Performance Data
Three Months Ended | Six Months Ended | |||||
2020 | 2019 | Change | 2020 | 2019 | Change | |
(CDN 000s, except per share data) | ||||||
(unaudited) | ($) | ($) | (%) | ($) | ($) | (%) |
Revenue | 26,848 | 72,894 | (63) | 100,810 | 155,037 | (35) |
EBITDA (1,2) | 4,271 | 25,606 | (83) | 37,740 | 66,041 | (43) |
Adjusted EBITDA (1.2) | (848) | 30,741 | — | 32,457 | 71,540 | (55) |
As a % of revenue | (3.2) | 42.2 | — | 32.2 | 46.1 | (1,390) bps |
Funds flow from operations | 134 | 23,794 | (99) | 26,856 | 59,693 | (55) |
Per share – basic | 0.00 | 0.28 | (100) | 0.32 | 0.70 | (54) |
Per share – diluted | 0.00 | 0.28 | (100) | 0.32 | 0.69 | (54) |
Cash from operating activities | 29,953 | 37,938 | (21) | 55,546 | 46,380 | 20 |
Capital expenditures | 799 | 4,216 | (81) | 3,887 | 14,533 | (73) |
Free cash flow (1) | 29,888 | 32,547 | (8) | 52,823 | 32,932 | 60 |
Cash dividends declared | 0.19 | 0.18 | 6 | 0.38 | 0.36 | 6 |
Net (loss) income | (4,799) | 9,245 | — | 11,753 | 28,289 | (58) |
Net (loss) income attributable to | (4,487) | 9,245 | — | 12,432 | 28,289 | (56) |
Per share – basic | (0.05) | 0.11 | — | 0.15 | 0.33 | (55) |
Per share – diluted | (0.05) | 0.11 | — | 0.15 | 0.33 | (55) |
Total interest bearing debt | — | — | — | — | — | — |
Shares outstanding end of period (#000's) | 84,096 | 85,393 | (2) | 84,096 | 85,393 | (2) |
(1) Non-IFRS financial measures are defined in the Management's Discussion and Analysis section. |
(2) Prior period amounts have been restated to conform with current year's presentation. |
Q2 2020 vs Q2 2019
The COVID-19 pandemic has had a significant negative impact on demand for fossil fuels, and this, combined with an over-supply of oil, resulted in an unprecedented drop in drilling rig activity during the second quarter of 2020. This lower level of drilling activity, combined with a drop in Revenue per EDR day, due in most part to a change in the mix of customers, and selected price concessions, resulted in consolidated revenue of
Adjusted EBITDA decreased to a loss of
Cash from operating activities was
Free cash flow was
The Company recorded a net loss attributable to
President's Message
As the global economy was slowing down towards the end of the first quarter 2020 due to the unprecedented impact of COVID-19, a disagreement between
In response to market conditions and the uncertainty regarding the trajectory of our industry,
We expect that oilfield activity will remain very low in the second half of 2020 before a slow recovery starts in 2021. We are fully prepared for that. With our leaner organization and clean balance sheet,
Our EDR market share in
Our PVT Smart Alarms are gaining traction with key customers and the new DataHub Dashboard has been introduced with great feedback from users.
Energy Toolbase has made good progress with positive momentum on software subscriptions and new battery control systems sold. With the industry-leading software package to model the economics and build proposals for solar and energy storage (battery) projects, combined with the iEMS control system and Energy DataHub products, Energy Toolbase is well positioned for meaningful long-term growth in this promising market.
We continue to invest significant resources in R&D, IT, and technical support to respond to customer requests, improve existing products and develop new products. We believe that this environment provides an opportunity for
On
I am humbled and grateful for the nine years I was able to serve
(signed)
President and Chief Executive Officer
Management's Discussion and Analysis
The following discussion and analysis has been prepared by management as of
Certain information regarding the Company contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements.
All financial measures presented in this report are expressed in Canadian dollars unless otherwise indicated.
Impact of Hyperinflation
In 2018, the Company concluded that its Argentinian subsidiary is operating in a hyperinflationary economy. This conclusion impacts the application of two accounting standards, IAS 21, The Effects of Changes in Foreign Exchange, and IAS 29, Financial Reporting in Hyperinflationary Economies.
The impact of applying IAS 21 to the operating results of
Impact on IFRS Measures
Three Months Ended | Six Months Ended | |
(000s) (unaudited) | ($) | ($) |
(Decrease) in revenue | (389) | (296) |
Decrease in rental services and local administration expenses | 265 | 210 |
(Increase) in depreciation expense | (267) | (411) |
(Decrease) in segment gross profit | (391) | (497) |
Net monetary gain presented in other expenses | 396 | 815 |
Decrease in other expenses | 11 | — |
Decrease in income tax provision | 13 | 1 |
Increase in net income | 29 | 319 |
Impact on Non-IFRS Measures
Three Months Ended | Six Months Ended | |
(000s) (unaudited) | ($) | ($) |
(Decrease) in revenue | (389) | (296) |
Decrease in rental services and local administration expenses | 265 | 210 |
Net monetary gain presented in other expenses | 396 | 815 |
Decrease in other expenses | 11 | — |
Increase in EBITDA | 283 | 729 |
(Elimination) of net monetary gain presented in other expenses | (396) | (815) |
(Elimination) of other expenses | (11) | — |
(Decrease) in Adjusted EBITDA | (124) | (86) |
Additional IFRS Measures
In its Consolidated Financial Statements, the Company uses certain additional IFRS measures. Management believes these measures provide useful supplemental information to readers.
Funds flow from operations
Management believes that funds flow from operations, as reported in the Consolidated Statements of Cash Flows, is a useful additional measure as it represents the cash generated during the period, regardless of the timing of collection of receivables and payment of payables. Funds flow from operations represents the cash flow from continuing operations, excluding non-cash items. Funds flow from operations is defined as net income adjusted for depreciation and amortization expense, non-cash, stock-based compensation expense, deferred taxes, and other non-cash items impacting operations.
Cash from operating activities
Cash from operating activities is defined as funds flow from operations adjusted for changes in working capital items.
Non-IFRS Financial Measures
These definitions are not recognized measures under IFRS, and accordingly, may not be comparable to measures used by other companies. These Non-IFRS measures provide readers with additional information regarding the Company's ability to generate funds to finance its operations, fund its research and development and capital expenditure program, and pay dividends.
Revenue per EDR day
Revenue per EDR day is defined as the daily revenue generated from all products that the Company has on rent on a drilling rig that has the Company's base EDR installed. This metric provides a key measure on the Company's ability to increase production adoption and evaluate product pricing.
EBITDA
EBITDA is defined as net income before interest income and expense, income taxes, stock-based compensation expense, and depreciation and amortization expense.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA, adjusted for foreign exchange, impairment of property, plant, and equipment, restructuring costs, net monetary adjustments, and other items which the Company does not consider to be in the normal course of continuing operations.
Management believes that EBITDA and Adjusted EBITDA are useful supplemental measures as they provide an indication of the results generated by the Company's principal business activities prior to the consideration of how these results are taxed in multiple jurisdictions, how the results are impacted by foreign exchange or how the results are impacted by the Company's accounting policies for equity-based compensation plans.
Free cash flow
Free cash flow is defined as cash from operating activities plus proceeds on disposal of property, plant, and equipment, less capital expenditures (including changes to non-cash working capital associated with capital expenditures), and deferred development costs. This metric provides a key measure on the Company's ability to generate cash from its principal business activities after funding the capital expenditure program, and provides an indication of the amount of cash available to finance, among other items, the Company's dividend and other investment opportunities.
Overall Performance
Three Months Ended | Six Months Ended | |||||
2020 | 2019 | Change | 2020 | 2019 | Change | |
(000s) (unaudited) | ($) | ($) | (%) | ($) | ($) | (%) |
Revenue | ||||||
Drilling Data | 14,093 | 39,269 | (64) | 52,764 | 82,522 | (36) |
Mud Management and Safety | 8,220 | 21,142 | (61) | 29,617 | 44,816 | (34) |
Communications | 937 | 4,582 | (80) | 6,015 | 10,539 | (43) |
Drilling Intelligence | 1,210 | 4,588 | (74) | 6,605 | 10,561 | (37) |
Analytics and Other | 2,388 | 3,313 | (28) | 5,809 | 6,599 | (12) |
Total revenue | 26,848 | 72,894 | (63) | 100,810 | 155,037 | (35) |
The Pason Electronic Drilling Recorder (EDR) remains the Company's primary product. The EDR provides a complete system of drilling data acquisition, data networking, and drilling management tools and reports at both the wellsite and at customer offices. The EDR is the base product from which all other wellsite instrumentation products are linked. By linking these products, a number of otherwise redundant elements such as data processing, display, storage, and networking are eliminated. This ensures greater reliability and a more robust system of instrumentation for the customer.
The COVID-19 pandemic has had a significant negative impact on the demand for fossil fuels and this combined with an over-supply of oil has led to a decline in oil prices. As a result, the Company's customers have reduced their capital expenditure programs which has led to a precipitous fall in the active rig count in all major markets the Company operates in, which has had a significant impact on the Company's revenue.
The US business unit experienced a decline in industry activity of 63% in the second quarter of 2020 compared to the corresponding period in 2019. For the second quarter of 2020, industry activity in the Canadian market decreased by 73% compared to the corresponding period in 2019. The International business unit experienced similar decreases in activity.
Total revenue decreased by 63% in the second quarter of 2020 compared to the corresponding period in 2019. The decrease is attributable to the decrease in industry activity as well as a decrease in revenue per EDR day in all three operating segments.
The decrease in analytics and other revenue of 28% in the second quarter of 2020 compared to the corresponding period in 2019 is less than the other categories predominantly as a result of the revenue generated from the acquisition of
US EDR days decreased by 61% in the second quarter of 2020 compared to the corresponding period in 2019, while Canadian EDR days, which includes non-oil and gas-related activity, decreased by 72% in the second quarter of 2020 compared to the corresponding period in 2019.
In the second quarter of 2020, the Pason EDR was installed on 65% of the land rigs in the US market, an increase of 300bps over the same period in 2019.
In the second quarter of 2020, the Pason EDR was installed on 94% of the land rigs in the Canadian market, an increase of 700bps over the same period in 2019. In calculating market share, the Company uses the number of EDR days billed and oil and gas drilling days as reported by accepted industry sources. The market share in the second quarter was impacted by higher than normal non-conventional rigs (e.g. crossing rigs) operating relative to conventional oil and gas rigs.
Discussion of Operations
United States Operations
Three Months Ended | Six Months Ended | ||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||
(000s) (unaudited) | ($) | ($) | (%) | ($) | ($) | (%) | |
Revenue | |||||||
Drilling Data | 11,672 | 29,242 | (60) | 36,382 | 58,418 | (38) | |
Mud Management and Safety | 6,344 | 17,038 | (63) | 20,427 | 34,255 | (40) | |
Communications | 714 | 3,101 | (77) | 2,988 | 6,330 | (53) | |
Drilling Intelligence | 913 | 3,128 | (71) | 3,030 | 6,280 | (52) | |
Analytics and Other | 1,477 | 1,122 | 32 | 3,280 | 2,813 | 17 | |
Total revenue | 21,120 | 53,631 | (61) | 66,107 | 108,096 | (39) | |
Rental services and local administration | 11,610 | 20,250 | (43) | 29,662 | 39,340 | (25) | |
Depreciation and amortization | 4,344 | 5,062 | (14) | 8,923 | 9,836 | (9) | |
Segment gross profit | 5,166 | 28,319 | (82) | 27,522 | 58,920 | (53) | |
Three Months Ended | Six Months Ended | ||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||
(unaudited) | (#) | (#) | (%) | (#) | (#) | (%) | |
Electronic Drilling Recorder (EDR) Rental Days | 20,900 | 53,600 | (61) | 64,600 | 109,300 | (41) | |
Three Months Ended | Six Months Ended | ||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||
(unaudited) | ($) | ($) | (%) | ($) | ($) | (%) | |
Revenue per EDR day - USD | 695 | 745 | (7) | 732 | 736 | (1) | |
Revenue per EDR day - CAD | 963 | 996 | (3) | 999 | 981 | 2 |
Industry activity in the US market decreased by 63% in the second quarter of 2020 over the 2019 comparable period. The US rig count dropped throughout the second quarter of 2020, falling from approximately 790 rigs at the start of the second quarter to approximately 260 rigs at quarter-end. The drop in US rig count contributed to a 61% decrease in revenue for the second quarter of 2020 over the 2019 comparable period (64% when measured in USD).
Analytics and other revenue increased 32% in the second quarter of 2020 over the 2019 comparable period predominantly due to the revenue generated from the
US market share was 65% for the second quarter of 2020 compared to 62% during the same period in 2019.
EDR rental days decreased by 61% in the second quarter of 2020 over the 2019 comparable period. Revenue per EDR day decreased by 7% to
Rental services and local administration decreased by 43% in the second quarter of 2020 over the 2019 comparative period. The decrease in operating costs is attributable to the Company managing field and office staff levels to support the current level of activity. Included in the US business segment are the results of
Canadian Operations
Three Months Ended | Six Months Ended | |||||
2020 | 2019 | Change | 2020 | 2019 | Change | |
(000s) (unaudited) | ($) | ($) | (%) | ($) | ($) | (%) |
Revenue | ||||||
Drilling Data | 982 | 3,642 | (73) | 9,439 | 11,734 | (20) |
Mud Management and Safety | 589 | 2,296 | (74) | 5,670 | 6,979 | (19) |
Communications | 176 | 1,060 | (83) | 2,531 | 3,352 | (24) |
Drilling Intelligence | 223 | 1,179 | (81) | 3,200 | 3,669 | (13) |
Analytics and Other | 720 | 1,038 | (31) | 1,576 | 1,994 | (21) |
Total revenue | 2,690 | 9,215 | (71) | 22,416 | 27,728 | (19) |
Rental services and local administration | 2,828 | 4,873 | (42) | 8,647 | 10,582 | (18) |
Depreciation and amortization | 3,268 | 3,824 | (15) | 8,064 | 8,379 | (4) |
Segment gross (loss) profit | (3,406) | 518 | — | 5,705 | 8,767 | (35) |
Three Months Ended | Six Months Ended | |||||
2020 | 2019 | Change | 2020 | 2019 | Change | |
(unaudited) | (#) | (#) | (%) | (#) | (#) | (%) |
Electronic Drilling Recorder (EDR) Rental Days | 1,800 | 6,400 | (72) | 17,300 | 21,900 | (21) |
Three Months Ended | Six Months Ended | |||||
2020 | 2019 | Change | 2020 | 2019 | Change | |
(unaudited) | ($) | ($) | (%) | ($) | ($) | (%) |
Revenue per EDR day - CAD | 1,060 | 1,290 | (18) | 1,210 | 1,185 | 2 |
Second quarter drilling activity in the WCSB was the lowest in almost four decades, and unlike in previous years, the industry did not see an uptick after spring breakup. Canadian drilling activity in the second quarter of 2020 decreased by 73% relative to the same period in 2019, while EDR rental days decreased by 72%.
The Canadian business unit's revenue decreased by 71% in the second quarter of 2020 over the 2019 comparative period.
Canadian market share was 94% for the second quarter of 2020 compared to a market share of 87% in the comparative period in 2019. Revenue per EDR day decreased by
Depreciation and amortization decreased by 15% in the second quarter of 2020 over the 2019 comparative period. Included in this category is the amortization of previously deferred research and development costs. The drop in these costs is attributable to research and development projects that are now fully amortized.
Segment gross profit was a loss for the second quarter of 2020 of
International Operations
Three Months Ended | Six Months Ended | |||||
2020 | 2019 | Change | 2020 | 2019 | Change | |
(000s) (unaudited) | ($) | ($) | (%) | ($) | ($) | (%) |
Revenue | ||||||
Drilling Data | 1,439 | 6,385 | (77) | 6,943 | 12,370 | (44) |
Mud Management and Safety | 1,287 | 1,808 | (29) | 3,520 | 3,582 | (2) |
Communications | 47 | 421 | (89) | 496 | 857 | (42) |
Drilling Intelligence | 74 | 281 | (74) | 375 | 612 | (39) |
Analytics and Other | 191 | 1,153 | (83) | 953 | 1,792 | (47) |
Total revenue | 3,038 | 10,048 | (70) | 12,287 | 19,213 | (36) |
Rental services and local administration | 3,371 | 5,540 | (39) | 8,654 | 10,846 | (20) |
Depreciation and amortization | 1,000 | 1,092 | (8) | 2,039 | 1,985 | 3 |
Segment gross (loss) profit | (1,333) | 3,416 | — | 1,594 | 6,382 | (75) |
Revenue in the International business unit decreased by 70% in the second quarter of 2020 compared to the same period in 2019. Activity levels in most all of the Company's major international markets experienced the significant reduction in activity that was witnessed in
Segment gross profit was a loss of
Corporate Expenses
Three Months Ended | Six Months Ended | |||||
2020 | 2019 | Change | 2020 | 2019 | Change | |
(000s) (unaudited) | ($) | ($) | (%) | ($) | ($) | (%) |
Research and development | 6,737 | 7,661 | (12) | 14,799 | 15,405 | (4) |
Corporate services | 2,827 | 3,895 | (27) | 6,512 | 7,548 | (14) |
Stock-based compensation | 1,868 | 3,089 | (40) | 1,746 | 6,913 | (75) |
Other (income) expenses | ||||||
Derecognition of onerous lease | (5,757) | — | — | (5,757) | — | — |
Government wage assistance | (4,363) | — | — | (4,363) | — | — |
Reorganization costs | 5,554 | — | — | 5,554 | — | — |
Derecognition of lease receivable | — | 4,289 | — | — | 4,289 | — |
Foreign exchange loss | 79 | 553 | (86) | 32 | 654 | (95) |
Net interest expense - lease liability | 68 | 108 | (37) | 246 | 245 | — |
Interest income - short term investments | (406) | (283) | 43 | (982) | (468) | 110 |
Net monetary gain | (396) | — | — | (815) | — | — |
Equity loss (income) | 323 | (66) | — | 79 | (224) | — |
Other | (236) | 293 | — | 66 | 556 | (88) |
Total corporate expenses | 6,298 | 19,539 | (68) | 17,117 | 34,918 | (51) |
During the second quarter of 2020, the Company entered into an agreement to terminate the lease at its previous US head office in
During the second quarter of 2020, as a result of the decline in revenue of the Canadian business unit, the Company was eligible for the
During the second quarter of 2020, the Company initiated staff reduction initiatives to address the anticipated prolonged downturn in oil and gas drilling activity in all of its markets. Accordingly, the Company recorded reorganization expense of
During the second quarter of 2019, the Company was notified that the tenant that was leasing the Company's previous office space in
Net monetary gain is as a result of applying hyperinflation accounting to the Company's Argentinian subsidiary.
Q2 2020 vs Q1 2020
The COVID-19 pandemic has had a significant negative impact on the demand for fossil fuels and this combined with an over-supply of oil has led to a decline in oil prices. As a result, the Company's customers have reduced their capital expenditure programs which has led to a precipitous fall in the active rig count in all major markets the Company operates in, which has had a significant impact on the Company's revenue.
Consolidated revenue was
Revenue in the US business unit was
Revenue in the Canadian business unit was
The International business unit reported revenue of
Adjusted EBITDA, which adjusts EBITDA for foreign exchange and certain non-recurring charges, was a loss of
Cash from operating activities was
The Company recorded a net loss attributable to
Condensed Consolidated Interim Balance Sheets
As at | ||
(CDN 000s) (unaudited) | ($) | ($) |
Assets | ||
Current | ||
Cash and cash equivalents | 176,486 | 161,016 |
Trade and other receivables | 24,854 | 59,716 |
Income taxes recoverable - other | 15,304 | 15,304 |
Prepaid expenses | 1,805 | 3,621 |
Income taxes recoverable | 3,017 | 2,382 |
Total current assets | 221,466 | 242,039 |
Non-current | ||
Property, plant and equipment | 111,041 | 118,522 |
Investments | 26,186 | 26,265 |
Intangible assets and goodwill | 48,694 | 51,015 |
Total non-current assets | 185,921 | 195,802 |
Total assets | 407,387 | 437,841 |
Liabilities and equity | ||
Current | ||
Trade payables and accruals | 18,800 | 34,420 |
Income taxes payable | 5,722 | 3,133 |
Stock-based compensation liability | 2,513 | 2,442 |
Lease liability | 2,380 | 3,275 |
Investment - put option | 10,000 | 15,000 |
Total current liabilities | 39,415 | 58,270 |
Non-current | ||
Deferred tax liabilities | 8,513 | 8,566 |
Lease liability | 5,024 | 11,532 |
Stock-based compensation liability | 4,131 | 3,479 |
Obligation under put option | 10,010 | 9,540 |
Total non-current liabilities | 27,678 | 33,117 |
Equity | ||
Share capital | 166,561 | 166,701 |
Share-based benefits reserve | 31,869 | 30,863 |
Foreign currency translation reserve | 70,067 | 57,830 |
Equity reserve | (8,375) | (8,375) |
Retained earnings | 81,231 | 99,806 |
Total equity attributable to equity holders of the Company | 341,353 | 346,825 |
Non-controlling interest | (1,059) | (371) |
Total equity | 340,294 | 346,454 |
Total liabilities and equity | 407,387 | 437,841 |
Condensed Consolidated Interim Statements of Operations
Three Months Ended | Six Months Ended | |||
2020 | 2019 | 2020 | 2019 | |
(CDN 000s, except per share data) (unaudited) | ($) | ($) | ($) | ($) |
Revenue | 26,848 | 72,894 | 100,810 | 155,037 |
Operating expenses | ||||
Rental services | 15,554 | 27,264 | 40,335 | 54,058 |
Local administration | 2,255 | 3,399 | 6,628 | 6,710 |
Depreciation and amortization | 8,612 | 9,978 | 19,026 | 20,200 |
26,421 | 40,641 | 65,989 | 80,968 | |
Gross profit | 427 | 32,253 | 34,821 | 74,069 |
Other expenses | ||||
Research and development | 6,737 | 7,661 | 14,799 | 15,405 |
Corporate services | 2,827 | 3,895 | 6,512 | 7,548 |
Stock-based compensation expense | 1,868 | 3,089 | 1,746 | 6,913 |
Other (income) expenses | (5,134) | 4,894 | (5,940) | 5,052 |
6,298 | 19,539 | 17,117 | 34,918 | |
(Loss) income before income taxes | (5,871) | 12,714 | 17,704 | 39,151 |
Income tax provision | (1,072) | 3,469 | 5,951 | 10,862 |
Net (loss) income | (4,799) | 9,245 | 11,753 | 28,289 |
Net (loss) income attributable to: | ||||
Shareholders of | (4,487) | 9,245 | 12,432 | 28,289 |
Non-controlling interest | (312) | — | (679) | — |
Net (loss) income | (4,799) | 9,245 | 11,753 | 28,289 |
(Loss) Income per share | ||||
Basic | (0.05) | 0.11 | 0.15 | 0.33 |
Diluted | (0.05) | 0.11 | 0.15 | 0.33 |
Condensed Consolidated Interim Statements of Other Comprehensive Income
Three Months Ended | Six Months Ended | |||
2020 | 2019 | 2020 | 2019 | |
(CDN 000s) (unaudited) | ($) | ($) | ($) | ($) |
Net (loss) income | (4,799) | 9,245 | 11,753 | 28,289 |
Items that may be reclassified subsequently to net | ||||
Tax recovery on net investment in foreign | — | 9,690 | — | 10,481 |
Foreign currency translation adjustment | (11,660) | (5,567) | 12,228 | (13,093) |
Other comprehensive (loss) gain | (11,660) | 4,123 | 12,228 | (2,612) |
Total comprehensive (loss) income | (16,459) | 13,368 | 23,981 | 25,677 |
Total comprehensive (loss) income attributed | ||||
Shareholders of | (16,178) | 13,368 | 24,669 | 25,677 |
Non-controlling interest | (281) | — | (688) | — |
Total comprehensive (loss) income | (16,459) | 13,368 | 23,981 | 25,677 |
Condensed Consolidated Interim Statements of Cash Flows
Three Months Ended | Six Months Ended | |||
2020 | 2019 | 2020 | 2019 | |
(CDN 000s) (unaudited) | ($) | ($) | ($) | ($) |
Cash from (used in) operating activities | ||||
Net (loss) income | (4,799) | 9,245 | 11,753 | 28,289 |
Adjustment for non-cash items: | ||||
Depreciation and amortization | 8,612 | 9,978 | 19,026 | 20,200 |
Stock-based compensation | 1,868 | 3,089 | 1,746 | 6,913 |
Deferred income taxes | (285) | (1,356) | (278) | 1,419 |
Derecognition of onerous lease | (5,757) | — | (5,757) | — |
Derecognition of lease receivable | — | 4,289 | — | 4,289 |
Hyperinflation adjustment | (287) | — | (731) | — |
Unrealized foreign exchange loss and other | 782 | (1,451) | 1,097 | (1,417) |
Funds flow from operations | 134 | 23,794 | 26,856 | 59,693 |
Movements in non-cash working capital items: | ||||
Decrease in trade and other receivables | 36,301 | 13,353 | 35,941 | 4,099 |
Decrease in prepaid expenses | 770 | 742 | 1,869 | 1,021 |
(Decrease) in income taxes | (2,208) | (2,302) | 4,423 | 1,223 |
(Decrease) increase in trade payables, accruals | (3,679) | 834 | (11,142) | (6,164) |
Effects of exchange rate changes | (640) | 1,661 | (143) | 1,588 |
Cash generated from operating activities | 30,678 | 38,082 | 57,804 | 61,460 |
Income tax paid | (725) | (144) | (2,258) | (15,080) |
Net cash from operating activities | 29,953 | 37,938 | 55,546 | 46,380 |
Cash flows from (used in) financing activities | ||||
Proceeds from issuance of common shares | — | 1,114 | — | 3,127 |
Payment of dividends | (16,038) | (15,417) | (32,064) | (30,856) |
Repurchase and cancellation of shares under | (263) | (9,097) | (4,083) | (11,119) |
Repayment of lease liability | (658) | (382) | (1,243) | (1,053) |
Net cash used in financing activities | (16,959) | (23,782) | (37,390) | (39,901) |
Cash flows (used in) from investing activities | ||||
Payment on investment - put option | — | — | (5,000) | — |
Additions to property, plant and equipment | (1,378) | (4,335) | (4,044) | (14,084) |
Development costs | 579 | 119 | 157 | (449) |
Proceeds on disposal of investment and property, | 393 | 508 | 807 | 618 |
Changes in non-cash working capital | 341 | (1,683) | 357 | 467 |
Net cash used in investing activities | (65) | (5,391) | (7,723) | (13,448) |
Effect of exchange rate on cash and cash | (6,773) | (3,563) | 5,037 | (7,736) |
Net increase (decrease) in cash and cash | 6,156 | 5,202 | 15,470 | (14,705) |
Cash and cash equivalents, beginning of period | 170,330 | 183,931 | 161,016 | 203,838 |
Cash and cash equivalents, end of period | 176,486 | 189,133 | 176,486 | 189,133 |
Operating Segments
The Company operates in three geographic segments:
Three Months Ended | International | Total | ||
(CDN 000s) (unaudited) | ($) | ($) | ($) | ($) |
Revenue | ||||
Drilling Data | 982 | 11,672 | 1,439 | 14,093 |
Mud Management and Safety | 589 | 6,344 | 1,287 | 8,220 |
Communications | 176 | 714 | 47 | 937 |
Drilling Intelligence | 223 | 913 | 74 | 1,210 |
Analytics and Other | 720 | 1,477 | 191 | 2,388 |
Total Revenue | 2,690 | 21,120 | 3,038 | 26,848 |
Rental services and local administration | 2,828 | 11,610 | 3,371 | 17,809 |
Depreciation and amortization | 3,268 | 4,344 | 1,000 | 8,612 |
Segment gross (loss) profit | (3,406) | 5,166 | (1,333) | 427 |
Research and development | 6,737 | |||
Corporate services | 2,827 | |||
Stock-based compensation | 1,868 | |||
Other (income) | (5,134) | |||
Income tax provision | (1,072) | |||
Net (loss) | (4,799) | |||
Net (loss) attributable to | (4,487) | |||
Capital expenditures | 452 | 347 | — | 799 |
As at | ||||
Property plant and equipment | 37,684 | 59,673 | 13,684 | 111,041 |
Intangible assets | 12,011 | 1,928 | — | 13,939 |
1,259 | 30,896 | 2,600 | 34,755 | |
Segment assets | 99,927 | 255,897 | 51,563 | 407,387 |
Segment liabilities | 36,374 | 26,240 | 4,479 | 67,093 |
Three Months Ended | International | Total | ||
(CDN 000s) (unaudited) | ($) | ($) | ($) | ($) |
Revenue | ||||
Drilling Data | 3,642 | 29,242 | 6,385 | 39,269 |
Mud Management and Safety | 2,296 | 17,038 | 1,808 | 21,142 |
Communications | 1,060 | 3,101 | 421 | 4,582 |
Drilling Intelligence | 1,179 | 3,128 | 281 | 4,588 |
Analytics and Other | 1,038 | 1,122 | 1,153 | 3,313 |
Total Revenue | 9,215 | 53,631 | 10,048 | 72,894 |
Rental services and local administration | 4,873 | 20,250 | 5,540 | 30,663 |
Depreciation and amortization | 3,824 | 5,062 | 1,092 | 9,978 |
Segment gross profit | 518 | 28,319 | 3,416 | 32,253 |
Research and development | 7,661 | |||
Corporate services | 3,895 | |||
Stock-based compensation | 3,089 | |||
Other expenses | 4,894 | |||
Income tax provision | 3,469 | |||
Net income | 9,245 | |||
Net income attributable to | 9,245 | |||
Capital expenditures | 592 | 2,390 | 1,234 | 4,216 |
As at | ||||
Property plant and equipment | 41,013 | 67,824 | 15,039 | 123,876 |
Intangible assets | 17,089 | — | — | 17,089 |
1,259 | 7,468 | 2,600 | 11,327 | |
Segment assets | 106,984 | 276,687 | 53,575 | 437,246 |
Segment liabilities | 28,337 | 25,623 | 6,220 | 60,180 |
Six Months Ended | International | Total | ||
( | ($) | ($) | ($) | ($) |
Revenue | ||||
Drilling Data | 9,439 | 36,382 | 6,943 | 52,764 |
Mud Management and Safety | 5,670 | 20,427 | 3,520 | 29,617 |
Communications | 2,531 | 2,988 | 496 | 6,015 |
Drilling Intelligence | 3,200 | 3,030 | 375 | 6,605 |
Analytics and Other | 1,576 | 3,280 | 953 | 5,809 |
Total Revenue | 22,416 | 66,107 | 12,287 | 100,810 |
Rental services and local administration | 8,647 | 29,662 | 8,654 | 46,963 |
Depreciation and amortization | 8,064 | 8,923 | 2,039 | 19,026 |
Segment gross profit | 5,705 | 27,522 | 1,594 | 34,821 |
Research and development | 14,799 | |||
Corporate services | 6,512 | |||
Stock-based compensation | 1,746 | |||
Other (income) | (5,940) | |||
Income tax provision | 5,951 | |||
Net income | 11,753 | |||
Net income attributable to | 12,432 | |||
Capital expenditures | 2,506 | 1,031 | 350 | 3,887 |
As at | ||||
Property plant and equipment | 37,684 | 59,673 | 13,684 | 111,041 |
Intangible assets | 12,011 | 1,928 | — | 13,939 |
1,259 | 30,896 | 2,600 | 34,755 | |
Segment assets | 99,927 | 255,897 | 51,563 | 407,387 |
Segment liabilities | 36,374 | 26,240 | 4,479 | 67,093 |
Six Months Ended | International | Total | ||
( | ($) | ($) | ($) | ($) |
Revenue | ||||
Drilling Data | 11,734 | 58,418 | 12,370 | 82,522 |
Mud Management and Safety | 6,979 | 34,255 | 3,582 | 44,816 |
Communications | 3,352 | 6,330 | 857 | 10,539 |
Drilling Intelligence | 3,669 | 6,280 | 612 | 10,561 |
Analytics and Other | 1,994 | 2,813 | 1,792 | 6,599 |
Total Revenue | 27,728 | 108,096 | 19,213 | 155,037 |
Rental services and local administration | 10,582 | 39,340 | 10,846 | 60,768 |
Depreciation and amortization | 8,379 | 9,836 | 1,985 | 20,200 |
Segment gross profit | 8,767 | 58,920 | 6,382 | 74,069 |
Research and development | 15,405 | |||
Corporate services | 7,548 | |||
Stock-based compensation | 6,913 | |||
Other expenses | 5,052 | |||
Income tax provision | 10,862 | |||
Net income | 28,289 | |||
Net income attributable to | 28,289 | |||
Capital expenditures | 1,496 | 11,172 | 1,865 | 14,533 |
As at | ||||
Property plant and equipment | 41,013 | 67,824 | 15,039 | 123,876 |
Intangible assets | 17,089 | — | — | 17,089 |
1,259 | 7,468 | 2,600 | 11,327 | |
Segment assets | 106,984 | 276,687 | 53,575 | 437,246 |
Segment liabilities | 28,337 | 25,623 | 6,220 | 60,180 |
Other (Income) Expenses
Three Months Ended | Six Months Ended | |||
2020 | 2019 | 2020 | 2019 | |
(CDN 000s) (unaudited) | ($) | ($) | ($) | ($) |
Derecognition of onerous lease | (5,757) | — | (5,757) | — |
Government wage assistance | (4,363) | — | (4,363) | — |
Reorganization costs | 5,554 | — | 5,554 | — |
Derecognition of lease receivable | — | 4,289 | — | 4,289 |
Foreign exchange (gain) loss | 79 | 553 | 32 | 654 |
Net interest expense - lease liabilities | 68 | 108 | 246 | 245 |
Interest income - short term investments | (406) | (283) | (982) | (468) |
Net monetary gain | (396) | — | (815) | — |
Equity loss (income) | 323 | (66) | 79 | (224) |
Other | (236) | 293 | 66 | 556 |
Other (income) expenses | (5,134) | 4,894 | (5,940) | 5,052 |
During the second quarter of 2020, the Company entered into an agreement to terminate the lease at its previous US head office in
During the second quarter of 2020, as a result of the decline in revenue of the Canadian business unit, the Company was eligible for the
During the second quarter of 2020, the Company initiated staff reduction initiatives to address the anticipated prolonged downturn in oil and gas drilling activity in all of its markets. Accordingly, the Company recorded reorganization expense of
During the second quarter of 2019, the Company was notified that the tenant that was leasing the Company's previous office space in
Net monetary gain is as a result of applying hyperinflation accounting to the Company's Argentinian subsidiary.
Events After the Reporting Period
On
Second Quarter Conference Call
Additional information, including the Company's Annual Report and Annual Information Form for the year ended
Certain information regarding the Company contained herein may constitute forward-looking information under applicable securities law. The words "anticipate", "expect", "believe", "may", "should", "will", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward-looking information and statements. Forward-looking statements in this document may include statements, express or implied regarding the anticipated business prospects and financial performance of
Forward-looking information and statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking information and statements. Risk factors that could cause actual results or events to differ materially from current expectations include, among others, the ability of
Readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such forward looking statements, although considered reasonable by management as of the date hereof, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Additional information on risks and uncertainties and other factors that could affect
SOURCE
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