CALGARY, Aug. 12, 2015 /CNW/ – Petrowest Corporation (“Petrowest”) (TSX:PRW) announced today its consolidated financial results for the three and six month periods ended June 30, 2015.
Rick Quigley, Chief Executive Officer, stated that “our strategy of operating a diversified business model accompanied by the cost saving initiatives implemented by the Company has helped in minimizing the impact of the slowdown in our energy related operations. The Company's mobile aggregate rock crushing operations in the Civil division got an early start to the season and have since been operating at full capacity for the majority of the second quarter. Further, the Company anticipates that the Civil division will continue to have all nine mobile crushing plants operating for the remainder of the crushing season. Following both the slowdown in oil and gas drilling activity during the first quarter of 2015, and early spring breakup and associated road bans, the Construction group benefitted in the second quarter from the early lifting of road ban restrictions in June, as well as the resumption of drilling activity in northeastern British Columbia.” Approximately 40% of Petrowest's total revenue from operations is directly related to Western Canadian oil and gas activity, with approximately 90% of this exposure relating to Natural Gas drilling activity. Of note, both the Civil division and certain parts of the Transportation division are not as sensitive to commodity prices.
KEY QUARTERLY HIGHLIGHTS
During the second quarter, Petrowest sold a number of pieces of equipment, consistent with our corporate strategy. At the June 25, 2015 Ritchie Brothers auction in Grande Prairie, 68 pieces of equipment were sold, primarily from the Construction and Civil divisions, for net proceeds of $2.4 million. The prices received on this equipment were in line with our April 2015 third party appraisal values. Equipment prices at recent Ritchie Brothers auctions have been supported by the depreciating Canadian dollar which has resulted in increased foreign participation. The additional foreign involvement has resulted in a significant amount of equipment leaving the geographic areas in which Petrowest operates.
Petrowest previously announced that it has been awarded a sub-contract on the workforce housing facility for the Site C hydro-electric project in northeastern British Columbia. The Two Rivers Lodging Group was selected by BC Hydro as the preferred proponent for the construction of the workforce housing facility (announced May 4, 2015). BIRD Construction Inc., part of the Two Rivers Lodging Group consortium, has selected Petrowest's wholly-owned subsidiary, Petrowest Construction BC Ltd., for site preparation work. The project commenced during the first week of August and has an approximate value of $7.3 million. In aggregate, Petrowest has approximately $33 million of successful contract awards in the infrastructure and energy sector following the end of the second quarter.
In addition, Petrowest previously announced that its syndicate of lenders, led by Bank of Montreal, has granted a waiver to September 30, 2015 of non-compliance with certain financial covenants in the Company's syndicated credit facility. Petrowest undertook to enter into an amending agreement to the syndicated credit facility, on or before September 30, 2015, that includes modified financial covenants through the third quarter of 2016.
Finally, as a continuation of the Company's cost cutting initiatives, the Fort McMurray field office was closed in order to reduce headcount and overhead expenses. The operations have been absorbed into our Grande Prairie construction office and there will be no impact to our ability to service the area.
FINANCIAL HIGHLIGHTS
In the three months ended June 30, 2015 compared to the same period in 2014, the Company:
In the six months ended June 30, 2015 compared to the same period in 2014, the Company:
FINANCIAL RESULTS
|
Three months ended |
Six months ended |
||||||
|
($000's) |
2015 |
2014 |
2015 |
2014 |
|||
|
Revenue |
42,499 |
55,439 |
80,717 |
116,499 |
|||
|
Operating expense |
(38,486) |
(50,540) |
(76,471) |
(98,663) |
|||
|
Gross margin |
4,013 |
4,899 |
4,246 |
17,836 |
|||
|
General and administrative |
(1,733) |
(1,863) |
(3,223) |
(3,747) |
|||
|
Adjusted EBITDA |
2,280 |
3,036 |
1,023 |
14,089 |
|||
|
Amortization of property and equipment |
(7,732) |
(4,843) |
(15,128) |
(9,834) |
|||
|
Amortization of intangible assets |
(114) |
(89) |
(284) |
(288) |
|||
|
Share based compensation |
(475) |
(337) |
(958) |
(645) |
|||
|
Gain on disposal of property and equipment |
139 |
97 |
103 |
144 |
|||
|
Foreign exchange (gain) loss |
(8) |
– |
75 |
– |
|||
|
Operating (loss) profit |
(5,910) |
(2,136) |
(15,170) |
3,466 |
|||
|
Net finance expense |
(1,296) |
(1,071) |
(2,545) |
(2,138) |
|||
|
Net (loss) income and comprehensive (loss) income before income tax |
(7,206) |
(3,207) |
(17,715) |
1,328 |
|||
|
Deferred income tax (recovery) expense |
(777) |
(970) |
(3,443) |
39 |
|||
|
Net and comprehensive (loss) income |
(6,429) |
(2,237) |
(14,272) |
1,289 |
|||
|
Total assets |
175,362 |
166,466 |
175,362 |
166,466 |
|||
|
Total long term liabilities |
67,715 |
92,920 |
67,715 |
92,920 |
|||
|
Funds from (used in) Operations |
1,051 |
2,106 |
(1,242) |
12,231 |
|||
OPERATIONAL OUTLOOK
Looking forward, Petrowest is approaching an exciting period with major industry transformational events approaching which includes:
The Site C hydro-electric project is a proposed dam and hydroelectric generating station on the Peace River in northeastern British Columbia. In 2014 the Company, along with Acciona Infrastructure Canada Inc. and Samsung E&C America, Inc., were selected as one of four consortiums qualified to bid to provide the main civil work. In December 2014, the project received the final approval by the Province of British Columbia and construction is scheduled to commence in the summer 2015. Site preparation activities are underway as of the first week of August 2015 and the main civil works technical and financial bids are due on September 18, 2015 and October 9, 2015 respectively, as per www.sitecproject.com.
With regards to LNG, Petrowest continues to see encouraging signs for both current and future opportunities. With an increasing global demand for LNG and more favorable global pricing, the industry continues to work towards becoming a global supplier. Currently there are several projects proposed to provide liquefaction and export of natural gas. In addition, there are several gas pipelines proposed to be built from northeastern British Columbia to the coast.
The Company believes that the impact of these initiatives will continue to be significant for the Company and the industry as a whole, and will further drive increased drilling activity in northeastern British Columbia. Petrowest is well positioned in this area and has long-standing customer relationships with most of the significant natural gas producers. The Company recognizes that there are risks associated with the completion of these projects which include proving out sufficient natural gas supply, capital constraints relating to the construction of the projects and commodity price differentials.
Looking forward to the second half of 2015, activity levels in northeastern British Columbia have increased following spring break up, including additional infrastructure projects associated with both Site C and BC LNG, which positively signals stronger activity levels in the back half of the year for the Construction division. The Company anticipates that the Civil division will continue to have all nine mobile crushing plants operating for the remainder of the season. With our diversified customer base within the energy, forestry, industrial and government sectors, fleet size and quality of personnel, the Company believes it is well positioned to emerge from this challenging environment as a stronger and more profitable company.
In addition, Petrowest has updated its corporate presentation which can be found at www.petrowestcorp.com.
SELECTED FINANCIAL INFORMATION AND NON-IFRS MEASURES
Selected financial information for the three and six month periods ended June 30, 2015 and 2014 is set out above and includes the following non-IFRS financial measures: Gross margin, Gross margin percentage, Adjusted EBITDA, Adjusted EBITDA margin percentage and Funds from (used in) Operations. This information should be read in conjunction with the consolidated financial statements for the three and six month ended June 30, 2015 and the Company's Management, Discussion and Analysis (“MD&A”), available under the Company's profile on the SEDAR website at www.sedar.com. Further information respecting the non-IFRS financial measures is contained in the Company's MD&A.
FORWARD LOOKING INFORMATION
This news release contains forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “achievable”, “believe”, “expect”, “estimate”, “plan”, “intend”, “project”, “may”, “should”, “could”, “predict”, “will”, or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements and information are based on Petrowest's current beliefs as well as assumptions made by and information currently available to Petrowest concerning anticipated business performance. Although management of Petrowest considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking statements are subject to many external variables that are beyond Petrowest's control, such as fluctuating prices for crude oil and natural gas, changes in drilling activity, and general local and global economic, political, business and weather conditions. If any of these or other uncertainties materialize, the actual results of Petrowest may vary materially from those expected.
ABOUT PETROWEST
Petrowest is an Alberta corporation involved in pre-drilling and post-completion energy services as well as industrial and civil infrastructure projects, gravel crushing and hauling for non-energy sector customers. Petrowest's primary operations are based in the Grande Prairie area of northern Alberta and in northeastern British Columbia.
SOURCE Petrowest Corporation