CALGARY, AB, Nov. 3, 2021 /CNW/ - Pason Systems Inc.
("Pason" or the "Company") (TSX: PSI) announced today its 2021
third quarter results and the declaration of a quarterly dividend.
The following news release should be read in conjunction with the
Company's Management Discussion and Analysis ("MD&A"), the
unaudited interim condensed consolidated financial statements and
related notes for the three and nine months ended
September 30, 2021, as well as the Annual Information Form for
the year ended December 31, 2020. All
of these documents are available on SEDAR at www.sedar.com.
Financial Highlights
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
(CDN 000s, except per
share data)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
North American
Revenue
|
46,106
|
18,280
|
152
|
115,613
|
105,061
|
10
|
International
Revenue
|
10,434
|
3,878
|
169
|
25,307
|
16,165
|
57
|
Solar and Energy
Storage Revenue
|
1,165
|
910
|
28
|
2,933
|
2,652
|
11
|
Total
Revenue
|
57,705
|
23,068
|
150
|
143,853
|
123,878
|
16
|
EBITDA
(1)
|
24,870
|
2,348
|
959
|
55,527
|
40,088
|
39
|
Adjusted EBITDA
(1)
|
22,356
|
(1,118)
|
nmf
|
48,312
|
31,339
|
54
|
As a % of
revenue
|
38.7
|
nmf
|
nmf
|
33.6
|
25.3
|
830 bps
|
Funds flow from
operations
|
19,983
|
4,765
|
319
|
48,375
|
31,621
|
53
|
Per share –
basic
|
0.24
|
0.06
|
326
|
0.59
|
0.38
|
57
|
Per share –
diluted
|
0.24
|
0.06
|
326
|
0.59
|
0.38
|
57
|
Cash from operating
activities
|
17,074
|
5,754
|
197
|
38,000
|
61,300
|
(38)
|
Capital
expenditures
|
1,205
|
807
|
49
|
7,574
|
4,694
|
61
|
Free cash flow
(1)
|
16,261
|
4,141
|
293
|
31,121
|
56,964
|
(45)
|
Cash dividends
declared (per share)
|
0.05
|
0.05
|
—
|
0.15
|
0.43
|
(65)
|
Net income
(loss)
|
12,775
|
(3,957)
|
nmf
|
21,646
|
7,796
|
178
|
Net income (loss)
attributable to Pason
|
13,074
|
(3,698)
|
nmf
|
22,696
|
8,734
|
160
|
Per share –
basic
|
0.16
|
(0.04)
|
nmf
|
0.27
|
0.10
|
162
|
Per share –
diluted
|
0.16
|
(0.04)
|
nmf
|
0.27
|
0.10
|
162
|
(1) Non-GAAP
financial measures are defined under Non-GAAP Financial Measures in
the Company's Management Discussion and Analysis.
|
As
at
|
September 30,
2021
|
December 31,
2020
|
Change
|
(CDN 000s)
|
($)
|
($)
|
(%)
|
Cash and cash
equivalents
|
147,080
|
149,282
|
(1)
|
Working
capital
|
179,675
|
167,366
|
7
|
Total interest
bearing debt
|
—
|
—
|
—
|
Shares outstanding
end of period
|
82,415,162
|
83,088,941
|
(1)
|
Pason's financial results for the three months ended
September 30, 2021, reflect the Company's strong competitive
positioning, prudent balance sheet, and operating leverage as
industry conditions continued to improve from the lows experienced
in 2020. In comparison to the third quarter of 2020, which
reflected historically low activity levels due to the impacts of
the COVID-19 pandemic, financial results in the third quarter of
2021 have improved significantly.
Pason generated $57.7 million in
revenue in the third quarter of 2021, which represents a 150%
increase from the $23.1 million
generated in the third quarter of 2020 as drilling activity
improved significantly in Pason's operating regions. With this
increase in revenue, Pason generated $22.4
million in Adjusted EBITDA, or 38.7% of revenue in the third
quarter of 2021, compared to a $1.1
million loss in the third quarter of 2020. While the Company
incurred certain incremental expenses to support increased activity
levels, such as equipment repairs, research and development costs
and compensation expenses, third quarter results continue to
demonstrate the Company's strong operating leverage through
improved industry conditions. The Company recorded net income
attributable to Pason of $13.1
million ($0.16 per share) in
the third quarter of 2021 compared to a net loss attributable to
Pason of $3.7 million ($0.04 per share) recorded in the corresponding
period in 2020. The year over year increase is primarily due to the
improved operating results as outlined above.
Industry conditions in North
America continued to improve in the third quarter of 2021,
with a 124% increase in industry activity compared to the pandemic
lows experienced in the comparative prior year period. Outpacing
the improvement in industry activity, the North American business
unit generated $46.1 million of
revenue in the third quarter of 2021, a 152% increase from
$18.3 million in the comparative
period of 2020. Revenue per Industry day was $765 in Q3 2021, an increase of 15% from the
comparable period in 2020 and a record level for the Company. The
year over year increase is due to increased market share and also
reflects the very challenging pricing environment experienced in
the third quarter of 2020.
The International business unit generated $10.4 million of revenue in the third quarter of
2021 compared to $3.9 million in the
comparative period of 2020. The year over year increase is due to
increased industry activity in the international markets that the
company serves, and higher levels of revenue generated per drilling
day with improved product adoption. Further, in the third quarter
of 2021, the Company recognized a $0.6
million increase to revenue relating to a contractual
foreign exchange and inflationary related adjustment clause with
one of its major customers.
Revenue generated by the Solar and Energy Storage business unit
was $1.2 million, an increase of 28%
from the comparative period in 2020 and represented the highest
quarterly revenue level generated for the reporting segment. While
this revenue continued to be primarily comprised of
subscription-based software licenses for the Company's solar energy
planning tools, sales of control systems and related hardware
contributed to the increase in revenue.
In the third quarter, Pason recognized $2.2 million in government wage assistance,
primarily related to the Canada
Emergency Wage Subsidy ("CEWS") (Q3 2020: $3.3 million). The Company has excluded this
benefit in its calculation of Adjusted EBITDA.
Pason's balance sheet remains strong with no interest bearing
debt and $147.1 million in cash and
cash equivalents as at September 30,
2021, compared to $135.0
million as at June 30, 2021,
and $149.3 million as at December 31, 2020. During the third quarter of
2021, Pason generated $17.1 million
in net cash from operating activities (Q3 2020: $5.8 million) as the Company's operating results
improved and while the Company managed investments in working
capital to meet increased revenue levels.
Pason remains disciplined on capital spending and during the
third quarter of 2021, incurred $1.2
million of capital expenditures which represents rental
equipment additions to meet activity levels, partially offset by
the recognition of income tax credits for eligible development
costs. Resulting Free Cash Flow generated in Q3 2021 was
$16.3 million compared to
$4.1 million generated in the third
quarter of 2020.
Pason's results to date in 2021 continue to reinforce the
decision to retain critical technology and service capabilities
through the downturn, putting the Company in a position of strength
with a prudent balance sheet and significant operating leverage as
activity levels recover.
President's Message
Pason's President and Chief Executive Officer Jon Faber stated:
"What a difference a year makes. A year ago, North American land
drilling activity troughed at the lowest level in Pason's history
as the world grappled with the effects of the COVID-19 pandemic.
Since that time, industry activity has shown continued signs of
recovery each quarter. As a result, industry activity in the third
quarter of 2021 was 124% higher than the low point marked in the
same quarter of 2020. As we navigated those challenging quarters,
we maintained our conviction that making the necessary investments
to defend and grow our service and technology advantages would
position the Company to outperform as the industry recovered."
"Pason's third quarter 2021 results reflect the positive impacts
of both the improved industry environment in which we operate and
our strengthened competitive position."
"Consolidated revenue of $57.7
million represented an increase of 150% from the third
quarter of 2020. Our ability to outpace the underlying growth
in North American land drilling activity was primarily a function
of a 15% increase in Revenue per Industry Day in North America and significant growth from our
International operations. Our growth in Revenue per Industry Day
continues to be driven by market share gains, strong product
adoption and a more favourable pricing environment."
"Adjusted EBITDA of $22.4 million
in the third quarter increased by $23.5
million from a loss of $1.1
million in the prior year period. In our second quarter 2021
report, we noted that we anticipated that certain operating cost
categories, notably product repairs and staffing, would increase as
we continued to scale our operations to meet growing industry
activity and also as a result of higher prevailing rates of
inflation. These increases, coupled with strategic decisions to
make additional investments in research and development, will
continue to put some pressure on incremental margins, at least in
the short term, but will position Pason to fully participate in
improving industry conditions."
"Free cash flow increased by 293% from the third quarter of
2020, to $16.3 million and net income
attributable to Pason of $13.1
million ($0.16 per share)
compared to a $3.7 million loss
($0.04 per share) in the prior year
period."
"During the third quarter of 2021 Energy Toolbase ("ETB"), our
subsidiary in solar and energy storage markets, posted a 28%
increase in revenue from the corresponding quarter of 2020 as
bookings from the sale of control systems and associated hardware
are now beginning to translate into revenue and add to the base
provided by subscription-based licenses for the company's economic
modeling and proposal generation software."
"We continue to balance three priorities in our approach to
capital allocation: ensuring continued growth in our
drilling-related business, establishing additional sources of
revenue not directly tied to North American land drilling for
longer term growth, and maintaining a disciplined return of capital
to shareholders. Capital expenditures in the third quarter totaled
$1.2 million. While we continue to
expect to spend up to $15 million in
capital expenditures in 2021 before returning toward a more
sustainable level of capital expenditures of approximately
$25 million in 2022, the timing of
capital expenditures will be heavily influenced by the ongoing
global supply chain challenges. We will continue to make
investments to ensure the success of ETB, as well as Intelligent
Wellhead Systems, an early-stage company in which Pason holds a
minority interest and which is focused on the completions segment
of the oil and gas industry. Consistent with the second quarter, we
returned $7.1 million to shareholders
through a combination of dividends and share repurchases in the
third quarter and we are maintaining our quarterly dividend at
$0.05 per share."
"Our balance sheet remains strong, allowing us to both withstand
the inevitable volatility of land drilling activity and make
growth-related investments. We ended the third quarter with
$147 million in cash and cash
equivalents and $180 million in
positive working capital."
"The prospects for continued growth in industry activity remain
strong over the medium term. Global demand for oil has nearly
recovered to pre-pandemic levels, yet most supply sources continue
to significantly lag. US land production remains approximately 10%
below 2019 levels, and the total US inventory of crude and refined
products is at a level last witnessed in early 2015. The current
inventory of drilled but uncompleted wells ("DUCs") in the US is
now near its minimum sustainable level in the view of industry
observers. WTI oil prices recently traded above US$85 per barrel for the first time in seven
years. While the prospects of supply increases from OPEC+ nations
and a potential nuclear pact between the US and Iran weigh on oil markets, oil traders
continue to expect prices to trade higher for longer. As oil and
gas producers build their 2022 capital plans, there may be the
opportunity for them to increase spending, while maintaining
discipline to operate within cash flow and return capital to
shareholders. That said, growth in short term industry activity may
be muted as the industry contends with the challenges of labour
availability and supply chain shortages."
"Against this backdrop, Pason is poised to further strengthen
our position. Our product and service offerings remain squarely
aligned with the increased efforts of customers to more fully
utilize technology to increase operational performance and are
supported by our unmatched service quality." concluded Mr.
Faber.
Quarterly Dividend
Pason announced today that the Board of Directors have declared
a quarterly dividend of five cents
(C$0.05) per share on the Company's
common shares. The dividend will be paid on December 31, 2021, to shareholders of record at
the close of business on December 15,
2021.
Third Quarter Conference Call
Pason will be conducting a conference call for interested
analysts, brokers, investors, and media representatives to review
its 2021 third quarter results at 9:00 a.m. (MDT) on Thursday, November 4th, 2021. The conference call
dial-in number is 1-888-664-6383 or 1-416-764-8650. You can access
the fourteen-day replay by dialing 1-888-390-0541 or
1-416-764-8677, using password 946301#.
An archived audio webcast of the conference call will also be
available on Pason's website at www.pason.com.
Forward Looking Information
Certain statements contained herein constitute "forward-looking
statements" and/or "forward-looking information" under applicable
securities laws (collectively referred to as "forward-looking
statements"). Forward–looking statements can generally be
identified by the words "anticipate", "expect", "believe", "may",
"could", "should", "will", "estimate", "project", "intend", "plan",
"outlook", "forecast" or expressions of a similar nature suggesting
a future outcome or outlook.
Without limiting the foregoing, this document includes, but is
not limited to, the following forward–looking statements: the
Company's growth strategy and related schedules; divergence in
activity levels between the geographic regions in which we operate;
demand fluctuations for our products and services; the Company's
ability to increase or maintain market share; projected future
value, forecast operating and financial results; planned capital
expenditures; expected product performance and adoption, including
the timing, growth and profitability thereof; potential dividends
and dividend growth strategy; future use and development of
technology; our financial ability to meet long-term commitments not
included in liabilities; the collectability of accounts receivable;
the application of critical accounting estimates and judgements;
treatment under governmental regulatory and taxation regimes; and
projected increasing shareholder value.
These forward-looking statements reflect the current views of
Pason with respect to future events and operating performance as of
the date of this document. They are subject to known and unknown
risks, uncertainties, assumptions, and other factors that could
cause actual results to be materially different from results that
are expressed or implied by such forward-looking statements.
Although we believe that these forward-looking statements are
reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Such risks and
uncertainties include, but are not limited to: the state of the
economy; volatility in industry activity levels and resulting
customer expenditures on exploration and production activities;
customer demand for existing and new products; the industry shift
towards more efficient drilling activity and technology to assist
in that efficiency; the impact of competition; the loss of key
customers; the loss of key personnel; cybersecurity risks; reliance
on proprietary technology and ability to protect the Company's
proprietary technologies; changes to government regulations
(including those related to safety, environmental, or taxation);
the impact of extreme weather events and seasonality on our
suppliers and on customer operations; and war, terrorism,
pandemics, social or political unrest that disrupts global
markets.
These risks, uncertainties and assumptions include but are not
limited to those discussed in Pason's Annual Information Form under
the heading, "Risk and Uncertainty," in our management's discussion
and analysis for the year ended December 31,
2020, and in our other filings with Canadian securities
regulators. These documents are on file with the Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) or through Pason's website
(www.pason.com).
Forward-looking statements contained in this document are
expressly qualified by this cautionary statement. Except to the
extent required by applicable law, Pason assumes no obligation to
publicly update or revise any forward-looking statements made in
this document or otherwise, whether as a result of new information,
future events or otherwise.
Pason Systems Inc.
Pason Systems Inc. is a leading global provider of specialized
data management systems for drilling rigs. Our solutions, which
include data acquisition, wellsite reporting, remote
communications, web-based information management, and analytics,
enable collaboration between the rig and the office. Through Energy
Toolbase ("ETB"), the Company also provides products and services
for the solar power and energy storage industry. ETB's solutions
enable solar and energy storage developers to model, control and
measure economics and performance of solar energy and storage
projects. Pason's common shares trade on the Toronto Stock Exchange
under the symbol PSI.
For more information about Pason Systems Inc., visit the
company's website at www.pason.com or contact
investorrelations@pason.com.
Additional information on risks and uncertainties and other
factors that could affect Pason's operations or financial results
are included in Pason's reports on file with the Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) or through Pason's website
(www.pason.com).
SOURCE Pason Systems Inc.