CALGARY, AB, Feb. 22, 2022 /CNW/ - Pason Systems Inc.
("Pason" or the "Company") (TSX: PSI) announced today its 2021
fourth quarter results and an increase in its quarterly dividend.
The following news release should be read in conjunction with the
Company's Management Discussion and Analysis ("MD&A"), the
audited consolidated financial statements and related notes for the
year ended December 31, 2021, as well as the Annual
Information Form for the year ended December
31, 2020. All of these documents are available on SEDAR at
www.sedar.com.
Financial Highlights
|
Three Months Ended
December 31,
|
Twelve Months
Ended December 31,
|
|
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
(CDN 000s, except per
share data)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
North American
Revenue
|
50,477
|
26,318
|
92
|
166,090
|
131,379
|
26
|
International
Revenue
|
11,182
|
5,738
|
95
|
36,489
|
21,903
|
67
|
Solar and Energy
Storage Revenue
|
1,174
|
702
|
67
|
4,107
|
3,354
|
22
|
Total
Revenue
|
62,833
|
32,758
|
92
|
206,686
|
156,636
|
32
|
EBITDA
(1)
|
26,874
|
8,300
|
224
|
82,401
|
48,388
|
70
|
Adjusted EBITDA
(1)
|
24,208
|
8,201
|
195
|
72,520
|
39,540
|
83
|
As a % of
revenue
|
38.5
|
25.0
|
1,350
bps
|
35.1
|
25.2
|
990 bps
|
Funds flow from
operations
|
19,353
|
8,939
|
117
|
67,728
|
40,560
|
67
|
Per share –
basic
|
0.23
|
0.11
|
120
|
0.82
|
0.48
|
71
|
Per share –
diluted
|
0.23
|
0.11
|
120
|
0.82
|
0.48
|
71
|
Cash from operating
activities
|
27,061
|
(2,717)
|
nmf
|
65,061
|
58,583
|
11
|
Capital
expenditures
|
3,346
|
465
|
620
|
10,920
|
5,159
|
112
|
Free cash flow
(1)
|
23,990
|
(3,100)
|
nmf
|
55,111
|
53,864
|
2
|
Cash dividends
declared (per share)
|
0.05
|
0.05
|
—
|
0.20
|
0.48
|
(58)
|
Net income
(loss)
|
10,279
|
(2,662)
|
nmf
|
31,925
|
5,134
|
522
|
Net income (loss)
attributable to Pason
|
11,149
|
(2,166)
|
nmf
|
33,845
|
6,568
|
415
|
Per share –
basic
|
0.14
|
(0.03)
|
nmf
|
0.41
|
0.08
|
423
|
Per share –
diluted
|
0.14
|
(0.03)
|
nmf
|
0.41
|
0.08
|
423
|
(1)
|
Non-GAAP financial
measures are defined under Non-GAAP Financial Measures in this
press release.
|
|
|
|
|
As at
|
December 31,
2021
|
December 31,
2020
|
Change
|
(CDN 000s)
|
($)
|
($)
|
(%)
|
Cash and cash
equivalents
|
158,283
|
149,282
|
6
|
Working
capital
|
184,083
|
167,366
|
10
|
Total interest
bearing debt
|
—
|
—
|
—
|
Shares outstanding
end of period
|
82,194,051
|
83,088,941
|
(1)
|
Pason's financial results for the three and twelve months ended
December 31, 2021, reflect the Company's strong competitive
positioning, prudent balance sheet, and operating leverage as
industry conditions improved from the lows experienced in 2020.
Pason generated $62.8 million in
revenue in the fourth quarter of 2021, which represents a 92%
increase from the $32.8 million
generated in the fourth quarter of 2020 as drilling activity
improved significantly in Pason's operating regions.
Industry conditions in North
America continued to improve in the fourth quarter of 2021,
with an 83% increase in industry activity compared to the fourth
quarter of 2020. Outpacing the improvement in industry activity,
the North American business unit generated $50.5 million of revenue in the fourth quarter of
2021, a 92% increase from $26.3
million in the comparative 2020 period. Revenue per Industry
day was $767 in Q4 2021, an increase
of 6% from the comparable period in 2020 and a record level for the
Company. The year over year increase reflects increased market
share and improved pricing conditions in 2021. North American
segment gross profit was $27.8
million during the fourth quarter of 2021, a 219% increase
from $8.7 million generated in the
fourth quarter of 2020. While the North American segment incurred
incremental operating costs to support higher levels of activity,
including repairs and headcount increases, Q4 2021 results continue
to demonstrate strong operating leverage in the context of
improving activity levels.
The International business unit reported revenue of $11.2 million in the fourth quarter of 2021, an
increase of 95% from $5.7 million
generated in the comparative 2020 period. The increase is due to
increased activity in the international markets that the Company
serves, and higher levels of revenue generated per drilling day
with improved product adoption. International segment gross profit
was $3.6 million during the fourth
quarter of 2021, a 200% increase from $1.2
million generated in the fourth quarter of 2020, also
demonstrating strong operating leverage with improving activity
levels.
Revenue generated by the Solar and Energy Storage business unit
was $1.2 million, an increase of 67%
from the comparative period in 2020 and represented the highest
quarterly revenue level generated for the reporting segment, for
which the majority is comprised of subscription-based software
licenses for the Company's solar energy economic modeling and
proposal generation tools.
Sequentially, Q4 2021 consolidated revenue increased from
$57.7 million generated in Q3 2021 to
$62.8 million in Q4 2021 as the
Company continued to defend its leading market share position in
key markets with improving activity levels.
Pason generated $24.2 million in
Adjusted EBITDA, or 38.5% of revenue in the fourth quarter of 2021,
compared to $8.2 million in the
fourth quarter of 2020 or 25.0% of revenue. In addition to
operating cost increases associated with higher levels of activity
as outlined above, throughout 2021, Pason has made additional
investments in research and development, further improving the
Company's ability to support increasing activity levels, increased
market share and product enhancements. While the Company incurred
these incremental expenses, fourth quarter results continue to
demonstrate the Company's strong operating leverage through
improved industry conditions. The Company recorded net income
attributable to Pason of $11.1
million ($0.14 per share) in
the fourth quarter of 2021 compared to a net loss attributable to
Pason of $2.2 million ($0.03 per share) recorded in the corresponding
period in 2020.
For the year ended December 31,
2021, Pason generated $206.7
million in revenue, an increase of 32% over the 2020
comparative period, and a reflection of the improvement in industry
conditions year over year in all of the Company's end markets.
Resulting Adjusted EBITDA for the year ended December 31, 2021 was $72.5 million, or 35.1% of revenue, an 83%
increase from $48.4 million, or 25.2%
of revenue generated in 2020. The Company recorded net income
attributable to Pason of $33.8
million ($0.41 per share) for
the annual 2021 period, compared to net income attributable to
Pason of $6.6 million ($0.08 per share) recorded in the corresponding
period in 2020.
Pason's balance sheet remains strong with no interest-bearing
debt and $158.3 million in cash and
cash equivalents as at December 31,
2021, compared to $149.3
million as at December 31,
2020. In 2021, Pason generated $65.1
million in net cash from operating activities as the
Company's operating results improved while managing investments in
working capital to meet increased revenue levels. In contrast, 2020
net cash from operating activities of $58.6
million reflects the working capital harvest experienced as
activity levels declined.
Pason remains disciplined on capital spending and in 2021,
incurred $10.9 million of capital
expenditures on updated and additional rental equipment to meet
activity levels. Resulting Free Cash Flow generated in 2021 was
$55.1 million compared to
$53.9 million generated in 2020.
Pason's results in 2021 continue to reinforce the decision to
retain critical technology and service capabilities through the
downturn, putting the Company in a position of strength with a
prudent balance sheet and significant operating leverage as
activity levels recover.
President's Message
Pason's President and Chief Executive Officer Jon Faber stated:
"The fourth quarter of 2021 showed a continuation of the
recovery in oil and gas land drilling that has been under way
since the industry bottomed in the third quarter of 2020.
Throughout the pandemic, Pason has been steadfast in our conviction
that our competitive position would be strengthened by maintaining
and building on our service and technology advantages. Pason's
fourth quarter results again reflected our strengthened competitive
position and improved industry conditions."
"Consolidated revenue of $62.8
million was 92% higher than the fourth quarter of 2020,
outpacing an 83% increase in North American land drilling activity.
North American Revenue per Industry Day of $767 in the fourth quarter marked the highest
level in Pason's history, with market share holding strong above
pre-pandemic levels while pricing and product adoption continue to
recover. Our International business showed strength again in
the fourth quarter, with revenue increasing 95% over the prior
year, and our Solar and Energy Storage segment saw a 67%
year-over-year increase."
"Fourth quarter Adjusted EBITDA was up 195% from the same
quarter of 2020, to $24.2 million. We
continue to make the necessary investments to scale our operations
in anticipation of further industry growth, most notably in the
areas of product repairs and staffing, which will put pressure on
incremental margins in the short term while positioning Pason to
outperform in the medium to longer term."
"Capital expenditures in the fourth quarter totaled $3.3 million as global supply chain shortages and
disruption continued to impact delivery schedules. As a
result, free cash flow came in at $24.0
million for the quarter, compared to negative free cash flow
of $3.1 million in the fourth quarter
of 2020. Pason generated net income of $0.14 per share in the fourth quarter, compared
to a net loss of $0.03 per share in
the prior year period."
"For the full year, consolidated revenue of $206.7 million was 32% higher than 2020, while
Adjusted EBITDA grew 83% to $72.5
million and net income increased 415% to $33.8 million. Capital expenditures for the year
came in at $10.9 million, with the
timing of certain planned equipment purchases being pushed to
2022 due to ongoing supply chain shortages and delays. As
a result, we now expect to spend approximately $30 million in capital expenditures in 2022,
which includes $5.2 million of
planned expenditures carried forward from 2021. We will continue to
evaluate our capital programs in the context of further
opportunities to evolve our product and service offering, while
navigating continued supply chain challenges."
"Our capital allocation priorities remain
unchanged. Investments in our drilling-related business are
focused on sustained growth. We are pursuing additional revenue
growth not directly tied to North American land drilling through
Energy Toolbase (ETB), which focuses on the solar and energy
storage market, and our minority investment in Intelligent Wellhead
Systems (IWS), which participates in the oil and gas completions
market. We remain committed to returning capital shareholders
through our regular dividend and share repurchases. As our cash
flow generation and outlook improves, we are able to increase
shareholder returns and, as such, we are increasing our quarterly
dividend from $0.05 per share to
$0.08 per share."
"Our balance sheet allows us to withstand the inevitable
volatility of North American land drilling and make growth-related
investments. At the end of the fourth quarter, we had $158.3 million in cash and cash equivalents and
$184.1 million of positive working
capital."
"Our outlook remains positive for continued growth in land-based
drilling in North America and
across our international markets. Global demand for oil has
remained resilient even in the face of additional COVID-19 variants
and is now forecast to exceed pre-pandemic levels in 2022. At
the same time, all signs point to further tightening of
supply. US storage levels of crude oil and petroleum products
are the lowest they have been in more than five years and the US
government has approved releases from the Strategic Petroleum
Reserve to combat elevated oil prices. As OPEC+ countries unwind
production cuts, estimates of spare capacity shrink in tandem. US
land production remains approximately 10% below 2019
levels. The inventory of drilled but uncompleted wells (DUCs)
in the US has decreased for each of the last 18 months, and the
current level is the lowest it has been in eight years and below
the minimum sustainable level in the view of industry
observers. Underinvestment in long-term development projects
over the past five years is likely to create further supply gaps in
the future."
"WTI oil prices are trading above US$90 per barrel for the first time in seven
years and industry analysts expect prices to push beyond
$100 per barrel this year. Oil and
gas producers appear to be able to increase spending, while
operating within cash flow and returning capital to shareholders.
We expect the growth in activity to continue its steady climb
through 2022, moderated by ongoing challenges with availability of
labour and equipment."
"Pason is well equipped to participate in continued
industry growth. We have demonstrated our ability to adapt to the
challenges of the pandemic and supply chain disruptions, and we
will continue to ensure we are able to deliver the leading
technologies and unmatched service quality that our customers rely
on as they look to utilize technology to increase their operational
performance" concluded Mr. Faber.
Quarterly Dividend
Pason announced today that the Board of Directors have declared
an increased quarterly dividend of eight cents (C$0.08) per share on the company's common
shares. The dividend will be paid on March
31, 2022, to shareholders of record at the close of business
on March 15, 2022.
Fourth Quarter Conference Call
Pason will be conducting a conference call for interested
analysts, brokers, investors, and media representatives to review
its 2021 fourth quarter results at 9:00 a.m.
("MST") on Wednesday, February 23rd,
2022. The conference call dial-in number is 1-888-664-6383
or 1-416-764-8650. You can access the fourteen-day replay by
dialing 1-888-390-0541 or 1-416-764-8677, using password
404951#.
An archived audio webcast of the conference call will also be
available on Pason's website at www.pason.com.
Non-GAAP Financial Measures
A non-GAAP financial measure has the definition set out in
National Instrument 52-112 "Non-GAAP and Other Financial Measures
Disclosure".
The following non-GAAP measures may not be comparable to
measures used by other companies. Management believes these
non-GAAP measures provide readers with additional information
regarding the Company's operating performance, and ability to
generate funds to finance its operations, fund its research and
development and capital expenditure program, and return capital to
shareholders through dividends or share repurchases.
EBITDA and Adjusted EBITDA
EBITDA is defined as net income before interest income and
expense, income taxes, stock-based compensation expense, and
depreciation and amortization expense.
Adjusted EBITDA is defined as EBITDA, adjusted for foreign
exchange, impairment of property, plant, and equipment,
restructuring costs, net monetary adjustments, government wage
assistance, revaluation of put obligation, 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. Users should be cautioned that
these metrics should not be construed as an alternative measure to
net income or loss determined in accordance with IFRS. Management
does not use these non-GAAP measures to assess the Company's
financial results against internal expectations.
Reconcile Net Income to EBITDA
Three Months
Ended
|
Mar 31,
2020
|
Jun 30,
2020
|
Sep 30,
2020
|
Dec 31,
2020
|
Mar 31,
2021
|
Jun 30,
2021
|
Sep 30,
2021
|
Dec 31,
2021
|
(000s)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
Net income
(loss)
|
16,552
|
(4,799)
|
(3,957)
|
(2,662)
|
3,991
|
4,880
|
12,775
|
10,279
|
Add:
|
|
|
|
|
|
|
|
|
Income
taxes
|
7,023
|
(1,072)
|
(1,369)
|
282
|
1,257
|
2,002
|
5,239
|
3,240
|
Depreciation and
amortization
|
10,414
|
8,612
|
7,503
|
7,888
|
7,831
|
6,156
|
5,530
|
6,172
|
Stock-based
compensation
|
(122)
|
1,868
|
276
|
2,818
|
2,602
|
2,216
|
1,611
|
5,094
|
Net interest (income)
expense
|
(398)
|
(338)
|
(105)
|
(26)
|
(8)
|
(270)
|
(285)
|
2,089
|
EBITDA
|
33,469
|
4,271
|
2,348
|
8,300
|
15,673
|
14,984
|
24,870
|
26,874
|
Reconcile EBITDA to Adjusted EBITDA
Three Months
Ended
|
Mar 31,
2020
|
Jun 30,
2020
|
Sep 30,
2020
|
Dec 31,
2020
|
Mar 31,
2021
|
Jun 30,
2021
|
Sep 30,
2021
|
Dec 31,
2021
|
(000s)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
EBITDA
|
33,469
|
4,271
|
2,348
|
8,300
|
15,673
|
14,984
|
24,870
|
26,874
|
Add:
|
|
|
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
(47)
|
79
|
113
|
968
|
448
|
725
|
(204)
|
(2,980)
|
Recognition of onerous
lease
|
—
|
(5,757)
|
—
|
—
|
—
|
—
|
—
|
—
|
Government wage
assistance
|
—
|
(4,363)
|
(3,334)
|
(2,244)
|
(2,924)
|
(2,966)
|
(2,190)
|
(128)
|
Reorganization
costs
|
—
|
5,554
|
—
|
—
|
—
|
—
|
—
|
—
|
Put option
revaluation
|
—
|
—
|
—
|
1,812
|
—
|
—
|
—
|
381
|
Net monetary
gain
|
(419)
|
(396)
|
(465)
|
(594)
|
(49)
|
(11)
|
(190)
|
(246)
|
Other
|
302
|
(236)
|
220
|
(41)
|
22
|
54
|
70
|
307
|
Adjusted
EBITDA
|
33,305
|
(848)
|
(1,118)
|
8,201
|
13,170
|
12,786
|
22,356
|
24,208
|
Free cash flow
Free cash flow is defined as cash from operating activities plus
proceeds on disposal of property, plant, and equipment, less
capital expenditures (including changes to non-cash working capital
associated with capital expenditures), and deferred development
costs. This metric provides a key measure on the Company's ability
to generate cash from its principal business activities after
funding capital expenditure programs, and provides an indication of
the amount of cash available to finance, among other items, the
Company's dividend and other investment opportunities.
Reconcile cash from operating activities to free cash
flow
Three Months
Ended
|
Mar 31,
2020
|
Jun 30,
2020
|
Sep 30,
2020
|
Dec 31,
2020
|
Mar 31,
2021
|
Jun 30,
2021
|
Sep 30,
2021
|
Dec 31,
2021
|
(000s)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
Cash from operating
activities
|
25,593
|
29,953
|
5,754
|
(2,717)
|
11,085
|
9,841
|
17,074
|
27,061
|
Less:
|
|
|
|
|
|
|
|
|
Net additions to
property, plant and equipment
|
(2,236)
|
(644)
|
(1,282)
|
(66)
|
(1,510)
|
(3,696)
|
(1,258)
|
(2,803)
|
Deferred development
costs
|
(422)
|
579
|
(331)
|
(317)
|
(399)
|
(461)
|
445
|
(268)
|
Free cash
flow
|
22,935
|
29,888
|
4,141
|
(3,100)
|
9,176
|
5,684
|
16,261
|
23,990
|
Revenue per Industry day
Revenue per Industry day is defined as the daily revenue
generated from all products that the Company is renting over all
active drilling rig days in the North American market. This metric
provides a key measure of the Company's ability to evaluate and
manage product adoption, pricing, and market share penetration.
Drilling days are calculated by using accepted industry
sources.
Forward Looking Information
Certain statements contained herein constitute "forward-looking
statements" and/or "forward-looking information" under applicable
securities laws (collectively referred to as "forward-looking
statements"). Forward–looking statements can generally be
identified by the words "anticipate", "expect", "believe", "may",
"could", "should", "will", "estimate", "project", "intend", "plan",
"outlook", "forecast" or expressions of a similar nature suggesting
a future outcome or outlook.
Without limiting the foregoing, this document includes, but is
not limited to, the following forward–looking statements: the
Company's growth strategy and related schedules; divergence in
activity levels between the geographic regions in which we operate;
demand fluctuations for our products and services; the Company's
ability to increase or maintain market share; projected future
value, forecast operating and financial results; planned capital
expenditures; expected product performance and adoption, including
the timing, growth and profitability thereof; potential dividends
and dividend growth strategy; future use and development of
technology; our financial ability to meet long-term commitments not
included in liabilities; the collectability of accounts receivable;
the application of critical accounting estimates and judgements;
treatment under governmental regulatory and taxation regimes; and
projected increasing shareholder value.
These forward-looking statements reflect the current views of
Pason with respect to future events and operating performance as of
the date of this document. They are subject to known and unknown
risks, uncertainties, assumptions, and other factors that could
cause actual results to be materially different from results that
are expressed or implied by such forward-looking statements.
Although we believe that these forward-looking statements are
reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Such risks and
uncertainties include, but are not limited to: the state of the
economy; volatility in industry activity levels and resulting
customer expenditures on exploration and production activities;
customer demand for existing and new products; the industry shift
towards more efficient drilling activity and technology to assist
in that efficiency; the impact of competition; the loss of key
customers; the loss of key personnel; cybersecurity risks; reliance
on proprietary technology and ability to protect the Company's
proprietary technologies; changes to government regulations
(including those related to safety, environmental, or taxation);
the impact of extreme weather events and seasonality on our
suppliers and on customer operations; and war, terrorism,
pandemics, social or political unrest that disrupts global
markets.
These risks, uncertainties and assumptions include but are not
limited to those discussed in Pason's Annual Information Form for
the year ended December 31,
2020, under the heading, "Risk and Uncertainty," in our
Management's Discussion and Analysis for the year ended
December 31, 2021, and in our other
filings with Canadian securities regulators. These documents are 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).
Forward-looking statements contained in this document are
expressly qualified by this cautionary statement. Except to the
extent required by applicable law, Pason assumes no obligation to
publicly update or revise any forward-looking statements made in
this document or otherwise, whether as a result of new information,
future events or otherwise.
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, web-based information management, and analytics,
enable collaboration between the rig and the office. Through Energy
Toolbase ("ETB"), the company also provides products and services
for the solar power and energy storage industry. ETB's solutions
enable solar and energy storage developers to model, control and
measure economics and performance of solar energy and storage
projects. Pason's common shares trade on the Toronto Stock Exchange
under the symbol PSI.
For more information about Pason Systems Inc., visit the
company's website at www.pason.com or contact
investorrelations@pason.com.
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).
SOURCE Pason Systems Inc.