CALGARY, Alberta, Nov. 09, 2022 (GLOBE NEWSWIRE) -- Total Energy Services Inc. ("Total Energy" or the "Company") (TSX:TOT) announces its consolidated financial results for the three and nine months ended September 30, 2022.
Financial Highlights
($000's except per share data)
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
| Revenue | $ | 207,678 | $ | 118,881 | 75% | $ | 548,334 | $ | 296,947 | 85% | |||||||
| Operating income (loss) | 21,622 | 6,415 | 237% | 33,738 | (3,093) | nm | |||||||||||
| EBITDA (1) | 42,335 | 27,015 | 57% | 95,448 | 63,448 | 50% | |||||||||||
| Cashflow | 41,078 | 26,253 | 56% | 92,205 | 58,047 | 59% | |||||||||||
| Net income (loss) | 17,163 | 4,279 | 301% | 25,735 | (1,464) | nm | |||||||||||
| Attributable to shareholders | 17,179 | 4,278 | 302% | 25,764 | (1,409) | nm | |||||||||||
| Per Share Data (Diluted) | |||||||||||||||||
| EBITDA (1) | $ | 0.98 | $ | 0.60 | 63% | $ | 2.21 | $ | 1.41 | 57% | |||||||
| Cashflow | $ | 0.95 | $ | 0.58 | 64% | $ | 2.14 | $ | 1.29 | 66% | |||||||
| Attributable to shareholders: | |||||||||||||||||
| Net income (loss) | $ | 0.40 | $ | 0.09 | 344% | $ | 0.60 | $ | (0.03) | nm | |||||||
| Common shares (000's)(4) | |||||||||||||||||
| Basic | 42,339 | 44,921 | (6%) | 42,367 | 44,737 | (5%) | |||||||||||
| Diluted | 43,090 | 45,164 | (5%) | 43,142 | 44,965 | (4%) | |||||||||||
| September 30 | December 31 | ||||||||||||||||
| Financial Position at | 2022 | 2021 | Change | ||||||||||||||
| Total Assets | $ | 897,084 | $ | 813,522 | 10% | ||||||||||||
| Long-Term Debt and Lease Liabilities (excluding current portion) | 155,429 | 196,007 | (21%) | ||||||||||||||
| Working Capital (2) | 129,354 | 137,304 | (6%) | ||||||||||||||
| Net Debt (3) | 26,075 | 58,703 | (56%) | ||||||||||||||
| Shareholders' Equity | 515,540 | 493,437 | 4% | ||||||||||||||
| Notes 1 through 4 please refer to the Notes to the Financial Highlights set forth at the end of this release. | |||||||||||||||||
| "nm" - calculation not meaningful | |||||||||||||||||
Total Energy's results for the third quarter and first nine months of 2022 reflect continued improvement of North American and Australian industry conditions that were underpinned by relatively strong commodity prices. Despite extended wet weather conditions in Australia that hampered field operations, Total Energy's third quarter represents the highest quarterly EBITDA, cashflow and net income results achieved in the Company's 26 year history as well as the fifth consecutive profitable quarter since the collapse in oil prices in April of 2020. The Company did not receive any COVID-19 relief funds during the quarter as compared to $4.5 million received in the third quarter of 2021.
Contract Drilling Services ("CDS")
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
| Revenue | $ | 73,976 | $ | 43,334 | 71% | $ | 183,478 | $ | 97,645 | 88% | |||||||
| EBITDA (1) | $ | 21,777 | $ | 11,392 | 91% | $ | 42,026 | $ | 22,368 | 88% | |||||||
| EBITDA (1) as a % of revenue | 29% | 26% | 12% | 23% | 23% | - | |||||||||||
| Operating days(2) | 3,097 | 2,221 | 39% | 7,885 | 4,994 | 58% | |||||||||||
| Canada | 2,041 | 1,318 | 55% | 4,675 | 2,965 | 58% | |||||||||||
| United States | 648 | 610 | 6% | 2,045 | 1,378 | 48% | |||||||||||
| Australia | 408 | 293 | 39% | 1,165 | 651 | 79% | |||||||||||
| Revenue per operating day(2), dollars | $ | 23,886 | $ | 19,511 | 22% | $ | 23,269 | $ | 19,552 | 19% | |||||||
| Canada | 22,655 | 16,187 | 40% | 21,560 | 16,180 | 33% | |||||||||||
| United States | 26,370 | 19,269 | 37% | 24,067 | 19,144 | 26% | |||||||||||
| Australia | 26,100 | 34,969 | (25%) | 28,729 | 35,774 | (20%) | |||||||||||
| Utilization | 35% | 25% | 40% | 30% | 19% | 58% | |||||||||||
| Canada | 29% | 19% | 53% | 22% | 14% | 57% | |||||||||||
| United States | 54% | 51% | 6% | 58% | 39% | 49% | |||||||||||
| Australia | 89% | 64% | 39% | 85% | 48% | 77% | |||||||||||
| Rigs, average for period | 95 | 95 | - | 95 | 97 | (2%) | |||||||||||
| Canada | 77 | 77 | - | 77 | 79 | (3%) | |||||||||||
| United States | 13 | 13 | - | 13 | 13 | - | |||||||||||
| Australia | 5 | 5 | - | 5 | 5 | - | |||||||||||
| (1) See Note 1 of the Notes to the Financial Highlights set forth at the end of this release. | |||||||||||||||||
| (2) Operating days includes drilling and paid stand-by days. | |||||||||||||||||
North American drilling activity continued to recover during the third quarter and first nine months of 2022 as compared to the same periods in 2021. A recovery in activity and pricing drove a significant year over year improvement in Canadian third quarter financial performance. In the U.S., increased day rates and modestly higher year over year third quarter utilization contributed to increased revenue and operating income. In Australia, results improved in the third quarter and first nine months of 2022 compared to the same periods in 2021 with two drilling rigs having returned to service in 2021 following necessary recertification and upgrades. The CDS segment's third quarter EBITDA margin increased 12% on a year over year basis with increased pricing offsetting the absence of COVID-19 relief funds and operating cost inflation.
Rentals and Transportation Services ("RTS")
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
| Revenue | $ | 18,070 | $ | 12,313 | 47% | $ | 46,911 | $ | 26,101 | 80% | |||||||
| EBITDA (1) | $ | 8,097 | $ | 4,638 | 75% | $ | 17,190 | $ | 9,928 | 73% | |||||||
| EBITDA (1) as a % of revenue | 45% | 38% | 18% | 37% | 38% | (3%) | |||||||||||
| Revenue per utilized piece of equipment, dollars | $ | 11,283 | $ | 9,452 | 19% | $ | 31,075 | $ | 26,023 | 19% | |||||||
| Pieces of rental equipment | 9,450 | 9,410 | - | 9,450 | 9,410 | - | |||||||||||
| Canada | 8,560 | 8,567 | - | 8,560 | 8,567 | - | |||||||||||
| United States | 890 | 843 | 6% | 890 | 843 | 6% | |||||||||||
| Rental equipment utilization | 17% | 13% | 31% | 16% | 10% | 60% | |||||||||||
| Canada | 16% | 13% | 23% | 15% | 9% | 67% | |||||||||||
| United States | 27% | 19% | 42% | 27% | 14% | 93% | |||||||||||
| Heavy trucks | 71 | 80 | (11%) | 71 | 80 | (11%) | |||||||||||
| Canada | 48 | 56 | (14%) | 48 | 56 | (14%) | |||||||||||
| United States | 23 | 24 | (4%) | 23 | 24 | (4%) | |||||||||||
| (1) See Note 1 of the Notes to the Financial Highlights set forth at the end of this release. | |||||||||||||||||
Third quarter revenue in the RTS segment increased as compared to the same period in 2021 due to higher equipment utilization and improved pricing. Increased equipment utilization as well as higher revenue per utilized piece of equipment contributed to the year over year increase in third quarter EBITDA. Third quarter EBITDA margin was higher compared to the same period in 2021 due to improved pricing offsetting the absence of COVID-19 relief assistance and significant operating cost inflation as well as this segment's significant leverage to higher equipment utilization given its relatively high fixed cost structure.
Compression and Process Services ("CPS")
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
| Revenue | $ | 86,654 | $ | 38,188 | 127% | $ | 238,001 | $ | 106,001 | 125% | |||||||
| EBITDA (1) | $ | 7,956 | $ | 5,843 | 36% | $ | 26,162 | $ | 17,100 | 53% | |||||||
| EBITDA (1) as a % of revenue | 9% | 15% | (40%) | 11% | 16% | (31%) | |||||||||||
| Horsepower of equipment on rent at period end | 37,563 | 28,605 | 31% | 37,563 | 28,605 | 31% | |||||||||||
| Canada | 15,018 | 12,080 | 24% | 15,018 | 12,080 | 24% | |||||||||||
| United States | 22,545 | 16,525 | 36% | 22,545 | 16,525 | 36% | |||||||||||
| Rental equipment utilization during the period (HP)(2) | 63% | 53% | 19% | 56% | 47% | 19% | |||||||||||
| Canada | 49% | 37% | 32% | 41% | 33% | 24% | |||||||||||
| United States | 81% | 78% | 4% | 77% | 71% | 8% | |||||||||||
| Sales backlog at period end, $ million | $ | 197.8 | $ | 95.5 | 107% | $ | 197.8 | $ | 95.5 | 107% | |||||||
| (1) See Note 1 of the Notes to the Financial Highlights set forth at the end of this release. | |||||||||||||||||
| (2) Rental equipment utilization is measured on a horsepower basis. | |||||||||||||||||
The year over year increase in the CPS segment's third quarter revenue was due primarily to higher fabrication sales and increased equipment overhaul activity. Compression rental fleet utilization continued to recover during the third quarter of 2022. The absence of COVID-19 relief assistance, general operating cost inflation and cost overruns on a project that were not anticipated based on previous projects with the same customer, contributed to a lower third quarter EBITDA margin in 2022 as compared to 2021. The fabrication sales backlog continued to grow during the third quarter of 2022, increasing by $50.3 million, or 34%, compared to the $147.5 million backlog at December 31, 2021 and $16.1 million from the $181.7 million backlog at June 30, 2022.
Well Servicing ("WS")
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
| Revenue | $ | 28,978 | $ | 25,046 | 16% | $ | 79,944 | $ | 67,200 | 19% | |||||||
| EBITDA (1) | $ | 6,896 | $ | 6,494 | 6% | $ | 17,173 | $ | 16,313 | 5% | |||||||
| EBITDA (1) as a % of revenue | 24% | 26% | (8%) | 21% | 24% | (13%) | |||||||||||
| Service hours(2) | 30,894 | 29,927 | 3% | 87,740 | 81,060 | 8% | |||||||||||
| Canada | 15,506 | 15,076 | 3% | 42,663 | 40,501 | 5% | |||||||||||
| United States | 5,073 | 4,147 | 22% | 13,783 | 10,206 | 35% | |||||||||||
| Australia | 10,315 | 10,704 | (4%) | 31,294 | 30,353 | 3% | |||||||||||
| Revenue per service hour(2), dollars | $ | 938 | $ | 837 | 12% | $ | 911 | $ | 829 | 10% | |||||||
| Canada | 969 | 719 | 35% | 903 | 682 | 32% | |||||||||||
| United States | 914 | 716 | 28% | 878 | 691 | 27% | |||||||||||
| Australia | 904 | 1,050 | (14%) | 937 | 1,072 | (13%) | |||||||||||
| Utilization(3) | 34% | 31% | 10% | 32% | 28% | 14% | |||||||||||
| Canada | 30% | 29% | 3% | 27% | 26% | 4% | |||||||||||
| United States | 50% | 32% | 56% | 46% | 27% | 70% | |||||||||||
| Australia | 39% | 40% | (3%) | 40% | 39% | 3% | |||||||||||
| Rigs, average for period | 80 | 83 | (4%) | 80 | 83 | (4%) | |||||||||||
| Canada | 57 | 57 | - | 57 | 57 | - | |||||||||||
| United States | 11 | 14 | (21%) | 11 | 14 | (21%) | |||||||||||
| Australia | 12 | 12 | - | 12 | 12 | - | |||||||||||
| (1) See Note 1 of the Notes to the Financial Highlights set forth at the end of this release. | |||||||||||||||||
| (2) Service hours is defined as well servicing hours of service provided to customers and includes paid rig move and standby. | |||||||||||||||||
| (3) The Company reports its service rig utilization for its operational service rigs in North America based on service hours of 3,650 per rig per year to reflect standard 10 hour operations per day. Utilization for the Company's service rigs in Australia is calculated based on service hours of 8,760 per rig per year to reflect standard 24 hour operations. | |||||||||||||||||
Third quarter WS segment revenue increased in 2022 as compared to 2021 due primarily to improved North American activity and pricing as well as the mix of equipment operating. EBITDA for the third quarter of 2022 was higher compared to the same period last year with stronger North American results offsetting weakness in Australia where field activity was limited due to prolonged wet weather conditions that resulted in a substantial year over year increase in lower rate paid stand-by. Improved year over year North American pricing was not sufficient to offset the absence of COVID-19 relief funds and significant operating cost inflation as well as the negative impact of the year over year depreciation of the Australian dollar relative to the Canadian dollar on Australian results.
Corporate
During the third quarter of 2022, Total Energy remained focused on the safe and efficient operation of its business and improving the overall financial performance of the Company in a challenging supply chain and cost environment. After funding third quarter capital expenditures, lease and interest obligations, Total Energy generated $29.5 million of free cash flow that was directed towards $10.7 million of debt reduction, $2.5 million of dividends and $2.2 million of share repurchases under the Company's normal course issuer bid.
For the nine months ended September 30, 2022, after changes in non-cash working capital items and funding $26.5 million of net capital expenditures, $5.3 million of interest payments and $3.6 million of lease payments, Total Energy has generated $56.8 million of free cash flow that has been allocated towards $42.0 million of debt repayment, $8.1 million of share repurchases and $5.0 million of declared dividends.
Total Energy exited the third quarter of 2022 with $129.4 million of positive working capital, including $34.3 million of cash, and $135 million of available credit under its $225 million of revolving bank credit facilities. The weighted average interest rate on the Company's outstanding debt at September 30, 2022 was 4.31%.
Outlook
Total Energy's record third quarter financial results were achieved despite relatively low global oil and gas industry investment as compared to prior periods of similarly high commodity prices. Contributing to the recovery in energy service industry conditions has been the significant contraction in industry capacity over the past few years. The Company's ability to achieve record quarterly results during a quarter that historically is seasonally weaker in Canada than the first quarter demonstrates the continued recovery in North American industry conditions as well as Total Energy's leverage to improving industry conditions following the acquisition of Savanna Energy Services in mid-2017 and subsequent annual realized integration synergies of approximately $23 million.
Current indications are that North American industry activity levels will continue to moderately increase in the near to medium term. While Australian industry conditions have also improved, prolonged wet weather conditions have hampered field activity. In response to immediate opportunities to upgrade and redeploy equipment within the CDS, RTS and WS segments, Total Energy has increased its 2022 capital expenditure budget by $7.0 million to $63.2 million, which includes $4.1 million of lease liabilities related to light duty vehicles. Excluding lease liabilities, capital expenditures to September 30, 2022 were $42.0 million and $36.1 million net of capital asset disposals. The Company intends to finance its remaining $17.1 million of non-lease 2022 capital commitments with cash on hand and cash flow.
After funding capital expenditure commitments, Total Energy expects to generate significant free cash flow for the remainder of 2022. Given its strong liquidity position and projected increases in short term interest rates, on October 13, 2022 Total Energy repaid in full the variable interest rate mortgage loan with a 2041 maturity that had been taken out by Savanna Energy Services shortly before being acquired by Total Energy. Including prepayment fees and accrued interest, the amount to retire this debt was $13.3 million, which was funded by cash on hand.
Given current market conditions, share buybacks and debt repayment remain attractive opportunities for the deployment of free cash flow. The Company continues to evaluate consolidation opportunities within its existing business segments but will remain disciplined in the pursuit of such opportunities.
Total Energy is pleased to welcome Jeremy Busch-Howell to the position of Vice President, Legal and General Counsel. Mr. Busch-Howell joined the Company in early October and was most recently employed by a private Canadian oil and gas midstream company. Prior to joining the oil and gas industry, Mr. Busch-Howell spent over eight years in private practice with a large Canadian law firm practicing corporate and securities law.
Conference Call
At 9:00 a.m. (Mountain Time) on November 10, 2022 Total Energy will conduct a conference call and webcast to discuss its third quarter financial results. Daniel Halyk, President & Chief Executive Officer, will host the conference call. A live webcast of the conference call will be accessible on Total Energy's website at www.totalenergy.ca by selecting "Webcasts". Persons wishing to participate in the conference call may do so by calling (800) 319-4610 or (416) 915-3239. Those who are unable to listen to the call live may listen to a recording of it on Total Energy's website. A recording of the conference call will also be available until December 10, 2022 by dialing (855) 669-9658 (passcode 9484).
Selected Financial Information
Selected financial information relating to the three and nine months ended September 30, 2022 and 2021 is included in this news release. This information should be read in conjunction with the condensed interim consolidated financial statements of Total Energy and the notes thereto as well as management's discussion and analysis to be issued in due course and in the Company's 2021 Annual report.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
| September 30 | December 31 | ||||||||
| 2022 | 2021 | ||||||||
| (unaudited) | (audited) | ||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 34,303 | $ | 33,365 | |||||
| Accounts receivable | 164,736 | 90,543 | |||||||
| Inventory | 93,390 | 89,921 | |||||||
| Prepaid expenses and deposits | 19,313 | 9,208 | |||||||
| Income taxes receivable | 2,269 | 2,208 | |||||||
| Current portion of lease asset | 507 | 487 | |||||||
| 314,518 | 225,732 | ||||||||
| Property, plant and equipment | 571,433 | 575,913 | |||||||
| Income taxes receivable | 7,070 | 7,070 | |||||||
| Deferred income tax asset | - | 393 | |||||||
| Lease asset | 10 | 361 | |||||||
| Goodwill | 4,053 | 4,053 | |||||||
| $ | 897,084 | $ | 813,522 | ||||||
| Liabilities & Shareholders' Equity | |||||||||
| Current liabilities: | |||||||||
| Accounts payable and accrued liabilities | $ | 119,547 | $ | 65,513 | |||||
| Deferred revenue | 55,140 | 16,274 | |||||||
| Dividends payable | 2,517 | - | |||||||
| Current portion of lease liabilities | 5,304 | 4,030 | |||||||
| Current portion of long-term debt | 2,656 | 2,611 | |||||||
| 185,164 | 88,428 | ||||||||
| Long-term debt | 145,906 | 187,906 | |||||||
| Lease liabilities | 9,523 | 8,101 | |||||||
| Deferred income tax liability | 40,951 | 35,650 | |||||||
| Shareholders' equity: | |||||||||
| Share capital | 264,110 | 270,905 | |||||||
| Contributed surplus | 3,513 | 5,757 | |||||||
| Accumulated other comprehensive loss | (17,997 | ) | (26,704 | ) | |||||
| Non-controlling interest | 532 | 561 | |||||||
| Retained earnings | 265,382 | 242,918 | |||||||
| 515,540 | 493,437 | ||||||||
| $ | 897,084 | $ | 813,522 | ||||||
Consolidated Statements of Comprehensive Income (Loss)
Unaudited (in thousands of Canadian dollars except per share amounts)
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| Revenue | $ | 207,678 | $ | 118,881 | $ | 548,334 | $ | 296,947 | |||||
| Cost of services | 156,803 | 85,255 | 427,518 | 219,435 | |||||||||
| Selling, general and administration | 9,695 | 7,254 | 28,589 | 19,862 | |||||||||
| Other income | (405 | ) | (474 | ) | (1,080 | ) | (2,654 | ) | |||||
| Share-based compensation | 312 | 186 | 791 | 576 | |||||||||
| Depreciation | 19,651 | 20,245 | 58,778 | 62,821 | |||||||||
| Operating income (loss) | 21,622 | 6,415 | 33,738 | (3,093 | ) | ||||||||
| Gain on sale of property, plant and equipment | 1,062 | 355 | 2,932 | 3,720 | |||||||||
| Finance costs, net | (1,911 | ) | (1,675 | ) | (5,280 | ) | (5,254 | ) | |||||
| Net income (loss) before income taxes | 20,773 | 5,095 | 31,390 | (4,627 | ) | ||||||||
| Current income tax expense (recovery) | 403 | (122 | ) | (39 | ) | (577 | ) | ||||||
| Deferred income tax expense (recovery) | 3,207 | 938 | 5,694 | (2,586 | ) | ||||||||
| Total income tax expense (recovery) | 3,610 | 816 | 5,655 | (3,163 | ) | ||||||||
| Net income (loss) | $ | 17,163 | $ | 4,279 | $ | 25,735 | $ | (1,464 | ) | ||||
| Net income (loss) attributable to: | |||||||||||||
| Shareholders of the Company | $ | 17,179 | $ | 4,278 | $ | 25,764 | $ | (1,409 | ) | ||||
| Non-controlling interest | (16 | ) | 1 | (29 | ) | (55 | ) | ||||||
| Income (loss) per share | |||||||||||||
| Basic | $ | 0.41 | $ | 0.10 | $ | 0.61 | $ | (0.03 | ) | ||||
| Diluted | $ | 0.40 | $ | 0.09 | $ | 0.60 | $ | (0.03 | ) | ||||
Consolidated Statements of Comprehensive Income (Loss)
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| Net income (loss) for the period | $ | 17,163 | $ | 4,279 | $ | 25,735 | $ | (1,464 | ) | ||||
| Unrealized foreign currency translation | 8,496 | 3,121 | 8,707 | (8,001 | ) | ||||||||
| Total other comprehensive income (loss) for the period | 8,496 | 3,121 | 8,707 | (8,001 | ) | ||||||||
| Total comprehensive income (loss) | $ | 25,659 | $ | 7,400 | $ | 34,442 | $ | (9,465 | ) | ||||
| Total comprehensive income (loss) attributable to: | |||||||||||||
| Shareholders of the Company | $ | 25,675 | $ | 7,399 | $ | 34,471 | $ | (9,410 | ) | ||||
| Non-controlling interest | (16 | ) | 1 | (29 | ) | (55 | ) | ||||||
Consolidated Statements of Cash Flows
Unaudited (in thousands of Canadian dollars)
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| Cash provided by (used in): | |||||||||||||
| Operations: | |||||||||||||
| Net income (loss) for the period | $ | 17,163 | $ | 4,279 | $ | 25,735 | $ | (1,464 | ) | ||||
| Add (deduct) items not affecting cash: | |||||||||||||
| Depreciation | 19,651 | 20,245 | 58,778 | 62,821 | |||||||||
| Share-based compensation | 312 | 186 | 791 | 576 | |||||||||
| Gain on sale of property, plant and equipment | (1,062 | ) | (355 | ) | (2,932 | ) | (3,720 | ) | |||||
| Finance costs, net | 1,911 | 1,675 | 5,280 | 5,254 | |||||||||
| Unrealized gain on foreign currencies translation | (405 | ) | (474 | ) | (1,080 | ) | (2,654 | ) | |||||
| Current income tax expense (recovery) | 403 | (122 | ) | (39 | ) | (577 | ) | ||||||
| Deferred income tax expense (recovery) | 3,207 | 938 | 5,694 | (2,586 | ) | ||||||||
| Income taxes (paid) recovered | (102 | ) | (119 | ) | (22 | ) | 397 | ||||||
| Cashflow | 41,078 | 26,253 | 92,205 | 58,047 | |||||||||
| Changes in non-cash working capital items: | |||||||||||||
| Accounts receivable | (33,689 | ) | (17,132 | ) | (73,667 | ) | (17,291 | ) | |||||
| Inventory | 123 | (6,431 | ) | (3,467 | ) | (4,302 | ) | ||||||
| Prepaid expenses and deposits | (3,856 | ) | (3,911 | ) | (10,105 | ) | (1,870 | ) | |||||
| Accounts payable and accrued liabilities | 16,121 | 7,984 | 44,960 | 15,975 | |||||||||
| Deferred revenue | (933 | ) | 6,531 | 38,866 | 11,223 | ||||||||
| Cash provided by operating activities | 18,844 | 13,294 | 88,792 | 61,782 | |||||||||
| Investing: | |||||||||||||
| Purchase of property, plant and equipment | (17,063 | ) | (4,077 | ) | (42,022 | ) | (17,230 | ) | |||||
| Proceeds on disposal of property, plant and equipment | 2,083 | 711 | 5,960 | 9,156 | |||||||||
| Changes in non-cash working capital items | 6,603 | (709 | ) | 9,554 | 342 | ||||||||
| Cash used in investing activities | (8,377 | ) | (4,075 | ) | (26,508 | ) | (7,732 | ) | |||||
| Financing: | |||||||||||||
| Repayment of long-term debt | (10,651 | ) | (7,636 | ) | (41,955 | ) | (36,911 | ) | |||||
| Repayment of lease liabilities | (1,326 | ) | (1,088 | ) | (3,607 | ) | (4,710 | ) | |||||
| Dividends to shareholders | (2,482 | ) | - | (2,482 | ) | - | |||||||
| Repurchase of common shares | (2,248 | ) | (2,489 | ) | (8,147 | ) | (4,742 | ) | |||||
| Shares issued on exercise of share options | 85 | - | 116 | - | |||||||||
| Interest paid | (1,887 | ) | (1,668 | ) | (5,271 | ) | (5,114 | ) | |||||
| Cash used in financing activities | (18,509 | ) | (12,881 | ) | (61,346 | ) | (51,477 | ) | |||||
| Change in cash and cash equivalents | (8,042 | ) | (3,662 | ) | 938 | 2,573 | |||||||
| Cash and cash equivalents, beginning of period | 42,345 | 29,231 | 33,365 | 22,996 | |||||||||
| Cash and cash equivalents, end of period | $ | 34,303 | $ | 25,569 | $ | 34,303 | $ | 25,569 | |||||
Segmented Information
The Company provides a variety of products and services to the energy and other resource industries through five reporting segments, which operate substantially in three geographic regions. These reporting segments are Contract Drilling Services, which includes the contracting of drilling equipment and the provision of labour required to operate the equipment, Rentals and Transportation Services, which includes the rental and transportation of equipment used in energy and other industrial operations, Compression and Process Services, which includes the fabrication, sale, rental and servicing of gas compression and process equipment and Well Servicing, which includes the contracting of service rigs and the provision of labour required to operate the equipment. Corporate includes activities related to the Company's corporate and public issuer affairs.
As at and for the three months ended September 30, 2022 (unaudited, in thousands of Canadian dollars)
| Contract | Rentals and | Compression | Well | Corporate (1) | Total | |||||||||||||
| Drilling | Transportation | and Process | Servicing | |||||||||||||||
| Services | Services | Services | ||||||||||||||||
| Revenue | $ | 73,976 | $ | 18,070 | $ | 86,654 | $ | 28,978 | $ | - | $ | 207,678 | ||||||
| Cost of services | 50,189 | 8,501 | 77,234 | 20,879 | - | 156,803 | ||||||||||||
| Selling, general and administration | 2,011 | 1,662 | 2,139 | 1,399 | 2,484 | 9,695 | ||||||||||||
| Other income | - | - | - | - | (405) | (405) | ||||||||||||
| Share-based compensation | - | - | - | - | 312 | 312 | ||||||||||||
| Depreciation | 8,888 | 4,855 | 2,415 | 3,247 | 246 | 19,651 | ||||||||||||
| Operating income (loss) | 12,888 | 3,052 | 4,866 | 3,453 | (2,637) | 21,622 | ||||||||||||
| Gain (loss) on sale of property, plant and equipment | 1 | 190 | 675 | 196 | - | 1,062 | ||||||||||||
| Finance costs, net | (8) | (20) | (114) | (8) | (1,761) | (1,911) | ||||||||||||
| Net income (loss) before income taxes | 12,881 | 3,222 | 5,427 | 3,641 | (4,398) | 20,773 | ||||||||||||
| Goodwill | - | 2,514 | 1,539 | - | - | 4,053 | ||||||||||||
| Total assets | 358,510 | 186,260 | 258,328 | 87,568 | 6,418 | 897,084 | ||||||||||||
| Total liabilities | 79,604 | 18,246 | 110,036 | 7,121 | 166,537 | 381,544 | ||||||||||||
| Capital expenditures | 10,506 | 2,260 | 2,801 | 1,427 | 69 | 17,063 | ||||||||||||
| Canada | United States | Australia | Other | Total | ||||||
| Revenue | $ | 98,020 | $ | 77,165 | $ | 32,493 | $ | - | $ | 207,678 |
| Non-current assets (2) | 374,894 | 149,528 | 51,074 | - | 575,496 | |||||
As at and for the three months ended September 30, 2021 (unaudited, in thousands of Canadian dollars)
| Contract | Rentals and | Compression | Well | Corporate (1) | Total | |||||||||||||
| Drilling | Transportation | and Process | Servicing | |||||||||||||||
| Services | Services | Services | ||||||||||||||||
| Revenue | $ | 43,334 | $ | 12,313 | $ | 38,188 | $ | 25,046 | $ | - | $ | 118,881 | ||||||
| Cost of services | 31,089 | 6,288 | 30,475 | 17,403 | - | 85,255 | ||||||||||||
| Selling, general and administration | 856 | 1,487 | 2,129 | 1,141 | 1,641 | 7,254 | ||||||||||||
| Other income | - | - | - | - | (474) | (474) | ||||||||||||
| Share-based compensation | - | - | - | - | 186 | 186 | ||||||||||||
| Depreciation | 9,038 | 4,917 | 2,353 | 3,658 | 279 | 20,245 | ||||||||||||
| Operating income (loss) | 2,351 | (379) | 3,231 | 2,844 | (1,632) | 6,415 | ||||||||||||
| Gain (loss) on sale of property, plant and equipment | 3 | 100 | 259 | (8) | 1 | 355 | ||||||||||||
| Finance costs | (1) | (13) | (69) | (5) | (1,587) | (1,675) | ||||||||||||
| Net income (loss) before income taxes | 2,353 | (292) | 3,421 | 2,831 | (3,218) | 5,095 | ||||||||||||
| Goodwill | - | 2,514 | 1,539 | - | - | 4,053 | ||||||||||||
| Total assets | 322,629 | 186,198 | 214,807 | 95,598 | 3,666 | 822,898 | ||||||||||||
| Total liabilities | 57,587 | 9,908 | 43,168 | 5,244 | 209,635 | 325,542 | ||||||||||||
| Capital expenditures | 2,818 | 61 | 910 | 288 | - | 4,077 | ||||||||||||
| Canada | United States | Australia | Other | Total | ||||||
| Revenue | $ | 70,832 | $ | 26,492 | $ | 21,557 | $ | - | $ | 118,881 |
| Non-current assets (2) | 386,720 | 141,153 | 61,265 | - | 589,138 | |||||
| (1) Corporate includes the Company's corporate activities and obligations pursuant to long-term credit facilities. | ||||||||||
| (2) Includes property, plant and equipment, lease asset (excluding current portion) and goodwill. | ||||||||||
As at and for the nine months ended September 30, 2022 (unaudited, in thousands of Canadian dollars)
| As at and for the nine months ended | Contract | Rentals and | Compression | Well | Corporate | Total | ||||||||||||
| September 30, 2022 | Drilling | Transportation | and Process | Servicing | (1) | |||||||||||||
| Services | Services | Services | ||||||||||||||||
| Revenue | $ | 183,478 | $ | 46,911 | $ | 238,001 | $ | 79,944 | $ | - | $ | 548,334 | ||||||
| Cost of services | 136,354 | 25,561 | 206,556 | 59,047 | - | 427,518 | ||||||||||||
| Selling, general and administration | 5,367 | 4,990 | 6,863 | 3,977 | 7,392 | 28,589 | ||||||||||||
| Other income | - | - | - | - | (1,080) | (1,080) | ||||||||||||
| Share-based compensation | - | - | - | - | 791 | 791 | ||||||||||||
| Depreciation | 26,647 | 14,650 | 7,107 | 9,667 | 707 | 58,778 | ||||||||||||
| Operating income (loss) | 15,110 | 1,710 | 17,475 | 7,253 | (7,810) | 33,738 | ||||||||||||
| Gain on sale of property, plant and equipment | 269 | 830 | 1,580 | 253 | - | 2,932 | ||||||||||||
| Finance costs, net | (14) | (59) | (288) | (17) | (4,902) | (5,280) | ||||||||||||
| Net income (loss) before income taxes | 15,365 | 2,481 | 18,767 | 7,489 | (12,712) | 31,390 | ||||||||||||
| Goodwill | - | 2,514 | 1,539 | - | - | 4,053 | ||||||||||||
| Total assets | 358,510 | 186,260 | 258,328 | 87,568 | 6,418 | 897,084 | ||||||||||||
| Total liabilities | 79,604 | 18,246 | 110,036 | 7,121 | 166,537 | 381,544 | ||||||||||||
| Capital expenditures | 27,970 | 5,018 | 5,562 | 3,392 | 80 | 42,022 | ||||||||||||
| Canada | United States | Australia | Other | Total | ||||||
| Revenue | $ | 282,287 | $ | 166,523 | $ | 99,524 | $ | - | $ | 548,334 |
| Non-current assets (2) | 374,894 | 149,528 | 51,074 | - | 575,496 | |||||
As at and for the nine months ended September 30, 2021 (unaudited, in thousands of Canadian dollars)
| Contract | Rentals and | Compression | Well | Corporate (1) | Total | |||||||||||||
| Drilling | Transportation | and Process | Servicing | |||||||||||||||
| Services | Services | Services | ||||||||||||||||
| Revenue | $ | 97,645 | $ | 26,101 | $ | 106,001 | $ | 67,200 | $ | - | $ | 296,947 | ||||||
| Cost of services | 72,359 | 13,989 | 85,631 | 47,456 | - | 219,435 | ||||||||||||
| Selling, general and administration | 3,201 | 4,015 | 4,753 | 3,470 | 4,423 | 19,862 | ||||||||||||
| Other income | - | - | - | - | (2,654) | (2,654) | ||||||||||||
| Share-based compensation | - | - | - | - | 576 | 576 | ||||||||||||
| Depreciation | 28,364 | 15,477 | 7,025 | 11,259 | 696 | 62,821 | ||||||||||||
| Operating income (loss) | (6,279) | (7,380) | 8,592 | 5,015 | (3,041) | (3,093) | ||||||||||||
| Gain on sale of property, plant and equipment | 283 | 1,831 | 1,483 | 39 | 84 | 3,720 | ||||||||||||
| Finance costs | (10) | (59) | (221) | (16) | (4,948) | (5,254) | ||||||||||||
| Net income (loss) before income taxes | (6,006) | (5,608) | 9,854 | 5,038 | (7,905) | (4,627) | ||||||||||||
| Goodwill | - | 2,514 | 1,539 | - | - | 4,053 | ||||||||||||
| Total assets | 322,629 | 186,198 | 214,807 | 95,598 | 3,666 | 822,898 | ||||||||||||
| Total liabilities | 57,587 | 9,908 | 43,168 | 5,244 | 209,635 | 325,542 | ||||||||||||
| Capital expenditures | 12,557 | 341 | 3,491 | 841 | - | 17,230 | ||||||||||||
| Canada | United States | Australia | Other | Total | ||||||
| Revenue | $ | 173,125 | $ | 67,695 | $ | 56,125 | $ | 2 | $ | 296,947 |
| Non-current assets (2) | 386,720 | 141,153 | 61,265 | - | 589,138 | |||||
| (1) Corporate includes the Company's corporate activities and obligations pursuant to long-term credit facilities. | ||||||||||
| (2) Includes property, plant and equipment, lease asset (excluding current portion) and goodwill. | ||||||||||
Total Energy provides contract drilling services, equipment rentals and transportation services, well servicing and compression and process equipment and service to the energy and other resource industries from operation centers in North America and Australia. The common shares of Total Energy are listed and trade on the TSX under the symbol TOT.
For further information, please contact Daniel Halyk, President & Chief Executive Officer at (403) 216-3921 or Yuliya Gorbach, Vice-President Finance and Chief Financial Officer at (403) 216-3920 or by e-mail at: investorrelations@totalenergy.ca or visit our website at www.totalenergy.ca
Notes to the Financial Highlights
| (1) | EBITDA means earnings before interest, taxes, depreciation and amortization and is equal to net income (loss) before income taxes plus finance costs plus depreciation. EBITDA is not a recognized measure under IFRS. Management believes that in addition to net income (loss), EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's primary business activities prior to consideration of how those activities are financed, amortized or how the results are taxed in various jurisdictions as well as the cash generated by the Company's primary business activities without consideration of the timing of the monetization of non-cash working capital items. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of Total Energy's performance. Total Energy's method of calculating EBITDA may differ from other organizations and, accordingly, EBITDA may not be comparable to measures used by other organizations. |
| (2) | Working capital equals current assets minus current liabilities. |
| (3) | Net Debt equals long-term debt plus lease liabilities plus current liabilities minus current assets. Management believes this measure provides a useful indication of the Company's liquidity. |
| (4) | Basic and diluted shares outstanding reflect the weighted average number of common shares outstanding for the periods. See note 5 to the Company's Condensed Interim Consolidated Financial Statements. |
Certain statements contained in this press release, including statements which may contain words such as "could", "should", "expect", "believe", "will" and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Forward-looking statements are based upon the opinions and expectations of management of Total Energy as at the effective date of such statements and, in some cases, information supplied by third parties. Although Total Energy believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from third parties is reliable, it can give no assurance that those expectations will prove to have been correct.
In particular, this press release contains forward-looking statements concerning industry activity levels, including expectations regarding Total Energy's future activity levels, market share and compression and process production activity. Such forward-looking statements are based on a number of assumptions and factors including fluctuations in the market for oil and natural gas and related products and services, political and economic conditions, central bank interest rate policy, the demand for products and services provided by Total Energy, Total Energy's ability to attract and retain key personnel and other factors. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Total Energy to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Reference should be made to Total Energy's most recently filed Annual Information Form and other public disclosures (available at www.sedar.com) for a discussion of such risks and uncertainties.
The TSX has neither approved nor disapproved of the information contained herein.
