Fourth Quarter Highlights
- PHX Energy
generated adjusted EBITDA(1) of $17.9 million and adjusted EBITDA
excluding the impact of share-based compensation(1) of $20.9
million.
- Positive net
earnings of $8.7 million were recorded.
- Revenue grew 85
percent quarter-over-quarter to $105.4 million.
- In light of the
Corporation’s balance sheet strength and improving adjusted EBITDA,
the Board has approved another increase to the quarterly dividend
to $0.075 per common share from the previous $0.05 per common share
effective for the dividend payable on April 18, 2022; an increase
of 50 percent.
Year End Highlights
- The Corporation
achieved its highest annual adjusted EBITDA(1) since 2014,
generating adjusted EBITDA(1) of $60.4 million and adjusted EBITDA
excluding the impact of share-based compensation(1) of $73.7
million.
- Net earnings of
$22.7 million were recorded in the 2021-year which was also the
highest level since 2014.
- Consolidated
annual revenue increased by 42 percent to $350 million.
- In 2021, the
Corporation spent $35.3 million in capital expenditures which were
primarily directed towards Atlas motors, Velocity systems, and
PowerDrive Orbit RSS.
- PHX Energy
currently anticipates spending $47.7 million in capital
expenditures during 2022, of which $15.5 million is expected to be
allocated to maintenance of existing drilling and other equipment
and $32.2 million allocated to growth capital.
- The Corporation
maintained strength in its financial position and reported a cash
balance of $24.8 million with no bank loans outstanding.
- We published our
first ESG and Sustainability Report in March of 2021 with our
second report to be released in upcoming weeks.
Shareholder Value
Highlights
- We intend to
protect and preserve our balance sheet strength to ensure we
execute on growth strategies and reward shareholders.
- We plan to
commit capital expenditures to expand our high performance
technologies and leverage our strong operational performance to
capture market share.
- We have
increased our dividend for a second time since we reinstated it
just over a year ago and we believe we are an outlier in our
sector.
- We will continue
to leverage our NCIB to buy back shares and bolster our market
position. Since 2017 we have re-purchased and cancelled 17 percent
of our shares outstanding.
_______________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.
Outlook
In 2021 we achieved strong operational and
financial results and we are proud of our performance and team that
makes each of these achievements possible. Improved industry
conditions are aiding the recovery of our share price and we
continue to leverage our balance sheet strength to reward
shareholders in as many ways as we can.
We are in a favorable phase of the commodity
cycle, and with the improved industry conditions in the first
quarter, we continue to see strong demand for our high performance
fleet in North America. We anticipate that this momentum will
continue in both Canada and the US throughout 2022. We have a
proven track record of setting new drilling records and we are well
positioned to deliver on operators’ mandate to drill faster and
more efficiently as we continue to allocate our capital
expenditures towards our high performance technologies. With our
2022 capital expenditures we intend to increase our Atlas fleet by
150 motors and our Power Drive Orbit RSS fleet by 9 systems. We
have leveraged our enviable financial position to proactively order
materials and equipment to mitigate the supply chain disruption
that became evident in the second half of 2021. Even with
these efforts there were some delays and we experienced some
shortages in the first quarter of the year. Our team is working
diligently to manage our fleet utilization to ensure we are
capitalizing on opportunities to grow our market share.
The strengthening economic and commodity price
environment that is driving increased activity in our North
American operations in recent months is also having a positive
impact on our international regions. Albanian operations,
which have been suspended since the onset of the pandemic, are
commencing in the first quarter, and we expect to be active on one
rig in March. Additionally, we are seeing improved activity
levels in Russia, and at this time we are continuing operations in
the region as the agreement for the sale of this division was
formally terminated. We expect to strengthen profitability in
Russia in 2022 and continue to explore alternative opportunities
for the sale of the division. Currently there is volatility in
Russia due to the geopolitical environment and we are proactively
monitoring the situation. In 2021 the Russian division represented
3 percent of our consolidated revenue and less than 1 percent of
adjusted EBITDA. We believe our greatest opportunity for
international growth remains in the MENA region as this market
competes with North America for the most active in the world.
As a technology provider to NESR, we are awaiting the award of
tenders submitted, as the result of Atlas and Velocity being
certified for operation in the region. We are optimistic that
the tenders will be successful based on the strong operational
performance demonstrated in the qualification period and that we
will see a gradual increase to revenue generating activity in the
region. We acknowledge the importance that our
stakeholders place on responsible, ethical and fair business
practices, including those related to sustainability and
environmental stewardship. We are committed to transparently
communicating our performance in these areas and anticipate
releasing our second ESG and Sustainability Report in the upcoming
weeks. We continue to evaluate how we can reduce our
operation’s environmental impact as well as contribute to industry
change. We are working to align our ESG strategy and reporting with
SASB and have provided valuable enhancements to our disclosure in
the 2021 report.
In 2022 we will continue our strategy of
creating a strong position as a technology leader, focusing on the
most lucrative drilling markets globally, retaining the best people
in the industry and remaining disciplined in our cost management.
We believe these areas of focus are the drivers that have led us to
outperform operationally and financially, which in turn has allowed
us to deliver on our commitment to our shareholders.
Michael Buker,
President February
23, 2022
Financial Results
For the year-ended December 31, 2021, the
Corporation achieved its highest adjusted EBITDA(1) and net
earnings since 2014. In the 2021-year, PHX Energy realized an
adjusted EBITDA of $60.4 million (17 percent of revenue), a 52
percent improvement compared to the $39.7 million (16 percent of
revenue) reported in the 2020-year. Net earnings for the 2021-year
were $22.7 million compared to a net loss of $7.8 million in the
2020-year. The North American drilling industry continued to rally
as it exited 2020, and PHX Energy particularly capitalized on the
US drilling activity’s momentum while maintaining strong cost
controls across all regions. Adjusted EBITDA and net earnings in
the 2021-year included share-based compensation of $13.3 million
(2020 - $2.1 million) and government grants of $8.8 million (2020 -
$5.4 million). Excluding the impact of share-based compensation,
adjusted EBITDA was $73.7 million in 2021 (2020 - $41.9
million).
In the three-month period ended December 31,
2021, adjusted EBITDA more than doubled to $17.9 million (17
percent of revenue) from $8.5 million (15 percent of revenue) in
the comparable 2020-quarter. Net earnings improved to $8.7 million
in the fourth quarter of 2021 from $2 million in the comparable
three-month period of 2020. Adjusted EBITDA and net earnings in the
2021-quarter included share-based compensation of $3 million (2020
- $3.1 million) and government grants of $0.1 million (2020 - $3
million). Excluding the impact of share-based compensation,
adjusted EBITDA was $20.9 million for the 2021 three-month period
(2020 - $11.5 million).
The Corporation’s consolidated revenue for the
2021-year increased by 42 percent to $350 million from $246.4
million in 2020 while consolidated operating days increased by 31
percent to 22,244 days from 16,980 days in 2020. For the fourth
quarter of 2021, the Corporation generated revenue of $105.4
million as compared to $56.8 million in the 2020-quarter, an
increase of 85 percent. Revenue growth in the 2021-year and fourth
quarter was primarily driven by increased activity in the US and
the deployment of and high demand for the Corporation’s high
performance technologies, in particular, the Atlas High Performance
motors (“Atlas”), Velocity Real-Time systems (“Velocity”), and
PowerDrive Orbit Rotary Steerable Systems (“RSS”).
Exiting the 2021-year, the Corporation
maintained strength in its financial position and reported a cash
balance of $24.8 million with no bank loans outstanding.
________________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.
DividendsThe Board reviews the
Corporation’s dividend policy on a quarterly basis. In light of the
Corporation’s balance sheet strength and improving adjusted EBITDA,
the Board has approved another increase to the quarterly dividend
to $0.075 per common share from the previous $0.05 per common share
effective for the dividend payable on April 18, 2022; an increase
of 50 percent.
In December 2020, the Board reinstated the
quarterly dividend program and declared a cash dividend of $0.025
per common shares. In the third-quarter of the 2021-year, the Board
approved a 100 percent increase to the quarterly cash dividend to
$0.05 per common share.
On December 15, 2021, PHX Energy declared a cash
dividend of $0.05 per common share and an aggregate of $2.5 million
was paid on January 17, 2022 to shareholders of record at the close
of business on December 31, 2021.
Capital SpendingFor the year
ended December 31, 2021, the Corporation spent $35.3 million in
capital expenditures, as compared to $25.9 million in capital
expenditures in the previous year. With oil prices surpassing
pre-pandemic levels and ongoing global supply chain disruptions,
the Corporation is maintaining a proactive strategy focused on
growing its fleet of high performance technologies to benefit from
the robust demand for oil and gas services. Capital expenditures in
the 2021-year were primarily directed towards Atlas motors,
Velocity systems, and PowerDrive Orbit RSS. Of the total capital
expenditures, $23.1 million was spent on growing the Corporation’s
fleet of drilling equipment (2020 - $17.8 million) and the
remaining $12.2 million was spent on maintenance of the current
fleet of drilling and other equipment (2020 - $8.1 million).
The approved capital expenditure budget for the
2021-year was $43 million. Due to global supply chain disruptions,
the Corporation received only $35.3 million of drilling and other
equipment in 2021. The remaining $7.7 million from the 2021 budget
has been carried forward into the 2022 capital expenditure budget.
PHX Energy currently anticipates spending $47.7 million in capital
expenditures during 2022, of which $15.5 million is expected to be
allocated to maintenance of existing drilling and other equipment
and $32.2 million allocated to growth capital.
As at December 31, 2021, the Corporation has
capital commitments to purchase drilling and other equipment for
$35.6 million, $24.4 million of which is growth capital and
includes $21 million for performance drilling motors, $2.2 million
for Velocity systems, and $1.2 million for other equipment.
Equipment on order as at December 31, 2021 is expected to be
delivered within the second half of 2022, with exception of RSS
orders which are anticipated in the first quarter of the year.
The Corporation currently possesses
approximately 456 Atlas motors, comprised of various configurations
including its 5.13", 5.25", 5.76", 6.63", 7.12", 7.25", 8" and 9"
Atlas motors, 95 Velocity systems, and 33 PowerDrive Orbit RSS, the
largest independent fleet in North America.
Responding to COVID-19In the
2021-year, COVID-19 and resulting government responses continued to
have a material impact on businesses worldwide. With vaccines
becoming widely available, there was an easing of restrictions by
most governments which lead to improved industry and economic
conditions in the year. The situation is dynamic and the ultimate
duration and magnitude of the impact on the economy and the
financial effect on the Corporation is not known at this time.
Currently there are mounting supply chain challenges that have
resulted from the impact of COVID-19 and these are creating
shortages and inflation related to the products and services
required within the energy sector, including within the
Corporation’s supply chain. PHX Energy has been proactive with
efforts to lessen the supply chain disruptions’ impact on its
operations and remains diligent in monitoring, evaluating and
adjusting its business costs in line with drilling activity in
North America. The Corporation will continue to implement changes
as required.
PHX Energy has and will continue to preserve a
solid financial position and retain financial flexibility through
substantial liquidity on its credit facilities. As at December 31,
2021, the Corporation has working capital(1) of $55.1 million and
approximately CAD $65 million and USD $15 million available from
its credit facilities. Additional information regarding the risks,
uncertainties and impact on the Corporation’s business can be found
throughout this Press Release, including under the headings
“Capital Spending”, “Operating Costs and Expenses”, and
“Outlook”.
Re-presentation of Assets Held for
SaleSubsequent to December 31, 2021, the Corporation
formally terminated the preliminary agreement for the sale of the
Russian division, Phoenix TSR LLC (“Phoenix TSR”). However,
discussions are continuing with the interested party to reach an
alternative agreement. At this time, there is no formal agreement
and if one is entered there can be no assurance that the sale of
the Russian division will be completed on the terms agreed upon or
at all. Accordingly, the comparative results for the year ended
December 31, 2020 have been re-presented to include the assets and
liabilities of Phoenix TSR as held for use and the operations of
Phoenix TSR as part of continuing operations and reporting under
the international cash generating unit (“CGU”).
As part of the reclassification from assets held
for sale and to held for use, the Corporation recognized a loss on
remeasurement of $1.2 million on the long-lived assets owned by
Phoenix TSR. The loss on remeasurement is reported in other income
on the Consolidated Statements of Comprehensive Earnings
(Loss).
The oil and natural gas drilling activity in
Russia has begun to recover from the downturn caused by the
pandemic in 2020 and early 2021, and PHX intends to continue to
operate within the country and evaluate the current sale
opportunity or other future opportunities as they arise.
________________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.
Technology ArrangementIn the
first quarter of 2021, the Corporation announced it had entered
into a technology arrangement with National Energy Services
Reunited Corp (“NESR”). Pursuant to the arrangement, PHX Energy
will provide its premium downhole technology for use in NESR’s
directional drilling operations in the Middle East and North Africa
(“MENA”) regions. Access to NESR’s international markets is
anticipated to provide opportunities to further extend the global
reach and reputation of the Corporation’s high performance
technologies and equipment. Velocity was certified as part of the
qualification process in the second quarter and in the third
quarter the Corporation successfully obtained certification for
Atlas motors as well. With the successful qualification of both
state-of-the-art technologies, NESR is now actively participating
in the tendering process with Atlas and Velocity. Based on
preliminary drilling results during the qualification process, the
Corporation is optimistic that the tenders will be successful and
through its arrangement will be an active supplier in the region.
It is anticipated that the tender process will take some time and
the Corporation is expecting to increase activity levels in the
region in the 2022-year.
Shares Held in TrustIn the
second quarter of 2021, the Corporation amended its cash-settled
share-based retention award plan (the “RAP”) to permit the
settlement of restricted and performance awards with, at the option
of the Corporation, either cash or common shares acquired by an
independent trustee in the open market from time-to-time for such
purposes. Pursuant to the terms of the RAP, if common shares are
used to settle awards, an additional multiplier to the award value
of 1.25 times is applied. Common shares acquired by the independent
trustee in the open market are held in trust for the potential
settlement of restricted and performance award values and are
netted out of share capital, including the cumulative purchase
cost, until they are distributed for future settlements. For the
year-ended December 31, 2021, the trustee purchased 1,662,537
common shares for a total cost of $7.5 million. As at December 31,
2021, 1,662,537 common shares are held in trust for purposes of the
RAP.
InvestmentsOn July 20, 2021,
PHX Energy announced a strategic investment of $3 million in a
geothermal power developer, DEEP Earth Energy Production Corp.
(“DEEP”). DEEP is currently developing a geothermal power facility
in southern Saskatchewan which stands to become the first major
geothermal power facility in Canada. The investment in DEEP
provides an opportunity for the Corporation to diversify the
business as management continues to focus on strategies to ensure
long term sustainable growth for the business. PHX Energy’s
investment in DEEP includes purchase warrants for an additional
$3.5 million equity if exercised by the Corporation. Exercise of
the warrants, which expires in three years from the initial grant
date, is at the discretion of the Corporation.
Normal Course Issuer Bid During
the third quarter of 2021, the TSX approved the renewal of PHX
Energy’s Normal Course Issuer Bid (“NCIB”) to purchase for
cancellation, from time-to-time, up to a maximum of 3,679,797
common shares, representing 10 percent of the Corporation’s public
float of common shares outstanding as at August 6, 2021. The NCIB
commenced on August 16, 2021 and will terminate on August 15, 2022
or such earlier time as the NCIB is completed or terminated by PHX
Energy. Purchases of common shares are to be made on the open
market through the facilities of the TSX and through alternative
trading systems. The price which PHX Energy is to pay for any
common shares purchased is to be at the prevailing market price on
the TSX or alternate trading systems at the time of such purchase.
Pursuant to the current NCIB, an aggregate of 1,499,900 common
shares have been purchased by the Corporation and cancelled as at
December 31, 2021.
The Corporation's previous NCIB commenced on
August 14, 2020 and terminated on August 13, 2021. Pursuant to the
previous NCIB, a total of 3,131,388 common shares were repurchased
and cancelled by the Corporation, of which 460,888 were repurchased
and cancelled in 2021.
PHX Energy has continued to use NCIBs as an
additional tool to enhance total long-term shareholder returns in
conjunction with management’s disciplined capital allocation
strategy. In 2021, the Corporation purchased and cancelled 4
percent of its total common shares outstanding as at December 31,
2020, representing 15 percent of funds from operations(1).
________________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.
Financial Highlights
(Stated in thousands of dollars except per share
amounts, percentages and shares outstanding)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
% Change |
|
2021 |
|
2020 |
|
% Change |
|
Operating Results |
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
Revenue |
105,428 |
|
56,838 |
|
85 |
|
349,920 |
|
246,402 |
|
42 |
|
|
Net earnings (loss) |
8,652 |
|
1,954 |
|
n.m. |
|
22,725 |
|
(7,771 |
) |
n.m. |
|
|
Earnings (loss) per share – diluted |
0.17 |
|
0.04 |
|
n.m. |
|
0.44 |
|
(0.15 |
) |
n.m. |
|
|
Adjusted EBITDA (1) |
17,868 |
|
8,472 |
|
111 |
|
60,382 |
|
39,719 |
|
52 |
|
|
Adjusted EBITDA excluding share-based compensation (1) |
20,889 |
|
11,538 |
|
81 |
|
73,655 |
|
41,850 |
|
76 |
|
|
Adjusted EBITDA per share – diluted (1) |
0.35 |
|
0.17 |
|
106 |
|
1.17 |
|
0.76 |
|
54 |
|
|
Adjusted EBITDA excluding share-based compensation as a percentage
of revenue (1) |
20 |
% |
20 |
% |
|
|
21 |
% |
17 |
% |
|
|
Cash Flow |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
13,777 |
|
10,131 |
|
36 |
|
45,431 |
|
67,911 |
|
(33 |
) |
|
Funds from operations (1) |
14,302 |
|
6,676 |
|
114 |
|
51,839 |
|
36,106 |
|
44 |
|
|
Funds from operations per share – diluted (1) |
0.28 |
|
0.13 |
|
115 |
|
1.00 |
|
0.69 |
|
45 |
|
|
Dividends paid per share |
0.05 |
|
- |
|
n.m. |
|
0.125 |
|
- |
|
n.m. |
|
|
Dividends paid |
2,505 |
|
- |
|
n.m. |
|
6,291 |
|
- |
|
n.m. |
|
|
Capital expenditures |
11,135 |
|
3,612 |
|
n.m. |
|
35,305 |
|
25,857 |
|
37 |
|
|
Free cash flow (1) |
8,967 |
|
2,713 |
|
n.m. |
|
34,193 |
|
22,596 |
|
51 |
|
|
Financial Position, December 31, |
|
|
|
|
|
|
|
|
Working capital (1) |
|
|
|
|
55,083 |
|
57,034 |
|
(3 |
) |
|
Net Debt (1) (2) |
|
|
|
|
(24,829 |
) |
(25,746 |
) |
(4 |
) |
|
Shareholders’ equity |
|
|
|
|
134,432 |
|
132,033 |
|
2 |
|
|
Common shares outstanding |
|
|
|
|
47,978,662 |
|
50,625,920 |
|
(5 |
) |
n.m. – not meaningful
Non-GAAP MeasuresThroughout
this Press Release, PHX Energy uses certain measures to analyze
operational and financial performance that do not have standardized
meanings prescribed under Canadian generally accepted accounting
principles (“GAAP”). These non-GAAP measures include adjusted
EBITDA, adjusted EBITDA excluding share-based compensation,
adjusted EBITDA per share, adjusted EBITDA excluding share-based
compensation as a percent of revenue, gross profit as a percentage
of revenue, gross profit as a percentage of revenue excluding
depreciation and amortization, selling, general and administrative
(“SG&A”) costs excluding share-based compensation as a
percentage of revenue, funds from operations, funds from operations
per share, free cash flow, net debt, and working capital.
Management believes that these measures provide supplemental
financial information that is useful in the evaluation of the
Corporation’s operations and are commonly used by other oil and
natural gas service companies. Investors should be cautioned,
however, that these measures should not be construed as
alternatives to measures determined in accordance with GAAP as an
indicator of PHX Energy’s performance. The Corporation’s method of
calculating these measures may differ from that of other
organizations, and accordingly, such measures may not be
comparable. Please refer to the “Non-GAAP Measures” section
following the Outlook section of this Press Release for applicable
definitions, rationale for use, method of calculation and
reconciliations where applicable.
________________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.(2) As at December 31, 2021 and 2020, the Corporation had
no bank loans outstanding and was in a cash positive position.
Revenue
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Revenue |
105,428 |
56,838 |
85 |
|
349,920 |
246,402 |
42 |
In the fourth quarter of 2021, PHX Energy
achieved its highest level of quarterly revenue since the fourth
quarter of 2014. This was achieved despite the US industry drilling
activity not having fully recovered to pre-pandemic levels. For the
three-month period ended December 31, 2021, consolidated revenue
increased by 85 percent to $105.4 million compared to $56.8 million
in the corresponding 2020-quarter. Higher revenue in the
2021-quarter was primarily driven by PHX Energy’s high performance
technologies as the Corporation continued to expand capacity and
improve operating efficiencies during the quarter to address
growing demand. Average consolidated revenue per day, excluding the
motor rental division in the US, for the three-month period ended
December 31, 2021, was $15,789 an increase of 17 percent as
compared to $13,545 in the 2020-quarter. In the 2021 three-month
period, consolidated operating days increased by 56 percent to
6,386 days compared to 4,099 days in the corresponding 2020-period.
US revenue comprised 76 percent of total consolidated revenue for
the fourth quarter of 2021 (2020 – 74 percent).
In the fourth quarter of 2021, the US and
Canadian rig counts almost doubled when compared to the number of
rigs operating in the comparable quarter of 2020. Similar to prior
quarters of the 2021-year, there has been substantial growth in rig
counts in both geographic divisions corresponding with the increase
in global energy prices. In Canada, there was an average of 159
active rigs per day in the fourth quarter of 2021 (2020 – 88 rigs)
and in the US, there was an average of 559 active rigs per day in
the fourth quarter of 2021 (2020 – 311 rigs). Horizontal and
directional drilling continues to dominate the market representing
approximately 95 percent of the drilling activity in North America
(Source: Baker Hughes).
For the year ended December 31, 2021,
consolidated revenue was $349.9 million, an increase of 42 percent,
compared to $246.4 million in 2020. Higher revenue in 2021 was
mainly driven by growth in the US division year-over-year, with the
US representing 78 percent (2020 – 75 percent) of total
consolidated revenue. In the 2021-year, consolidated operating days
increased by 31 percent to 22,244 days from 16,980 days in the same
2020-period. The 2021 annual average consolidated revenue per day,
excluding the motor rental division in the US, was $15,104 compared
to $13,968 in 2020, an 8 percent increase. In late 2021, PHX Energy
negotiated some pricing increases to reverse concessions made
during the downturn in 2020. However, the directional drilling
market remains highly competitive and as a result the process takes
some time. Operating Costs and Expenses
(Stated in thousands of dollars except
percentages)
|
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Direct costs |
84,276 |
49,227 |
71 |
|
278,265 |
213,064 |
31 |
|
Gross profit as a percentage of revenue(1) |
20% |
13% |
|
|
20% |
14% |
|
|
Depreciation & amortization drilling and other equipment
(included in direct costs) |
6,898 |
6,660 |
4 |
|
25,860 |
29,454 |
(12) |
|
Depreciation & amortization right-of-use asset (included in
direct costs) |
837 |
838 |
- |
|
3,336 |
3,561 |
(6) |
|
Gross profit as a percentage of revenue excluding depreciation
& amortization(1) |
27% |
27% |
|
|
29% |
27% |
|
Direct costs are comprised of field and shop
expenses and include depreciation and amortization of the
Corporation’s equipment and right-of-use assets. For the
three-month period and year ended December 31, 2021, direct costs
increased by 71 and 31 percent, respectively, primarily as a result
of higher activity in all of the Corporation’s operating segments
and inflationary pressures resulting in higher labour costs and
equipment repair expenses. No government grants were recognized in
direct costs for the three-month period ended December 31, 2021
(2020 - $1.6 million). For the year ended December 31, 2021,
government grants of $6.5 million (2020 - $3 million) related to
the Canadian Emergency Wage Subsidy (“CEWS”), Canadian Emergency
Rent Subsidy (“CERS”) programs, and the Coronavirus Aid, Relief,
and Economic Security (“CARES”) Act were recognized by the
Corporation in direct costs.
The Corporation’s depreciation and amortization
on drilling and other equipment for the three-month period ended
December 31, 2021, increased by 4 percent as capital expenditures
progressively increased during the year with the bulk of fixed
assets received in the fourth quarter of the 2021-year. For the
year ended December 31, 2021, depreciation and amortization on
drilling and other equipment decreased by 12 percent mainly due to
PHX Energy’s lower level of capital spending in the first half of
the year relative to the quarters before the COVID-19 pandemic and
more assets being fully depreciated.
Gross profit as a percentage of revenue (1),
excluding depreciation and amortization, was flat at 27 percent in
both three-month periods of 2021 and 2020. For the 2021-year, gross
profit as a percentage of revenue, excluding depreciation and
amortization, increased to 29 percent from 27 percent in 2020.
Despite the US industry activity still being below pre-pandemic
levels and the absence of government grants in the second half of
the 2021-year, management was successful in maintaining
profitability through effective cost management and continuing cost
efficiencies in all major aspects of the Corporation’s operations,
particularly related to equipment repair costs and equipment
rentals. Government grants received in the first half of 2021 also
contributed to the improvement in gross profit for the year.
________________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.
(Stated in thousands of dollars except
percentages)
|
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
|
2020 |
% Change |
|
Selling, general and administrative (“SG&A”) costs |
13,510 |
8,200 |
65 |
|
46,710 |
|
28,738 |
63 |
|
Cash-settled share-based compensation (included in SG&A
costs) |
2,972 |
3,038 |
(2) |
|
12,889 |
|
1,889 |
n.m. |
|
Equity-settled share-based compensation (included in SG&A
costs) |
49 |
28 |
75 |
|
384 |
|
242 |
59 |
|
SG&A costs excluding cash and equity-settled share-based
compensation as a percentage of revenue(1) |
10% |
9% |
|
|
10% |
|
11% |
|
n.m. – not meaningful
For the three-month period and year ended
December 31, 2021, SG&A costs were $13.5 million and $46.7
million, respectively, as compared to $8.2 million and $28.7
million in the corresponding 2020-periods. The increase in SG&A
costs in the fourth quarter of 2021 was mainly due to higher
personnel costs associated with increased drilling activity and the
absence of government grants (2020 - $1.1 million). For the year
ended December 31, 2021, SG&A costs increased by 63 percent
primarily as a result of higher labour costs and greater
compensation expenses related to cash-settled share-based awards.
The increase in SG&A costs for the 2021-year was partially
offset by government grants of $1.9 million (2020 - $1.9 million)
related to CEWS, CERS and CARES support.
Cash-settled share-based compensation relate to
the Corporation’s RAP and are measured at fair value. In the
2021-quarter, the related compensation expense recognized by PHX
Energy remained flat at $3 million. For the year-ended December 31,
2021, the compensation expense related to cash-settled share-based
restricted awards was $12.9 million compared to the 2020-year’s
expense of $1.9 million. Changes in cash-settled share-based
compensation expense in the 2021-periods are mainly attributable to
fluctuations in the Corporation’s share price period-over-period.
There were 3,267,579 cash-settled share-based restricted awards
outstanding as at December 31, 2021 (2020 – 3,487,297).
Equity-settled share-based compensation relate
to the amortization of the fair values of issued options of the
Corporation using the Black-Scholes model. For the three-month
period and year ended December 31, 2021, equity-settled share-based
compensation expense increased to $49 thousand and $0.4 million,
respectively, compared to $28 thousand and $0.2 million in the same
2020-periods. The higher equity-settled share-based compensation
expense in both 2021-periods are largely due to the higher fair
value of the 2021 options granted compared to the 2018 to 2020
options that vested during the respective periods.
________________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Research and development expense |
1,049 |
148 |
n.m. |
|
2,774 |
1,944 |
43 |
n.m. – not meaningful
Research and development (“R&D”)
expenditures during the quarter and year ended December 31, 2021
were $1 million and $2.8 million, respectively, compared to $0.1
million and $1.9 million in the corresponding 2020-periods. PHX
Energy’s R&D focus continues to be on developing new
technologies, improving the reliability of equipment, and reducing
costs to operations. The higher R&D expenditures in both
2021-periods are primarily due to the increase of personnel related
costs in the R&D department. R&D expenses for the quarter
and year ended December 31, 2021 included government grants of $0.1
million and $0.4 million, respectively (2020 - $0.3 million and
$0.5 million, respectively).
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Finance expense |
117 |
108 |
8 |
|
496 |
769 |
(36) |
|
Finance expense lease liability |
516 |
562 |
(8) |
|
2,125 |
2,361 |
(10) |
Finance expense mainly relates to interest
charges on the Corporation’s long-term and short-term bank
facilities. With all loans and borrowings paid down in the second
quarter of 2020, finance charges for the three-month periods ended
December 31, 2021 and 2020, which comprised primarily of standby
charges, remained consistent at $0.1 million. For the 2021-year,
finance expense decreased 36 percent to $0.5 million from $0.8
million in 2020. Since the second quarter of 2020, the Corporation
has solely funded its operating, investing, and financing
activities with funds from operations and cash and cash
equivalents.
Finance expense lease liability relates to
interest expenses incurred on lease liabilities. For the three and
twelve-month periods ended December 31, 2021, finance expense lease
liability decreased to $0.5 million and $2.1 million, respectively
(2020 - $0.6 million and $2.4 million, respectively).
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
|
2021 |
2020 |
|
Net gain on disposition of drilling equipment |
(3,459) |
(1,211) |
|
(7,718) |
(3,756) |
|
Foreign exchange loss |
103 |
88 |
|
88 |
86 |
|
Provision for (recovery of) bad debts |
(2) |
(699) |
|
(281) |
1,645 |
|
Loss on remeasurement |
1,178 |
- |
|
1,178 |
- |
|
Other income |
(2,180) |
(1,822) |
|
(6,733) |
(2,025) |
Net gain on disposition of drilling equipment
typically result from insurance programs undertaken whereby
proceeds for the lost equipment are at current replacement values,
which are higher than the respective equipment’s book value. The
recognized gain is net of losses, which typically result from asset
retirements that were made before the end of the equipment’s useful
life and self-insured downhole equipment losses. During the quarter
and year ended December 31, 2021, the Corporation recognized a $3.5
million and $7.7 million gain on dispositions, respectively,
compared to gains of $1.2 million and $3.8 million in the
corresponding 2020-periods. Over the course of 2021, the
Corporation had a higher occurrence of downhole equipment losses
resulting in a higher net gain on disposition of drilling
equipment.
Foreign exchange losses relate to unrealized and
realized exchange losses in the period. Foreign exchange losses
remained consistent at $0.1 million for the three-month periods and
years ended December 31, 2021 and 2020.
For the three and twelve-month periods ended
December 31, 2021, the Corporation reported a bad debt recovery of
$2 thousand and $0.3 million, respectively (2020 - $0.7 million
recovery and $1.6 million expense, respectively), which relates
mainly to US receivable accounts recovered in 2021.
For the quarter and year-ended December 31,
2021, the Corporation recognized a loss on remeasurement of $1.2
million as the assets and liabilities of Phoenix TSR no longer meet
the criteria to be reported as held for sale. As part of the
reclassification to assets held for use and continuing operations,
the long-lived assets of Phoenix TSR were remeasured to approximate
carrying value had depreciation been recognized on the drilling
equipment during its classification as assets held for sale.
(Stated in thousands of dollars except
percentages)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
|
2021 |
2020 |
|
Provision for (Recovery of) income taxes |
(511) |
(1,540) |
|
3,558 |
(1,407) |
|
Effective tax rates |
n.m. |
n.m. |
|
14% |
15% |
n.m. – not meaningful
For the three-month period ended December 31,
2021, the Corporation recognized a recovery for income taxes of
$0.5 million (2020 - $1.5 million). For the year-ended December 31,
2021, the Corporation recognized an income tax provision of $3.6
million (2020 - $1.4 million recovery).
Higher provisions for the 2021-periods are
mainly a result of improved profitability particularly in the US
jurisdictions. Deferred taxes in the 2021 and 2020-periods were
impacted by unrecognized deferred tax assets with respect to
deductible temporary differences in the Canadian jurisdictions.
(Stated in thousands of dollars except per share
amounts and percentages)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Net earnings (loss) |
8,652 |
1,954 |
n.m. |
|
22,725 |
(7,771) |
n.m. |
|
Earnings (loss) per share – diluted |
0.17 |
0.04 |
n.m. |
|
0.44 |
(0.15) |
n.m. |
|
Adjusted EBITDA(1) |
17,868 |
8,472 |
111 |
|
60,382 |
39,719 |
52 |
|
Adjusted EBITDA excluding share-based compensation(1) |
20,889 |
11,538 |
81 |
|
73,655 |
41,850 |
76 |
|
Adjusted EBITDA per share – diluted(1) |
0.35 |
0.17 |
106 |
|
1.17 |
0.76 |
54 |
|
Adjusted EBITDA excluding share-based compensation as a
percentage of revenue(1) |
20% |
20% |
|
|
21% |
17% |
|
n.m. – not meaningful
For the three-month period the Corporation’s
adjusted EBITDA excluding share-based compensation as a percentage
of revenue remained consistent at 20 percent. For the year ended
December 31, 2021, adjusted EBITDA excluding share-based
compensation as a percentage of revenue increased to 21 percent
from 17 percent in the corresponding 2020-period. Higher activity
and revenue as well as continual implementation of cost saving
initiatives over the course of 2021 mainly contributed to the
improvement in the Corporation’s profitability.
Despite the recognition of a loss on
remeasurement of $1.2 million and minimal government grants
received in the three-month period of 2021, net earnings in the
2021-quarter increased to $8.7 million as compared to $2 million in
the 2020-quarter. The 2021-quarter net earnings included a $3.5
million net gain on disposition of drilling equipment. The
2020-quarter net earnings included a bad debt recovery of $0.7
million and government grants of $3 million related to CEWS and
CERS. For the year-ended December 31, 2021, net earnings were $22.7
million as compared to a loss of $7.8 million in the 2020-year. Net
earnings for the 2021-year included $8.8 million in various
government grants, a $7.7 million net gain on disposition of
drilling equipment, and $13.3 million in share-based compensation.
The loss incurred during the 2020-year included a $10.7 million
impairment loss and $5.4 million of government grants earned as
part of the CEWS and CERS programs.
Segmented Information
The Corporation reports three operating segments
on a geographical basis throughout the Canadian provinces of
Alberta, Saskatchewan, British Columbia, and Manitoba; throughout
the Gulf Coast, Northeast and Rocky Mountain regions of the US; and
internationally, in Russia and Albania.
________________________________________
(1) Non-GAAP measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to non-GAAP
measures section in this Press Release and in the Corporation’s
MD&A.
Canada
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Revenue |
22,541 |
12,821 |
76 |
|
67,560 |
49,031 |
38 |
|
Reportable segment profit before tax (1) |
1,798 |
3,823 |
(53) |
|
6,604 |
3,916 |
69 |
(1) Includes adjustments to intercompany
transactions.
Rig counts returned to pre-pandemic levels in
the final quarter of the 2021-year; however, the Canadian oil and
gas industry continues to experience low rig counts relative to
historic levels. Despite another challenging year overall, PHX
Energy’s Canadian operations realized positive segment earnings.
The Canadian division remained focused on maintaining market share
and providing unparalleled drilling performance while protecting
its margins through operational efficiencies and cost saving
measures.
For the three-month period ended December 31,
2021, PHX Energy’s Canadian division generated $22.5 million in
revenue, an increase of 76 percent compared to $12.8 million in the
2020-quarter. Higher revenue in the 2021-quarter mainly resulted
from increased activity, which rose by 62 percent to 2,287 days
compared to 1,411 days in the same 2020-quarter. The average
revenue per day in the 2021-quarter was $9,836 (2020 - $9,088), an
increase of 8 percent over the 2020 fourth quarter that was
primarily due to the easing of some pricing concessions made as a
result of the COVID-19 pandemic. In the final quarter of the
2021-year, PHX Energy’s Canadian operations realized a lower
reportable segment profit before tax of $1.8 million compared to
$3.8 million during the fourth quarter of 2020 as the Canadian
division did not recognize government grants in its reportable
segment profit in the 2021 three-month period (2020 - $3
million).
For the year ended December 31, 2021, PHX
Energy’s Canadian division’s revenue increased by 38 percent to
$67.6 million from $49 million in the 2020-year. The Canadian
segment also realized a reportable segment profit before tax of
$6.6 million in the 2021-year compared to $3.9 million in the
2020-year, a 69 percent increase. Excluding government grants, the
Canadian segment profit for the 2021-year was $3.3 million compared
to a segment loss of $1.5 million in the prior year. Improved
revenue and profitability in the 2021-year primarily resulted from
increased operating days, lower depreciation, and lower level of
inventory obsolescence. Drilling activity in the Canadian segment
improved by 40 percent from 5,184 operating days in 2020 to 7,269
days in 2021. For the year ended December 31, 2021, there were
45,624 horizontal and directional drilling days realized in the
Canadian industry, compared to the 29,619 days realized in 2020, a
54 percent improvement (Sources: Daily Oil Bulletin). The
difference between the industry’s rate of growth and the
Corporation’s mainly relates to customer mix, the Corporation’s
strategies to protect profit margins and the competitive nature of
the directional drilling sector. PHX Energy’s Canadian operating
segment remains a leader in this market being among the top three
service providers. During the 2021-year, the Corporation was active
in the Montney, Glauconite, Frobisher, Cardium, Viking, Bakken,
Torquay, Colony, Clearwater, Duvernay, and Scallion basins.
United States
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Revenue |
79,861 |
41,984 |
90 |
|
272,492 |
185,058 |
47 |
|
Reportable segment profit (loss) before tax (1) |
9,445 |
(2,442) |
n.m. |
|
33,056 |
7,393 |
n.m. |
n.m. – not meaningful (1) Includes adjustments
to intercompany transactions.
PHX Energy’s US segment successfully maintained
strong activity levels throughout the 2021-year as the industry
activity continued to improve and the division achieved the second
highest fourth quarter and annual US revenue in the Corporation’s
history, with the highest being achieved in the same 2014-periods.
For the three-month period ended December 31, 2021, US revenue
increased by 90 percent to $79.9 million as compared to $42 million
in the 2020-quarter. For the year ended December 31, 2021, US
revenue grew 47 percent to $272.5 million from $185.1 million in
2020. The strong revenue improvement was driven by the superior
performance of PHX Energy’s premium equipment, specifically
Velocity, Atlas and PowerDrive Orbit RSS, and increasing demand for
these technologies and the efficiencies they deliver. To address
the growing demand, PHX Energy expanded its fleet of premium
technologies in the US, particularly the number of PowerDrive Orbit
RSS which began the year with 18 systems and ended the year with a
fleet of 33. The larger fleet of PowerDrive Orbit RSS helped
support the overall increase in activity and average revenue per
day in the 2021-periods.
In the 2021-quarter, operating days improved by
49 percent to 3,783 days as compared to 2,546 days in the
corresponding 2020-quarter. In comparison, industry activity grew
80 percent with the average number of horizontal and directional
rigs running per day climbing to 561 in the fourth quarter of 2021
from 311 rigs in the comparative 2020-quarter (Source: Baker
Hughes). For the year-ended December 31, 2021, the US segment’s
operating days were 14,041 days, compared to 10,492 days in the
2020-year; an increase of 34 percent. In comparison, the US
industry activity, as measured by the average number of horizontal
and directional rigs running on a daily basis, grew by 11 percent
to 456 rigs in 2021 from 412 rigs in 2020 (Source: Baker Hughes).
During the 2021-year, Phoenix USA was active in the Permian, Eagle
Ford, SCOOP/STACK, Marcellus, Bakken, and Niobrara basins.
In the 2021 three-month period, the average
revenue per day, excluding the Corporation’s US motor rental
division, rose to $19,895, an increase of 25 percent compared to
$15,977 in the relative 2020-quarter. Omitting the impact of
foreign exchange, the average revenue per day, excluding the
Corporation’s motor rental division, increased by 29 percent
quarter-over-quarter. For the year ended December 31, 2021, the
average revenue per day, excluding the Corporation’s US motor
rental division, was $18,413 an increase of 9 percent in comparison
to $16,857 in 2020. The growth in the average revenue per day was
offset by a weakening in the US dollar. Omitting the impact of
foreign exchange, the average revenue per day, excluding the
Corporation’s motor rental division, increased by 17 percent
year-over-year.
For the three-month period and year ended
December 31, 2021, the US segment realized reportable segment
income before tax of $9.4 million and $33.1 million, respectively,
compared to the corresponding 2020-periods when the US segment had
reportable segment loss before tax of $2.4 million in the fourth
quarter and reportable segment profit before tax of $7.4 million
for the 2020-year. The improved profitability in both 2021-periods
was mainly due to higher drilling activity, increased deployment of
the Corporation’s high performance technologies, and $5.1 million
in government grants through the CARES Act that were recognized in
the first half of 2021. No government grants were received in the
fourth quarter of 2021.
International
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
2020 |
% Change |
|
2021 |
2020 |
% Change |
|
Revenue |
3,026 |
2,033 |
49 |
|
9,868 |
12,313 |
(20) |
|
Reportable segment profit (loss) before tax |
361 |
(647) |
n.m. |
|
(650) |
(2,094) |
n.m. |
n.m. – not meaningful
For the three-month period ended December 31,
2021, the international segment’s revenue was $3 million as
compared to $2 million in the 2020-quarter, an increase of 49
percent. For the year ended December 31, 2021, the international
segment’s revenue was $9.9 million as compared to $12.3 million, a
decrease of 20 percent. During the later part of 2021 the Russian
division experienced a recovery in drilling activity and this led
to improved international revenue in the fourth quarter.
For the three-month period ended December 31,
2021, the Russian division’s revenue was $2.9 million, 44 percent
higher than the $2 million of revenue in the corresponding
2020-quarter. The division achieved 316 operating days in the
2021-quarter, which is 121 percent greater than the 143 days in the
2020-quarter. For the year ended December 31, 2021, Russian revenue
was $9.8 million, 20 percent lower compared to the $12.3 million of
annual revenue in 2020. The Russia division generated 934 operating
days in the 2021-year, which is 28 percent lower than the 1,304
days in 2020. The effects of the COVID-19 pandemic continued to
impact the Russian division’s drilling activity in the first half
of the 2021-year; however, as the global energy market recovered,
drilling activity in the Russian segment improved as well in the
second half of the 2021-year.
Throughout 2021, due to economic uncertainties
and reduced local drilling activity levels, PHX Energy’s operations
in Albania continued to be suspended. In the fourth quarter of
2021, the Albania division realized revenue of $0.1 million to
recuperate costs of keeping personnel and equipment on standby.
Drilling activity and operations in the Albania division are
anticipated to restart in early 2022.
In the 2021 three-month period, the
international segment generated reportable segment profit before
tax of $0.4 million compared to reportable segment loss before tax
of $0.6 million in the 2020-period. For the year-ended December 31,
2021, the international segment reduced its reportable segment loss
before tax to $0.7 million from $2.1 million in the corresponding
2020-year. The positive margin in the 2021-quarter and reduced
losses year-over-year primarily resulted from the improvement in
the Russian division’s drilling activity in the second half of
2021.
Investing Activities Net cash
used in investing activities for the year ended December 31, 2021
was $23.6 million as compared to $19.1 million in 2020. During
2021, the Corporation spent $35.3 million (2020 - $25.9 million) on
capital expenditures directed towards drilling and other equipment
and received proceeds of $12.4 million (2020 - $7.4 million)
primarily from involuntary disposal of drilling equipment in well
bores. The 2021 expenditures comprised of:
- $13.2 million in
downhole performance drilling motors;
- $11.3 million in
MWD systems and spare components; and
- $10.8 million in RSS tools,
machining and equipment, and other assets.
The capital expenditure program undertaken in
the year was financed from cash flow from operating activities. Of
the total capital expenditures in the 2021-year, $23.1 million was
used to grow the Corporation’s fleet of drilling equipment and the
remaining $12.2 million was used to maintain the current fleet of
drilling and other equipment.
The change in non-cash working capital balances
of $4.2 million (source of cash) for the year ended December 31,
2021, relates to the net change in the Corporation’s trade payables
that are associated with the acquisition of capital assets. This
compares to a $0.6 million (use of cash) for the year ended
December 31, 2020.
In 2021, the Corporation continued to preserve
cash flows, however, with the rebound in commodity prices to
pre-pandemic levels and to strategically address global supply
chain issues, capital spending was increased primarily to expand
the Corporation’s fleet of high performance technologies including
its Atlas motors, Velocity systems, and PowerDrive Orbit RSS
tools.
Investments
In addition to the acquisition of drilling and
other equipment, the Corporation made another strategic investment
by acquiring a minor equity position in DEEP, a geothermal power
developer. The investment in DEEP provides a potential opportunity
for the Corporation to diversify its business to include renewable
energy projects, provide drilling expertise to the project and
increase the focus on long term sustainable growth.
Financing Activities
For the year ended December 31, 2021, net cash
used in financing activities was $22.7 million as compared to $33.6
million in 2020. In the 2021-year:
- 1,960,788
common shares were repurchased and cancelled for $8 million under
the NCIBs;
- 1,662,537
common shares were purchased by an independent trustee in the open
market for $7.5 million to be held in trust for the potential
future settlement of restricted awards granted under the
Corporation’s RAP;
- dividends of
$6.3 million were paid to shareholders;
- payments of
$3.3 million were made towards lease liability; and,
- 976,067 common
shares were issued from treasury for proceeds of $2.3 million upon
the exercise of share options.
Capital Resources
As of December 31, 2021, the Corporation had
nothing drawn on its syndicated and operating facilities, and a
cash balance of $24.8 million. In addition, the Corporation had CAD
$65 million and USD $15 million available from its credit
facilities as at December 31, 2021. The credit facilities are
secured by substantially all of the Corporation’s assets and
matures in December 2023.
As at December 31, 2021, the Corporation was in
compliance with all its financial covenants as follows:
|
Ratio |
Covenant |
As at December 31, 2021 |
|
Debt to covenant EBITDA |
<3.0x |
n.m. |
|
Interest coverage ratio |
>3.0x |
109.9 |
n.m. – not meaningfulCash Requirements
for Capital Expenditures Historically, the Corporation has
financed its capital expenditures and acquisitions through cash
flows from operating activities, debt and equity. The 2022 capital
budget is expected to be $47.7 million and is primarily dedicated
to growing and maintaining the Velocity, RSS and Atlas fleets to
meet increased demand anticipated in 2022.
These planned expenditures are expected to be
financed from cash flow from operations, cash and cash equivalents,
and / or the Corporation’s unused credit facilities, if necessary.
However, if a sustained period of market uncertainty and financial
market volatility persists in 2022, the Corporation's activity
levels, cash flows and access to credit may be negatively impacted,
and the expenditure level would be reduced accordingly where
possible. Conversely, if future growth opportunities present
themselves, the Corporation would look at expanding this planned
capital expenditure amount.
As at December 31, 2021, the Corporation has
commitments to purchase drilling and other equipment for $35.6
million. Delivery is expected to occur within the first half of
2022.
About PHX Energy Services
Corp.
The Corporation, through its directional
drilling subsidiary entities, provides horizontal and directional
drilling technology and services to oil and natural gas producing
companies in Canada, the US, Russia, Albania, and the Middle East
regions through an arrangement with National Energy Services
Reunited Corp.
PHX Energy’s Canadian directional drilling
operations are conducted through Phoenix Technology Services LP.
The Corporation maintains its corporate head office, research and
development, Canadian sales, service and operational centres in
Calgary, Alberta. In addition, PHX Energy has a facility in
Estevan, Saskatchewan. PHX Energy’s US operations, conducted
through the Corporation’s wholly-owned subsidiary, Phoenix
Technology Services USA Inc. (“Phoenix USA”), is headquartered in
Houston, Texas. Phoenix USA has sales and service facilities in
Houston, Texas; Casper, Wyoming; Midland, Texas; and Oklahoma City,
Oklahoma. Internationally, PHX Energy has sales offices and service
facilities in Albania and Russia, and administrative offices in
Nicosia, Cyprus; and Luxembourg City, Luxembourg.
As at December 31, 2021, PHX Energy had 707
full-time employees (2020 – 540) and the Corporation utilized over
120 additional field consultants in 2021 (2020 – over 150).
The common shares of PHX Energy trade on the
Toronto Stock Exchange under the symbol PHX.
For further information please contact:John
Hooks, CEO; Michael Buker, President; or Cameron Ritchie, Senior
Vice President Finance and CFO
PHX Energy Services Corp.Suite 1400, 250 2nd
Street SWCalgary, Alberta T2P 0C1Tel: 403-543-4466 Fax:
403-543-4485 www.phxtech.comCondensed Consolidated
Statements of Financial Position
|
|
|
|
(re-presented) |
|
|
December 31, 2021 |
|
December 31, 2020 |
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
24,828,830 |
|
|
$ |
25,745,911 |
|
|
|
Trade and other receivables |
|
76,478,093 |
|
|
|
44,687,494 |
|
|
|
Inventories |
|
36,691,141 |
|
|
|
27,485,601 |
|
|
|
Prepaid expenses |
|
2,814,272 |
|
|
|
2,065,466 |
|
|
|
Current tax assets |
|
346,554 |
|
|
|
219,400 |
|
|
|
Total current assets |
|
141,158,890 |
|
|
|
100,203,872 |
|
|
Non-current assets: |
|
|
|
|
|
|
|
Drilling and other long-term assets |
|
76,363,001 |
|
|
|
70,885,739 |
|
|
|
Right-of-use asset |
|
25,708,177 |
|
|
|
28,956,908 |
|
|
|
Intangible assets |
|
16,137,024 |
|
|
|
16,204,673 |
|
|
|
Investments |
|
3,000,500 |
|
|
|
- |
|
|
|
Deferred tax assets |
|
126,133 |
|
|
|
289,542 |
|
|
|
Total non-current assets |
|
121,334,835 |
|
|
|
116,336,862 |
|
|
Total assets |
$ |
262,493,725 |
|
|
$ |
216,540,734 |
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Trade and other payables |
$ |
80,361,673 |
|
|
$ |
38,505,544 |
|
|
|
Lease liability |
|
3,232,503 |
|
|
|
3,398,559 |
|
|
|
Dividends payable |
|
2,482,060 |
|
|
|
1,265,648 |
|
|
|
Total current liabilities |
|
86,076,236 |
|
|
|
43,169,751 |
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
Lease liability |
|
32,638,819 |
|
|
|
35,698,084 |
|
|
|
Deferred tax liability |
|
9,346,426 |
|
|
|
5,640,261 |
|
|
|
Total non-current liabilities |
|
41,985,245 |
|
|
|
41,338,345 |
|
|
Equity: |
|
|
|
|
|
|
|
Share capital |
|
235,463,414 |
|
|
|
247,543,263 |
|
|
|
Contributed surplus |
|
9,462,091 |
|
|
|
10,131,786 |
|
|
|
Deficit |
|
(121,721,790 |
) |
|
|
(136,939,398 |
) |
|
|
Accumulated other comprehensive income |
|
11,228,529 |
|
|
|
11,296,987 |
|
|
|
Total equity |
|
134,432,244 |
|
|
|
132,032,638 |
|
|
Total liabilities and equity |
$ |
262,493,725 |
|
|
$ |
216,540,734 |
|
Condensed
Consolidated Statements of Comprehensive Income (Loss)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
(re-presented) |
|
|
Revenue |
$ |
105,428,038 |
|
$ |
56,837,747 |
|
|
$ |
349,919,670 |
|
$ |
246,401,990 |
|
|
Direct costs |
|
84,275,522 |
|
|
49,227,002 |
|
|
|
278,265,030 |
|
|
213,064,045 |
|
|
Gross profit |
|
21,152,516 |
|
|
7,610,745 |
|
|
|
71,654,640 |
|
|
33,337,945 |
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
13,510,462 |
|
|
8,200,424 |
|
|
|
46,710,478 |
|
|
28,737,739 |
|
|
Research and development expenses |
|
1,048,545 |
|
|
147,749 |
|
|
|
2,773,559 |
|
|
1,943,713 |
|
|
Finance expense |
|
117,261 |
|
|
108,004 |
|
|
|
495,958 |
|
|
769,430 |
|
|
Finance expense lease liability |
|
515,614 |
|
|
561,762 |
|
|
|
2,125,017 |
|
|
2,361,078 |
|
|
Other income |
|
(2,180,070 |
) |
|
(1,821,129 |
) |
|
|
(6,732,615 |
) |
|
(2,025,479 |
) |
|
Impairment loss |
|
- |
|
|
- |
|
|
|
- |
|
|
10,729,587 |
|
|
|
|
|
13,011,812 |
|
|
7,196,810 |
|
|
|
45,372,397 |
|
|
42,516,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes |
|
8,140,704 |
|
|
413,935 |
|
|
|
26,282,243 |
|
|
(9,178,123 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (Recovery of) income taxes |
|
|
|
|
|
|
|
|
|
|
Current |
|
(17,348 |
) |
|
(238,270 |
) |
|
|
(237,023 |
) |
|
(980,058 |
) |
|
Deferred |
|
(493,899 |
) |
|
(1,301,960 |
) |
|
|
3,794,631 |
|
|
(426,908 |
) |
|
|
|
|
(511,247 |
) |
|
(1,540,230 |
) |
|
|
3,557,608 |
|
|
(1,406,966 |
) |
|
Net earnings (loss) |
|
8,651,951 |
|
|
1,954,165 |
|
|
|
22,724,635 |
|
|
(7,771,157 |
) |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
(835,013 |
) |
|
(3,646,415 |
) |
|
|
(68,458 |
) |
|
(2,879,860 |
) |
|
Total comprehensive earnings (loss) |
$ |
7,816,938 |
|
$ |
(1,692,250 |
) |
|
$ |
22,656,177 |
|
$ |
(10,651,017 |
) |
|
Earnings (loss) per share - basic |
$ |
0.18 |
|
$ |
0.04 |
|
|
$ |
0.46 |
|
$ |
(0.15 |
) |
|
Earnings (loss) per share - diluted |
$ |
0.17 |
|
$ |
0.04 |
|
|
$ |
0.44 |
|
$ |
(0.15 |
) |
Condensed Consolidated Statements of
Cash Flows
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
(re-presented) |
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
8,651,951 |
|
$ |
1,954,165 |
|
|
$ |
22,724,635 |
|
$ |
(7,771,157 |
) |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
6,898,289 |
|
|
6,659,853 |
|
|
|
25,860,400 |
|
|
29,453,878 |
|
|
Depreciation and amortization right-of-use asset |
|
836,765 |
|
|
838,112 |
|
|
|
3,336,282 |
|
|
3,561,488 |
|
|
Provision for income taxes |
|
(511,247 |
) |
|
(1,540,230 |
) |
|
|
3,557,608 |
|
|
(1,406,966 |
) |
|
Impairment loss |
|
- |
|
|
- |
|
|
|
- |
|
|
10,729,587 |
|
|
Loss on remeasurement |
|
1,177,546 |
|
|
- |
|
|
|
1,177,546 |
|
|
- |
|
|
Unrealized foreign exchange loss (gain) |
|
181,107 |
|
|
(116,994 |
) |
|
|
268,985 |
|
|
(16,836 |
) |
|
Net gain on disposition of drilling equipment |
|
(3,458,991 |
) |
|
(1,211,391 |
) |
|
|
(7,718,185 |
) |
|
(3,756,022 |
) |
|
Equity-settled share-based payments |
|
49,056 |
|
|
27,844 |
|
|
|
383,604 |
|
|
241,853 |
|
|
Finance expense |
|
117,262 |
|
|
108,004 |
|
|
|
495,958 |
|
|
769,430 |
|
|
Provision for (Recovery of) bad debts |
|
(1,547 |
) |
|
(698,753 |
) |
|
|
(280,612 |
) |
|
1,644,980 |
|
|
Provision for inventory obsolescence |
|
361,493 |
|
|
655,195 |
|
|
|
2,033,144 |
|
|
2,655,625 |
|
|
Interest paid |
|
(51,855 |
) |
|
(52,693 |
) |
|
|
(206,155 |
) |
|
(388,068 |
) |
|
Income taxes received (paid) |
|
(97,340 |
) |
|
7,740 |
|
|
|
109,345 |
|
|
417,342 |
|
|
Change in non-cash working capital |
|
(375,863 |
) |
|
3,499,699 |
|
|
|
(6,312,039 |
) |
|
31,776,282 |
|
|
Net cash from operating activities |
|
13,776,626 |
|
|
10,130,551 |
|
|
|
45,430,516 |
|
|
67,911,416 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Proceeds on disposition of drilling equipment |
|
5,237,647 |
|
|
1,933,263 |
|
|
|
12,363,604 |
|
|
7,405,750 |
|
|
Acquisition of drilling and other equipment |
|
(11,134,819 |
) |
|
(3,612,053 |
) |
|
|
(35,304,507 |
) |
|
(25,857,406 |
) |
|
Acquisition of intangible assets |
|
(1,852,731 |
) |
|
- |
|
|
|
(1,852,731 |
) |
|
- |
|
|
Acquisition of equity investment |
|
- |
|
|
- |
|
|
|
(3,000,500 |
) |
|
- |
|
|
Change in non-cash working capital |
|
1,804,142 |
|
|
(275,346 |
) |
|
|
4,164,905 |
|
|
(648,472 |
) |
|
Net cash used in investing activities |
|
(5,945,761 |
) |
|
(1,954,136 |
) |
|
|
(23,629,229 |
) |
|
(19,100,128 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Repurchase of shares under the NCIB |
|
(4,515,467 |
) |
|
(603,849 |
) |
|
|
(7,979,601 |
) |
|
(3,796,095 |
) |
|
Purchase of shares held in trust |
|
(1,414,000 |
) |
|
- |
|
|
|
(7,500,000 |
) |
|
- |
|
|
Dividends paid to shareholders |
|
(2,505,450 |
) |
|
- |
|
|
|
(6,290,612 |
) |
|
- |
|
|
Payments of lease liability |
|
(856,425 |
) |
|
(785,726 |
) |
|
|
(3,294,608 |
) |
|
(3,054,801 |
) |
|
Proceeds from issuance of share capital |
|
1,372,126 |
|
|
69,750 |
|
|
|
2,346,453 |
|
|
77,500 |
|
|
Surrender value cash payment |
|
- |
|
|
- |
|
|
|
- |
|
|
(1,518,042 |
) |
|
Repayment of operating facility |
|
- |
|
|
- |
|
|
|
- |
|
|
(11,395,835 |
) |
|
Repayment of loans and borrowings |
|
- |
|
|
- |
|
|
|
- |
|
|
(13,960,400 |
) |
|
Net cash used in financing activities |
|
(7,919,216 |
) |
|
(1,319,825 |
) |
|
|
(22,718,368 |
) |
|
(33,647,673 |
) |
|
Net increase (decrease) in cash and cash
equivalents |
|
(88,351 |
) |
|
6,856,590 |
|
|
|
(917,081 |
) |
|
15,163,615 |
|
|
Cash and cash equivalents, beginning of period |
|
24,917,181 |
|
|
18,889,321 |
|
|
|
25,745,911 |
|
|
10,582,296 |
|
|
Cash and cash equivalents, end of period |
$ |
24,828,830 |
|
$ |
25,745,911 |
|
|
$ |
24,828,830 |
|
$ |
25,745,911 |
|
Cautionary Statement Regarding
Forward-Looking Information and Statements
This document contains certain forward-looking
information and statements within the meaning of applicable
securities laws. The use of "expect", "anticipate", "continue",
"estimate", "objective", "ongoing", "may", "will", "project",
"could", "should", "can", "believe", "plans", "intends", "strategy"
and similar expressions are intended to identify forward-looking
information or statements.
The forward-looking information and statements
included in this document are not guarantees of future performance
and should not be unduly relied upon. These statements and
information involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements and information. The Corporation believes the
expectations reflected in such forward-looking statements and
information are reasonable, but no assurance can be given that
these expectations will prove to be correct. Such forward-looking
statements and information included in this document should not be
unduly relied upon. These forward-looking statements and
information speak only as of the date of this document.
In particular, forward-looking information and
statements contained in this document include, without limitation,
the anticipated impact of COVID-19 on the Corporation’s operations,
results and the Corporation’s planned responses thereto, the
anticipated impact of global supply chain disruptions on the
Corporation’s operations, results, and the Corporation’s planned
responses thereto; the anticipated increase in demand for the
Corporations services and technologies in North America, the
continuing discussion related to the sale of the Russian division
and the possibility of an alternative formal agreement and
anticipated closing and terms of the transaction to sell the
Russian division, the intention to continue operations in Russia,
the opportunities that will be created by the NESR partnership, the
potential award of tenders in the region and the ramp up of
activity in 2022, the anticipated continuation of PHX Energy’s
quarterly dividend program and the amounts of dividends, the
potential future settlement of retention and performance awards in
common shares that were purchased and held in trust by an
independent trustee in the open market, the anticipation of resumed
activity in Albania, and the timeline for delivery of equipment on
order, the projected capital expenditures budget for 2022 and how
these budgets will be allocated and funded.
The above are stated under the headings:
“Dividends”, “Capital Spending”, “Responding to COVID-19”,
“Re-presentation of Assets Held for Sale”, “Technology
Arrangement”, “Shares Held in Trust”, “Segmented Information”,
“Investing Activities”, “Financing Activities” and “Cash
Requirements for Capital Expenditures”. In addition, all
information contained under the headings “Responding to COVID-19”,
and “Outlook” sections of this press release may contains
forward-looking statements.
In addition to other material factors,
expectations and assumptions which may be identified in this
document and other continuous disclosure documents of the
Corporation referenced herein, assumptions have been made in
respect of such forward-looking statements and information
regarding, among other things: the Corporation will continue to
conduct its operations in a manner consistent with past operations;
the general continuance of current industry conditions; anticipated
financial performance, business prospects, impact of competition,
strategies, the general stability of the economic and political
environment in which the Corporation operates; the continuing
impact of COVID-19 on the global economy, specifically trade,
manufacturing, supply chain and energy consumption, among other
things and the resulting impact on the Corporation’s operations and
future results which remain uncertain, exchange and interest rates;
the continuance of existing (and in certain circumstances, the
implementation of proposed) tax, royalty and regulatory regimes;
the sufficiency of budgeted capital expenditures in carrying out
planned activities; the availability and cost of labour and
services; the adequacy of cash flow, debt and ability to obtain
financing on acceptable terms to fund its planned expenditures,
which are subject to change based on commodity prices; market
conditions and future oil and natural gas prices; and potential
timing delays. Although management considers these material
factors, expectations, and assumptions to be reasonable based on
information currently available to it, no assurance can be given
that they will prove to be correct.
Readers are cautioned that the foregoing lists
of factors are not exhaustive. Additional information on these and
other factors that could affect the Corporation's operations and
financial results are included in reports on file with the Canadian
Securities Regulatory Authorities and may be accessed through the
SEDAR website (www.sedar.com) or at the Corporation's website. The
forward-looking statements and information contained in this
document are expressly qualified by this cautionary statement. The
Corporation does not undertake any obligation to publicly update or
revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, except as
may be required by applicable securities laws.
Non-GAAP Measures
Adjusted EBITDA Adjusted EBITDA,
defined as earnings before finance expense, finance expense lease
liability, income taxes, depreciation and amortization, impairment
losses on drilling and other equipment and goodwill, loss on
remeasurement, severance payouts relating to the Corporation’s
restructuring cost, and unrealized foreign exchange gains or
losses, does not have a standardized meaning and is not a financial
measure that is recognized under GAAP. However, Management believes
that adjusted EBITDA provides supplemental information to net
earnings that is useful in evaluating the results of the
Corporation’s principal business activities before considering
certain charges, how it was financed and how it was taxed in
various countries. Investors should be cautioned, however, that
adjusted EBITDA should not be construed as an alternative measure
to net earnings determined in accordance with GAAP. PHX Energy’s
method of calculating adjusted EBITDA may differ from that of other
organizations and, accordingly, its adjusted EBITDA may not be
comparable to that of other companies.
Adjusted EBITDA excluding share-based
compensation is calculated by adding cash-settled and
equity-settled share-based compensation to adjusted EBITDA.
The following is a reconciliation of net
earnings to adjusted EBITDA and adjusted EBITDA excluding
share-based compensation:
(Stated in thousands of
dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
|
2021 |
2020 |
|
|
Net earnings (loss): |
8,652 |
|
1,955 |
|
|
22,725 |
(7,771 |
) |
|
Add: |
|
|
|
|
|
|
Depreciation and amortization drilling and other equipment |
6,898 |
|
6,660 |
|
|
25,860 |
29,454 |
|
|
Depreciation and amortization right-of-use asset |
837 |
|
838 |
|
|
3,336 |
3,561 |
|
|
Provision for income taxes |
(511 |
) |
(1,540 |
) |
|
3,558 |
(1,407 |
) |
|
Finance expense |
117 |
|
108 |
|
|
496 |
769 |
|
|
Finance expense lease liability |
516 |
|
562 |
|
|
2,125 |
2,361 |
|
|
Unrealized foreign exchange (gain) loss |
181 |
|
(117 |
) |
|
269 |
(17 |
) |
|
Severance |
- |
|
6 |
|
|
835 |
2,039 |
|
|
Loss on remeasurement |
1,178 |
|
- |
|
|
1,178 |
- |
|
|
Impairment loss |
- |
|
- |
|
|
- |
10,730 |
|
|
Adjusted EBITDA |
17,868 |
|
8,472 |
|
|
60,382 |
39,719 |
|
|
Add: |
|
|
|
|
|
|
Cash-settled share-based compensation |
2,972 |
|
3,038 |
|
|
12,889 |
1,889 |
|
|
Equity-settled share-based compensation |
49 |
|
28 |
|
|
384 |
242 |
|
|
Adjusted EBITDA excluding share-based compensation |
20,889 |
|
11,538 |
|
|
73,655 |
41,850 |
|
Adjusted EBITDA per share - diluted is
calculated using the treasury stock method whereby deemed proceeds
on the exercise of the share options are used to reacquire common
shares at an average share price. The calculation of adjusted
EBITDA per share - dilutive is based on the adjusted EBITDA as
reported in the table above divided by the diluted number of shares
outstanding as quantified in Note 11(c) in the Notes to the
Consolidated Financial Statements.
Adjusted EBITDA as a percentage of revenue is
calculated by dividing the adjusted EBITDA as reported in the table
above by revenue as stated on the Consolidated Statements of
Comprehensive Earnings (Loss).
Adjusted EBITDA excluding share-based
compensation as a percentage of revenue is calculated by dividing
the adjusted EBITDA excluding share-based compensation as reported
in the table above by revenue as stated on the Consolidated
Statements of Comprehensive Earnings (Loss).
Funds from OperationsFunds from
operations is defined as cash flows generated from operating
activities before changes in non-cash working capital, interest
paid, and income taxes paid. This non-GAAP measure does not have a
standardized meaning and is not a financial measure recognized
under GAAP. Management uses funds from operations as an indication
of the Corporation’s ability to generate funds from its operations
before considering changes in working capital balances and interest
and taxes paid. Investors should be cautioned, however, that this
financial measure should not be construed as an alternative measure
to cash flows from operating activities determined in accordance
with GAAP. PHX Energy’s method of calculating funds from operations
may differ from that of other organizations and, accordingly, it
may not be comparable to that of other companies.
The following is a reconciliation of cash flows
from operating activities to funds from operations:
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2021 |
2020 |
|
2021 |
2020 |
|
Cash flows from operating activities |
13,777 |
10,131 |
|
|
45,431 |
|
67,911 |
|
|
Add (deduct): |
|
|
|
|
|
|
Changes in non-cash working capital |
376 |
(3,500 |
) |
|
6,312 |
|
(31,776 |
) |
|
Interest paid |
52 |
53 |
|
|
206 |
|
388 |
|
|
Income taxes paid (received) |
97 |
(8 |
) |
|
(110 |
) |
(417 |
) |
|
Funds from operations |
14,302 |
6,676 |
|
|
51,839 |
|
36,106 |
|
Funds from operations per share - diluted is
calculated using the treasury stock method whereby deemed proceeds
on the exercise of the share options are used to reacquire common
shares at an average share price. The calculation of funds from
operations per share - diluted is based on the funds from
operations as reported in the table above divided by the diluted
number of shares outstanding as quantified in Note 11(c) in the
Notes to the Consolidated Financial Statements
Free Cash FlowFree cash flow is
defined as funds from operations (as defined above) less
maintenance capital expenditures and cash payment on leases. This
non-GAAP measure does not have a standardized meaning and is not a
financial measure recognized under GAAP. Management uses free cash
flow as an indication of the Corporation’s ability to generate
funds from its operations to support operations and maintain the
Corporation’s drilling and other equipment. This performance
measure is useful to investors for assessing the Corporation’s
operating and financial performance, leverage and liquidity.
Investors should be cautioned, however, that this financial measure
should not be construed as an alternative measure to cash flows
from operating activities determined in accordance with GAAP. PHX
Energy’s method of calculating free cash flow may differ from that
of other organizations and, accordingly, it may not be comparable
to that of other companies.
The following is a reconciliation of cash flows
from operating activities to free cash flow:
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2021 |
2020 |
|
2021 |
2020 |
|
Cash flows from operating activities |
13,777 |
|
10,131 |
|
|
45,431 |
|
67,911 |
|
|
Add (deduct): |
|
|
|
|
|
|
Changes in non-cash working capital |
376 |
|
(3,500 |
) |
|
6,312 |
|
(31,776 |
) |
|
Interest paid |
52 |
|
53 |
|
|
206 |
|
388 |
|
|
Income taxes paid (received) |
97 |
|
(8 |
) |
|
(110 |
) |
(417 |
) |
|
Maintenance capital expenditures |
(3,963 |
) |
(2,616 |
) |
|
(12,226 |
) |
(8,094 |
) |
|
Cash payment on leases |
(1,372 |
) |
(1,347 |
) |
|
(5,420 |
) |
(5,416 |
) |
|
Free cash flow |
8,967 |
|
2,713 |
|
|
34,193 |
|
22,596 |
|
Working CapitalWorking capital
is defined as the Corporation’s current assets less its current
liabilities and is used to assess the Corporation’s short-term
liquidity. This non-GAAP measure does not have a standardized
meaning and is not a financial measure recognized under GAAP.
Management uses working capital to provide insight as to the
Corporation’s ability to meet obligations as at the reporting date.
PHX Energy’s method of calculating working capital may differ from
that of other organizations and, accordingly, it may not be
comparable to that of other companies.
The following is a reconciliation of current
assets and current liabilities to working capital:
(Stated in thousands of dollars)
|
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
|
Current assets |
141,159 |
|
100,204 |
|
|
Deduct: |
|
|
|
Current liabilities |
(86,076 |
) |
(43,170 |
) |
|
Working capital |
55,083 |
|
57,034 |
|
Net DebtNet debt is defined as
the Corporation’s operating facility and loans and borrowings less
cash and cash equivalents. This non-GAAP measure does not have a
standardized meaning and is not a financial measure recognized
under GAAP. Management uses net debt to provide insight as to the
Corporation’s ability to meet obligations as at the reporting date.
PHX Energy’s method of calculating net debt may differ from that of
other organizations and, accordingly, it may not be comparable to
that of other companies.
The following is a reconciliation of operating
facility, loans and borrowings, and cash and cash equivalents to
net debt:
(Stated in thousands of dollars)
|
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
2019 |
|
|
Operating facility |
- |
|
- |
|
11,396 |
|
|
Loans and borrowings |
- |
|
- |
|
13,896 |
|
|
Total loans and borrowings |
- |
|
- |
|
25,292 |
|
|
Deduct: |
|
|
|
|
Cash and cash equivalents |
(24,829 |
) |
(25,746 |
) |
(10,582 |
) |
|
Net debt |
(24,829 |
) |
(25,746 |
) |
14,710 |
|
Gross Profit as a Percentage of
RevenueGross profit as a percentage of revenue is defined
as the Corporation’s gross profit divided by revenue and is used to
assess operational profitability. This non-GAAP measure does not
have a standardized meaning and is not a financial measure
recognized under GAAP. PHX Energy’s method of calculating gross
profit as a percentage of revenue may differ from that of other
organizations and, accordingly, it may not be comparable to that of
other companies.
The following is a reconciliation of revenue,
direct costs, and gross profit to gross profit as a percentage of
revenue:
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
Revenue |
105,428 |
|
56,838 |
|
|
349,920 |
|
246,402 |
|
|
Direct costs |
(84,276 |
) |
(49,227 |
) |
|
(278,265 |
) |
(213,064 |
) |
|
Gross profit |
21,152 |
|
7,611 |
|
|
71,655 |
|
33,338 |
|
|
Gross profit as a percentage of revenue |
20 |
% |
13 |
% |
|
20 |
% |
14 |
% |
Gross profit as a percentage of revenue
excluding depreciation and amortization is calculated by taking
gross profit as stated on the Consolidated Statements of
Comprehensive Earnings (Loss), adding back depreciation and
amortization and depreciation and amortization right-of-use assets
as stated on the Consolidated Statements of Cash Flows and dividing
the sum by revenue as stated on the Consolidated Statements of
Comprehensive Earnings (Loss).
SG&A Costs Excluding Cash and
Equity-Settled Share-Based Compensation as a Percentage of
Revenue
SG&A costs excluding cash and equity-settled
share-based compensation as a percentage of revenue is defined as
the Corporation’s SG&A costs excluding cash and equity-settled
share-based compensation divided by revenue and is used to assess
the impact of administrative costs excluding the effect of share
price volatility. This non-GAAP measure does not have a
standardized meaning and is not a financial measure recognized
under GAAP. PHX Energy’s method of calculating SG&A costs
excluding cash and equity-settled share-based compensation as a
percentage of revenue may differ from that of other organizations
and, accordingly, it may not be comparable to that of other
companies.
The following is a reconciliation of SG&A
costs, cash-settled share-based compensation, equity-settled
share-based compensation, and revenue to SG&A costs excluding
cash and equity-settled share-based compensation as a percentage of
revenue:
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
SG&A Costs |
13,510 |
|
8,200 |
|
|
46,710 |
|
28,738 |
|
|
Deduct: |
|
|
|
|
|
|
Cash-settled share-based compensation |
(2,972 |
) |
(3,038 |
) |
|
(12,889 |
) |
(1,889 |
) |
|
Equity-settled share-based compensation |
(49 |
) |
(28 |
) |
|
(384 |
) |
(242 |
) |
|
|
10,489 |
|
5,134 |
|
|
33,437 |
|
26,607 |
|
|
Revenue |
105,428 |
|
56,838 |
|
|
349,920 |
|
246,402 |
|
|
SG&A costs excluding cash and equity-settled share-based
compensation as a percentage of revenue |
10 |
% |
9 |
% |
|
10 |
% |
11 |
% |
PHX Energy Services (TSX:PHX)
Gráfica de Acción Histórica
De Dic 2024 a Ene 2025
PHX Energy Services (TSX:PHX)
Gráfica de Acción Histórica
De Ene 2024 a Ene 2025
