Results from Operations
---------------------------------------------------------------------------- Three months ended March 31, ($ thousands, except per share amounts) 2014 2013 ---------------------------------------------------------------------------- Revenue
$ 23,035 $ 17,201Gross margin $ 4,726 $ 3,872 Gross margin % 21% 23% Adjusted gross margin (1) $ 6,286 $ 5,322 Adjusted gross margin % 27% 31% EBITDAS (1) $ 2,433 $ 1,613 EBITDAS % 11% 9% Net income (loss) before tax (1) $ 476 $ (259) Per common share - basic $ 0.02 $ (0.01) Per common share - diluted $ 0.02 $ (0.01) Net income (loss) $ 476 $ (401) Per common share - basic $ 0.02 $ (0.02) Per common share - diluted $ 0.02 $ (0.02) Cash flow before changes in non-cash working capital (1) $ 2,489 $ 1,427 Cash flow from (used in) operating activities $ (5,243)$ 3,801 ---------------------------------------------------------------------------- (1)See definition within the Non-IFRS Measures section of this press release
Highlights for the three months ended
-- Q1 2014 was a very encouraging quarter. In recent months, Enseco has increased its sales presence in nearly every division and this quarter has seen a 34% increase in quarterly revenue compared to the prior year period. Each of the four divisions achieved an increase in their sales for the period, with
USADirectional showing the largest improvements. -- A large percentage of equipment rentals were required due to the increase in sales activity. The Company will work to reduce these equipment rentals with owned assets. Efforts are also focused on reducing repair costs to improve the gross margin and EBITDAS of each division. -- The USADirectional division continues to create pace setting drilling records in a number of new areas in which it is now operating and its service quality continues to improve as more equipment is being serviced internally through the USAMWD facility and the Canadian motor shop. -- The Canadian Testing division continues to work for many of the larger E&P companies and has set new records for the number of staff working in the field throughout the quarter which translates into greater revenue for the division. -- In the Canadian Directional division, where nearly 100% of the motor and MWD fleet are serviced and repaired internally, enhancements have resulted in continuous service quality improvements.
Enseco expects the increase in re venue to continue through Q3 and Q4 as its sales force continues to create new opportunities and its operations group continue to focus and increase the level of service quality provided to their clients.
Indications are that Enseco's clients are expanding their drilling and completion programs through the remainder of 2014.
Management continues to work to secure the assets required to promote the revenue growth and monitor costs to increase profitability while monitoring operating areas to ensure equipment and manpower are positioned to provide sustainable equipment utilization rates.
The Company will continue to search for new opportunities to grow the company while looking for efficiencies and cost reductions to increase its gross margins and EBITDAS. It is expected that the pursuit of these opportunities, accompanied by initiatives to both improve margin efficiency, and reduce debt levels, will continue to improve the Company's financial performance going forward.
Enseco has filed with Canadian securities regulatory authorities its unaudited interim consolidated financial statements for the three months ended
Enseco is a premier supplier of directional drilling, production testing and frac flowback services operating throughout the
Certain information and statements contained in this press release constitute forward-looking information, including, but not limited to: statements concerning Enseco's future business strategy, focus, marketing and other plans; expectations regarding the future performance of the Company's
The information and statements contained in this press release that are not historical facts are forward- looking statements. Forward-looking statements (often, but not always, identified by the use of words such as "seek", "plan", "continue", " estimate", "project", "predict", "potential", "targeting ", "intend", "could", "might", "should", "believe", "expect", "may", "anticipate" or "will" and similar expressions) may include plans, expectations, opinions, or guidance that are not statements of fact. Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by oil and gas producers and explorers), the credit risk to which the Company is exposed in the conduct of its business, fluctuations in prevailing commodity prices or currency and interest rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of the Company' s various business divisions to access equipment (including parts) and new technologies and to maintain relationships with key suppliers, the ability of the Company's various business divisions to attract and maintain key personnel and other qualified employees, various environmental risks to which the Company's business divisions are exposed in the conduct of their operations, inherent risks associated with the conduct of the businesses in which the Company's business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities.
Forward-looking information concerning the nature and timing of growth within the various business divisions is based on the current budget of the Company (which is subject to change), factors that affected the historical growth of such business divisions, sources of historic growth opportunities and expectations relating to future economic and operating conditions. Forward-looking information concerning the future competitive position of the Company's business divisions is based upon the current competitive environment in which those business divisions operate, expectations relating to future economic and operating conditions, current and announced build programs and other expansion plans of other organizations that operate in the energy service business. Forward-looking information concerning the financing of future business activities is based upon the financing sources on which the Company has historically relied and expectations relating to the continued cooperation of the Company's lender and future economic and operating conditions. Forward-looking information concerning future economic and operating conditions is based upon historical economic and operating conditions, opinions of third-party analysts respecting anticipated economic and operating conditions.
With respect to forward-looking statements contained in this press release, Enseco has made assumptions regarding commodity prices and royalty regimes, availability of skilled labor, timing and amount of capital expenditures, future foreign exchange rates, interest rates, the impact of increasing competition, conditions in general economic and financial markets, effects of regulation by governmental agencies, and future operating costs.
Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on Enseco's future operations and such information may not be appropriate for other purposes. Enseco's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Enseco will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of in this press release and Enseco disclaims any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
EBITDAS means earnings before interest, taxes, depreciation and amortization, and stock-based compensation and is equal to earnings before income taxes from continuing operations plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, unrealized foreign exchange loss, and loss on sale of equipment. Adjusted gross margin from continuing operations equals gross margin, plus interest on debt, other charges and interest expense, depreciation and amortization, stock-based compensation, impairment loss/recovery, and loss on sale of equipment. Cash flow means cash flows provided by continuing operations before changes in non-cash working capital items.
EBITDAS, adjusted gross margin from continuing operations, and cash flows from continuing operations before changes in non-cash working capital items are not recognized measures under International Financial Reporting Standards ("IFRS"). Management believes that in addition to net losses, EBITDAS and cash flows, are useful supplemental measures as they provide an indication of the results generated by the Company's primary business activities prior to consideration of how those activities are financed, amortized or how the results are taxed in various jurisdictions as well as the cash generated by the Company's primary business activities. Readers should be cautioned, however, that EBITDAS and cash flows from continuing operations before changes in non-cash working capital items should not be construed as an alternative to net losses determined in accordance with IFRS as an indicator of Enseco's performance. Enseco's method of calculating operating losses, EBITDAS and cash flows from continuing operations before changes in non-cash working capital items may differ from other organizations and, accordingly, such measures may not be comparable to measures used by other organizations. For reconciliation to the appropriate IFRS measure, see our MD&A.
FOR FURTHER INFORMATION PLEASE CONTACT:
Enseco Energy Services Corp. Kent Devlin, CEO 403-806-0088 Enseco Energy Services Corp. Blair Layton, CFO 403-806-0088 Info@enseco.com Source: Enseco Energy Services Corp.