CALGARY, Aug. 14, 2014 /CNW/ - Winalta Inc. ("Winalta" or
the "Company") (TSXV:WTA) is pleased to announce results for the
three months ended June 30, 2014 (the
"Period"). Record revenues of $5.0
million and record EBITDA of $1.3
million, showed increases of $3.5
million or 232% and $1.5
million or 609%, respectively, to revenue of $1.5 million and EBITDA of negative $0.3 million for the three months ended
June 30, 2013 (the "Comparative
Period").
A 105% increase in utilization of Company owned assets was a
leading factor in improved Company performance. The Company has
been successful in diversifying its customer base and penetrating
the pad and multilateral drilling space, a strategy that has helped
to normalize the seasonality in its revenues.
The Company recorded a Net Loss of $(0.4)
million or $(0.01) per share,
a $1.0 million improvement over
$(1.4) million or $(0.04) per share for the Comparative Period. The
Net Loss included a one time impairment of $(0.4) million relating to the $1.1 million
sale of Winalta's Sylvan Lake land
assets.
QUARTER END HIGHLIGHTS
Revenue increased by $3.5 million
or 232%
EBITDA increased by $1.5 million or
609%
Q2 2014 SELECTED FINANCIAL HIGHLIGHTS
(Thousands of
Canadian dollars, except for per share amounts)
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
2014
|
June 30,
2013
|
June 30,
2014
|
June 30,
2013
|
Revenue
|
4,976
|
1,499
|
14,627
|
8,334
|
Net Earnings
(Loss)
|
(442)
|
(1,443)
|
1,414
|
321
|
Earnings (Loss)
per share and diluted earnings
|
(0.01)
|
(0.04)
|
0.03
|
0.01
|
EBITDA1
|
1,291
|
(254)
|
5,548
|
3,598
|
EBITDA per share
|
0.03
|
(0.01)
|
0.14
|
0.09
|
Total
assets
|
46,815
|
41,426
|
46,815
|
41,426
|
Total
liabilities
|
22,809
|
17,400
|
22,809
|
17,400
|
Dividends
paid
|
821
|
403
|
1,630
|
807
|
(1) EBITDA 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
Winalta increased revenues by $3.5
million or 232% over the Comparative Period. Of the
$3.5 million increase, $1.7 million (49%) was generated through Company
owned assets and $1.8 million (51%)
was generated through sub-contractor revenue.
Wellsite utilization improved 95% along with a 7% increase in
day rates. Sub-contractor revenue showed an increase of
$1.8 million (552%) over the
Comparative Period.
For the six months ended June 30,
2014, the Company increased revenues by $6.3 million (76%) over the comparative six month
period. Of the $6.3
million increase, $2.0 million
(32%) was generated through Company owned assets and $4.3 million (68%) was generated through
sub-contractor revenue.
DIRECT COSTS
Direct operating costs increased by $2.0
million over the Comparative Period. The majority
($1.8 million or 90%) of the increase
can be attributed to the increase in sub-contractor equipment and
services. The remaining $194
thousand represents the growth in service staff wages and
benefits of $43 thousand and fleet
costs of $151 thousand.
For the six months ended June 30,
2014, direct operating costs were $7.4 million versus $2.8
million for the six months ended June
30, 2013. The increase of $4.6
million can be attributed to increases in sub-contractor
equipment and services of $4.2
million; $234 thousand in
fleet cost service and maintenance and $132
thousand in service staff wages and benefits.
GENERAL AND ADMINISTRATIVE
For the Period, administrative costs were $1.0 million compared to $0.9 million for the Comparative Period.
The Company saw a reduction in professional fees ($36 thousand) which was offset by increases in
staff costs ($42 thousand), marketing
costs ($25 thousand), office rent and
operating costs ($26 thousand), and
bad debt expense ($10
thousand). The Company recorded additional
non-recurring expenses of $50
thousand relating to legal fees for the Plan of
Arrangement.
For the six months ended June 30,
2014, administrative costs were $2.0
million versus $1.7 million
for the comparative six month period.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization was $1.5
million for the Period as compared to $1.4 million for the Comparative Period.
The increase in depreciation and amortization expense reflects the
net acquisition of $10.0 million of
equipment in the trailing 12 months.
For the six months ended June 30,
2014, depreciation and amortization was $3.0 million for the period as compared to
$2.7 million for the comparative six
month period.
FINANCE COSTS
Finance costs, which include interest on long-term debt and
finance leases, and fees paid on refinancing, were $251 thousand for the Period as compared to
$190 thousand for the Comparative
Period. The increase was primarily the result of the Company
entering into fixed term financing agreements for the purchase of 4
Integrated Wellsite System ("IWS") units. The current rate
for the Company's operating loan facility and revolving term loan
facility is prime plus 1.00% per annum and prime plus 1.50% per
annum, respectively.
For the six months ended June 30
2014, finance costs, which include interest on long-term debt and
finance leases, and fees paid on refinancing, were $486 thousand as compared to $373 thousand for the comparative six month
period.
OUTLOOK & PROPOSED BUSINESS COMBINATION
Winalta achieved a strong second quarter and management has an
optimistic outlook for the balance of 2014 based on an expected
diversified customer base and continued penetration into pad and
multilateral drilling space specifically with IWS units.
A shift to deploy equipment within the pad drilling programs,
combined with conventional drilling, should continue to mitigate
some of the seasonal impact on revenues in the third quarter of
2014 and second quarter of 2015. Demand for, and utilization
of, wellsite units is expected to continue to increase throughout
the second half of 2014.
On June 26, 2014 the Company
entered into an arrangement agreement with CERF Incorporated
("CERF") pursuant to which CERF will acquire all of the outstanding
Winalta common shares in exchange for 0.3352 of a common share of
CERF for each Winalta common share. Upon completion of the plan of
arrangement with CERF (the "Plan of Arrangement"), the current
shareholders of CERF would own approximately 61% of the combined
entity and the shareholders of Winalta would own approximately 39%,
on a fully diluted basis. Based on CERF's closing price on
June 25, 2014 of $3.49, the exchange ratio equates to $1.17 per Winalta share. The combined
company is expected to operate under the name CERF and will
continue to trade on the TSX Venture Exchange under the symbol
"CFL".
CERF operates 3 business lines; MCL, 4-Way and TRAC Energy
Services ("TRAC"). TRAC is similar to Winalta in that it provides
surface rental equipment to oil and gas companies. TRAC and Winalta
have different oilfield rental asset classes and do not share the
same customer base. The proposed Plan of Arrangement is expected
allow Winalta to expand its customer base along with TRAC.
Completion of the Plan of Arrangement is contingent upon, among
other things, the approval of the shareholders of each of Winalta
and CERF at meetings to be held on August
26, 2014. An Information Circular dated July 25, 2014 describing the terms of the Plan of
Arrangement, has been mailed to shareholders of Winalta and is
available under Winalta's profile on SEDAR.
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 rates for the Company's rental units, possible
expansion of the Company's rental offerings, expansion of the
Company's customer base, completion (including timing for
completion) of the Plan of Arrangement 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.