CALGARY, ALBERTA–(Marketwired – March 7, 2017) – Total Energy Services Inc. (“Total Energy” or the “Company”) (TSX:TOT) announces its consolidated financial results for the three months and the year ended December 31, 2016.
| Financial Highlights |
| ($000’s except per share data) |
| Three Months Ended December 31 |
Year Ended December 31 |
||||||||||||||
| (unaudited) | (audited) | ||||||||||||||
| 2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||
| Revenue | $ | 57,415 | $ | 52,082 | 10 | % | $ | 197,800 | $ | 283,193 | (30 | %) | |||
| Operating Income (Loss) | (4,296 | ) | (381 | ) | (1028 | %) | (15,110 | ) | 19,805 | (176 | %) | ||||
| EBITDA (1) | 3,554 | 6,581 | (46 | %) | 14,041 | 52,869 | (73 | %) | |||||||
| Cashflow (2) | 2,827 | 5,662 | (50 | %) | 15,717 | 19,064 | (18 | %) | |||||||
| Net Income (Loss) | (3,667 | ) | (3,019 | ) | (21 | %) | (11,914 | ) | 8,655 | (238 | %) | ||||
| Per Share Data (Diluted) | |||||||||||||||
| EBITDA (1) | $ | 0.11 | $ | 0.21 | (48 | %) | $ | 0.45 | $ | 1.71 | (74 | %) | |||
| Cashflow (2) | $ | 0.09 | $ | 0.18 | (50 | %) | $ | 0.51 | $ | 0.62 | (18 | %) | |||
| Net Earnings (Loss) | $ | (0.12 | ) | $ | (0.10 | ) | (20 | %) | $ | (0.38 | ) | $ | 0.28 | (236 | %) |
| December 31 2016 (audited) |
Dec. 31 2015 (audited) |
% Change | ||||
| Financial Position | ||||||
| Total Assets | $ | 522,599 | $ | 532,379 | (2 | %) |
| Long-Term Debt and Obligations Under Finance Leases (excluding current portion) | 46,557 | 49,185 | (5 | %) | ||
| Working Capital (3) | 71,770 | 90,314 | (21 | %) | ||
| Net Debt (4) | nil | nil | – | |||
| Shareholders’ Equity | 364,302 | 383,335 | (5 | %) | ||
| Shares Outstanding (000’s) | ||||||
| Basic and Diluted | 30,920 | 30,997 | – | |||
Notes 1 through 4 please refer to the Notes to the Financial Highlights set forth at the end of this release.
Total Energy’s results for the three months ended December 31, 2016 reflect improving North American industry activity levels from the historic lows experienced earlier in the year. Despite increased activity levels, fierce price competition continued and operating margins remained under pressure, particularly within the Contract Drilling Services (“CDS”) and Rentals and Transportation Services (“RTS”) segments where spot market pricing for certain equipment and services dropped to levels never before witnessed during the Company’s 20 year history. Also negatively impacting the Company’s results for the fourth quarter of 2016 was approximately $1.2 million of non-recurring expenses which related primarily to the Company’s outstanding offer to purchase all of the common shares (“Savanna Shares”) of Savanna Energy Services Corp. (“Savanna”).
Total Energy’s CDS segment achieved 18% utilization during the fourth quarter of 2016, recording 298 operating days (spud to rig release), compared to 241 operating days, or 15% utilization, during the fourth quarter of 2015. Revenue per operating day decreased 16% for the fourth quarter of 2016 relative to the prior year comparable period due to reduced pricing. Effective July 1, 2016, the Company changed its estimate of depreciation for drilling rigs and related equipment by establishing a minimum depreciation charge and reducing residual values to zero. As a result of this change in estimate, there was an increase in depreciation expense of $1.8 million for the year ended December 31, 2016.
The RTS segment achieved a utilization rate on major rental equipment of 18% during the fourth quarter of 2016 as compared to 17% during the fourth quarter of 2015. Segment revenue per utilized rental piece decreased 9% for the fourth quarter of 2016 compared to the same period in 2015 due to lower pricing. This segment exited the fourth quarter of 2016 with approximately 10,000 pieces of major rental equipment and 121 heavy trucks as compared to 10,000 rental pieces and 119 heavy trucks at December 31, 2015.
Revenue in the Compression and Process Services (“CPS”) segment increased 16% to $42.1 million for the three months ended December 31, 2016 compared to $36.5 million for the same period in 2015. This segment exited the fourth quarter of 2016 with a $65.5 million backlog of fabrication sales orders as compared to $48.9 million at December 31, 2015 and $62.0 million at September 30, 2016. At December 31, 2016, there was 39,200 horsepower in the compression rental fleet, of which approximately 12,600 horsepower was on rent as compared to 15,800 horsepower on rent at December 31, 2015 and 11,400 horsepower at September 30, 2016. The gas compression rental fleet operated at an average utilization rate of 32% during the fourth quarter of 2016 as compared to 42% during the fourth quarter of 2015.
Total Energy continued to successfully diversify its revenue base through the growth of its international business operations. This is evidenced by the fact that 20% of 2016 consolidated revenue was generated in Australia and the United States by the CPS and RTS segments.
During the fourth quarter, Total Energy declared a quarterly dividend of $0.06 per share to shareholders of record on December 31, 2016. This dividend was paid on January 31, 2017. For Canadian income tax purposes, all dividends paid by Total Energy on its common shares are designated as “eligible dividends” unless otherwise indicated. During the fourth quarter of 2016, 20,000 common shares were purchased under the Company’s normal course issuer bid at an average price of $13.33 per share (including commissions). Such shares were cancelled.
Outlook
With an improvement in oil and natural gas prices over the course of 2016, North American oil and natural gas drilling and completion activity levels began to recover during the fourth quarter of 2016. Current indications from announced capital budgets are that North American oil and natural gas producers will increase their capital expenditure programs for 2017 as compared to 2016 and the relative stability of oil prices thus far in 2017 has supported increased activity levels. This increase in drilling and completion activity has contributed to increased demand for compression and process equipment and related services, including increased demand for compression rental equipment. While pricing has improved modestly, it remains very low by historical standards, particularly within the CDS and RTS segments, and higher activity levels will need to be sustained for some time before meaningful price recovery is achieved.
Throughout the industry downturn, which began in the second half of 2014, Total Energy has executed a deliberate business strategy focused on preserving its asset base, operating capacity and financial strength. Such strategy included rationalizing the Company’s cost structure without reducing its branch infrastructure or cannibalizing its equipment fleet and declining business opportunities where price expectations were unreasonable or credit risk was unacceptable. Such strategy was expected to, and did result in, a loss of market share within the CDS and RTS segments and operating costs were higher than if the Company determined to close branch locations that were particularly slow. However, with the recent recovery in activity levels and a modest increase in pricing, Total Energy has begun to recover lost market share and expects to further recover market share should industry conditions continue to improve. Also, Total Energy will not be burdened by pricing arrangements made during the depths of the downturn.
While properly maintaining its equipment, preserving its operating infrastructure and leaving employee benefit programs intact resulted in higher operating costs during 2016, this investment was made so the Company would be able to fully participate in an eventual industry recovery without incurring significant start-up costs or undue operational and human resource challenges. The benefit of this investment is evidenced by the fact that all segments have been successful in retaining sufficient personnel to respond to increased activity levels. As a further illustration, during the first quarter of 2017, the CDS segment reactivated Rig 1, its lightest double and oldest rig. Despite being idle for well over a year, Rig 1 experienced nominal start-up costs and no repair down time during operations.
Total Energy continues to invest in the growth and development of its business segments. In January 2017, the Company announced a preliminary 2017 capital expenditure budget of $22.8 million, including $15.6 million of expansion capital. $9.0 million is being directed to expand the RTS segment’s Canadian access matting business. $6.6 million is being invested into the continued growth of the CPS segment, including expanding its fabrication capacity into the northeast United States. In that regard, the CPS segment has recently secured a 100,000 square foot manufacturing facility in Weirton, West Virginia and expects to commence operations from that location during the second quarter of 2017.
Following an unsuccessful attempt to engage with Savanna to explore a combination of Total Energy and Savanna, on December 9, 2016 Total Energy made an offer to acquire all Savanna Shares, which offer was amended on March 1, 2017 to, among other things, increase the consideration offered by $0.20 cash per Savanna Share. Total Energy’s offer is open for acceptance by Savanna Shareholders until March 24, 2017. Total Energy believes that consolidation within the North American energy services industry is required in order to better compete in an increasingly global, diversified and competitive energy market, regardless of whether a sustained industry recovery is underway or not. The difficult industry environment experienced over the past two years has exposed energy service industry overcapacity, inefficiency and excess indebtedness and highlights the need for consolidation under proven, experienced and disciplined management that is aligned with shareholders through meaningful equity ownership. Savanna and Total Energy shareholders share this belief as evidenced by the strong support each has demonstrated thus far for such a combination that would see Total Energy issue equity to the public for the first time since 2005. Total Energy’s Board of Directors, management and staff welcome the opportunity to join with Savanna’s management and staff to operate the combined business in a sustainable and disciplined manner that will benefit all stakeholders and continue to provide Total Energy’s shareholders, both existing and new, with an industry leading return on their equity investment in the Company.
Total Energy’s financial condition remains very strong, with $71.8 million of positive working capital (including $21.0 million, or $0.68 per share, of cash and marketable securities) and no net debt as at December 31, 2017. The Company’s only bank debt consists of a $46.9 million mortgage loan, which is secured by approximately 60% of the Company’s real estate holdings (based on value). Total Energy’s $65 million operating credit facility was renewed during the fourth quarter of 2016 to February 2019, was undrawn at December 31, 2016 and remains undrawn today. The Company’s mortgage loan and operating credit facility require that it maintain a debt (less cash) to equity ratio below 2.5 to 1.0 and a current ratio of at least 1.3 to 1.0. As at December 31, 2016, Total Energy’s debt to equity ratio was 0.09 to 1.0 and the current ratio was 2.44 to 1.0.
Total Energy has not recorded an impairment or write-down of any of its acquisitions or capital assets (including goodwill) during its 20 year history and was one of the very few public North American energy services companies that maintained its dividend to shareholders through the very challenging industry conditions experienced over the past two years.
Conference Call
At 9:00 a.m. (Mountain Time) on March 8, 2017 Total Energy will conduct a conference call and webcast to discuss its fourth quarter financial results. Daniel Halyk, President & Chief Executive Officer, will host the conference call. A live webcast of the conference call will be accessible on Total’s website at www.totalenergy.ca by selecting “Webcasts”. Persons wishing to participate in the conference call may do so by calling (800) 806-5484 or (416) 406-0743. Those who are unable to listen to the call live may listen to a recording of it on Total Energy’s website. A recording of the conference call will also be available until March 15, 2017 by dialing (800) 408-3053 (passcode 1987942).
United States Registration Statement
Total Energy has filed with the U.S. Securities and Exchange Commission (“SEC”) a Registration Statement, which includes a notice of change and variation and the offer and take-over bid circular relating to its offer to Savanna shareholders. TOTAL ENERGY URGES INVESTORS AND SECURITYHOLDERS TO READ THE REGISTRATION STATEMENT, THE NOTICE OF CHANGE AND VARIATION AND THE OFFER AND TAKE-OVER BID CIRCULAR AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC AND CANADIAN SECURITIES REGULATORY AUTHORITIES, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors may obtain a free copy of the notice of change and variation and the offer and take-over bid circular and other documents filed by Total Energy with the Canadian securities regulators at www.sedar.com and with the SEC at the SEC’s website at www.sec.gov. The notice of change and variation and the offer and take-over bid circular and other documents may also be obtained free of charge from Total Energy’s website at www.totalenergy.ca/savannaoffer or upon request made to Total Energy at 2550, 300 – 5th Avenue S.W., Calgary, Alberta T2P 3C4.
Selected Financial Information
Selected financial information relating to the three months and the year ended December 31, 2016 and 2015 is attached to this news release. This information should be read in conjunction with the consolidated financial statements of Total Energy and the attached notes to the consolidated financial statements and management’s discussion and analysis to be issued in due course and reproduced in the Company’s 2016 annual report.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
| December 31, | December 31, | ||||
| 2016 | 2015 | ||||
| (audited) | (audited) | ||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 15,916 | $ | 8,875 | |
| Accounts receivable | 47,545 | 48,091 | |||
| Inventory | 54,964 | 59,066 | |||
| Income taxes receivable | – | 2,733 | |||
| Other assets | 5,095 | 5,768 | |||
| Prepaid expenses and deposits | 4,029 | 4,101 | |||
| 127,549 | 128,634 | ||||
| Property, plant and equipment | 383,497 | 392,622 | |||
| Income taxes receivable | 7,070 | 7,070 | |||
| Deferred tax asset | 430 | – | |||
| Goodwill | 4,053 | 4,053 | |||
| $ | 522,599 | $ | 532,379 | ||
| Liabilities & Shareholders’ Equity | |||||
| Current liabilities: | |||||
| Accounts payable and accrued liabilities | $ | 36,755 | $ | 22,002 | |
| Deferred revenue | 13,573 | 10,556 | |||
| Dividends payable | 1,856 | 1,860 | |||
| Income taxes payable | 249 | – | |||
| Current portion of obligations under finance leases | 1,408 | 2,023 | |||
| Current portion of long-term debt | 1,938 | 1,879 | |||
| 55,779 | 38,320 | ||||
| Long-term debt | 44,962 | 46,900 | |||
| Obligations under finance leases | 1,595 | 2,285 | |||
| Deferred tax liability | 55,961 | 61,539 | |||
| Shareholders’ equity: | |||||
| Share capital | 88,654 | 88,875 | |||
| Contributed surplus | 7,683 | 8,255 | |||
| Retained earnings | 267,965 | 286,205 | |||
| 364,302 | 383,335 | ||||
| $ | 522,599 | $ | 532,379 | ||
Consolidated Statements of Comprehensive Income (Loss)
(in thousands of Canadian dollars except per share amounts)
| Three months ended December 31 |
Year ended December 31 |
||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Revenue | $ | 57,415 | $ | 52,082 | $ | 197,800 | $ | 283,193 | |||||
| Cost of services | 47,258 | 39,323 | 160,541 | 206,550 | |||||||||
| Selling, general and administration | 6,444 | 5,893 | 22,924 | 27,975 | |||||||||
| Share-based compensation | 234 | 515 | 1,311 | 1,375 | |||||||||
| Depreciation | 7,775 | 6,732 | 28,134 | 27,488 | |||||||||
| Operating income (loss) | (4,296 | ) | (381 | ) | (15,110 | ) | 19,805 | ||||||
| Gain on sale of property, plant and equipment | 75 | 230 | 1,017 | 5,576 | |||||||||
| Finance income | 57 | 260 | 547 | 897 | |||||||||
| Finance costs | (621 | ) | (3,547 | ) | (2,426 | ) | (9,728 | ) | |||||
| Net income (loss) before income taxes | (4,785 | ) | (3,438 | ) | (15,972 | ) | 16,550 | ||||||
| Current income tax expense | 1,307 | (2,420 | ) | 1,950 | 6,906 | ||||||||
| Deferred income tax (recovery) expense | (2,425 | ) | 2,001 | (6,008 | ) | 989 | |||||||
| Total income tax (recovery) expense | (1,118 | ) | (419 | ) | (4,058 | ) | 7,895 | ||||||
| Net income (loss) and total comprehensive (loss) income for the year | (3,667 | ) | $ | (3,019 | ) | $ | (11,914 | ) | $ | 8,655 | |||
| Earnings (loss) per share | |||||||||||||
| Basic earnings per share | $ | (0.12 | ) | $ | (0.10 | ) | $ | (0.38 | ) | $ | 0.28 | ||
| Diluted earnings per share | $ | (0.12 | ) | $ | (0.10 | ) | $ | (0.38 | ) | $ | 0.28 | ||
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
| Three months ended December 31 |
Year ended December 31 |
|||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| Cash provided by (used in): | ||||||||||||||
| Operations: | ||||||||||||||
| Net income (loss) for the year | $ | (3,667 | ) | $ | (3,019 | ) | $ | (11,914 | ) | $ | 8,655 | |||
| Add (deduct) items not affecting cash: | ||||||||||||||
| Depreciation | 7,775 | 6,732 | 28,134 | 27,488 | ||||||||||
| Share-based compensation | 234 | 515 | 1,311 | 1,375 | ||||||||||
| Gain on disposal of property, plant and equipment | (75 | ) | (230 | ) | (1,017 | ) | (5,576 | ) | ||||||
| Finance income | – | – | (463 | ) | – | |||||||||
| Finance costs | 637 | 3,547 | 2,426 | 9,728 | ||||||||||
| Unrealized loss (gain) on foreign currencies translation | (469 | ) | (203 | ) | 266 | (1,038 | ) | |||||||
| Current income tax expense (recovery) | 1,307 | (2,420 | ) | 1,950 | 6,906 | |||||||||
| Deferred income tax (recovery) expense | (2,425 | ) | 2,001 | (6,008 | ) | 989 | ||||||||
| Income taxes recovered (paid) | (490 | ) | (1,261 | ) | 1,032 | (29,463 | ) | |||||||
| Cashflow | 2,827 | 5,662 | 15,717 | 19,064 | ||||||||||
| Changes in non-cash working capital items: | ||||||||||||||
| Accounts receivable | (4,317 | ) | 2,935 | (119 | ) | 51,377 | ||||||||
| Inventory | (3,808 | ) | 1,532 | 4,102 | (4,718 | ) | ||||||||
| Prepaid expenses and deposits | 675 | (304 | ) | 72 | 1,475 | |||||||||
| Accounts payable and accrued liabilities | 12,698 | (3,703 | ) | 15,700 | (29,580 | ) | ||||||||
| Deferred revenue | 9,025 | 288 | 3,017 | 3,126 | ||||||||||
| 17,100 | 6,410 | 38,489 | 40,744 | |||||||||||
| Investments: | ||||||||||||||
| Purchase of property, plant and equipment | (4,828 | ) | (5,448 | ) | (11,090 | ) | (22,079 | ) | ||||||
| Acquisition of business | (2,166 | ) | – | (10,855 | ) | (1,231 | ) | |||||||
| Proceeds on sale of other assets | 137 | 273 | 576 | 411 | ||||||||||
| Purchase of other assets | – | (10 | ) | – | (6,127 | ) | ||||||||
| Proceeds on disposal of property, plant and equipment | 139 | 440 | 5,148 | 31,413 | ||||||||||
| Changes in non-cash working capital items | 898 | 1,706 | (462 | ) | (6,994 | ) | ||||||||
| (5,820 | ) | (3,039 | ) | (16,683 | ) | (4,607 | ) | |||||||
| Financing: | ||||||||||||||
| Advances under long-term debt | – | – | – | 50,000 | ||||||||||
| Repayment of long-term debt | (475 | ) | (461 | ) | (2,192 | ) | (1,221 | ) | ||||||
| Repayment of convertible debentures | – | – | – | (69,000 | ) | |||||||||
| Repayment of obligations under finance leases | (483 | ) | (694 | ) | (2,273 | ) | (3,056 | ) | ||||||
| Payment of dividends | (1,855 | ) | (1,860 | ) | (7,434 | ) | (7,440 | ) | ||||||
| Repurchase of common shares | (267 | ) | – | (1,000 | ) | (108 | ) | |||||||
| Interest paid | (557 | ) | (875 | ) | (1,866 | ) | (4,182 | ) | ||||||
| (3,637 | ) | (3,890 | ) | (14,765 | ) | (35,007 | ) | |||||||
| Change in cash and cash equivalents | 7,643 | (519 | ) | 7,041 | 1,130 | |||||||||
| Cash and cash equivalents, beginning of year | 8,273 | 9,394 | 8,875 | 7,745 | ||||||||||
| Cash and cash equivalents, end of year | $ | 15,916 | $ | 8,875 | $ | 15,916 | $ | 8,875 | ||||||
Segmented Information
The Company operates in three main industry segments, which are substantially in one geographic segment. These segments are Contract Drilling Services, which includes the contracting of drilling equipment and the provision of labour required to operate the equipment, Rentals and Transportation Services, which includes the rental and transportation of equipment used in drilling, completion and production operations and Compression and Process Services, which includes the fabrication, sale, rental and servicing of natural gas compression and oil and natural gas process equipment.
As at and for the three months ended December 31, 2016 (unaudited)
| Contract Drilling Services |
Rentals and Transportation Services |
Compression and Process Services |
Corporate (1) |
Total |
|||||||||||
| Revenue | $ | 4,096 | $ | 11,213 | $ | 42,106 | $ | – | $ | 57,415 | |||||
| Cost of services | 2,805 | 8,551 | 35,902 | – | 47,258 | ||||||||||
| Selling, general and administration | 456 | 2,681 | 1,586 | 1,721 | 6,444 | ||||||||||
| Share-based compensation | – | – | – | 234 | 234 | ||||||||||
| Depreciation | 1,756 | 4,181 | 1,818 | 20 | 7,775 | ||||||||||
| Operating income (loss) | (921 | ) | (4,200 | ) | 2,800 | (1,975 | ) | (4,296 | ) | ||||||
| Gain on sale of property, plant and equipment | 25 | 40 | 10 | – | 75 | ||||||||||
| Finance income | – | – | – | 57 | 57 | ||||||||||
| Finance costs | (88 | ) | (191 | ) | (102 | ) | (240 | ) | (621 | ) | |||||
| Net income before income taxes | (984 | ) | (4,351 | ) | 2,708 | (2,158 | ) | (4,785 | ) | ||||||
| Goodwill | – | 2,514 | 1,539 | – | 4,053 | ||||||||||
| Total assets | 110,864 | 230,419 | 169,359 | 11,957 | 522,599 | ||||||||||
| Total liabilities | 22,040 | 40,810 | 46,932 | 48,515 | 158,297 | ||||||||||
| Capital expenditures (2) | $ | 224 | $ | 5,606 | $ | 1,164 | $ | – | $ | 6,994 | |||||
| Canada | United States | Australia | International | Total | |
| Revenue | 34,336 | 7,242 | 15,837 | – | 57,415 |
| Non-current assets (4) | 372,368 | 13,688 | 1,494 | – | 387,550 |
As at and for the three months ended December 31, 2015 (unaudited)
| Contract Drilling Services |
Rentals and Transportation Services |
Compression and Process Services |
Other(1) |
Total |
|||||||||||
| Revenue | $ | 3,954 | $ | 11,673 | $ | 36,455 | $ | – | $ | 52,082 | |||||
| Cost of services | 2,347 | 7,867 | 29,109 | – | 39,323 | ||||||||||
| Selling, general and administration | 577 | 2,825 | 2,024 | 467 | 5,893 | ||||||||||
| Share-based compensation | – | – | – | 515 | 515 | ||||||||||
| Depreciation | 743 | 4,057 | 1,915 | 17 | 6,732 | ||||||||||
| Operating income (loss) | 287 | (3,076 | ) | 3,407 | (999 | ) | (381 | ) | |||||||
| Gain on sale of property, plant and equipment | – | 233 | (3 | ) | – | 230 | |||||||||
| Finance income | – | – | – | 260 | 260 | ||||||||||
| Finance costs | (94 | ) | (192 | ) | (110 | ) | (3,151 | ) | (3,547 | ) | |||||
| Net income (loss) before income taxes | 193 | (3,035 | ) | 3,294 | (3,890 | ) | (3,438 | ) | |||||||
| Goodwill | – | 2,514 | 1,539 | – | 4,053 | ||||||||||
| Total assets | 115,300 | 230,662 | 170,860 | 15,557 | 532,379 | ||||||||||
| Total liabilities | 20,058 | 43,877 | 33,845 | 51,264 | 149,044 | ||||||||||
| Capital expenditures | $ | 965 | $ | 2,704 | $ | 1,679 | $ | 100 | $ | 5,448 | |||||
| Canada | United States | Australia | International | Total | |
| Revenue | 49,848 | 2,043 | 3 | 188 | 52,082 |
| Non-current assets (4) | 390,733 | 4,360 | 1,582 | – | 396,675 |
As at and for the year ended December 31, 2016 (audited)
| Contract Drilling Services |
Rentals and Transportation Services |
Compression and Process Services |
Corporate (1) |
Total |
|||||||||||
| Revenue | $ | 11,109 | $ | 39,059 | $ | 147,632 | $ | – | $ | 197,800 | |||||
| Cost of services | 7,556 | 27,072 | 125,913 | – | 160,541 | ||||||||||
| Selling, general and administration | 1,805 | 10,688 | 6,452 | 3,979 | 22,924 | ||||||||||
| Share-based compensation | – | – | – | 1,311 | 1,311 | ||||||||||
| Depreciation | 4,180 | 16,507 | 7,367 | 80 | 28,134 | ||||||||||
| Operating income (loss) | (2,432 | ) | (15,208 | ) | 7,900 | (5,370 | ) | (15,110 | ) | ||||||
| Gain on sale of property, plant and equipment | 72 | 294 | 651 | – | 1,017 | ||||||||||
| Finance income | – | – | – | 547 | 547 | ||||||||||
| Finance costs | (360 | ) | (747 | ) | (423 | ) | (896 | ) | (2,426 | ) | |||||
| Net income (loss) before income taxes | (2,720 | ) | (15,661 | ) | 8,128 | (5,719 | ) | (15,972 | ) | ||||||
| Goodwill | – | 2,514 | 1,539 | – | 4,053 | ||||||||||
| Total assets | 110,864 | 230,419 | 169,359 | 11,957 | 522,599 | ||||||||||
| Total liabilities | 22,040 | 40,810 | 46,932 | 48,515 | 158,297 | ||||||||||
| Capital expenditures (2) | $ | 1,321 | $ | 18,101 | $ | 2,519 | $ | 4 | $ | 21,945 | |||||
| Canada | United States | Australia | International | Total | |
| Revenue | 157,026 | 16,355 | 24,152 | 267 | 197,800 |
| Non-current assets (4) | 372,368 | 13,688 | 1,494 | – | 387,550 |
As at and for the year ended December 31, 2015 (audited)
| Contract Drilling Services |
Rentals and Transportation Services |
Compression and Process Services |
Corporate (1) |
Total |
|||||||||||
| Revenue | $ | 15,907 | $ | 70,958 | $ | 196,328 | $ | – | $ | 283,193 | |||||
| Cost of services | 9,480 | 39,518 | 157,552 | – | 206,550 | ||||||||||
| Selling, general and administration | 2,108 | 13,206 | 8,804 | 3,857 | 27,975 | ||||||||||
| Share-based compensation | – | – | – | 1,375 | 1,375 | ||||||||||
| Depreciation | 2,669 | 16,490 | 8,263 | 66 | 27,488 | ||||||||||
| Operating income (loss) | 1,650 | 1,744 | 21,709 | (5,298 | ) | 19,805 | |||||||||
| Gain on sale of property, plant and equipment | 39 | 556 | 4,967 | 14 | 5,576 | ||||||||||
| Finance income | – | – | – | 897 | 897 | ||||||||||
| Finance costs | (566 | ) | (1,197 | ) | (762 | ) | (7,203 | ) | (9,728 | ) | |||||
| Net income (loss) before income taxes | 1,123 | 1,103 | 25,914 | (11,590 | ) | 16,550 | |||||||||
| Goodwill | – | 2,514 | 1,539 | – | 4,053 | ||||||||||
| Total assets | 115,300 | 230,662 | 170,860 | 15,557 | 532,379 | ||||||||||
| Total liabilities | 20,058 | 43,877 | 33,845 | 51,264 | 149,044 | ||||||||||
| Capital expenditures(3) | $ | 1,625 | $ | 15,483 | $ | 6,077 | $ | 125 | $ | 23,310 | |||||
| Canada | United States | Australia | International | Total | |
| Revenue | 273,545 | 9,317 | 98 | 233 | 283,193 |
| Non-current assets (4) | 390,733 | 4,360 | 1,582 | – | 396,675 |
| (1) | Corporate includes the Company’s corporate activities, accretion of convertible debentures in 2015 and obligations pursuant to long-term credit facilities. |
| (2) | Includes acquisitions of assets in January, May and October of 2016 described in note 5 to 2016 audited Consolidated Financial Statements. |
| (3) | Includes January 2015 acquisition of a business described in note 5 to 2016 audited Consolidated Financial Statements. |
| (4) | Includes property, plant and equipment and goodwill. |
Total Energy Services Inc. is a growth oriented energy services corporation involved in contract drilling services, rentals and transportation services and the fabrication, sale, rental and servicing of natural gas compression and oil and natural gas process equipment. The common shares of Total Energy are listed and trade on the TSX under the symbol TOT.
For further information, please visit our website at www.totalenergy.ca.
Notes to Financial Highlights
| (1) | EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to net income (loss) before income taxes plus finance costs plus depreciation minus finance income. EBITDA is not a recognized measure under IFRS. Management believes that in addition to net income (loss), EBITDA is useful supplemental measure as it provides 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 without consideration of the timing of the monetization of non-cash working capital items. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of Total Energy’s performance. Total Energy’s method of calculating EBITDA may differ from other organizations and, accordingly, EBITDA may not be comparable to measures used by other organizations. | |
| (2) | Cashflow for the year ended December 31, 2015 is net of $12.7 million of income taxes paid during the period that relates to 2014 taxable income as a result of the Company not having been required to make income tax installment payments during 2014 and $7.1 million paid as a result of a Canadian federal income tax reassessment that has been appealed by the Company. | |
| (3) | Working capital equals current assets minus current liabilities. | |
| (4) | Net Debt equals long-term debt plus obligations under finance leases plus current liabilities minus current assets. |
Certain statements contained in this press release, including statements which may contain words such as “could”, “should”, “expect”, “believe”, “will” and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Forward-looking statements are based upon the opinions and expectations of management of Total Energy as at the effective date of such statements and, in some cases, information supplied by third parties. Although Total Energy believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from third parties is reliable, it can give no assurance that those expectations will prove to have been correct.
In particular, this press release contains forward-looking statements concerning increased capital expenditure programs for North American oil and nature gas producers, expectations regarding Total Energy’s market share, Total Energy’s expectations of their ability to participate in an eventual industry recovery, expansion and growth of the Company’s RTS and CPS segments, timing of the commencement of operations at the Company’s Weirton, West Virginia manufacturing facility and information concerning Total Energy’s offer to acquire Savanna (the “Offer”), the timing for completion of the Offer, the consideration payable under the Offer and the expected benefits of the Offer. Such forward-looking statements are based on a number of assumptions and factors including fluctuations in the market for oil and natural gas and related products and services, political and economic conditions, the demand for products and services provided by Total Energy, Total Energy’s ability to attract and retain key personnel and other factors. Forward-looking statements concerning the benefits of the Offer are also based upon various assumptions and factors, including financial information of Savanna available through publicly filed documents, that Savanna has made full and accurate disclosure of all material information concerning Savanna in accordance with applicable Canadian securities laws and Total’s general industry knowledge and experience. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Total Energy to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Reference should be made to Total Energy’s most recently filed Annual Information Form and other public disclosures (available at www.sedar.com) for a discussion of such risks and uncertainties.
The TSX has neither approved nor disapproved of the information contained herein.
Daniel Halyk
President & Chief Executive Officer
(403) 216-3921
Total Energy Services Inc.
Yuliya Gorbach
Vice-President Finance and Chief Financial Officer
(403) 216-3920
[email protected]
www.totalenergy.ca
