PHX Energy foresees the future potential for a game changing shift in the North American industry related to projects focused on exporting natural gas outside of North America. In addition, it is anticipated that international operators will begin to deploy the techniques and technologies that created the shale revolution in North America. These paradigm shifts will bode well for the Corporation, however, it is not likely they will take hold in the near term. As such, in 2013 PHX Energy will continue to leverage its diverse operational footprint and high service level to continually reward shareholders. Additionally, PHX Energy will keep a watchful eye on the industry trends and ensure it is equipped to be at the forefront when the shift begins to take hold.
John Hooks, Chairman of the Board, President and Chief Executive Officer
February 27, 2013
Non-GAAP Measures
1) EBITDA
EBITDA, defined as earnings before interest, taxes, depreciation and amortization, is not a financial measure that is recognized under GAAP. However, Management believes that EBITDA provides supplemental information to net earnings that is useful in evaluating the Corporation's operations before considering how it was financed or taxed in various countries. Investors should be cautioned, however, that EBITDA should not be construed as an alternative measure to net earnings determined in accordance with GAAP. PHX Energy's method of calculating EBITDA may differ from that of other organizations and, accordingly, its EBITDA may not be comparable to that of other companies.
The following is a reconciliation of net earnings to EBITDA:
(Stated in thousands of dollars)
Three-month periods ended Years ended December 31, December 31, 2012 2011 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Net earnings 4,537 5,284 17,707 18,328Add:Depreciation and amortization 5,800 4,447 21,336 16,171Provision for income taxes 2,147 3,189 6,561 8,411Finance expense 1,091 646 3,233 2,097----------------------------------------------------------------------------EBITDA as reported 13,575 13,566 48,837 45,007--------------------------------------------------------------------------------------------------------------------------------------------------------
EBITDA per share - diluted is calculated using the treasury stock method whereby deemed proceeds on the exercise of the share options are used to reacquire common shares at an average share price. The calculation of EBITDA per share on a dilutive basis does not include anti-dilutive options.
2) Funds from Operations
Funds from operations is defined as cash flows generated from operating activities before changes in non-cash working capital. This is not a measure recognized under GAAP. Management uses funds from operations as an indication of the Corporation's ability to generate funds from its operations before considering changes in working capital balances. Investors should be cautioned, however, that this financial measure should not be construed as an alternative measure to cash flows from operating activities determined in accordance with GAAP. PHX Energy's method of calculating funds from Operations may differ from that of other organizations and, accordingly, it may not be comparable to that of other companies.
