CALGARY, AB, Nov. 3, 2020 /CNW/ - ESI Energy Services Inc. (CSE: OPI) ("ESI" or the "Company") announces its 2020 third quarter financial results.
Robert Dunstan, ESI's President and CEO, announced higher levels of revenue, EBITDA, funds flow from operations and long-term debt as well as lower net income and working capital, for the third quarter of 2020 compared with the same period in 2019.
Highlights
Q3 2020 Highlights
Revenue for the three-month period ended September 30, 2020 increased by 7 percent to $4,703,000 compared to $4,392,000 during the same period in 2019. Most of this revenue was generated by padding machine rentals. Substantially all the padding revenue was generated in the United States.
Approximately 66 percent of the revenue generated during the three-month period ended September 30, 2020 came from padding machine rentals, 53 percent of which was from the large machines and 47 percent from the small machines. Activity levels for large padding machines were down from 45 padding months during the third quarter of 2019 to 23 padding months during the same period in 2020, a decrease of 49 percent. Activity levels for small padding machines were up by 118 percent to 48 padding months during the third quarter of 2020, compared with 22 padding months during the same period in 2019. Virtually all the revenue from small padding machines was generated from renewables (wind and solar) construction as well as approximately 15 percent of the large padder months. OPP-200 padding machines are used for both pipeline and renewables construction, whereas OPP-300 machines are used almost exclusively for large diameter pipeline construction.
Gross margin for the three-month period ended September 30, 2020 increased by 11 percent to $2,729,000 compared to $2,462,000 for the same period in 2019. This increase was primarily due to higher revenue in 2020 compared with 2019.
The Company generated a net income of $ 723,000 during the third quarter of 2020 which was lower by $219,000 compared to a net income of $942,000 during the same period in 2019. The decrease in net income during the third quarter of 2020 was primarily due to a foreign exchange loss of $122,000 in 2020 compared to a foreign exchange gain of $88,000 in 2019, accompanied with a higher depreciation in 2020.
EBITDA during the third quarter of 2020 was $1,845,000 compared to $1,517,000 during the same period in 2019, an increase of 22 percent or $328,000, primarily due to higher revenue.
Funds flow from operations was $1,869,000 during the third quarter of 2020, an increase of $300,000 compared to $1,569,000 during the same period in 2019. The increase was primarily due to an increase in revenue during the third quarter of 2020.
Q3 2020 YTD Highlights
Revenue for the nine-month period ended September 30, 2020 increased by 25 percent to $10,964,000 compared to $8,774,000 during the same period in 2019. Consistent with the first two quarters in 2020, virtually all this revenue was generated from padding revenue in the United States.
Approximately 71 percent of the revenue generated during the nine-month period ended September 30, 2020 came from padding machine rentals, 54 percent of which was from the large machines and 46 percent from the small machines. Activity levels for large padding machines were down from 80 padding months during the first nine months of 2019 to 61 padding months during the same period in 2020, a decrease of 24 percent. Activity levels for small padding machines were up by 125 percent to 119 padding months during the first nine months of 2020, compared to 53 padding months during the same period in 2019.
Gross margin for the nine-month period ended September 30, 2020 increased by $1,678,000 or 42 percent, to $5,642,000 from $3,964,000 during the same period in 2019. The increase was primarily due to higher revenue in 2020 compared to 2019.
Net loss for the nine-month period ended September 30, 2020 was $10,546,000 compared with a net loss of $701,000 during the same period in 2019. Net Income on an adjusted basis for the impairment charge on intangible assets for the nine-month period ended September 30, 2020 was $211,000.
EBITDA during the first nine months of 2020 was $2,918,000 compared to $1,133,000 during the same period in 2019, an increase of 158 percent or $1,785,000, primarily due to higher revenue by $2,190,000.
Funds flow from operations was $3,014,000 during the first nine months of 2020, an increase of $1,745,000 compared with a $1,269,000 during the same period in 2019. The increase in funds flow was primarily due to higher revenue during the first nine months of 2020.
Working capital decreased to $11,031,000 at September 30, 2020 compared to $12,734,000 at December 31, 2019. The decrease in working capital during the first nine months of 2020 was primarily due to increase in current portion of long-term debt and accounts payable associated with capital and operational expenditures.
Long-term debt and lease obligations increased by $437,000 to $2,283,000 at September 30, 2020 compared to $1,846,000 at December 31, 2019.
About ESI
ESI is a publicly traded company listed on the Canadian Securities Exchange under the stock symbol "OPI". ESI is a pipeline and renewables equipment rental and sales company with principal operations in Leduc, Alberta and Phoenix, Arizona. The Company, together with its operating subsidiaries, ESI Pipeline Services, Inc. ("ESIPI") and ESI Energy Services (Australia) Pty Ltd., supplies (rents and sells) backfill separation machines ("Padding Machines") to mainline pipeline contractors, renewables and utility construction contractors, as well as oilfield pipeline and construction contractors.
Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or future performance. The use of the word "will", and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current beliefs or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Company. The forward-looking information contained in this release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Due to the risks, uncertainties and assumptions inherent in forward-looking information, investors should not place undue reliance on forward- looking information. The foregoing statements expressly qualify any forward-looking information contained herein.
SOURCE ESI Energy Services Inc.
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