NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES ("U.S.")
The news release contains “forward-looking information and statements” within the meaning of applicable
securities laws. For full disclosure of the forward-looking information and statements and the risks to which they are subject, see
the “Cautionary Statement Regarding Forward-Looking Information and Statements” later in this news release.
CALGARY, Alberta, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Strad Energy Services Ltd., (TSX:SDY)
(“Strad” or the “Company”), a North American-focused, energy services company, today announced
its financial results for the three and nine months ended September 30, 2017. All amounts are stated in Canadian dollars unless
otherwise noted.
THIRD QUARTER SELECTED FINANCIAL AND OPERATIONAL HIGHLIGHTS:
• Revenue of $33.9 million increased 67% compared to $20.3 million for the same period in 2016;
• Adjusted EBITDA(1) of $9.4 million compared to $1.2 million for the same period in
2016;
• Net income and income per share was $0.6 million and $0.01, respectively, compared to
a net loss and loss per share of $(3.7) million and $(0.09) for the same period in 2016;
• Revenue from the energy infrastructure customer vertical for the three months ended
September 30, 2017, decreased to $10.8 million or 17% from $13.0 million from the same period in 2016;
• During the third quarter, the Company amended and extended its credit facilities by
two years to September 29, 2020. The amendments include a return to pre-covenant relief period maximum ratio of Funded Debt
to covenant EBITDA(3) of 3.0:1 and a minimum ratio of Interest Expense to covenant EBITDA(3) of 3.0:1;
• Capital additions totaled $7.2 million during the third quarter of 2017; and
• Total funded debt(2) to covenant EBITDA(3) ratio was 0.9 to 1
at the end of the third quarter of 2017 compared to 1.2 to 1 at the end of the second quarter of 2017.
Notes:
(1) Earnings before interest, taxes, depreciation and amortization and other
adjustments (“adjusted EBITDA”) is not a recognized measure under IFRS; see “Non-IFRS Measures Reconciliation”.
(2) Funded debt includes bank indebtedness plus long-term debt plus current and
long-term obligations under finance lease less cash.
(3) EBITDA is based on trailing twelve months adjusted EBITDA plus share based
payments, plus additional one time charges.
“Significant year-over-year improvements in our financial performance continued into the third quarter with
strong results from both our Canadian and U.S. Operations,” said Andy Pernal, President and Chief Executive Officer of Strad. “We
are pleased with the steady improvement in our operations south of the border and expect this trend to continue as we focus on
increasing our market share and pricing. During the third quarter, the improved EBITDA performance in our Canadian Operations
continued to be driven by matting rental and service on large energy infrastructure projects. On balance, our strong financial
performance in 2017 and strong balance sheet have us positioned well heading into 2018 and ready to take advantage of opportunities
as the macro environment continues to improve.”
“Our funded debt to EBITDA leverage ratio continued to decline during the third quarter due to the continued
improvement in our adjusted EBITDA results year-over-year,” said Michael Donovan, Chief Financial Officer of Strad. “With improving
market fundamentals, our focus will remain on preserving the strength of our balance sheet and maintaining the cost structure we’ve
established as we continue to grow and scale the business.”
THIRD QUARTER FINANCIAL HIGHLIGHTS
| ($000's, except per share amounts) |
Three months ended September 30, |
|
Nine months ended September 30, |
| |
2017 |
|
2016 |
|
% chg. |
|
|
2017 |
|
2016 |
|
% chg. |
|
| |
|
|
|
|
|
|
|
| Revenue |
33,923 |
|
20,277 |
|
67 |
|
|
90,077 |
|
45,115 |
|
100 |
|
| Adjusted EBITDA(1) |
9,418 |
|
1,247 |
|
655 |
|
|
19,505 |
|
(338 |
) |
nm |
|
| Adjusted EBITDA as a % of revenue |
28 |
% |
6 |
% |
|
|
22 |
% |
(1 |
)% |
|
|
| Per share ($), basic |
0.16 |
|
0.03 |
|
433 |
|
|
0.34 |
|
(0.01 |
) |
nm |
|
| Per share ($), diluted |
0.16 |
|
0.03 |
|
433 |
|
|
0.34 |
|
(0.01 |
) |
nm |
|
| Net income (loss) |
598 |
|
(3,746 |
) |
nm |
|
|
(3,911 |
) |
(13,697 |
) |
nm |
|
| Per share ($), basic |
0.01 |
|
(0.09 |
) |
nm |
|
|
(0.07 |
) |
(0.36 |
) |
nm |
|
| Per share ($), diluted |
0.01 |
|
(0.09 |
) |
nm |
|
|
(0.07 |
) |
(0.36 |
) |
nm |
|
| Funds from operations(2) |
11,397 |
|
2,881 |
|
|
|
23,000 |
|
3,839 |
|
|
| Per share ($), basic |
0.19 |
|
0.01 |
|
1,800 |
|
|
0.40 |
|
0.10 |
|
300 |
|
| Per share ($), diluted |
0.19 |
|
0.01 |
|
1,800 |
|
|
0.40 |
|
0.10 |
|
300 |
|
| |
|
|
|
|
|
|
|
| Capital expenditures(3) |
7,233 |
|
3,215 |
|
|
|
16,967 |
|
3,806 |
|
|
| |
|
|
|
|
|
|
|
| Total assets |
189,388 |
|
188,965 |
|
|
|
189,388 |
|
188,965 |
|
|
| Long-term debt |
18,886 |
|
25,761 |
|
(27 |
) |
|
18,886 |
|
25,761 |
|
(27 |
) |
| Total long-term liabilities |
30,695 |
|
37,171 |
|
(17 |
) |
|
30,695 |
|
37,171 |
|
(17 |
) |
| Common shares - end of period ('000's) |
60,013 |
|
48,379 |
|
|
|
60,013 |
|
48,379 |
|
|
| Weighted avg common shares ('000's) |
|
|
|
|
|
|
|
| Basic |
58,844 |
|
40,493 |
|
|
|
57,531 |
|
38,123 |
|
|
| Diluted |
59,234 |
|
40,493 |
|
|
|
57,531 |
|
38,123 |
|
|
Notes:
(1) Earnings before interest, taxes, depreciation and amortization and other adjustments
(“adjusted EBITDA”) is not a recognized measure under IFRS; see “Non-IFRS Measures Reconciliation”.
(2) Funds from operations is cash flow from operating activities excluding changes in non-cash
working capital. Funds from operations is not a recognized measure under IFRS; see “Non-IFRS Measures Reconciliation”. Strad
updated 2016 comparative note per Financial Statement note disclosure as 2016 funds from operations have amounts that were
reclassified to conform to the current presentation of the interim consolidated statement of cash flows.
(3) Includes assets acquired under finance lease and purchases of intangible assets.
FINANCIAL POSITION AND RATIOS
| ($000's except ratios) |
As at September 30,
2017
|
|
As at December 31,
2016
|
|
| |
|
|
| Working capital (1) |
$ |
24,138 |
|
$ |
15,636 |
|
| Funded debt (2) |
23,286 |
|
29,025 |
|
| Total assets |
189,388 |
|
185,321 |
|
| |
|
|
| Funded debt to EBITDA (3) |
0.9 : 1
|
|
3.2 : 1
|
|
Notes:
(1) Working capital is calculated as current assets less current liabilities.
(2) Funded debt includes bank indebtedness plus long-term debt plus current and long-term
obligations under finance lease less cash.
(3) EBITDA is based on trailing twelve months adjusted EBITDA plus share based payments, plus
additional one time charges. See “Non-IFRS Measures Reconciliation”.
THIRD QUARTER RESULTS
Strad reported an increase in revenue and adjusted EBITDA of 67% and 655%, respectively during the three months
ended September 30, 2017, compared to the same period in 2016. Strad’s third quarter results were driven by increased drilling
activity in the WCSB and Strad’s U.S. operating regions, in addition to increased customer pricing. Furthermore revenue was
impacted by the increase in utilization within the Canadian surface equipment product lines and both of the U.S. product lines, due
to the increase in drilling activity. As a result adjusted EBITDA margin percentage increased to 28% compared to 6% in the prior
year, due to increased revenue and a relatively fixed cost structure.
Revenue generated from Strad’s energy infrastructure customer vertical decreased to $10.8 million during the
third quarter of 2017 compared to $13.0 million in 2016. The decrease in energy infrastructure revenue is primarily a result of
lower Product sales due to a one time sale during the third quarter of 2016 that did not re-occur this year. The energy
infrastructure vertical continued to be primarily driven by matting in Canada. For the nine months ended September 30, 2017, energy
infrastructure revenue has totaled $30.2 million of total revenue as compared to $22.6 million.
Strad’s Canadian Operations reported an increase in revenue and adjusted EBITDA of 70% and 237%, respectively,
during the three months ended September 30, 2017, compared to the same period in 2016. Increased revenue was a result of higher
drilling activity and continued improved pricing within the matting vertical during the third quarter. Additionally surface
equipment utilization increased by 26% as compared to the third quarter of 2016, which contributed to the increase in revenue for
the third quarter of 2017. Energy infrastructure contributed $9.4 million in revenue of the total $23.4 million revenue for the
third quarter of 2017 compared to $8.8 million in revenue of $13.7 million revenue in the same period in 2016.
Strad's U.S. Operations reported an increase in revenue of 164% as compared to the same period in 2016. Rig
counts in all three of Strad’s targeted U.S. resource plays were higher during the third quarter of 2017 compared to the same
period in 2016. Rig counts in the Bakken, Rockies and Marcellus regions increased by 89%, 114%, and 94%, respectively resulting in
increased utilization for the third quarter of 2017 as compared to the same period in 2016. Revenue for the third quarter of 2017
was also impacted by increased customer pricing as compared to the same period in 2016. Third quarter EBITDA increased for Q3 2017
to $1.8 million as compared to a loss of $0.3 million in Q3 2016, as a result of a lower cost structure in the U.S. due to our
focus on reducing overhead costs and discretionary spending.
Strad's Product Sales reported a decline in revenue of 23%, primarily the result of lower in-house manufactured
products and third party sales which decreased to $0.2 million and $nil, respectively, during the three months ending September 30,
2017, as compared to $0.9 million and $2.1 million during the same period in 2016. This was offset by an increase in rental
fleet sales which increased to $2.6 million during the third quarter of 2017 as compared to $0.6 million in the same period in
2016.
During the third quarter of 2017, capital expenditures were $7.1 million in Canada and were related primarily to
wood matting additions in Canada to support Strad's energy infrastructure customer vertical. The Company is expecting to spend the
remaining $9 million of the $26 million annual capital budget in the fourth quarter of 2017, in order to continue to meet the needs
of energy infrastructure clients.
RESULTS OF OPERATIONS
| Canadian Operations |
|
|
|
|
|
|
|
| |
Three months ended September 30, |
|
Nine months ended September 30, |
| ($000's) |
2017 |
|
2016 |
|
% chg. |
|
|
2017 |
|
2016 |
|
% chg. |
|
| |
|
|
|
|
|
|
|
|
| Revenue |
23,366 |
|
13,730 |
|
70 |
|
|
63,521 |
|
27,139 |
|
134 |
|
| Operating expenses |
12,745 |
|
9,726 |
|
31 |
|
|
40,207 |
|
19,557 |
|
106 |
|
| Selling, general and administration |
2,081 |
|
1,462 |
|
42 |
|
|
4,800 |
|
3,775 |
|
27 |
|
| Share based payments |
57 |
|
27 |
|
|
|
|
205 |
|
68 |
|
|
|
| Net income |
2,718 |
|
2,202 |
|
23 |
|
|
5,849 |
|
1,951 |
|
200 |
|
| Adjusted EBITDA(1) |
8,484 |
|
2,515 |
|
237 |
|
|
18,308 |
|
3,739 |
|
390 |
|
| Adjusted EBITDA as a % of revenue |
36 |
% |
18 |
% |
|
|
|
29 |
% |
14 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures(2) |
7,136 |
|
2,441 |
|
|
|
|
14,172 |
|
2,550 |
|
|
|
| Gross capital assets(4) |
165,497 |
|
147,036 |
|
13 |
|
|
165,497 |
|
147,036 |
|
13 |
|
| Total assets |
124,322 |
|
114,402 |
|
9 |
|
|
124,322 |
|
114,402 |
|
9 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Equipment Fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
| Surface equipment |
4,000 |
|
4,100 |
|
|
|
4,000 |
|
4,100 |
|
|
|
| Utilization %(3) |
29 |
% |
23 |
% |
|
|
32 |
% |
18 |
% |
|
|
| Matting |
67,700 |
|
64,800 |
|
|
|
67,700 |
|
64,800 |
|
|
|
| Utilization % |
56 |
% |
67 |
% |
|
|
53 |
% |
43 |
% |
|
|
Notes:
(1) Earnings before interest, taxes, depreciation and amortization and other adjustments
(“Adjusted EBITDA”) is not a recognized measure under IFRS; see “Non- IFRS Measures Reconciliation”.
(2) Includes assets acquired under finance lease and purchases of intangible assets.
(3) Equipment utilization includes surface and matting equipment on rent only and is calculated
using gross asset value.
(4) Gross capital assets are total property, plant and equipment before impairment and
depreciation expense.
Revenue for the three months ended September 30, 2017, of $23.4 million increased 70% compared to $13.7 million
for the same period in 2016. Increased revenue during the quarter was primarily a result of increased pricing in the matting
product line as well as higher rig counts, which increased by approximately 73%, as compared to the third quarter of 2016. Also
impacting the third quarter results was an increase of 26% in utilization in the surface equipment product line as compared to the
prior year. Furthermore only one month of results from the acquisition of Redneck Oilfield Services Ltd. and Raptor Oilfield
Services Ltd. was included in the third quarter of 2016 results, whereas a full quarter was included for 2017. September 30,
2017.
During the third quarter, revenue from energy infrastructure projects was $9.4 million or 40% of total revenue
for Canadian Operations as compared to $8.8 million or 64% of total Canadian Operations revenue in the third quarter of 2016. The
overall increase in revenue year-over-year is primarily due to improved matting pricing, offset by lower utilization rates during
the third quarter.
During the third quarter, Strad’s matting fleet increased to approximately 67,700 mats at September 30, 2017,
compared to approximately 64,800 mats as at September 30, 2016. New mats acquired during the quarter were deployed to support a top
tier energy infrastructure customer on a pipeline project. Third quarter matting utilization decreased to 56% compared to 67% in
the same period of 2016 due to drier than normal summer weather conditions. However, the decline in utilization was more than
offset by pricing improvements year-over-year. During the third quarter, Strad’s surface equipment fleet decreased to approximately
4,000 pieces, slightly down from 4,100 pieces as at September 30, 2016. Surface equipment utilization increased by 26% during the
third quarter of 2017, compared to the same period in 2016, due primarily to the increase in drilling activity.
Adjusted EBITDA for the three months ended September 30, 2017, of $8.5 million, increased 237% compared to $2.5
million for the same period in 2016. Adjusted EBITDA as a percentage of revenue, for the three months ended September 30, 2017,
increased to 36% compared to 18% for the same period in 2016. The increase in EBITDA is driven primarily by the increase in
revenue during the second quarter of 2017 as well as a relatively fixed cost structure.
Revenue for the nine months ended September 30, 2017, of $63.5 million increased 134% compared to $27.1 million
for the same period in 2016. Increased drilling activity and energy infrastructure projects were the primary drivers of increased
revenue year-over-year.
During the nine months ended September 30, 2017, revenue from energy infrastructure projects was approximately
$24.1 million or 38% of total revenue for Canadian Operations as compared to $15.4 million or 57% of total Canadian Operations
revenue in the same period of 2016. Increased pricing and an earlier start to the matting season for energy infrastructure projects
are the primary drivers of increased revenue year-over-year.
Adjusted EBITDA for the nine months ended September 30, 2017, of $18.3 million, increased 390% compared to $3.7
million for the same period in 2016. Adjusted EBITDA as a percentage of revenue, for the nine months ended September 30, 2017,
increased to 29% compared to 14% for the same period in 2016.
Operating expenses for the three and nine months ended September 30, 2017, of $12.8 million and $40.2 million
increased 31% and 106% compared to $9.7 million and $19.6 million for the same period in 2016. The increase in operating
expenses during the first nine months of 2017 is a result of increased activity levels and fleet size, as well as an increase in
third party expenses, as compared to the same period in 2016. The increase in overall expenses is consistent with the increase in
drilling activity and energy infrastructure projects that have occurred year to date for 2017.
Selling, general and administrative costs ("SG&A") for the three and nine months ended
September 30, 2017, of $2.1 million and $4.8 million, respectively, increased 42% and 27% compared to $1.5 million and $3.8 million
for the same period in 2016. SG&A costs increased over the three and nine months as a result of the first quarter 2017
acquisition of Got Mats? as well as the third quarter 2016 acquisition of Redneck Oilfield Services and Raptor Oilfield
Services.
| |
|
|
|
|
|
|
|
| U.S. Operations |
|
|
|
|
|
|
|
| |
Three months ended September 30, |
|
Nine months ended September 30, |
| ($000's) |
2017 |
|
|
2016 |
|
|
% chg. |
|
|
2017 |
|
|
2016 |
|
|
% chg. |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
7,776 |
|
|
2,950 |
|
|
164 |
|
|
19,094 |
|
|
10,251 |
|
|
86 |
|
| Operating expenses |
4,925 |
|
|
2,403 |
|
|
105 |
|
|
13,643 |
|
|
8,848 |
|
|
54 |
|
| Selling, general and administration |
993 |
|
|
858 |
|
|
16 |
|
|
2,750 |
|
|
3,355 |
|
|
(18 |
) |
| Share based payments |
14 |
|
|
14 |
|
|
|
|
|
46 |
|
|
34 |
|
|
|
|
| Net loss |
(1,621 |
) |
|
(4,028 |
) |
|
nm |
|
|
(8,238 |
) |
|
(13,107 |
) |
|
nm |
|
| Adjusted EBITDA(1) |
1,844 |
|
|
(325 |
) |
|
nm |
|
|
2,655 |
|
|
(1,986 |
) |
|
nm |
|
| Adjusted EBITDA as a % of revenue |
24 |
% |
|
(11 |
)% |
|
|
|
|
14 |
% |
|
(19 |
)% |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures(2) |
21 |
|
|
774 |
|
|
|
|
|
2,694 |
|
|
1,214 |
|
|
|
|
| Gross capital assets(4) |
129,472 |
|
|
143,462 |
|
|
(10 |
) |
|
129,472 |
|
|
143,462 |
|
|
(10 |
) |
| Total assets |
64,070 |
|
|
73,341 |
|
|
(13 |
) |
|
64,070 |
|
|
73,341 |
|
|
(13 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Equipment Fleet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Surface equipment |
2,000 |
|
|
2,000 |
|
|
|
|
|
2,000 |
|
|
2,000 |
|
|
|
|
| Utilization %(3) |
29 |
% |
|
15 |
% |
|
|
|
|
26 |
% |
|
16 |
% |
|
|
|
| Matting |
17,600 |
|
|
13,100 |
|
|
34 |
|
|
17,600 |
|
|
13,100 |
|
|
34 |
|
| Utilization %(3) |
32 |
% |
|
14 |
% |
|
|
|
|
26 |
% |
|
15 |
% |
|
|
|
Notes:
(1) Earnings before interest, taxes, depreciation and amortization and other adjustments
(“Adjusted EBITDA”) is not a recognized measure under IFRS; see “Non-IFRS Measures Reconciliation”.
(2) Includes assets acquired under finance lease and purchases of intangible assets.
(3) Equipment utilization includes surface and matting equipment on rent only and is calculated
using gross asset value.
(4) Gross capital assets are total property, plant and equipment before impairment and
depreciation expense.
Revenue for the three months ended September 30, 2017, increased 164% to $7.8 million from $3.0 million for the
same period in 2016. The increase in revenue is due to a combination of higher surface equipment and matting utilization rates and
modestly higher customer pricing resulting from increased drilling activity when compared to the same period in 2016. Average rig
counts in the Bakken, Rockies and Marcellus regions increased by 89%, 114%, and 94%, respectively, during the third quarter of 2017
compared to the same period in 2016.
During the third quarter, revenue from energy infrastructure projects was $0.4 million or 6% of total revenue
for U.S. Operations compared to $1.1 million or 37% in the same period of 2016. The decrease in revenue from energy infrastructure
projects is due to fewer projects in 2017 compared to the same period in 2016.
The U.S. matting fleet increased to 17,600 mats as at September 30, 2017, compared to 13,100 mats as at
September 30, 2016. The addition of mats during the first three quarters of 2017 was to support the increase in U.S. energy
infrastructure customers. The U.S. surface equipment fleet remained consistent with surface equipment of 2,000 pieces at September
30, 2017, compared to September 30, 2016.
Adjusted EBITDA for the three months ended September 30, 2017, increased to $1.8 million compared to $(0.3)
million for the same period in 2016. Adjusted EBITDA as a percentage of revenue, for the three months ended September 30, 2017, was
24% compared to (11)% for the same period in 2016. The increase in both adjusted EBITDA and adjusted EBITDA as a percentage of
revenue is primarily due to increased drilling activity levels which resulted in higher utilization and modestly improved customer
pricing in the third quarter of 2017 compared to the same period of 2016.
Revenue for the nine months ended September 30, 2017, increased 86% to $19.1 million from $10.3 million for the
same period in 2016. The increase in revenue for the nine months ended September 30, 2017 can be attributed to higher surface
equipment and matting utilization rates due to increased drilling activity levels across all of our U.S. operating regions and
modestly higher customer pricing as compared to the same period in 2016. In addition, energy infrastructure revenue as a percentage
of total revenue increased to 9.4% or $1.8 million during the nine months ended September 30, 2017 compared to 10.7% or $1.1
million in the same period of 2016.
Adjusted EBITDA for the nine months ended September 30, 2017, increased to $2.7 million compared to $(2.0)
million for the same period in 2016. Adjusted EBITDA as a percentage of revenue, for the nine months ended September 30, 2017, was
14% compared to (19)% for the same period in 2016. The increase in both adjusted EBITDA and adjusted EBITDA as a percentage of
revenue is primarily due to the increase in revenue during the first nine months of 2017 in addition to a relatively fixed cost
structure.
Operating expenses for the three and nine months ended September 30, 2017, of $4.9 million and $13.6 million,
respectively, increased 105% and 54% compared to $2.4 million and $8.8 million for the same period in 2016. The increase in
operating expenses during the first nine months of 2017 is a result of increased activity levels.
SG&A costs for the three and nine months ended September 30, 2017, of $1.0 million and $2.8 million
increased 16% and decreased 18% respectively compared to $0.9 million and $3.4 million for the same period in 2016. The change in
SG&A expenses is due to cost reductions implemented by management including staff reductions and reductions in discretionary
spending.
| |
|
|
|
|
|
|
|
| Product Sales |
|
|
|
|
|
|
|
| |
Three months ended September 30, |
|
Nine months ended September 30, |
| ($000's) |
2017 |
|
|
2016 |
|
|
% chg. |
|
|
2017 |
|
|
2016 |
|
|
% chg. |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
2,781 |
|
|
3,597 |
|
|
(23 |
) |
|
7,462 |
|
|
7,725 |
|
|
(3 |
) |
| Operating expenses |
2,673 |
|
|
3,240 |
|
|
(18 |
) |
|
5,747 |
|
|
6,701 |
|
|
(14 |
) |
| Selling, general and administration |
52 |
|
|
24 |
|
|
117 |
|
|
151 |
|
|
44 |
|
|
243 |
|
| Net loss |
(417 |
) |
|
(160 |
) |
|
nm |
|
|
(691 |
) |
|
(706 |
) |
|
nm |
|
| Adjusted EBITDA(1) |
60 |
|
|
333 |
|
|
(82 |
) |
|
1,569 |
|
|
980 |
|
|
60 |
|
| Adjusted EBITDA as a % of revenue |
2 |
% |
|
9 |
% |
|
|
|
|
21 |
% |
|
13 |
% |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Capital expenditures(2) |
— |
|
|
— |
|
|
— |
|
|
25 |
|
|
— |
|
|
— |
|
| Total assets |
104 |
|
|
137 |
|
|
(24 |
) |
|
104 |
|
|
137 |
|
|
(24 |
) |
Notes:
(1) Earnings before interest, taxes, depreciation and amortization and other adjustments
(“Adjusted EBITDA”) is not a recognized measure under IFRS; see “Non- IFRS Measures Reconciliation”.
(2) Includes assets acquired under finance lease and purchases of intangible assets.
Product Sales are comprised of in-house manufactured products sold to external customers, third party equipment
sales to existing customers and sales of equipment from Strad’s existing fleet to customers.
Revenue for the three months ended September 30, 2017, decreased 23% to $2.8 million from $3.6 million for the
same period in 2016, resulting primarily from lower in-house manufactured products and third party sales. During the three months
ended September 30, 2017, Product Sales consisted of $2.6 million of rental fleet sales, $0.2 million of in-house manufactured
products and $nil of third party equipment sales compared to $0.6 million, $0.9 million and $2.1 million, respectively, during the
same period in 2016.
During the third quarter, revenue from energy infrastructure projects was $1.0 million or 33% of total revenue
compared to $3.2 million or 88% of total revenue in the same period of 2016. The decrease in revenue year-over-year is due to
one-time sales during the third quarter of 2016 that did not re-occur in 2017. Product sales vary from quarter to quarter and are
dependent on project timing and customer demands.
Adjusted EBITDA for the three months ended September 30, 2017, decreased to $0.1 million from $0.3 million for
the same period in 2016. Adjusted EBITDA as a percentage of revenue, for the three months ended September 30, 2017, was 2% compared
to 9% for the same period in 2016. The decrease in adjusted EBITDA is due to one-time costs of $0.2 million that were recorded for
three months ended September 30, 2017, as compared to the same period in 2016.
Revenue for the nine months ended September 30, 2017, decreased 3% to $7.5 million from $7.7 million for the
same period in 2016, resulting primarily from lower in-house manufactured equipment sales year over year. During the nine months
ended, September 30, 2017, Product Sales consisted of $5.5 million of rental fleet sales, $1.3 million of in-house manufactured
products and $0.6 million of third party equipment sales compared to $1.3 million, $2.4 million and $3.9 million, respectively,
during the same period in 2016.
During the nine months ended September 30, 2017, revenue from energy infrastructure projects was $4.2 million or
56% of total revenue compared to $6.1 million or 79% of total revenue in the same period of 2016. Revenue decreased year-over-year
due to one time sales to energy infrastructure customers in the third quarter of 2016.
Adjusted EBITDA for the nine months ended September 30, 2017, increased to $1.6 million from $1.0 million for
the same period in 2016. Adjusted EBITDA as a percentage of revenue, for the nine months ended September 30, 2017, was 21% compared
to 13% for the same period in 2016.
Operating expenses for the three and nine months ended September 30, 2017, of $2.7 million and $5.7 million
decreased 18% and 14% compared to $3.2 million and $6.7 million for the same period in 2016. Operating expenses vary with
individual transactions and business activity levels.
OUTLOOK
Our trend of improved year-over-year financial performance continued into the third quarter on the strength of
our Canadian matting business, improved customer pricing and our relatively fixed cost structure. Average rig count improvements in
the WCSB and our U.S operating regions resulted in higher utilization of our equipment and matting rental fleets and higher
customer pricing year-over-year.
In Canada, customer pricing for our matting continued to improve from the second quarter as favorable supply and
demand market conditions continued into the third quarter. The third quarter has historically been the peak for matting utilization
due to late summer, early fall drilling programs commencing and more energy infrastructure projects tend to begin during the summer
construction period. Matting utilization typically begins to decline in the fourth quarter as the ground starts to freeze, reducing
the need for matting in drilling locations as well as summer construction projects winding down. We expect to see this trend
continue during the fourth quarter of 2017 with a portion of the utilization decline offset by smaller energy infrastructure
projects that build through the winter months.
For the fifth consecutive quarter in a row, we reported improved financial results from our U.S. Operations both
sequentially and year-over-year, driven primarily by improved average rig counts in our operating regions and modest increases in
customer prices from historically low levels.
During the third quarter, we continued to execute on our strategic priorities including continued growth of the
energy infrastructure customer vertical, continued focus on increasing our size and scale, and maintaining our lean cost structure.
Revenue generated by energy infrastructure customers accounted for 32% of total revenue, 40% of Canadian Operations revenue, 5% of
U.S. Operations revenue and 37% of Product Sales revenue during the third quarter.
Year-to-date in 2017, we have deployed $17 million of our planned $26 million 2017 capital program with a focus
on organic growth with $14.2 million of the capital spending being allocated primarily to our Canadian matting fleet to meet strong
demand. We plan to continue investing in our matting fleet throughout the remainder of 2017 to ensure we are positioned to meet
forecasted demand during the first quarter of 2018.
Looking ahead to the remainder of 2017 and into 2018, we anticipate demand for our Canadian surface equipment to
remain steady during the fourth quarter before increasing in the first quarter of 2018 in conjunction with the winter drilling
season. Although many of our customers have yet to finalize their 2018 budgets, we have some indications that demand for our
equipment and services during the first quarter could meet or exceed average 2017 levels. We expect the normal decline in demand
for our Canadian matting fleet during the fourth quarter as summer energy infrastructure projects come to a conclusion and the
ground begins to freeze. However, in keeping with the normal historical trend for our matting business, we anticipate demand
increasing again mid to late first quarter of 2018.
For the remainder of 2017 and early 2018, we expect to see continued improvement in our U.S. financial results
as pricing increases and higher utilization rates combined with a low cost structure continue to drive improved profitability. For
2018, we will continue our focus on increasing prices for our products where market economic conditions allow, and managing our
lean cost structure to ensure the efficiencies gained over the past two years are maintained. Capital allocation and balance sheet
preservation in 2018 will continue to be top priorities to ensure we maintain flexibility and are well positioned to take advantage
of opportunities that arise as market fundamentals continue to slowly improve.
LIQUIDITY AND CAPITAL RESOURCES
| ($000's) |
September 30,
2017
|
|
December 31,
2016
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Current assets |
$ |
40,021 |
|
$ |
31,852 |
|
| Current liabilities |
15,883 |
|
16,216 |
|
| Working Capital(1) |
24,138 |
|
15,636 |
|
| |
|
|
| Banking facilities |
|
|
| Operating facility |
3,626 |
|
1,478 |
|
| Syndicated revolving facility |
18,886 |
|
26,501 |
|
| Total facility borrowings |
22,512 |
|
27,979 |
|
| |
|
|
| Total credit facilities(2) |
48,500 |
|
48,500 |
|
| Unused credit capacity |
25,988 |
|
20,521 |
|
Notes:
(1) Working capital is calculated as current assets less current liabilities.
(2) Facilities are subject to certain limitations on accounts receivable, inventory, and net book
value of fixed assets and are secured by a general security agreement over all of the Company's assets. As at June 30, 2017, Strad
had access to $48.5 million of credit facilities.
As at September 30, 2017, working capital was $24.1 million compared to $15.6 million at December 31, 2016. The
change in current assets is a result of a 44% increase in accounts receivable to $35.2 million for the third quarter of 2017
compared to $24.4 million for the fourth quarter of 2016. The increase in accounts receivable is due to an increase in matting and
surface equipment related revenue, as well as delays in customer payments during the third quarter as compared to the fourth
quarter of 2016. Inventory decreased by 10% to $3.5 million at September 30, 2017, from $3.9 million at December 31, 2016, and
prepaid expenses decreased 13% to $1.0 million at September 30, 2017 from $1.1 million at December 31, 2016. The decrease in
inventory and prepaids relates to the normal course of business.
The change in current liabilities is a result of a 15% decrease in accounts payable and accrued liabilities to
$11.8 million at September 30, 2017, compared to $13.9 million at year end. Bank indebtedness increased to $3.6 million at
the end of the third quarter compared to $1.5 million for the fourth quarter of 2016.
Funds from operations for the three months ended September 30, 2017, increased to $11.4 million compared to $0.3
million for the three months ended September 30, 2016. Capital expenditures totaled $7.2 million for the three months ended
September 30, 2017. Strad's total facility borrowing decreased by $5.5 million for the three months ended September 30, 2017,
compared to the fourth quarter of 2016. Management monitors funds from operations and the timing of capital additions to ensure
adequate capital resources are available to fund Strad’s capital program.
As at September 30, 2017, the Company’s syndicated banking facility consists of an operating facility with a
maximum principal amount of $7.0 million CAD and $5.0 million USD, and a $36.5 million CAD syndicated revolving facility, both of
which are subject to certain limitations on accounts receivable, inventory and net book value of fixed assets and are secured by a
general security agreement over all of the Company’s assets. As at September 30, 2017, the Company had access to the maximum credit
facilities. The syndicated banking facility was extended and amended during the third quarter of 2017 and will mature on September
29, 2020. These amendments include a return to pre-covenant relief period maximum ratio of Funded Debt to covenant EBITDA of 3.0:1
and a minimum ratio of Interest Expense to covenant EBITDA of 3.0:1. The syndicated banking facility bears interest at bank prime
plus a variable rate, which is dependent on the Company’s funded debt to covenant EBITDA ratio.
Based on the Company's funded debt to covenant EBITDA ratio, the interest rate on the syndicated credit facility
is bank prime plus 1.25% on prime rate advances and at the prevailing rate plus a stamping fee of 2.25% on bankers' acceptances.
For the three months ended September 30, 2017, the overall effective rates on the operating facility and revolving facility were
5.44% and 5.27%, respectively. As of September 30, 2017, $3.6 million was drawn on the operating facility and $18.9 million was
drawn on the revolving facility. Required payments on the revolving facility are interest only.
As at September 30, 2017, the Company was in compliance with all of the financial covenants under its credit
facilities.
The relevant definitions related to the financial debt covenant ratio terms as set forth in the Company's
syndicated banking facility are as follows:
• Funded debt includes bank indebtedness plus long-term debt plus current and long-term
obligations under finance lease less cash.
• Covenant EBITDA is based on trailing twelve months adjusted EBITDA plus share based
payments, plus additional one-time charges.
• Interest expense ratio is calculated as the ratio of trailing twelve months adjusted
EBITDA plus share based payments to trailing twelve months interest expense on loans and borrowings.
The above noted definitions are not recognized under IFRS and are provided strictly for the purposes of the
financial covenant calculation.
| |
|
|
| Financial Debt Covenants |
As at September 30,
2017
|
|
As at December 31,
2016
|
|
| Funded debt to EBITDA ratio (not to exceed 3.0:1) |
|
|
|
|
|
|
| Funded debt |
$ |
23,286 |
|
$ |
29,025 |
|
| Covenant EBITDA |
25,157 |
|
9,119 |
|
| Ratio |
0.9 |
|
3.2 |
|
| |
|
|
| EBITDA to interest coverage ratio (no less than 3.0:1) |
|
|
| Covenant EBITDA |
$ |
25,157 |
|
$ |
9,119 |
|
| Interest expense |
1,584 |
|
1,557 |
|
| Ratio |
15.9 |
|
5.9 |
|
| |
|
|
|
|
NON-IFRS MEASURES RECONCILIATION
Certain supplementary measures in this MD&A do not have any standardized meaning as prescribed under IFRS
and, therefore, are considered non-IFRS measures. These measures are described and presented in order to provide shareholders and
potential investors with additional information regarding the Company’s financial results, liquidity and its ability to generate
funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to
the equivalent IFRS measure. However, they should not be used as an alternative to IFRS, because they may not be consistent with
calculations of other companies. These measures are further explained below.
Earnings before interest, taxes, depreciation and amortization and other adjustments (“adjusted EBITDA”) is not
a recognized measure under IFRS. Management believes that in addition to net income, adjusted EBITDA is a useful supplemental
measure as it provides an indication of the results generated by the Company’s principal business activities prior to consideration
of how those activities are financed or how the results are taxed. Adjusted EBITDA is calculated as net income (loss) plus
interest, finance fees, taxes, depreciation and amortization, loss on disposal of property, plant and equipment, loss on foreign
exchange, less gain on foreign exchange and gain on disposal of property, plant and equipment. Segmented adjusted EBITDA is based
upon the same calculation for defined business segments, which are comprised of Canadian Operations, U.S. Operations and Product
Sales.
Funds from operations are cash flow from operating activities excluding changes in non-cash working capital. It
is a supplemental measure to gauge performance of the Company before non-cash items. Working capital is calculated as current
assets minus current liabilities. Working capital, cash forecasting and banking facilities are used by Management to ensure funds
are available to finance growth opportunities.
Funded debt is calculated as bank indebtedness plus long-term debt plus current and long-term portion of finance
lease obligations less cash from syndicate institutions.
Reconciliation of Funds from Operations
| ($000's) |
|
|
|
|
| |
Three months ended September 30, |
Nine months ended September 30, |
| |
2017
|
|
2016
|
|
2017
|
|
2016
|
|
| |
|
|
| Net cash generated from operating activities |
$ |
4,223 |
|
$ |
(1,867 |
) |
$ |
10,795 |
|
$ |
7,814 |
|
| Less: |
|
|
|
|
| Changes in non-cash working capital(1) |
(7,174 |
) |
(4,748 |
) |
(12,205 |
) |
3,975 |
|
| Funds from Operations |
11,397 |
|
2,881 |
|
23,000 |
|
3,839 |
|
Notes:
(1) Prior period comparative funds from operations have amounts that were reclassified to conform to the
current presentation of the interim consolidated statement of cash flows. See note 17 of the unaudited interim consolidated
financial statements.
Reconciliation of Adjusted EBITDA
| ($'000's) |
|
|
|
|
| |
Three months ended September
30,
|
|
Nine months ended September
30,
|
|
| |
2017
|
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss): |
$ |
598 |
|
$ |
(3,746 |
) |
$ |
(3,911 |
) |
$ |
(13,697 |
) |
| Add (deduct): |
|
|
|
|
| Depreciation and amortization |
7,359 |
|
4,930 |
|
21,314 |
|
14,594 |
|
| Gain on disposal of PP&E |
(6 |
) |
(35 |
) |
(234 |
) |
(496 |
) |
| Deferred income tax (recovery) expense |
(244 |
) |
(33 |
) |
(231 |
) |
206 |
|
| Financing fees |
58 |
|
44 |
|
204 |
|
138 |
|
| Interest expense |
301 |
|
318 |
|
1,156 |
|
718 |
|
| (Gain) loss on foreign exchange |
(15 |
) |
17 |
|
(160 |
) |
(416 |
) |
| Current income tax recovery |
1,367 |
|
(248 |
) |
1,367 |
|
(1,385 |
) |
| Adjusted EBITDA |
9,418 |
|
1,247 |
|
19,505 |
|
(338 |
) |
| Reconciliation of quarterly non-IFRS measures |
|
|
|
|
| ($'000's) |
|
|
|
|
| |
Three months ended |
| |
|
Sep 30,
2017 |
|
|
Jun 30,
2017 |
|
|
Mar 31,
2017 |
|
|
Dec 31,
2016 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss: |
$ |
598 |
|
$ |
(2,163 |
) |
$ |
(2,347 |
) |
$ |
(3,105 |
) |
| Add (deduct): |
|
|
|
|
| Depreciation and amortization |
7,359 |
|
7,572 |
|
6,383 |
|
7,610 |
|
| Gain on disposal of PP&E |
(6 |
) |
(150 |
) |
(78 |
) |
(105 |
) |
| Deferred income tax (recovery) expense |
(244 |
) |
(102 |
) |
116 |
|
(403 |
) |
| Financing fees |
58 |
|
73 |
|
73 |
|
43 |
|
| Interest expense |
301 |
|
419 |
|
436 |
|
415 |
|
| (Gain) loss on foreign exchange |
(15 |
) |
(58 |
) |
(87 |
) |
123 |
|
| Current tax (recovery) expense |
1,367 |
|
— |
|
— |
|
204 |
|
| Adjusted EBITDA |
9,418 |
|
5,591 |
|
4,496 |
|
4,782 |
|
| |
Three months ended |
| |
|
Sep 30,
2016 |
|
|
Jun 30,
2016 |
|
|
Mar 31,
2016 |
|
|
Dec 31,
2015 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss: |
$ |
(3,746 |
) |
$ |
(6,958 |
) |
$ |
(2,994 |
) |
$ |
(8,316 |
) |
| Add (deduct): |
|
|
|
|
| Depreciation and amortization |
4,930 |
|
4,516 |
|
5,149 |
|
7,126 |
|
| Gain on disposal of PP&E |
(35 |
) |
(268 |
) |
(193 |
) |
(99 |
) |
| Deferred tax expense (recovery) |
(33 |
) |
1,438 |
|
(1,201 |
) |
(4,033 |
) |
| Financing fees |
44 |
|
47 |
|
47 |
|
34 |
|
| Interest expense |
318 |
|
157 |
|
244 |
|
427 |
|
| Loss (gain) on foreign exchange |
17 |
|
3 |
|
(437 |
) |
216 |
|
| Current tax recovery |
(248 |
) |
(918 |
) |
(217 |
) |
(677 |
) |
| Impairment loss |
— |
|
— |
|
— |
|
7,822 |
|
| Adjusted EBITDA |
1,247 |
|
(1,983 |
) |
398 |
|
2,500 |
|
| Reconciliation of funded debt |
|
|
| ($'000's) |
|
|
| |
|
|
| |
Nine months ended September 30,
2017
|
|
Year ended December 31, 2016 |
|
| |
|
|
|
|
|
| Bank indebtedness, net of cash on hand at syndicate banks |
$ |
3,626 |
|
$ |
1,478 |
|
| Long term debt |
18,886 |
|
|
26,501 |
|
| Current and long term obligations under finance lease |
774 |
|
|
1,046 |
|
| Total Funded Debt |
23,286 |
|
|
29,025 |
|
| |
|
|
|
|
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
Certain statements and information contained in this press release constitute forward-looking information and
statements within the meaning of applicable securities laws. The use of any of the words “expect”, “plan”, “continue”, “estimate”,
“anticipate”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “may”, “predict”, or “will” and similar
expressions are intended to identify forward-looking information or statements. More particularly, this press release contains
forward-looking statements concerning future capital expenditures of the Company, including its 2017 capital budget, and funding
thereof, changes and expectations in margins to be experienced by Strad, anticipated cash flow, debt, anticipated demand for the
Company’s products and services over the balance of 2017 and into 2018, drilling activity in North America, pricing of the
Company’s products and services and expectations for the remainder of 2017 and into 2018 and potential for improved profitability,
and the potential for growth and expansion of certain components of the Company's business, including further additions to our
matting fleet, anticipated benefits from cost reductions and timing thereof, manufacturing capacity to meet anticipated demand for
the Company’s products, and expected exploration and production industry activity including the effects of industry trends on
demand for the Company's products. These statements relate to future events or to the Company’s future financial performance and
involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, levels of activity,
performance or achievements to be materially different from future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements.
Various assumptions were used in drawing the conclusions or making the projections contained in the
forward-looking statements throughout this press release. The forward-looking information and statements included in this press
release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on
current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results
to differ materially from those anticipated and described in the forward-looking statements. Such information and statements
involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from
those anticipated in such forward-looking information or statements. In addition to other material factors, expectations and
assumptions which may be identified in this press release and other continuous disclosure documents of the Company referenced
herein, assumptions have been made in respect of such forward-looking statements and information regarding, among other things: the
Company will continue to conduct its operations in a manner consistent with past operations; the general continuance of current
industry conditions; anticipated financial performance, business prospects, impact of competition, strategies, the general
stability of the economic and political environment in which the Company operates; exchange and interest rates; tax laws; the
sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services
and the adequacy of cash flow; debt and ability to obtain financing on acceptable terms to fund its planned expenditures, which are
subject to change based on commodity prices; market conditions and future oil and natural gas prices; and potential timing delays.
Although Management considers these material factors, expectations and assumptions to be reasonable based on information currently
available to it, no assurance can be given that they will prove to be correct.
Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these
and other factors that could affect the Company's operations and financial results are included in reports on file with the
Canadian Securities Regulatory Authorities and may be accessed through the SEDAR website (www.sedar.com) or at the Company's
website. The forward-looking statements and information contained in this press release are expressly qualified by this cautionary
statement. The Company does not undertake any obligation to publicly update or revise any forward looking statements or
information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities
laws.
THIRD QUARTER EARNINGS CONFERENCE CALL
Strad Energy Services Ltd. has scheduled a conference call to begin promptly at 8:00 a.m. MT (10:00 a.m. ET) on
Friday, November 10th 2017.
The conference call dial in number is 1-844-388-0561, followed by Conference ID code
97352803
The conference call will also be accessible via webcast at www.stradenergy.com
A replay of the call will be available approximately one hour after the conference call ends until Friday,
November 17th, 2017, at 1:00pm ET. To access the replay, call 1-855-859-2056, followed by pass code 97352803.
| Strad Energy Services Ltd. |
|
|
|
Interim Consolidated Statement of Financial Position
|
|
|
|
| (Unaudited) |
|
|
|
| |
|
|
|
| (in thousands of Canadian dollars) |
As at September 30, 2017 |
|
|
As at December 31, 2016 |
|
| |
$ |
|
|
$ |
|
| Assets |
|
|
|
| Current assets |
|
|
|
| Cash |
— |
|
|
369 |
|
| Trade receivables |
35,228 |
|
|
24,460 |
|
| Inventories |
3,482 |
|
|
3,890 |
|
| Prepaids and deposits |
966 |
|
|
1,111 |
|
| Income tax receivable |
345 |
|
|
2,022 |
|
| |
40,021 |
|
|
31,852 |
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
146,462 |
|
|
150,622 |
|
| Intangible assets |
567 |
|
|
665 |
|
| Long term assets |
1,812 |
|
|
2,023 |
|
| Deferred income tax assets |
526 |
|
|
159 |
|
| Total assets |
189,388 |
|
|
185,321 |
|
| |
|
|
|
| Liabilities |
|
|
|
| Current liabilities |
|
|
|
| Bank indebtedness |
3,626 |
|
|
1,478 |
|
| Accounts payable and accrued liabilities |
11,762 |
|
|
13,893 |
|
| Current portion of obligations under finance lease |
495 |
|
|
845 |
|
| |
15,883 |
|
|
16,216 |
|
| Non-current liabilities |
|
|
|
| Long-term debt |
18,886 |
|
|
26,501 |
|
| Obligations under finance lease |
279 |
|
|
201 |
|
| Deferred income tax liabilities |
11,530 |
|
|
10,321 |
|
| |
46,578 |
|
|
53,239 |
|
| Equity |
|
|
|
| Share capital |
155,054 |
|
|
135,935 |
|
| Contributed surplus |
12,613 |
|
|
12,243 |
|
| Accumulated other comprehensive income |
22,114 |
|
|
26,963 |
|
| Deficit |
(46,971 |
) |
|
(43,059 |
) |
| Total equity |
142,810 |
|
|
132,082 |
|
| Total liabilities and equity |
189,388 |
|
|
185,321 |
|
| |
|
|
|
| Strad Energy Services Ltd. |
|
|
|
| Interim Consolidated Statement of Loss and Comprehensive Loss |
|
|
|
| For the three and nine months ended September 30, 2017 and 2016 |
|
|
|
| (Unaudited) |
|
|
|
| |
|
|
|
| |
Three months ended September 30, |
|
Nine months ended September 30, |
| |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
| |
$
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
| Revenue |
|
33,923 |
|
|
|
20,277 |
|
|
|
90,077 |
|
|
|
45,115 |
|
| Expenses |
|
|
|
|
|
|
|
| Operating expenses |
|
20,343 |
|
|
|
15,369 |
|
|
|
59,597 |
|
|
|
35,106 |
|
| Depreciation |
|
7,295 |
|
|
|
4,864 |
|
|
|
21,118 |
|
|
|
14,248.212 |
|
| Amortization of intangible assets |
|
42 |
|
|
|
43 |
|
|
|
126 |
|
|
|
275.117 |
|
| Amortization of long term assets |
|
22 |
|
|
|
23 |
|
|
|
70 |
|
|
|
71.185 |
|
| Selling, general and administration |
|
4,080 |
|
|
|
3,610 |
|
|
|
10,605 |
|
|
|
10,176 |
|
| Share-based payments |
|
82 |
|
|
|
51 |
|
|
|
370 |
|
|
|
170.865 |
|
| Gain on disposal of property, plant and equipment |
|
(6 |
) |
|
|
(35 |
) |
|
|
(234 |
) |
|
|
(496 |
) |
| Foreign exchange (gain) loss |
|
(15 |
) |
|
|
17 |
|
|
|
(160 |
) |
|
|
(416 |
) |
| Finance fees |
|
58 |
|
|
|
44 |
|
|
|
204 |
|
|
|
138 |
|
| Interest expense |
|
301 |
|
|
|
318 |
|
|
|
1,156 |
|
|
|
718 |
|
| Loss before income tax |
|
1,721 |
|
|
|
(4,027 |
) |
|
|
(2,775 |
) |
|
|
(14,876 |
) |
| Current income tax recovery |
|
1,367 |
|
|
|
(248 |
) |
|
|
1,367 |
|
|
|
(1,385 |
) |
| Deferred income tax expense (recovery) |
|
(244 |
) |
|
|
(33 |
) |
|
|
(231 |
) |
|
|
206 |
|
| Loss for the period |
|
598 |
|
|
|
(3,746 |
) |
|
|
(3,911 |
) |
|
|
(13,697 |
) |
| |
|
|
|
|
|
|
|
| Other comprehensive loss |
|
|
|
|
|
|
|
| Items that may be reclassified subsequently to net loss |
|
|
|
|
|
|
|
| Cumulative translation adjustment |
|
(2,510 |
) |
|
|
618 |
|
|
|
(4,849 |
) |
|
|
(5,004 |
) |
| Total comprehensive loss for the period |
|
(1,912 |
) |
|
|
(3,128 |
) |
|
|
(8,760 |
) |
|
|
(18,701 |
) |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Loss per share: |
|
|
|
|
|
|
|
| Basic |
$0.01 |
|
|
($0.09 |
) |
|
|
($0.07 |
) |
|
|
($0.36 |
) |
| Diluted |
$0.01 |
|
|
($0.09 |
) |
|
|
($0.07 |
) |
|
|
($0.36 |
) |
| |
|
| Strad Energy Services Ltd. |
|
| Interim Consolidated Statement of Cash Flow |
|
| For the nine months ended September 30, 2017 and 2016 |
|
| (Unaudited) |
|
| |
|
| (in thousands of Canadian dollars) |
Nine months ended September
30,
|
| |
2017 |
|
|
2016 |
|
| |
|
|
|
(revised) |
|
| Cash flow provided by (used in) |
$ |
|
|
$ |
|
| |
|
|
|
|
|
| Operating activities |
|
|
|
| Loss for the period |
(3,911 |
) |
|
(13,697 |
) |
| Adjustments for items not affecting cash: |
|
|
|
| Depreciation and amortization |
21,314 |
|
|
14,594 |
|
| Deferred income tax expense |
(231 |
) |
|
231 |
|
| Current income tax (recovery) expense |
1,367 |
|
|
— |
|
| Share-based payments |
370 |
|
|
171 |
|
| Interest expense and finance fees |
1,360 |
|
|
856 |
|
| Unrealized foreign exchange gain |
(495 |
) |
|
(379 |
) |
| Gain on disposal of property, plant and equipment |
(234 |
) |
|
(496 |
) |
| Book value of used fleet sales in operating activities |
3,460 |
|
|
2,559 |
|
| Changes in items of non-cash working capital |
(12,205 |
) |
|
3,975 |
|
| Net cash generated from operating activities |
10,795 |
|
|
7,814 |
|
| |
|
|
|
| Investing activities |
|
|
|
| Purchase of property, plant and equipment |
(16,967 |
) |
|
(3,806 |
) |
| Proceeds from sale of property, plant and equipment |
790 |
|
|
367 |
|
| Purchase of intangible assets |
(34 |
) |
|
(65 |
) |
| Cash paid on business acquisition |
(2,750 |
) |
|
— |
|
| Cash assumed on business acquisition |
322 |
|
|
196 |
|
| Changes in items of non-cash working capital |
117 |
|
|
157 |
|
| Net cash (used in) generated from investing activities |
(18,522 |
) |
|
(3,151 |
) |
| |
|
|
|
| Financing activities |
|
|
|
| Proceeds on issuance of long-term debt |
5,307 |
|
|
20,000 |
|
| Repayment of long-term debt |
(12,919 |
) |
|
(9,739 |
) |
| Repayment of long-term debt assumed in business acquisition |
— |
|
|
(12,995 |
) |
| Repayment of finance lease obligations (net) |
(790 |
) |
|
(453 |
) |
| Issuance of shareholder loan (net of repayments) |
304 |
|
|
(94 |
) |
| Interest expense and finance fees |
(1,360 |
) |
|
(856 |
) |
| Issuance of common shares |
15,000 |
|
|
— |
|
| Share issue costs |
(1,025 |
) |
|
— |
|
| Changes in items of non-cash working capital |
(76 |
) |
|
10 |
|
| Net cash generated from (used in) financing activities |
4,441 |
|
|
(4,127 |
) |
| Effect of exchange rate changes on cash and cash equivalents |
769 |
|
|
(750 |
) |
| Increase in cash and cash equivalents |
(2,517 |
) |
|
(214 |
) |
| |
|
|
|
| Cash and cash equivalents – beginning of year |
(1,109 |
) |
|
(2,874 |
) |
| Cash and cash equivalents – end of period |
(3,626 |
) |
|
(3,088 |
) |
| |
|
|
|
| Cash paid for income tax |
— |
|
|
— |
|
| Cash paid for interest |
203 |
|
|
706 |
|
| |
ABOUT STRAD ENERGY SERVICES LTD.
Strad is a North American energy services company that provides rental equipment and matting solutions to the
oil and gas and energy infrastructure sectors. Strad focuses on providing complete customer solutions in Canada and the
United States.
Strad is headquartered in Calgary, Alberta, Canada. Strad is listed on the Toronto Stock Exchange under the
trading symbol “SDY”.
For more information, please contact:
Strad Energy Services Ltd.
Andy Pernal
President and Chief Executive Officer
(403) 775-9202
Fax: (403) 232-6901
email: apernal@stradenergy.com
Strad Energy Services Ltd.
Michael Donovan
Chief Financial Officer
(403) 775-9221
Fax: (403) 232-6901
email: mdonovan@stradenergy.com
www.stradenergy.com
