CALGARY,
AB, April 28, 2022 /CNW/ - Pason Systems Inc.
("Pason" or the "Company") (TSX:PSI) announced today its 2022 first
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 months ended March 31, 2022, as
well as the Annual Information Form for the year ended December 31, 2021. All of these documents are
available on SEDAR at www.sedar.com.
Financial Highlights
|
Three Months Ended
March 31,
|
|
2022
|
2021
|
Change
|
(CDN 000s, except per
share data)
|
($)
|
($)
|
(%)
|
North American
Revenue
|
62,000
|
34,579
|
79
|
International
Revenue
|
10,691
|
7,064
|
51
|
Solar and Energy
Storage Revenue
|
1,777
|
912
|
95
|
Total
Revenue
|
74,468
|
42,555
|
75
|
EBITDA
(1)
|
34,686
|
15,673
|
121
|
Adjusted EBITDA
(1)
|
33,373
|
13,170
|
153
|
As a % of
revenue
|
44.8
|
30.9
|
1,390
bps
|
Funds flow from
operations
|
25,704
|
13,730
|
87
|
Per share –
basic
|
0.31
|
0.17
|
89
|
Per share –
diluted
|
0.31
|
0.17
|
89
|
Cash from operating
activities
|
28,050
|
11,085
|
153
|
Capital expenditures
(2)
|
4,464
|
1,849
|
141
|
Free cash flow
(1)
|
23,582
|
9,176
|
157
|
Cash dividends declared
(per share)
|
0.08
|
0.05
|
60
|
Net income
|
18,001
|
3,991
|
351
|
Net income attributable
to Pason
|
18,573
|
4,315
|
330
|
Per share –
basic
|
0.23
|
0.05
|
360
|
Per share –
diluted
|
0.23
|
0.05
|
360
|
(1) Non-GAAP financial
measures are defined under Non-GAAP Financial Measures in the
Company's Management Discussion and Analysis.
|
(2) Includes additions
to property plant, and equipment and development costs from Pason's
Condensed Consolidated Interim Statement of Cash Flows
|
As at
|
March 31,
2022
|
December 31,
2021
|
Change
|
(CDN 000s)
|
($)
|
($)
|
(%)
|
Cash and cash
equivalents
|
172,057
|
158,283
|
9
|
Working
capital
|
182,353
|
184,083
|
(1)
|
Total interest bearing
debt
|
—
|
—
|
—
|
Shares outstanding, end
of period (#)
|
82,195,141
|
82,194,051
|
—
|
Pason's financial results for the three months ended March 31,
2022, reflect improved industry conditions, and the Company's
strong competitive positioning, prudent balance sheet, and
operating leverage. In comparison to Q1 2021, financial results
have improved significantly.
Pason generated $74.5 million in
revenue in the first quarter of 2022, representing a 75% increase
from the $42.6 million generated in
the first quarter of 2021 as drilling activity improved
significantly across Pason's operating regions. Furthermore, the
Company realized the fourth consecutive quarter of sequential
growth in Revenue per Industry day in the North American business
unit with a new record of $835 in Q1
2022, an increase of 16% from the comparative period in 2021,
resulting in improvements in revenue that outpaced underlying
industry activity. With this increase in revenue, Pason generated
$33.4 million in Adjusted EBITDA, or
44.8% of revenue in the first quarter of 2022, compared to
$13.2 million in the first quarter of
2021, or 30.9% of revenue. While the Company incurred certain
incremental expenses to support increased activity levels, such as
equipment repairs, research and development costs and compensation
expenses, first quarter results continue to demonstrate the
Company's strong operating leverage. As a result, the Company
generated net income attributable to Pason of $18.6 million ($0.23 per share) in the first quarter of 2022
compared to net income attributable to Pason of $4.3 million ($0.05
per share) in the corresponding period of 2021.
Industry conditions in North
America continued to improve in the first quarter of 2022,
with a 57% increase in industry activity compared to the
comparative prior year period. The North American business unit
outpaced the improvement in industry activity, generating
$62.0 million of revenue in the first
quarter of 2022, a 79% increase from $34.6
million in the comparative period of 2021. Revenue per
Industry day was $835 in Q1 2022, an
increase of 16% from the comparable period in 2021 and a new record
level for the Company. The year over year increase is due to a
combination of factors including increased market share, increased
adoption of certain products, and improvement in pricing conditions
compared to the very challenging environment that existed since the
COVID-19 pandemic began. Furthermore, Revenue per Industry Day in
the first quarter of 2022 benefited from a strong Canadian winter
drilling season, a region which has historically generated
comparatively higher levels of Revenue per Industry Day for the
Company.
The International business unit generated $10.7 million of revenue in the first quarter of
2022 compared to $7.1 million in the
comparative period of 2021. 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.
Revenue generated by the Solar and Energy Storage business unit
was $1.8 million, an increase of 95%
from the comparative period in 2021 and represented the highest
quarterly revenue level generated for the reporting segment. The
increase in revenue is primarily due to the commissioning of
control systems and sales of related hardware.
Sequentially, Q1 2022 revenue increased 19% from the
$62.8 million generated in Q4 2021 as
the Company continued to defend its leading market share position
in key markets with improving activity levels. Q1 2022 revenue in
the North American business unit increased 23% to $62.0 million. The increased revenue was driven
by a 14% increase in North American industry days as well as a 9%
increase in Revenue per Industry day of $835 in Q1 2022 versus $767 in Q4 2021. Both industry activity and
Revenue per Industry day in Q1 2022 benefited from strong Canadian
winter drilling activity throughout the first quarter.
Adjusted EBITDA was $33.4 million
in the first quarter of 2022, a 38% increase from $24.2 million in the fourth quarter of 2021. The
Company's cost structure remains primarily fixed and Pason
continues to demonstrate its operating leverage with
79% incremental Adjusted EBITDA margins generated
sequentially.
The Company recorded net income attributable to Pason in the
first quarter of 2022 of $18.6
million ($0.23 per share)
compared to net income attributable to Pason of $11.1 million ($0.14 per share) in the fourth quarter of 2021.
First quarter net income benefited from the increased activity
levels and operating results, as noted above.
Pason's balance sheet remains strong, with no interest bearing
debt and $172.1 million in cash and
cash equivalents as at March 31,
2022, compared to $158.3
million at December 31, 2021.
During the first quarter of 2022, Pason generated $28.1 million in net cash from operating
activities (Q1 2021: $11.1 million) as the Company's operating
results improved and while the Company managed required investments
in working capital while revenue levels grew. Net cash from
operating activities in the first quarter of 2022 also benefitted
from the collection of withholding taxes owing from the IRS in the
amount of $12.5 million.
During the first quarter of 2022, Pason incurred $4.5 million of capital expenditures which
represents rental equipment additions to meet activity levels, as
well as investments associated with ongoing refresh of the
Company's fleet and technology platform. Resulting Free Cash Flow
generated in Q1 2022 was $23.6 million compared to $9.2 million generated in the first quarter of
2021.
Pason's first quarter results continue to reinforce the decision
to retain critical technology and service capabilities through the
pandemic related downturn, putting the Company in a position of
strength with a prudent balance sheet and significant operating
leverage as activity levels continue to recover.
President's Message
Pason's President and Chief Executive Officer Jon Faber stated:
"Since bottoming in the third quarter of 2020, oil and gas
drilling conditions have maintained a consistent trajectory of
steady growth; this trend continued again through the first quarter
of 2022. While it has not fully returned to levels witnessed before
the onset of the COVID-19 pandemic, North American land drilling
activity increased 57% compared to the same quarter in 2021.
Coupled with growth across our international markets and continued
strength in our competitive position, this growth drove a 75%
year-over-year increase in Pason's consolidated revenue to
$74.5 million in the first quarter.
Pason's revenue and Adjusted EBITDA in the first quarter were
nearly identical to the first quarter of 2020, the last quarter
prior to significant global shutdowns related to the COVID-19
pandemic, despite North American land drilling activity being 15%
lower than the 2020 period."
"For the fourth consecutive quarter, Pason posted growth in
North American Revenue per Industry Day, with a new record
generated this quarter of $835
breaking through the $800 per
Industry Day level for the first time in the Company's history. We
have held onto the market share gains we made through the pandemic,
while both pricing and product adoption continue to improve. First
quarter results are also positively impacted by the seasonally
strong contribution from the Canadian winter drilling season. Our
International business posted a 51% revenue increase over the first
quarter of 2021. With additional revenue from installations of our
intelligent energy management systems, our Solar and Energy Storage
segment grew 95% year-over-year to $1.8
million in the quarter."
"We delivered an additional $0.63
of Adjusted EBITDA from every additional dollar of revenue compared
to the first quarter of 2021. As a result, Adjusted EBITDA for the
first quarter of $33.4 million was up
153% from a year ago and represented an Adjusted EBITDA margin of
45%. We continue to make the necessary investments to scale our
operations in anticipation of further industry growth, most notably
in the areas of product repairs and staffing, which will impact
margins in the short term while positioning Pason to outperform in
the medium to longer term."
"Global supply chain shortages and disruptions continue to be a
challenge and are impacting delivery schedules. As a result, while
we continue to plan to spend approximately $30 million in capital expenditures in 2022, our
expenditures in the first quarter came in at $4.5 million. We continue to evaluate our capital
programs in the context of further opportunities to evolve our
product and service offering, while navigating continued supply
chain challenges. We are pursuing opportunities to mitigate the
impact of supply chain disruptions by strategically increasing our
inventory of equipment components and parts further in advance of
anticipated repairs and equipment builds. This will have an impact
on near-term working capital requirements, while enabling us to be
responsive to continued industry growth and to maintain the product
and service advantages which underpin our leading competitive
position."
"Free cash flow for the first quarter of $23.6 million represented a 157% improvement from
the first quarter of 2021, while net income attributable to Pason
of $18.6 million was up 330% over the
same time period."
"We remain disciplined in our approach to capital allocation. We
are committed to making the necessary investments in capital
expenditures and working capital to support our growing core
business. At the same time, we are pursuing additional revenue
growth not directly tied to North American land drilling through
Energy Toolbase (ETB), which focuses on the solar and energy
storage market, and our minority investment in Intelligent Wellhead
Systems (IWS), which participates in the oil and gas completions
market. We remain committed to returning capital to our
shareholders through our regular quarterly dividend, which we are
maintaining at $0.08 per share, and
share repurchases."
"Our balance sheet allows us to withstand the inevitable
volatility of North American land drilling and make growth-related
investments. At the end of the first quarter, we had $172 million in cash and cash equivalents and
$182 million of positive working
capital, both of which benefited from the receipt of a
long-standing income tax receivable in the amount of $12.5 million in the quarter."
"Oil prices continue to trade around US$100 per barrel as a result of both the ongoing
military conflict in Ukraine and
persistent global supply and demand imbalances. The circumstances
around the conflict in Eastern
Europe are both troubling and unpredictable, and they are
likely to create continued volatility in global oil prices in the
short-term."
"Our positive outlook for continued steady growth in North
American land drilling remains rooted first and foremost in an
analysis of significant global supply and demand indicators. While
global oil demand has largely returned to pre-pandemic levels, all
significant sources of supply not only remain below pre-pandemic
levels, but in some cases they are trending lower. US storage
levels of crude oil and petroleum products continue to decrease and
are already below their 5-year lows. The US has announced plans to
release one million barrels per day from the Strategic Petroleum
Reserve for up to 6 months, a plan which if fully implemented would
move the reserve to its lowest level since 1984. US land production
is nudging higher, but still remains almost 10% below pre-pandemic
levels. The inventory of drilled but uncompleted wells in the US
has decreased for 21 consecutive months and now sits at its lowest
level since early 2013. Oil supply challenges could be further
exasperated by underinvestment in long-term development projects
over the past five years. The industry's ability to respond to the
growing supply shortfalls quickly is further limited by challenges
with availability of labour and equipment."
"The drilling of new wells represents the first step in the
creation of additional supply, and we expect land drilling activity
to steadily grow over the coming quarters. Companies remain focused
on ensuring they develop new sources of supply in a responsible
manner and maximizing the productivity of each new well. To do so,
they are increasingly looking to technology solutions which harness
the power of data to drive automation and analytics solutions that
optimize their efforts. Pason sits at the center of the ecosystem
of much of the Western Hemisphere's drilling data, and we are well
positioned to provide our customers with the leading technologies,
unmatched service and support, and high-quality data they require
to pursue their initiatives" concluded Mr. Faber.
Quarterly Dividend
Pason announced today that the Board of Directors have declared
a quarterly dividend of eight cents
(C$0.08) per share on the company's
common shares. The dividend will be paid on June 30, 2022, to shareholders of record at the
close of business on June 15,
2022.
Annual General Meeting
Pason will be holding its annual general meeting of shareholders
on Thursday, April 28, 2022, at
3:30 p.m. (MDT) via live audio
webcast at www.meetnow.global/M77P2HM. Additional details on how to
access and login to the meeting are provided on Pason's website at
www.pason.com/investors.
First Quarter Conference
Call
Pason will be conducting a conference call for interested
analysts, brokers, investors, and media representatives to review
its 2022 first quarter results at 9:00 a.m.
(MDT) on Friday, April 29, 2022. The conference call dial-in
numbers are 1-888-664-6383 or 1-416-764-8650, and the call will be
simultaneously audio webcast via: www.pason.com/webcast. You can
access the fourteen-day replay by dialing 1-888-390-0541 or
1-416-764-8677, using password 893731#. An archived audio webcast
of the conference call will also be available on Pason's website at
www.pason.com/investors.
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 for
the year ended December 31, 2021
under the heading, "Risk and Uncertainty," in our management's
discussion and analysis for the year ended December 31, 2021, 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.