Financial Highlights
($000’s except per share data)
Three Months Ended | ||||||
2020 | 2019 | Change | ||||
Revenue | $ | 134,268 | $ | 221,990 | (40 | %) |
Operating Income | 10,529 | 8,437 | 25 | % | ||
EBITDA (1) | 30,903 | 29,415 | 5 | % | ||
Cashflow | 21,911 | 28,453 | (23 | %) | ||
Net Income | 4,724 | 4,759 | (1 | %) | ||
Attributable to Shareholders | 4,672 | 4,760 | (2 | %) | ||
Per Share Data (Diluted) | ||||||
EBITDA (1) | $ | 0.69 | $ | 0.64 | 8 | % |
Cashflow | $ | 0.49 | $ | 0.62 | (21 | %) |
Net Income Attributable to Shareholders | $ | 0.10 | $ | 0.10 | - | |
2020 | 2019 | Change | ||||
Financial Position | ||||||
Total Assets | $ | 999,229 | $ | 997,161 | - | |
Long-Term Debt and Lease Liabilities (excluding current portion) | 252,035 | 248,448 | 1 | % | ||
Working Capital (2) | 124,010 | 103,234 | 20 | % | ||
Net Debt (3) | 128,025 | 145,214 | (12 | %) | ||
Shareholders’ Equity | 552,995 | 543,142 | 2 | % | ||
Common Shares (000’s)(4) | ||||||
Basic and Diluted | 45,087 | 45,829 | (1 | %) |
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
Total Energy’s Contract Drilling Services (“CDS”) segment achieved 22% utilization during the first quarter of 2020, recording 2,166 operating days (spud to rig release) with a fleet of 107 drilling rigs, compared to 2,021 operating days, or 20% utilization, during first quarter of 2019 with a fleet of 114 drilling rigs. Revenue per operating day was
The Rentals and Transportation Services (“RTS”) segment achieved a utilization rate on major rental equipment of 15% during the first quarter of 2020 compared to 23% utilization during the first quarter of 2019. Segment revenue per utilized rental piece in the first quarter of 2020 was 41% higher than revenue per utilized piece in the first quarter of 2019 due primarily to improved pricing for assets relocated to
Revenue in the CPS segment decreased 66% to
Total Energy’s Well Servicing (“WS”) segment generated
During the first quarter of 2020 Total Energy repurchased 68,700 common shares at an average price (including commissions) of
Outlook
On
Total Energy’s foremost concern is the health and safety of its employees and other stakeholders as well as the public at large. Protocols have been implemented throughout the Company’s global operations to mitigate the spread of the COVID-19 virus and Total Energy is pleased that there have been no reported cases of infection in any of its business segments to date.
With the collapse in oil prices, North American producers have and are expected to continue to significantly reduce near term capital spending. This has resulted in a substantial decrease in North American industry activity levels. A notable exception is the expected increase in Canadian oil and natural gas well abandonment and reclamation activity following the recent announcement of the Canadian federal government to provide
While the full magnitude and duration of the current downturn is uncertain, Total Energy has taken immediate and substantial steps to reduce cash outflows and protect its balance sheet and financial liquidity, including the following:
- suspended its dividend (
$10.8 million of annual cash savings); - reduced its 2020 capital expenditure budget by
$13.0 million to$10.0 million ; - reduced its North American employee head count to levels below those immediately prior to the Company’s acquisition of
Savanna Energy Services inJune 2017 ; - reduced director and officer compensation by 10% to 15%;
- reduced North American employee compensation by a minimum of 10% through salary and wage rollbacks, reduced hours of service and job sharing;
- reduced and eliminated discretionary North American employee benefit plans;
- further RTS segment branch closures in
Canada and temporary withdrawal from service of a substantial portion of the North American heavy truck fleet; - suspended all non-essential travel and discretionary spending; and
- applied for all available government assistance programs intended to protect jobs.
Activity levels have remained relatively stable in
Despite the current market conditions, on
Total Energy has demonstrated over its 24-year history the ability to generate free cash flow during previous industry downturns. While the current downturn is unlike any before, the measures taken by the Company to reduce cash costs are also unprecedented. These measures, combined with Total Energy’s geographic and business diversification, position the Company not only to survive this downturn but to also increase market share and capitalize on other opportunities that will arise as the energy industry goes through a process of rationalization and consolidation. While such process is difficult and negatively impacts many stakeholders, it is also necessary to ensure the future sustainability and economic viability of the North American energy service industry.
Conference Call
At
Annual Meeting of Shareholders
Shareholders are reminded that Total Energy’s annual meeting of Shareholders will take place on
Selected Financial Information
Selected financial information relating to the three months ended
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
2020 | 2019 | ||||||
(unaudited) | (audited) | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 29,946 | $ | 19,873 | |||
Accounts receivable | 107,325 | 113,934 | |||||
Inventory | 113,071 | 105,672 | |||||
Prepaid expenses and deposits | 9,291 | 10,878 | |||||
Income taxes receivable | 3,508 | 4,403 | |||||
Current portion of finance lease asset | 581 | 664 | |||||
263,722 | 255,424 | ||||||
Property, plant and equipment | 724,292 | 730,435 | |||||
Income taxes receivable | 7,070 | 7,070 | |||||
Lease asset | 92 | 179 | |||||
4,053 | 4,053 | ||||||
$ | 999,229 | $ | 997,161 | ||||
Liabilities & Shareholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 83,188 | $ | 95,742 | |||
Deferred revenue | 6,836 | 3,883 | |||||
Dividends payable | - | 2,710 | |||||
Current portion of lease liabilities | 8,628 | 8,270 | |||||
Current portion of long-term debt | 41,060 | 41,585 | |||||
139,712 | 152,190 | ||||||
Long-term debt | 241,108 | 236,278 | |||||
Lease liabilities | 10,927 | 12,170 | |||||
Deferred tax liability | 54,487 | 53,381 | |||||
Shareholders' equity: | |||||||
Share capital | 284,077 | 284,510 | |||||
Contributed surplus | 7,809 | 7,528 | |||||
Accumulated other comprehensive loss | (11,571 | ) | (16,722 | ) | |||
Non-controlling interest | (184 | ) | (236 | ) | |||
Retained earnings | 272,864 | 268,062 | |||||
552,995 | 543,142 | ||||||
$ | 999,229 | $ | 997,161 |
Consolidated Statements of Comprehensive Income
(in thousands of Canadian dollars except per share amounts)
Three months ended | |||||||||
2020 | 2019 | ||||||||
(unaudited) | (unaudited) | ||||||||
Revenue | $ | 134,268 | $ | 221,990 | |||||
Cost of services | 100,683 | 179,978 | |||||||
Selling, general and administration | 10,585 | 12,762 | |||||||
Other expense (income) | (7,928 | ) | 1,161 | ||||||
Share-based compensation | 405 | 368 | |||||||
Depreciation | 19,994 | 19,284 | |||||||
Operating income | 10,529 | 8,437 | |||||||
Gain on sale of property, plant and equipment | 380 | 1,694 | |||||||
Finance costs | (3,439 | ) | (3,245 | ) | |||||
Net income before income taxes | 7,470 | 6,886 | |||||||
Current income tax expense | 1,336 | 700 | |||||||
Deferred income tax expense | 1,410 | 1,427 | |||||||
Total income tax expense | 2,746 | 2,127 | |||||||
Net income for the period | $ | 4,724 | $ | 4,759 | |||||
Net income (loss) attributable to: | |||||||||
Shareholders of the Company | $ | 4,672 | $ | 4,760 | |||||
Non-controlling interest | 52 | (1 | ) | ||||||
Income per share | |||||||||
Basic and diluted | $ | 0.10 | $ | 0.10 | |||||
Consolidated Statements of Comprehensive Income
Three months ended | |||||
2020 | 2019 | ||||
Net income for the period | $ | 4,724 | $ | 4,759 | |
Foreign currency translation adjustment | 4,847 | (3,670 | ) | ||
Deferred tax effect | 304 | (390 | ) | ||
Total other comprehensive income (loss) for the period | 5,151 | (4,060 | ) | ||
Total comprehensive income | $ | 9,875 | $ | 699 | |
Total comprehensive income (loss) attributable to: | |||||
Shareholders of the Company | $ | 9,823 | $ | 700 | |
Non-controlling interest | 52 | (1 | ) |
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
Three months ended | ||||||
2020 | 2019 | |||||
Cash provided by (used in): | ||||||
Operations: | ||||||
Net income for the period | $ | 4,724 | $ | 4,759 | ||
Add (deduct) items not affecting cash: | ||||||
Depreciation | 19,994 | 19,284 | ||||
Share-based compensation | 405 | 368 | ||||
Gain on sale of property, plant and equipment | (380 | ) | (1,694 | ) | ||
Finance costs | 3,439 | 3,224 | ||||
Unrealized loss (gain) on foreign currencies translation | (8,576 | ) | 399 | |||
Current income tax expense | 1,336 | 700 | ||||
Deferred income tax expense | 1,410 | 1,427 | ||||
Income taxes paid | (441 | ) | (14 | ) | ||
Cashflow | 21,911 | 28,453 | ||||
Changes in non-cash working capital items: | ||||||
Accounts receivable | 5,613 | 7,440 | ||||
Inventory | (7,399 | ) | (10,976 | ) | ||
Prepaid expenses and deposits | 3,502 | 4,364 | ||||
Accounts payable and accrued liabilities | (10,237 | ) | 12,727 | |||
Onerous leases | - | 1,297 | ||||
Deferred revenue | 2,953 | 6,882 | ||||
Cash provided by operating activities | 16,343 | 50,187 | ||||
Investing: | ||||||
Purchase of property, plant and equipment | (2,246 | ) | (14,700 | ) | ||
Proceeds on sale of other assets | - | 20 | ||||
Proceeds on disposal of property, plant and equipment | 1,705 | 2,670 | ||||
Changes in non-cash working capital items | (1,308 | ) | 2,229 | |||
Cash used in investing activities | (1,849 | ) | (9,781 | ) | ||
Financing: | ||||||
Advances on long-term debt | 20,000 | - | ||||
Repayment of long-term debt | (15,695 | ) | (10,851 | ) | ||
Repayment of lease liabilities | (2,059 | ) | (2,081 | ) | ||
Dividends to shareholders | (2,710 | ) | (2,752 | ) | ||
Repurchase of common shares | (427 | ) | (842 | ) | ||
Interest paid | (3,530 | ) | (4,770 | ) | ||
Cash used in financing activities | (4,421 | ) | (21,296 | ) | ||
Change in cash and cash equivalents | 10,073 | 19,110 | ||||
Cash and cash equivalents, beginning of period | 19,873 | 30,640 | ||||
Cash and cash equivalents, end of period | $ | 29,946 | $ | 49,750 | ||
Segmented Information
The Company provides a variety of products and services in the oil and natural gas industry through five reporting segments, which operate substantially in three geographic segments. These reporting 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, Compression and Process Services, which includes the fabrication, sale, rental and servicing of natural gas compression and oil and natural gas process equipment and Well Servicing, which includes the contracting of service rigs and the provision of labour required to operate the equipment. Corporate includes activities related to the Company’s corporate and public issuer affairs.
As at and for the three months ended
Contract | Rentals and | Compression | Well | Corporate | Total | |||||||||||||
Drilling | Transportation | and Process | Servicing | (1) | ||||||||||||||
Services | Services | Services | ||||||||||||||||
Revenue | $ | 43,025 | $ | 16,833 | $ | 40,744 | $ | 33,666 | $ | - | $ | 134,268 | ||||||
Cost of services | 32,457 | 10,617 | 33,411 | 24,198 | - | 100,683 | ||||||||||||
Selling, general and administration | 2,441 | 2,503 | 2,216 | 1,727 | 1,698 | 10,585 | ||||||||||||
Other income | - | - | - | - | (7,928 | ) | (7,928 | ) | ||||||||||
Share-based compensation | - | - | - | - | 405 | 405 | ||||||||||||
Depreciation (2) | 7,836 | 6,151 | 2,293 | 3,530 | 184 | 19,994 | ||||||||||||
Operating income (loss) | 291 | (2,438 | ) | 2,824 | 4,211 | 5,641 | 10,529 | |||||||||||
Gain on sale of property, plant and equipment | 91 | 153 | 113 | 10 | 13 | 380 | ||||||||||||
Finance costs | (42 | ) | (23 | ) | (98 | ) | (9 | ) | (3,267 | ) | (3,439 | ) | ||||||
Net income (loss) before income taxes | 340 | (2,308 | ) | 2,839 | 4,212 | 2,387 | 7,470 | |||||||||||
- | 2,514 | 1,539 | - | - | 4,053 | |||||||||||||
Total assets | 394,120 | 232,602 | 235,487 | 111,510 | 25,510 | 999,229 | ||||||||||||
Total liabilities | 77,709 | 23,473 | 45,000 | 7,517 | 292,535 | 446,234 | ||||||||||||
Capital expenditures | $ | 861 | $ | 523 | $ | 56 | $ | 802 | $ | 4 | $ | 2,246 |
Other | Total | |||||||||
Revenue | $ | 69,475 | $ | 31,411 | $ | 33,040 | $ | 342 | $ | 134,268 |
Non-current assets (3) | 476,630 | 187,699 | 64,108 | - | 728,437 |
As at and for the three months ended
Contract | Rentals and | Compression | Well | Corporate | Total | |||||||||||||
Drilling | Transportation | and Process | Servicing | (1) | ||||||||||||||
Services | Services | Services | ||||||||||||||||
Revenue | $ | 45,704 | $ | 18,407 | $ | 121,075 | $ | 36,804 | $ | - | $ | 221,990 | ||||||
Cost of services | 37,921 | 11,858 | 103,320 | 26,879 | - | 179,978 | ||||||||||||
Selling, general and administration | 2,199 | 3,660 | 3,648 | 1,760 | 1,495 | 12,762 | ||||||||||||
Other expense | - | - | - | - | 1,161 | 1,161 | ||||||||||||
Share-based compensation | - | - | - | - | 368 | 368 | ||||||||||||
Depreciation | 8,194 | 4,521 | 2,334 | 4,201 | 34 | 19,284 | ||||||||||||
Operating income (loss) | (2,610 | ) | (1,632 | ) | 11,773 | 3,964 | (3,058 | ) | 8,437 | |||||||||
Gain on sale of property, plant and equipment | 74 | 129 | 1,404 | - | 87 | 1,694 | ||||||||||||
Finance costs | (102 | ) | (22 | ) | (105 | ) | (6 | ) | (3,010 | ) | (3,245 | ) | ||||||
Net income (loss) before income taxes | (2,638 | ) | (1,525 | ) | 13,072 | 3,958 | (5,981 | ) | 6,886 | |||||||||
- | 2,514 | 1,539 | - | - | 4,053 | |||||||||||||
Total assets | 423,227 | 255,728 | 255,808 | 137,447 | 28,817 | 1,101,027 | ||||||||||||
Total liabilities | 77,260 | 41,239 | 128,558 | 8,587 | 287,329 | 542,973 | ||||||||||||
Capital expenditures | $ | 2,795 | $ | 7,567 | $ | 2,405 | $ | 1,682 | $ | 251 | $ | 14,700 |
Other | Total | |||||||||
Revenue | $ | 95,455 | $ | 74,548 | $ | 51,939 | $ | 48 | $ | 221,990 |
Non-current assets (3) | 525,904 | 172,167 | 79,159 | - | 777,230 |
(1) | Corporate includes the Company’s corporate activities and obligations pursuant to long-term credit facilities. |
(2) | Effective |
(3) | Includes property, plant and equipment, leased assets and goodwill. |
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Notes to the Financial Highlights
(1) | EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to net income before income taxes plus finance costs plus depreciation. EBITDA is not a recognized measure under IFRS. Management believes that in addition to net income, EBITDA is a 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 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) | Working capital equals current assets minus current liabilities. | |
(3) | Net Debt equals long-term debt plus lease liabilities plus current liabilities minus current assets. | |
(4) | Basic and diluted shares outstanding reflect the weighted average number of common shares outstanding for the periods. See note 5 to the Company’s condensed interim consolidated financial statements for the three months ended |
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 industry activity levels, including expectations regarding Total Energy’s future activity levels, market share and compression and process production activity. 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, central bank interest rate policy, the demand for products and services provided by Total Energy, Total Energy’s ability to attract and retain key personnel and other factors. 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.
Source:
2020 GlobeNewswire, Inc., source