CALGARY,
AB, March 16, 2023 /CNW/ - Calfrac Well
Services Ltd. ("Calfrac" or "the Company") (TSX: CFW) announces
its financial and operating results for the three and twelve months
ended December 31, 2022. The
following press release should be read in conjunction with the
management's discussion and analysis and audited consolidated
annual financial statements and notes thereto as at December 31, 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, 2022, dated March 16, 2023.
CEO'S MESSAGE
Calfrac's strong financial performance in 2022, particularly in
the second half of the year, confirmed its returns-focused
strategy, and the Company expects further earnings growth
throughout 2023 as the pressure pumping market is anticipated to
remain tight. Last year, the Company leveraged its strong execution
and customer relationships to generate free cash flow from
continuing operations of approximately $36
million, which it employed towards strengthening its balance
sheet in conjunction with commencing a multi-year fleet
modernization program to upgrade its fracturing equipment to Tier
IV dynamic gas blending ("DGB") technology. This investment
capitalizes on growing demand for this type of equipment while
allowing the Company and its customers to reduce fuel costs and is
expected to begin yielding positive results as the initial phase of
repowered pumps are deployed into the
United States during the first quarter. Calfrac expects to
deliver on its brand promise this year across its diversified
operating areas in North America
and Argentina and drive
substantially improved year-over-year financial performance as its
continues to focus on generating sustainable long-term returns for
its shareholders.
Calfrac's Chief Executive Officer, Pat
Powell commented: "I am proud of the significant milestones
achieved last year and look forward to taking additional steps
towards our long-term goals in 2023 as we begin deploying our
next-generation equipment into our operating areas in North America and continue to execute on our
brand promise."
SELECT FINANCIAL HIGHLIGHTS – CONTINUING OPERATIONS
|
Three months ended
Dec. 31,
|
Years ended Dec.
31,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except per
share amounts)
|
($)
|
($)
|
( %)
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
Revised
(1)
|
|
|
Revised
(1)
|
|
Revenue
|
447,847
|
229,661
|
95
|
1,499,220
|
880,249
|
70
|
Adjusted
EBITDA(2)
|
75,954
|
8,382
|
806
|
233,741
|
51,577
|
353
|
Consolidated cash flows
provided by (used in) operating activities
|
68,838
|
3,632
|
NM
|
107,532
|
(15,337)
|
NM
|
Capital
expenditures
|
35,810
|
14,868
|
143
|
87,940
|
66,575
|
32
|
Net income
(loss)
|
14,757
|
(29,132)
|
NM
|
35,303
|
(94,731)
|
NM
|
Per share
– basic
|
0.27
|
(0.77)
|
NM
|
0.83
|
(2.52)
|
NM
|
Per share
– diluted
|
0.17
|
(0.77)
|
NM
|
0.47
|
(2.52)
|
NM
|
As at
|
December
31,
|
December 31,
|
Change
|
|
2022
|
2021
|
|
(C$000s)
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
Cash and cash
equivalents
|
8,498
|
—
|
NM
|
Working capital, end of
period
|
183,580
|
121,934
|
51
|
Total debt, end of
period
|
329,186
|
388,479
|
(15)
|
(1) All comparative amounts
exclude the impact from the Company's Russia
operations.
|
(2)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
During the quarter, Calfrac:
- generated revenue of $447.8
million, an increase of 95 percent from the comparative
quarter in 2021 resulting primarily from improved pricing and
activity in North America;
- reported Adjusted EBITDA of $76.0
million versus $8.4 million in
the fourth quarter of 2021;
- completed an early conversion incentive program for its 1.5
Lien Notes resulting in $44.8 million
in notes converted to shares, leaving a remaining principal amount
of $2.6 million at the end of
2022;
- reduced its outstanding debt since the end of the third quarter
by over $80.0 million through the
conversion of a majority of its 1.5 Lien Notes and the repayment of
$30.0 million on its outstanding
credit facility borrowings;
- reduced its Total Debt and Funded Debt to Adjusted EBITDA
ratios to 1.38:1.00 and 0.69:1.00, respectively;
- recorded an impairment of property, plant and equipment of
$10.7 million in the United States to permanently retire 54
obsolete fracturing pumps and recognized an impairment of inventory
of $8.5 million in North America to write-down spare parts and
product inventory to their respective net realizable value;
- reported net income of $14.8
million or $0.17 per share
diluted, compared to a net loss of $29.1
million or $0.77 per share
diluted in 2021;
- reported period-end working capital of $183.6 million versus $121.9 million at December
31, 2021; and
- incurred capital expenditures of $35.8
million, which included $8.3
million of reactivation costs in the United States and $3.5 million related to the Tier IV fleet
modernization program.
Subsequent to the quarter ended December
31, 2022, the Company and Wilks Brothers, LLC resolved all
outstanding legal disputes between the parties and their affiliates
on a confidential basis and without admission of fault or liability
by any party.
FINANCIAL OVERVIEW – CONTINUING OPERATIONS
THREE MONTHS AND YEARS ENDED DECEMBER 31, 2022 VERSUS
2021
UNITED STATES
|
Three Months Ended
Dec. 31,
|
Years ended Dec.
31,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except
operational and exchange rate information)
|
|
|
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
242,651
|
110,581
|
119
|
805,867
|
428,521
|
88
|
Adjusted
EBITDA(1)
|
46,123
|
2,060
|
2,139
|
144,672
|
10,268
|
NM
|
Adjusted EBITDA
(%)
|
18.8
|
1.9
|
889
|
17.9
|
2.4
|
NM
|
Fracturing revenue per
job ($)
|
65,316
|
36,709
|
78
|
53,515
|
30,982
|
73
|
Number of fracturing
jobs
|
3,714
|
3,013
|
23
|
15,054
|
13,833
|
9
|
Active pumping
horsepower, end of period (000s)
|
746
|
579
|
29
|
746
|
579
|
29
|
US$/C$ average exchange
rate(2)
|
1.3578
|
1.2603
|
8
|
1.3011
|
1.2535
|
4
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
(2)
Source: Bank of Canada.
|
OUTLOOK
After a transformative 2022 where Calfrac's United States operations produced one of its
highest financial returns per fleet in its history, intense winter
storms in the Rockies region impacted activity in December and
during some points of the first quarter of 2023. The division
reactivated existing equipment in early January to replace the 10th
fracturing fleet that had been temporarily mobilized from
Canada during the fourth quarter.
Calfrac anticipates steady utilization of its ten fracturing fleets
throughout the remainder of the year and expects financial
performance to remain strong. Even with the constructive long-term
outlook for the United States
pressure pumping industry, the Company expects to navigate any
potential activity reduction in its natural gas concentrated
regions by remaining steadfast in its disciplined returns-focused
strategy and will either relocate equipment to more active regions
or decrease its operational fleet count according to demand.
Calfrac plans to deploy its upgraded Tier IV DGB pumps gradually
through the next 18 months to assist with meeting the operational
and ESG goals of its clients while leveraging the repowered
equipment with sustainable compensation for the investment incurred
to generate increased returns for its shareholders.
THREE MONTHS ENDED DEC. 31,
2022 COMPARED TO THREE MONTHS ENDED DEC. 31, 2021
REVENUE
Revenue from Calfrac's United
States operations increased significantly to $242.7 million during the fourth quarter of 2022
from $110.6 million in the comparable
quarter of 2021. The 119 percent increase in revenue can be
attributed to a combination of a 78 percent increase in revenue per
job period-over-period, combined with a 23 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 increase in job count was mainly due to the Company operating
nine of its marketed fleets during the quarter with more
consistent utilization, although December was impacted by severe
weather conditions resulting in the loss of approximately 10
operating days per fleet. A 10th fleet was temporarily
transferred from Canada in
November, which also contributed to the increase in jobs completed
during the quarter. Activity in the Rockies and North Dakota regions increased relative to the
comparable quarter in 2021 while activity in Pennsylvania was lower than the comparable
quarter in 2021 due to weather-related down time and job mix.
ADJUSTED EBITDA
The Company's operations in the United
States generated Adjusted EBITDA of $46.1 million during the fourth quarter of 2022
compared to $2.1 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 19 percent compared to 2 percent in the
comparable quarter in 2021 through strong pricing and utilization
for its nine active fracturing fleets across its three operating
districts plus an incremental 10th fleet that was activated part
way through the quarter.
YEAR ENDED DEC. 31, 2022
COMPARED TO YEAR ENDED DEC. 31,
2021
REVENUE
Revenue from Calfrac's United
States operations increased to $805.9
million in 2022 from $428.5
million in 2021 primarily due to higher pricing combined
with a 9 percent increase in the number of completed fracturing
jobs. The Company operated nine fleets for the full year in
the United States during 2022 and
added a 10th fleet in November with equipment that was
temporarily transferred from Canada. The 73 percent increase in 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. The
stronger U.S. dollar during 2022 also contributed to the higher
reported revenue.
ADJUSTED EBITDA
The Company's United States
division generated Adjusted EBITDA of $144.7
million in 2022 compared to $10.3
million in 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 combined with further weather-related
disruptions in December.
CANADA
|
Three Months Ended
Dec. 31,
|
Years ended Dec.
31,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except
operational information)
|
|
|
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
126,475
|
67,334
|
88
|
442,280
|
280,258
|
58
|
Adjusted
EBITDA(1)
|
22,716
|
4,769
|
376
|
79,762
|
38,614
|
107
|
Adjusted EBITDA
(%)
|
18.0
|
7.1
|
154
|
18.0
|
13.8
|
30
|
Fracturing revenue per
job ($)
|
40,200
|
23,259
|
73
|
29,312
|
21,626
|
36
|
Number of fracturing
jobs
|
2,818
|
2,630
|
7
|
13,503
|
11,769
|
15
|
Active pumping
horsepower, end of period (000s)
|
227
|
227
|
—
|
227
|
227
|
—
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
OUTLOOK
Calfrac's operations in Canada
generated significant profitability improvement in 2022 and the
Company anticipates the momentum to continue into 2023 as it has
activated a large fracturing fleet, utilizing equipment that was
temporarily mobilized to the United
States during the fourth quarter, to meet growing customer
demand during the first quarter. While weather and client budget
exhaustion reduced activity towards the end of last year, Calfrac
expects a strong first quarter with consistent utilization for its
five large fracturing fleets and six coiled tubing units into the
second half of the year. The Company believes that the re-opening
of the Blueberry River First Nation territorial lands could also be
a positive catalyst for growth in completions activity over the
next few years. As a market leader, Calfrac is looking forward to
incorporating its upgraded Tier IV DGB units with its best-in-class
service quality to execute its customers' development programs
safely, efficiently, and profitably.
THREE MONTHS ENDED DEC. 31,
2022 COMPARED TO THREE MONTHS ENDED DEC. 31, 2021
REVENUE
Revenue from Calfrac's Canadian operations during the fourth
quarter of 2022 was $126.5 million
compared to $67.3 million in the same
period of 2021 primarily due to higher pricing and activity. The
number of fracturing jobs increased by 7 percent from the
comparable period in 2021 due to improved utilization of its four
active fleets. Revenue per fracturing job was 73 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 12 percent versus the fourth
quarter in 2021. The 93 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 fourth quarter of 2022 was $22.7
million compared to $4.8
million in the same period of 2021. The Canadian division's
Adjusted EBITDA as a percentage of revenue improved to 18 percent
compared to 7 percent in the fourth 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 fourth 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
fourth quarter of 2022, while the comparable quarter included a
benefit of $0.7 million.
YEAR ENDED DEC. 31, 2022
COMPARED TO YEAR ENDED DEC. 31,
2021
REVENUE
Revenue from Calfrac's Canadian operations increased from
$280.3 million in 2021 to
$442.3 million in 2022 primarily due
to improved pricing and higher activity. Revenue per fracturing job
was 36 percent higher than 2021 as pricing increases were
implemented during the year to compensate for significant inflation
in the Company's operating costs. The number of fracturing jobs
also increased by 15 percent as the Company's four fracturing
fleets were better utilized versus 2021. The number of coiled
tubing jobs increased by 9 percent from 2021 due to higher activity
while revenue per job increased by 64 percent due to improved
pricing and changes in job mix.
ADJUSTED EBITDA
The Company's Canadian division generated Adjusted EBITDA of
$79.8 million compared to
$38.6 million in 2021 resulting
mainly from higher pricing and crew utilization for its four
fracturing fleets relative to the prior year. The Company
temporarily transferred one fleet to the
United States during the fourth quarter in 2022.
ARGENTINA
|
Three Months Ended
Dec. 31,
|
Years ended Dec.
31,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s, except
operational and exchange rate information)
|
|
|
|
($)
|
($)
|
( %)
|
(unaudited)
|
|
|
|
|
|
|
Revenue
|
78,721
|
51,746
|
52
|
251,073
|
171,470
|
46
|
Adjusted
EBITDA(1)
|
14,616
|
6,900
|
112
|
30,979
|
22,804
|
36
|
Adjusted EBITDA
(%)
|
18.6
|
13.3
|
40
|
12.3
|
13.3
|
(8)
|
Fracturing revenue per
job ($)
|
84,445
|
63,476
|
33
|
74,181
|
57,453
|
29
|
Number of fracturing
jobs
|
558
|
468
|
19
|
1,973
|
1,800
|
10
|
Active pumping
horsepower, end of period (000s)
|
139
|
137
|
1
|
139
|
137
|
1
|
US$/C$ average exchange
rate(2)
|
1.3578
|
1.2603
|
8
|
1.3011
|
1.2535
|
4
|
(1)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
(2)
Source: Bank of Canada.
|
OUTLOOK
Calfrac's Argentina division
exited last year with very strong momentum and anticipates
increased utilization combined with a full year of improved pricing
for its fracturing fleets in the Vaca Muerta shale play and the
conventional basins in southern Argentina to produce enhanced financial
returns in 2023.
THREE MONTHS ENDED DEC. 31,
2022 COMPARED TO THREE MONTHS ENDED DEC. 31, 2021
REVENUE
Calfrac's Argentinean operations generated revenue of
$78.7 million during the fourth
quarter of 2022 compared to $51.7
million in the comparable quarter in 2021 primarily due to
higher fracturing and coiled tubing 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. The Company also completed 19 percent more jobs than the
comparable period in 2021. Activity in the Company's cementing
operations increased by 8 percent offset partially by a 5 percent
decrease in revenue per job. The number of coiled tubing jobs was
consistent with the comparable period while revenue per job
improved by 84 percent primarily due to job mix and higher pricing
due to inflation.
ADJUSTED EBITDA
The Company's operations in Argentina generated Adjusted EBITDA of
$14.6 million during the fourth
quarter of 2022 compared to $6.9 million in the comparable
quarter of 2021, while the Company's Adjusted EBITDA margins as a
percentage of revenue also improved to19 percent from 13 percent.
The Company entered into a new contract at the beginning of the
third quarter with higher utilization and improved pricing which
resulted in higher Adjusted EBITDA margins relative to the
comparable period in 2021.
YEAR ENDED DEC. 31, 2022
COMPARED TO YEAR ENDED DEC. 31,
2021
REVENUE
Calfrac's Argentinean operations generated revenue of
$251.1 million during 2022 compared
to $171.5 million in 2021. 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 second half of the year. Overall fracturing
activity increased by 10 percent compared to 2021 while revenue per
job was 29 percent higher primarily due to overall inflation in
operating costs and better pricing in the second half of 2022
combined with a stronger U.S. dollar. Revenue from the Company's
coiled tubing and cementing service lines also continued to improve
relative to the previous year. The number of coiled tubing jobs
increased by 22 percent as activity increased in Neuquén and
southern Argentina while revenue
per job was 39 percent higher primarily due to job mix and
inflation. Activity in the Company's cementing operations increased
by 23 percent and revenue per job increased by 28 percent due to
changes in job mix as a greater number of pre-fracturing projects,
which are typically larger job sizes, were completed in 2022.
ADJUSTED EBITDA
The Company's operations in Argentina generated Adjusted EBITDA of
$31.0 million during 2022 versus
$22.8 million in 2021 as utilization
of the Company's equipment improved across all service lines. The
Company's operating margins as a percentage of revenue decreased
slightly from 13 percent to 12 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.
CAPITAL EXPENDITURES
|
Three Months Ended
Dec. 31,
|
Years ended Dec.
31,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
(C$000s)
|
($)
|
|
|
($)
|
($)
|
($)
|
Canada
|
6,821
|
3,583
|
90
|
17,071
|
12,189
|
40
|
United
States
|
24,561
|
7,366
|
233
|
60,600
|
42,033
|
44
|
Argentina
|
4,428
|
3,919
|
13
|
10,269
|
12,353
|
(17)
|
Continuing
Operations
|
35,810
|
14,868
|
141
|
87,940
|
66,575
|
32
|
Capital expenditures were $35.8
million for the quarter ended December 31, 2022.
Calfrac's Board of Directors have approved a 2023 capital budget of
approximately $155.0 million, which
excludes expenditures related to fluid end components as these will
be recorded as maintenance expenses beginning in January 2023 for all continuing reporting
segments. This change in accounting estimate is based on new
information surrounding the useful life of these components.
OTHER DEVELOPMENTS
During the fourth quarter of 2022, the Company completed an
early conversion incentive program in respect of its 1.5 Lien Notes
resulting in $44.8 million in notes
converted to shares at a price of $1.3325 per share, leaving approximately
$2.6 million principal amount of 1.5
Lien Notes outstanding. As a result of the program, the Company
issued approximately 33.6 million common shares associated with the
conversion of the participating 1.5 Lien Notes and will realize
interest savingss of approximately $2.3
million otherwise payable on the 1.5 Lien Notes to the
maturity date.
As part of Calfrac's strategy to streamline and simplify its
operational and administrative structure, the Company has decided
to evaluate and report the financial and operating performance for
the United States and Canada under a single North America division beginning with the
interim financial statements and management's discussion and
analysis for the three months ending March
31, 2023.
SUMMARY OF QUARTERLY RESULTS – CONTINUING OPERATIONS
Three Months
Ended
|
Mar. 31,
|
Jun. 30,
|
Sep. 30,
|
Dec. 31,
|
Mar. 31,
|
Jun. 30,
|
Sep. 30,
|
Dec.
31,
|
|
2021
|
2021
|
2021
|
2021
|
2022
|
2022
|
2022
|
2022
|
(C$000s, except per
share and operating data)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
(unaudited)
|
Revised
(1)
|
Revised
(1)
|
Revised
(1)
|
Revised
(1)
|
Revised
(1)
|
Revised
(1)
|
Revised
(1)
|
|
Financial
|
|
|
|
|
|
|
|
|
Revenue
|
213,954
|
173,769
|
262,865
|
229,661
|
294,524
|
318,511
|
438,338
|
447,847
|
Adjusted
EBITDA(2)
|
11,720
|
550
|
30,925
|
8,382
|
22,763
|
48,992
|
86,032
|
75,954
|
Net income
(loss)
|
(23,029)
|
(35,516)
|
(7,055)
|
(29,132)
|
(18,030)
|
(6,776)
|
45,352
|
14,757
|
Per share –
basic
|
(0.62)
|
(0.95)
|
(0.19)
|
(0.77)
|
(0.47)
|
(0.18)
|
1.15
|
0.27
|
Per share –
diluted
|
(0.62)
|
(0.95)
|
(0.19)
|
(0.77)
|
(0.47)
|
(0.18)
|
0.60
|
0.17
|
Capital
expenditures
|
10,503
|
17,166
|
24,133
|
14,868
|
12,145
|
15,241
|
24,745
|
36,182
|
(1)
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. In addition, Adjusted EBITDA
reflects a change in definition and excludes realized foreign
exchange gains and losses.
|
(2)
Refer to "Non-GAAP Measures" on page 7 for further
information.
|
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, 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 Dec. 31,
|
Years Ended Dec.
31
|
|
2022
|
2021
|
2022
|
2021
|
(C$000s)
|
|
|
($)
|
($)
|
(unaudited)
|
|
Revised
|
|
Revised
|
Net income (loss) from
continuing operations
|
14,757
|
(29,132)
|
35,303
|
(94,731)
|
Add back
(deduct):
|
|
|
|
|
Depreciation
|
32,294
|
31,440
|
122,027
|
127,431
|
Foreign exchange
losses (gains)(2)
|
3,732
|
1,278
|
(2,972)
|
4,658
|
Loss (gain) on
disposal of property, plant and equipment
|
951
|
(108)
|
5,333
|
405
|
Impairment of
property, plant and equipment
|
10,670
|
—
|
10,670
|
—
|
Impairment of
inventory
|
8,477
|
—
|
8,477
|
—
|
Impairment of other
assets
|
64
|
705
|
64
|
705
|
Litigation settlements
in Canadian division
|
—
|
—
|
11,258
|
(700)
|
Restructuring
charges
|
3,710
|
2
|
5,273
|
673
|
Stock-based
compensation
|
457
|
916
|
2,776
|
2,272
|
Interest
|
15,018
|
9,662
|
46,555
|
37,739
|
Income
taxes
|
(14,176)
|
(6,381)
|
(11,023)
|
(26,875)
|
Adjusted EBITDA from
continuing operations (1)
|
75,954
|
8,382
|
233,741
|
51,577
|
(1) For bank covenant
purposes, EBITDA includes $16.4 million income from discontinued
operations for the twelve months ended December 31, 2022 (twelve
months ended December 31, 2021 – $14.4 million) and the deduction
of an additional $10.4 million of lease payments for the twelve
months ended December 31, 2022 (twelve months ended December 31,
2021 – $9.0 million) that would have been recorded as operating
expenses prior to the adoption of IFRS 16.
|
(2)
Adjusted EBITDA reflects a change in definition and excludes
realized foreign exchange gains and losses.
|
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 North
America 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 services, service
quality, operational execution, financial performance and
competitive position; operating and financial strategies,
performance, priorities, metrics, estimates and targets; the
Company's Russian division, including the planned sale of the
Russian division, the ongoing risks, uncertainties and restrictions
relating to its business and operations, the regulatory approvals
and Company's compliance with applicable sanctions and
counter-sanctions; capital expenditure programs, including planned
equipment investments and useful life expectancy of component
parts; the Company's approach and strategy with respect to its
environmental, social and governance matters; 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; Company's
expectations for its customers' capital budgets and geographical
areas of focus; the effect of unconventional oil and gas projects
have had on supply and demand fundamentals for oil and natural gas;
the effect of environmental, social and governance factors on
customer and investor preferences and capital deployment; the
effect of the military conflict in the Ukraine and related international sanctions
and counter-sanctions and restrictions by Russia on the Company's ownership and planned
sale of the Russian division; industry equipment levels including
the number of active fracturing fleets marketed by the Company's
competitors; 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: (A) industry risks,
including but not limited to, global economic conditions and the
level of exploration, development and production for oil and
natural gas in North America and
Argentina; excess equipment
levels; impacts of conservation measures and technological advances
on the demand for the Company's services; hazards inherent in the
industry; the ongoing impacts of the COVID-19 pandemic; the actions
of activist shareholders and the increasing reluctance of
institutional investors to invest in the industry in which the
Company operates; and an intensely competitive oilfield services
industry; (B) business operations risks, including but not limited
to, fleet reinvestment risk, including the ability of the Company
to finance the capital necessary for equipment upgrades to support
its operational needs while meeting government and customer
requirements and preferences; difficulty retaining, replacing or
adding personnel; failure to improve and adapt equipment,
proprietary fluid chemistries and other products and services;
reliance on equipment suppliers and fabricators for timely delivery
and quality of equipment; a concentrated customer base; seasonal
volatility and climate change; cybersecurity risks, and activism;
(C) financial risks, including but not limited to, price escalation
and availability of raw materials, diesel fuel and component parts;
restrictions on the Company's access to capital, including the
impacts of covenants under the Company's lending documents; direct
and indirect exposure to volatile credit markets; fluctuations in
currency exchange rates; actual results which are materially
different from management estimates and assumptions;
insufficient internal controls; and possible impacts on the
Company' access to capital and common share price given a
significant number of common shares are controlled by two directors
of the Company; (D) geopolitical risks, including but not limited
to, foreign operations exposure, 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, and international trade and regulatory
controls and sanctions; the impacts of a delay of sale or failure
to sell the Company's discontinued operations in Russia, including
failure to receive any applicable regulatory approvals and
reputational risks; foreign legal actions and unknown consequences
of such actions; and risk associated with compliance with
applicable law; (E) legal and regulatory risks, including but not
limited to, federal, provincial and state legislative and
regulatory initiatives; health, safety and environmental laws and
regulations; and legal and administrative proceedings; and (F)
environmental, social and governance risks, including but not
limited to. failure to effectively and timely address the energy
transition; legal and regulatory initiatives to limit greenhouse
gas emissions; and the direct and indirect costs of various
existing and proposed climate change regulations. Further
information about these and other risks and uncertainties are set
forth in the Company's most recently filed Annual Information Form
under the heading "Risk Factors" which is available on the SEDAR
website at www.sedar.com under Company's profile.
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 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 under the heading "Risk Factors" which is
available on the SEDAR website at www.sedar.com under Company's
profile. 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.
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 4 to
the Company's audited consolidated financial statements for the
year ended December 31, 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.
FOURTH QUARTER CONFERENCE CALL
Calfrac will be conducting a conference call for interested
analysts, brokers, investors and news media representatives to
review its 2022 fourth-quarter results at 10:00 a.m. (Mountain Time) on Thursday, March 16,
2023. 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 (285704#). A webcast of the
conference call may be accessed via the Company's website at
www.calfrac.com.
CONSOLIDATED BALANCE SHEETS
|
As at December
31,
|
|
2022
|
2021
|
(C$000s)
|
($)
|
($)
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
8,498
|
—
|
Accounts
receivable
|
238,769
|
189,835
|
Income taxes
recoverable
|
—
|
2,859
|
Inventories
|
108,866
|
101,840
|
Prepaid expenses and
deposits
|
12,297
|
12,999
|
|
368,430
|
307,533
|
Assets classified as
held for sale
|
45,940
|
—
|
|
414,370
|
307,533
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
543,475
|
563,423
|
Right-of-use
assets
|
22,908
|
22,005
|
Deferred income tax
assets
|
15,000
|
—
|
|
581,383
|
585,428
|
Total assets
|
995,753
|
892,961
|
LIABILITIES
|
|
|
Current
liabilities
|
|
|
Bank
overdraft
|
—
|
1,351
|
Accounts payable and
accrued liabilities
|
171,603
|
127,441
|
Income taxes
payable
|
964
|
—
|
Current portion of
long-term debt
|
2,534
|
—
|
Current portion of
lease obligations
|
9,749
|
8,004
|
|
184,850
|
136,796
|
Liabilities directly
associated with assets classified as held for sale
|
18,852
|
—
|
|
203,702
|
136,796
|
Non-current
liabilities
|
|
|
Long-term
debt
|
329,186
|
388,479
|
Lease
obligations
|
13,443
|
12,560
|
Deferred income tax
liabilities
|
26,450
|
26,286
|
|
369,079
|
427,325
|
Total
liabilities
|
572,781
|
564,121
|
|
As at December
31,
|
|
2022
|
2021
|
(C$000s)
|
($)
|
($)
|
EQUITY
|
|
|
Equity attributable to
the shareholders of Calfrac
|
|
|
Capital
stock
|
865,059
|
801,178
|
Conversion rights on
convertible notes
|
212
|
4,764
|
Contributed
surplus
|
70,141
|
68,258
|
Warrants
|
36,558
|
40,282
|
Loan receivable for
purchase of common shares
|
—
|
(2,500)
|
Accumulated
deficit
|
(580,544)
|
(592,221)
|
Accumulated other
comprehensive income
|
31,546
|
9,079
|
Total equity
|
422,972
|
328,840
|
Total liabilities and
equity
|
995,753
|
892,961
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Three Months Ended
Dec. 31,
|
Years Ended Dec.
31,
|
|
2022
|
2021
|
2022
|
2021
|
(C$000s, except per
share data)
|
($)
|
($)
|
($)
|
($)
|
|
|
Revised
(1)
|
|
Revised
(1)
|
Revenue
|
447,847
|
229,661
|
1,499,220
|
880,249
|
Cost of
sales
|
388,088
|
240,852
|
1,344,614
|
915,587
|
Gross profit
(loss)
|
59,759
|
(11,191)
|
154,606
|
(35,338)
|
Expenses
|
|
|
|
|
Selling, general and
administrative
|
20,266
|
12,785
|
62,199
|
42,761
|
Foreign exchange
losses (gains)
|
3,732
|
1,278
|
(2,972)
|
4,658
|
Loss (gain) on
disposal of property, plant and equipment
|
951
|
(108)
|
5,333
|
405
|
Impairment of
property, plant and equipment
|
10,670
|
—
|
10,670
|
—
|
Impairment of
inventory
|
8,477
|
—
|
8,477
|
—
|
Impairment of other
assets
|
64
|
705
|
64
|
705
|
Interest
|
15,018
|
9,662
|
46,555
|
37,739
|
|
59,178
|
24,322
|
130,326
|
86,268
|
Income (loss) before
income tax
|
581
|
(35,513)
|
24,280
|
(121,606)
|
Income tax expense
(recovery)
|
|
|
|
|
Current
|
2,810
|
(64)
|
5,443
|
158
|
Deferred
|
(16,986)
|
(6,317)
|
(16,466)
|
(27,033)
|
|
(14,176)
|
(6,381)
|
(11,023)
|
(26,875)
|
Net income (loss) from
continuing operations
|
14,757
|
(29,132)
|
35,303
|
(94,731)
|
Net income (loss) from
discontinued operations
|
4,552
|
814
|
(23,626)
|
11,919
|
Net income (loss) for
the period
|
19,309
|
(28,318)
|
11,677
|
(82,812)
|
|
|
|
|
|
Earnings (loss) per
share – basic
|
|
|
|
|
Continuing
operations
|
0.27
|
(0.77)
|
0.83
|
(2.52)
|
Discontinued
operations
|
0.08
|
0.02
|
(0.55)
|
0.32
|
|
0.36
|
(0.75)
|
0.27
|
(2.21)
|
|
|
|
|
|
Earnings (loss) per
share – diluted
|
|
|
|
|
Continuing
operations
|
0.17
|
(0.77)
|
0.47
|
(2.52)
|
Discontinued
operations
|
0.04
|
0.01
|
(0.28)
|
0.14
|
|
0.22
|
(0.75)
|
0.19
|
(2.21)
|
(1) 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.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Three Months Ended
Dec. 31,
|
Years Ended Dec.
31,
|
|
2022
|
2021
|
2022
|
2021
|
(C$000s)
|
($)
|
($)
|
($)
|
($)
|
CASH FLOWS PROVIDED
BY (USED IN)
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income (loss) for
the period
|
19,309
|
(28,318)
|
11,677
|
(82,812)
|
Adjusted for the
following:
|
|
|
|
|
Depreciation
|
32,294
|
31,638
|
122,226
|
127,925
|
Stock-based
compensation
|
457
|
916
|
2,776
|
2,272
|
Unrealized foreign
exchange losses (gains)
|
2,363
|
1,338
|
(16,334)
|
718
|
Loss (gain) on
disposal of property, plant and equipment
|
951
|
(110)
|
5,329
|
403
|
Impairment of
property, plant and equipment
|
11,042
|
—
|
16,676
|
—
|
Impairment of
inventory
|
9,987
|
—
|
38,736
|
—
|
(Recovery) impairment
of other assets
|
(2,852)
|
705
|
4,484
|
705
|
Interest
|
14,977
|
9,662
|
46,511
|
37,737
|
Interest
paid
|
(5,356)
|
(1,074)
|
(33,049)
|
(25,127)
|
Deferred income
taxes
|
(16,986)
|
(6,317)
|
(16,466)
|
(27,033)
|
Changes in items of
working capital
|
2,652
|
(4,808)
|
(75,034)
|
(50,125)
|
Cash flows provided by
(used in) operating activities
|
68,838
|
3,632
|
107,532
|
(15,337)
|
FINANCING
ACTIVITIES
|
|
|
|
|
Bridge loan
proceeds
|
—
|
—
|
15,000
|
—
|
Issuance of long-term
debt, net of debt issuance costs
|
(2,020)
|
8,648
|
17,762
|
59,555
|
Bridge loan
repayments
|
—
|
|
(15,000)
|
|
Long-term debt
repayments
|
(30,000)
|
—
|
(45,000)
|
(6,050)
|
Lease obligation
principal repayments
|
(2,579)
|
(2,162)
|
(9,166)
|
(7,836)
|
Proceeds on issuance
of common shares from the exercise of warrants and stock
options
|
987
|
93
|
2,871
|
183
|
Cash flows (used in)
provided by financing activities
|
(33,612)
|
6,579
|
(33,533)
|
45,852
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property,
plant and equipment
|
(34,222)
|
(16,446)
|
(79,810)
|
(63,434)
|
Proceeds on disposal
of property, plant and equipment
|
1,919
|
15
|
3,576
|
938
|
Proceeds on disposal
of right-of-use assets
|
282
|
177
|
1,909
|
1,202
|
Cash flows used in
investing activities
|
(32,021)
|
(16,254)
|
(74,325)
|
(61,294)
|
Effect of exchange rate
changes on cash and cash equivalents
|
(7,741)
|
(1,351)
|
20,070
|
(402)
|
(Decrease) increase in
cash and cash equivalents
|
(4,536)
|
(7,394)
|
19,744
|
(31,181)
|
Cash and cash
equivalents (bank overdraft), beginning of period
|
22,929
|
6,043
|
(1,351)
|
29,830
|
Cash and cash
equivalents (bank overdraft), end of period
|
18,393
|
(1,351)
|
18,393
|
(1,351)
|
Included in the cash
and cash equivalents per the balance sheet
|
8,498
|
|
8,498
|
|
Included in the assets
held for sale/discontinued operations
|
9,895
|
|
9,895
|
|
SOURCE Calfrac Well Services Ltd.