Phoenix Oilfield Hauling Inc. ("Phoenix" or the "Company") (TSX VENTURE:PHN), a
leading provider of oilfield hauling services and equipment rentals to the
energy industry, today announced record results for the year and quarter ended
December 31, 2011.
2011 BUSINESS HIGHLIGHTS
-- Revenue for the year ended December 31, 2011 grew by $32.3 million to
$72.2 million, compared with revenue of $39.8 million for the year ended
December 31, 2010;
-- Increased net income for the year ended December 31, 2011 by $0.8
million to $2.6 million, compared with a $1.8 million for the same
period in 2010;
-- Improved 2011 earnings per share to $0.45 compared to $0.32 in 2010;
-- Increased Adjusted EBITDA(1) for 2011 by $7.1 million to $11.3 million,
compared with Adjusted EBITDA(1) of $4.2 million in 2010;
-- Completed a $2.0 million purchase of rental assets in the Fort
Assiniboine area;
-- Raised $3.5 million in new equity in 2011;
-- Closed a $40.0 million senior debt financing facility with PNC Bank
Canada Branch. This facility includes a current operating facility of
$35 million and an accordion feature for $5 million which may be
accessed should the Company's operations demand additional financing;
-- Closed a $4.7 million convertible subordinated debt financing facility
with Werklund Capital Corporation ("WCC");
-- Restructured Phoenix's balance sheet to facilitate future growth;
-- Repaid the Company's former debt and majority of its capital lease
holders which enabled the Company to cure its previous covenant
violations; and
-- Implemented a new management team, under the leadership of Mr. David
Werklund, Interim President & Chief Executive Officer, Bharat Mahajan,
Vice-President, Finance & Chief Financial Officer and Mr. Darcy
Thompson, Chief Operating Officer.
"Through the hard work and commitment of our people across our entire North
American team, we were successful in generating record revenue, profitability
and EBITDA," said David Werklund, Interim President and CEO of Phoenix "I am
extremely proud of our achievements and look forward to continued growth in
2012."
Financial Overview
(in thousands, except ratios and per share amounts)
Year Ended Year Ended
December 31, December 31, % Change
2011 2010 2010 - 2011
---------------------------------------------
Revenue 72,161 39,823 81.2%
Gross profit 17,214 5,513 212.2%
Gross margin 23.9% 13.8% 72.3%
Adjusted EBITDA(1) 11,332 4,201 169.7%
Adjusted EBITDA(1) as a
percentage of revenue 15.7% 10.5% 48.9%
Net earnings(2) 2,599 1,791 45.1%
Net earnings(2) as a percentage
of revenue 3.6% 4.5% -19.9%
Adjusted EBITDA per share(1, 3) 1.96 0.75 160.0%
Net earnings per share(3) 0.45 0.32 39.9%
Current ratio 2.28 0.45 409.0%
Debt to equity ratio(4) 1.37 2.09 -34.2%
Debt to EBITDA ratio(4,5) 2.10 5.45 -61.5%
Capital assets additions 8,422 370 2176.2%
Three Months Three Months
Ended December Ended December % Change
31, 2011 31, 2010 2010 - 2011
---------------------------------------------
Revenue 19,554 14,865 31.5%
Gross profit 4,315 3,252 32.7%
Gross margin 22.1% 21.9% 0.9%
Adjusted EBITDA(1) 2,655 2,472 7.4%
Adjusted EBITDA(1) as a
percentage of revenue 13.6% 16.6% -18.4%
Net earnings(2) 336 5,212 -93.6%
Net earnings(2) as a percentage
of revenue 1.7% 35.1% -95.1%
Adjusted EBITDA per share(1, 3) 0.45 0.44 2.3%
Net earnings per share(3) 0.06 0.93 -93.8%
Current ratio 2.28 0.45 409.0%
Debt to equity ratio(4) 1.37 2.09 -34.2%
Debt to EBITDA ratio(4,5) 2.10 5.45 -61.5%
Capital assets additions 8,352 278 2904.3%
Notes:
(1) This News Release contains the term Adjusted EBITDA. Adjusted EBITDA as
presented does not have any standardized meaning prescribed by
international financial reporting standards (IFRS) and therefore it may
not be comparable with the calculation of similar measures for other
entities. Management uses Adjusted EBITDA to analyze the operating
performance of the business. Adjusted EBITDA as presented is not
intended to represent cash provided by operating activities, net
earnings or other measures of financial performance calculated in
accordance with IFRS. It is defined as earnings before interest, taxes,
depreciation and amortization excluding foreign exchange gains or losses
which are primarily related to the US dollar activities of the Company
and can vary significantly depending on exchange rate fluctuations,
which are beyond the control of the Company, and write downs of
intangible assets, goodwill impairment, financing costs, gains or losses
on disposal of assets, stock based compensation, fees and expenses on
settlement of debt and losses on extinguishment of debt.
(2) 2010 net earnings include a $5.2 million gain due to a write-up of fixed
assets from the Company's conversion to IFRS.
(3) 2010 Per share amounts calculated to take into consideration the
Company's 30:1 share consolidation with took place on November 28, 2011
as if the share consolidation had been in affect in 2010.
(4) Debt includes, revolving credit facility, loans and borrowings,
obligations under finance lease and convertible debenture as per their
carrying amounts on the balance sheet.
(5) Three months ended December 31, 2012 debt to EBITDA ratio calculated
using Adjusted EBITDA for the last 12 months.
The Company's audited consolidated financial statements and Management's
Discussion and Analysis are available on the SEDAR website at www.sedar.com.
The Company's investor presentation can be found on the Company's website at
www.phoenixhauling.com.
Outlook
The Company earns revenue primarily by providing specialized transportation
services required for the drilling exploration, development and production of
petroleum resources. Demand for the Company's transportation services is
therefore linked to the economic conditions of the energy industry and the
general level of exploration, development and production of petroleum resources
in Western Canada and in the United States. Drilling and exploration activity in
the Western Canadian Sedimentary Basin ("WCSB") and in the United States has in
recent history been affected by amongst other things, low natural gas prices and
higher than normal natural gas inventories in storage caused by many factors
including reduced demand for commodities as a consequence of a global recession
and the temporary oversupply of natural gas caused by the fast development of
shale gas resources in the United States. Countering these factors is strong
pricing for oil. The outlook for the demand for oil, suggest improving levels of
rig utilization in 2012 over 2011 and 2010. However, global markets continue to
show volatility due to European economic challenges and political instabilities
in Africa and the Middle East. These volatilities may reduce drilling activity
in the short term, but in the long term can potentially contribute to the
strengthening of the level of activity in the North American E&P sector, as the
United States continues to pursue their goal of reduced dependence on foreign
energy resources.
In Canada the Company has enjoyed the increased activity levels of 2011 over
2010 in the markets in which it operates. In November 2011 the Petroleum
Services Alliance of Canada ("PSAC", information available at www.psac.ca)
released their forecast of wells drilled in Canada in 2012, projecting a 10%
increase in 2012 compared to 2011. If this forecast proves to be true, the
Company expects continued increase in the utilization of its equipment than in
recent years. In addition, this forecast supports the Company's view of
opportunity to expand its operations and increase its revenue in certain areas
of Canada.
Opportunities for expansion and growth appear strongest for the Company in the
United States. According to Baker Hughes (see www.bakerhughes.com), the United
States active land rig count on March 28, 2012 showed an increase of over 12%
year over year. The current active land based rig count remains close to 2,000.
Much of that activity continues to be in key shale and tight oil and gas plays,
but an increasing number of rigs are also being directed to areas previously in
decline that are now facing new growth due to advancements in Enhanced Oil
Recovery ("EOR") technologies. The Company is currently active in three of those
plays through its branches in Texas and Pennsylvania and expects that levels of
industry exploration activity, as measured by the active rig count, will remain
at least consistent with current levels over the next few quarters.
Recently the Company has welcomed the addition of several key people to its
senior management team. The team members are excited about the prospects they
see for strategically growing the Company in key markets and enhancing
shareholder value.
The recent financings discussed in this news release and announced on December
14, 2011 have significantly strengthened the Company's balance sheet. The
Company expects to grow its equipment fleet by approximately $14.0 million.
Approximately 50% of this equipment fleet will be deployed at the recently
announced expansion in Pleasanton, TX. The balance of this investment will be
used to augment the equipment fleet throughout the rest of the Company and also
to retire some equipment that is currently used by the Company through various
operating leases. Approximately $2.0 million of this $14.0 million investment
was completed in December 2011, the balance will be completed predominately in
the first half of 2012. Further, the Company has committed approximately $1.0
million to improved technology in the form of satellite GPS tracking systems and
a new ERP system. These technology investments are expected to create
opportunities for cost saving synergies. The Company anticipates reaping the
financial benefits of these synergies in the latter half of 2012 and beyond. The
company also completed the purchase of certain land and building in Texas in the
first quarter of 2012 of $0.7 million and will also be spending approximately
$0.5 million on leasehold improvements and other non-revenue generating fixed
assets over the first half of 2012.
The Company currently operates under several brand names. The Company has made a
decision to rebrand itself under one unified name. It is anticipated that the
cost of rebranding will have a negative impact of approximately $0.5 million on
earnings in the first half of 2012. Ultimately, management is of the strong
opinion that a unified brand will create synergies throughout the Company which
will deliver shareholder value.
The Company made a decision to restructure and refurbish its operations and
equipment in Manitoba in the first quarter of 2012. This restructuring and
refurbishment is anticipated to have a negative impact on Adjusted EBITDA and
earnings in the first quarter of 2012 of approximately $1.0 million and $0.25
million in the second quarter as compared to the respective periods of 2011. As
is customary in the WCSB, in 2012 the Company also paid winter retention bonuses
to some of its field personnel for the first quarter of 2012. The payment of the
winter retention bonuses is a new practice for the Company, as such, Adjusted
EBITDA and earnings will be negatively impacted by approximately $0.15 million
compared to the same period of the prior year. The Company is currently
reviewing the first quarter winter bonuses and may choose to discontinue this
practice in future years. Despite the impact of the items mentioned above, the
Company anticipates posting strong financial results for 2012 as a direct result
from the recently announced expansion into Pleasanton, TX, increased revenue
from its operations that will benefit from the capital expenditure program
outlined above and the generation of cost saving synergies from the deployment
of new technologies as outlined above.
About Phoenix Oilfield Hauling Inc.
Phoenix provides specialized transportation services required for the drilling,
exploration, development and production of petroleum resources in the Western
Canadian Sedimentary Basin and in the United States of America principally in
and around the states of Texas and Pennsylvania. Transportation services include
both the equipment necessary to move the load as well as a trained, professional
driver capable of securing, moving and manipulating the load at its origin and
destination. Phoenix's rental operations include the rental of tanks, mats,
pickers, light towers and other equipment necessary for oilfield operations.
Phoenix was incorporated in 1994 as a private company to serve the oil and gas
industry. In the spring of 2006 the Company went public on the TSX Venture
Exchange. Phoenix has major operations in Calgary, AB, Slave Lake, AB, Nisku,
AB, Grand Prairie, AB, Melita, MB, Mineral Wells, TX, Pleasanton, TX and New
Columbia, PA. Phoenix is publicly traded on the TSX Venture Exchange under the
symbol PHN. For more information on Phoenix please visit www.phoenixhauling.com.
This News Release contains certain forward-looking statements and
forward-looking information (collectively referred to herein as "forward-looking
statements") within the meaning of applicable Canadian securities laws. All
statements other than statements of present or historical fact are
forward-looking statements. Forward-looking statements are often, but not
always, identified by the use of words such as "anticipate", "achieve", "could",
"believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate",
"outlook", "expect", "may", "will", "project", "should" or similar words,
including negatives thereof, suggesting future outcomes. In particular, this
News Release contains forward-looking statements relating to: projected capital
expenditures and commitments and the financing thereof; expansion; increases in
revenue; equipment delivery and deployment dates; rebranding costs; effect of
rebranding; geographic allocation of equipment; customer commitments; ability to
establish a working relationship with third party suppliers; expectations
regarding the Corporation's ability to raise capital and to increase its
equipment fleet; benefits associated with financial results; activity levels;
business strategy; successful integration of structural changes; restructuring
plans; acquisitions and availability of insurance coverage. Phoenix believes the
expectations reflected in such forward-looking statements are reasonable as of
the date hereof but no assurance can be given that these expectations will prove
to be correct and such forward-looking statements should not be unduly relied
upon.
Various material factors and assumptions are typically applied in drawing
conclusions or making the forecasts or projections set out in forward-looking
statements. Those material factors and assumptions are based on information
currently available to Phoenix, including information obtained from third party
industry analysts and other third party sources. In some instances, material
assumptions and material factors are presented elsewhere in this News Release in
connection with the forward-looking statements. Readers are cautioned that the
following list of material factors and assumptions is not exhaustive. Specific
material factors and assumptions include, but are not limited to:
-- the performance of Phoenix's businesses, including current business and
economic trends;
-- oil and natural gas commodity prices and production levels;
-- the effect of the rebranding on Phoenix's businesses;
-- capital expenditure programs and other expenditures by Phoenix and its
customers:
-- the ability of Phoenix to retain and hire qualified personnel;
-- the ability of Phoenix to obtain parts, consumables, equipment,
technology, and supplies in a timely manner to carry out its activities;
-- the ability of Phoenix to maintain good working relationships with key
suppliers;
-- the ability of Phoenix to market its services successfully to existing
and new customers;
-- the ability of Phoenix to obtain timely financing on acceptable terms;
-- currency exchange and interest rates;
-- risks associated with foreign operations;
-- changes under governmental regulatory regimes and tax, environmental and
other laws in Canada and the United States; and
-- a stable competitive environment.
Forward-looking statements are not a guarantee of future performance and involve
a number of risks and uncertainties, some of which are described herein. Such
forward-looking statements necessarily involve known and unknown risks and
uncertainties, which may cause Phoenix's actual performance and financial
results in future periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to, the risks
identified by Phoenix's annual information form and management discussion and
analysis for the year ended December 31, 2011 (the "MD&A") and contained herein
under the heading "Risk Factors". Any forward-looking statements are made as of
the date hereof and, except as required by law, Phoenix assumes no obligation to
publicly update or revise such statements to reflect new information, subsequent
or otherwise.
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