CALGARY,
AB, Nov. 2, 2022 /CNW/ - Calfrac Well
Services Ltd. ("Calfrac" or "the Company") (TSX: CFW) announces
its financial and operating results for the three and nine months
ended September 30, 2022. The
following press release should be read in conjunction with the
management's discussion and analysis and unaudited consolidated
interim financial statements and notes thereto as at September 30, 2022. Readers should also refer to
the "Forward-looking statements" legal advisory and the section
regarding "Non-GAAP Measures" at the end of this press release. All
financial amounts and measures are expressed in Canadian dollars
unless otherwise indicated. Additional information about Calfrac is
available on the SEDAR website at www.sedar.com, including the
Company's Annual Information Form for the year ended December 31, 2021 dated March 18, 2022.
CEO'S MESSAGE
The third quarter was the
culmination of hard work and commitment to the Company's
Brand Promise as the Calfrac team
efficiently executed its customers' development programs to
generate the Company's best quarterly Adjusted EBITDA margin in
over a decade. The top priority of the Company's leadership has
been to align the organization's strategy to focus on increasing
cash flow while maintaining its strong safety and service quality
performance, and these latest financial results demonstrate that
these efforts are progressing according to plan. The Company looks
to further that momentum in the fourth quarter as operators are
continuing to maintain a steady pace of development in a tight
oilfield services market. Calfrac is encouraged by the strong
operating cash flow that its returns-focused strategy is producing
and looks to build upon it throughout 2023.
Calfrac's Chief Executive Officer, Pat
Powell commented: "I am proud of the tremendous effort that
our employees have shown this quarter and so far this year. While
we have to remain focused on finishing this year strong, I am
looking forward to 2023 and building on the solid foundation that
we have laid this year. This quarter, Calfrac delivered premier
service to our clients and made significant strides towards the
Company's financial goals."
Calfrac also announces today that Mr. Lindsay Link, President, Chief Operating Officer
and a director, will retire from the Company and the board of
directors on January 4, 2023. Mr.
Link has been President and Chief Operating Officer of Calfrac
since June 2019, after joining the
Company as President, U.S. Operating Division in February 2013 and subsequently serving as Chief
Operating Officer in January 2015.
Ron Mathison, Chairman of
Calfrac, commented "Lindsay has played an important role in growing
our U.S. franchise as well as helping the Company navigate the
unprecedented operational challenges of the past few years,
positioning Calfrac to take advantage of the current market
recovery. On behalf of Calfrac, I would like to thank Lindsay for
his dedication and leadership and wish him well in his
retirement."
"I am proud of the Calfrac Team. Their commitment and teamwork
day in and day out enabled us to consistently deliver on our core
values of safety and service quality regardless of the challenges
we faced," said Mr. Link. "I look forward to working together with
Pat and the rest of the team over the next few months as I
transition to retirement, and watching the Company succeed into the
future on the strength of the culture that we worked together to
create."
SELECT FINANCIAL HIGHLIGHTS – CONTINUING OPERATIONS
|
Three months ended Sep. 30,
|
Nine months ended Sep. 30,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except per share
amounts)
|
($)
|
($)
|
( %)
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
Revised
|
|
|
Revised
|
|
Revenue
|
438,338
|
262,865
|
67
|
1,051,373
|
650,588
|
62
|
Adjusted
EBITDA(1)
|
91,322
|
29,758
|
207
|
151,405
|
39,500
|
283
|
Consolidated cash flows
provided by (used in) operating
activities
|
13,753
|
(17,935)
|
NM
|
38,694
|
(18,969)
|
NM
|
Capital
expenditures
|
24,745
|
24,133
|
3
|
52,130
|
51,707
|
1
|
Net income
(loss)
|
45,352
|
(7,054)
|
NM
|
20,546
|
(65,599)
|
NM
|
Per share
– basic
|
1.15
|
(0.19)
|
NM
|
0.53
|
(1.75)
|
NM
|
Per share
– diluted
|
0.60
|
(0.19)
|
NM
|
0.31
|
(1.75)
|
NM
|
As at
|
September 30,
|
December
31,
|
Change
|
|
2022
|
2021
|
|
(C$000s)
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
Cash and cash
equivalents
|
11,879
|
—
|
NM
|
Working capital, end of
period
|
207,974
|
121,934
|
71
|
Total debt, end of
period
|
412,030
|
388,479
|
6
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
(2)
During the first quarter of 2022, management committed to a plan
to sell its Russian division, resulting in the associated assets
and liabilities being classified as held for sale and presented as
discontinued operations. Results from discontinued operations have
not been included in the table above, unless otherwise
noted.
|
During the quarter, Calfrac:
- exceeded the high end of its published guidance for revenue and
Adjusted EBITDA from continuing operations by $8.3 million and $6.3
million, respectively;
- generated revenue of $438.3
million, an increase of 67 percent from the third quarter in
2021, resulting primarily from improved fracturing activity in
North America and improved pricing
in all of the Company's operating divisions;
- reported Adjusted EBITDA of $91.3
million versus $29.8 million
in the comparable period in 2021, mainly as a result of
significantly improved performance in North America;
- generated consolidated cash flow from operating activities of
$13.8 million, which included
$13.2 million of interest paid and
cash used for working capital of $57.9
million;
- reported net income of $45.4
million or $0.60 per share
diluted compared to a net loss of $7.1
million or $0.19 per share
diluted in the third quarter in 2021;
- amended and restated its credit agreement, which included an
extension of the maturity date to July 1,
2024;
- incurred capital expenditures of $24.7
million, focused on maintenance activities to primarily
support the Company's fracturing operations, including $4.5 million of reactivation costs in
the United States; and
- reported period-end working capital of $208.0 million and a cash balance of $11.9 million.
FINANCIAL OVERVIEW – CONTINUING OPERATIONS
THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2022 VERSUS 2021
UNITED STATES
|
Three months ended Sep. 30,
|
Nine months ended Sep. 30,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except operational and exchange rate
information)
|
|
|
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
237,075
|
138,339
|
71
|
563,216
|
317,940
|
77
|
Adjusted
EBITDA(1)
|
54,866
|
13,812
|
297
|
98,660
|
8,316
|
NM
|
Adjusted EBITDA
(%)
|
23.1
|
10.0
|
131
|
17.5
|
2.6
|
NM
|
Fracturing revenue per
job ($)
|
56,038
|
33,308
|
68
|
49,650
|
29,387
|
69
|
Number of fracturing
jobs
|
4,228
|
4,156
|
2
|
11,340
|
10,820
|
5
|
Active pumping
horsepower, end of period (000s)
|
601
|
576
|
4
|
601
|
576
|
4
|
US$/C$ average exchange
rate(2)
|
1.3056
|
1.2600
|
4
|
1.2830
|
1.2514
|
3
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
(2)
Source: Bank of Canada.
|
OUTLOOK
The Company's financial results for
the United States division
exemplified its operational strength with the best third quarter
profitability on a fleet basis since 2014. Calfrac leveraged
consistent utilization and improved pricing across its nine
fracturing fleets to generate significant free cash flow. To meet
the increasing demand for the Company's services as well as
capitalize on the early phase of an anticipated multi-year margin
expansion cycle, Calfrac began reactivating an additional fleet and
initiating a strategic transition to Tier IV DGB equipment. The
Company anticipates both investments to start paying dividends
before year-end. Calfrac believes that its practical approach
towards capital allocation will increase cash flow and generate
sustainable returns for its stakeholders.
THREE MONTHS ENDED SEP. 30,
2022 COMPARED TO THREE MONTHS ENDED SEP. 30, 2021
REVENUE
Revenue from Calfrac's United States operations increased
significantly to $237.1 million
during the third quarter of 2022 from $138.3
million in the comparable quarter of 2021. The 71 percent
increase in revenue can be attributed to a combination of a 68
percent increase in revenue per job period-over-period combined
with a 2 percent increase in the number of fracturing jobs
completed. The higher revenue per job was the result of improved
pricing for its services as the Company passed through higher input
costs to its customers while also achieving net pricing gains,
combined with the impact of job mix. The slight increase in job
count was mainly due to the Company operating all nine of its
marketed fleets for the entire quarter with consistent utilization.
Activity in the Rockies region increased relative to the comparable
quarter in 2021 while activity in North
Dakota and Pennsylvania was
relatively consistent with the comparable quarter in 2021.
ADJUSTED EBITDA
The Company's operations in
the United States generated
Adjusted EBITDA of $54.8 million
during the third quarter of 2022 compared to $13.8 million in the same period in 2021. This
increase in Adjusted EBITDA was largely driven by strong net
pricing gains and a dedicated focus on cost control which supported
significant margin expansion relative to the comparable quarter in
2021. The Company was able to achieve an Adjusted EBITDA margin of
23 percent compared to 10 percent in the comparable quarter in 2021
through strong pricing and utilization for its nine active
fracturing fleets across its three operating districts.
NINE MONTHS ENDED SEP. 30, 2022
COMPARED TO NINE MONTHS ENDED SEP. 30,
2021
REVENUE
Revenue from Calfrac's United States operations increased to
$563.2 million in the first nine
months in 2022 from $317.9 million in
the same period in 2021 primarily due to higher pricing and a 5
percent increase in the number of completed fracturing jobs. A
total of four active fleets were operating in the United States at the beginning of the year
but increased to eight fleets exiting the first quarter with a
ninth fracturing crew commencing operations in May. The higher
fracturing revenue per job was reflective of improved pricing as
the Company passed on higher input costs to its clients and was
able to attain net pricing increases during the second and third
quarters.
ADJUSTED EBITDA
The Company's United States division generated Adjusted
EBITDA of $98.7 million in the first
nine months of 2022 compared to $8.3
million in the same period of 2021 primarily due to a larger
number of operating fleets, a higher number of operating days per
fleet and improved pricing, offset partially by a slow start to the
year and adverse weather in April 2022.
CANADA
|
Three months ended Sep. 30,
|
Nine months ended Sep. 30,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except operational
information)
|
|
|
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
137,082
|
76,574
|
79
|
315,805
|
212,924
|
48
|
Adjusted
EBITDA(1)
|
36,697
|
14,968
|
145
|
57,079
|
33,991
|
68
|
Adjusted EBITDA
(%)
|
26.8
|
19.5
|
37
|
18.1
|
16.0
|
13
|
Fracturing revenue per
job ($)
|
32,570
|
23,823
|
37
|
26,440
|
21,156
|
25
|
Number of fracturing
jobs
|
3,864
|
2,949
|
31
|
10,685
|
9,139
|
17
|
Active pumping
horsepower, end of period (000s)
|
270
|
202
|
34
|
270
|
202
|
34
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
OUTLOOK
The Company's operations in Canada achieved strong utilization and
increased pricing during the third quarter and generated
significant year-over-year profitability growth. Calfrac
anticipates consistent activity for its four large fracturing
fleets and five coiled tubing units through the end of the year and
into 2023. As visibility for next year improves, the Company
expects to leverage steady pricing with robust demand to produce
strong financial returns as operators prioritize safe and reliable
service providers.
THREE MONTHS ENDED SEP. 30,
2022 COMPARED TO THREE MONTHS ENDED SEP. 30, 2021
REVENUE
Revenue from Calfrac's Canadian operations
during the third quarter of 2022 was $137.1
million compared to $76.6
million in the same period of 2021 primarily due to higher
pricing and activity. The number of fracturing jobs increased by 31
percent from the comparable period in 2021 due to improved
utilization of its four active fleets. Revenue per fracturing job
was 37 percent higher than the comparable quarter due to a
combination of pricing increases and the impact of job mix during
the quarter. The number of coiled tubing jobs increased by 6
percent versus the third quarter in 2021. The 76 percent increase
in the coiled tubing revenue per job as compared to the same
quarter in 2021 was due to a combination of higher pricing and the
type of work completed during the quarter.
ADJUSTED EBITDA
Adjusted EBITDA in Canada during the third quarter of 2022 was
$36.7 million compared to
$15.0 million in the same period of
2021. The Canadian division's Adjusted EBITDA as a percentage of
revenue improved to 27 percent compared to 20 percent in the third
quarter of 2021 as a result of higher utilization and pricing for
its four active fleets. The Company introduced price increases
during the first and second quarters to address significant input
cost inflation that was in effect for the entire third quarter in
2022. The improvement in financial performance was significant and
did not include any benefit from the Canadian Emergency Wage
Subsidy program in the third quarter of 2022, while the comparable
quarter included a benefit of $2.4
million.
NINE MONTHS ENDED SEP. 30, 2022
COMPARED TO NINE MONTHS ENDED SEP. 30,
2021
REVENUE
Revenue from Calfrac's Canadian operations
during the first nine months in 2022 was $315.8 million, an increase from $212.9 million in the comparable period in 2021,
primarily due to improved pricing and increased activity. Revenue
per fracturing job was 25 percent higher than the comparable period
in 2021 as price increases were implemented during the period to
recover the significant inflation in operating costs. The number of
fracturing jobs increased by 17 percent as the Company's four
fracturing fleets were highly utilized in the first quarter prior
to the onset of spring break-up conditions and improved
significantly beginning in the month of June. This positive
momentum in activity was maintained throughout the third quarter.
The number of coiled tubing jobs increased by 7 percent from the
comparable period in 2021 due to higher activity while revenue per
job increased by 55 percent due to improved pricing and changes in
job mix.
ADJUSTED EBITDA
The Company's Canadian division
generated Adjusted EBITDA of $57.1
million compared to $34.0
million in the comparable period in 2021. The improvement in
Adjusted EBITDA was the result of higher pricing and activity
relative to the comparable period in 2021. The Company introduced
price increases during the first quarter that were in effect for
the entire second and third quarters, which combined with higher
utilization of its four crewed fleets, resulted in a 68 percent
improvement in Adjusted EBITDA.
ARGENTINA
|
Three months ended Sep. 30,
|
Nine months ended Sep. 30,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except operational and exchange rate
information)
|
|
|
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
64,181
|
47,952
|
34
|
172,352
|
119,724
|
44
|
Adjusted
EBITDA(1)
|
8,720
|
6,589
|
32
|
16,409
|
15,923
|
3
|
Adjusted EBITDA
(%)
|
13.6
|
13.7
|
(1)
|
9.5
|
13.3
|
(29)
|
Fracturing revenue per
job ($)
|
84,843
|
54,820
|
55
|
70,133
|
55,336
|
27
|
Number of fracturing
jobs
|
471
|
534
|
(12)
|
1,415
|
1,332
|
6
|
Active pumping
horsepower, end of period (000s)
|
140
|
121
|
16
|
140
|
121
|
16
|
US$/C$ average exchange
rate(2)
|
1.3056
|
1.2600
|
4
|
1.2830
|
1.2514
|
3
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
(2)
Source: Bank of Canada.
|
OUTLOOK
Calfrac's division in Argentina combined operational excellence with
a renewed contract for a dedicated fracturing fleet in the Vaca
Muerta shale play to generate significant year-over-year financial
improvement during the third quarter. As the pressure pumping
market tightens in Argentina, the
Company expects the positive momentum experienced in the third
quarter to continue throughout the remainder of the year and into
2023 enabling Calfrac to deliver strong financial returns.
THREE MONTHS ENDED SEP. 30,
2022 COMPARED TO THREE MONTHS ENDED SEP. 30, 2021
REVENUE
Calfrac's Argentinean operations generated
revenue of $64.2 million during the
third quarter of 2022 compared to $48.0
million in the comparable quarter in 2021 primarily due to
higher fracturing and cementing revenue. Fracturing revenue
increased due to a combination of higher pricing, as the Company
entered into a new contract at the beginning of the third quarter
at pricing levels that covered higher costs caused by inflationary
pressures during the quarter, and the completion of larger jobs on
average. This was partially offset by the completion of 12 percent
fewer jobs than the comparable period in 2021. Activity in the
Company's cementing operations increased by 39 percent and revenue
per job increased by 33 percent due to changes in job mix as a
greater number of pre-fracturing projects, which are typically
larger job sizes, were completed in the third quarter of 2022. The
number of coiled tubing jobs decreased by 27 percent due to reduced
customer activity in Neuquén while revenue per job improved by 50
percent primarily due to job mix and higher pricing due to
inflation.
ADJUSTED EBITDA
The Company's operations in
Argentina achieved Adjusted EBITDA
of $8.7 million during the third
quarter of 2022 compared to $6.6
million in the comparable quarter of 2021, while the
Company's EBITDA margins as a percentage of revenue remained
consistent at approximately 14 percent. The Company entered into a
new contract at the beginning of the third quarter with pricing
adjusted for inflation, which allowed it to maintain consistent
EBITDA margins relative to the comparable period in 2021.
NINE MONTHS ENDED SEP. 30, 2022
COMPARED TO NINE MONTHS ENDED SEP. 30,
2021
REVENUE
Calfrac's Argentinean operations generated
revenue of $172.4 million during the
first nine months of 2022 compared to $119.7
million in the comparable period in 2021. Activity in the
first nine months of 2022 improved from the comparable period in
2021 across all service lines with the vast majority of the
improvement occurring in the Neuquén region. Activity in the Vaca
Muerta shale play continued to increase while activity in southern
Argentina was relatively
consistent for the first half of 2022 but improved significantly in
the third quarter. Overall fracturing activity increased by 6
percent compared to the first nine months in 2021 along with 27
percent higher revenue per job resulting primarily from inflation.
Revenue from the Company's coiled tubing and cementing service
lines continued to improve relative to the same period in 2021. The
number of coiled tubing jobs increased by 32 percent as activity
increased in Neuquén and southern Argentina while revenue per job was 24 percent
higher primarily due to job mix and inflation. Activity in the
Company's cementing operations increased by 29 percent and revenue
per job increased by 50 percent due to changes in job mix as a
greater number of pre-fracturing projects, which are typically
larger job sizes, were completed in the first half of 2022.
ADJUSTED EBITDA
The Company's operations in
Argentina generated Adjusted
EBITDA of $16.4 million during the
first nine months of 2022 compared to $15.9
million in the comparable period of 2021. Utilization of the
Company's equipment improved across all service lines compared to
the same period in 2021. The Company's operating margins as a
percentage of revenue decreased from 13 percent to 10 percent
primarily due to inflationary salary increases for one major
contract that were paid in pesos but not fully offset by the
devaluation in the official peso exchange rate during the first
half of 2022. However, the Company was able to implement pricing
increases to offset these cost pressures beginning in the third
quarter. The Company also incurred $0.6
million of severance costs during the first nine months of
2022 that were added back in the calculation of Adjusted
EBITDA.
CAPITAL EXPENDITURES
|
Three months ended Sep. 30,
|
Nine months ended Sep. 30,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s)
|
($)
|
|
|
($)
|
($)
|
($)
|
Canada
|
3,874
|
5,766
|
(33)
|
10,250
|
8,606
|
19
|
United
States
|
18,069
|
14,689
|
23
|
36,039
|
34,667
|
4
|
Argentina
|
2,802
|
3,678
|
(24)
|
5,841
|
8,434
|
(31)
|
Continuing
Operations
|
24,745
|
24,133
|
3
|
52,130
|
51,707
|
1
|
Capital expenditures were $24.7
million for the quarter ended September 30, 2022.
Calfrac's Board of Directors have approved a 2022 capital budget of
approximately $97.0 million of which
$52.1 million has been incurred
during the first nine months in 2022. The Company's fourth-quarter
capital expenditures are expected to be comprised of maintenance
items, combined with additional expenditures related to fleet
reactivations and the commencement of Tier IV dual-fuel upgrades in
the United States.
OTHER DEVELOPMENTS
On September
29, 2022, the Company amended and restated its credit
agreement, which included an extension of the maturity date to
July 1, 2024. The Company's revolving
credit facilities consist of an operating facility of $45.0 million and a syndicated facility of
$205.0 million.
Subsequent to September 30, 2022,
$8.6 million of 1.5 Lien Notes were
converted into common shares. Following this conversion, the
remaining principal amount outstanding was $47.4 million.
SUMMARY OF QUARTERLY RESULTS – CONTINUING OPERATIONS
Three Months
Ended
|
Dec. 31,
|
Mar. 31,
|
Jun. 30,
|
Sep. 30,
|
Dec. 31,
|
Mar. 31,
|
Jun. 30,
|
Sep. 30,
|
|
2020
|
2021
|
2021
|
2021
|
2021
|
2022
|
2022
|
2022
|
(C$000s, except per share and operating
data)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
(unaudited)
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
|
|
|
Revenue
|
153,773
|
213,954
|
173,769
|
262,865
|
229,661
|
294,524
|
318,511
|
438,338
|
Adjusted
EBITDA(1)
|
9,554
|
10,821
|
(1,080)
|
29,758
|
7,961
|
20,831
|
39,252
|
91,322
|
Net income
(loss)
|
121,616
|
(23,029)
|
(35,516)
|
(7,055)
|
(29,132)
|
(18,030)
|
(6,776)
|
45,352
|
Per share –
basic(2)
|
14.91
|
(0.62)
|
(0.95)
|
(0.19)
|
(0.77)
|
(0.47)
|
(0.18)
|
1.15
|
Per share –
diluted(2)
|
2.22
|
(0.62)
|
(0.95)
|
(0.19)
|
(0.77)
|
(0.47)
|
(0.18)
|
0.60
|
Capital
expenditures
|
6,053
|
10,503
|
17,166
|
24,133
|
14,868
|
12,145
|
15,241
|
24,745
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
(2)
Comparative amounts were adjusted to reflect the Company's
fifty-to-one common share consolidation that occurred on December
18, 2020.
|
(3)
All comparative amounts exclude the impact from the Company's
Russia operations, which have been classified as held for sale and
presented as discontinued operations.
|
NON-GAAP MEASURES
Certain supplementary measures
presented in this press release do not have any standardized
meaning under IFRS and, because IFRS have been incorporated as
Canadian generally accepted accounting principles (GAAP), these
supplementary measures are also non-GAAP measures. These measures
have been described and presented to provide shareholders and
potential investors with additional information regarding the
Company's financial results, liquidity and ability to generate
funds to finance its operations. These measures may not be
comparable to similar measures presented by other entities, and are
explained below.
Adjusted EBITDA is defined in the Company's credit agreement for
covenant purposes as net income or loss for the period adjusted for
interest, income taxes, depreciation and amortization, unrealized
foreign exchange losses (gains), non-cash stock-based compensation,
and gains and losses that are extraordinary or non-recurring.
Adjusted EBITDA is presented because it is used in the calculation
of the Company's bank covenants. Adjusted EBITDA for the period was
calculated as follows:
Three Months Ended Sep. 30,
|
Nine Months Ended Sep. 30,
|
|
2022
|
2021
|
2022
|
2021
|
(C$000s)
|
|
|
($)
|
($)
|
(unaudited)
|
|
Revised
|
|
Revised
|
Net income (loss) from
continuing operations
|
45,352
|
(7,054)
|
20,546
|
(65,599)
|
Add back
(deduct):
|
|
|
|
|
Depreciation
|
29,394
|
33,098
|
89,733
|
95,991
|
Unrealized foreign
exchange gains
|
(10,073)
|
(3,157)
|
(13,086)
|
(315)
|
(Gain) loss on
disposal of property, plant and equipment
|
(406)
|
159
|
4,382
|
513
|
Litigation settlements
in Canadian division
|
8,258
|
—
|
11,258
|
(700)
|
Restructuring
charges
|
597
|
198
|
1,563
|
671
|
Stock-based
compensation
|
366
|
1,079
|
2,319
|
1,356
|
Interest
|
10,804
|
9,677
|
31,537
|
28,077
|
Income
taxes
|
7,030
|
(4,242)
|
3,153
|
(20,494)
|
Adjusted EBITDA from
continuing operations (1)
|
91,322
|
29,758
|
151,405
|
39,500
|
(1)
For bank covenant purposes, EBITDA includes $11.0 million income
from discontinued operations for the nine months ended September
30, 2022 (nine months ended September 30, 2021 – $12.7 million) and
the deduction of an additional $7.5 million of lease payments for
the nine months ended September 30, 2022 (nine months ended
September 30, 2021 – $6.5 million) that would have been recorded as
operating expenses prior to the adoption of IFRS 16.
|
CONSOLIDATED BALANCE SHEETS
|
September 30, 2022
|
December 31,
2021
|
(C$000s) (unaudited)
|
($)
|
($)
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
11,879
|
—
|
Accounts
receivable
|
280,226
|
189,835
|
Income taxes
recoverable
|
—
|
2,859
|
Inventories
|
100,194
|
101,840
|
Prepaid expenses and
deposits
|
16,486
|
12,999
|
|
408,785
|
307,533
|
Assets classified as
held for sale
|
46,975
|
—
|
|
455,760
|
307,533
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
554,392
|
563,423
|
Right-of-use
assets
|
22,723
|
22,005
|
|
577,115
|
585,428
|
Total assets
|
1,032,875
|
892,961
|
LIABILITIES AND EQUITY
|
|
|
Current
liabilities
|
|
|
Bank
overdraft
|
—
|
1,351
|
Accounts payable and
accrued liabilities
|
192,527
|
127,441
|
Income taxes
payable
|
296
|
—
|
Current portion of
lease obligations
|
7,988
|
8,004
|
|
200,811
|
136,796
|
Liabilities directly
associated with assets classified as held for sale
|
19,561
|
—
|
|
220,372
|
136,796
|
Non-current
liabilities
|
|
|
Long-term
debt
|
412,030
|
388,479
|
Lease
obligations
|
12,838
|
12,560
|
Deferred income tax
liabilities
|
28,769
|
26,286
|
|
453,637
|
427,325
|
Total
liabilities
|
674,009
|
564,121
|
Total equity
|
358,866
|
328,840
|
Total liabilities and
equity
|
1,032,875
|
892,961
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Three Months Ended Sep. 30,
|
Nine Months Ended Sep. 30,
|
|
2022
|
2021
|
2022
|
2021
|
(C$000s, except per share data)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
|
|
Revised
|
|
Revised
|
Revenue
|
438,338
|
262,865
|
1,051,373
|
650,588
|
Cost of
sales
|
365,536
|
256,106
|
956,526
|
674,735
|
Gross profit
(loss)
|
72,802
|
6,759
|
94,847
|
(24,147)
|
Expenses
|
|
|
|
|
Selling, general and
administrative
|
17,128
|
10,209
|
41,933
|
29,976
|
Foreign exchange
(gains) losses
|
(7,106)
|
(1,990)
|
(6,704)
|
3,380
|
(Gain) loss on
disposal of property, plant and equipment
|
(406)
|
159
|
4,382
|
513
|
Interest
|
10,804
|
9,677
|
31,537
|
28,077
|
|
20,420
|
18,055
|
71,148
|
61,946
|
Income (loss) before
income tax
|
52,382
|
(11,296)
|
23,699
|
(86,093)
|
Income tax expense
(recovery)
|
|
|
|
|
Current
|
1,647
|
52
|
2,633
|
222
|
Deferred
|
5,383
|
(4,294)
|
520
|
(20,716)
|
|
7,030
|
(4,242)
|
3,153
|
(20,494)
|
Net income (loss) from
continuing operations
|
45,352
|
(7,054)
|
20,546
|
(65,599)
|
Net income (loss) from
discontinued operations
|
4,746
|
5,513
|
(28,178)
|
11,105
|
Net income (loss) for
the period
|
50,098
|
(1,541)
|
(7,632)
|
(54,494)
|
|
|
|
|
|
Earnings (loss) per
share – basic
|
|
|
|
|
Continuing
operations
|
1.15
|
(0.19)
|
0.53
|
(1.75)
|
Discontinued
operations
|
0.12
|
0.15
|
(0.73)
|
0.30
|
|
1.27
|
(0.04)
|
(0.20)
|
(1.45)
|
|
|
|
|
|
Earnings (loss) per
share – diluted
|
|
|
|
|
Continuing
operations
|
0.60
|
(0.19)
|
0.31
|
(1.75)
|
Discontinued
operations
|
0.12
|
0.14
|
(0.27)
|
0.20
|
|
0.66
|
(0.04)
|
(0.02)
|
(1.45)
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Three Months Ended Sep. 30,
|
Nine Months Ended Sep. 30,
|
|
2022
|
2021
|
2022
|
2021
|
(C$000s) (unaudited)
|
($)
|
($)
|
($)
|
($)
|
CASH FLOWS PROVIDED BY (USED
IN)
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
Net income (loss) for
the period
|
50,098
|
(1,541)
|
(7,632)
|
(54,494)
|
Adjusted for the
following:
|
|
|
|
|
Depreciation
|
29,394
|
33,248
|
89,932
|
96,287
|
Stock-based
compensation
|
366
|
1,079
|
2,319
|
1,356
|
Unrealized foreign
exchange gains
|
(9,629)
|
(3,607)
|
(18,697)
|
(620)
|
(Gain) loss on
disposal of property, plant and equipment
|
(409)
|
159
|
4,378
|
513
|
Impairment of
property, plant and equipment
|
—
|
—
|
5,634
|
—
|
Impairment of
inventory
|
1,201
|
—
|
28,749
|
—
|
(Recovery) impairment
of other assets
|
(2,312)
|
—
|
7,336
|
—
|
Interest
|
10,801
|
9,677
|
31,534
|
28,075
|
Interest
paid
|
(13,229)
|
(12,379)
|
(27,693)
|
(24,053)
|
Deferred income
taxes
|
5,383
|
(4,294)
|
520
|
(20,716)
|
Changes in items of
working capital
|
(57,911)
|
(40,277)
|
(77,686)
|
(45,317)
|
Cash flows provided by
(used in) operating activities
|
13,753
|
(17,935)
|
38,694
|
(18,969)
|
FINANCING ACTIVITIES
|
|
|
|
|
Bridge loan
proceeds
|
—
|
—
|
15,000
|
—
|
Issuance of long-term
debt, net of debt issuance costs
|
12,825
|
28,716
|
19,782
|
50,907
|
Bridge loan
repayments
|
—
|
—
|
(15,000)
|
—
|
Long-term debt
repayments
|
(15,000)
|
(5,000)
|
(15,000)
|
(6,050)
|
Lease obligation
principal repayments
|
(2,328)
|
(2,129)
|
(6,587)
|
(5,674)
|
Proceeds on issuance
of common shares from the exercise of warrants and stock
options
|
621
|
1
|
1,884
|
90
|
Cash flows (used in)
provided by financing activities
|
(3,882)
|
21,588
|
79
|
39,273
|
INVESTING ACTIVITIES
|
|
|
|
|
Purchase of property,
plant and equipment
|
(18,479)
|
(21,530)
|
(45,588)
|
(46,988)
|
Proceeds on disposal
of property, plant and equipment
|
882
|
275
|
1,657
|
923
|
Proceeds on disposal
of right-of-use assets
|
716
|
266
|
1,627
|
1,025
|
Cash flows used in
investing activities
|
(16,881)
|
(20,989)
|
(42,304)
|
(45,040)
|
Effect of exchange rate
changes on cash and cash equivalents
|
7,388
|
2,714
|
27,811
|
949
|
Increase (decrease) in
cash and cash equivalents
|
378
|
(14,622)
|
24,280
|
(23,787)
|
Cash and cash
equivalents (bank overdraft), beginning of period
|
22,551
|
20,665
|
(1,351)
|
29,830
|
Cash and cash
equivalents, end of period
|
22,929
|
6,043
|
22,929
|
6,043
|
ADVISORIES
FORWARD-LOOKING STATEMENTS
This press release contains
forward-looking statements within the meaning of applicable
securities laws. The use of any of the words "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", "predict", "potential", "targeting", "intend",
"could", "might", "should", "believe", "forecast" or similar words
suggesting future outcomes, are forward-looking statements.
In particular, forward-looking statements in this press release
include, but are not limited to, statements with respect to the
activity, demand, utilization and outlook for the Company's
operating divisions in Canada,
the United States and Argentina; the supply and demand fundamentals
and prospects of the pressure pumping industry; input costs, margin
and service pricing trends, projections and strategies; the
Company's service quality, operational execution, financial
performance and competitive position; operating and financial
strategies, performance, priorities, metrics, estimates and
targets; the planned sale of the Company's Russia division, including its accounting
treatment; capital expenditure programs, including planned
equipment investments; the Company's debt, liquidity and financial
position; future oil and natural gas development activity in the
Company's operating jurisdictions; and the Company's intentions and
expectations with respect to the foregoing. These statements are
derived from certain assumptions and analyses made by the Company
based on its experience and perception of historical trends,
current conditions, expected future developments and other factors
that it believes are appropriate in the circumstances, including,
but not limited to, the economic and political environment in which
the Company operates, the effect of the military conflict in the
Ukraine and related Canadian, U.S.
and international sanctions and restrictions involving Russia and counter-sanctions and restrictions
by Russia on the Company's
ownership and planned sale of the Russian division and the broader
markets for the Company's services, the Company's expectations for
its current and prospective customers' capital budgets and
geographical areas of focus, the effect of environmental, social
and governance factors on customer and investor preferences and
capital deployment, the Company's existing contracts and the status
of current negotiations with key customers and suppliers, the
continued effectiveness of cost reduction measures instituted by
the Company and the likelihood that the current tax and regulatory
regime will remain substantially unchanged.
Forward-looking statements are subject to a number of known and
unknown risks and uncertainties that could cause actual results to
differ materially from the Company's expectations. Such risk
factors include but are not limited to: volatility of industry
conditions including the level of exploration, development and
production for oil and natural gas in Canada, the U.S. and Argentina and market prices for oil and
natural gas impacting the demand for oilfield services; sourcing,
pricing and availability of raw materials, component parts,
equipment, suppliers, facilities and skilled personnel; oilfield
equipment utilization levels; risks associated with foreign
operations, including risks relating to unsettled political
conditions, war, including the ongoing Russia and Ukraine conflict and any expansion of that
conflict, foreign exchange rates and controls, international trade
and regulatory controls and sanctions, and doing business with
national oil companies; failure to receive any applicable
regulatory approvals, including in respect of the sale of the
Company's Russian division; the impacts of the Russia-Ukraine conflict on the supply and demand for
oil and gas produced in Russia and
globally; and those other risk factors discussed or incorporated by
reference under the heading "Business Risks" below.
Consequently, all of the forward-looking statements made in this
press release are qualified by these cautionary statements and
there can be no assurance that actual results or developments
anticipated by the Company will be realized, or that they will have
the expected consequences or effects on the Company or its business
or operations. These statements speak only as of the respective
date of this press release or the document incorporated by
reference herein. The Company assumes no obligation to update
publicly any such forward-looking statements, whether as a result
of new information, future events or otherwise, except as required
pursuant to applicable securities laws.
BUSINESS RISKS
The business of Calfrac is subject to
certain risks and uncertainties. Prior to making any investment
decision regarding Calfrac, investors should carefully consider,
among other things, the risk factors set forth in the Company's
most recently filed Annual Information Form, which is specifically
incorporated by reference herein. The Annual Information Form is
available through the Internet on the Canadian System for
Electronic Document Analysis and Retrieval (SEDAR), which can be
accessed at www.sedar.com. Copies of the Annual Information Form
may also be obtained on request without charge from Calfrac at
Suite 500, 407 - 8th Avenue S.W., Calgary, Alberta, Canada, T2P 1E5, or at
www.calfrac.com, or by facsimile at 403-266-7381.
The ongoing conflict between Russia and Ukraine has added a level of risk and
uncertainty and additional restrictions around the operations of
the Company's Russian subsidiary. As a result of these changes in
circumstances, the risks, restrictions, and uncertainties
surrounding banking and limitations on the ability to repatriate
funds to Canada from Russia, the Company's ownership and control
over its Russian subsidiary, the physical security of property,
plant and equipment in Russia,
collectability of accounts receivable, the regulatory approvals to
complete a sale transaction and overall business and
operational risks are being monitored and addressed as
circumstances evolve. For additional information related to
Calfrac's assets held for sale, see note 3 of the interim
consolidated financial statements for the three and nine months
ended September 30, 2022.
ADDITIONAL INFORMATION
Calfrac's common shares and
warrants are publicly traded on the Toronto Stock Exchange under
the trading symbols "CFW" and "CFW.WT", respectively.
Calfrac provides specialized oilfield services to exploration
and production companies designed to increase the production of
hydrocarbons from wells with continuing operations focused
throughout western Canada,
the United States and Argentina. During the first quarter of 2022,
management committed to a plan to sell the Company's Russian
division, resulting in the associated assets and liabilities being
classified as held for sale and presented in the Company's
financial statements as discontinued operations. The results of the
Company's discontinued operations are excluded from the discussion
and figures presented above unless otherwise noted. See Note 3 to
the Company's consolidated interim financial statements for the
three and nine months ended September 30,
2022 for additional information on the Company's
discontinued operations.
Further information regarding Calfrac Well Services Ltd.,
including the most recently filed Annual Information Form, can be
accessed on the Company's website at www.calfrac.com or under the
Company's public filings found at www.sedar.com.
THIRD QUARTER CONFERENCE CALL
Calfrac will be
conducting a conference call for interested analysts, brokers,
investors and news media representatives to review its 2022
third-quarter results at 10:00 a.m.
(Mountain Time) on Wednesday, November 2, 2022. The
conference call dial-in number is 1-888-664-6383 or 416-764-8650.
The seven-day replay numbers are 1-888-390-0541 or 416-764-8677
(once connected, enter (206612#). A webcast of the conference call
may be accessed via the Company's website at www.calfrac.com.
SOURCE Calfrac Well Services Ltd.