News Column

Winalta Announces First Quarter Results for 2014

May 15, 2014

CALGARY, May 15, 2014 /CNW/ - Winalta Inc. ("Winalta" or the "Company") (TSXV:WTA) is pleased to announce results for the three months ended March 31, 2014 (the "Period"). Revenues of $9.7 million and EBITDA of $4.3 million, showed increases of $2.8 million or 41% and $0.4 million or 11%, respectively, to revenue of $6.8 million and EBITDA of $3.9 million for the three months ending March 31, 2013 (the "Comparative Period").

Utilization and Fleet size increased 8% and 12%, respectively, but were offset by average day rate decreases of 14%. The decrease in average day rates was expected with the implementation of Winalta's strategy of increasing the concentration of revenue generated from SAGD and other pad drilling activity, which tends to operate more days per year but commands lower day rates. The overall positive impact of this increased utilization is expected to be shown in the second and third quarters of 2014. 

Sub-contractor revenue showed an increase of $2.4 million or 157% over the Comparative Period. Sub-contractor services include different configuration of Wellsites and Drill Camps, generators and other services. The increase in revenue associated with these services has a positive impact on total revenue but reduces EBITDA margin percentages as a lower margin is realized on the provision of these sub-contracted services. This is an opportunity for Winalta to continue to monitor its rental offerings to include services that were sub-contracted in the Period for which it already has demand from existing clients.

Quarter End Highlights

•Revenue increased 41% or $2.8 million•EBITDA increased 11% to $4.3 million or $0.11 per share •Net Earnings increased 5% to $1.9 million or $0.04 per share

SELECTED FINANCIAL HIGHLIGHTS

(Thousands of Canadian dollars, except for per share amounts)



Three Months Ended



March 31, 2014

March 31, 2013

 Revenue

9,651

6,835

 Net Earnings

1,856

1,764

 Earnings per share

0.05

0.04

Earnings per share diluted

0.04

0.04

 EBITDA1

4,257

3,851

 EBITDAper share

0.11

0.10

 Total assets

49,673

43,360

 Total liabilities

24,669

17,509

 Dividends

809

403



(1) EBITDA is defined as net earnings from continuing operations before interest and finance costs, income taxes, depreciation and amortization. EBITDA does not have a standardized meaning and is therefore not likely to be comparable with similar measures used by other issuers. However, Winalta calculates EBITDA consistently from period to period. While EBITDA is not considered an alternative to net earnings in measuring performance, it is a key measure used by the Company and its investors. The Company believes EBITDA assists investors in assessing Winalta's performance on a consistent basis without regard to financing costs, taxes and depreciation which, can vary significantly from period to period for reasons not directly related to operations.

Dividend Payment

Winalta Inc. announces that its Board of Directors has declared a quarterly cash dividend of $0.02 per class "A" common share payable on June 27, 2014 to all shareholders of record on June 13, 2014.  The ex-dividend date for this payment is June 11, 2014.  This dividend is an eligible dividend for Canadian income tax purposes.

Revenue

Winalta increased revenues by $2.8 million or 41% over the Comparative Period. The increase in revenue was achieved by both improvements in Company owned assets revenue of $0.4 million (7%) and sub-contractor revenue of $2.4 million (157%).

Direct Costs

Direct operating costs increased by $2.5 million over the Comparative Period. The majority ($2.2 million or 88%) of the increase can be attributed to the increase in sub-contractor equipment and services.  The remaining $172 thousand represents increases in the growth in service staff wages and benefits of $91 thousand and fleet costs of $81 thousand.

Fleet Expansion

The Company's fleet increased by 32 Wellsite units and 4 IWS units, which includes the sale of 10 Wellsite units and 1 Drill Camp over the Comparative Period.

General and Administrative

For the Period, administrative costs were $966 thousand compared to $877 thousand for the Comparative Period.  The Company saw a reduction in professional fees ($37 thousand) and bad debt expense ($10 thousand) which was offset by increases in staff costs ($96 thousand), marketing costs ($28 thousand) and office rent and operating costs ($12 thousand). 

Depreciation and Amortization

Depreciation and amortization was $1.5 million for the Period as compared to $1.3 million for the Comparative Period.  The increase in depreciation and amortization expense reflects the net acquisition of $11.0 million of equipment in the trailing 12 months.

Finance Costs

Finance costs, which include interest on long-term debt and finance leases and, fees paid on refinancing, were $235 thousand for the Period as compared to $183 thousand for the Comparable Period.  The increase was the result of the Company entering fixed term financing agreements for the purchase of 4 IWS units.  The current rate for the operating loan facility and the revolving term loan facility is prime plus 1.00% per annum and prime plus 1.50% per annum, respectively.

Outlook

Winalta's management saw a strong first quarter and have an optimistic outlook for the balance of 2014 based on continued development of the Integrated Wellsite System (IWS), and a more diversified customer base.

The Company continues to pursue other opportunities to deploy IWS and conventional Wellsites in the SAGD pad and multilateral drilling space.  A shift to deploy equipment within the pad drilling programs, combined with conventional drilling, should mitigate some of the seasonal impact on revenues in the second and third quarter of 2014.  Demand for, and utilization of, Wellsite units continued to increase throughout the first quarter of 2014 and into the second quarter of 2014.  This activity is expected to continue, adjusted for seasonality, for the balance of 2014.

Winalta continues to monitor its rental offerings to include services that were sub-contracted for which it already has demand from existing clients.  Sub-contractor revenue for the quarter increased by $2.4 million or 157% over the three months ended March 31, 2013. Sub-contractor services include different configuration of Wellsites and Drill Camps, generators and other services.

Forward-looking information

Certain information set forth in this press release, including management's assessment of the potential for increased cash flows, continued growth of the Company's rental fleet, demand and utilization rates for the Company's rental units, possible expansion of the Company's rental offerings and the Company's expectation regarding the status of the economy and its impact on the Company, may constitute forward-looking statements. By their nature, forward-looking statements involve material assumptions and are subject to numerous risks and uncertainties, including with respect to market and economic conditions and their impact on the Company's business, some of which, are beyond the Company's control. Readers are cautioned not to place undue reliance on the forward-looking statements as the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and actual results, performance or outcomes could materially differ from those expressed or implied in such forward-looking statements and accordingly, no assurance can be given that any of the events anticipated by forward looking statements will transpire or occur, or if any of them do so, what benefit Winalta will derive therefrom. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.

SOURCE Winalta Inc.


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