CALGARY, Aug. 29, 2018 /CNW/ - New West Energy Services
Inc. (TSX Venture: NWE), an oil and gas and environmental
services company focused on Western
Canada, today announced its financial results for the six
months ended June 30, 2018.
NOTE REGARDING CHANGE IN FINANCIAL YEAR-END
NWE has changed its financial year-end from April 30 to December 31 to better conform with
other similar energy services companies in the industry and to line
up the company's quarterly filings with more traditional
quarters. Consequently, in this new financial year commencing
January 1, 2018, NWE is reporting
unaudited second quarter interim financial results for the six
months ended June 30, 2018 compared
to the six months ended July 31,
2017.
Going forward, NWE will use a customary quarterly reporting
calendar based on a December 31
financial year-end, with fiscal quarters ending on the last day in
March, June, September and December each year.
FINANCIAL HIGHLIGHTS
Gerry E. Kerkhoff, President and
Chief Executive Officer of NWE stated "New West reported continued
top line growth in the first quarter with revenue closing in on
$8 million but struggled in the
second quarter due to a longer spring breakup and lower activity
across all drilling, completions and production sectors. As a
result of our reduced revenue in the second quarter and an increase
proportionally in direct costs associated with our fluid
transportation division, our gross margin decreased
considerably."
Mr. Kerkhoff continued: "Importantly, looking forward we have
increased our revenue generating units by around 45% by completing
approximately $630,000 in major
equipment repairs, near $400,000 of
which occurred in the second quarter with the remaining amount
occurring subsequent to the quarter end. Management
anticipates our gross margin to improve in the second half of 2018
and into 2019 as a higher proportion of our revenue is generated by
higher margin owned equipment, reducing considerably our previous
reliance on lower margin third-party contractors and owner
operators, and service rates increase due to expected stronger
demand."
- Revenue was $10,530,892 in the
six months ended June 30, 2018
compared to $9,073,471 in the six
months ended July 31, 2017, and
$2,622,753 in the three months ended
June 30, 2018 compared to
$4,196,883 in the three months ended
July 31, 2017. This increase in
the six-month period reflects much stronger revenue in the first
quarter of 2018 compared to 2017, with the decrease in the
three-month period being due primarily to a longer spring breakup
and generally lower activity across all drilling, completions and
production sectors.
- Gross margin was 15% in the six months ended June 30, 2018 compared to 23% in the six months
ended July 31, 2017, and 10% in the
three months ended June 30, 2018
compared to 24% in the three months ended July 31, 2017. This decrease in gross
margin is due primarily to a significant reduction in revenue in
the second quarter of 2018 with an increase proportionally in
direct costs in the Vacuum Truck and Fluid Transportation Services
division, including higher fuel and labour costs relative to NWE's
service rates and proportionally higher repair and maintenance
costs for equipment.
- General and administrative expenses were $1,876,126 in the six months ended June 30, 2018 compared to $1,599,206 in the six months ended July 31, 2017, and $932,012 in the three months ended June 30, 2018 compared to $846,564 in the three months ended July 31, 2017. This increase was mainly due to
expenses associated with the hiring of personnel and the
establishment of operations in Grande
Prairie servicing the completions and production
sectors.
- Normalized EBITDAC was negative $204,780 in the six months ended June 30, 2018 compared to $536,192 in the six months ended July 31, 2017, and negative $642,590 in the three months ended June 30, 2018 compared to $174,861 in the three months ended July 31, 2017.
|
For the six months ended June 30,
|
|
For the six months ended July 31,
|
|
2018
|
|
2017
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
$
|
$
|
|
$
|
$
|
$
|
$
|
Revenue
|
8,354,010
|
2,176,882
|
-
|
10,530,892
|
|
6,755,416
|
2,318,055
|
-
|
9,073,471
|
Direct
costs
|
7,410,917
|
1,484,496
|
-
|
8,895,413
|
|
5,356,095
|
1,588,147
|
-
|
6,944,242
|
Gross
margin
|
943,093
|
692,386
|
-
|
1,635,479
|
|
1,399,321
|
729,908
|
-
|
2,129,229
|
G & A
expenses
|
995,958
|
717,777
|
162,391
|
1,876,126
|
|
728,704
|
685,983
|
184,519
|
1,599,206
|
Share base
pmts
|
-
|
-
|
16,511
|
16,511
|
|
-
|
-
|
540,269
|
540,269
|
Finance
charges
|
297,226
|
32,455
|
47,543
|
377,224
|
|
371,033
|
19,927
|
80,521
|
471,481
|
Depreciation
|
736,781
|
-
|
-
|
736,781
|
|
867,357
|
-
|
-
|
867,357
|
Disposal of
assets
|
71,881
|
-
|
-
|
71,881
|
|
10,566
|
-
|
-
|
10,566
|
Net loss before
tax
|
(1,158,753)
|
(57,846)
|
(226,445)
|
(1,443,044)
|
|
(578,339)
|
23,998
|
(805,309)
|
(1,359,650)
|
Total
assets
|
10,843,330
|
534,160
|
31,997
|
11,409,487
|
|
14,490,405
|
950,513
|
49,181
|
15,490,099
|
EBITDAC*
|
(16,998)
|
(25,391)
|
(162,391)
|
(204,780)
|
|
670,617
|
50,094
|
(184,519)
|
536,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended June 30,
|
|
For the three months ended July 31,
|
|
2018
|
|
2017
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
Vacuum Truck
&
Fluid
Transportation
Services
|
Environmental
Services
|
Corporate
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
$
|
$
|
|
$
|
$
|
$
|
$
|
Revenue
|
2,088,190
|
534,563
|
-
|
2,622,753
|
|
2,918,283
|
1,278,600
|
-
|
4,196,883
|
Direct
costs
|
2,046,952
|
322,246
|
-
|
2,369,198
|
|
2,321,167
|
860,460
|
-
|
3,181,627
|
Gross
margin
|
41,238
|
212,317
|
-
|
253,555
|
|
597,116
|
418,140
|
-
|
1,015,256
|
G & A
expenses
|
497,206
|
346,388
|
88,418
|
932,012
|
|
444,908
|
324,707
|
76,949
|
846,564
|
Share base
pmts
|
-
|
-
|
16,511
|
16,511
|
|
-
|
-
|
263,529
|
263,529
|
Finance
charges
|
119,104
|
16,150
|
23,909
|
159,163
|
|
171,887
|
6,066
|
41,173
|
219,126
|
Depreciation
|
365,699
|
-
|
-
|
365,699
|
|
459,716
|
-
|
-
|
459,716
|
Disposal of
assets
|
(6,733)
|
-
|
-
|
(6,733)
|
|
10,566
|
-
|
-
|
10,566
|
Net loss before
tax
|
(934,038)
|
(150,221)
|
(128,838)
|
(1,213,097)
|
|
(489,961)
|
87,367
|
(381,651)
|
(784,245)
|
Total
assets
|
10,843,330
|
534,160
|
31,997
|
11,409,487
|
|
14,490,405
|
950,513
|
49,181
|
15,490,099
|
EBITDAC*
|
(420,101)
|
(134,071)
|
(88,418)
|
(642,590)
|
|
152,208
|
99,602
|
(76,949)
|
174,861
|
* Normalized EBITDAC is earnings from continuing operations
before interest, taxes, depreciation, amortization and share-based
payments and is a measure of NWE's operating profitability. The
calculation is further adjusted to normalize EBITDAC by removing
any non-reoccurring transactions that are not in the normal course
of operations. ** Copies of NWE's financial statements,
MD&A and other public filings are available under the company's
profile on SEDAR at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this news release may constitute
"forward-looking information" within the meaning of applicable
securities laws that involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements or industry results to be materially different from
any future results, performance or achievements or industry results
expressed or implied by such forward-looking information and
financial outlook. Forward-looking information is identified
by the use of terms and phrases such as "anticipate", "believe",
"could", "estimate", "expect", "intend", "may", "plan", "predict",
"project", "will", "would", and similar terms and phrases,
including references to assumptions. Such information may
involve, but is not limited to, comments with respect to
strategies, expectations, planned operations or future
actions. Forward-looking information in this news release
includes, without limitation, statements with respect to: the use
of proceeds of its loans; the use of the acquired equipment;
planned changes in NWE's business and revenues; the competitive
environment in which NWE operates; and the assessment of future
plans and operations. Actual events or results may differ
materially. The forward-looking information in this news
release is based on assumptions which includes, but is not limited
to: NWE realizing the expected benefits of its loans and acquired
equipment; the general state of the economy and the oil and gas
industry not worsening; NWE not losing any key personnel; NWE
sustaining or increasing their level of revenues and EBITDAC
NWE growing its businesses long term and managing its growth;
NWE complying with existing regulations and not becoming subject to
more stringent regulations; and, NWE's insurance being sufficient
to cover losses that may occur as a result of its operations.
The forward-looking information in this news release is subject to
risks, uncertainties and other factors that could cause actual
results to differ materially from historical results or results
anticipated by the forward-looking information. The factors
which could cause results to differ from current expectations
include, but are not limited to: failure to realize the expected
benefits of its loans and acquired equipment; potential undisclosed
liens associated with the acquired equipment; NWE's results being
dependent upon the general state of the economy and the oil and gas
industry; NWE being dependent on key personnel, the loss of which
could harm its business; NWE may not be able to sustain or increase
their revenues or EBITDAC; NWE may be unable to grow its business
long term or to manage any growth; NWE may be unable to integrate
the acquired equipment into its business; competition in NWE's
markets may lead to reduced revenues and EBITDAC; NWE may fail to
comply with existing regulations or become subject to more
stringent regulations; NWE's insurance may be insufficient to cover
losses that may occur as a result of NWE's operations; the market
price of NWE's common shares will fluctuate; and, there is a
possibility of dilution of existing holders of NWE's common shares
due to future financings or acquisitions. Although NWE has
attempted to identify factors that would cause actual actions,
events or results to differ materially from those disclosed in the
forward-looking statements in this news release, there may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended. Also, many of the factors are
beyond the control of NWE. Accordingly, readers should not
place undue reliance on the forward-looking information in this
news release. The forward-looking information is made as of
the date of this news release, and NWE does not assume any
obligation to publicly update or revise such forward-looking
information to reflect new information, subsequent or otherwise,
except as may be required by applicable law. The
forward-looking information contained herein is expressly qualified
in its entirety by this cautionary statement.
SOURCE New West Energy Services Inc.