Oct 13 - PHX Energy Services Corp. Reports Third Quarter Financial and Operating Results Including Record Revenue, Operating Days, EBITDA and Net Earnings and Announces an Increase in Monthly Dividends Source Press Release Company PHX Energy Services Corp. Date October 30, 2013 Due to strong growth in all operating regions, PHX Energy Services Corp. (TSX:PHX) (PHX Energy) achieved all-time quarterly records for revenue, operating days, EBITDA, and net earnings. For the three-month period ended September 30, 2013, consolidated revenue of $107 million was achieved as compared to $84.1 million in the 2012-period; a 27 percent increase. EBITDA increased by 22 percent to $21.6 million in the third quarter of 2013 from $17.7 million in 2012. Net earnings increased by 37 percent from $7.8 million in the 2012-quarter to $10.7 million in 2013. Included in the third quarters EBITDA and net earnings were a gain of $2.2 million from the sale of land and an operations centre and $1.2 million that related to the write off of certain tools as the technology is no longer being utilized. Excluding these gains and items, EBITDA increased by 16 percent to $20.6 million and net earnings increased by 25 percent to $9.8 million for the three-month period ended September 30, 2013. The Corporation realized strong activity levels in all of its operating segments in the third quarter of 2013. US revenue, a record for any quarter, as a percentage of consolidated revenue was 47 percent during the 2013-quarter as compared to 48 percent in the 2012-quarter. Albanias strong activity levels and the momentum of Russias growth continued through the third quarter of 2013. As a result, for the three-month period ended September 30, 2013, the international segment, for the second consecutive quarter, realized record revenue and represented 13 percent of consolidated revenue as compared to 12 percent in the corresponding 2012-period. As previously announced, PHX Energy has expanded its 2013 capital expenditure program from $30.4 million to $45 million, in light of strong equipment utilization levels. During the third quarter of 2013, $6.9 million in capital expenditures were incurred, and an additional $12.3 million of equipment is currently on order and is expected to be received by the end of 2013. On August 7, 2013, the terms of the Corporations syndicated loan agreement with its bank were amended to extend the maturity date of the syndicated facility and US operating facility from September 6, 2015 to September 5, 2016. In addition, the previous requirement to repay the current portion of the syndicated facility of $15 million was removed. Consequently, the aggregate carrying amount of the syndicated facility of $80 million as at September 30, 2013 was classified as a non-current liability. PHX Energy ended the third quarter with total long-term debt of $105.2 million and working capital of $65.6 million. In the 2013-quarter, the Corporation paid dividends of $5.2 million or $0.18 per share. On October 18, 2013, PHX Energy closed a bought deal financing for aggregate gross proceeds of $31.1 million. An aggregate of 2,990,000 common shares of the Corporation were issued at a price of $10.40 per common share. Concurrent with the closing of the public offering, certain directors, officers and employees of PHX Energy and their associates, purchased a total of 500,000 common shares at a price of $10.40 per share on a private placement basis. The gross proceeds from the public offering and concurrent private placement totaled to approximately $36.3 million. The net proceeds of the offerings will be used to temporarily reduce indebtedness, which will then be available to be redrawn and applied to fund the Corporations ongoing capital expenditure program and for general corporate purposes. On September 25, 2013, PHX Energy and RMS Systems Inc. (RMS) entered into an Arrangement Agreement whereby the Corporation will acquire all of the issued and outstanding shares of RMS. Under the terms of the Arrangement, all shareholders of RMS will receive 0.037209 of a common share of PHX Energy for each RMS share held based upon a value ascribed to each of the RMS shares and PHX Energy shares of $0.40 and $10.75, respectively. Following completion of the Arrangement, RMS will become a wholly-owned subsidiary of the Corporation. The Arrangement is subject to customary stock exchange, Court and regulatory approvals, including approval from the shareholders of RMS in a special meeting expected to be held on November 27, 2013. The Arrangement allows PHX Energy to strategically expand into a market segment that compliments its current services and presents many opportunities for growth. The information and data management segment of the oilfield services industry is attractive as there are only a few competitors and the technology is required on nearly every rig that operates. RMS recently completed upgrades to its technology to create a more competitive product and the Corporation believes it can successfully market this technology with its proven ability to foster strong client relationships. PHX Energy will leverage its existing infrastructure and geographical footprint to expand market share and create cost benefits where possible. In light of the record financial results and positive company outlook, the Board of Directors has approved a dividend increase of $0.01 per share per month from $0.06 to $0.07 per share per month payable on December 13, 2013 to shareholders of record at the close of business on November 29, 2013. Financial Highlights (Stated in thousands of dollars except per share amounts, percentages and shares outstanding) Three-month periods ended September 30, Nine-month periods ended September 30, 2013 2012 % Change 2013 2012 % Change Operating Results (unaudited) (unaudited) (unaudited) (unaudited) Revenue 106,971 84,054 27 265,120 222,247 19 Net earnings 10,737 7,836 37 14,308 13,170 9 Earnings per share - diluted 0.37 0.28 32 0.50 0.47 6 EBITDA (1) 21,574 17,703 22 40,270 35,263 14 EBITDA per share - diluted (1) 0.75 0.63 19 1.41 1.25 13 Cash Flow Cash flows from (used in) operating activities (7,233) (420) n.m. 18,011 19,322 (7) Funds from operations (1) 20,393 17,996 13 37,999 36,732 3 Funds from operations per share - diluted (1) 0.70 0.64 9 1.33 1.30 2 Dividends paid 5,169 5,074 2 15,375 13,516 14 Dividends per share (2) 0.18 0.18 - 0.54 0.48 13 Capital expenditures 6,918 9,660 (28) 28,547 46,118 (38) Financial Position (unaudited) Sept. 30, 13 Dec. 31, 12 Working capital 65,575 45,480 44 Long-term debt 105,242 80,000 32 Shareholders equity 121,426 115,095 6 Common shares outstanding 28,808,766 28,241,371 2 n.m. - not meaningful (1) Refer to non-GAAP measures section. (2) Dividends paid by the Corporation on a per share basis in the period. Outlook For the third quarter of 2013, PHX Energy is pleased to report record consolidated activity and financial results, for any given quarter. The achievements in the quarter confirm the Corporations strategy is targeting the right direction and its execution is creating the desired results, despite industry drilling levels being lower than the prior year. As part of this effort, PHX Energy continues to focus on improving its field operating margins. Overall, the Corporation believes it is well positioned and this can be directly accredited to the experience and motivation of its more than 900 employees. In Canada, the Corporations goal is to be the choice provider in key drilling areas. The wet weather conditions typical of the second quarter persisted into July, which limited operators access to build leases and deploy operations; thus, the expected robust level of horizontal drilling activity anticipated never materialized. Despite these industry conditions, PHX Energys client base and market share in many important basins increased as a result of the relentless focus on continual improvement in customer satisfaction. A strategic objective that has persisted over the past few years is growth in the lucrative and large United States horizontal drilling market. This remains key to PHX Energy, and in the third quarter progress was made with the addition of new clients and an increase in operating days. Although, the Corporation had anticipated a greater level of growth, it believes the performance achieved thus far by the superior marketing and operating personnel speaks volumes. It is expected that the US operations momentum and brand awareness will only increase in future quarters. The Corporations initiatives to diversify its operations internationally also continued to produce positive results in the third quarter. In Colombia, recent strides have been made which improved activity levels and profitability and PHX Energy believes this performance will be sustained. Additionally, Russia continues to present many opportunities for the Corporation. It is a very large market and PHX Energy is developing stronger client relationships as it further establishes its reputation. The Corporation is committed to the international segments where market share growth can be achieved and positive operating margins are attainable. As such future growth and profitability are forecasted for international operations, albeit these gains may come at a slower pace in certain quarters. PHX Energys outlook for the remainder of the year is that overall North American drilling activity levels will remain stagnant. However, there are many oil and natural gas basins that are looked upon by the industry as favorable for horizontal drilling applications as operators continue to embrace this technology. In addition, in the international areas the Corporation occupies similar opportunities exist, and as such PHX Energy anticipates growth in operating days and market share in almost all of its operating segments in the fourth quarter of 2013.
Posted on: Sun, 10 Nov 2013 00:43:08 +0000
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