CALGARY, Nov. 13, 2018 /CNW/ - MATRRIX Energy Technologies
Inc. ("MATRRIX" or the "Corporation") (TSX-V: MXX) announces
financial results for the three and nine month periods ended
September 30, 2018. The following
should be read in conjunction with the Corporation's unaudited
interim condensed consolidated financial statements and the notes
thereto for the three and nine month periods ended September 30, 2018 and related management's
discussion and analysis, which are available on SEDAR at
www.sedar.com.
All monetary amounts contained herein are expressed in thousands
of Canadian dollars, except for per share amounts.
THIRD QUARTER 2018 SUMMARY (Compared with the third
quarter 2017)
- Adjusted EBITDA of $157, up 216%
from an adjusted EBITDA loss of ($135);
- Revenue of $4,785, up 148% from
$1,933;
- Net loss of ($905), increased 22%
from a net loss of ($743);
- Gross margin of 26%, decreased 13% from 30%.
NINE MONTHS ENDED SEPTEMBER 30,
2018 SUMMARY (Compared with the nine months ended
September 30, 2017)
- Adjusted EBITDA of $691, up 227%
from an adjusted EBITDA loss of ($543);
- Revenue of $14,307 up 215% from
$4,544;
- Net loss of ($2,125), improved
12% from a net loss of ($2,411);
- Gross margin of 28%, decreased 14% from 32%.
FINANCIAL HIGHLIGHTS
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
(000's CAD
$)
|
2018
|
2017
|
%
Change
|
|
2018
|
2017
|
%
Change
|
Revenue
|
4,785
|
1,933
|
148%
|
|
14,307
|
4,544
|
215%
|
Adjusted EBITDA
(i)
|
157
|
(135)
|
216%
|
|
691
|
(543)
|
227%
|
Adjusted EBITDA per
share
|
|
|
|
|
|
|
|
Basic
|
-
|
-
|
nm
|
|
0.01
|
(0.02)
|
150%
|
Diluted
|
-
|
-
|
nm
|
|
0.01
|
(0.02)
|
150%
|
Net loss
|
(905)
|
(743)
|
(22%)
|
|
(2,125)
|
(2,411)
|
12%
|
Net loss per
share
|
|
|
|
|
|
|
|
Basic
|
(0.01)
|
(0.02)
|
50%
|
|
(0.02)
|
(0.07)
|
71%
|
Diluted
|
(0.01)
|
(0.02)
|
50%
|
|
(0.02)
|
(0.07)
|
71%
|
Funds flow
|
135
|
(116)
|
216%
|
|
339
|
(503)
|
167%
|
Gross Margin
(i)
|
1,247
|
582
|
114%
|
|
3,959
|
1,458
|
172%
|
Capital expenditures
related to acquisitions
|
-
|
-
|
nm
|
|
8,511
|
-
|
nm
|
Capital
expenditures
|
2,364
|
-
|
nm
|
|
9,845
|
77
|
nm
|
Weighted Average
common shares outstanding
|
131,577
|
33,862
|
289%
|
|
130,623
|
32,750
|
299%
|
Weighted Average
diluted common shares outstanding
|
131,577
|
33,862
|
289%
|
|
130,623
|
32,750
|
299%
|
nm - calculation is
not meaningful
|
|
|
|
Revenue
Consolidated revenue for the three and nine month periods ended
September 30, 2018 was $4,785 and $14,307,
respectively, as compared to $1,933
and $4,544 for the corresponding 2017
periods. The increase in revenue was primarily related to the new
contract drilling rig segment offset by decreases in operating
activity in the Corporation's horizontal and directional drilling
segment.
Adjusted EBITDA
Adjusted EBITDA for the three and nine month periods ended
September 30, 2018 was $157 and $691,
respectively, as compared to ($135)
and ($543) for the corresponding 2017
periods. The increase in EBITDA was primarily related to the
profitability of the new contract drilling rig segment. For the
three and nine month periods ended September
30, 2018, the contract drilling rig segment contributed
$150 and $1,637 for the respective periods.
Net Loss
Consolidated net loss for the three and nine month periods ended
September 30, 2018 was ($905) and ($2,125), respectively, as compared to net losses
of ($743) and ($2,411), respectively, for the 2017
corresponding periods.
Capital Expenditures
Capital expenditures for the three and nine month periods ended
September 130, 2018 were $2,364 and
$14,703, respectively, as compared to
$nil and $77 for the corresponding
2017 periods. The Q3 2018 capital expenditures were related to rig
upgrades. As of the date of this press release, the Corporation has
committed $2,348 for rig upgrades as
part of its 2018 capital program.
OUTLOOK
Currently, the Corporation has both of its Alberta drilling rigs (or 100%) which had been
recently upgraded and mobilized from Saskatchewan and five out of seven (or 63%) of
its Saskatchewan drilling rigs
operating. The Corporation forecasts to have all of its
Alberta and Saskatchewan drilling rigs working into the
latter half of Q4 2018, continuing through Q1 2019 and into spring
breakup.
Despite the steady rise in oil prices for the first nine months
in 2018, a lack of consistent market access has caused
differentials to widen significantly across the WCSB. Therefore,
the Corporation continues to believe activity in the WCSB will
remain challenged with similar activity levels in Q4 2018 and Q1
2019 as compared to Q4 2017 and Q1 2018 respectively. Currently,
none of the Corporation's customers are producing Canadian heavy
oil.
The Corporation has made significant capital investments over
the past year with the strategy of ensuring geographical
diversification of its business and is well positioned to capture
new customer demand while growing with its current customer base.
The Corporation will continue its strategic plan of purchasing high
quality assets at prices that will provide a high rate of return
for shareholders.
The Corporation will continue to seek increased market share
with the horizontal and directional drilling segment.
Management believes the Corporation's strong balance sheet
provides flexibility to grow organically and execute on strategic
acquisition opportunities that align with its profitable growth
strategy. The Corporation remains focused on reducing variable
direct operating and administrative expenses without sacrificing
the quality of its service offering. By providing high quality
assets and crews management believes the Corporation will continue
to help its customers grow and create long-term shareholder
value.
NON-GAAP MEASURES
This press release contains references to (i) Adjusted EBITDA
and (ii) gross margin. These financial measures are not measures
that have any standardized meaning prescribed by International
Financial Reporting Standards ("IFRS") and are therefore referred
to as non-GAAP measures. The non-GAAP measures used by the
Corporation may not be comparable to similar measures used by other
companies.
(i)
|
Adjusted EBITDA is
defined as "income (loss) before interest income, interest expense,
taxes, business acquisition transaction costs, depreciation and
amortization, shared based compensation expense, gains on disposal
of property and equipment, impairment expenses, interest and other
income, foreign exchange, non recurring restructuring charges,
accretion of debentures and other income/expenses, and any other
items that the Corporation considers appropriate to adjust given
the irregular nature and relevance to comparable operations."
Management believes that in addition to net and total comprehensive
income (loss), Adjusted EBITDA is a useful supplemental measure as
it provides an indication of the results generated by the
Corporation's principal business activities prior to consideration
of how these activities are financed, how assets are depreciated,
amortized and impaired, the impact of foreign exchange, or how the
results are affected by the accounting standards associated with
the Corporation's stock based compensation plan. Investors should
be cautioned, however, that Adjusted EBITDA should not be construed
as an alternative to net income (loss) and comprehensive income
(loss) determined in accordance with IFRS as an indicator of the
Corporation's performance. The Corporation'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.
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
(000's CAD
$)
|
2018
|
2017
|
%
Change
|
|
2018
|
2017
|
%
Change
|
Net loss
|
(905)
|
(743)
|
(22%)
|
|
(2,125)
|
(2,411)
|
12%
|
Depreciation
|
841
|
592
|
42%
|
|
2,373
|
1,837
|
29%
|
Interest on
Convertible Debenture
|
65
|
-
|
nm
|
|
195
|
-
|
nm
|
Gain from disposition
of property and equipment
|
-
|
-
|
nm
|
|
(313)
|
-
|
nm
|
Gain from equipment
lost in hole
|
-
|
(12)
|
nm
|
|
(635)
|
(42)
|
(1,412%)
|
Interest and other
income
|
(2)
|
(6)
|
67%
|
|
(29)
|
(19)
|
(53%)
|
Share based
payments
|
52
|
71
|
(27%)
|
|
199
|
124
|
60%
|
Transaction costs
|
46
|
-
|
nm
|
|
539
|
-
|
nm
|
Foreign exchange
(gain) loss
|
29
|
(37)
|
178%
|
|
59
|
(32)
|
284%
|
Accretion of
debentures
|
31
|
-
|
nm
|
|
98
|
-
|
nm
|
Non-recurring
restructuring charges
|
-
|
-
|
nm
|
|
330
|
-
|
nm
|
Adjusted
EBITDA
|
157
|
(135)
|
216%
|
|
691
|
(543)
|
227%
|
nm - not
meaningful
|
|
|
|
|
|
|
|
|
|
(ii)
|
Gross margin is
defined as "gross profit from services revenue before stock based
compensation and depreciation". Gross margin is a measure that
provides shareholders and potential investors additional
information regarding the Corporation's cash generating and
operating performance. Management utilizes this measure to assess
the Corporation's operating performance.
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
(000's CAD
$)
|
2018
|
2017
|
%
Change
|
|
2018
|
2017
|
%
Change
|
Income (loss) from
operations
|
407
|
(6)
|
6,883%
|
|
1,589
|
(355)
|
548%
|
Depreciation
|
840
|
588
|
43%
|
|
2,370
|
1,813
|
31%
|
Gross
margin
|
1,247
|
582
|
114%
|
|
3,959
|
1,458
|
172%
|
Gross margin
%
|
26%
|
30%
|
(13%)
|
|
28%
|
32%
|
(14%)
|
nm - not
meaningful
|
|
|
|
|
|
|
|
FORWARD-LOOKING INFORMATION
Certain statements contained in this press release constitute
forward-looking statements or forward-looking information
(collectively, "forward-looking information"). Forward-looking
information relates to future events or the Corporation's future
performance. All information other than statements of historical
fact is forward-looking information. The use of any of the words
"anticipate", "plan", "contemplate", "continue", "estimate",
"expect", "intend", "propose", "might", "may", "will", "could",
"believe", "predict", and "forecast" are intended to identify
forward-looking information.
This press release contains forward-looking information
pertaining to, among other things: the Corporation's 2018 capital
program, including the amount committed for rig upgrades; the
expectation that all of the Corporation's drilling rigs in
Alberta and Saskatchewan will be working into the latter
half of Q4 2018, through Q1 2019 and into spring breakup; that
industry activity will remain challenged with similar activity
levels in Q4 2018 and Q1 2019 as compared to Q4 2017 and Q1 2018,
respectively; the Corporation's strategic plan, including with
respect to asset purchases; the expectation that the Corporation's
strategic plans of acquiring assets may provide a high rate of
return for shareholders; the Corporation's expectation to increase
market share of the horizontal and directional drilling rig
segment; and the Corporation's focus on reducing variable direct
operating and administrative expenses and creating shareholder
value.
This forward-looking information involves material assumptions
and known and unknown risks and uncertainties and other factors,
certain of which are beyond the Corporation's control, that may
cause actual results or events to differ materially from those
anticipated in such forward-looking information. This press
release, the Corporation's management's discussion and analysis for
the three and nine month periods ended September 30, 2018, the Corporation's annual
information form for the year ended December
31, 2017 and other documents filed with securities
regulatory authorities (accessible through the SEDAR website
www.sedar.com) describe the risks, the material assumptions and
other factors that could influence actual results, which include,
among other things, anticipated financial performance; the
implementation of the Corporation's growth strategy; the ability to
execute the Corporation's 2018 capital program; business prospects;
conditions in general economic and financial markets; the ability
to get additional market share with the horizontal and directional
drilling segment; industry conditions; current commodity prices and
royalty regimes; regulatory developments; the impact of increasing
competition; future exchange rates; the availability and cost of
labour and services; the sufficiency of budgeted capital
expenditures in carrying out planned activities; timing and amount
of capital expenditures; the ability of the Corporation to renew
existing contracts and enter into new contracts; utilization and
pricing of the Corporation's systems and rigs, including the
ability of the Corporation to have all of its Alberta and Saskatchewan drilling rigs working by the
latter half of Q4 2018 through to spring breakup in 2019; supply
and demand for oil and natural gas services relating to drilling
and ancillary services; effects of regulation by governmental
agencies; tax laws; future operating costs; and the ability to
obtain financing on acceptable terms, which are subject to change
based on, amongst other factors, commodity prices, market
conditions and potential timing delays. Although management of the
Corporation considers these assumptions to be reasonable based on
information currently available to it, such assumptions may prove
to be incorrect. Actual results, performance or achievements
could differ material from those expressed in, or implied by,
forward-looking information and, accordingly, no assurance can be
given that any of the events anticipated by the forward-looking
information will transpire or occur, or if any of them do so, what
benefits the Corporation will derive therefrom.
Statements, including forward-looking information, are made as
of the date of this press release and the Corporation does not
undertake any obligation to update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, except as may be required by applicable securities
laws. The forward-looking information contained in this press
release is expressly qualified by this cautionary statement.
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.
SOURCE MATRRIX Energy Technologies Inc.