|
23
|
|
12,008
|
|
11,157
|
|
8
|
|
Stock-based
compensation
|
2,589
|
|
3,145
|
|
(18)
|
|
8,978
|
|
8,869
|
|
1
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
(gain) loss
|
(1,516)
|
|
113
|
|
—
|
|
6,675
|
|
(353)
|
|
—
|
|
|
Other
|
(644)
|
|
552
|
|
—
|
|
(458)
|
|
768
|
|
—
|
|
Total corporate
expenses
|
11,503
|
|
14,308
|
|
(20)
|
|
46,890
|
|
39,524
|
|
19
|
|
Corporate service expenses increased in the third quarter of
2018 over the 2017 comparative period due to one time costs
combined with certain expenses being recognized in different
periods in 2018 as compared to 2017.
Q3 2018 vs Q2 2018
Consolidated revenue was $82.3
million in the third quarter of 2018 compared to
$68.3 million in the second quarter
of 2018, an increase of $14.0 million
or 21%. The second quarter of the year is typically the weakest for
the Company due to the seasonality of Canadian drilling activity.
US and international activity levels continued to increase and this
partially offset the anticipated drop in Canadian activity.
Revenue in the US segment was $54.2
million in the third quarter of 2018 compared to
$50.3 million in the second quarter
of 2018, an increase of $3.9 million
or 8% as industry activity, market share and revenue per EDR day
all increased. The Canadian segment earned revenue of $20.0 million in the third quarter of 2018
compared to $10.7 million in the
second quarter of 2018, an increase of $9.4
million or 88%. The International segment earned revenue of
$8.2 million in the third quarter of
2018 compared to $7.3 million in the
second quarter of 2018, an increase of $0.8
million or 11%.
Adjusted EBITDA, which adjusts EBITDA for foreign exchange and
certain non-recurring charges, was $42.5
million in the third quarter of 2018 compared to
$29.5 million in the second quarter
of 2018. Funds flow from operations was $36.0 million in the third quarter of 2018
compared to $27.8 million in the
second quarter of 2018.
The Company recorded net income in the third quarter of 2018 of
$24.4 million ($0.28 per share) compared to a profit of
$5.5 million ($0.06 per share) in the second quarter of 2018.
The Company recorded an unrealized foreign exchange gain in the
third quarter of 2018 compared to a significant unrealized foreign
exchange loss in the second quarter of 2018.
Third Quarter Conference Call
Pason will be conducting a conference call for interested
analysts, brokers, investors and media representatives to review
its third quarter 2018 results at 9:00
am (Calgary time) on
Thursday, November 8, 2018. The
conference call dial-in number is 1-888-231-8191 or 1-647-427-7450.
You can access the seven-day replay by dialing 1-855-859-2056 or
1-416-849-0833, using password 3476978.
Pason Systems Inc. is a leading global provider of specialized
data management systems for drilling rigs. Our solutions, which
include data acquisition, wellsite reporting, remote
communications, web-based information management, and analytics,
enable collaboration between the rig and the office. Pason's common
shares trade on the Toronto Stock Exchange under the symbol
PSI.
Additional information, including the Company's Annual Report
and Annual Information Form for the year ended December 31, 2017, is available on SEDAR at
www.sedar.com or on the Company's website at
www.pason.com.
Condensed Consolidated Interim Balance Sheets
As
at
|
|
September 30,
2018
|
|
December 31,
2017
|
(CDN 000s)
(unaudited)
|
|
($)
|
|
($)
|
Assets
|
|
|
|
|
Current
|
|
|
|
|
|
Cash and cash
equivalents
|
|
119,762
|
|
154,129
|
|
Short-term
investments
|
|
64,725
|
|
—
|
|
Trade and other
receivables
|
|
70,684
|
|
55,069
|
|
Income tax
recoverable other
|
|
15,304
|
|
17,881
|
|
Prepaid
expenses
|
|
4,096
|
|
4,028
|
|
Income taxes
recoverable
|
|
5,413
|
|
3,946
|
|
Total current
assets
|
|
279,984
|
|
235,053
|
Non-current
|
|
|
|
|
|
Property, plant and
equipment
|
|
117,323
|
|
127,685
|
|
Intangible assets and
goodwill
|
|
32,377
|
|
34,318
|
|
Deferred tax
assets
|
|
—
|
|
1,390
|
|
Total non-current
assets
|
|
149,700
|
|
163,393
|
Total
assets
|
|
429,684
|
|
398,446
|
Liabilities and
equity
|
|
|
|
|
Current
|
|
|
|
|
|
Trade payables and
accruals
|
|
23,511
|
|
20,391
|
|
Income taxes payable
other
|
|
15,304
|
|
17,881
|
|
Stock-based
compensation liability
|
|
6,398
|
|
3,089
|
|
Total current
liabilities
|
|
45,213
|
|
41,361
|
Non-current
|
|
|
|
|
|
Stock-based
compensation liability
|
|
4,849
|
|
2,758
|
|
Deferred tax
liabilities
|
|
16,165
|
|
4,515
|
|
Onerous lease
obligation
|
|
2,189
|
|
2,326
|
|
Total non-current
liabilities
|
|
23,203
|
|
9,599
|
Equity
|
|
|
|
|
|
Share
capital
|
|
156,440
|
|
150,887
|
|
Share-based benefits
reserve
|
|
27,072
|
|
24,425
|
|
Foreign currency
translation reserve
|
|
48,065
|
|
40,358
|
|
Retained
earnings
|
|
129,691
|
|
131,816
|
|
Total
equity
|
|
361,268
|
|
347,486
|
Total liabilities
and equity
|
|
429,684
|
|
398,446
|
Condensed Consolidated Interim Statements of
Operations
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017 (Restated)
|
|
2018
|
|
2017 (Restated)
|
(CDN 000s, except per
share data) (unaudited)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
82,344
|
|
64,576
|
|
224,428
|
|
179,417
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
Rental
services
|
|
25,648
|
|
25,245
|
|
76,896
|
|
70,827
|
|
Local
administration
|
|
3,149
|
|
2,675
|
|
9,153
|
|
7,923
|
|
Depreciation and
amortization
|
|
8,904
|
|
11,184
|
|
27,299
|
|
33,980
|
|
|
37,701
|
|
39,104
|
|
113,348
|
|
112,730
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
44,643
|
|
25,472
|
|
111,080
|
|
66,687
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
6,711
|
|
6,945
|
|
19,687
|
|
19,083
|
|
Corporate
services
|
|
4,363
|
|
3,553
|
|
12,008
|
|
11,157
|
|
Stock-based
compensation expense
|
|
2,589
|
|
3,145
|
|
8,978
|
|
8,869
|
|
Other (income)
expense
|
|
(2,160)
|
|
665
|
|
6,217
|
|
415
|
|
|
11,503
|
|
14,308
|
|
46,890
|
|
39,524
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
|
33,140
|
|
11,164
|
|
64,190
|
|
27,163
|
|
Income tax
provision
|
|
8,754
|
|
3,760
|
|
21,966
|
|
6,987
|
Net
income
|
|
24,386
|
|
7,404
|
|
42,224
|
|
20,176
|
Income per
share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
0.29
|
|
0.08
|
|
0.50
|
|
0.24
|
|
Diluted
|
|
0.28
|
|
0.08
|
|
0.49
|
|
0.24
|
Condensed Consolidated Interim Statements of Other
Comprehensive Income
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
(Restated)
|
|
2018
|
|
2017 (Restated)
|
(CDN 000s)
(unaudited)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Net
income
|
|
24,386
|
|
7,404
|
|
42,224
|
|
20,176
|
Items that may be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
Tax expense
(recovery) on net investment in foreign operations related to an
inter-company financing
|
|
632
|
|
1,409
|
|
(1,134)
|
|
2,685
|
|
Foreign currency
translation adjustment
|
|
(9,813)
|
|
(12,613)
|
|
8,841
|
|
(23,351)
|
Other
comprehensive gain (loss)
|
|
(9,181)
|
|
(11,204)
|
|
7,707
|
|
(20,666)
|
Total
comprehensive income (loss)
|
|
15,205
|
|
(3,800)
|
|
49,931
|
|
(490)
|
Condensed Consolidated Interim Statements of Changes in
Equity
|
|
Share
Capital
|
|
Share-Based
Benefits
Reserve
|
|
Foreign
Currency
Translation
Reserve
|
|
Retained
Earnings
|
|
Total
Equity
|
(CDN 000s)
(unaudited)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Balance at January
1, 2017 -
Previously reported
|
|
139,730
|
|
23,026
|
|
69,443
|
|
154,452
|
|
386,651
|
|
Correction of
error
|
|
—
|
|
—
|
|
(9,871)
|
|
9,871
|
|
—
|
Balance at January
1, 2017 -
Currently reported
|
|
139,730
|
|
23,026
|
|
59,572
|
|
164,323
|
|
386,651
|
|
Net income - as
restated
|
|
—
|
|
—
|
|
—
|
|
20,176
|
|
20,176
|
|
Dividends
|
|
—
|
|
—
|
|
—
|
|
(43,238)
|
|
(43,238)
|
|
Other comprehensive
loss - as restated
|
|
—
|
|
—
|
|
(20,666)
|
|
—
|
|
(20,666)
|
|
Exercise of stock
options
|
|
6,290
|
|
(1,516)
|
|
—
|
|
—
|
|
4,774
|
|
Expense related to
vesting of options
|
|
—
|
|
2,617
|
|
—
|
|
—
|
|
2,617
|
Balance at September
30, 2017
|
|
146,020
|
|
24,127
|
|
38,906
|
|
141,261
|
|
350,314
|
|
Net income - as
restated
|
|
—
|
|
—
|
|
—
|
|
5,014
|
|
5,014
|
|
Dividends
|
|
—
|
|
—
|
|
—
|
|
(14,459)
|
|
(14,459)
|
|
Other comprehensive
loss
|
|
—
|
|
—
|
|
1,452
|
|
—
|
|
1,452
|
|
Exercise of stock
options
|
|
3,117
|
|
(731)
|
|
—
|
|
—
|
|
2,386
|
|
Expense related to
vesting of options
|
|
—
|
|
1,029
|
|
—
|
|
—
|
|
1,029
|
|
Verdazo
Acquisition
|
|
1,750
|
|
—
|
|
—
|
|
—
|
|
1,750
|
Balance at December
31, 2017
|
|
150,887
|
|
24,425
|
|
40,358
|
|
131,816
|
|
347,486
|
|
Net income
|
|
—
|
|
—
|
|
—
|
|
42,224
|
|
42,224
|
|
Dividends
|
|
—
|
|
—
|
|
—
|
|
(44,349)
|
|
(44,349)
|
|
Other comprehensive
income
|
|
—
|
|
—
|
|
7,707
|
|
—
|
|
7,707
|
|
Exercise of stock
options
|
|
5,553
|
|
(888)
|
|
—
|
|
—
|
|
4,665
|
|
Expense related to
vesting of options
|
|
—
|
|
3,535
|
|
—
|
|
—
|
|
3,535
|
Balance at
September 30, 2018
|
|
156,440
|
|
27,072
|
|
48,065
|
|
129,691
|
|
361,268
|
Condensed Consolidated Interim Statements of Cash
Flows
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017 (Restated)
|
|
2018
|
|
2017 (Restated)
|
(CDN 000s)
(unaudited)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Cash from (used
in) operating activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
24,386
|
|
7,404
|
|
42,224
|
|
20,176
|
Adjustment for
non-cash items:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
8,904
|
|
11,184
|
|
27,299
|
|
33,980
|
|
Stock-based
compensation
|
|
2,589
|
|
3,145
|
|
8,978
|
|
8,869
|
|
Deferred income
taxes
|
|
1,328
|
|
(20)
|
|
11,992
|
|
(685)
|
|
Unrealized foreign
exchange (gain) loss and other
|
|
(1,168)
|
|
(1,817)
|
|
7,340
|
|
(2,575)
|
Funds flow from
operations
|
|
36,039
|
|
19,896
|
|
97,833
|
|
59,765
|
Movements in non-cash
working capital items:
|
|
|
|
|
|
|
|
|
|
Decrease in trade and
other receivables
|
|
(11,941)
|
|
(6,954)
|
|
(18,688)
|
|
(5,138)
|
|
Decrease in prepaid
expenses
|
|
(1,374)
|
|
(1,418)
|
|
(99)
|
|
(1,160)
|
|
Decrease in income
taxes
|
|
10,324
|
|
3,811
|
|
11,594
|
|
13,377
|
|
Increase in trade
payables, accruals and stock-based compensation
liability
|
|
2,989
|
|
2,609
|
|
2,011
|
|
5,743
|
|
Effects of exchange
rate changes
|
|
(75)
|
|
(23)
|
|
235
|
|
962
|
Cash generated
from operating activities
|
|
35,962
|
|
17,921
|
|
92,886
|
|
73,549
|
|
Income tax
paid
|
|
(4,153)
|
|
(2,793)
|
|
(9,116)
|
|
(4,389)
|
Net cash from
operating activities
|
|
31,809
|
|
15,128
|
|
83,770
|
|
69,160
|
Cash flows from
(used in) financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of common shares
|
|
993
|
|
1,694
|
|
4,665
|
|
4,774
|
|
Payment of
dividends
|
|
(15,378)
|
|
(14,425)
|
|
(44,349)
|
|
(43,238)
|
Net cash used in
financing activities
|
|
(14,385)
|
|
(12,731)
|
|
(39,684)
|
|
(38,464)
|
Cash flows (used
in) from investing activities
|
|
|
|
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
(3,819)
|
|
(5,126)
|
|
(12,144)
|
|
(10,406)
|
|
Development
costs
|
|
(1,039)
|
|
(245)
|
|
(3,282)
|
|
(1,198)
|
|
Proceeds on disposal
of investment and property, plant and equipment
|
|
92
|
|
47
|
|
188
|
|
61
|
|
Purchase of
short-term investments
|
|
—
|
|
—
|
|
(65,840)
|
|
—
|
|
Acquisition
|
|
—
|
|
—
|
|
—
|
|
(4,750)
|
|
Proceeds on sale of
net operating assets
|
|
—
|
|
—
|
|
—
|
|
7,123
|
|
Changes in non-cash
working capital
|
|
(163)
|
|
1,198
|
|
387
|
|
1,524
|
Net cash used in
investing activities
|
|
(4,929)
|
|
(4,126)
|
|
(80,691)
|
|
(7,646)
|
Effect of exchange
rate on cash and cash equivalents
|
|
(4,075)
|
|
(5,354)
|
|
2,238
|
|
(10,092)
|
Net increase
(decrease) in cash and cash equivalents
|
|
8,420
|
|
(7,083)
|
|
(34,367)
|
|
12,958
|
Cash and cash
equivalents, beginning of period
|
|
111,342
|
|
166,520
|
|
154,129
|
|
146,479
|
Cash and cash
equivalents, end of period
|
|
119,762
|
|
159,437
|
|
119,762
|
|
159,437
|
Operating Segments
The Company operates in three geographic segments: Canada, the United
States, and International (Latin
America, Offshore, the Eastern Hemisphere, and the
Middle East). The following table
represents a disaggregation of revenue from contracts with
customers along with the reportable segment for each category:
Three Months Ended
September 30, 2018
|
Canada
|
|
United
States
|
|
International
|
|
Total
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Revenue
|
|
|
|
|
|
|
|
|
Drilling
Data
|
7,804
|
|
29,640
|
|
4,646
|
|
42,090
|
|
Mud Management and
Safety
|
5,333
|
|
15,274
|
|
1,692
|
|
22,299
|
|
Communications
|
3,028
|
|
4,099
|
|
377
|
|
7,504
|
|
Drilling
Intelligence
|
2,869
|
|
3,774
|
|
468
|
|
7,111
|
|
Analytics and
Other
|
981
|
|
1,382
|
|
977
|
|
3,340
|
Total
Revenue
|
20,015
|
|
54,169
|
|
8,160
|
|
82,344
|
Rental services and
local administration
|
6,046
|
|
18,317
|
|
4,434
|
|
28,797
|
Depreciation and
amortization
|
3,900
|
|
4,200
|
|
804
|
|
8,904
|
Segment gross
profit
|
10,069
|
|
31,652
|
|
2,922
|
|
44,643
|
Research and
development
|
|
|
|
|
|
|
6,711
|
Corporate
services
|
|
|
|
|
|
|
4,363
|
Stock-based
compensation
|
|
|
|
|
|
|
2,589
|
Other
(income)
|
|
|
|
|
|
|
(2,160)
|
Income tax
|
|
|
|
|
|
|
8,754
|
Net income
|
|
|
|
|
|
|
24,386
|
Capital
expenditures
|
1,285
|
|
2,298
|
|
1,275
|
|
4,858
|
As at September
30, 2018
|
|
|
|
|
|
|
|
Property plant and
equipment
|
38,216
|
|
65,503
|
|
13,604
|
|
117,323
|
Goodwill
|
1,259
|
|
7,387
|
|
2,600
|
|
11,246
|
Intangible
assets
|
21,090
|
|
41
|
|
—
|
|
21,131
|
Segment
assets
|
112,550
|
|
271,754
|
|
45,380
|
|
429,684
|
Segment
liabilities
|
48,696
|
|
15,145
|
|
4,575
|
|
68,416
|
Three Months Ended
September, 2017
(Restated)
|
Canada
|
|
United
States
|
|
International
|
|
Total
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Revenue
|
|
|
|
|
|
|
|
|
Drilling
Data
|
7,763
|
|
20,888
|
|
3,238
|
|
31,889
|
|
Mud Management and
Safety
|
5,366
|
|
12,763
|
|
1,159
|
|
19,288
|
|
Communications
|
2,869
|
|
3,458
|
|
240
|
|
6,567
|
|
Drilling
Intelligence
|
1,414
|
|
2,266
|
|
419
|
|
4,099
|
|
Analytics and
Other
|
908
|
|
1,303
|
|
522
|
|
2,733
|
Total
Revenue
|
18,320
|
|
40,678
|
|
5,578
|
|
64,576
|
Rental services and
local administration
|
6,473
|
|
17,130
|
|
4,317
|
|
27,920
|
Depreciation and
amortization
|
6,053
|
|
4,151
|
|
980
|
|
11,184
|
Segment gross
profit
|
5,794
|
|
19,397
|
|
281
|
|
25,472
|
Research and
development
|
|
|
|
|
|
|
6,945
|
Corporate
services
|
|
|
|
|
|
|
3,553
|
Stock-based
compensation
|
|
|
|
|
|
|
3,145
|
Other
expense
|
|
|
|
|
|
|
665
|
Income tax
|
|
|
|
|
|
|
3,760
|
Net income
|
|
|
|
|
|
|
7,404
|
Capital
expenditures
|
(363)
|
|
5,213
|
|
521
|
|
5,371
|
As at September
30, 2017
|
|
|
|
|
|
|
|
Property plant and
equipment
|
43,187
|
|
67,393
|
|
17,453
|
|
128,033
|
Goodwill
|
1,259
|
|
7,183
|
|
2,600
|
|
11,042
|
Intangible
assets
|
25,304
|
|
141
|
|
—
|
|
25,445
|
Segment
assets
|
109,863
|
|
243,696
|
|
45,367
|
|
398,926
|
Segment
liabilities
|
25,954
|
|
10,253
|
|
12,405
|
|
48,612
|
Nine Months Ended
September 30, 2018
|
Canada
|
|
United
States
|
|
International
|
|
Total
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Revenue
|
|
|
|
|
|
|
|
|
Drilling
Data
|
21,904
|
|
80,311
|
|
12,590
|
|
114,805
|
|
Mud Management and
Safety
|
14,956
|
|
43,153
|
|
4,754
|
|
62,863
|
|
Communications
|
8,303
|
|
11,997
|
|
1,113
|
|
21,413
|
|
Drilling
Intelligence
|
6,104
|
|
8,827
|
|
1,135
|
|
16,066
|
|
Analytics and
Other
|
2,837
|
|
4,267
|
|
2,177
|
|
9,281
|
Total
Revenue
|
54,104
|
|
148,555
|
|
21,769
|
|
224,428
|
Rental services and
local administration
|
19,510
|
|
52,657
|
|
13,882
|
|
86,049
|
Depreciation and
amortization
|
12,508
|
|
12,128
|
|
2,663
|
|
27,299
|
Segment gross
profit
|
22,086
|
|
83,770
|
|
5,224
|
|
111,080
|
Research and
development
|
|
|
|
|
|
|
19,687
|
Corporate
services
|
|
|
|
|
|
|
12,008
|
Stock-based
compensation
|
|
|
|
|
|
|
8,978
|
Other
expenses
|
|
|
|
|
|
|
6,217
|
Income tax
|
|
|
|
|
|
|
21,966
|
Net income
|
|
|
|
|
|
|
42,224
|
Capital
expenditures
|
4,336
|
|
9,097
|
|
1,993
|
|
15,426
|
As at September
30, 2018
|
|
|
|
|
|
|
|
Property plant and
equipment
|
38,216
|
|
65,503
|
|
13,604
|
|
117,323
|
Goodwill
|
1,259
|
|
7,387
|
|
2,600
|
|
11,246
|
Intangible
assets
|
21,090
|
|
41
|
|
—
|
|
21,131
|
Segment
assets
|
112,550
|
|
271,754
|
|
45,380
|
|
429,684
|
Segment
liabilities
|
48,696
|
|
15,145
|
|
4,575
|
|
68,416
|
Nine Months Ended
September 30, 2017
(Restated)
|
Canada
|
|
United
States
|
|
International
|
|
Total
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Revenue
|
|
|
|
|
|
|
|
|
Drilling
Data
|
22,365
|
|
56,630
|
|
9,979
|
|
88,974
|
|
Mud Management and
Safety
|
15,475
|
|
34,352
|
|
3,398
|
|
53,225
|
|
Communications
|
8,222
|
|
9,443
|
|
775
|
|
18,440
|
|
Drilling
Intelligence
|
4,192
|
|
5,723
|
|
1,398
|
|
11,313
|
|
Analytics and
Other
|
2,532
|
|
3,691
|
|
1,242
|
|
7,465
|
Total
Revenue
|
52,786
|
|
109,839
|
|
16,792
|
|
179,417
|
Rental services and
local administration
|
17,826
|
|
47,642
|
|
13,282
|
|
78,750
|
Depreciation and
amortization
|
17,632
|
|
13,322
|
|
3,026
|
|
33,980
|
Segment gross
profit
|
17,328
|
|
48,875
|
|
484
|
|
66,687
|
Research and
development
|
|
|
|
|
|
|
19,083
|
Corporate
services
|
|
|
|
|
|
|
11,157
|
Stock-based
compensation
|
|
|
|
|
|
|
8,869
|
Other
income
|
|
|
|
|
|
|
415
|
Income tax
|
|
|
|
|
|
|
6,987
|
Net income
|
|
|
|
|
|
|
20,176
|
Capital
expenditures
|
(245)
|
|
11,428
|
|
421
|
|
11,604
|
As at September
30, 2017
|
|
|
|
|
|
|
|
Property plant and
equipment
|
43,187
|
|
67,393
|
|
17,453
|
|
128,033
|
Goodwill
|
1,259
|
|
7,183
|
|
2,600
|
|
11,042
|
Intangible
assets
|
25,304
|
|
141
|
|
—
|
|
25,445
|
Segment
assets
|
109,863
|
|
243,696
|
|
45,367
|
|
398,926
|
Segment
liabilities
|
25,954
|
|
10,253
|
|
12,405
|
|
48,612
|
Correction of Error
During the fourth quarter of 2017, the Company adjusted for a
re-classification of an immaterial non-cash error in the
recognition of a component of its deferred income tax expense. The
error was a result of the Company recognizing in the statement of
operations the deferred income tax effect of the future taxable
foreign exchange gain adjustment associated with its net investment
in foreign operations related to an inter-company financing, when
the amount should have been adjusted through the foreign currency
translation reserve within equity. Accordingly, this adjustment has
been corrected on a retrospective basis with all prior period
comparative figures being restated.
The cumulative impact of this error as of January 1, 2017 was to increase retained earnings
and reduce Foreign Currency Translation Reserve by $9,871.
For the third quarter of 2017, the income tax provision
increased by $1,409. For the nine
month period ended September 30,
2017, the income tax provision increased by $2,685.
Other (Income) Expenses
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Foreign exchange
(gain) loss
|
(1,516)
|
|
113
|
|
6,675
|
|
(353)
|
Other
|
(644)
|
|
552
|
|
(458)
|
|
768
|
Other (income)
expenses
|
(2,160)
|
|
665
|
|
6,217
|
|
415
|
The Company recorded a significant unrealized loss for the nine
months ended September 30, 2018 as a
result of the significant devaluation of the Argentinian peso
relative to the Canadian dollar.
Short-term investments
During the second quarter of 2018, the Company invested in a USD
$50,000 term deposit bearing an
interest rate of 2.30% maturing in November, 2018. This is
reflected on the Condensed Consolidated Interim Balance Sheet as
Short-term investments.
Events After the Reporting Period
On November 7, 2018, the Company announced a quarterly
dividend of $0.18 per share on the
Company's common shares. The dividend will be paid on December 31, 2018 to shareholders of record at
the close of business on December 14,
2018.
Pason Systems Inc.
Pason Systems Inc. is a leading global provider of specialized
data management systems for drilling rigs. Our solutions, which
include data acquisition, wellsite reporting, remote
communications, and web-based information management, enable
collaboration between the rig and the office. Pason's common shares
trade on the Toronto Stock Exchange under the symbol PSI.TO.
Certain information regarding the Company contained herein may
constitute forward-looking information under applicable securities
law. The words "anticipate", "expect", "believe", "may", "should",
"will", "estimate", "project", "outlook", "forecast" or other
similar words are used to identify such forward-looking information
and statements. Forward-looking statements in this document may
include statements, express or implied regarding the anticipated
business prospects and financial performance of Pason; expectations
or projections about future strategies and goals for growth and
expansion; expected and future cash flows and revenues; and
expected impact of future commitments. These forward-looking
statements are based upon various underlying factors and
assumptions, including the state of the economy and the oil and gas
exploration and production business, in particular; the Company's
business prospects and opportunities; and estimates of the
financial and operational performance of Pason.
Forward-looking information and statements are subject to known
or unknown risks and uncertainties that may cause actual results to
differ materially from those anticipated or implied in the
forward-looking information and statements. Risk factors that could
cause actual results or events to differ materially from current
expectations include, among others, the ability of Pason to
successfully implement its strategic initiatives and whether such
strategic initiatives will yield the expected benefits, the
operating performance of Pason's assets and businesses, the price
of energy commodities, competitive factors in the energy industry,
changes in laws and regulations affecting Pason's businesses,
technological developments, and general economic conditions.
Readers are cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such forward looking statements, although considered
reasonable by management as of the date hereof, may prove to be
incorrect and actual results may differ materially from those
anticipated. Forward-looking statements contained in this press
release are expressly qualified by this cautionary statement.
Additional information on risks and uncertainties and other
factors that could affect Pason's operations or financial results
are included in Pason's reports on file with the Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) or through Pason's website
(www.pason.com). Furthermore, any forward looking statements
contained in this news release are made as of the date of this news
release, and Pason does not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by securities law.
SOURCE Pason Systems Inc.