CALGARY, Nov. 6, 2019
/CNW/ - Pason Systems Inc. (TSX:PSI) announced today its 2019
third quarter results.
Performance Data
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(CDN 000s, except per
share data)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
72,195
|
82,344
|
(12)
|
227,232
|
224,428
|
1
|
EBITDA
(1)
|
33,167
|
44,633
|
(26)
|
99,208
|
100,467
|
(1)
|
Adjusted EBITDA
(1)
|
31,557
|
42,473
|
(26)
|
102,873
|
106,684
|
(4)
|
As a % of
revenue
|
43.7
|
51.6
|
(790) bps
|
45.3
|
47.5
|
(220) bps
|
Funds flow from
operations
|
29,899
|
36,039
|
(17)
|
89,592
|
97,833
|
(8)
|
Per share –
basic
|
0.35
|
0.42
|
(17)
|
1.04
|
1.15
|
(10)
|
Per share –
diluted
|
0.35
|
0.42
|
(17)
|
1.04
|
1.13
|
(8)
|
Cash from operating
activities
|
37,453
|
31,809
|
18
|
83,833
|
83,770
|
—
|
Capital
expenditures
|
4,058
|
4,858
|
(16)
|
18,591
|
15,426
|
21
|
Free cash flow
(1)
|
33,067
|
26,880
|
23
|
65,999
|
68,919
|
(4)
|
Cash dividends
declared
|
0.19
|
0.18
|
6
|
0.55
|
0.52
|
6
|
Net Income
|
15,418
|
24,386
|
(37)
|
43,707
|
42,224
|
4
|
Per share –
basic
|
0.18
|
0.29
|
(37)
|
0.51
|
0.50
|
3
|
Per share –
diluted
|
0.18
|
0.28
|
(36)
|
0.51
|
0.49
|
3
|
Total interest
bearing debt
|
—
|
—
|
—
|
—
|
—
|
—
|
Shares outstanding
end of period (#000's)
|
85,299
|
85,431
|
—
|
85,299
|
85,431
|
—
|
|
|
(1)
|
Non-IFRS financial
measures are defined in the Management's Discussion and Analysis
section.
|
|
Current period
amounts are in accordance with IFRS following the adoption of IFRS
16, Leases as discussed in Note 3 in the Consolidated Financial
Statements. Prior periods have not been restated.
|
Q3 2019 vs Q3 2018
The Company generated consolidated revenue of $72.2 million in the third quarter of 2019, a
decrease of 12% from the same period in 2018. The decrease is
attributable to a drop in North American drilling activity, offset
by a slight increase in activity in the International business
unit, increased market share in the US business unit, and continued
increases in product penetration in all major business units,
leading to increases in Revenue per EDR day.
Adjusted EBITDA decreased to $31.6
million in the third quarter, a decrease of 26% from the
same period in 2018. The decrease in adjusted EBITDA was driven by
the decrease in consolidated gross profit and an increase in
research and development expense.
Funds flow from operations was $29.9
million in the third quarter, a decrease of 17% from the
same period in 2018. Cash from operating activities was
$37.5 million in the third quarter of
2019, an increase of 18% from the same period in 2018. This
financial metric was significantly impacted by movements in working
capital, mostly due to the release of trade and other
receivables.
Free cash flow was $33.1 million
in the third quarter of 2019, an increase of 23% from the same
period in 2018. The increase was driven by the increase in cash
from operating activities and a decline in capital
expenditures.
The Company recorded net income of $15.4
million ($0.18 per share) in
the third quarter of 2019, compared to net income of $24.4 million ($0.28 per share) recorded in the same period in
2018. Net income was negatively impacted by the drop in drilling
activity, and this combined with the Company's fixed cost structure
led to a drop in consolidated gross profit of $11.6 million. In addition, higher research and
development costs and an increase in foreign exchange losses
contributed to the decline in net income. These negative factors
were off-set by recording a non-cash net monetary gain of
$2.4 million as a result of applying
hyperinflationary accounting to the Company's Argentina subsidiary.
President's Message
Pason's operating environment across North America has deteriorated in the third
quarter. Industry activity in Canada remains at low levels as transportation
constraints collide with political intransigence to sap E&P
producers' confidence to increase spending levels. As a result,
third quarter industry activity in Canada decreased 37% compared to the previous
year. The situation in the United
States is also challenging with drilling activity down 14%
driven by the industry facing pressure from equity and debt
investors to constrain spending within cash flows.
These headwinds were partially offset by higher activity in
Pason's international markets, market share increases in
the United States, and continued
growth in product penetration in all geographies, leading to higher
Revenue per EDR Day. Leading the increase in Revenue per EDR Day
were the higher adoption of data delivery and certain other
peripheral products.
The company generated revenue of $72.2
million in the period, a decrease of 12% compared to the
same quarter last year, and essentially unchanged from the second
quarter. Adjusted EBITDA was $31.6
million for the quarter, a decrease of 26% compared to the
prior year, and up slightly from the second quarter. Adjusted
EBITDA as a percentage of revenue was 44% compared to 52% one year
ago. Pason recorded net income for the quarter of $15.4 million ($0.18 per share) compared to $24.4 million ($0.28 per share) in the prior year quarter, and
up from $9.2 million ($0.11 per share) in the second quarter.
At September 30, 2019, our working
capital position stood at $230
million, including cash and short-term investments of
$181 million. We are maintaining our
quarterly dividend at $0.19
share.
With drilling activity levels declining since the second quarter
and operators maintaining disciplined spending levels, visibility
remains poor with respect to operator budgets as we move into 2020.
There is a chance that rig counts will bottom in the fourth quarter
and they may stay low for some time. As a result, we are likely to
see further oilfield services industry consolidation; the industry
simply has too many assets and too much debt.
However, we believe that there are good reasons for optimism
regarding drilling activity in the medium term. Demand for oil
continues to increase each year. Consumption of oil-based products
has gone from 75 million barrels per day in 1999 to 101 million
barrels per day this year. The industry needs to add more than 1
million barrels per year of new supply each year. The world relies
on hydrocarbons and there is nothing on the horizon that can
replace it. Fears that the trade war between the US and
China will significantly reduce
oil demand seem overblown and the International Energy Agency has
reduced their oil demand forecast by only a hundred thousand
barrels per day. It is not possible for US oil production to keep
increasing, or even stay flat, if drilling activity is low and
dropping. Oil prices must go higher at some point to
avoid a supply shortage.
In this environment, we are keeping our fixed costs low and
maintaining flexibility for our go-forward plans, which gives us
the means and confidence to address any activity scenario. We do
not plan to reduce our R&D efforts. Our capital expenditures
will be relatively modest going forward with a larger portion of
development efforts focused on software and analytics. We continue
to intend to spend up to $30 million
in capital expenditures in 2019 and expect capital spending levels
to be up to $25 million in 2020.
Our highly capable and flexible IT and communications platform
can host additional new Pason and third-party software at the
rigsite and in the cloud. Our market positions remain strong, and
we expect to be able to deliver growth in our international markets
and through higher product adoption going forward. We are the
service provider of choice for many leading operators and drilling
contractors with Pason equipment installed on over 65% of all
active land drilling rigs in the Western Hemisphere.
Pason recently made two investments which provide avenues for us
to deploy our distinctive capabilities in two additional end
markets.
In September, we announced the acquisition of a majority
interest of Energy Toolbase LLC ("ETB"), a private US-based
software-as-a-service company, for US$20
million. ETB provides an industry-leading software package
to model the economics and build proposals for solar and energy
storage (battery) projects. The ETB product is utilized by a
significant number of distributed energy project developers across
the United States. Building on
Pason's deep data management expertise, we are combining the
capabilities of Pason Power and ETB. Over the last two years, Pason
Power has been building a foundation in the solar and energy
storage market through its iEMS control system and Energy DataHub
products. With this investment, we are positioning ourselves for
meaningful long-term growth in the solar and energy storage
market.
In October, we announced a C$25
million investment to acquire a minority interest in
Intelligent Wellhead Solutions ("IWS"). IWS is a privately-owned
oilfield technology and service company that provides unique
surface control systems for well completions and workover
operations. Pason has been looking to enter the completions space
for several years and IWS represents the first truly compelling
opportunity we have seen where we believe we can build on Pason's
expertise in end-to-end data management and ruggedized field
technologies. We are excited to play a role in IWS' continued
growth.
The timing of these two investments close each other was
coincidental. We had been investigating opportunities to make an
investment in the completions space, as well as to accelerate our
efforts in the solar and energy storage market, for several years.
There are no additional investments planned in the short term in
either area. However, we will continue to scan the drilling,
completions and power markets for attractive long-term growth
opportunities.
(signed)
Marcel Kessler
President and Chief Executive Officer
November 6, 2019
Management's Discussion and Analysis
The following discussion and analysis has been prepared by
management as of November 6, 2019, and is a review of the
financial condition and results of operations of Pason Systems Inc.
(Pason or the Company) based on International Financial Reporting
Standards (IFRS) and should be read in conjunction with the
Consolidated Financial Statements and accompanying notes.
Certain information regarding the Company contained herein may
constitute forward-looking statements under applicable securities
laws. Such statements are subject to known or unknown risks and
uncertainties that may cause actual results to differ materially
from those anticipated or implied in the forward-looking
statements.
All financial measures presented in this report are expressed in
Canadian dollars unless otherwise indicated.
Impact of IFRS 16
The Company adopted IFRS 16, Leases, effective January 1, 2019, using the modified retrospective
approach. This new standard supersedes IAS 17, Leases, and
introduces a single lessee accounting model by eliminating a
lessee's classification of leases as either operating leases or
finance leases. Comparative figures have not been restated. Further
disclosure is provided in Note 3 to the Condensed Consolidated
Interim Financial Statements.
The impact of adopting this new standard on IFRS Measures and
Non-IFRS Measures is described below. The figures presented below
are the 2019 actual numbers that are classified differently than
the 2018 comparative figures. Effectively, the operating expense
line items recognized under the previous standard will be
bifurcated between depreciation expense and interest expense.
Impact on IFRS Measures
|
Three Months
Ended
September 30, 2019
|
Nine Months
Ended
September 30, 2019
|
(000s)
|
($)
|
($)
|
Reduction in rental
services and local administration expenses
|
270
|
827
|
Reduction in research
and development expenses
|
99
|
234
|
Reduction in
corporate services costs
|
324
|
916
|
(Increase) in
depreciation of right of use assets
|
(653)
|
(1,933)
|
(Increase) in net
interest expense on lease liabilities
|
(115)
|
(345)
|
Reduction in Income
tax provision
|
20
|
81
|
(Decrease) in net
income
|
(55)
|
(220)
|
Increase in
depreciation of right of use assets
|
653
|
1,933
|
(Reduction) in Income
tax provision
|
(20)
|
(81)
|
Total increase in
funds flow from operations and cash from operating
activities
|
578
|
1,632
|
Impact on Non-IFRS Measures
|
Three Months
Ended
September 30, 2019
|
Nine Months
Ended
September 30, 2019
|
(000s)
|
($)
|
($)
|
Decrease in rental
services and local administration - Canada operating
segment
|
40
|
120
|
Decrease in rental
services and local administration - United States operating
segment
|
200
|
596
|
Decrease in rental
services and local administration - International operating
segment
|
30
|
111
|
Decrease in research
and development expenses
|
99
|
234
|
Decrease in corporate
services costs
|
324
|
916
|
Total increase in
EBITDA and Adjusted EBITDA
|
693
|
1,977
|
Impact of Hyperinflation
In 2018 the Company concluded that its Argentinian subsidiary is
operating in a hyperinflationary economy. This conclusion impacts
the application of two accounting standards, IAS 21, The Effects of
Changes in Foreign Exchange, and IAS 29, Financial Reporting in
Hyperinflationary Economies.
The impact of applying IAS 21 to the operating results of
Argentina subsidiary for the three
and nine months ended September 30,
2019 was to reduce revenue and segment gross profit by
approximately $1,747 and $950 respectively.
The impact of applying ISA 29 to the non-monetary assets and
liabilities, and shareholders' equity of the Argentina subsidiary was to recorded a
non-cash net monetary gain of $2,376
for the three and nine months ended September 30, 2019.
Impact on IFRS Measures
|
Three and Nine
Months Ended
September 30, 2019
|
(000s)
|
($)
|
Reduction in
revenue
|
(1,747)
|
Reduction in rental
services and local administration expenses
|
1,055
|
Increase in
depreciation expense
|
(258)
|
(Decrease) in
segment gross profit
|
(950)
|
Reduction in other
expense
|
2,376
|
Reduction in Income
tax provision
|
80
|
Increase in net
income
|
1,506
|
Impact on Non-IFRS Measures
|
Three and Nine
Months Ended
September 30, 2019
|
(000s)
|
($)
|
Reduction in revenue
income
|
(1,747)
|
Reduction in rental
services and local administration expenses
|
1,055
|
Reduction in other
expense
|
2,376
|
Increase in
EBITDA
|
1,684
|
(Reduction) in other
expense
|
(2,376)
|
Decrease in
Adjusted EBITDA
|
(692)
|
Additional IFRS Measures
In its Consolidated Financial Statements, the Company uses
certain additional IFRS measures. Management believes these
measures provide useful supplemental information to readers.
Funds flow from operations
Management believes that funds flow from operations, as reported
in the Consolidated Statements of Cash Flows, is a useful
additional measure as it represents the cash generated during the
period, regardless of the timing of collection of receivables and
payment of payables. Funds flow from operations represents the cash
flow from continuing operations, excluding non-cash items. Funds
flow from operations is defined as net income adjusted for
depreciation and amortization expense, non-cash, stock-based
compensation expense, deferred taxes, and other non-cash items
impacting operations.
Cash from operating activities
Cash from operating activities is defined as funds flow from
operations adjusted for changes in working capital items.
Non-IFRS Financial Measures
These definitions are not recognized measures under IFRS, and
accordingly, may not be comparable to measures used by other
companies. These Non-IFRS measures provide readers with additional
information regarding the Company's ability to generate funds to
finance its operations, fund its research and development and
capital expenditure program, and pay dividends.
Revenue per EDR day
Revenue per EDR day is defined as the daily revenue generated
from all products that the Company has on rent on a drilling rig
that has the Company's base EDR installed. This metric provides a
key measure on the Company's ability to increase production
adoption and evaluate product pricing.
EBITDA
EBITDA is defined as net income before interest expense,
income taxes, stock-based compensation expense, depreciation and
amortization expense, and gains on disposal of investments.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA, adjusted for foreign
exchange, impairment of property, plant, and equipment,
restructuring costs, net monetary adjustments, and other items
which the Company does not consider to be in the normal course of
continuing operations.
Management believes that EBITDA and Adjusted EBITDA are useful
supplemental measures as they provide an indication of the results
generated by the Company's principal business activities prior to
the consideration of how these results are taxed in multiple
jurisdictions, how the results are impacted by foreign exchange or
how the results are impacted by the Company's accounting policies
for equity-based compensation plans.
Free cash flow
Free cash flow is defined as cash from operating activities plus
proceeds on disposal of property, plant, and equipment, less
capital expenditures (including changes to non-cash working capital
associated with capital expenditures), and deferred development
costs. This metric provides a key measure on the Company's ability
to generate cash from its principal business activities after
funding the capital expenditure program, and provides an indication
of the amount of cash available to finance, among other items, the
Company's dividend and other investment opportunities.
Overall Performance
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
Drilling
Data
|
37,771
|
42,090
|
(10)
|
120,293
|
114,805
|
5
|
Mud Management and
Safety
|
21,243
|
22,299
|
(5)
|
66,059
|
62,863
|
5
|
Communications
|
4,783
|
7,504
|
(36)
|
15,322
|
21,413
|
(28)
|
Drilling
Intelligence
|
5,141
|
7,111
|
(28)
|
15,702
|
16,066
|
(2)
|
Analytics and
Other
|
3,257
|
3,340
|
(2)
|
9,856
|
9,281
|
6
|
Total
revenue
|
72,195
|
82,344
|
(12)
|
227,232
|
224,428
|
1
|
The Pason Electronic Drilling Recorder (EDR) remains the
Company's primary product. The EDR provides a complete system of
drilling data acquisition, data networking, and drilling management
tools and reports at both the wellsite and at customer offices. The
EDR is the base product from which all other wellsite
instrumentation products are linked. By linking these products, a
number of otherwise redundant elements such as data processing,
display, storage, and networking are eliminated. This ensures
greater reliability and a more robust system of instrumentation for
the customer.
Total revenue decreased by 12% in the third quarter of 2019
compared to the corresponding period in 2018. This decrease is
mostly attributable to a decline in Canada and US drilling activity, offset by a
market share increase in the US combined with increases in revenue
per EDR day in all three operating segments.
Industry activity in the US market decreased by 14% in the third
quarter of 2019 compared to the corresponding period in 2018, while
third quarter Canadian industry activity decreased by 37%.
US EDR days decreased by 12% in the third quarter of 2019
compared to the corresponding period in 2018, while Canadian EDR
days, which includes non-oil and gas-related activity, decreased
39% from 2018 levels.
In the third quarter of 2019, the Pason EDR was installed on 63%
of the land rigs in the US market, an increase of 200bps over the
same time period in 2018.
In the third quarter of 2019, the Pason EDR was installed on 81%
of the land rigs in the Canadian market, a decrease of 400bps over
the same period in 2018. For the purposes of market share, the
Company uses the number of EDR days billed and oil and gas drilling
days as reported by accepted industry sources.
For the third quarter of 2019, the Company saw an increase in
revenue in all major regions of the International business unit
with the largest absolute increases in Australia.
Communication revenue decreased 36% in the third quarter of 2019
compared to the corresponding period in 2018. In the Company's
major operating segments, wellsite communications have been
transitioning from satellite to terrestrial bandwidth. The
transition has resulted in a lower rental service cost to Pason
with cost savings shared with its customers.
Drilling intelligence revenue decreased 28% in the third quarter
of 2019 compared to the corresponding period in 2018 as a result of
the decrease in drilling activity in the North American markets as
well as the mix of rig types and customers which were active in the
period.
Discussion of Operations
United States Operations
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
Drilling
Data
|
26,980
|
29,640
|
(9)
|
85,398
|
80,311
|
6
|
Mud Management and
Safety
|
15,918
|
15,274
|
4
|
50,173
|
43,153
|
16
|
Communications
|
2,712
|
4,099
|
(34)
|
9,042
|
11,997
|
(25)
|
Drilling
Intelligence
|
2,773
|
3,774
|
(27)
|
9,053
|
8,827
|
3
|
Analytics and
Other
|
1,417
|
1,382
|
3
|
4,230
|
4,267
|
(1)
|
Total
revenue
|
49,800
|
54,169
|
(8)
|
157,896
|
148,555
|
6
|
Rental services
and local administration
|
19,383
|
18,317
|
6
|
58,723
|
52,657
|
12
|
Depreciation and
amortization
|
4,535
|
4,200
|
8
|
14,371
|
12,128
|
18
|
Segment gross
profit
|
25,882
|
31,652
|
(18)
|
84,802
|
83,770
|
1
|
|
Current period
amounts are in accordance with IFRS following the adoption of IFRS
16, Leases as discussed in Note 3 in the Consolidated Financial
Statements. Prior periods have not been restated.
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
(%)
|
2019
|
2018
|
(%)
|
(000s)
|
(#)
|
(#)
|
|
(#)
|
(#)
|
|
Electronic Drilling
Recorder (EDR) Rental Days
|
50,800
|
57,500
|
(12)
|
160,100
|
164,700
|
(3)
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
(%)
|
2019
|
2018
|
(%)
|
|
($)
|
($)
|
|
($)
|
($)
|
|
Revenue per EDR day -
USD
|
736
|
716
|
3
|
736
|
694
|
6
|
Revenue per EDR day -
CAD
|
972
|
936
|
4
|
978
|
893
|
10
|
Revenue from the US operations decreased by 8% in the third
quarter of 2019 over the 2018 comparable period (9% when measured
in USD).
Industry activity in the US market decreased by 14% in the third
quarter of 2019 over the 2018 comparable period as US producers
continue to take a more conservative approach to the deployment of
capital, with weakness accelerating during the latter part of the
quarter. Active rig count declined in most major plays.
On a year to date basis, industry activity in the US market
decreased by 4%.
US market share was 63% for the third quarter of 2019 compared
to 61% during the same period in 2018.
EDR rental days decreased by 12% in the third quarter of 2019
over the 2018 comparable period. Revenue per EDR day increased to
US$736 in the third quarter of 2019,
an increase of US$20 over the same
period in 2018. The increase in revenue per EDR day was driven by
higher adoption of peripheral products.
Rental services and local administration increased by 6% in the
third quarter of 2019 over the 2018 comparative period (7% when
measured in USD). The increase in operating costs is attributable
mostly to higher field staff levels to support the additional
activity in the latter half of 2018 and the early stages of 2019
combined with repair costs which were previously committed.
Included in these costs are administrative expenses relating to
Pason Power, which increased approximately $0.3 million over 2018 levels.
Depreciation expense increased by 8% in the third quarter of
2019 over the 2018 comparative period. The majority of the increase
is due to the adoption of IFRS 16, Leases and an up-tick in capital
expenditures.
Canadian Operations
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
Drilling
Data
|
5,581
|
7,804
|
(28)
|
17,315
|
21,904
|
(21)
|
Mud Management and
Safety
|
3,498
|
5,333
|
(34)
|
10,477
|
14,956
|
(30)
|
Communications
|
1,752
|
3,028
|
(42)
|
5,104
|
8,303
|
(39)
|
Drilling
Intelligence
|
2,012
|
2,869
|
(30)
|
5,681
|
6,104
|
(7)
|
Analytics and
Other
|
1,003
|
981
|
2
|
2,997
|
2,837
|
6
|
Total
revenue
|
13,846
|
20,015
|
(31)
|
41,574
|
54,104
|
(23)
|
Rental services
and local administration
|
5,301
|
6,046
|
(12)
|
15,883
|
19,510
|
(19)
|
Depreciation and
amortization
|
4,285
|
3,900
|
10
|
12,664
|
12,508
|
1
|
Segment gross
profit
|
4,260
|
10,069
|
(58)
|
13,027
|
22,086
|
(41)
|
|
Current period
amounts are in accordance with IFRS following the adoption of IFRS
16, Leases as discussed in Note 3 in the Consolidated Financial
Statements. Prior periods have not been restated.
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
(000s)
|
(#)
|
(#)
|
(%)
|
(#)
|
(#)
|
(%)
|
Electronic Drilling
Recorder (EDR) Rental Days
|
9,800
|
16,100
|
(39)
|
31,700
|
45,500
|
(30)
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
|
2019
|
2018
|
Change
|
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue per EDR day -
CAD
|
1,325
|
1,191
|
11
|
1,228
|
1,133
|
8
|
Canadian drilling activity in the third quarter of 2019
decreased by 37% relative to the same period in 2018, while EDR
rental days decreased 39% in the third quarter of 2019 compared to
2018. On a year to date basis, Canadian drilling activity has
decreased 32%. The decrease in drilling activity was impacted by
continued spending constraints and unfavourable weather in several
regions. Third quarter 2019 activity is at the lowest levels in
over 25 years.
Revenue in the Canadian business unit decreased by 31% in the
third quarter of 2019 over the 2018 comparative period. Canadian
market share was 81% for the third quarter of 2019 compared to 85%
during the same period of 2018.
Revenue per EDR day increased by $134 to $1,325
during the third quarter of 2019 compared to the same period in
2018. The increase is driven by continued acceptance of drilling
intelligence products and increased data delivery
functionality.
Rental services and local administration decreased by 12% in the
third quarter of 2019 relative to the same period in 2018,
primarily due to the bandwidth cost savings the Company has
achieved in its communications category and the implementation of
cost saving measures.
Depreciation and amortization expense increased by 10% in the
third quarter of 2019 over the 2018 comparative period. The
majority of the increase is due to the adoption of IFRS 16, Leases
and the Company initiating the amortization of previously deferred
research and development projects.
Segment gross profit for the third quarter of 2019 decreased 58%
to $4.3 million compared to
$10.1 million in segment gross profit
in the 2018 comparative period.
International Operations
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
Drilling
Data
|
5,210
|
4,646
|
12
|
17,580
|
12,590
|
40
|
Mud Management and
Safety
|
1,827
|
1,692
|
8
|
5,409
|
4,754
|
14
|
Communications
|
319
|
377
|
(15)
|
1,176
|
1,113
|
6
|
Drilling
Intelligence
|
356
|
468
|
(24)
|
968
|
1,135
|
(15)
|
Analytics and
Other
|
837
|
977
|
(14)
|
2,629
|
2,177
|
21
|
Total
revenue
|
8,549
|
8,160
|
5
|
27,762
|
21,769
|
28
|
Rental services
and local administration
|
4,525
|
4,434
|
2
|
15,371
|
13,882
|
11
|
Depreciation and
amortization
|
1,097
|
804
|
36
|
3,082
|
2,663
|
16
|
Segment gross
profit
|
2,927
|
2,922
|
—
|
9,309
|
5,224
|
78
|
|
Current period
amounts are in accordance with IFRS following the adoption of IFRS
16, Leases as discussed in Note 3 in the Consolidated Financial
Statements. Prior periods have not been restated.
|
In 2018, management concluded that its Argentinian subsidiary is
operating in a hyperinflationary economy. As a result of applying
hyperinflation accounting to the operating results of this
subsidiary, revenue and segment gross profit for the three months
and nine months ended September 30,
2019, was reduced by approximately $1,747 and $950
respectively. The 2018 impact was not material.
Drilling activity increased in Australia and the Andean region in the third
quarter of 2019 over 2018 levels. Revenue increased in all of the
Company's international markets, with the majority of the absolute
gains seen in Australia.
Revenue in the International business unit increased by 5% in
the third quarter of 2019 compared to the same period in 2018.
Rental services and local administration expenses increased by
2% in the third quarter of 2019 compared to the same period in
2018. Depreciation expense increased by 36% in the third quarter of
2019 compared to the same period in 2018 as a result of higher
capital expenditures incurred to support additional activity.
Segment gross profit was $2.9
million for the third quarter of 2019, unchanged from the
same period in 2018.
Corporate Expenses
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
Change
|
2019
|
2018
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Other
expenses
|
|
|
|
|
|
|
Research and
development
|
7,564
|
6,711
|
13
|
22,969
|
19,687
|
17
|
Corporate
services
|
3,865
|
4,363
|
(11)
|
11,413
|
12,008
|
(5)
|
Stock-based
compensation
|
2,446
|
2,589
|
(6)
|
9,359
|
8,978
|
4
|
Other
|
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
615
|
(1,516)
|
(141)
|
1,269
|
6,675
|
(81)
|
Net interest expense -
lease liability
|
159
|
—
|
—
|
404
|
—
|
—
|
Interest income -
short term investments
|
(258)
|
—
|
—
|
(726)
|
—
|
—
|
Derecognition of lease
receivable
|
—
|
—
|
—
|
4,289
|
—
|
—
|
Net monetary
adjustment
|
(2,376)
|
—
|
—
|
(2,376)
|
—
|
—
|
Other
|
151
|
(644)
|
(123)
|
483
|
(458)
|
—
|
Total corporate
expenses
|
12,166
|
11,503
|
6
|
47,084
|
46,890
|
—
|
|
Current period
amounts are in accordance with IFRS following the adoption of IFRS
16, Leases as discussed in Note 3 in the Consolidated Financial
Statements. Prior periods have not been restated.
|
Research and development expenses increased in the third quarter
of 2019 over the 2018 comparative period. This is due to a greater
proportion of research and development project costs being expensed
for accounting purposes and the Company's continued transition
towards more cloud-based IT infrastructure.
The majority of the decrease in corporate service costs is due
to the adoption of IFRS 16, Leases.
In 2018, the Company commenced applying IAS 29, Financial
Reporting in Hyperinflationary Economies for its Argentina subsidiary. Accordingly, the
application of hyperinflation accounting has been applied to the
non-monetary assets and liabilities, and shareholders' equity of
the Argentina subsidiary. In the
third quarter of 2019, a non-cash net monetary gain of $2,376 was recorded. The impact of applying this
accounting standard on 2018 amounts was not material.
In July 2019, the Company was
notified that the tenant that was leasing the Company's previous
office space in Colorado, USA
filed for Chapter 7 bankruptcy. As a result, the Company
derecognized the lease receivable that it had previously recorded
and reported a non-cash charge of $4.3
million in the second quarter of 2019. Management intends to
initiate the process of finding a tenant for the remaining lease
term.
The Company recorded an unrealized foreign exchange loss in the
third quarter of 2018 on inter-company advances made to the
Company's Argentinian subsidiary as a result of a significant
devaluation of the Argentina peso
relative to the Canadian dollar.
Q3 2019 vs Q2 2019
Consolidated revenue was $72.2
million in the third quarter of 2019 compared to
$72.9 million in the second quarter
of 2019, a decrease of $0.7 million.
The second quarter of the year is typically the weakest for the
Company due to the seasonality of Canadian drilling activity.
Revenue in the US business unit was $49.8
million in the third quarter of 2019 compared to
$53.6 million in the second quarter
of 2019. Sequentially, EDR rental days decreased 5% while industry
activity declined 6%. Revenue per EDR day decreased slightly. US
market share increased 100bps to 63%.
Revenue in the Canadian business unit was $13.8 million in the third quarter of 2019
compared to $9.2 million in the
second quarter of 2019. Revenue per EDR day increased by
$35.
The International business unit reported revenue of $8.5 million in the third quarter of 2019
compared to $10.0 million in the
second quarter of 2019. Third quarter revenue was negatively
impacted by a $1.7 million adjustment
to the application of hyperinflation accounting in Argentina.
Adjusted EBITDA, which adjusts EBITDA for foreign exchange and
certain non-recurring charges, was $31.6
million in the third quarter of 2019 compared to
$30.7 million in the second quarter
of 2019. Funds flow from operations was $29.9 million in the third quarter of 2019
compared to $23.8 million in the
second quarter of 2019.
The Company recorded net income in the third quarter of 2019 of
$15.4 million ($0.18 per share) compared to net income of
$9.2 million ($0.11 per share) in the second quarter of
2019.
Condensed Consolidated Interim Balance Sheets
As
at
|
September 30,
2019
|
December 31,
2018
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
Assets
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
180,865
|
203,838
|
Trade and other
receivables
|
65,903
|
80,020
|
Income tax recoverable
- other
|
15,304
|
15,304
|
Prepaid
expenses
|
3,813
|
3,934
|
Income taxes
recoverable
|
1,937
|
6,203
|
Total current
assets
|
267,822
|
309,299
|
Non-current
|
|
|
Property, plant and
equipment
|
122,471
|
120,417
|
Intangible assets and
goodwill
|
55,869
|
32,000
|
Total non-current
assets
|
178,340
|
152,417
|
Total
assets
|
446,162
|
461,716
|
|
|
|
Liabilities and
equity
|
|
|
Current
|
|
|
Trade payables and
accruals
|
27,768
|
34,229
|
Income taxes payable -
other
|
—
|
15,304
|
Stock-based
compensation liability
|
6,918
|
3,301
|
Lease
liability
|
2,926
|
312
|
Total current
liabilities
|
37,612
|
53,146
|
Non-current
|
|
|
Deferred tax
liabilities
|
10,008
|
17,060
|
Lease
liability
|
12,297
|
2,233
|
Stock-based
compensation liability
|
5,580
|
3,200
|
Gross obligation under
put option
|
9,923
|
—
|
Total non-current
liabilities
|
37,808
|
22,493
|
Equity
|
|
|
Share
capital
|
167,827
|
164,723
|
Share-based benefits
reserve
|
29,922
|
27,287
|
Foreign currency
translation reserve
|
61,781
|
63,574
|
Equity
reserve
|
(9,079)
|
—
|
Retained
earnings
|
119,047
|
130,493
|
Total equity
attributable to shareholders
|
369,498
|
386,077
|
Non-controlling
interest
|
1,244
|
—
|
Total
equity
|
370,742
|
386,077
|
Total liabilities
and equity
|
446,162
|
461,716
|
Condensed Consolidated Interim Statements of
Operations
|
Three Months Ended
September
30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
72,195
|
82,344
|
227,232
|
224,428
|
Operating
expenses
|
|
|
|
|
Rental
services
|
25,779
|
25,648
|
79,837
|
76,896
|
Local
administration
|
3,430
|
3,149
|
10,140
|
9,153
|
Depreciation and
amortization
|
9,917
|
8,904
|
30,117
|
27,299
|
|
39,126
|
37,701
|
120,094
|
113,348
|
|
|
|
|
|
Gross
profit
|
33,069
|
44,643
|
107,138
|
111,080
|
Other
expenses
|
|
|
|
|
Research and
development
|
7,564
|
6,711
|
22,969
|
19,687
|
Corporate
services
|
3,865
|
4,363
|
11,413
|
12,008
|
Stock-based
compensation expense
|
2,446
|
2,589
|
9,359
|
8,978
|
Other
expense
|
(1,709)
|
(2,160)
|
3,343
|
6,217
|
|
12,166
|
11,503
|
47,084
|
46,890
|
|
|
|
|
|
Income before
income taxes
|
20,903
|
33,140
|
60,054
|
64,190
|
Income tax
provision
|
5,485
|
8,754
|
16,347
|
21,966
|
Net
income
|
15,418
|
24,386
|
43,707
|
42,224
|
Income per
share
|
|
|
|
|
Basic
|
0.18
|
0.29
|
0.51
|
0.50
|
Diluted
|
0.18
|
0.28
|
0.51
|
0.49
|
Condensed Consolidated Interim Statements of Other
Comprehensive Income
|
Three Months Ended
September
30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Net
income
|
15,418
|
24,386
|
43,707
|
42,224
|
Items that may be
reclassified subsequently to net
income:
|
|
|
|
|
Tax recovery (expense)
on net investment in
foreign operations related to an inter-company
financing
|
—
|
632
|
10,481
|
(1,134)
|
Foreign currency
translation adjustment
|
819
|
(9,813)
|
(12,274)
|
8,841
|
Other
comprehensive gain (loss)
|
819
|
(9,181)
|
(1,793)
|
7,707
|
Total
comprehensive income
|
16,237
|
15,205
|
41,914
|
49,931
|
Condensed Consolidated Interim Statements of Cash
Flows
|
Three Months Ended
September
30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Cash from (used
in) operating activities
|
|
|
|
|
Net income
|
15,418
|
24,386
|
43,707
|
42,224
|
Adjustment for
non-cash items:
|
|
|
|
|
Depreciation and
amortization
|
9,917
|
8,904
|
30,117
|
27,299
|
Stock-based
compensation
|
2,446
|
2,589
|
9,359
|
8,978
|
Deferred income
taxes
|
2,101
|
1,328
|
3,520
|
11,992
|
Derecognition of lease
receivable
|
—
|
—
|
4,289
|
—
|
Unrealized foreign
exchange loss (gain) and other
|
1,523
|
(1,168)
|
106
|
7,340
|
Hyperinflationary
adjustment
|
(1,506)
|
—
|
(1,506)
|
—
|
Funds flow from
operations
|
29,899
|
36,039
|
89,592
|
97,833
|
Movements in non-cash
working capital items:
|
|
|
|
|
Decrease (increase) in
trade and other receivables
|
4,922
|
(11,941)
|
9,021
|
(18,688)
|
Decrease in prepaid
expenses
|
(1,066)
|
(1,374)
|
(45)
|
(99)
|
Increase in income
taxes
|
3,476
|
10,324
|
4,699
|
11,594
|
Increase (decrease) in
trade payables, accruals
and stock-based compensation liability
|
2,270
|
2,989
|
(3,894)
|
2,011
|
Effects of exchange
rate changes
|
(1,850)
|
(75)
|
(262)
|
235
|
Cash generated
from operating activities
|
37,651
|
35,962
|
99,111
|
92,886
|
Income tax
paid
|
(198)
|
(4,153)
|
(15,278)
|
(9,116)
|
Net cash from
operating activities
|
37,453
|
31,809
|
83,833
|
83,770
|
Cash flows from
(used in) financing activities
|
|
|
|
|
Proceeds from issuance
of common shares
|
239
|
993
|
3,366
|
4,665
|
Payment of
dividends
|
(16,199)
|
(15,378)
|
(47,055)
|
(44,349)
|
Repurchase and
cancellation of shares under
Normal Course Issuer Bid
|
(1,944)
|
—
|
(13,063)
|
—
|
Repayment of lease
liability
|
(840)
|
—
|
(1,893)
|
—
|
Net cash used in
financing activities
|
(18,744)
|
(14,385)
|
(58,645)
|
(39,684)
|
Cash flows (used
in) from investing activities
|
|
|
|
|
Acquisition
|
(23,830)
|
—
|
(23,830)
|
—
|
Additions to property,
plant and equipment
|
(3,398)
|
(3,819)
|
(17,482)
|
(12,144)
|
Development
costs
|
(660)
|
(1,039)
|
(1,109)
|
(3,282)
|
Proceeds on disposal
of investment and property,
plant and equipment
|
188
|
92
|
806
|
188
|
Purchase of short-term
investments
|
—
|
—
|
—
|
(65,840)
|
Changes in non-cash
working capital
|
(516)
|
(163)
|
(49)
|
387
|
Net cash used in
investing activities
|
(28,216)
|
(4,929)
|
(41,664)
|
(80,691)
|
Effect of exchange
rate on cash and cash
equivalents
|
1,239
|
(4,075)
|
(6,497)
|
2,238
|
Net (decrease)
increase in cash and cash
equivalents
|
(8,268)
|
8,420
|
(22,973)
|
(34,367)
|
Cash and cash
equivalents, beginning of period
|
189,133
|
111,342
|
203,838
|
154,129
|
Cash and cash
equivalents, end of period
|
180,865
|
119,762
|
180,865
|
119,762
|
Operating Segments
The Company operates in three geographic segments: Canada, the United
States, and International (Latin
America, Offshore, the Eastern Hemisphere, and the
Middle East). The following table
represents a disaggregation of revenue from contracts with
customers along with the reportable segment for each category:
Three Months Ended
September 30, 2019
|
Canada
|
United
States
|
International
|
Total
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
Drilling
Data
|
5,581
|
26,980
|
5,210
|
37,771
|
Mud Management and
Safety
|
3,498
|
15,918
|
1,827
|
21,243
|
Communications
|
1,752
|
2,712
|
319
|
4,783
|
Drilling
Intelligence
|
2,012
|
2,773
|
356
|
5,141
|
Analytics and
Other
|
1,003
|
1,417
|
837
|
3,257
|
Total
Revenue
|
13,846
|
49,800
|
8,549
|
72,195
|
Rental services and
local administration
|
5,301
|
19,383
|
4,525
|
29,209
|
Depreciation and
amortization
|
4,285
|
4,535
|
1,097
|
9,917
|
Segment gross
profit
|
4,260
|
25,882
|
2,927
|
33,069
|
Research and
development
|
|
|
|
7,564
|
Corporate
services
|
|
|
|
3,865
|
Stock-based
compensation
|
|
|
|
2,446
|
Other
income
|
|
|
|
(1,709)
|
Income tax
expense
|
|
|
|
5,485
|
Net Income
|
|
|
|
15,418
|
Capital
expenditures
|
1,042
|
2,125
|
891
|
4,058
|
As at September
30, 2019
|
|
|
|
|
Property plant and
equipment
|
40,759
|
66,396
|
15,316
|
122,471
|
Intangible assets and
goodwill
|
17,148
|
36,121
|
2,600
|
55,869
|
Segment
assets
|
112,971
|
278,619
|
54,572
|
446,162
|
Segment
liabilities
|
28,321
|
41,033
|
6,066
|
75,420
|
Three Months Ended
September 30, 2018
|
Canada
|
United
States
|
International
|
Total
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
Drilling
Data
|
7,804
|
29,640
|
4,646
|
42,090
|
Mud Management and
Safety
|
5,333
|
15,274
|
1,692
|
22,299
|
Communications
|
3,028
|
4,099
|
377
|
7,504
|
Drilling
Intelligence
|
2,869
|
3,774
|
468
|
7,111
|
Analytics and
Other
|
981
|
1,382
|
977
|
3,340
|
Total
Revenue
|
20,015
|
54,169
|
8,160
|
82,344
|
Rental services and
local administration
|
6,046
|
18,317
|
4,434
|
28,797
|
Depreciation and
amortization
|
3,900
|
4,200
|
804
|
8,904
|
Segment gross
profit
|
10,069
|
31,652
|
2,922
|
44,643
|
Research and
development
|
|
|
|
6,711
|
Corporate
services
|
|
|
|
4,363
|
Stock-based
compensation
|
|
|
|
2,589
|
Other
income
|
|
|
|
(2,160)
|
Income tax
expense
|
|
|
|
8,754
|
Net income
|
|
|
|
24,386
|
Capital
expenditures
|
1,285
|
2,298
|
1,275
|
4,858
|
As at September
30, 2018
|
|
|
|
|
Property plant and
equipment
|
38,216
|
65,503
|
13,604
|
117,323
|
Intangible assets and
goodwill
|
22,349
|
7,428
|
2,600
|
32,377
|
Segment
assets
|
112,550
|
271,754
|
45,380
|
429,684
|
Segment
liabilities
|
48,696
|
15,145
|
4,575
|
68,416
|
Nine Months Ended
September 30, 2019
|
Canada
|
United
States
|
International
|
Total
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
Drilling
Data
|
17,315
|
85,398
|
17,580
|
120,293
|
Mud Management and
Safety
|
10,477
|
50,173
|
5,409
|
66,059
|
Communications
|
5,104
|
9,042
|
1,176
|
15,322
|
Drilling
Intelligence
|
5,681
|
9,053
|
968
|
15,702
|
Analytics and
Other
|
2,997
|
4,230
|
2,629
|
9,856
|
Total
Revenue
|
41,574
|
157,896
|
27,762
|
227,232
|
Rental services and
local administration
|
15,883
|
58,723
|
15,371
|
89,977
|
Depreciation and
amortization
|
12,664
|
14,371
|
3,082
|
30,117
|
Segment gross
profit
|
13,027
|
84,802
|
9,309
|
107,138
|
Research and
development
|
|
|
|
22,969
|
Corporate
services
|
|
|
|
11,413
|
Stock-based
compensation
|
|
|
|
9,359
|
Other
expense
|
|
|
|
3,343
|
Income tax
expense
|
|
|
|
16,347
|
Net Income
|
|
|
|
43,707
|
Capital
expenditures
|
2,538
|
13,297
|
2,756
|
18,591
|
As at September
30, 2019
|
|
|
|
|
Property plant and
equipment
|
40,759
|
66,396
|
15,316
|
122,471
|
Intangible assets and
goodwill
|
17,148
|
36,121
|
2,600
|
55,869
|
Segment
assets
|
112,971
|
278,619
|
54,572
|
446,162
|
Segment
liabilities
|
28,321
|
41,033
|
6,066
|
75,420
|
Nine Months Ended
September 30, 2018
|
Canada
|
United
States
|
International
|
Total
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
Drilling
Data
|
21,904
|
80,311
|
12,590
|
114,805
|
Mud Management and
Safety
|
14,956
|
43,153
|
4,754
|
62,863
|
Communications
|
8,303
|
11,997
|
1,113
|
21,413
|
Drilling
Intelligence
|
6,104
|
8,827
|
1,135
|
16,066
|
Analytics and
Other
|
2,837
|
4,267
|
2,177
|
9,281
|
Total
Revenue
|
54,104
|
148,555
|
21,769
|
224,428
|
Rental services and
local administration
|
19,510
|
52,657
|
13,882
|
86,049
|
Depreciation and
amortization
|
12,508
|
12,128
|
2,663
|
27,299
|
Segment gross
profit
|
22,086
|
83,770
|
5,224
|
111,080
|
Research and
development
|
|
|
|
19,687
|
Corporate
services
|
|
|
|
12,008
|
Stock-based
compensation
|
|
|
|
8,978
|
Other
expense
|
|
|
|
6,217
|
Income tax
expense
|
|
|
|
21,966
|
Net Income
|
|
|
|
42,224
|
Capital
expenditures
|
4,336
|
9,097
|
1,993
|
15,426
|
As at September
30, 2018
|
|
|
|
|
Property plant and
equipment
|
38,216
|
65,503
|
13,604
|
117,323
|
Intangible assets and
goodwill
|
22,349
|
7,428
|
2,600
|
32,377
|
Segment
assets
|
112,550
|
271,754
|
45,380
|
429,684
|
Segment
liabilities
|
48,696
|
15,145
|
4,575
|
68,416
|
Other (Income) Expense
|
Three Months Ended
September
30,
|
Nine Months Ended
September 30,
|
|
2019
|
2018
|
2019
|
2018
|
(CDN 000s)
(unaudited)
|
($)
|
($)
|
($)
|
($)
|
Foreign exchange loss
(gain)
|
615
|
(1,516)
|
1,269
|
6,675
|
Net interest expense
- lease liabilities
|
159
|
—
|
404
|
—
|
Interest income -
short term investments
|
(258)
|
—
|
(726)
|
—
|
Derecognition of
lease receivable
|
—
|
—
|
4,289
|
—
|
Net monetary
gain
|
(2,376)
|
—
|
(2,376)
|
—
|
Other
|
151
|
(644)
|
483
|
(458)
|
Other (income)
expense
|
(1,709)
|
(2,160)
|
3,343
|
6,217
|
Net interest expense - lease liabilities is a result of the
adoption of IFRS 16, Leases.
In 2018, the Company commenced applying IAS 29, Financial
Reporting in Hyperinflationary Economies for its Argentina subsidiary. Accordingly, the
application of hyperinflation accounting has been applied to the
non-monetary assets and liabilities, and shareholders' equity of
the Argentina subsidiary. In the
third quarter of 2019, a non-cash net monetary gain of $2,376 was recorded. The impact of applying this
accounting standard on 2018 amounts was not material.
In July 2019, the Company was
notified that the tenant that was leasing the Company's previous
office space in Colorado, USA
filed for Chapter 7 bankruptcy. As a result, the Company
derecognized the lease receivable that it had previously recorded
and reported a non-cash charge in the second quarter of 2019.
The Company recorded an unrealized foreign exchange loss in the
second quarter of 2018 on inter-company advances made to the
Company's Argentinian subsidiary as a result of a significant
devaluation of the Argentina peso
relative to the Canadian dollar.
Acquisition
On September 10, 2019, a US
subsidiary of the Company, Pason US Holdings Corp. ("Holdco")
entered into an agreement with Energy Toolbase LLC (ETB LLC),
whereby Holdco and ETB LLC formed Energy Toolbase Software Inc (ETB
Inc). ETB LLC is a private, US-based software-as-a-service
(SaaS) company in the software development of a platform that
specializes in modeling and proposing the economics of solar PV and
energy storage projects.
For further details on the acquisition, see note 7 of the
Company's Condensed Consolidated Interim Financial
Statements.
Events After the Reporting Period
On October 2, 2019 the Company
announced that it has entered into an agreement to invest
$25,000 to acquire a minority
interest in Intelligent Wellhead Systems Inc. (IWS). IWS is a
privately-owned oil and gas technology and service company that
provides proprietary and unique surface control systems for various
markets globally, including unconventional shale, subsea
intervention, critical well intervention, and offshore
operations.
On November 6, 2019, the Company announced a quarterly
dividend of $0.19 per share on the
Company's common shares. The dividend will be paid on December 30, 2019 to shareholders of record at
the close of business on December 16,
2019.
Third Quarter Conference Call
Pason will be conducting a conference call for interested
analysts, brokers, investors and media representatives to review
its third quarter 2019 results at 9:00
am (Calgary time) on
Thursday, November 7, 2019. The
conference call dial-in number is 1-888-231-8191 or 1-647-427-7450.
You can access the seven-day replay by dialing 1-855-859-2056 or
1-416-849-0833, using password 5875214.
Pason Systems Inc. is a leading global provider of specialized
data management systems for drilling rigs. Our solutions, which
include data acquisition, wellsite reporting, remote
communications, web-based information management, and analytics,
enable collaboration between the rig and the office. Pason's common
shares trade on the Toronto Stock Exchange under the symbol
PSI.
Additional information, including the Company's Annual Report
and Annual Information Form for the year ended December 31, 2018, is available on SEDAR at
www.sedar.com or on the Company's website at
www.pason.com.
Pason Systems Inc.
Pason Systems Inc. is a leading global provider of specialized
data management systems for drilling rigs. Our solutions, which
include data acquisition, wellsite reporting, remote
communications, and web-based information management, enable
collaboration between the rig and the office. Pason's common shares
trade on the Toronto Stock Exchange under the symbol PSI.TO.
Certain information regarding the Company contained herein may
constitute forward-looking information under applicable securities
law. The words "anticipate", "expect", "believe", "may", "should",
"will", "estimate", "project", "outlook", "forecast" or other
similar words are used to identify such forward-looking information
and statements. Forward-looking statements in this document may
include statements, express or implied regarding the anticipated
business prospects and financial performance of Pason; expectations
or projections about future strategies and goals for growth and
expansion; expected and future cash flows and revenues; and
expected impact of future commitments. These forward-looking
statements are based upon various underlying factors and
assumptions, including the state of the economy and the oil and gas
exploration and production business, in particular; the Company's
business prospects and opportunities; and estimates of the
financial and operational performance of Pason.
Forward-looking information and statements are subject to known
or unknown risks and uncertainties that may cause actual results to
differ materially from those anticipated or implied in the
forward-looking information and statements. Risk factors that could
cause actual results or events to differ materially from current
expectations include, among others, the ability of Pason to
successfully implement its strategic initiatives and whether such
strategic initiatives will yield the expected benefits, the
operating performance of Pason's assets and businesses, the price
of energy commodities, competitive factors in the energy industry,
changes in laws and regulations affecting Pason's businesses,
technological developments, and general economic conditions.
Readers are cautioned not to place undue reliance on
forward-looking statements as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such forward looking statements, although considered
reasonable by management as of the date hereof, may prove to be
incorrect and actual results may differ materially from those
anticipated. Forward-looking statements contained in this press
release are expressly qualified by this cautionary statement.
Additional information on risks and uncertainties and other
factors that could affect Pason's operations or financial results
are included in Pason's reports on file with the Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) or through Pason's website
(www.pason.com). Furthermore, any forward looking statements
contained in this news release are made as of the date of this news
release, and Pason does not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by securities law.
SOURCE Pason Systems Inc.