Flint Energy Services Ltd. Announces Fourth Quarter & 2009 Annual Earnings Release
(TSX - FES)
CALGARY, March 18 /PRNewswire-FirstCall/ - Flint Energy Services Ltd. (Flint, the Company) released its fourth quarter and 2009 annual results today after markets closed.
2009 Highlights
Cash increased to $163.9 million as at December 31, 2009 compared to $1.4 million at the end of 2008 due to improved effectiveness and timeliness of billings and collections. Accounts receivable and Revenue in excess of billings decreased by $107.0 million and $106.8 million respectively, representing a collective decrease of $213.8 million or 41.0% compared to the prior year.
Increased cash flow from operations resulted in the full repayment of the revolving operating loan of $40.9 million in the second quarter of 2009. As a result of sufficient cash flow from operations, the Company did not have to draw on its short term borrowing facilities.
For the year ended December 31, 2009, revenues were $1,876.5 million down from $2,314.6 million in 2008, representing a decrease of $438.1 million or 18.9% as a result of lower drilling activity throughout fiscal 2009. United States revenues were $313.0 million or 16.7% of consolidated revenues compared to $519.5 million or 22.4% of consolidated revenues in 2008.
General and administrative expenses for 2009 decreased $24.5 million or 14.7% to $141.7 million compared to $166.2 million in 2008. The Company implemented many cost control measures including salary reductions in 2009, however due to lower revenue levels, general and administrative expenses increased slightly to 7.6% from 7.2% as a percentage of revenue.
EBITDA for the year ended December 31, 2009 was $149.2 million, down $52.5 million or 26.0% from $201.7 million in 2008. The decrease in EBITDA was primarily a result of the decrease in revenues from 2008. In the current year, Facility Infrastructure and Maintenance Services' percentage of total revenue was larger in comparison to 2008. As these segments primarily have lower margins due to their lower risk profile, this resulted in lower overall EBITDA.
For the year ended December 31, 2009, net earnings were $46.5 million ($1.01 per common share - diluted) compared to a net loss of $341.0 million ($7.19 per common share - diluted) in 2008. In 2008 an impairment charge of $442.5 million, which was partially offset by a future income tax reduction of $26.4 million, reduced net earnings. The 2009 net earnings of $46.5 million ($1.01 per common share - diluted) compared to adjusted net earnings excluding the after-tax impairment charge were $75.1 million in 2008 ($1.58 per common share - diluted).
W. J. (Bill) Lingard said, "In spite of a 50% decline in activity in both Canada and the United States, our revenues and earnings performance in 2009 demonstrated that our strategy of diversification, both in services provided and our geographic reach, has helped the Company weather one of the worst downturns we have seen in recent memory. We saw the decline in activity coming in late 2008 and we undertook cost cutting measures early in 2009, which helped maintain our position of financial strength during a difficult year."
Quarter Four
Revenues for the three months ended December 31, 2009 were $462.5 million compared to $681.5 million in the comparative quarter of 2008, representing a decrease of $219.0 million or 32.1%. The decrease in revenues for the fourth quarter of fiscal 2009 was primarily the result of declining activities in the Production Services and Oilfield Services segments over the same quarter in the prior year.
EBITDA for the three months ended December 31, 2009 was $43.4 million, down $17.9 million from $61.3 million in the comparative period in 2008. However, quarterly EBITDA margins as a percentage of revenue increased to 9.4% compared to 9.0% in 2008. Facility Infrastructure EBITDA was $23.8 million, up $15.1 million from $8.7 million in the comparative period in 2008. Facility Infrastructure's fourth quarter EBITDA margins were 14.8% compared to 4.4% the previous year. Maintenance Services EBITDA of $5.5 million was flat to 2008, however, EBITDA margins improved to 7.3%, from 6.3% in the fourth quarter of 2008. These gains were offset by declines in EBITDA margins in Production Services, 6.7% compared to 11.9%, Oilfield Services, 4.9% compared to 11.0%.
General and administrative expenses for the three months ended December 31, 2009 decreased $7.0 million or 15.4% to $38.4 million, compared to $45.4 million in 2008. General and administrative expenses as a percentage of revenue in the quarter were 8.3% compared to 6.7% in the comparative quarter of 2008, due to lower revenue levels in 2009.
During the three months ended December 31, 2009, the Company's net earnings were $14.5 million compared to a net loss of $208.2 million in quarter four of 2008. The net loss in 2008 was the result of the after-tax impairment charge of $236.3. Net earnings in the fourth quarter of 2009 represented a decrease of $13.6 million or 48.4% ($0.28 per common share - diluted) from adjusted net earnings of $28.1 million in quarter four of 2008, excluding the after-tax impairment charge.
Outlook
As the first quarter of 2010 comes to a close, the oil and gas industry is showing signs of a moderate recovery in drilling and production activities in both Canada and the United States, with a focus on new unconventional plays in which the Company is seeing many opportunities for growth. This recovery has been driven by improving energy prices, strengthening demand for energy, and new technology. With Canadian and United States drilling expected to increase approximately 20% over 2009 levels, the Company expects its Production Services and Oilfield Services segments to see better utilization in 2010, especially in the unconventional plays.
The Company has opened, or is planning to open new locations to support both drilling and production services in new unconventional basins including the Horn River in Northeast British Columbia, Bakken in both Saskatchewan and North Dakota, Marcellus in both West Virginia and Pennsylvania, and the Woodford Shale in Louisiana.
The Facility Infrastructure division will complete work on three major projects in mid-2010: Suncor Energy's Firebag 3 SAGD project, Shell's Albian Sands project and the StatOil Canada's Leismer project. While work and revenues in this division will slow down in 2010 compared to the last few years, several new major oil sands projects have been sanctioned which the Company is targeting to add to its backlog for 2011 and 2012. With the announcement of resumption of work on Suncor Energy's Firebag 3 project, the decision to proceed by ConocoPhillips on their Surmont SAGD project, and approval of Husky's Sunrise SAGD project, the next phases of oil sands production growth have been confirmed, and as a result, the tendering of construction work by the Company is being actively pursued at this time.
Similarly, the Company's Maintenance Services segment including its 50% owned subsidiary company, FT Services, continues to develop its market presence and prove its successful asset maintenance model with its existing customers. In 2010, FT Services will be managing two significant maintenance turnarounds for Shell and Suncor Energy, and is actively marketing its services to other producers in oil sands as well as refining operations across Canada. The Company expects this division to show promising growth over the next few years as major clients consider replacing their existing asset management programs with FT Services' maintenance model.
Overall, the outlook for 2010 is that it will improve moderately for the early cycle and maintenance businesses with continued competitive pressures on pricing, and management's continuing focus on reducing costs and consolidating operations where possible, while expanding into new areas as opportunities arise.
A conference call with management to discuss the Company's 2009 results and outlook for 2010 is scheduled for 11:00 AM Eastern Time on Friday, March 19, 2010. Details on how to participate in or listen to the call are available on the Company's website: www.flintenergy.com.
A summary of financial information follows. Complete copies of the Company's 2009 MD&A and Consolidated Annual Financial Results are available on www.SEDAR.com and on the Company's website: www.flintenergy.com.
Consolidated Fourth Quarter Financial Results
(Millions of Canadian dollars, except share data)
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(For the three months Increase
ended December 31) 2009 2008 (decrease) % Change
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Revenue $ 462.5 $ 681.5 $ (219.0) (32.1%)
Direct costs 380.9 575.5 (194.6) (33.8%)
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81.6 106.0 (24.4) (23.0%)
General and
administrative expenses 38.4 45.4 (7.0) (15.4%)
Amortization 14.5 13.3 1.2 9.0%
Share based compensation
expense 2.4 1.1 1.3 118.2%
Interest expense, net of
interest income 4.1 4.9 (0.8) (16.3%)
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Adjusted earnings before
income taxes 22.2 41.3 (19.1) (46.2%)
Income taxes, current
and future 7.7 13.2 (5.5) (41.7%)
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Adjusted net earnings 14.5 28.1 (13.6) (48.4%)
per common share
- basic $ 0.32 $ 0.60 $ (0.28) -
per common share
- diluted $ 0.32 $ 0.60 $ (0.28) -
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Impairment charge - 252.1 (252.1) -
Future income taxes
related to impairment - (15.8) 15.8 -
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Net earnings (loss) 14.5 (208.2) 222.7 (107.0%)
per common share
- basic $ 0.32 $ (4.44) $ 4.76 -
per common share
- diluted $ 0.32 $ (4.44) $ 4.76 -
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EBITDA 43.4 61.3 (17.9) (29.2%)
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Selected financial information for each reportable business segment for
the fourth quarter is as follows:
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(in thousands
of Canadian Increase %
dollars) 2009 2008 (decrease) Change
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Revenue by
reportable
segment
Production
Services $ 168,844 37% $ 323,180 47% $ (154,336) (47.8%)
Facility
Infra-
structure 160,898 35% 194,568 29% (33,670) (17.3%)
Oilfield
Services 57,331 12% 76,315 11% (18,984) (24.9%)
Maintenance
Services 75,382 16% 87,495 13% (12,113) (13.8%)
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Total $ 462,455 100% $ 681,558 100% $ (219,103) (32.1%)
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EBITDA by
reportable
segment
Production
Services $ 11,347 26% $ 38,619 63% $ (27,272) (70.6%)
Facility
Infra-
structure 23,800 55% 8,676 14% 15,124 174.3%
Oilfield
Services 2,817 6% 8,427 14% (5,610) (66.6%)
Maintenance
Services 5,466 13% 5,578 9% (112) (2.0%)
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Total $ 43,430 100% $ 61,300 100% $ (17,870) (29.2%)
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Consolidated Annual Financial Results
(Millions of Canadian dollars, except share data)
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% of % of Increase %
2009 Revenue 2008 Revenue (decrease) Change
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Revenue $ 1,876.5 100.0% $ 2,314.6 100.0% $ (438.1) (18.9%)
Direct costs 1,586.9 84.6% 1,948.4 84.2% (361.5) (18.6%)
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289.6 15.4% 366.2 15.8% (76.6) (20.9%)
General and
administrative
expenses 141.7 7.6% 166.2 7.2% (24.5) (14.7%)
Amortization 57.8 3.1% 66.5 2.9% (8.7) (13.1%)
Share based
compensation
expense 4.9 0.3% 4.6 0.2% 0.3 6.5%
Interest
expense, net
of interest
income 16.9 0.9% 19.9 0.9% (3.0) (15.1%)
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Adjusted
earnings
before income
taxes 68.3 3.6% 109.0 4.7% (40.7) (37.3%)
Income taxes,
current and
future 21.8 1.2% 33.9 1.5% (12.1) (35.7%)
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Adjusted net
earnings 46.5 2.5% 75.1 3.2% (28.6) (38.1%)
per common
share -
basic $ 1.02 $ 1.58 $ (0.56) -
per common
share -
diluted $ 1.01 $ 1.58 $ (0.57) -
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Impairment
charge - - 442.5 19.1% (442.5) -
Future income
taxes related
to impairment - - (26.4) (1.1%) 26.4 -
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Net earnings
(loss) 46.5 2.5% (341.0) (14.7%) 387.5 -
per common
share -
basic $ 1.02 $ (7.19) $ 8.21 -
per common
share -
diluted $ 1.01 $ (7.19) $ 8.20 -
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EBITDA 149.2 7.9% 201.7 8.7% (52.5) (26.0%)
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Selected annual financial information for each reportable business
segment is as follows:
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(in thousands
of Canadian Increase %
dollars) 2009 2008 (decrease) Change
-------------------------------------------------------------------------
Revenue by
reportable
segment
Production
Services $ 792,048 42% $1,146,909 50% $ (354,861) (30.9%)
Facility
Infra-
structure 592,462 32% 585,449 25% 7,013 1.2%
Oilfield
Services 212,442 11% 278,813 12% (66,371) (23.8%)
Maintenance
Services 279,584 15% 303,438 13% (23,854) (7.9%)
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Total $1,876,536 100% $2,314,609 100% $ (438,073) (18.9%)
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EBITDA by
reportable
segment
Production
Services $ 45,669 31% $ 112,628 56% $ (66,959) (59.5%)
Facility
Infra-
structure 70,751 47% 43,401 22% 27,350 63.0%
Oilfield
Services 16,271 11% 25,781 12% (9,510) (36.9%)
Maintenance
Services 16,537 11% 19,861 10% (3,324) (16.7%)
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Total $ 149,228 100% $ 201,671 100% $ (52,443) (26.0%)
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Consolidated Financial Position as of December 31, 2009
(Millions of Canadian dollars, except share data)
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Increase
2009 2008 (decrease) % Change
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Current assets $ 551.2 $ 633.5 $ (82.3) (13.0%)
Current liabilities 194.4 319.7 (125.3) (39.2%)
Net working capital 356.8 313.8 43.0 13.7%
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Long-term debt 239.1 310.5 (71.4) (23.0%)
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Current 16.7 60.3 (43.6) (72.3%)
Non-current 222.4 250.2 (27.8) (11.1%)
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Total assets 974.7 1,088.9 (114.2) (10.5%)
Total liabilities 459.4 606.7 (147.3) (24.3%)
Total equity 515.3 482.2 33.1 6.9%
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Days sales outstanding
(DSO) 69 79 (10) (12.7%)
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Flint Energy Services Ltd. is a market leader providing an expanding range of integrated products and services for the oil and gas industry including: production services; infrastructure construction; oilfield transportation; and maintenance services. Flint, with more than 10,000 employees, provides this unique breadth of products and services through over 60 strategic locations in the oil and gas producing areas of Western North America, from Inuvik in the Northwest Territories to Mission, Texas on the Mexican border. Flint is a preferred provider of infrastructure construction management, module fabrication, maintenance services for upgrading, and production facilities in Alberta's oil sands sector.
FORWARD LOOKING STATEMENTS
Certain statements in this news release are "forward-looking statements", which reflect current expectations of the management of Flint regarding future events or Flint's future performance. All statements other than statements of historical fact contained in this news release may be forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking statements. Flint believes that the expectations reflected in such forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements are made as of the date of this news release and Flint assumes no obligation to update or revise them to reflect new events or circumstances, except as expressly required by applicable securities law. Further information regarding risks and uncertainties relating to Flint and its securities can be found in the disclosure documents filed by Flint with the securities regulatory authorities, available at www.sedar.com.
SOURCE Flint Energy Services Ltd.
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