Internationally, the Corporation's growth compared to the first quarter of 2012 was steady and continues to show progress toward achieving market recognition and gains. Albanian operations remained consistent with past activity levels, and like in the US, PHX Energy is focusing on areas where the industry presents growth opportunities, which at this time for PHX Energy is Russia. Personnel have been added to the Phoenix Russia team, which will assist in gaining a greater market share. Although South America at this time does not present the same opportunity, PHX Energy believes it has the strategies in place required to sustain profitable operations in both Colombia and Peru.
PHX Energy believes its culture is one of its greatest strengths as it has attracted and retained the excellent personnel that day in and day out remain focused on the quality of service provided to our customer and are constantly striving to take quality of service to the next level. This factored with the understanding of the key basins in North America and abroad, and having the infrastructure and assets to service these basins, will continue to generate positive results for the Corporation and its Shareholders in the future.
John HooksChairman of the Board, President and Chief Executive OfficerMay 1, 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 March 31, 2013 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Net earnings 8,306 7,918Add:Depreciation and amortization 5,830 4,834Provision for income taxes 3,100 1,730Finance expense 1,093 556----------------------------------------------------------------------------EBITDA as reported 18,329 15,038--------------------------------------------------------------------------------------------------------------------------------------------------------
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.
The following is a reconciliation of cash flows from operating activities tofunds from operations:(Stated in thousands of dollars) Three-month periods ended March 31, 2013 2012--------------------------------------------------------------------------------------------------------------------------------------------------------Cash flows from operating activities 13,302 4,076Add:Changes in non-cash working capital 1,979 9,462Interest paid 1,272 531Income taxes paid 181 679----------------------------------------------------------------------------Funds from operations 16,734 14,748--------------------------------------------------------------------------------------------------------------------------------------------------------
