MATRRIX Announces Fourth Quarter and 2016 Annual Results

CALGARY, March 22, 2017 /CNW/ - MATRRIX Energy Technologies Inc. ("MATRRIX" or the "Corporation") (TSX-V: MXX) announces financial results for the three month period and the year ended December 31, 2016.

(All monetary amounts contained herein are expressed in thousands of Canadian dollars, except for per share amounts)

OVERALL HIGHLIGHTS

For the three month period ended December 31, 2016, the Corporation experienced an increase in operating activity as compared to the corresponding 2015 period. For the year ended December 31, 2016, consistent with industry conditions, the Corporation experienced a significant decline in horizontal drilling and motor rental activity relative to the comparative period in 2015. The anticipated decline in the Corporation's overall 2016 operational activity was due to decreased capital expenditures by the Corporation's key customers due to weak commodity prices.

The Corporation is in a strong financial positon with positive working capital of $4,136 ($0.13/per share) including $3,608 ($0.11/per share) of cash and cash equivalents on hand as at December 31, 2016.

FOURTH QUARTER 2016 SUMMARY (Compared with year prior)

• Revenue of $1,135, up 42% from $797
• Gross margin of 22%, down 35% from 34%
• Net loss of $1,042, improved 22% from net loss of $1,343
• Adjusted EBITDA loss of $381, improved 24% from an Adjusted EBITDA loss of $502

YEAR ENDED 2016 SUMMARY (Compared with year prior)

• Revenue of $2,334, down 47% from $4,381
• Gross margins of 26%, improved 100% from 13%
• Net loss of $4,423, improved 53% from net loss of $9,492
• Adjusted EBITDA loss of $1,620, improved 37% from an Adjusted EBITDA loss of $2,588

OUTLOOK

The current business strategy of MATRRIX is to deploy horizontal and directional drilling technology in Canada, while actively seeking investment opportunities to acquire existing drilling technology services businesses and/or equipment.  As at the date of this press release, 25 Systems are available for deployment to the field in the Western Canadian Sedimentary Basin.

The oil and gas industry in North America extensively uses horizontal drilling to exploit conventional and unconventional oil and liquids-rich natural gas plays in most basins within North America. Oil prices have significantly rebounded from lows experienced in early 2016, which have positively affected capital expenditures and drilling programs by the Corporation's oil and gas clients, while improving the outlook for oil and gas service companies including MATRRIX.

The Corporation expects 2017 to be a recovery year for the industry. Supply of oil and gas services equipment continues to exceed demand, and until activity meets a reasonable threshold to improve the supply / demand imbalance, we expect pricing to remain challenged. To that end, the Corporation continues to drive efficiency and scalability into its systems and processes, with a view that fixed expenses will be spread over a larger revenue base as the Corporation's revenue base recovers.

Canada

Assuming strength in oil prices, and improvements in market access, the Corporation expects industry activity levels in Western Canada to grow through 2017.

MATRRIX continues to leverage and build relationships with active current and potential customers in Western Canada to grow revenue and earnings within an improving industry environment. The Corporation continues to effectively balance costs with forecasted activity levels, while managing equipment vendor relationships, and perpetually improving operational efficiency.

USA

The Corporation temporarily ceased operations in the USA during 2015 to preserve the Corporation's strong balance sheet and cash position.

The Corporation continues to assess opportunities to re-enter the USA market, and remains opportunistic in its approach to re-establish its presence in that important sector of the North American oil and gas market.

OTHER MARKETS

The Corporation will evaluate, assess, and execute (if it deems appropriate) an expansion program into markets outside of North America, with a goal to improving geographic diversity.

Opportunities will be evaluated based upon expected financial impact and risk to the Corporation through delivery of appropriate levels of revenue, income, and returns in each geographic region.

In considering geographic expansion, the Corporation will assess the potential of partnering with established organizations that have significant, existing operations in its regions of interest.

President Richard Ryan states:

"Oil and gas industry fundamentals and service company activity levels began improving during the last half 2016, bouncing off second quarter 2016 historic lows. Assuming commodity prices continue to hold or improve, we expect 2017 to be characterized by improving client fundamentals, reactivation of capital programs focused on drilling, and a return to reasonable levels of oil and gas services activity.

Regarding 2017 activity levels, there remains an excess of oil and gas services equipment, a situation affecting service company pricing leverage and pricing recovery. During the 2016 downturn, our organization remained focused on building systems and processes, and specifically our D²ROX^TM infrastructure, targeting scalable revenue growth while leveraging improvements to MATRRIX revenue, while capping cost escalation. D²ROX^TM  allows MATRRIX staff to deliver high quality horizontal and directional drilling services by enabling targeted and measured results through the entire MATRRIX sales, service and field delivery chain.

As of December 31, 2016, MATRRIX has zero debt, a strong working capital position, and $3,608 in cash. Our team is working hard to leverage market improvements, and is focused on creating measurable, sustainable value for our clients and shareholders while returning to a mindset of growth and profitability."

FINANCIAL HIGHLIGHTS

NON-GAAP MEASURES

This press release contains references to (i) EBITDA; (ii) Adjusted EBITDA; (iii) Funds Flow; and (iv) Gross Margin. These financial measures are not measures that have any standardized meaning prescribed by IFRS and are therefore referred to as non-GAAP measures. The non-GAAP measures used by the Corporation may not be comparable to similar measures used by other companies.

(i)  EBITDA is not a measure recognized under IFRS and does not have a standardized meanings prescribed by IFRS. EBITDA is defined as "income (loss) before interest expense, income taxes, depreciation and amortization.

(ii)  Adjusted EBITDA is defined as "income (loss) before interest income, interest expense, taxes, business acquisition transaction costs, depreciation and amortization, shared based compensation expense, gains on disposal of property and equipment, impairment expenses, interest and other income, and foreign exchange." Management believes that in addition to net and total comprehensive income (loss), Adjusted EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Corporation's principal business activities prior to consideration of how these activities are financed, how assets are depreciated, amortized and impaired: the impact of foreign exchange, or how the results are affected by the accounting standards associated with the Corporation's stock based compensation plan.

(iii)  Funds flow from operations is defined as "cash provided by operating activities before the change in non-cash working capital". Funds flow from operations is a measure that provides shareholders and potential investors additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations. Management utilizes this measure to assess the Corporation's ability to finance operating activities and capital expenditures.

(iv) Gross margin is defined as "gross profit from services revenue before stock based compensation and depreciation". Gross margin is a measure that provides shareholders and potential investors additional information regarding the Corporation's cash generating and operating performance. Management utilizes this measure to assess the Corporation's operating performance. 

FORWARD-LOOKING INFORMATION

Certain statements contained in this press release constitute forward-looking information.  This information relates to future events or the Corporation's future performance.  All information other than statements of historical fact is forward-looking information. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "could", "believe", "predict" and "forecast" are intended to identify forward-looking information.

In particular, this press release contains forward-looking information pertaining to the following: the Corporation's expectation is that 2017 will be a recovery year for the industry; the Corporation's expectation that pricing will remain challenged until the supply/demand imbalance is improved and the expectation that 2017 will be characterized by improving client fundamentals, reactivation of capital programs focused on drilling, and a return to reasonable levels of oil and gas services activity.

This forward-looking information involves material assumptions and known and unknow risks and uncertainties, certain of which are beyond the Corporation's control. The Corporation's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com ) describe the risks, the material assumptions and other factors that could influence actual results and which are incorporated herein by reference. Actual results, performance or achievements could differ material from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits the Corporation will derive therefrom.

The forward-looking information contained herein is provided as at the date hereof and the Corporation does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Matrrix Energy Technologies Inc.

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