CALGARY, May 5, 2015 /CNW/ - Pason Systems Inc. (TSX:PSI) announced today its 2015 first quarter results.
Performance Data
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
(CDN 000s, except per share data)
|
($)
|
($)
|
(%)
|
|
Revenue
|
99,402
|
123,174
|
(19)
|
|
Income
|
14,191
|
20,821
|
(32)
|
|
Per share – basic
|
0.17
|
0.25
|
(32)
|
|
Per share – diluted
|
0.17
|
0.25
|
(32)
|
|
EBITDA (1)
|
44,126
|
70,469
|
(37)
|
|
As a % of revenue
|
44.4
|
57.2
|
(22)
|
|
Funds flow from operations
|
43,262
|
56,311
|
(23)
|
|
Per share – basic
|
0.52
|
0.68
|
(24)
|
|
Per share – diluted
|
0.52
|
0.67
|
(22)
|
|
Cash from operating
activities
|
71,533
|
64,385
|
11
|
|
Free cash flow (1)
|
48,219
|
47,962
|
1
|
|
Per share – basic
|
0.58
|
0.58
|
—
|
|
Per share – diluted
|
0.58
|
0.57
|
2
|
|
Capital expenditures
|
23,513
|
16,509
|
42
|
|
Working capital
|
236,446
|
152,227
|
55
|
|
Total assets
|
592,223
|
493,291
|
20
|
|
Total long-term debt
|
—
|
—
|
—
|
|
Cash dividends declared
|
0.17
|
0.15
|
13
|
|
Shares outstanding end of period (#)
|
83,559
|
82,422
|
1
|
|
(1)
|
Non-IFRS financial measures are defined in the Management's Discussion and Analysis section.
|
Q1 2015 vs Q1 2014
The Company generated consolidated revenue of $99.4 million in the first quarter of 2015, down 19% from $123.2 million in the same period of 2014. The slowdown in oil and gas drilling activity, combined with a reduction in product adoption on certain products and pricing pressure from customers contributed to the decrease in revenue, which was partially offset by the strengthening of the US dollar relative to the Canadian dollar.
Consolidated EBITDA was $44.1 million in the first quarter, a decrease of $26.3 million from the first quarter of 2014.
Net income decreased by $6.6 million to $14.2 million ($0.17 per share) in the first quarter of 2015 from net income of $20.8 million ($0.25 per share) in the prior year period.
President's Message
It didn't seem that extraordinary at the time but, looking back, it is clear that 2014 was a fantastic year for the oilfield services industry and for Pason in particular. The great run ended in the fourth quarter, when oil prices finished the year at half of previous levels - a process that began in July of 2014. By December, active US rig counts started to decline and customers began to seek price reductions from service providers.
The declines in drilling activity across North America during the first quarter of 2015 were steeper than most people expected. Last week, the US land rig count stood at 932, down 50% from the recent peak in the fourth quarter of 2014. In Canada, after winter drilling breakup, there were 79 active rigs, 53% lower than one year ago. In addition, we are experiencing significant pressure on pricing and on the use of peripheral products. In short, this is a very challenging environment for the industry and for Pason.
In response to these challenges, we have lowered our capital program for 2015 to $65 million (from $121 million in 2014), reduced our staffing levels by 5% and cut back on discretionary spending. We are closely monitoring current activity and, more importantly, the industry outlook for 2016 to determine if and when further operating cost and capital expenditure reductions may be required.
That said, we continue to invest significantly in future growth so we will be well positioned to capture opportunities presented by the eventual turnaround. This includes investments in new product development (both hardware and software, catering to the needs of E&P companies, drilling contractors and other service providers), service capabilities, sales and marketing skills, and in infrastructure and systems.
Pason's operational and financial performance in the first quarter of 2015 is a reflection of the steep decline in US drilling activity throughout the period, a very short Canadian drilling season, and widely varying conditions in international markets. Revenue for the quarter was $99 million, down 19% from the first quarter of 2014. The slowdown in industry activity, combined with a decline in product adoption and pricing pressure from customers, contributed to the decrease in revenue. This was partially offset by the strengthening of the US dollar relative to the Canadian dollar. About 21% of the revenue decline was offset by exchange rate movements. EBITDA was $44 million, a decline of 37% from 2014 levels, driven by fixed costs in the business. Income was down 32% to $14 million, or $0.17 per share, respectively. Free cash flow (defined as cash from operating activities less capital expenditures, net of disposals, and deferred development costs) was essentially unchanged from the same period in the previous year at $48 million including a $29 million recovery of working capital in the quarter.
First quarter operating profit for the United States was $23 million ($33 million in corresponding period of 2014), $11 million in Canada ($30 million in 2014), and $2 million in our International business unit ($3 million in the first quarter of 2014). Pason's business in Argentina demonstrated very strong performance during the first quarter and our joint venture in Saudi Arabia is gaining traction. A detailed look at first quarter performance by region and product category is laid out in the Management's Discussion and Analysis section of this quarterly report.
On March 31, 2015, our cash position stood at $192 million and working capital at $236 million. There is no debt on the balance sheet. We are maintaining our quarterly dividend at $0.17 per share.
With our excellent product suite, distinctive service model, technical capabilities and pristine balance sheet, Pason is well positioned to utilize this downturn to maximum effect and emerge even stronger.
(signed)
Marcel Kessler
President and Chief Executive Officer
May 5, 2015
Management's Discussion and Analysis
The following discussion and analysis has been prepared by management as of May 5, 2015, 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 Corporation 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.
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.
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 and deferred development costs.
Overall Performance
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
(000s)
|
($)
|
($)
|
(%)
|
|
Revenue
|
|
|
|
|
Electronic Drilling Recorder
|
41,401
|
53,515
|
(23)
|
|
Pit Volume Totalizer/ePVT
|
14,167
|
18,641
|
(24)
|
|
Communications
|
9,963
|
10,155
|
(2)
|
|
Software
|
6,679
|
8,710
|
(23)
|
|
AutoDriller
|
7,606
|
11,479
|
(34)
|
|
Gas Analyzer
|
7,681
|
10,050
|
(24)
|
|
Other
|
11,905
|
10,624
|
12
|
|
Total revenue
|
99,402
|
123,174
|
(19)
|
Electronic Drilling Recorder (EDR) and Pit Volume Totalizer (PVT) rental day performance for Canada and the United States is reported below:
|
Canada
|
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
#
|
#
|
(%)
|
|
EDR rental days
|
26,200
|
42,700
|
(39)
|
|
PVT rental days
|
24,800
|
41,300
|
(40)
|
|
|
|
|
|
|
|
|
|
United States
|
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
#
|
#
|
(%)
|
|
EDR rental days
|
66,000
|
89,100
|
(26)
|
|
PVT rental days
|
51,900
|
68,300
|
(24)
|
Electronic Drilling Recorder
The Pason 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 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. Revenue generated from the EDR decreased 23% for the first quarter of 2015 compared to the same period in 2014. This decrease is attributable to the industry slowdown, lower product adoption of certain peripheral devices, and pricing pressures from customers which were offset by a strengthening US dollar relative to the Canadian dollar and the continued acceptance of the Company's Rig Display. Industry activity in the US market decreased 22% in the first quarter of 2015, while first quarter Canadian rig activity decreased 43% compared to the same period in 2014. Canadian EDR days decreased 39% in the first quarter of 2015, while US EDR days decreased by 26% for the first quarter of 2015.
In the first quarter, the Pason EDR was installed on 99% of all active land rigs in Canada and 55% of the land rigs in the US, compared to 95% and 58% respectively in the first quarter of 2014.
In its International business unit, the Company continues to increase EDR days in both Mexico and Argentina compared to the first quarter of 2014.
Pit Volume Totalizer/ePVT
The PVT is Pason's proprietary solution for the detection and early warning of "kicks" that are caused by hydrocarbons entering the wellbore under high pressure and expanding as they migrate to the surface. PVT revenue for the first three months of 2015 was impacted by the decline in rig count activity, offset partially with continued customer adoption of the new ePVT. During the first three months of 2015, the PVT was installed on 95% of rigs with a Pason EDR in Canada and 79% in the US, compared to 98% and 77% respectively, in the same period of 2014.
Communications
Pason's Communications revenue is derived from the provision of communications services including the provision of bandwidth through the Company's automatically-aiming satellite system and terrestrial networks. This system provides reliable high-speed wellsite communications for email and web application management tools. Pason displays all data in standard forms on its DataHub web application, although if customers require greater analysis or desire to have the information transferred to another supplier's database, data is available for export from the Pason DataHub using WITSML (a specification for transferring data among oilfield service companies, drilling contractors, and operators). The Company complements its satellite equipment with High Speed Packet Access (HSPA), a high-speed wireless ground system which provides automatic fail-over between satellite and terrestrial networks to achieve greater reliability in its service offering.
Communications revenue decreased by 2% in the first three months of 2015 compared to the same period in 2014 due to the industry slowdown, offset by both the increased usage of the Company's premium product offerings in the Canadian and US markets, and the strengthening of the US dollar relative to the Canadian dollar.
Software
The Pason DataHub is the Company's data management system that collects, stores, and displays drilling data, reports, and real-time information from drilling operations. The DataHub provides access to data through a number of innovative applications or services, including:
- Live Rig View (LRV), which provides advanced data viewing, directional drilling, and 3D visualization of drilling data in real time via a web browser.
- LRV Mobile, which allows users to access their data on mobile devices, including iPhone, iPad, BlackBerry, and Android.
- WITSML, which provides seamless data sharing with third-party applications, enhancing the value of data hosted by Pason.
- Additional specialized software, including remote directional.
During the first three months of 2015, 95% of the Company's Canadian customers and 87% of customers in the US were using all or a portion of the functionality of the DataHub, compared to 96% and 91% respectively in the first quarter of 2014.
AutoDriller
Pason's AutoDriller is used to maintain constant weight on the drill bit while a well is being drilled. During the three months ended March 31, 2015, the AutoDriller was installed on 65% of Canadian and 37% of US land rigs operating with a Pason EDR system, compared to 75% and 45%, respectively, in 2014.
Gas Analyzer
The Pason Gas Analyzer measures the total hydrocarbon gases (C1 through C4) exiting the wellbore, and then calculates the lag time to show the formation depth where the gases were produced. The Gas Analyzer provides information about the composition of the gas, and further calculates geologic ratios from the gas composition to assist in indicating the type of gas, natural gas liquid, or oil in the formation. During the first three months of 2015, the Gas Analyzer was installed on 58% of Canadian and 28% of US land rigs operating with a Pason EDR system, compared to 59% and 23% for the Canadian and US segments respectively in the prior year period.
Other
Other is comprised mostly of the rental of service rig recorders in Latin America, the Electronic Choke Actuator, Hazardous Gas Alarm products, Mobilization revenue, sales of sensors and other systems sold by 3PS, and spare parts sold by Pason Offshore. The increase in Other is due mostly to increased mobilization revenue in the US.
Discussion of Operations
United States Operations
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
(000s)
|
($)
|
($)
|
(%)
|
|
Revenue
|
|
|
|
|
Electronic Drilling Recorder
|
25,832
|
30,453
|
(15)
|
|
Pit Volume Totalizer/ePVT
|
8,036
|
9,393
|
(14)
|
|
Communications
|
4,598
|
3,782
|
22
|
|
Software
|
4,206
|
5,049
|
(17)
|
|
AutoDriller
|
3,722
|
5,498
|
(32)
|
|
Gas Analyzer
|
3,604
|
3,630
|
(1)
|
|
Other
|
7,517
|
6,327
|
19
|
|
Total revenue
|
57,515
|
64,132
|
(10)
|
|
Operating costs
|
24,975
|
23,147
|
8
|
|
Depreciation and amortization
|
9,758
|
7,560
|
29
|
|
Segment operating profit
|
22,782
|
33,425
|
(32)
|
|
Three Months Ended March 31,
|
2015
|
2014
|
|
USD
|
CAD
|
USD
|
CAD
|
|
$
|
$
|
$
|
$
|
|
Revenue per EDR day
|
672
|
834
|
628
|
691
|
|
Revenue per industry day
|
371
|
461
|
367
|
404
|
US segment revenue decreased by 10% in the first quarter over the 2014 comparable period (21% decrease when measured in USD).
Industry activity in the US market during the first quarter of 2015 decreased 22% from the prior year while revenue from the rental of instrumentation decreased by 11% for the quarter over 2014 levels (21% decrease when measured in USD). EDR rental days decreased by 26% for the three months ended March 31, 2015 over the same time period in 2014, while revenue per EDR day in the first quarter of 2015 increased to US$672, an increase of US$44 over the same period in 2014.
The decrease in industry activity, combined with pricing pressure from customers and lower product adoption on certain products accounted for the drop in revenue in the first quarter. This decrease was offset by the favourable movement in the USD/CAD exchange rate, increases in Communications revenue as customers continue to upgrade to premium communication services and Other revenue, most notably, mobilization revenue. US market share was 55% during the three months ended March 31, 2015, down from 58% in the same period of 2014.
Operating costs increased by 8% in the first quarter relative to the same period in the prior year primarily due to the appreciation of the US dollar relative to the Canadian dollar. When measured in USD, operating costs decreased 4% from 2014 levels.
Depreciation expense has increased 29% over the first three months of 2014 due to the rollout of the Company's new Versatile Services Platform (VSP) servers, capital equipment associated with the commercialization of the ePVT, including the continued roll-out of the Rig Display, and the upgrade program in the Company's fleet of workstations, all of which occurred during the latter half of 2014.
Segment profit, as a percentage of revenue, was 40% for the first quarter of 2015 compared to 52% for the corresponding period in 2014, a decrease of $10.6 million.
Canadian Operations
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
(000s)
|
($)
|
($)
|
(%)
|
|
Revenue
|
|
|
|
|
Electronic Drilling Recorder
|
10,674
|
18,438
|
(42)
|
|
Pit Volume Totalizer/ePVT
|
4,553
|
7,447
|
(39)
|
|
Communications
|
4,793
|
5,994
|
(20)
|
|
Software
|
2,308
|
3,502
|
(34)
|
|
AutoDriller
|
2,497
|
4,816
|
(48)
|
|
Gas Analyzer
|
3,098
|
5,245
|
(41)
|
|
Other
|
1,436
|
2,419
|
(41)
|
|
Total revenue
|
29,359
|
47,861
|
(39)
|
|
Operating costs
|
8,905
|
10,923
|
(18)
|
|
Depreciation and amortization
|
9,629
|
6,479
|
49
|
|
Segment operating profit
|
10,825
|
30,459
|
(64)
|
|
Three Months Ended March 31,
|
2015
|
2014
|
|
CAD
|
CAD
|
|
$
|
$
|
|
Revenue per EDR day
|
1,112
|
1,114
|
|
Revenue per industry day
|
1,153
|
1,062
|
Canadian segment revenue decreased by 39% for the quarter ended March 31, 2015 compared to the same period in 2014. This drop is the result of a 43% decrease in the number of drilling industry days in the first quarter compared to 2014 levels, pricing pressures from customers, lower product adoption and an earlier than anticipated spring break-up. EDR rental days decreased 39% in the first quarter compared to 2014.
The factors above combined to result in a decrease in revenue per EDR day of $2 to $1,112 during the first quarter of 2015 compared to 2014. Lower product adoption on some products was offset by customers continuing to upgrade to premium communication services.
Operating costs decreased by 18% in the first quarter of 2015 relative to the same period in 2014, primarily due to a decrease in activity levels.
Depreciation has increased 49% over the first three months of 2014 due to the Company's 2014 capital expenditure program that was explained above in the United States operations update.
Segment operating profit of $10.8 million is a decrease of 64% over the prior year.
International Operations
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
(000s)
|
($)
|
($)
|
(%)
|
|
Revenue
|
|
|
|
|
Electronic Drilling Recorder
|
4,895
|
4,624
|
6
|
|
Pit Volume Totalizer/ePVT
|
1,578
|
1,801
|
(12)
|
|
Communications
|
572
|
379
|
51
|
|
Software
|
165
|
159
|
4
|
|
AutoDriller
|
1,387
|
1,165
|
19
|
|
Gas Analyzer
|
979
|
1,175
|
(17)
|
|
Other
|
2,952
|
1,878
|
57
|
|
Total revenue
|
12,528
|
11,181
|
12
|
|
Operating costs
|
8,532
|
6,491
|
31
|
|
Depreciation and amortization
|
2,335
|
1,703
|
37
|
|
Segment operating profit
|
1,661
|
2,987
|
(44)
|
Revenue in the International operations segment increased 12% in the first quarter of 2015 compared to the same period in 2014.
Operating profit decreased by $1.3 million for the first quarter of 2015 over 2014, a decrease of 44%.
A number of factors influenced these results:
- Latin America revenue increased 38% in the first quarter compared to the prior year as the Company saw increased activity in Argentina, Brazil and Mexico.
- Operating costs increased due in most part to the increased drilling activity in Argentina combined with an increase in equipment importation costs for Argentina.
- Australia revenue decreased 19% for the three month period ended March 31, 2015, as drilling activity decreased 38% in the region.
Corporate Expenses
|
Three Months Ended March 31,
|
2015
|
2014
|
Change
|
|
(000s)
|
($)
|
($)
|
(%)
|
|
Other expenses
|
|
|
|
|
Research and development
|
9,330
|
7,658
|
22
|
|
Corporate services
|
5,186
|
4,476
|
16
|
|
Stock-based compensation
|
(1,775)
|
17,668
|
—
|
|
Other
|
|
|
|
|
Foreign exchange gain
|
(2,447)
|
(450)
|
444
|
|
Gain on sale of investment
|
(2,290)
|
—
|
—
|
|
Other
|
795
|
460
|
73
|
|
Total corporate expenses
|
8,799
|
29,812
|
(70)
|
During the first quarter of 2015, the Company disposed of its investment in a small privately held company and realized a gain of $2,290.
Q1 2015 vs Q4 2014
The first quarter of the year is typically the strongest for Pason due to the seasonality of Canadian drilling activity, however this did not hold true in 2015 due to an overall industry slowdown, pricing pressures from customers and an earlier than normal spring break-up period. Consolidated revenue was $99.4 million in the first quarter of 2015 compared to $138.2 million in the fourth quarter of 2014, a decrease of $38.8 million or 28%. The Canadian segment earned revenue of $29.4 million in the first quarter as compared to $40.3 million in the fourth quarter of 2014, a decrease of $10.9 million. Revenue in the US market decreased by $25.6 million while the International segment experienced a revenue decrease of $2.3 million.
Sequentially, EBITDA decreased 25% from $59.1 million in the fourth quarter of 2014 to $44.1 million in the first quarter of 2015, while funds flow from operations decreased to $43.3 million in the first quarter from $60.0 million in the fourth quarter of 2014.
Net income decreased by 70% to $14.2 million ($0.17 per share) in the first quarter of 2015 from $47.2 million ($0.57 per share) in the prior quarter due in most part to the industry slowdown and the large stock-based compensation recovery of $20.6 million recorded in the fourth quarter of 2014.
First Quarter Conference Call
Pason will be conducting a conference call for interested analysts, brokers, investors and media representatives to review its first quarter 2015 results at 9:00 am (Calgary time) on Wednesday May 6, 2015. The conference call dial-in number is 1-888-231-8191 or 1-647-427-7450. You can access the seven-day replay by dialing 1-855-859-2056 or 1-416-849-0833, using password 9737466.
Pason Systems Inc. is a leading global provider of specialized data management systems for drilling rigs. Our solutions, which include data acquisition, wellsite reporting, remote communications, and web-based information management, enable collaboration between the rig and the office. Pason's common shares trade on the Toronto Stock Exchange under the symbol PSI.
Additional information, including the Company's Annual Report and Annual Information Form for the year ended December 31, 2014, is available on SEDAR at www.sedar.com or on the Company's website at www.pason.com.
Annual and Special Meeting
Shareholders are also invited to attend the Company's Annual and Special Meeting on Wednesday, May 6, 2015, at 3:30 pm at the offices of Pason Systems Inc., 6120 Third Street SE, Calgary, Alberta.
Condensed Consolidated Interim Balance Sheets
|
As at
|
|
March 31, 2015
|
December 31, 2014
|
|
(CDN 000s) (unaudited)
|
|
($)
|
($)
|
|
Assets
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash equivalents
|
|
191,786
|
144,858
|
|
Trade and other receivables
|
|
85,136
|
122,494
|
|
Prepaid expenses
|
|
4,733
|
5,811
|
|
Income taxes recoverable
|
|
413
|
491
|
|
Total current assets
|
|
282,068
|
273,654
|
|
Non-current
|
|
|
|
|
Property, plant and equipment
|
|
248,799
|
234,344
|
|
Intangible assets and goodwill
|
|
61,356
|
62,068
|
|
Total non-current assets
|
|
310,155
|
296,412
|
|
Total assets
|
|
592,223
|
570,066
|
|
Liabilities and equity
|
|
|
|
|
Current
|
|
|
|
|
Trade payables and accruals
|
|
30,840
|
47,414
|
|
Income taxes payable
|
|
2,035
|
3,544
|
|
Stock-based compensation liability
|
|
12,747
|
16,125
|
|
Total current liabilities
|
|
45,622
|
67,083
|
|
Non-current
|
|
|
|
|
Stock-based compensation liability
|
|
3,505
|
3,018
|
|
Deferred tax liabilities
|
|
24,832
|
16,442
|
|
Total non-current liabilities
|
|
28,337
|
19,460
|
|
Equity
|
|
|
|
|
Share capital
|
|
117,611
|
113,827
|
|
Share-based benefits reserve
|
|
12,927
|
12,927
|
|
Foreign currency translation reserve
|
|
63,766
|
32,807
|
|
Retained earnings
|
|
323,960
|
323,962
|
|
Total equity
|
|
518,264
|
483,523
|
|
Total liabilities and equity
|
|
592,223
|
570,066
|
Condensed Consolidated Interim Statements of Operations
|
Three Months Ended March 31,
|
|
2015
|
2014
|
|
(CDN 000s, except per share data) (unaudited)
|
|
($)
|
($)
|
|
|
|
|
|
Revenue
|
|
99,402
|
123,174
|
|
Operating expenses
|
|
|
|
|
Rental services
|
|
37,496
|
35,572
|
|
Local administration
|
|
4,916
|
4,989
|
|
Depreciation and amortization
|
|
21,722
|
15,742
|
|
|
64,134
|
56,303
|
|
|
|
|
|
Operating profit
|
|
35,268
|
66,871
|
|
Other expenses
|
|
|
|
|
Research and development
|
|
9,330
|
7,658
|
|
Corporate services
|
|
5,186
|
4,476
|
|
Stock-based compensation (recovery) expense
|
|
(1,775)
|
17,668
|
|
Other (income) expenses
|
|
(3,942)
|
10
|
|
|
8,799
|
29,812
|
|
|
|
|
|
Income before income taxes
|
|
26,469
|
37,059
|
|
Income tax expense
|
|
12,278
|
16,238
|
|
Net income
|
|
14,191
|
20,821
|
|
Income per share
|
|
|
|
|
Basic
|
|
0.17
|
0.25
|
|
Diluted
|
|
0.17
|
0.25
|
Condensed Consolidated Interim Statements of Other Comprehensive Income
|
Three Months Ended March 31,
|
|
2015
|
2014
|
|
(CDN 000s) (unaudited)
|
|
($)
|
($)
|
|
Net income
|
|
14,191
|
20,821
|
|
Items that may be reclassified subsequently to net income:
|
|
|
|
|
Foreign currency translation adjustment
|
|
30,959
|
8,670
|
|
Total comprehensive income
|
|
45,150
|
29,491
|
Condensed Consolidated Interim Statements of Changes in Equity
|
|
Share Capital
|
Share-Based
Benefits
Reserve
|
Foreign
Currency
Translation
Reserve
|
Retained
Earnings
|
Total Equity
|
|
(CDN 000s) (unaudited)
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
Balance at January 1, 2014
|
|
80,725
|
12,927
|
7,958
|
264,859
|
366,469
|
|
Net lncome
|
|
—
|
—
|
—
|
20,821
|
20,821
|
|
Dividends
|
|
—
|
—
|
—
|
(12,356)
|
(12,356)
|
|
Other comprehensive income
|
|
—
|
—
|
8,670
|
—
|
8,670
|
|
Exercise of stock options
|
|
7,451
|
—
|
—
|
—
|
7,451
|
|
Balance at March 31, 2014
|
|
88,176
|
12,927
|
16,628
|
273,324
|
391,055
|
|
Net income
|
|
—
|
—
|
—
|
91,283
|
91,283
|
|
Dividends
|
|
—
|
—
|
—
|
(40,645)
|
(40,645)
|
|
Other comprehensive income
|
|
—
|
—
|
16,179
|
—
|
16,179
|
|
Exercise of stock options
|
|
25,651
|
—
|
—
|
—
|
25,651
|
|
Balance at December 31, 2014
|
|
113,827
|
12,927
|
32,807
|
323,962
|
483,523
|
|
Net income
|
|
—
|
—
|
—
|
14,191
|
14,191
|
|
Dividends
|
|
—
|
—
|
—
|
(14,193)
|
(14,193)
|
|
Other comprehensive income
|
|
—
|
—
|
30,959
|
—
|
30,959
|
|
Exercise of stock options
|
|
3,784
|
—
|
—
|
—
|
3,784
|
|
Balance at March 31, 2015
|
|
117,611
|
12,927
|
63,766
|
323,960
|
518,264
|
Condensed Consolidated Interim Statements of Cash Flows
|
Three Months Ended March 31,
|
2015
|
2014
|
|
(CDN 000s) (unaudited)
|
|
($)
|
($)
|
|
Cash from operating activities
|
|
|
|
|
Net income
|
|
14,191
|
20,821
|
|
Adjustment for non-cash items:
|
|
|
|
|
Depreciation and amortization
|
|
21,722
|
15,742
|
|
Gain on sale of investment
|
|
(2,290)
|
—
|
|
Stock-based compensation
|
|
(1,775)
|
17,668
|
|
Deferred income taxes
|
|
8,022
|
2,657
|
|
Unrealized foreign exchange loss/(gain)
|
|
3,392
|
(577)
|
|
Funds flow from operations
|
|
43,262
|
56,311
|
|
Movements in non-cash working capital items:
|
|
|
|
|
Decrease/(increase) in trade and other receivables
|
|
44,590
|
(9,594)
|
|
Decrease in prepaid expenses
|
|
1,261
|
924
|
|
Increase in income taxes
|
|
4,488
|
10,774
|
|
(Decrease)/increase in trade payables, accruals and stock-based compensation liability
|
|
(13,047)
|
5,293
|
|
Effects of exchange rate changes
|
|
(3,189)
|
1,778
|
|
Cash generated from operating activities
|
|
77,365
|
65,486
|
|
Income tax paid
|
|
(5,832)
|
(1,101)
|
|
Net cash from operating activities
|
|
71,533
|
64,385
|
|
Cash flows from (used in) financing activities
|
|
|
|
|
Proceeds from issuance of common shares
|
|
2,693
|
3,565
|
|
Purchase of stock options
|
|
—
|
(2,592)
|
|
Payment of dividends
|
|
(14,193)
|
(11,502)
|
|
Net cash used in financing activities
|
|
(11,500)
|
(10,529)
|
|
Cash flows (used in) from investing activities
|
|
|
|
|
Additions to property, plant and equipment
|
|
(21,435)
|
(14,453)
|
|
Deferred development costs
|
|
(2,078)
|
(2,056)
|
|
Proceeds on disposal of investment and property, plant and equipment
|
|
3,288
|
86
|
|
Changes in non-cash working capital
|
|
(5,127)
|
997
|
|
Net cash used in investing activities
|
|
(25,352)
|
(15,426)
|
|
Effect of exchange rate on cash and cash equivalents
|
|
12,247
|
1,209
|
|
Net increase in cash and cash equivalents
|
|
46,928
|
39,639
|
|
Cash and cash equivalents, beginning of period
|
|
144,858
|
89,520
|
|
Cash and cash equivalents, end of period
|
|
191,786
|
129,159
|
|
|
|
|
|
Cash and cash equivalents consists of:
|
|
|
|
|
Cash and cash equivalents
|
|
191,786
|
116,803
|
|
Cash held in trust
|
|
—
|
12,356
|
|
Cash and cash equivalents, end of period
|
|
191,786
|
129,159
|
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 amounts related to each segment are as follows:
|
Three Months Ended March 31, 2015
|
Canada
|
United States
|
International
|
Total
|
|
($)
|
($)
|
($)
|
($)
|
|
Revenue
|
29,359
|
57,515
|
12,528
|
99,402
|
|
Operating costs
|
8,905
|
24,975
|
8,532
|
42,412
|
|
Depreciation and amortization
|
9,629
|
9,758
|
2,335
|
21,722
|
|
Segment operating profit
|
10,825
|
22,782
|
1,661
|
35,268
|
|
Research and development
|
|
|
|
9,330
|
|
Corporate services
|
|
|
|
5,186
|
|
Stock-based compensation
|
|
|
|
(1,775)
|
|
Other income
|
|
|
|
(3,942)
|
|
Income taxes
|
|
|
|
12,278
|
|
Net lncome
|
|
|
|
14,191
|
|
Capital expenditures
|
5,924
|
11,822
|
5,767
|
23,513
|
|
Goodwill
|
—
|
23,474
|
2,600
|
26,074
|
|
Intangible assets
|
31,233
|
2,170
|
1,879
|
35,282
|
|
Segment assets
|
159,178
|
353,989
|
79,056
|
592,223
|
|
Segment liabilities
|
28,969
|
32,616
|
12,374
|
73,959
|
|
|
|
|
|
|
Three Months Ended March 31, 2014
|
|
|
|
|
|
|
|
|
Revenue
|
47,861
|
64,132
|
11,181
|
123,174
|
|
Operating costs
|
10,923
|
23,147
|
6,491
|
40,561
|
|
Depreciation and amortization
|
6,479
|
7,560
|
1,703
|
15,742
|
|
Segment operating profit
|
30,459
|
33,425
|
2,987
|
66,871
|
|
Research and development
|
|
|
|
7,658
|
|
Corporate services
|
|
|
|
4,476
|
|
Stock-based compensation
|
|
|
|
17,668
|
|
Other expenses
|
|
|
|
10
|
|
Income taxes
|
|
|
|
16,238
|
|
Net lncome
|
|
|
|
20,821
|
|
Capital expenditures
|
3,913
|
11,018
|
1,578
|
16,509
|
|
Goodwill
|
—
|
20,457
|
2,600
|
23,057
|
|
Intangible assets
|
32,828
|
7,436
|
2,801
|
43,065
|
|
Segment assets
|
166,469
|
262,406
|
64,416
|
493,291
|
|
Segment liabilities
|
60,681
|
32,945
|
8,610
|
102,236
|
Other (Income) Expenses
|
Three Months Ended March 31,
|
2015
|
2014
|
|
($)
|
($)
|
|
Foreign exchange gain
|
(2,447)
|
(450)
|
|
Gain on sale of investment
|
(2,290)
|
—
|
|
Other
|
795
|
460
|
|
Other (income) expenses
|
(3,942)
|
10
|
During the first quarter of 2015, the Company disposed of its investment in a small, privately held company and realized a gain of $2,290.
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.
about Pason Systems Inc., visit the company's website at www.pason.com or contact: Marcel Kessler, President and CEO, 403-301-3400, marcel.kessler@pason.com; Jon Faber, Chief Financial Officer, 403-301-3400, jon.faber@pason.comCopyright CNW Group 2015