CALGARY, Nov. 28, 2018
/CNW/ - New West Energy Services Inc. (TSX Venture: NWE), an
oil and gas and environmental services company focused on
Western Canada, today announced
its financial results for the third quarter of 2018.
NOTE REGARDING CHANGE IN FINANCIAL YEAR-END
NWE has changed its financial year-end from April 30 to December 31 to better conform with
other similar energy services companies in the industry and to line
up the company's quarterly filings with more traditional
quarters. Consequently, in this new financial year commencing
January 1, 2018, NWE is reporting
unaudited third quarter interim financial results for the nine
months ended September 30, 2018
compared to the nine months ended October
31, 2017.
Going forward, NWE will use a customary quarterly reporting
calendar based on a December 31
financial year-end, with fiscal quarters ending on the last day in
March, June, September and December each year.
FINANCIAL HIGHLIGHTS
Gerry E. Kerkhoff, President and
Chief Executive Officer of NWE stated "Since 2016, New West has
recorded top line improvement driven primarily by growth in our
Vacuum Truck and Fluid Transportation Services division. In
the third quarter, our drilling services equipment was at near full
utilization and recorded a 71% increase in revenue from the year
before, but our revenue from completions and production was down
49% due to producers delaying projects as a result of deteriorating
market conditions."
Mr. Kerkhoff continued: "Over the past two months, the decrease
in the price of benchmark WTI crude and a sharp increase in the
price differential between US and Canadian crude has created
industry volatility. Management expects sector fundamentals
to improve in 2019 with an increase in rail transportation
capacity, the completion of the Enbridge Inc. Line 3 pipeline
replacement and additional U.S. refineries going online following
maintenance shutdowns. Overall equipment rates have started
to increase, which should help to improve our margins. Also,
we have completed major repairs on our fluid transportation
equipment, which has reduced our reliance on low margin third-party
contractors. Subject to increasing activity in the
completions and production sector, management expects top and
bottom line improvement in the fourth quarter of 2018 and first
quarter of 2019."
- Revenue was $14,827,975 in the
nine months ended September 30, 2018
compared to $14,588,531 in the nine
months ended October 31, 2017, and
$4,297,083 in the three months ended
September 30, 2018 compared to
$5,515,060 in the three months ended
October 31, 2017. While there was a
consistency between the two nine-month periods, in the current
period, NWE realized much stronger revenue in the first quarter
which was offset by a significant decrease in revenue in the second
and third quarters – mostly due to a longer period of spring break
up across all sectors and a reduction in completions activity in
the third quarter.
- Gross margin decreased to 15% in the nine months ended
September 30, 2018 from 19% in the
nine months ended October 31, 2017,
due primarily to a significant reduction in revenue in the second
and third quarter of 2018 with an increase proportionally in direct
costs, including higher fuel and labour costs relative to NWE's
service rates and proportionally higher repair and maintenance
costs for equipment in the first and second quarter. In the three
months ended September 30, 2018,
gross margin increased to 26% when compared to 21% in the three
months ended October 31, 2017. This
increase is due primarily to the Vacuum Truck and Fluid
Transportation Services division where, in the drilling sector,
revenue increased by 71% and gross margin improved from 28 to 35%.
In the completions and production sectors, revenue decreased by 49%
but was offset by a significant decrease in associated expenses,
coupled with a decrease in reliance on low margin third-party
contractors, resulting in gross margin decreasing slightly from 13
to 11%.
- General and administrative expenses were $2,777,314 in the nine months ended September 30, 2018 compared to $2,509,516 in the nine months ended October 31, 2017, due mainly to expenses
associated with the hiring of personnel and the continued
establishment of operations in Grande
Prairie servicing the completions and production sectors,
and $901,188 in the three months
ended September 30, 2018 compared to
$910,310 in the three months ended
October 31, 2017, reflecting a
consistency between the two reporting periods.
- Normalized EBITDAC was $19,875 in
the nine months ended September 30,
2018 compared to $779,765 in
the nine months ended October 31,
2017, and $224,655 in the
three months ended September 30, 2018
compared to $243,573 in the three
months ended October 31, 2017.
|
For the nine months ended September
30,
|
For the nine months ended October 31,
|
|
2018
|
|
2017
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
$
|
$
|
|
$
|
$
|
$
|
$
|
Revenue
|
11,714,051
|
3,113,924
|
-
|
14,827,975
|
|
11,021,536
|
3,566,995
|
-
|
14,588,531
|
Direct
costs
|
9,985,819
|
2,092,105
|
-
|
12,077,924
|
|
8,918,572
|
2,386,847
|
-
|
11,305,419
|
Gross
margin
|
1,728,232
|
1,021,819
|
-
|
2,750,051
|
|
2,102,964
|
1,180,148
|
-
|
3,283,112
|
G & A
expenses
|
1,454,070
|
1,059,417
|
263,827
|
2,777,314
|
|
1,210,708
|
1,027,885
|
270,923
|
2,509,516
|
Share base
pmts
|
-
|
-
|
109,043
|
109,043
|
|
-
|
-
|
540,269
|
540,269
|
Finance
charges
|
443,112
|
45,745
|
77,993
|
566,850
|
|
530,240
|
38,959
|
121,695
|
690,894
|
Depreciation
|
1,112,002
|
-
|
-
|
1,112,002
|
|
1,311,700
|
-
|
-
|
1,311,700
|
Disposal of
assets
|
141,894
|
-
|
-
|
141,894
|
|
79,213
|
-
|
-
|
79,213
|
Net loss before
tax
|
(1,422,846)
|
(83,343)
|
(450,863)
|
(1,957,052)
|
|
(1,028,897)
|
113,304
|
(932,887)
|
(1,848,480)
|
Total
assets
|
11,643,203
|
771,752
|
13,822
|
12,428,777
|
|
14,238,484
|
1,341,434
|
60,889
|
15,640,807
|
EBITDAC*
|
310,029
|
(37,598)
|
(252,556)
|
19,875
|
|
892,256
|
158,432
|
(270,923)
|
779,765
|
|
For the three months ended September 30,
|
|
For the three months ended October 31,
|
|
2018
|
|
2017
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
$
|
$
|
|
$
|
$
|
$
|
$
|
Revenue
|
3,360,041
|
937,042
|
-
|
4,297,083
|
|
4,266,120
|
1,248,940
|
-
|
5,515,060
|
Direct
costs
|
2,574,902
|
607,609
|
-
|
3,182,511
|
|
3,562,477
|
798,700
|
-
|
4,361,177
|
Gross
margin
|
785,139
|
329,433
|
-
|
1,114,572
|
|
703,643
|
450,240
|
-
|
1,153,883
|
G & A
expenses
|
458,112
|
341,640
|
101,436
|
901,188
|
|
482,004
|
341,902
|
86,404
|
910,310
|
Share base
pmts
|
-
|
-
|
92,532
|
92,532
|
|
-
|
-
|
-
|
-
|
Finance
charges
|
145,886
|
13,290
|
30,450
|
189,626
|
|
159,207
|
19,032
|
41,174
|
219,413
|
Depreciation
|
375,221
|
-
|
-
|
375,221
|
|
444,343
|
-
|
-
|
444,343
|
Disposal of
assets
|
70,013
|
-
|
-
|
70,013
|
|
68,647
|
-
|
-
|
68,647
|
Net loss before
tax
|
(264,093)
|
(25,497)
|
(224,418)
|
(514,008)
|
|
(450,558)
|
89,306
|
(127,578)
|
(488,830)
|
Total
assets
|
11,643,203
|
771,752
|
13,822
|
12,428,777
|
|
14,238,484
|
1,341,434
|
60,889
|
15,640,807
|
EBITDAC*
|
327,027
|
(12,207)
|
(90,165)
|
224,655
|
|
221,639
|
108,338
|
(86,404)
|
243,573
|
* Normalized EBITDAC is earnings from continuing operations
before interest, taxes, depreciation, amortization and share-based
payments and is a measure of NWE's operating profitability. The
calculation is further adjusted to normalize EBITDAC by removing
any non-reoccurring transactions that are not in the normal course
of operations. ** Copies of NWE's financial statements,
MD&A and other public filings are available under the company's
profile on SEDAR at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this news release may constitute
"forward-looking information" within the meaning of applicable
securities laws that involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements or industry results to be materially different from
any future results, performance or achievements or industry results
expressed or implied by such forward-looking information and
financial outlook. Forward-looking information is identified
by the use of terms and phrases such as "anticipate", "believe",
"could", "should", "estimate", "expect", "intend", "may", "plan",
"predict", "project", "will", "would", and similar terms and
phrases, including references to assumptions. Such
information may involve, but is not limited to, comments with
respect to strategies, expectations, planned operations or future
actions. Forward-looking information in this news release
includes, without limitation, statements with respect to: the use
of proceeds of its loans; the use of the acquired equipment;
planned changes in NWE's business and revenues; the competitive
environment in which NWE operates; and the assessment of future
plans and operations. Actual events or results may differ
materially. The forward-looking information in this news
release is based on assumptions which includes, but is not limited
to: NWE realizing the expected benefits of its loans and acquired
equipment; the general state of the economy and the oil and gas
industry not worsening; NWE not losing any key personnel; NWE
sustaining or increasing their level of revenues and EBITDAC
NWE growing its businesses long term and managing its growth;
NWE complying with existing regulations and not becoming subject to
more stringent regulations; and, NWE's insurance being sufficient
to cover losses that may occur as a result of its operations.
The forward-looking information in this news release is subject to
risks, uncertainties and other factors that could cause actual
results to differ materially from historical results or results
anticipated by the forward-looking information. The factors
which could cause results to differ from current expectations
include, but are not limited to: failure to realize the expected
benefits of its loans and acquired equipment; potential undisclosed
liens associated with the acquired equipment; NWE's results being
dependent upon the general state of the economy and the oil and gas
industry; NWE being dependent on key personnel, the loss of which
could harm its business; NWE may not be able to sustain or increase
their revenues or EBITDAC; NWE may be unable to grow its business
long term or to manage any growth; NWE may be unable to integrate
the acquired equipment into its business; competition in NWE's
markets may lead to reduced revenues and EBITDAC; NWE may fail to
comply with existing regulations or become subject to more
stringent regulations; NWE's insurance may be insufficient to cover
losses that may occur as a result of NWE's operations; the market
price of NWE's common shares will fluctuate; and, there is a
possibility of dilution of existing holders of NWE's common shares
due to future financings or acquisitions. Although NWE has
attempted to identify factors that would cause actual actions,
events or results to differ materially from those disclosed in the
forward-looking statements in this news release, there may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended. Also, many of the factors are
beyond the control of NWE. Accordingly, readers should not
place undue reliance on the forward-looking information in this
news release. The forward-looking information is made as of
the date of this news release, and NWE does not assume any
obligation to publicly update or revise such forward-looking
information to reflect new information, subsequent or otherwise,
except as may be required by applicable law. The
forward-looking information contained herein is expressly qualified
in its entirety by this cautionary statement.
SOURCE New West Energy Services Inc.