Fourth Quarter Highlights
- For the
three-month period ended December 31, 2022, PHX Energy generated
consolidated revenue of $157.8 million, the highest level of
quarterly revenue in the Corporation’s history and an increase of
54 percent from the fourth quarter of 2021.
- Adjusted
EBITDA(1) from continuing operations increased to $33.9 million, 21
percent of consolidated revenue(1). This is also PHX Energy’s
highest level of quarterly adjusted EBITDA and all-time record as a
percentage of consolidated revenue. Included in the 2022-quarter’s
adjusted EBITDA is $6.9 million in cash-settled share-based
compensation expense. Excluding cash-settled share-based
compensation expense, adjusted EBITDA from continuing operations(1)
in the fourth quarter of 2022 was $40.8 million, 26 percent of
consolidated revenue.
- Earnings from
continuing operations doubled to $20.3 million in the 2022-quarter
from $9.3 million in the 2021 three-month period.
- PHX Energy’s
strong momentum in the US continued, with the Corporation’s US
division generating its highest quarterly revenue for the fourth
consecutive quarter. US revenue was $125.7 million in the fourth
quarter of 2022, representing 80 percent of consolidated
revenue.
- The US dollar
remained strong and continued to have a favorable impact to the
2022-quarter’s financial results. In the 2022 three-month period,
the average US dollar to Canadian dollar foreign exchange rate was
1.36 compared to 1.26 in the 2021-period.
- The Corporation
generated excess cash flow(2) of $14.3 million, a 119 percent
increase over the fourth quarter of 2021.
- In the
2022-quarter, PHX Energy paid $5.1 million in dividends which is
double the dividends paid in the same 2021-quarter. On December 15,
2022, the Corporation declared a dividend of $0.15 per share or
$7.6 million, paid on January 16, 2023 to shareholders of record on
December 30, 2022.
Year End Highlights
- For the year
ended December 31, 2022, PHX Energy generated consolidated revenue
of $535.7 million, the highest level of annual revenue in the
Corporation’s history and an increase of 58 percent from 2021.
- Adjusted
EBITDA(1) from continuing operations increased to $92.7 million, 17
percent of consolidated revenue(1). This is also PHX Energy’s
highest level of annual adjusted EBITDA. Included in the
2022-year’s adjusted EBITDA is $24.6 million in cash-settled
share-based compensation expense. Excluding cash-settled
share-based compensation expense, adjusted EBITDA from continuing
operations(1) in the 2022-year was $117.3 million, 22 percent of
consolidated revenue.
- Earnings from
continuing operations increased to $44.3 million in the 2022
twelve-month period from $23.3 million in the comparative
2021-period, a 90 percent increase. This is an all-time record
level of annual earnings for the Corporation.
- The Corporation
maintained a strong financial position with working capital(2) of
$94.3 million and net debt(2) of $4.5 million with credit facility
capacity in excess of $57 million as at December 31, 2022.
PHX Energy achieved these financial results
despite continued constraints in activity and equipment utilization
that resulted from ongoing supply chain challenges and inflation.
The resulting increased costs and component shortages with certain
suppliers are expected to have less of an impact in 2023 and the
Corporation will continue to leverage its strong market position
and implement strategies to mitigate the impacts to its
operations.
Financial Highlights (Stated in
thousands of dollars except per share amounts, percentages and
shares outstanding)
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
2022 |
|
2021 |
|
% Change |
|
|
2022 |
|
2021 |
|
% Change |
|
|
Operating Results – Continuing Operations |
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
Revenue |
157,758 |
|
102,296 |
|
54 |
|
|
535,745 |
|
339,946 |
|
58 |
|
|
Earnings |
20,333 |
|
9,330 |
|
118 |
|
|
44,311 |
|
23,318 |
|
90 |
|
|
Earnings per share – diluted |
0.39 |
|
0.18 |
|
117 |
|
|
0.87 |
|
0.45 |
|
93 |
|
|
Adjusted EBITDA (1) |
33,874 |
|
17,410 |
|
95 |
|
|
92,719 |
|
60,164 |
|
54 |
|
|
Adjusted EBITDA per share – diluted (1) |
0.66 |
|
0.34 |
|
94 |
|
|
1.83 |
|
1.16 |
|
58 |
|
|
Adjusted EBITDA as a percentage of revenue
(1) |
21% |
|
17% |
|
|
|
17% |
|
18% |
|
|
|
Cash Flow – Continuing Operations |
|
|
|
|
|
|
|
Cash flows from operating activities |
8,970 |
|
12,968 |
|
(31 |
) |
|
38,338 |
|
45,548 |
|
(16 |
) |
|
Funds from operations (2) |
25,068 |
|
13,772 |
|
82 |
|
|
72,482 |
|
51,211 |
|
42 |
|
|
Funds from operations per share – diluted (3) |
0.49 |
|
0.27 |
|
81 |
|
|
1.43 |
|
0.99 |
|
44 |
|
|
Dividends paid per share (3) |
0.10 |
|
0.05 |
|
100 |
|
|
0.300 |
|
0.125 |
|
140 |
|
|
Dividends paid |
5,078 |
|
2,505 |
|
103 |
|
|
15,148 |
|
6,291 |
|
141 |
|
|
Capital expenditures |
21,474 |
|
11,122 |
|
93 |
|
|
73,525 |
|
35,281 |
|
108 |
|
|
Excess cash flow (2) |
14,268 |
|
6,513 |
|
119 |
|
|
21,113 |
|
22,850 |
|
(8 |
) |
|
Financial Position, December 31, |
|
|
|
|
|
|
|
|
Working capital (2) |
|
|
|
|
94,339 |
|
57,872 |
|
63 |
|
|
Net debt (Net cash) (2) |
|
|
|
|
4,484 |
|
(24,829 |
) |
n.m. |
|
|
Shareholders’ equity |
|
|
|
|
176,878 |
|
134,432 |
|
32 |
|
|
Common shares outstanding |
|
|
|
|
50,896,175 |
|
47,978,662 |
|
6 |
|
n.m. – not meaningful
Outlook
2022 was undoubtedly the strongest year in our
history, as we set many all-time financial records, and built upon
our position as a market leader while maintaining our balance sheet
strength. With the high level of performance achieved, we are
positioned to continue to leverage our operational strength to
create further growth while upholding our commitment to reward
shareholders.
- In 2023, we
anticipate that the accelerated growth in industry activity will
stabilize, plateauing at an average of 1,000 active rigs per day in
North America. We believe that this will be the result of a
weakening in commodity prices, but even with these lower rates the
industry will remain in a healthy position that will support
further growth, particularly in our US division.
- Through 2022 our
premium technology remained in high demand and our fleet operated
at capacity, even as new assets were brought online, as this demand
outpaced our supply with climbing rig counts. Supply chain product
and component shortages delayed the delivery of some of the 2022
capital expenditures, and we anticipate receiving these deliveries
in the first half of 2023.
- We believe the
2023 capital expenditure program will allow us to meet the ongoing
demand for our premium technology as operators continue to seek
technologies, like ours, that increase the speed at which they
drill. In 2023, we anticipate growing our market share as the
industry activity flattens and we will see the full benefit from
the record level of net capital expenditures in 2022 and
expenditures planned for 2023.
- We will continue
to diligently act to protect our operating margins as inflation
continues to be a prominent factor in all aspects of our business.
Our supply chain department will work proactively to control costs
and inventory levels, and as in the previous year, we will strive
to implement purchasing and marketing strategies to offset further
cost increases.
- The strength of
our US operations led to all-time record divisional revenue being
achieved in 2022, and even with this growth we only touched 10
percent of rigs in the US land market with our technology,
including full service work and motor rentals. There is another 90
percent of this market that we believe we can gain a portion of,
leveraging our strong brand and premium technologies to generate
opportunities for greater revenue streams with attractive margins.
Additionally, similar opportunities continue to exist in select
international markets.
- We are
committed to maintaining one of the strongest balance sheets in the
sector with minimal or no net debt, remaining disciplined in our
approach to capital spending, and focused on profitability while
providing shareholders attractive total return. We intend to
continue to do so through our Return of Capital Strategy (“ROCS”)
which will potentially allow us to return up to 70 percent of
excess cash flow to shareholders through both base dividend, and
the possibility of special dividends (more information on the ROCS
can be found in the Return of Capital Strategy section of this
document).
We believe we are strategically positioned to
continue our successes and remain the leader in our sector in 2023.
We employ an exceptional team of people who embody a culture of
superior customer service and operational excellence. We believe
their unwavering focus on utilizing our industry-leading technology
and expertise to deliver faster, more efficient drilling operations
will continue to generate strong revenue and profitability in the
upcoming year. We will remain diligent in leveraging these
operational strengths to maintain our healthy financial position
and to allow us to execute on strategies that will fulfill our
commitment to shareholder returns, as described in the
ROCS.
Michael Buker,
President February
28, 2023
Overall
Performance
In the three-month period and year ended
December 31, 2022, PHX Energy achieved the highest level of
quarterly and annual revenue and adjusted EBITDA(1) in its
history.
In the fourth quarter of 2022, the Corporation
generated consolidated revenue of $157.8 million, an increase of 54
percent as compared to $102.3 million in the 2021-quarter.
Consolidated operating days grew by 24 percent to 7,509 days from
6,070 days in the corresponding 2021-quarter. For the year ended
December 31, 2022, the Corporation’s consolidated revenue increased
by 58 percent to $535.7 million from $340 million in 2021. PHX
Energy’s activity levels grew by 33 percent with consolidated
operating days increasing to 28,368 days in 2022 from 21,310 days
in 2021. Revenue growth in both the 2022-quarter and year were
primarily driven by: stronger industry activity; increased capacity
in the Corporation’s high performance technologies, in particular,
the Atlas High Performance motors (“Atlas”), Velocity Real-Time
systems (“Velocity”), and PowerDrive Orbit Rotary Steerable Systems
(“RSS”); and pricing increases that were achieved as a result of
the strong demand for PHX Energy’s premium technologies and
targeted marketing efforts to help mitigate inflationary costs.
For the fourth consecutive quarter, PHX Energy’s
US operations generated its highest quarterly revenue in the
Corporation’s history. In the 2022 three-month period, US revenue
grew by 57 percent to $125.7 million (2021 - $79.9 million) while
US operating days increased by 28 percent to 4,843 (2021 – 3,783).
In the 2022-quarter, revenue from the Corporation’s US division
represented 80 percent of consolidated revenue (2021 – 76
percent).
The Corporation’s Canadian division also
experienced growth in the quarter generating revenue of $30.7
million, a 37 percent increase from $22.5 million in the same
2021-quarter. PHX Energy’s Canadian segment recorded 2,571
operating days in the 2022-quarter, a 12 percent increase from the
2,287 operating days realized in the comparable 2021-period.
Throughout 2022, the Corporation implemented
strategies to mitigate the negative impacts of supply chain
challenges and inflationary pressures. These strategies, together
with growth in revenue and activity, helped yield record results in
profitability. In the fourth quarter of 2022, adjusted EBITDA from
continuing operations increased by 95 percent to $33.9 million (21
percent of revenue) from $17.4 million (17 percent of revenue) in
the same 2021-quarter, while earnings from continuing operations
doubled to $20.3 million from $9.3 million in the comparable
2021-period. For the year ended December 31, 2022, PHX Energy
realized adjusted EBITDA from continuing operations of $92.7
million (17 percent of revenue), a 54 percent improvement compared
to the $60.2 million (18 percent of revenue) reported in the
2021-year. Earnings from continuing operations for the 2022-year
increased to $44.3 million from $23.3 million in the 2021-year.
Included in the 2021-year adjusted EBITDA and earnings from
continuing operations is $8.8 million of government grants compared
to $0.3 million included in the 2022-year. Also included in the
2022 three and twelve-month period adjusted EBITDA from continuing
operations is cash-settled share-based compensation expense of $6.9
million (2021 - $3 million) and $24.6 million (2021 - $12.9
million), respectively. Excluding cash-settled share-based
compensation expense, adjusted EBITDA from continuing operations
for the three and twelve-month period ended December 31, 2022 is
$40.8 million (2021 - $20.4 million) and $117.3 million (2021 -
$73.1 million), respectively.
The Corporation continued to maintain a strong
financial position with working capital of $94.3 million and net
debt of $4.5 million with available credit facilities in excess of
$57 million.
DividendsIn November 2022, the
Board approved another increase to the Corporation’s quarterly
dividend to $0.15 per common share from $0.10 per common share,
which commenced with the dividend payable January 16, 2023 to
shareholders of record at the close of business on December 30,
2022. An aggregate of $7.6 million was paid on January 16, 2023.
This is the fourth dividend increase since its re-instatement in
December 2020 and is a 500 percent increase from the dividend
payable on December 31, 2020.
Return of Capital StrategyIn
the fourth quarter of 2022, PHX Energy’s Board approved a Return of
Capital Strategy (“ROCS”) that establishes the Corporation’s
intention for creating unprecedented shareholder returns.
Highlights of the ROCS include:
- Maintaining a strong balance sheet
with little to no bank debt.
- Growth capital expenditures will be
available for expanding the fleet in the most attractive
basins.
- Base dividends will remain a
focus.
- Special dividends may be considered
with available excess cash.
- Share buy backs
may be considered if deemed accretive.
The Return of Capital Strategy approved by the
Board will potentially allow up to 70 percent of 2023 excess cash
flow(2) to be used for shareholder returns.
Capital SpendingFor the year
ended December 31, 2022, the Corporation spent $73.5 million in
capital expenditures, of which $48.5 million was spent on growing
the Corporation’s fleet of drilling equipment (2021 - $23.1
million) and the remaining $25 million was spent on maintaining
capacity in the Corporation’s fleet of drilling and other equipment
and replacing equipment lost downhole during drilling operations
(2021 - $12.2 million). With proceeds on disposition of drilling
and other equipment of $27.5 million, the Corporation’s net capital
expenditures(2) for the 2022-year were $46.1 million (2021 - $22.9
million). Capital expenditures in the 2022-year were primarily
directed towards Atlas motors, Velocity systems, and RSS. PHX
Energy funded capital spending primarily using cash flows from
operating activities, proceeds on disposition of drilling
equipment, and its credit facilities when required.
The approved capital expenditure budget for the
2022-year was $85 million. Due to global supply chain disruptions,
the Corporation received only $73.5 million of drilling and other
equipment in 2022. The remaining $11.5 million from the 2022 budget
has been carried forward into the 2023 capital expenditure budget.
As a result of this carry over, PHX Energy now anticipates spending
$61.5 million, previously announced $50 million, in capital
expenditures during 2023. Of the total expenditures, $41.8 million
is expected to be allocated to growth capital and the remaining
$19.7 million is expected to be allocated towards maintenance of
the existing fleet of drilling and other equipment and replacement
of equipment lost downhole during drilling operations. The
maintenance capital amount could increase throughout the year
should there be more downhole equipment losses than forecasted.
These increases would likely be funded by proceeds on disposition
of drilling equipment.
As at December 31, 2022, the Corporation has
capital commitments to purchase drilling and other equipment for
$43.3 million, $19.6 million of which is growth capital and
includes $14.4 million for performance drilling motors and $5.2
million for other equipment. Equipment on order as at
December 31, 2022 is expected to be delivered within the first half
of 2023.
The Corporation currently possesses
approximately 647 Atlas motors, comprised of various configurations
including its 5.13", 5.25", 5.76", 6.63", 7.12", 7.25", 8" and 9"
Atlas motors, 112 Velocity systems, and 51 PowerDrive Orbit RSS,
the largest independent fleet in North America.
Supply Chain Disruptions and
InflationThroughout 2022, industry and economic conditions
continued to improve as most of the COVID-19 restrictions have been
lifted by governments. However, supply chain challenges escalated
and continued to create shortages and inflation related to the
products and services required within the energy sector, including
those within the Corporation’s supply chain. These shortages
resulted in increased turn-around times for servicing the
Corporation’s premium technologies and in turn limited equipment
utilization and constrained activity growth. Inflationary pressures
led to overall cost increases and have negatively impacted the
Corporation’s margins.
PHX Energy has been proactive with efforts to
lessen the supply chain disruptions’ impact on its operations.
Specifically, the Corporation has maintained higher minimum safety
stock levels and taken advantage of pre-ordering materials to
manufacture technology and obtain bulk discounts, and as a result,
inventory levels have increased by 72 percent from $36.7 million at
the end of 2021 to $63.1 million at December 31, 2022. In addition,
to mitigate the impact of inflationary costs and to protect its
margins, the Corporation also continues to pursue pricing increases
where possible.
Additional information regarding certain
material risks and uncertainties, and their impact on the
Corporation’s business can be found throughout this document,
including under the headings “Capital Spending”, “Operating Costs
and Expenses”, and “Outlook”.
Shares Held in TrustDuring the
2022-year, the Corporation equity settled a portion of its
outstanding Retention Awards (“RA”) granted under its Retention
Award Plan (the “RAP”). Pursuant to RA settlements, 2,277,875
common shares were released from the independent trustee in 2022 to
settle $14.6 million in RAP liabilities. The independent trustee
acquires common shares on the open market from time-to-time for the
potential settlement of future share-based compensation obligations
of the Corporation. For the twelve-month period ended December 31,
2022, the trustee purchased 626,400 common shares for a total cost
of $4.1 million. As at December 31, 2022, 11,064 common shares were
held in trust for purposes of the RAP.
Normal Course Issuer Bid During
the third quarter of 2022, the TSX approved the renewal of PHX
Energy’s Normal Course Issuer Bid (“NCIB”) to purchase for
cancellation, from time-to-time, up to a maximum of 3,622,967
common shares, representing 10 percent of the Corporation’s public
float of Common Shares as at August 3, 2022. The NCIB commenced on
August 16, 2022 and will terminate on August 15, 2023 or such
earlier time as the NCIB is completed or terminated by PHX Energy.
Purchases of common shares are to be made on the open market
through the facilities of the TSX and through alternative trading
systems. The price which PHX Energy is to pay for any common shares
purchased is to be at the prevailing market price on the TSX or
alternate trading systems at the time of such purchase.
For the year ended December 31, 2022, the
Corporation did not repurchase shares through its previous or
current NCIB. Pursuant to the previous NCIB, 1,499,900 common
shares were purchased during the 2021-year by the Corporation and
cancelled.
Non-GAAP and Other Financial
Measures
Throughout this document, PHX Energy uses
certain measures to analyze financial performance, financial
position, and cash flow. These Non-GAAP and other specified
financial measures do not have standardized meanings prescribed
under Canadian generally accepted accounting principles (“GAAP”)
and include Non-GAAP Financial Measures and Ratios, Capital
Management Measures and Supplementary Financial Measures
(collectively referred to as “Non-GAAP and Other Financial
Measures”). These non-GAAP and other specified financial measures
include, but are not limited to, adjusted EBITDA, adjusted EBITDA
per share, adjusted EBITDA as a percentage of revenue, gross profit
as a percentage of revenue excluding depreciation and amortization
and government grants, selling, general and administrative
(“SG&A”) costs excluding share-based compensation as a
percentage of revenue, funds from operations, funds from operations
per share, excess cash flow, net capital expenditures, net debt,
and working capital. Management believes that these measures
provide supplemental financial information that is useful in the
evaluation of the Corporation’s operations and are commonly used by
other oil and natural gas service companies. Investors should be
cautioned, however, that these measures should not be construed as
alternatives to measures determined in accordance with GAAP as an
indicator of PHX Energy’s performance. The Corporation’s method of
calculating these measures may differ from that of other
organizations, and accordingly, such measures may not be
comparable. Please refer to the “Non-GAAP and Other Financial
Measures” section of this document for applicable definitions,
rationale for use, method of calculation and reconciliations where
applicable.
Revenue
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2022 |
2021 |
% Change |
|
2022 |
2021 |
% Change |
|
Revenue |
157,758 |
102,296 |
54 |
|
535,745 |
339,946 |
58 |
|
|
|
|
|
|
|
|
|
In the three-month period and year ended
December 31, 2022, PHX Energy achieved its highest-ever quarterly
and annual revenue, surpassing the previous records set in the
fourth quarter and year ended 2014. For the three-month period
ended December 31, 2022, consolidated revenue increased by 54
percent to $157.8 million compared to $102.3 million in the
corresponding 2021-quarter. For the year ended December 31, 2022,
consolidated revenue was $535.7 million, an increase of 58 percent,
compared to $340 million in 2021. In the 2022-quarter and year, PHX
Energy continued to expand its fleet capacity to address the strong
growing demand for its premium technologies as the North American
industry’s rig count continued to improve with the support of
robust commodity prices.
During the fourth quarter of 2022, the Western
Texas Intermediate (“WTI”) crude oil price was 7 percent higher
than in the 2021-quarter averaging USD $83/bbl (2021-quarter – USD
$77/bbl) and the Western Canadian Select (“WCS”) oil prices
declined by 7 percent, averaging CAD$74/bbl (2021-quarter – CAD
$79/bbl) (Source: Peters & Co. Limited, Energy Update,
01-23-23). Industry activity levels in both Canada and the US
improved quarter-over-quarter. In the US, the 2022 fourth quarter
average number of rigs operating per day was 776 (2021-quarter –
559 rigs) while in Canada, the average for the same period was 199
(2021-quarter – 159 rigs) (Source: Baker Hughes, North American
Rotary Rig Count, Jan 2000 - Current,
https://rigcount.bakerhughes.com/na-rig-count). In comparison, the
Corporation’s consolidated operating days grew by 24 percent to
7,509 days in the 2022 three-month period from 6,070 days in the
corresponding 2021-period. For the year-ended December 31, 2022,
there were 28,368 consolidated operating days recorded which is 33
percent more than the 21,310 days in the 2021-year.
The record quarterly and annual revenue achieved
in 2022 were also supported by pricing increases realized during
these periods and the favorable impact of the US dollar
strengthening in the 2022-periods relative to 2021. Average
consolidated revenue per day(3), excluding the motor rental
division in the US, for the three-month period ended December 31,
2022, was $19,974 an increase of 24 percent as compared to $16,122
in the 2021-quarter. The 2022 annual average consolidated revenue
per day, excluding the motor rental division in the US, was $18,097
compared to $15,298 in 2021, an 18 percent increase.
Operating Costs and
Expenses
(Stated in thousands of dollars except
percentages)
|
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
|
2022 |
|
2021 |
|
% Change |
|
|
2022 |
|
2021 |
|
% Change |
|
|
Direct costs |
121,906 |
|
82,138 |
|
48 |
|
|
426,107 |
|
270,637 |
|
57 |
|
|
Depreciation & amortization drilling and other equipment
(included in direct costs) |
8,876 |
|
6,898 |
|
29 |
|
|
32,119 |
|
25,860 |
|
24 |
|
|
Depreciation & amortization right-of-use asset (included in
direct costs) |
805 |
|
837 |
|
(4) |
|
|
3,235 |
|
3,336 |
|
(3) |
|
|
Gross profit as a percentage of revenue excluding depreciation
& amortization and government grants(1) |
29% |
|
27% |
|
|
|
27% |
|
27% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs are comprised of field and shop
expenses and include depreciation and amortization on the
Corporation’s equipment and right-of-use assets. For the
three-month period and year ended December 31, 2022, direct costs
increased by 48 and 57 percent, respectively. Higher direct costs
in both periods were largely driven by activity growth, greater
depreciation and amortization expenses on drilling and other
equipment, and rising costs related to personnel, repair parts, and
equipment rentals as a result of inflation. In the 2022-year, PHX
Energy’s equipment rental costs increased to 7 percent of
consolidated revenue from 6 percent in 2021.
The Corporation’s depreciation and amortization
on drilling and other equipment for the three-month period and year
ended December 31, 2022, increased by 29 percent and 24 percent,
respectively with a significant number of fixed assets received
throughout 2022 as the capital expenditure program was increased to
help mitigate supply chain challenges and increase capacity to meet
growing demand.
In the three and twelve-month periods of 2022,
gross profit as a percentage of revenue excluding depreciation and
amortization and government grants was 29 percent and 27 percent,
respectively, compared to 27 percent in both corresponding 2021
periods. Included in the 2021-year’s direct costs are $6.5 million
in government grants. Despite the negative impacts of inflation,
PHX Energy was able to sustain and improve profitability levels
through effective implementation of various strategies to soften
the impact of rising costs, including but not limited to, volume
discounts and continuous efforts to achieve cost efficiencies
across all major aspects in the Corporation’s operations.
(Stated in thousands of dollars except
percentages)
|
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Selling, general and administrative (“SG&A”) costs |
19,365 |
|
13,044 |
|
48 |
|
68,901 |
|
44,982 |
|
53 |
|
Cash-settled share-based compensation (included in SG&A
costs) |
6,938 |
|
2,972 |
|
133 |
|
24,568 |
|
12,889 |
|
91 |
|
Equity-settled share-based compensation (included in SG&A
costs) |
58 |
|
49 |
|
18 |
|
451 |
|
384 |
|
17 |
|
SG&A costs excluding share-based compensation as a percentage
of revenue(1) |
8% |
|
10% |
|
|
|
8% |
|
9% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
For the three-month period and year ended
December 31, 2022, SG&A costs were $19.4 million and $68.9
million, respectively, as compared to $13 million and $45 million
in the corresponding 2021-periods. In both 2022-periods, higher
SG&A costs were primarily a result of greater personnel costs
necessary to support activity growth and increased compensation
expenses related to cash-settled share-based awards. SG&A costs
in the 2021-year also included $1.9 million of government
grants.
Cash-settled share-based compensation relates to
the Corporation’s retention awards and are measured at fair value.
For the three-month period and year ended December 31, 2022, the
related compensation expense recognized by PHX Energy was $6.9
million (2021 - $3 million) and $24.6 million (2021 - $12.9
million), respectively. Changes in cash-settled share-based
compensation expense in the 2022-periods were mainly driven by
increases in the Corporation’s share price period-over-period.
There were 2,845,191 retention awards outstanding as at December
31, 2022 (2021 – 3,267,579). Excluding share-based compensation,
SG&A costs as a percentage of revenue for the 2022 three and
twelve-month periods improved to 8 percent in both periods as
compared to 10 percent and 9 percent, respectively, in the
corresponding 2021-periods.
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2022 |
2021 |
% Change |
|
2022 |
2021 |
% Change |
|
Research and development expense |
1,184 |
1,049 |
13 |
|
3,723 |
2,774 |
34 |
|
|
|
|
|
|
|
|
|
Throughout the 2022-year with the increase in
activity levels and the capacity of the premium technology fleet,
PHX Energy’s research and development (“R&D”) department worked
on a greater number of initiatives to improve the reliability of
equipment, reduce costs to operations, and develop new
technologies. To support these initiatives, greater personnel
related costs and prototype expenses were necessary. For the
three-month period and year ended December 31, 2022, PHX Energy’s
R&D expenditures increased to $1.2 million and $3.7 million,
respectively, from $1 million and $2.8 million in the corresponding
2021-periods. R&D expenses in the 2022 twelve-month period
included $0.2 million of government grants (2021 – $0.4
million).
(Stated in thousands of dollars)
|
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
|
2022 |
2021 |
% Change |
|
2022 |
2021 |
% Change |
|
|
Finance expense |
487 |
115 |
n.m. |
|
1,360 |
494 |
175 |
|
|
Finance expense lease liabilities |
525 |
516 |
2 |
|
2,032 |
2,125 |
(4 |
) |
n.m. – not meaningful
Finance expense mainly relates to interest
charges on the Corporation’s credit facilities. For the three-month
period and year ended December 31, 2022, finance expense increased
to $0.5 million (2021 - $0.1 million) and $1.4 million (2021 - $0.5
million), respectively, primarily due to higher drawings on the
credit facilities that were used to fund PHX Energy’s capital
spending. Rising variable interest rates on the Corporation’s
operating and syndicated facilities also contributed to the
increase in finance expense in both 2022-periods.
Finance expense lease liabilities relate to
interest expenses incurred on lease liabilities. For both the three
and twelve-month periods ended December 31, 2022, finance expense
lease liabilities were relatively flat at $0.5 million and $2
million, respectively (2021 - $0.5 million and $2.1 million,
respectively).
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
|
Net gain on disposition of drilling equipment |
|
(8,693 |
) |
(3,483 |
) |
|
(19,492 |
) |
(7,746 |
) |
|
Foreign exchange loss |
|
5 |
|
100 |
|
|
287 |
|
85 |
|
|
Recovery of bad debts |
|
(11 |
) |
(2 |
) |
|
(13 |
) |
(281 |
) |
|
Other |
|
- |
|
- |
|
|
(512 |
) |
- |
|
|
Other income |
|
(8,699 |
) |
(3,385 |
) |
|
(19,730 |
) |
(7,942 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
For the three-month period and year ended
December 31, 2022, the Corporation recognized other income of $8.7
million and $19.7 million, respectively (2021 - $3.4 million and
$7.9 million, respectively). The increases from the 2021-periods
were mainly due to higher net gain on disposition of drilling
equipment realized in both 2022-periods.
Net gain on disposition of drilling equipment is
comprised of gains on disposition of drilling equipment and
proceeds from insurance programs. The recognized gain is net of
losses, which typically result from asset retirements that were
made before the end of the equipment’s useful life. In both
2022-periods, as drilling activity grew, more instances of downhole
equipment losses occurred as compared to the corresponding
2021-periods, resulting in a higher net gain on disposition of
drilling equipment. The Corporation will use capital expenditure
funds, including the proceeds from disposition of drilling
equipment, to replace this equipment and these amounts will be
added to the expected capital expenditures in 2023.
(Stated in thousands of dollars except
percentages)
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
|
Provision for (Recovery of) income taxes |
2,657 |
|
(511 |
) |
|
9,042 |
|
3,559 |
|
|
Effective tax rates(3) |
12% |
|
(6% |
) |
|
17% |
|
13% |
|
|
|
|
|
|
|
|
|
|
|
|
For the three-month period and year ended
December 31, 2022, the Corporation reported income tax provisions
of $2.7 million (2021 - $0.5 million recovery) and $9 million (2021
- $3.6 million), respectively. Higher provisions in the
2022-periods were mainly a result of improved taxable profits in
the US.
(Stated in thousands of dollars except per share
amounts and percentages)
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Operating Results – Continuing Operations |
|
|
|
|
|
|
|
|
Earnings |
20,333 |
|
9,330 |
|
118 |
|
44,311 |
|
23,318 |
|
90 |
|
Earnings per share – diluted |
0.39 |
|
0.18 |
|
117 |
|
0.87 |
|
0.45 |
|
93 |
|
Adjusted EBITDA (1) |
33,874 |
|
17,410 |
|
95 |
|
92,719 |
|
60,164 |
|
54 |
|
Adjusted EBITDA per share – diluted (1) |
0.66 |
|
0.34 |
|
94 |
|
1.83 |
|
1.16 |
|
58 |
|
Adjusted EBITDA as a percentage of revenue (1) |
21% |
|
17% |
|
|
|
17% |
|
18% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three-month period ended December 31,
2022, the Corporation’s adjusted EBITDA from continuing operations
as a percentage of revenue increased to 21 percent from 17 percent
in the 2021-period while earnings from continuing operations
increased to $20.3 million as compared to $9.3 million in the
2021-quarter. These substantial improvements in the Corporation’s
profitability were achieved primarily as a result of activity
growth and effective cost control measures and strategies
implemented to shelter margins from the adverse effects of
inflationary pressures and supply chain challenges.
For the year ended December 31, 2022, adjusted
EBITDA from continuing operations as a percentage of revenue
decreased slightly to 17 percent from 18 percent in the
corresponding 2021-period while earnings from continuing operations
increased by 90 percent to $44.3 million from $23.3 million in
2021. Adjusted EBITDA and earnings from continuing operations in
the comparative 2021-period included $8.8 million of government
grants. Excluding the impact of government grants, 2022 adjusted
EBITDA from continuing operations shows an improvement to 17
percent of revenue from 15 percent in the 2021-year.
Segmented Information
The Corporation reports three operating segments
on a geographical basis throughout the Canadian provinces of
Alberta, Saskatchewan, British Columbia, and Manitoba; throughout
the Gulf Coast, Northeast and Rocky Mountain regions of the US; and
internationally, in Albania.
Canada
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2022 |
2021 |
|
% Change |
|
2022 |
2021 |
% Change |
|
Revenue |
30,705 |
22,335 |
|
37 |
|
108,544 |
67,354 |
61 |
|
Reportable segment profit (loss) before tax (i) |
771 |
(1,319 |
) |
n.m. |
|
8,700 |
3,489 |
149 |
n.m. – not meaningful(i) Includes adjustments to
intercompany transactions.
In the three and twelve-month periods of 2022,
PHX Energy’s Canadian operations realized significant improvements
in its activity levels and average revenue per day as the Canadian
industry continued to recover with higher volume of active rigs in
2022.
For the three-month period ended December 31,
2022, PHX Energy’s Canadian division generated $30.7 million in
revenue, an increase of 37 percent compared to $22.3 million in the
2021-quarter. Canadian operating days in the 2022 three-month
period rose by 12 percent to 2,571 days compared to 2,287 days in
the same 2021-quarter. In comparison, industry horizontal and
directional drilling activity, as measured by drilling days,
increased by 21 percent to 16,813 in the fourth quarter of 2022
from 13,947 in the 2021-quarter (Source: Daily Oil Bulletin, hz-dir
days 221231). The difference between the industry’s
rate of growth and the Corporation’s mainly relates to customer
mix, the Corporation’s strategies to protect profit margins and the
competitive nature of the directional drilling sector.
For the year ended December 31, 2022, PHX
Energy’s Canadian division’s revenue increased by 61 percent to
$108.5 million from $67.4 million in the 2021-year. Drilling
activity in the Canadian segment improved by 35 percent from 7,269
operating days in 2021 to 9,823 days in 2022. In comparison, for
the year ended December 31, 2022, there were 60,276 horizontal and
directional drilling days realized in the Canadian industry,
compared to the 45,624 days realized in 2021, a 32 percent
improvement (Source: Daily Oil Bulletin, hz-dir days 221231). PHX
Energy’s Canadian operating segment remains a leader in this market
being among the top three service providers. During the 2022-year,
the Corporation was active in the Duvernay, Montney, Glauconite,
Frobisher, Cardium, Viking, Bakken, Torquay, Colony, Clearwater,
Deadwood, and Scallion basins.
In the 2022 three and twelve-month periods, PHX
Energy’s Canadian division achieved higher levels of profitability
despite the Canadian market remaining highly competitive and the
challenges faced in relation to inflation, labour shortages, and
supply chain difficulties. For the three-month period and year
ended December 31, 2022, the Corporation’s Canadian division
recognized reportable segment profit before tax of $0.8 million
(2021 - $1.3 million of reportable segment loss before tax) and
$8.7 million (2021 - $3.5 million), respectively. The improvements
in segment profits in both periods were achieved mainly through
greater volumes of activity and pricing increases negotiated with
customers to help curtail rising costs.
United States
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2022 |
2021 |
% Change |
|
2022 |
2021 |
% Change |
|
Revenue |
125,693 |
79,861 |
57 |
|
423,083 |
272,492 |
55 |
|
Reportable segment profit before tax (i) |
23,643 |
14,511 |
63 |
|
64,030 |
43,636 |
47 |
(i) Includes adjustments to intercompany
transactions.
In the fourth quarter of 2022, PHX Energy’s US
operations once again achieved its highest quarterly revenue in its
history. This marks the first year where consecutive all-time
record revenue was generated in each quarter and as a result of
this cumulative success, the 2022 annual US revenue is the highest
on record. For the three-month period ended December 31, 2022, US
revenue increased by 57 percent to $125.7 million as compared to
$79.9 million in the 2021-quarter. For the year ended December 31,
2022, US revenue grew 55 percent to $423.1 million from $272.5
million in 2021.
In the fourth quarter of 2022, the Corporation’s
US drilling activity increased by 28 percent to 4,843 days from
3,783 days in the same 2021-quarter while US industry horizontal
and directional rig count in the fourth quarter of 2022 increased
by 41 percent quarter-over-quarter with an average of 752 active
horizontal and directional rigs per day compared to an average of
533 active horizontal and directional rigs per day in the
2021-quarter (Source: Baker Hughes, North American Rotary Rig
Count, Jan 2000 - Current,
https://rigcount.bakerhughes.com/na-rig-count). For the year-ended
December 31, 2022, the US segment’s operating days were 18,248
days, compared to 14,041 days in the 2021-year; an increase of 30
percent. In comparison, the US industry activity, as measured by
the average number of horizontal and directional rigs running on a
daily basis, grew by 53 percent to 698 rigs in 2022 from 456 rigs
in 2021 (Source: Baker Hughes, North American Rotary Rig Count, Jan
2000 - Current, https://rigcount.bakerhughes.com/na-rig-count).
Horizontal and directional drilling continues to represent the
majority of rigs running on a daily basis during the fourth quarter
and year ended 2022. During the 2022-year, Phoenix USA was active
in the Permian, Scoop/Stack, Marcellus, Utica, Bakken, and Niobrara
basins.
Despite significant additions to the fleet that
aided stronger activity levels, the Corporation’s US growth was
constrained by fleet capacity that could not keep up with demand
given the supply chain environment. The Corporation’s fleet of
premium technology operated at maximum capacity during the year,
and with this strong demand and targeted marketing efforts, PHX
Energy’s US division realized price increases in both 2022-periods.
For the three-month period ended December 31, 2022, average revenue
per day (3), excluding the Corporation’s US motor rental division,
rose by 22 percent to $24,348 from $19,895 in the 2021-quarter. For
the year ended December 31, 2022, average revenue per day,
excluding the Corporation’s US motor rental division, grew by 19
percent to $21,958 from $18,413 in 2021. The strengthening of the
US dollar in both 2022-periods also supported the increases in
average revenue per day. Omitting the impact of foreign exchange,
the average revenue per day, excluding the Corporation’s motor
rental division, increased by 14 percent quarter-over-quarter and
15 percent year-over-year.
For the three-month period and year ended
December 31, 2022, the US segment realized reportable segment
income before tax of $23.6 million and $64 million, respectively,
compared to the corresponding 2021-periods when the US segment had
reportable segment profit before tax of $14.5 million and $43.6
million, respectively. The improved profitability in both
2022-periods was mainly due to growth in activity levels and
revenue per day, and effective strategies implemented to mitigate
the impacts of inflation.
International – Continuing
Operations
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
2022 |
2021 |
|
% Change |
|
2022 |
2021 |
|
% Change |
|
Revenue |
1,360 |
100 |
|
n.m. |
|
4,118 |
100 |
|
n.m. |
|
Reportable segment profit (loss) before tax |
631 |
(61 |
) |
n.m. |
|
1,412 |
(1,161 |
) |
n.m. |
n.m. – not meaningful
The Corporation’s international segment revenue
is mainly comprised of revenue from Albania. For the three-month
period and year ended December 31, 2022, the international
segment’s revenue was $1.4 million (2021-quarter - $0.1 million)
and $4.1 million (2021 - $0.1 million), respectively. Albania
operations were suspended in 2021 and resumed late in the first
quarter of 2022 with one rig.
With the resumption of activity in 2022, the
international segment generated reportable segment profit before
tax of $0.6 million in the 2022 three-month period compared to
reportable segment loss before tax of $0.1 million in the
2021-period. For the year-ended December 31, 2022, the
international segment realized reportable segment profit before tax
of $1.4 million from a loss of $1.2 million in the corresponding
2021-year.
Discontinued Operations –
Russia
On June 30, 2022, the Corporation disposed of
the Russian division operating under the entity, Phoenix TSR.
Accordingly, for the three and twelve-month periods ended December
31, 2022, the Russian operations and loss on disposition have been
presented as discontinued operations.
The results of the disposed Phoenix TSR operations
are as follows:
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
2022 |
2021 |
|
|
2022 |
|
|
2021 |
|
|
Revenue |
- |
3,133 |
|
|
7,443 |
|
|
9,974 |
|
|
Expenses |
- |
(2,633 |
) |
|
(5,781 |
) |
|
(9,390 |
) |
|
|
- |
500 |
|
|
1,662 |
|
|
584 |
|
| Reclassification
of foreign currency translation loss on disposition of Phoenix
TSR |
- |
- |
|
|
(10,561 |
) |
|
- |
|
|
Loss on disposition of Phoenix TSR |
- |
- |
|
|
(3,496 |
) |
|
- |
|
| Impairment and
other write-offs |
- |
- |
|
|
(1,967 |
) |
|
- |
|
| Loss on
remeasurement |
- |
(1,178 |
) |
|
– |
|
|
(1,178 |
) |
|
Loss from discontinued operations |
- |
(678 |
) |
|
(14,362 |
) |
|
(594 |
) |
|
Income tax (recovery) from discontinued operations |
- |
(1 |
) |
|
196 |
|
|
(1 |
) |
|
Loss from discontinued operations, net of taxes |
- |
(677 |
) |
|
(14,558 |
) |
|
(593 |
) |
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
Net cash used in investing activities for the
year ended December 31, 2022 was $47.3 million as compared to $23.6
million in 2021. During 2022, the Corporation spent $73.5 million
(2021 - $35.3 million) on capital expenditures directed towards
drilling and other equipment and received proceeds of $27.5 million
(2021 - $12.3 million) primarily from involuntary disposal of
drilling equipment in well bores.
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
|
Growth capital expenditures |
15,252 |
|
7,182 |
|
|
48,457 |
|
23,078 |
|
|
Maintenance capital expenditures from downhole equipment losses and
asset retirements |
6,222 |
|
3,940 |
|
|
25,068 |
|
12,203 |
|
|
Total capital expenditures |
21,474 |
|
11,122 |
|
|
73,525 |
|
35,281 |
|
|
Deduct: |
|
|
|
|
|
|
Proceeds on disposition of drilling equipment |
(12,005 |
) |
(5,236 |
) |
|
(27,459 |
) |
(12,340 |
) |
|
Net capital expenditures(2) |
9,469 |
|
5,886 |
|
|
46,066 |
|
22,941 |
|
|
|
|
|
|
|
|
|
|
|
|
The 2022-year capital expenditures comprised
of:
- $31.7 million in
downhole performance drilling motors;
- $38.2 million in
MWD systems and spare components and RSS; and
- $3.6 million in machinery and
equipment and other assets.
The capital expenditure program undertaken in
the year was primarily financed from cash flows from operating
activities, proceeds on disposition of drilling equipment, and the
Corporation’s credit facilities when required. Of the total capital
expenditures in the 2022-year, $48.5 million was used to grow the
Corporation’s fleet of drilling equipment and the remaining $25
million was used to maintain capacity in the Corporation’s fleet of
drilling and other equipment and replace equipment lost downhole
during drilling operations. With proceeds on disposition of
drilling and other equipment of $27.5 million, the Corporation’s
net capital expenditures for the 2022-year was $46.1 million.
Capital Expenditures
In 2022, the Corporation’s capital spending was
the highest in its history, while its net debt remained minimal.
The Corporation leveraged its strong financial position to
proactively order materials and equipment to mitigate the impacts
of supply chain challenges and inflation. The 2022 capital
expenditures were primarily directed towards expanding the
Corporation’s fleet of high-performance technologies, including its
Atlas motors, Velocity systems, and PowerDrive Orbit RSS tools, to
address the growing demand as robust commodity prices and growing
industry activity continued.
Financing Activities
For the year ended December 31, 2022, net cash
generated from financing activities was $2.7 million as compared to
$22.7 million used in financing activities in 2021. In the
2022-year:
- dividends of
$15.1 million were paid to shareholders;
- 626,400 common
shares were purchased by an independent trustee in the open market
for $4.1 million and held in trust for the use of potential future
settlements of restricted awards granted under the Corporation’s
RAP;
- payments of $3.3
million were made towards lease liabilities;
- 1,266,038 common
shares were issued from treasury for proceeds of $2.5 million upon
the exercise of share options; and
- $22.7 million
net in drawings were taken against the Corporation’s syndicated
credit facility.
Capital Resources
As of December 31, 2022, the Corporation had CAD
$22.7 million drawn on its Canadian credit facilities, nothing
drawn on its US operating facility, and a cash balance of $18.2
million. As at December 31, 2022, the Corporation had CAD $42.3
million and USD $15 million available from its credit facilities.
The credit facilities are secured by substantially all of the
Corporation’s assets and mature in December 2025.
As at December 31, 2022, the Corporation was in
compliance with all its financial covenants as follows:
|
Ratio |
Covenant |
|
As at December 31, 2022 |
|
Debt to covenant EBITDA(i) |
<3.0x |
|
0.27 |
|
Interest coverage ratio(i) |
>3.0x |
|
62.40 |
(i) Definitions for these terms are included in
the credit agreement filed on SEDAR
Under the syndicated credit agreement, in any
given year, the Corporation’s distributions (as defined therein)
cannot exceed its distributable cash flows as defined in the
Corporation’s syndicated credit agreement. Distributions include,
without limitation, dividends declared and paid, as well as cash
used for common shares purchased by the independent trustee in the
open market and held in trust for potential settlement of
outstanding RAs. For the year ended December 31, 2022, the
Corporation’s distributions were 29 percent of its distributable
cash flows.
Cash Requirements for Capital
Expenditures
Historically, the Corporation has financed its
capital expenditures and acquisitions through cash flows from
operating activities, proceeds on disposition of drilling
equipment, debt and equity. In order to continue the advantageous
strategy of placing advanced orders in a robust industry
environment and continue to mitigate the supply chain issues
expected to continue into 2023, the Board has approved a 2023
capital expenditure program of $61.5 million. Of the 2023 capital
expenditures, $19.7 million is expected to be allocated to maintain
capacity in the existing fleet of drilling and other equipment and
replace equipment lost downhole during drilling operations, and
$41.8 million is expected to be allocated to growth capital. The
amount expected to be allocated towards replacing equipment lost
downhole could increase should more downhole equipment losses occur
throughout the year.
These planned expenditures are expected to be
financed from cash flow from operating activities, proceeds on
disposition of drilling equipment, cash and cash equivalents, and
the Corporation’s credit facilities, if necessary. However, if a
sustained period of market uncertainty and financial market
volatility persists in 2023, the Corporation’s activity levels,
cash flows and access to credit may be negatively impacted, and the
expenditure level would be reduced accordingly where possible.
Conversely, if future growth opportunities present themselves, the
Corporation would look at expanding this planned capital
expenditure amount.
As at December 31, 2022, the Corporation has
commitments to purchase drilling and other equipment for $43.3
million. Delivery is expected to occur within the first half of
2023.
About PHX Energy Services
Corp.
PHX Energy is a growth oriented, public oil and
natural gas services company. The Corporation, through its
directional drilling subsidiary entities provides horizontal and
directional drilling services to oil and natural gas exploration
and development companies principally in Canada and the US. In
connection with the services it provides, PHX Energy engineers,
develops and manufactures leading-edge technologies. In recent
years, PHX Energy has developed various new technologies that have
positioned the Corporation as a technology leader in the horizontal
and directional drilling services sector.
PHX Energy’s Canadian directional drilling
operations are conducted through Phoenix Technology Services LP.
The Corporation maintains its corporate head office, research and
development, Canadian sales, service and operational centers in
Calgary, Alberta. In addition, PHX Energy has a facility in
Estevan, Saskatchewan. PHX Energy’s US operations, conducted
through the Corporation’s wholly-owned subsidiary, Phoenix
Technology Services USA Inc. (“Phoenix USA”), is headquartered in
Houston, Texas. Phoenix USA has sales and service facilities in
Houston, Texas; Casper, Wyoming; Midland, Texas; and Oklahoma City,
Oklahoma. Internationally, PHX Energy has sales offices and service
facilities in Albania, and administrative offices in Nicosia,
Cyprus and Luxembourg City, Luxembourg. The Corporation also
operates in the Middle East regions through an arrangement with
National Energy Services Reunited Corp.
The common shares of PHX Energy trade on the
Toronto Stock Exchange under the symbol PHX.
For further information please contact:John
Hooks, CEO; Michael Buker, President; or Cameron Ritchie, Senior
Vice President Finance and CFO
PHX Energy Services Corp.Suite 1600, 215 9th
Avenue SW, Calgary Alberta T2P 1K3Tel: 403-543-4466 Fax:
403-543-4485 www.phxtech.com
Consolidated Statements of Financial
Position
|
|
|
|
|
|
(Adjusted) |
|
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
18,247,376 |
|
|
$ |
24,828,830 |
|
|
|
Trade and other receivables |
|
|
125,836,273 |
|
|
|
76,478,093 |
|
|
|
Inventories |
|
|
63,119,489 |
|
|
|
36,691,141 |
|
|
|
Prepaid expenses |
|
|
3,024,166 |
|
|
|
2,814,272 |
|
|
|
Current tax assets |
|
|
- |
|
|
|
346,554 |
|
|
|
Total current assets |
|
|
210,227,304 |
|
|
|
141,158,890 |
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
Drilling and other long-term assets |
|
|
115,945,060 |
|
|
|
76,363,001 |
|
|
|
Right-of-use asset |
|
|
29,336,163 |
|
|
|
25,708,177 |
|
|
|
Intangible assets |
|
|
15,668,180 |
|
|
|
16,137,024 |
|
|
|
Investments |
|
|
3,000,500 |
|
|
|
3,000,500 |
|
|
|
Other long-term assets |
|
|
993,112 |
|
|
|
- |
|
|
|
Deferred tax assets |
|
|
53,869 |
|
|
|
126,133 |
|
|
|
Total non-current assets |
|
|
164,996,884 |
|
|
|
121,334,835 |
|
|
Total assets |
|
$ |
375,224,188 |
|
|
$ |
262,493,725 |
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Trade and other payables |
|
$ |
104,688,901 |
|
|
$ |
77,571,887 |
|
|
|
Dividends payable |
|
|
7,636,085 |
|
|
|
2,482,060 |
|
|
|
Lease liability |
|
|
2,906,708 |
|
|
|
3,232,503 |
|
|
|
Current tax liabilities |
|
|
656,499 |
|
|
|
- |
|
|
|
Total current liabilities |
|
|
115,888,193 |
|
|
|
83,286,450 |
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Lease liability |
|
|
36,768,003 |
|
|
|
32,638,819 |
|
|
|
Loans and borrowings |
|
|
22,731,389 |
|
|
|
- |
|
|
|
Deferred tax liability |
|
|
18,496,619 |
|
|
|
9,346,426 |
|
|
|
Other |
|
|
4,461,531 |
|
|
|
2,789,786 |
|
|
|
Total non-current liabilities |
|
|
82,457,542 |
|
|
|
44,775,031 |
|
|
Equity: |
|
|
|
|
|
|
|
|
Share capital |
|
|
251,344,809 |
|
|
|
235,463,414 |
|
|
|
Contributed surplus |
|
|
7,044,317 |
|
|
|
9,462,091 |
|
|
|
Deficit |
|
|
(112,120,484 |
) |
|
|
(121,721,790 |
) |
|
|
Accumulated other comprehensive income |
|
|
30,609,811 |
|
|
|
11,228,529 |
|
|
|
Total equity |
|
|
176,878,453 |
|
|
|
134,432,244 |
|
|
Total liabilities and equity |
|
$ |
375,224,188 |
|
|
$ |
262,493,725 |
|
Condensed Consolidated Statements of
Comprehensive Income
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
(Re-presented) |
|
|
Revenue |
|
$ |
157,758,297 |
|
$ |
102,295,822 |
|
|
$ |
535,744,879 |
|
$ |
339,946,067 |
|
|
Direct costs |
|
|
121,906,394 |
|
|
82,137,785 |
|
|
|
426,106,571 |
|
|
270,636,934 |
|
|
Gross profit |
|
|
35,851,903 |
|
|
20,158,037 |
|
|
|
109,638,308 |
|
|
69,309,133 |
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
19,364,769 |
|
|
13,044,314 |
|
|
|
68,901,204 |
|
|
44,982,155 |
|
|
Research and development expenses |
|
|
1,183,578 |
|
|
1,048,545 |
|
|
|
3,722,513 |
|
|
2,773,559 |
|
|
Finance expense |
|
|
486,984 |
|
|
114,746 |
|
|
|
1,360,429 |
|
|
494,287 |
|
|
Finance expense lease liability |
|
|
524,909 |
|
|
515,614 |
|
|
|
2,031,549 |
|
|
2,125,017 |
|
|
Other income |
|
|
(8,698,806 |
) |
|
(3,384,400 |
) |
|
|
(19,730,307 |
) |
|
(7,942,246 |
) |
|
|
|
|
12,861,434 |
|
|
11,338,819 |
|
|
|
56,285,388 |
|
|
42,432,772 |
|
|
Earnings from continuing operations before income taxes |
|
|
22,990,469 |
|
|
8,819,218 |
|
|
|
53,352,920 |
|
|
26,876,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) income taxes |
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
363,172 |
|
|
(17,348 |
) |
|
|
759,822 |
|
|
(235,944 |
) |
|
Deferred |
|
|
2,294,216 |
|
|
(493,899 |
) |
|
|
8,281,708 |
|
|
3,794,631 |
|
|
|
|
|
2,657,388 |
|
|
(511,247 |
) |
|
|
9,041,530 |
|
|
3,558,687 |
|
|
Earnings from continuing operations |
|
|
20,333,081 |
|
|
9,330,465 |
|
|
|
44,311,390 |
|
|
23,317,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations, net of taxes |
|
|
- |
|
|
(678,515 |
) |
|
|
(14,558,032 |
) |
|
(593,039 |
) |
|
Net earnings |
|
|
20,333,081 |
|
|
8,651,950 |
|
|
|
29,753,358 |
|
|
22,724,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
|
|
(1,743,303 |
) |
|
(558,781 |
) |
|
|
8,820,328 |
|
|
(68,458 |
) |
|
Reclassification of foreign currency translation loss on
disposition |
|
|
- |
|
|
- |
|
|
|
10,560,954 |
|
|
- |
|
|
Total comprehensive income for the period |
|
$ |
18,589,778 |
|
$ |
8,093,169 |
|
|
$ |
49,134,640 |
|
$ |
22,656,177 |
|
|
Earnings per share – basic |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.40 |
|
$ |
0.19 |
|
|
$ |
0.88 |
|
$ |
0.47 |
|
|
Discontinued operations |
|
$ |
- |
|
$ |
(0.01 |
) |
|
$ |
(0.29 |
) |
$ |
(0.01 |
) |
|
Net earnings |
|
$ |
0.40 |
|
$ |
0.18 |
|
|
$ |
0.59 |
|
$ |
0.46 |
|
|
Earnings per share – diluted |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.39 |
|
$ |
0.18 |
|
|
$ |
0.87 |
|
$ |
0.45 |
|
|
Discontinued operations |
|
$ |
- |
|
$ |
(0.01 |
) |
|
$ |
(0.29 |
) |
$ |
(0.01 |
) |
|
Net earnings |
|
$ |
0.39 |
|
$ |
0.17 |
|
|
$ |
0.58 |
|
$ |
0.44 |
|
Condensed Consolidated Statements of
Cash Flows
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
(Re-presented) |
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations |
$ |
20,333,081 |
|
$ |
9,330,465 |
|
|
$ |
44,311,390 |
|
$ |
23,317,674 |
|
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
8,875,776 |
|
|
6,898,289 |
|
|
|
32,118,506 |
|
|
25,860,400 |
|
|
Depreciation and amortization right-of-use asset |
|
805,421 |
|
|
836,765 |
|
|
|
3,235,024 |
|
|
3,336,282 |
|
|
Provision for (recovery of) income taxes |
|
2,657,388 |
|
|
(511,247 |
) |
|
|
9,041,530 |
|
|
3,558,687 |
|
|
Unrealized foreign exchange loss |
|
132,706 |
|
|
176,407 |
|
|
|
169,308 |
|
|
253,071 |
|
|
Net gain on disposition of drilling equipment |
|
(8,692,877 |
) |
|
(3,482,704 |
) |
|
|
(19,491,747 |
) |
|
(7,745,851 |
) |
|
Equity-settled share-based payments |
|
58,146 |
|
|
49,056 |
|
|
|
451,188 |
|
|
383,604 |
|
|
Finance expense |
|
486,984 |
|
|
114,746 |
|
|
|
1,360,429 |
|
|
494,287 |
|
|
Recovery of bad debts |
|
(11,712 |
) |
|
(1,547 |
) |
|
|
(13,213 |
) |
|
(280,612 |
) |
|
Provision for inventory obsolescence |
|
422,631 |
|
|
361,493 |
|
|
|
1,299,155 |
|
|
2,033,144 |
|
|
Interest paid |
|
(249,587 |
) |
|
(40,528 |
) |
|
|
(841,288 |
) |
|
(195,672 |
) |
|
Interest paid on lease liabilities |
|
(524,909 |
) |
|
(515,614 |
) |
|
|
(2,031,549 |
) |
|
(2,125,017 |
) |
|
Income taxes received |
|
3,221 |
|
|
(97,302 |
) |
|
|
231,812 |
|
|
109,455 |
|
|
Change in non-cash working capital |
|
(15,326,046 |
) |
|
(150,396 |
) |
|
|
(31,502,843 |
) |
|
(3,451,337 |
) |
|
Continuing operations |
|
8,970,223 |
|
|
12,967,883 |
|
|
|
38,337,702 |
|
|
45,548,115 |
|
|
Discontinued operations |
|
- |
|
|
830,929 |
|
|
|
(1,254,859 |
) |
|
(95,412 |
) |
|
Net cash from operating activities |
|
8,970,223 |
|
|
13,798,812 |
|
|
|
37,082,843 |
|
|
45,452,703 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Proceeds on disposition of drilling equipment |
|
12,005,349 |
|
|
5,235,902 |
|
|
|
27,458,977 |
|
|
12,340,237 |
|
|
Acquisition of drilling and other equipment |
|
(21,473,931 |
) |
|
(11,122,110 |
) |
|
|
(73,525,079 |
) |
|
(35,281,303 |
) |
|
Acquisition of intangible assets |
|
(568,978 |
) |
|
(1,852,731 |
) |
|
|
(1,261,372 |
) |
|
(1,852,731 |
) |
|
Acquisition of equity investment |
|
- |
|
|
- |
|
|
|
- |
|
|
(3,000,500 |
) |
|
Change in non-cash working capital |
|
(332,618 |
) |
|
1,804,142 |
|
|
|
7,349 |
|
|
4,164,905 |
|
|
Continuing operations |
|
(10,370,178 |
) |
|
(5,934,797 |
) |
|
|
(47,320,125 |
) |
|
(23,629,392 |
) |
|
Discontinued operations |
|
- |
|
|
(10,964 |
) |
|
|
(68,068 |
) |
|
163 |
|
|
Net cash used in investing activities |
|
(10,370,178 |
) |
|
(5,945,761 |
) |
|
|
(47,388,193 |
) |
|
(23,629,229 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Proceeds on (repayment of) loans and borrowings |
|
(1,268,611 |
) |
|
- |
|
|
|
22,731,389 |
|
|
- |
|
|
Proceeds from exercise of options |
|
332,800 |
|
|
1,372,126 |
|
|
|
2,503,685 |
|
|
2,346,453 |
|
|
Dividends paid to shareholders |
|
(5,078,134 |
) |
|
(2,505,450 |
) |
|
|
(15,147,530 |
) |
|
(6,290,612 |
) |
|
Purchase of shares held in trust |
|
(610,000 |
) |
|
(1,414,000 |
) |
|
|
(4,110,000 |
) |
|
(7,500,000 |
) |
|
Payments of lease liability |
|
(805,268 |
) |
|
(856,425 |
) |
|
|
(3,271,452 |
) |
|
(3,294,608 |
) |
|
Repurchase of shares under the NCIB |
|
- |
|
|
(4,515,467 |
) |
|
|
- |
|
|
(7,979,601 |
) |
|
Continuing operations |
|
(7,429,213 |
) |
|
(7,919,216 |
) |
|
|
2,706,092 |
|
|
(22,718,368 |
) |
|
Discontinued operations |
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
Net cash from (used in) financing activities |
|
(7,429,213 |
) |
|
(7,919,216 |
) |
|
|
2,706,092 |
|
|
(22,718,368 |
) |
|
Net decrease in cash and cash equivalents |
|
(8,829,168 |
) |
|
(66,165 |
) |
|
|
(7,599,258 |
) |
|
(894,894 |
) |
|
Cash and cash equivalents, beginning of period |
|
27,023,659 |
|
|
24,917,181 |
|
|
|
24,828,830 |
|
|
25,745,911 |
|
|
Effect of movements in exchange rates on cash held |
|
52,885 |
|
|
(22,186 |
) |
|
|
1,017,804 |
|
|
(22,187 |
) |
|
Cash and cash equivalents, end of period |
$ |
18,247,376 |
|
$ |
24,828,830 |
|
|
$ |
18,247,376 |
|
$ |
24,828,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cautionary Statement Regarding
Forward-Looking Information and Statements
This document contains certain forward-looking
information and statements within the meaning of applicable
securities laws. The use of “expect”, “anticipate”, “continue”,
“estimate”, “objective”, “ongoing”, “may”, “will”, “project”,
“could”, “should”, “can”, “believe”, “plans”, “intends”, “strategy”
and similar expressions are intended to identify forward-looking
information or statements.
The forward-looking information and statements
included in this document are not guarantees of future performance
and should not be unduly relied upon. These statements and
information involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements and information. The Corporation believes the
expectations reflected in such forward-looking statements and
information are reasonable, but no assurance can be given that
these expectations will prove to be correct. Such forward-looking
statements and information included in this document should not be
unduly relied upon. These forward-looking statements and
information speak only as of the date of this document.
In particular, forward-looking information and
statements contained in this document include without limitation,
the anticipated increase in demand for the Corporation’s services
and technologies in North America, the expectation that supply
chain challenges faced in 2022 will lessen in 2023, the anticipated
impact of global supply chain disruptions and inflation on the
Corporation’s operations, results, and the Corporation’s planned
responses thereto, the Corporation’s intent to preserve balance
sheet strength and continue to reward shareholders, including
through the ROCS Program, the anticipated continuation of PHX
Energy’s quarterly dividend program and the amounts of dividends,
the projected capital expenditures budget 2023 and how the budget
will be allocated and funded, the timeline for delivery of
equipment on order, the anticipated increase in demand for the
Corporation’s services and technologies in North America, and the
potential future settlement of retention and performance awards in
common shares that were purchased and held in trust by an
independent trustee in the open market.
The above are stated under the headings: “Year
End Highlights”, “Overall Performance”, “Return of Capital
Strategy”, “Capital Spending”, “Supply Chain Disruption and
Inflation”, and “Cash Requirements for Capital Expenditures”. In
addition, all information contained under the headings “Return of
Capital Strategy”, and “Outlook” sections of this document may
contain forward-looking statements.
In addition to other material factors,
expectations and assumptions which may be identified in this
document and other continuous disclosure documents of the
Corporation referenced herein, assumptions have been made in
respect of such forward-looking statements and information
regarding, without limitation, that: the Corporation will continue
to conduct its operations in a manner consistent with past
operations; the general continuance of current industry conditions
and the accuracy of the Corporation’s market outlook expectations
for 2023 and in the future; that future business, regulatory and
industry conditions will be within the parameters expected by the
Corporation, anticipated financial performance, business prospects,
impact of competition, strategies, the general stability of the
economic and political environment in which the Corporation
operates; the impact of pandemics and the Russian-Ukrainian war on
the global economy, specifically trade, manufacturing, supply
chain, inflation and energy consumption, among other things and the
resulting impact on the Corporation’s operations and future results
which remain uncertain, exchange and interest rates including the
potential for further interest rate hikes by global central banks
and the impact on financing charges and foreign exchange and the
anticipated global economic response to concerted interest rate
hikes; the continuance of existing (and in certain circumstances,
the implementation of proposed) tax, royalty and regulatory
regimes; the sufficiency of budgeted capital expenditures in
carrying out planned activities; the availability and cost of
labour and services and the adequacy of cash flow; debt and ability
to obtain financing on acceptable terms to fund its planned
expenditures, which are subject to change based on commodity
prices; market conditions and future oil and natural gas prices;
and potential timing delays. Although management considers these
material factors, expectations, and assumptions to be reasonable
based on information currently available to it, no assurance can be
given that they will prove to be correct.
Readers are cautioned that the foregoing lists
of factors are not exhaustive. Additional information on these and
other factors that could affect the Corporation’s operations and
financial results are included in reports on file with the Canadian
Securities Regulatory Authorities and may be accessed through the
SEDAR website (www.sedar.com) or at the Corporation’s website. The
forward-looking statements and information contained in this
document are expressly qualified by this cautionary statement. The
Corporation does not undertake any obligation to publicly update or
revise any forward-looking statements or information, whether as a
result of new information, future events or otherwise, except as
may be required by applicable securities laws.
Non-GAAP and Other Financial
Measures
Non-GAAP Financial Measures and
Ratios
a) Adjusted EBITDA from
Continuing Operations
Adjusted EBITDA from continuing operations,
defined as earnings before finance expense, finance expense lease
liability, income taxes, depreciation and amortization, impairment
losses on drilling and other equipment and goodwill and other
write-offs, equity-settled share-based payments, severance payouts
relating to the Corporation’s restructuring cost, and unrealized
foreign exchange gains or losses, does not have a standardized
meaning and is not a financial measure that is recognized under
GAAP. However, Management believes that adjusted EBITDA from
continuing operations provides supplemental information to earnings
from continuing operations that is useful in evaluating the results
of the Corporation’s principal business activities before
considering certain charges, how it was financed and how it was
taxed in various countries. Investors should be cautioned, however,
that adjusted EBITDA from continuing operations should not be
construed as an alternative measure to earnings from continuing
operations determined in accordance with GAAP. PHX Energy’s method
of calculating adjusted EBITDA from continuing operations may
differ from that of other organizations and, accordingly, its
adjusted EBITDA from continuing operations may not be comparable to
that of other companies.
The following is a reconciliation of earnings from
continuing operations to adjusted EBITDA:
(Stated in thousands of
dollars)
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2022 |
2021 |
|
|
2022 |
2021 |
|
Earnings from continuing operations: |
20,333 |
9,330 |
|
|
44,311 |
23,318 |
|
Add: |
|
|
|
|
|
|
Depreciation and amortization drilling and
other
equipment |
8,876 |
6,898 |
|
|
32,119 |
25,860 |
|
Depreciation and amortization right-of-use
asset |
805 |
837 |
|
|
3,235 |
3,336 |
|
Provision for (recovery of) income taxes |
2,657 |
(511 |
) |
|
9,042 |
3,559 |
|
Finance expense |
487 |
115 |
|
|
1,360 |
494 |
|
Finance expense lease liability |
525 |
516 |
|
|
2,032 |
2,125 |
|
Equity-settled share-based payments |
58 |
49 |
|
|
451 |
384 |
|
Unrealized foreign exchange loss |
133 |
176 |
|
|
169 |
253 |
|
Severance |
- |
- |
|
|
- |
835 |
|
Adjusted EBITDA from continuing operations |
33,874 |
17,410 |
|
|
92,719 |
60,164 |
|
|
|
|
|
|
|
|
b) Adjusted EBITDA from
Continuing Operations Per Share - Diluted
Adjusted EBITDA from continuing operations per
share - diluted is calculated using the treasury stock method
whereby deemed proceeds on the exercise of the share options are
used to reacquire common shares at an average share price. The
calculation of adjusted EBITDA from continuing operations per share
- dilutive is based on the adjusted EBITDA from continuing
operations as reported in the table above divided by the diluted
number of shares outstanding as quantified in Note 11(b) in the
Notes to the Consolidated Financial Statements.
c) Adjusted EBITDA from
Continuing Operations as a Percentage of Revenue
Adjusted EBITDA as a percentage of revenue is
calculated by dividing the adjusted EBITDA from continuing
operations as reported in the table above by revenue as stated on
the Consolidated Statements of Comprehensive Earnings.
d) Adjusted EBITDA from
Continuing Operations Excluding Cash-settled Share-based
Compensation Expense
Adjusted EBITDA from continuing operations
excluding cash-settled share-based compensation expense is
calculated by adding cash-settled share-based compensation expense
to adjusted EBITDA from continuing operations as described
above.
The following is a reconciliation of earnings
from continuing operations to adjusted EBITDA from continuing
operations excluding cash-settled share-based compensation
expense:
(Stated in thousands of
dollars)
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
2022 |
2021 |
|
|
2022 |
2021 |
|
Earnings from continuing operations: |
20,333 |
9,330 |
|
|
44,311 |
23,318 |
|
Add: |
|
|
|
|
|
|
Depreciation and amortization drilling and
other
equipment |
8,876 |
6,898 |
|
|
32,119 |
25,860 |
|
Depreciation and amortization right-of-use
asset |
805 |
837 |
|
|
3,235 |
3,336 |
|
Provision for (recovery of) income taxes |
2,657 |
(511 |
) |
|
9,042 |
3,559 |
|
Finance expense |
487 |
115 |
|
|
1,360 |
494 |
|
Finance expense lease liability |
525 |
516 |
|
|
2,032 |
2,125 |
|
Equity-settled share-based payments |
58 |
49 |
|
|
451 |
384 |
|
Unrealized foreign exchange loss |
133 |
176 |
|
|
169 |
253 |
|
Severance |
- |
- |
|
|
- |
835 |
|
Cash-settled share-based compensation expense |
6,938 |
2,972 |
|
|
24,568 |
12,889 |
|
Adjusted EBITDA from continuing operations excluding
cash-settled share-based compensation expense |
40,812 |
20,382 |
|
|
117,287 |
73,053 |
|
|
|
|
|
|
|
|
e) Adjusted
EBITDA from Continuing Operations Excluding Cash-settled
Share-based Compensation Expense as a Percentage of
Revenue
Adjusted EBITDA from continuing operations
excluding cash-settled share-based compensation expense as a
percentage of revenue is calculated by dividing adjusted EBITDA
from continuing operations excluding cash-settled share-based
compensation expense as reported above by revenue as stated on the
Consolidated Statements of Comprehensive Earnings.
f) Gross Profit as a
Percentage of Revenue Excluding Depreciation & Amortization and
Government Grants
Gross profit as a percentage of revenue
excluding depreciation & amortization and government grants is
defined as the Corporation’s gross profit excluding depreciation
and amortization and government grants divided by revenue and is
used to assess operational profitability. This Non-GAAP ratio does
not have a standardized meaning and is not a financial measure
recognized under GAAP. PHX Energy’s method of calculating gross
profit as a percentage of revenue may differ from that of other
organizations and, accordingly, it may not be comparable to that of
other companies.
The following is a reconciliation of revenue,
direct costs, depreciation and amortization, government grants and
gross profit to gross profit as a percentage of revenue excluding
depreciation and amortization and government grants:
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
|
|
Years ended December 31, |
|
|
|
|
2022 |
|
2021 |
|
|
|
2022 |
|
2021 |
|
|
Revenue |
|
157,758 |
|
102,296 |
|
|
|
535,745 |
|
339,946 |
|
|
Direct costs |
|
121,906 |
|
82,138 |
|
|
|
426,107 |
|
270,637 |
|
|
Gross profit |
|
35,852 |
|
20,158 |
|
|
|
109,638 |
|
69,309 |
|
| Depreciation &
amortization drilling and other equipment (included in
direct costs) |
|
8,876 |
|
6,898 |
|
|
|
32,119 |
|
25,860 |
|
| Depreciation &
amortization right-of-use asset (included in direct
costs) |
|
805 |
|
837 |
|
|
|
3,235 |
|
3,336 |
|
|
Government grants (included in direct costs) |
|
(8 |
) |
- |
|
|
|
(83 |
) |
(6,488 |
) |
|
|
|
45,525 |
|
27,893 |
|
|
|
144,909 |
|
92,017 |
|
|
Gross profit as a percentage of revenue excluding
depreciation & amortization and government
grants |
|
29% |
|
27% |
|
|
|
27% |
|
27% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
g) SG&A Costs
Excluding Share-Based Compensation as a Percentage of
Revenue
SG&A costs excluding share-based
compensation as a percentage of revenue is defined as the
Corporation’s SG&A costs excluding share-based compensation
divided by revenue and is used to assess the impact of
administrative costs excluding the effect of share price
volatility. This Non-GAAP ratio does not have a standardized
meaning and is not a financial measure recognized under GAAP. PHX
Energy’s method of calculating SG&A costs excluding share-based
compensation as a percentage of revenue may differ from that of
other organizations and, accordingly, it may not be comparable to
that of other companies.
The following is a reconciliation of SG&A
costs, share-based compensation, and revenue to SG&A costs
excluding share-based compensation as a percentage of revenue:
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
Years ended December 31, |
|
|
|
2022 |
2021 |
|
2022 |
2021 |
|
SG&A Costs |
|
19,365 |
13,044 |
|
68,901 |
44,982 |
|
Deduct: |
|
|
|
|
|
|
|
Share-based compensation (included in SG&A) |
|
6,996 |
3,021 |
|
25,019 |
13,273 |
|
|
|
12,369 |
10,023 |
|
43,882 |
31,709 |
|
Revenue |
|
157,758 |
102,296 |
|
535,745 |
339,946 |
|
SG&A costs excluding share-based compensation as a
percentage of revenue |
|
8% |
10% |
|
8% |
9% |
|
|
|
|
|
|
|
|
Capital Management Measures
a) Funds from
Operations
Funds from operations is defined as cash flows
generated from operating activities before changes in non-cash
working capital, interest paid, and income taxes paid. This
financial measure does not have a standardized meaning and is not a
financial measure recognized under GAAP. Management uses funds from
operations as an indication of the Corporation’s ability to
generate funds from its operations before considering changes in
working capital balances and interest and taxes paid. Investors
should be cautioned, however, that this financial measure should
not be construed as an alternative measure to cash flows from
operating activities determined in accordance with GAAP. PHX
Energy’s method of calculating funds from operations may differ
from that of other organizations and, accordingly, it may not be
comparable to that of other companies.
The following is a reconciliation of cash flows
from operating activities to funds from operations:
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
Years ended December 31, |
|
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
Cash flows from operating activities |
8,970 |
|
12,969 |
|
38,338 |
|
45,548 |
|
|
Add (deduct): |
|
|
|
|
|
|
Changes in non-cash working capital |
15,326 |
|
150 |
|
31,503 |
|
3,451 |
|
|
Interest paid |
775 |
|
556 |
|
2,873 |
|
2,321 |
|
|
Income taxes paid (received) |
(3 |
) |
97 |
|
(232 |
) |
(109 |
) |
|
Funds from operations |
25,068 |
|
13,772 |
|
72,482 |
|
51,211 |
|
|
|
|
|
|
|
|
|
|
|
b) Excess Cash
Flow
Excess cash flow is defined as funds from
operations (as defined above) less cash payment on leases, growth
capital expenditures, and maintenance capital expenditures from
downhole equipment losses and asset retirements, and increased by
proceeds on disposition of drilling equipment. This financial
measure does not have a standardized meaning and is not a financial
measure recognized under GAAP. Management uses excess cash flow as
an indication of the Corporation’s ability to generate funds from
its operations to support operations and grow and maintain the
Corporation’s drilling and other equipment. This performance
measure is useful to investors for assessing the Corporation’s
operating and financial performance, leverage and liquidity.
Investors should be cautioned, however, that this financial measure
should not be construed as an alternative measure to cash flows
from operating activities determined in accordance with GAAP. PHX
Energy’s method of calculating excess cash flow may differ from
that of other organizations and, accordingly, it may not be
comparable to that of other companies.
The following is a reconciliation of cash flows
from operating activities to excess cash flow:
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
|
Cash flows from operating activities |
8,970 |
|
12,969 |
|
|
38,338 |
|
45,548 |
|
|
Add (deduct): |
|
|
|
|
|
|
Changes in non-cash working capital |
15,326 |
|
150 |
|
|
31,503 |
|
3,451 |
|
|
Interest paid |
774 |
|
556 |
|
|
2,873 |
|
2,321 |
|
|
Income taxes paid (received) |
(3 |
) |
97 |
|
|
(232 |
) |
(109 |
) |
|
Cash payment on leases |
(1,330 |
) |
(1,372 |
) |
|
(5,303 |
) |
(5,420 |
) |
|
|
23,737 |
|
12,399 |
|
|
67,179 |
|
45,791 |
|
|
|
|
|
|
|
|
|
Proceeds on disposition of drilling equipment |
12,005 |
|
5,236 |
|
|
27,459 |
|
12,340 |
|
|
Maintenance capital expenditures from downhole
equipment losses and asset retirements |
(6,222 |
) |
(3,940 |
) |
|
(25,068 |
) |
(12,203 |
) |
|
Net proceeds |
5,783 |
|
1,296 |
|
|
2,391 |
|
137 |
|
|
|
|
|
|
|
|
|
Growth capital expenditures |
(15,252 |
) |
(7,182 |
) |
|
(48,457 |
) |
(23,078 |
) |
|
|
|
|
|
|
|
|
Excess cash flow |
14,268 |
|
6,513 |
|
|
21,113 |
|
22,850 |
|
|
|
|
|
|
|
|
|
|
|
|
c) Working
Capital
Working capital is defined as the Corporation’s
current assets less its current liabilities and is used to assess
the Corporation’s short-term liquidity. This financial measure does
not have a standardized meaning and is not a financial measure
recognized under GAAP. Management uses working capital to provide
insight as to the Corporation’s ability to meet obligations as at
the reporting date. PHX Energy’s method of calculating working
capital may differ from that of other organizations and,
accordingly, it may not be comparable to that of other
companies.
The following is a reconciliation of current
assets and current liabilities to working capital:
(Stated in thousands of dollars)
|
Years ended December 31, |
|
|
|
|
|
|
2022 |
|
2021 |
|
|
Current assets |
|
|
|
210,227 |
|
141,159 |
|
|
Deduct: |
|
|
|
|
|
|
Current liabilities |
|
|
|
(115,888 |
) |
(83,286 |
) |
|
Working capital |
|
|
|
94,339 |
|
57,873 |
|
|
|
|
|
|
|
|
|
|
d) Net
Debt (Net Cash)
Net debt is defined as the Corporation’s
operating facility and loans and borrowings less cash and cash
equivalents. This financial measure does not have a standardized
meaning and is not a financial measure recognized under GAAP.
Management uses net debt to provide insight as to the Corporation’s
ability to meet obligations as at the reporting date. PHX Energy’s
method of calculating net debt may differ from that of other
organizations and, accordingly, it may not be comparable to that of
other companies.
The following is a reconciliation of operating
facility, loans and borrowings, and cash and cash equivalents to
net debt:
(Stated in thousands of dollars)
|
Years ended December 31, |
|
|
|
|
|
2022 |
|
2021 |
|
|
Loans and borrowings |
|
|
22,731 |
|
- |
|
|
Deduct: |
|
|
|
|
|
Cash and cash equivalents |
|
|
(18,247 |
) |
(24,829 |
) |
|
Net debt (Net cash) |
|
|
4,484 |
|
(24,829 |
) |
|
|
|
|
|
|
|
|
e) Net
Capital Expenditures
Net capital expenditures is comprised of total
additions to drilling and other long-term assets, as determined in
accordance with IFRS, less total proceeds from disposition of
drilling equipment, as determined in accordance with IFRS. This
financial measure does not have a standardized meaning and is not a
financial measure recognized under GAAP. Management uses net
capital expenditures to provide insight as to the Corporation’s
ability to meet obligations as at the reporting date. PHX Energy’s
method of calculating net debt may differ from that of other
organizations and, accordingly, it may not be comparable to that of
other companies.
The following is a reconciliation of additions to
drilling and other equipment and proceeds from disposition of
drilling equipment to net capital expenditures:
(Stated in thousands of dollars)
|
Three-month periods ended December 31, |
|
|
Years ended December 31, |
|
|
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
| Additions
to drilling and other equipment (Capital
expenditures) |
21,474 |
|
11,122 |
|
|
73,525 |
|
35,281 |
|
|
Deduct: |
|
|
|
|
|
|
Proceeds on disposition of drilling equipment |
(12,005 |
) |
(5,236 |
) |
|
(27,459 |
) |
(12,340 |
) |
|
Net capital expenditures |
9,469 |
|
5,886 |
|
|
46,066 |
|
22,941 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Financial
Measures“Average consolidated revenue per
day” is comprised of consolidated revenue, as determined
in accordance with IFRS, divided by the Corporation’s consolidated
number of operating days. Operating days is defined under the
“Definitions” section below.“Average revenue per operating
day” is comprised of revenue, as determined in accordance
with IFRS, divided by the number of operating days.
“Dividends paid per share” is
comprised of dividends paid, as determined in accordance with IFRS,
divided by the number of shares outstanding at the dividend record
date.“Dividends declared per
share” is comprised of dividends
declared, as determined in accordance with IFRS, divided by the
number of shares outstanding at the dividend record
date.“Effective tax rate” is
comprised of provision for or recovery of income tax, as determined
in accordance with IFRS, divided by earnings from continuing
operations before income taxes, as determined in accordance with
IFRS.“Funds from operations per share – diluted”
is calculated using the treasury stock method whereby deemed
proceeds on the exercise of the share options are used to reacquire
common shares at an average share price. The calculation of funds
from operations per share - diluted is based on the funds from
operations as reported in the table above divided by the diluted
number of shares outstanding as quantified in Note 11(b) in the
Notes to the Consolidated Financial Statements.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/0317a569-e3b2-4d62-bd9b-17a5f5dc3bee
(1) Non-GAAP financial measure or ratio that
does not have any standardized meaning under IFRS and therefore may
not be comparable to similar measures presented by other entities.
Refer to Non-GAAP and Other Financial Measures section of this
document.(2) Capital management measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other entities. Refer to Non-GAAP
and Other Financial Measures section of this document.(3)
Supplementary financial measure that does not have any standardized
meaning under IFRS and therefore may not be comparable to similar
measures presented by other entities. Refer to Non-GAAP and Other
Financial Measures section of this document.
PHX Energy Services (TSX:PHX)
과거 데이터 주식 차트
부터 12월(12) 2024 으로 1월(1) 2025
PHX Energy Services (TSX:PHX)
과거 데이터 주식 차트
부터 1월(1) 2024 으로 1월(1) 2025
