Trican Reports First Quarter Results for 2014
CALGARY, ALBERTA--(Marketwired - May 7, 2014) - Trican Well
Service Ltd. (TSX:TCW) -
Financial Review
|
|
|
Three months ended |
|
| ($
millions, except per |
|
|
March 31, |
|
March 31, |
December 31, |
|
| share amounts; unaudited) |
|
2014 |
|
2013 |
2013 |
|
|
Revenue |
|
|
$643.2 |
|
$618.4 |
$552.1 |
|
|
Operating income * |
|
|
42.4 |
|
86.7 |
35.5 |
|
|
Profit / (loss) for the period |
|
|
(8.5 |
) |
25.4 |
(20.8 |
) |
|
Earnings / (loss) per share |
(basic |
) |
(0.06 |
) |
$0.17 |
($0.14 |
) |
|
(diluted |
) |
(0.06 |
) |
$0.17 |
($0.14 |
) |
|
Adjusted profit / (loss) * |
|
|
(6.3 |
) |
27.6 |
(9.9 |
) |
|
Adjusted profit / (loss) per share* |
(basic |
) |
(0.04 |
) |
$0.18 |
($0.07 |
) |
|
(diluted |
) |
(0.04 |
) |
$0.18 |
($0.07 |
) |
|
Funds provided by operations* |
|
|
38.0 |
|
58.0 |
30.4 |
|
| Notes: |
| * Trican makes reference to operating income, adjusted
profit (loss) and funds provided by operations. These are measures
that are not recognized under International Financial Reporting
Standards (IFRS). Management believes that, in addition to profit
(loss), operating income, adjusted profit (loss) and funds provided
by operations are useful supplemental measures. Operating
income provides investors with an indication of earnings before
depreciation, foreign exchange, taxes and interest. Adjusted profit
(loss) provides investors with information on profit (loss)
excluding one-time non-cash charges and the non-cash effect of
stock-based compensation expense. Funds provided by operations
provide investors with an indication of cash available for capital
commitments, debt repayments and other expenditures. Investors
should be cautioned that operating income, adjusted profit (loss),
and funds provided by (used in) operations should not be construed
as an alternative to profit (loss) and cash flow from operations
determined in accordance with IFRS as an indicator of Trican's
performance. Trican's method of calculating operating income,
adjusted profit (loss) and funds provided by operations may differ
from that of other companies and accordingly may not be comparable
to measures used by other companies. |
FIRST QUARTER HIGHLIGHTS
Consolidated revenue for the first quarter of 2014 was $643.2
million, an increase of 4% compared to the first quarter of 2013.
The adjusted consolidated loss was $6.3 million compared to profit
of $27.6 million, and adjusted loss per share was $0.04 compared to
profit of $0.18 for the same period in 2013.
Canadian revenue increased by 4% but operating margins decreased
by 880 basis points in the first quarter of 2014 compared to the
first quarter of 2013. Canadian equipment utilization levels were
high for most of the quarter due to an extended winter drilling
season that kept pressure pumping demand strong to the end of
March. Pressure pumping demand also benefitted from improving
Canadian market fundamentals as Canadian commodity prices and a
weakening Canadian dollar led to increased cash flows for our
customers. Despite the strong demand, Canadian operating margins
were below expectations due to a low pricing environment combined
with increased costs. Higher diesel prices, increased sand hauling
requirements and a stronger U.S. dollar have all contributed to the
rising cost structure in Canada. We expect to raise prices in
Canada during the second quarter of 2014 to address the recent
declines in Canadian operating margins. In addition, due to an
expected increase in customer demand, we plan to deploy an
additional fracturing crew in Canada in late 2014. The equipment
for this crew is expected to come from our existing fleet of parked
equipment.
U.S. revenue for the first quarter of 2014 was relatively
consistent with the first quarter of 2013 and was up 22% on a
sequential basis. Although operating income increased on a
sequential basis, our U.S. operations incurred an operating loss of
$1.0 million in the first quarter of 2014. U.S. equipment
utilization was negatively impacted by unfavorable weather
conditions in January and February for our operations in the
Marcellus, Permian and Oklahoma regions. The financial performance
of our U.S. operations improved substantially in March as operating
conditions improved. We believe the March results reflect improving
fundamentals for the U.S. pressure pumping market and we expect
operating margins to continue to improve sequentially for our U.S.
business throughout 2014. During the second quarter, we expect to
deploy a fourth fracturing crew into the Marcellus region that will
be supported by customer commitments. In addition, due to
underperformance in the region, we have closed our operating base
in Woodward, Oklahoma, where one fracturing crew had been active.
We believe these strategic decisions will improve the financial
performance of our U.S. operations in the second half of 2014.
International revenue for the first quarter of 2014 increased by
12% and operating margins improved by 340 basis points compared to
the first quarter of 2013. As expected, cold weather at the start
of the quarter negatively impacted Russian activity levels;
however, Russian activity rebounded strongly near the end of the
first quarter once operating conditions improved. First quarter
revenue and operating margins increased substantially for the North
Sea completion tools business on both a year-over-year and
sequential basis. Strong customer acceptance of the completion
tools technology in this region has led to improved financial
performance for this division. International operating margins in
the first quarter of 2014 were negatively impacted by increased
start-up costs incurred in both Saudi Arabia and Colombia. Active
cementing operations were initiated in Colombia during April and we
expect to begin coiled tubing operations in Saudi Arabia in the
second quarter of 2014.
MANAGEMENT'S
DISCUSSION AND ANALYSIS
OVERVIEW
Headquartered in Calgary, Alberta, Trican has operations in
Canada, the U.S., Russia, Kazakhstan, Algeria, Australia, Norway,
Saudi Arabia and Colombia. Trican provides a comprehensive array of
specialized products, equipment and services that are used during
the exploration and development of oil and gas reserves.
| COMPARATIVE QUARTERLY INCOME STATEMENTS ($ thousands,
unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Quarter- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Over- |
|
|
|
|
|
|
|
%
of |
|
|
|
%
of |
|
Quarter |
|
% |
|
| Three months ended March 31, |
2014 |
|
Revenue |
|
2013 |
|
Revenue |
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
643,217 |
|
100.0% |
|
618,376 |
|
100.0% |
|
24,841 |
|
4.0% |
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials and operating |
568,277 |
|
88.3% |
|
502,026 |
|
81.2% |
|
66,251 |
|
13.2% |
|
|
|
General and administrative |
32,536 |
|
5.1% |
|
29,680 |
|
4.8% |
|
2,856 |
|
9.6% |
|
| Operating income* |
42,404 |
|
6.6% |
|
86,670 |
|
14.0% |
|
(44,266 |
) |
(51.1% |
) |
|
Finance costs |
10,227 |
|
1.6% |
|
8,488 |
|
1.4% |
|
1,739 |
|
20.5% |
|
|
Depreciation and amortization |
52,751 |
|
8.2% |
|
47,059 |
|
7.6% |
|
5,692 |
|
12.1% |
|
|
Foreign exchange gain |
(2,292 |
) |
(0.4% |
) |
(1,726 |
) |
(0.3% |
) |
(566 |
) |
32.8% |
|
|
|
Other income |
(2,604 |
) |
(0.4% |
) |
(2,070 |
) |
(0.3% |
) |
(534 |
) |
(25.8% |
) |
| (Loss)/ profit before income taxes |
(15,678 |
) |
(2.4% |
) |
34,919 |
|
5.6% |
|
(50,597 |
) |
(144.9% |
) |
| Income tax (recovery) / expense |
(6,568 |
) |
(1.0% |
) |
9,727 |
|
1.6% |
|
(16,295 |
) |
(167.5% |
) |
| Non-controlling interest |
(629 |
) |
(0.1% |
) |
(171 |
) |
0% |
|
(458 |
) |
267.8% |
|
| (Loss) / income for the period |
(8,481 |
) |
(1.3% |
) |
25,363 |
|
4.1% |
|
(33,844 |
) |
(133.4% |
) |
CANADIAN OPERATIONS
| ($ thousands, except revenue per job, unaudited) |
March 31, |
% of |
March 31, |
% of |
Dec.31, |
% of |
| Three months ended, |
2014 |
Revenue |
2013 |
Revenue |
2013 |
Revenue |
| Revenue |
353,342 |
|
338,649 |
|
286,869 |
|
| Expenses |
|
|
|
|
|
|
|
Materials and operating |
283,280 |
80.2% |
241,473 |
71.3% |
228,533 |
79.7% |
|
General and administrative |
7,543 |
2.1% |
7,376 |
2.2% |
5,244 |
1.8% |
|
Total
expenses |
290,823 |
82.3% |
248,849 |
73.5% |
233,777 |
81.5% |
| Operating income* |
62,519 |
17.7% |
89,800 |
26.5% |
53,092 |
18.5% |
| Number of jobs |
6,396 |
|
6,955 |
|
5,154 |
|
| Revenue per job |
55,200 |
|
48,280 |
|
55,435 |
|
Sales Mix
|
Three months ended, |
March 31, |
March 31, |
Dec. 31, |
|
(unaudited) |
2014 |
2013 |
2013 |
| % of
Total Revenue |
|
|
|
|
Fracturing |
67% |
64% |
67% |
|
Cementing |
19% |
20% |
18% |
|
Nitrogen |
6% |
7% |
6% |
|
Coiled Tubing |
3% |
4% |
3% |
|
Acidizing |
2% |
3% |
1% |
|
Other |
2% |
1% |
1% |
|
Industrial Services |
1% |
1% |
4% |
|
Total |
100% |
100% |
100% |
Operations Review
Equipment utilization for our Canadian operations was strong
throughout most of the first quarter of 2014. Pressure pumping
demand was soft in the first half of January due to reduced
drilling and completions activity at the end of 2013 that carried
into early 2014; however, our Canadian equipment was fully utilized
from the second half of January to the end of March. First quarter
Canadian pressure pumping demand benefitted from increased customer
cash flows due to higher Canadian commodity prices combined with a
stronger U.S. dollar. In addition, cold temperatures throughout the
quarter led to an extended winter drilling season that carried to
the end of March and into early April.
The Canadian dollar weakened relative to the U.S. dollar on both
a year-over-year and sequential basis. A weaker Canadian dollar
negatively impacted operating margins as a portion of our product
costs are denominated in U.S. dollars. In addition, sand volumes
and fracturing stages per well continued to increase during the
first quarter of 2014. This trend led to higher sand hauling
requirements in Canada and required our Canadian operations to
outsource a higher percentage of hauling services. Our Canadian
cost structure was also impacted by higher first quarter diesel
prices relative to the comparative periods.
Our pricing levels declined at the end of the fourth quarter of
2013 and these rates were carried throughout all of the first
quarter of 2014. As a result, first quarter Canadian pricing was
down slightly on a sequential basis and substantially compared to
the first quarter of 2013. Lower pricing combined with higher costs
led to first quarter operating margins that were 880 basis points
lower in Canada on a year-over-year basis.
The Canadian completion tools division continued to show strong
growth during the first quarter of 2014. We are continuing to gain
customer acceptance of the technology and are focused on increasing
the Canadian customer base and improving the profitability of the
division.
Q1 2014 versus Q1 2013
Canadian revenue for the first quarter of 2014 increased by 4%
compared to the first quarter of 2013. Revenue per job increased by
14% due to an increase in fracturing job size combined with an
increase in fracturing revenue as a percentage of total revenue.
Proppant used per fracturing job, a good indicator of job size,
increased by 40% on a year-over-year basis. These factors were
partially offset by a year-over-year decrease in Canadian
pricing.
The job count decreased by 8% due largely to lower coiled tubing
activity caused by increased competition in Canada for this service
line. Lower coiled tubing activity also had a negative impact on
our nitrogen and acidizing job count as these service lines are
closely correlated with coiled tubing. Cementing and fracturing
activity remained strong throughout most of the quarter and
benefitted from robust demand and favorable weather conditions.
As a percentage of revenue, materials and operating expenses
increased to 80.2% compared to 71.3% in the first quarter of 2013.
The most significant cause of the margin decline was lower
year-over-year pricing. Operating margins were also negatively
impacted by higher fuel and sand hauling costs as well as a weaker
Canadian dollar that led to higher U.S. denominated product
costs.
General and administrative expenses increased by $0.2 million
due to slightly higher overhead costs associated with the growing
Canadian completion tools business.
Q1 2014 versus Q4 2013
Sequentially, Canadian revenue increased by 23% due largely to
an increase in activity levels. The job count increased by 24% as
equipment utilization was up for all pressure pumping service lines
compared to the fourth quarter of 2013. Pressure pumping demand
benefitted from favorable weather conditions and increased customer
cash flows due to higher Canadian commodity prices combined with a
stronger U.S. dollar. Revenue per job was down slightly as lower
average pricing levels were offset by larger fracturing job
sizes.
As a percentage of revenue, materials and operating expenses
increased to 80.2% compared to 79.7% in the fourth quarter of 2013.
Lower average pricing combined with increased product, fuel and
hauling costs contributed to the reduction in operating margins.
These factors were largely offset by increased operational leverage
on our fixed costs due to the increase in utilization for our
pressure pumping service lines.
General and administrative expenses increased by $2.3 million
due largely to higher share-based and profit sharing expenses.
UNITED STATES OPERATIONS
| ($ thousands, except revenue per job, unaudited) |
March 31, |
|
% of |
|
March 31, |
% of |
Dec. 31, |
|
% of |
|
| Three months ended, |
2014 |
|
Revenue |
|
2013 |
Revenue |
2013 |
|
Revenue |
|
| Revenue |
211,040 |
|
|
|
210,685 |
|
173,470 |
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
Materials and operating |
205,207 |
|
97.2% |
|
186,213 |
88.4% |
174,989 |
|
100.9% |
|
|
General and administrative |
6,868 |
|
3.3% |
|
6,483 |
3.1% |
6,776 |
|
3.9% |
|
|
Total
expenses |
212,075 |
|
100.5% |
|
192,696 |
91.5% |
181,765 |
|
104.8% |
|
| Operating income / (loss)* |
(1,035 |
) |
(0.5% |
) |
17,989 |
8.5% |
(8,295 |
) |
(4.8% |
) |
| Number of jobs |
3,218 |
|
|
|
2,035 |
|
2,262 |
|
|
|
| Revenue per job |
61,776 |
|
|
|
103,696 |
|
68,533 |
|
|
|
|
|
|
|
|
Three months ended, |
March 31, |
March 31, |
Dec. 31, |
|
(unaudited) |
2014 |
2013 |
2013 |
| % of
Total Revenue |
|
|
|
|
Fracturing |
90% |
92% |
88% |
|
Cementing |
6% |
6% |
7% |
|
Coiled Tubing |
4% |
2% |
5% |
|
Total |
100% |
100% |
100% |
Operations Review
January and February activity levels in the U.S. were negatively
impacted by cold weather and customer delays, in particular for our
operations in the Marcellus, Permian and Oklahoma regions. As
operating conditions improved in late February, overall equipment
utilization increased for our U.S. operations. As a result, March
financial results improved substantially compared to January and
February for most of our U.S. operating regions.
March results were particularly strong in the Marcellus play.
Our reputation for superior service quality and operational
execution continued to benefit our Marcellus operations, despite
the flat rig count in the region. Once weather conditions improved,
our three fracturing crews operating in this region were fully
utilized.
Financial and operational performance improved significantly in
both the Permian and Bakken regions during the first quarter.
Despite the challenging weather conditions at the start of the
first quarter, improved operational execution combined with a
rising horizontal rig count led to improved March financial results
for our operations in the Permian region. In addition, a focused
sales effort, strong operational execution, and customer acceptance
of our recycled water technology led to significant sequential
financial improvements for our fracturing crew operating in the
Bakken play.
Improving natural gas prices led to a modest increase in
activity levels in the Haynesville shale and, as a result, a
fracturing crew was deployed back into this region during the first
quarter of 2014. Pressure pumping demand remained steady in the
Eagle Ford region with one contracted crew and one crew working in
the spot market.
Our operations in the Barnett shale and Oklahoma regions
performed below expectations during the first quarter. Despite the
recent rise in natural gas prices, the rig count in the Barnett
shale continued to decrease and led to weak first quarter
utilization for our fracturing crew in this region. Despite
relatively strong overall activity levels in the various Oklahoma
oil and gas plays, our two Oklahoma operating regions performed
below expectations. Weather impacted our Oklahoma operations early
in the first quarter; however, equipment utilization did not return
to acceptable levels once operating conditions improved.
Our first quarter pricing levels were relatively consistent with
the fourth quarter of 2013 for all of our U.S. operating
regions.
Revenue for the U.S. completion tools division decreased
sequentially due to delays with one of our major customers. We
continue to be pleased with customer acceptance of the completion
tools technology in the U.S. and expect revenue and profitability
to improve throughout 2014.
Q1 2014 versus Q1 2013
First quarter revenue for our U.S. operations was relatively
stable in Canadian dollars but was down approximately 8% in U.S.
dollars. The U.S. dollar strengthened by approximately 9% on a
year-over-year basis. The positive impact of a stronger U.S. dollar
on revenue per job was more than offset by a change in job mix as
revenue per job in the first quarter of 2014 decreased by 40%
compared to the first quarter of 2013. A substantial year-over-year
increase in Marcellus, Bakken and Permian activity contributed to
the lower revenue per job. Fracturing jobs in these regions are
generally higher volume but lower revenue per job compared to other
U.S. operating regions such as the Haynesville and Oklahoma. Lower
year-over-year pricing also contributed to the decrease in revenue
per job. The job count rose by 58% due largely to increased
Marcellus, Bakken and Permian fracturing activity combined with
higher coiled tubing activity.
First quarter materials and operating expenses increased to
97.2% of revenue compared to 88.4% in the first quarter of 2013.
Lower pricing was the most significant cause of the reduction in
operating margins. Margins were also negatively impacted by higher
fuel and repairs and maintenance expenses. These factors were
partially offset by decreased product costs. General and
administrative expenses increased by $0.4 million due primarily to
higher insurance costs and one-time professional fees.
Q1 2014 versus Q4 2013
Sequentially, U.S. revenue increased by 22% due to an increase
in activity levels combined with a 5% strengthening of the U.S.
dollar. The job count increased by 42% due largely to higher
Marcellus, Bakken and Permian activity levels. Fracturing jobs in
these plays are generally smaller, which contributed to the 10%
decline in revenue per job.
As a percentage of revenue, materials and operating expenses
decreased to 97.2% compared to 100.9% sequentially. Operating
margins benefitted from increased operational leverage on our fixed
cost structure, which was offset partially by higher fuel and
repairs and maintenance expenses. General and administrative
expenses were relatively consistent on a sequential basis.
INTERNATIONAL OPERATIONS
| ($ thousands, except revenue per job, unaudited) |
March 31, |
% of |
March 31, |
|
% of |
|
Dec. 31, |
% of |
| Three months ended, |
2014 |
Revenue |
2013 |
|
Revenue |
|
2013 |
Revenue |
| Revenue |
78,835 |
|
70,111 |
|
|
|
91,805 |
|
| Expenses |
|
|
|
|
|
|
|
|
|
Materials and operating |
73,299 |
93.0% |
68,384 |
|
97.5% |
|
80,556 |
87.7% |
|
General and administrative |
5,256 |
6.7% |
3,848 |
|
5.5% |
|
4,434 |
4.8% |
|
Total
expenses |
78,555 |
99.7% |
72,232 |
|
103.0% |
|
84,990 |
92.6% |
| Operating income/ (loss)* |
280 |
0.3% |
(2,121 |
) |
(3.0% |
) |
6,815 |
7.4% |
| Number of jobs |
966 |
|
914 |
|
|
|
1,074 |
|
| Revenue per job |
73,520 |
|
73,249 |
|
|
|
82,872 |
|
Sales Mix
|
Three months ended, |
March 31, |
March 31, |
Dec. 31, |
|
(unaudited) |
2014 |
2013 |
2013 |
| % of
Total Revenue |
|
|
|
|
Fracturing |
85% |
84% |
84% |
|
Coiled Tubing |
6% |
8% |
6% |
|
Cementing |
5% |
5% |
5% |
|
Nitrogen |
2% |
2% |
2% |
|
Other |
2% |
1% |
3% |
|
Total |
100% |
100% |
100% |
Operations Review
The majority of International revenue is generated from our
Russian operations. Cold weather throughout January and February
negatively impacted Russian activity levels, which was consistent
with expectations. Operating conditions improved in March and
Russian financial and operating results were strong at the end of
the quarter.
The conflict between Russia and the Ukraine did not impact our
Russian operations during the first quarter of 2014 and we are not
anticipating any operational disruptions to our Russian business
throughout 2014; however, we will continue to monitor the situation
closely and react appropriately if the conflict escalates further.
The potential financial impact, if any, to Trican from additional
economic sanctions placed on Russia in the future is unknown at
this time.
First quarter revenue and operating margins increased
substantially for the North Sea completion tools business on both a
year-over-year and sequential basis. We continued to expand our
customer base in this region through strong acceptance of the
completion tools technology.
Start-up costs were incurred in both Saudi Arabia and Colombia
during the first quarter of 2014, which had a negative impact on
international operating margins. We completed our first cementing
job in Colombia during April 2014 and expect activity to increase
in this region throughout 2014. Active operations in Saudi Arabia
are expected to commence the second quarter of 2014. We are
currently in discussions with Saudi Aramco to secure additional
contracts in this region.
Revenue increased for our Australian operations in the first
quarter of 2014 compared to the first quarter of 2013 as we
improved our market share in the region. We remain optimistic about
the long-term growth opportunities in the region and are committed
to growing our Australian cementing business during 2014. Although
financial results improved in Algeria during the first quarter,
this region continued to perform below expectations due to low
equipment utilization levels.
Q1 2014 versus Q1 2013
First quarter International revenue increased by 12% compared to
the first quarter of 2013. Year-over-year international revenue
benefited from a substantial increase in North Sea completion tools
sales. In addition, the job count increased by 6% as strong March
activity led to an increase in Russian pressure pumping jobs. A
rise in cementing work in Australia also contributed to the
increase in the job count. Revenue per job was up slightly as
larger fracturing job size in Russia was offset by a devaluation of
the ruble relative to the Canadian dollar.
Materials and operating expenses decreased to 93.0% of revenue
compared to 97.5% in the first quarter of 2013. An increase in
activity for our Russian, Australian, Algerian and North Sea
operations led to improved operational leverage on our fixed cost
structure. This was offset partially by increased start-up costs
during the first quarter of 2014 in Saudi Arabia and Colombia
compared to the first quarter of 2013. General and administrative
expenses increased by $1.4 million due to higher share based
employee expenses and a bad debt provision in Russia of $0.9
million recorded in the first quarter of 2014.
Q1 2014 versus Q4 2013
Sequentially, International revenue decreased by 14%. The job
count decreased by 10% due to seasonal factors in Russia that led
to lower activity for all Russian service lines. Low Russian
activity was offset by a sequential rise in North Sea completion
tools activity. Revenue per job decreased by 11% due to a decline
in the value of the ruble relative to the Canadian dollar, which
led to lower revenue per job in Russia. A change in job type mix
also led to lower revenue per job in Russia for the fracturing and
cementing service lines.
As a percentage of revenue, materials and operating expenses
increased to 93.0% compared to 87.7% in the fourth quarter of 2013.
Operating margins were negatively impacted by a sequential increase
in start-up costs in Saudi Arabia and Colombia and lower activity
levels in Russia. General and administrative costs increased by
$0.8 million due primarily to a bad debt provision recorded in
Russia during the first quarter of 2014.
CORPORATE
| ($ thousands, except revenue per job, unaudited) |
March 31, |
|
% of |
March 31, |
|
% of |
Dec. 31, |
|
% of |
| Three months ended, |
2014 |
|
Revenue |
2013 |
|
Revenue |
2013 |
|
Revenue |
| Expenses |
|
|
|
|
|
|
|
|
|
|
Materials and operating |
6,491 |
|
1.0% |
6,663 |
|
1.1% |
6,635 |
|
1.2% |
|
General and administrative |
12,869 |
|
2.0% |
12,987 |
|
2.1% |
9,477 |
|
1.7% |
|
Total
expenses |
19,360 |
|
3.0% |
19,650 |
|
3.2% |
16,112 |
|
2.9% |
| Operating loss* |
(19,360 |
) |
|
(19,650 |
) |
|
(16,112 |
) |
|
Q1 2014 versus Q1 2013
Corporate costs for the first quarter of 2014 decreased by $0.3
million due largely to lower profit sharing and share based
expenses, offset partially by expenses incurred relating to an
insolvent vendor issue.
Q1 2014 versus Q4 2013
Corporate costs increased sequentially by $3.2 million due
largely to expenses incurred relating to an insolvent vendor issue,
higher share based expenses and a slight increase in profit sharing
expenses.
OTHER EXPENSES AND
INCOME
Finance costs increased by $1.7 million on a year-over-year
basis due to an increase in average debt balances. Foreign exchange
gains of $2.3 million were recognized in the first quarter of 2014
compared to $1.7 million in the first quarter of 2013. The gain is
due largely to the net impact of fluctuations in the U.S. dollar
and Russian ruble relative to the Canadian dollar. Other income was
$2.6 million compared to $2.1 million in the same period in 2013.
Other income is largely comprised of net gains on disposal of
property and equipment and interest income earned on cash
balances.
Depreciation expense for the first quarter of 2014 increased by
$5.7 million compared to the first quarter of 2013 due to an
increase in depreciable property and equipment balances.
LIQUIDITY AND CAPITAL
RESOURCES
Operating Activities
Funds provided by operations was $38.0 million in the first
quarter of 2014 compared to $58.0 million in the first quarter of
2013. Lower profits contributed to the decline in operating cash
flows, which was partially offset by less taxes paid.
Working capital at March 31, 2014 increased by $112 million
compared to December 31, 2013 due to a sequential increase in
Canadian activity, and to a lesser extent, an increase in U.S.
activity.
Investing Activities
Property and equipment purchases were $16.7 million in the first
quarter of 2014 compared to $31.0 million in the first quarter of
2013. Capital spending has decreased in response to reduced
operating cash flows from our Canadian and U.S. operations as well
as adequate equipment capacity in all of our operating regions.
There were no significant changes made to our 2014 capital
budget during the first quarter of 2014. Remaining expenditures on
approved capital budgets are expected to be approximately $65
million to $75 million.
Financing Activities
As at May 7, 2014, Trican had 149,030,739 common shares and
10,351,798 employee stock options outstanding.
Trican currently pays a semi-annual dividend of $0.15 per share.
During the first quarter of 2014, $22.3 million in dividend
payments were made and we expect an additional $22.3 million to be
paid in July 2014.
During the quarter ended March 31, 2014, Trican withdrew $103.6
million on its revolving credit and bank facilities to fund
operating, investing and financing activities. As at March 31,
2014, Trican has available unused committed bank credit facilities
in the amount of $199.0 million plus cash and trade and other
receivables of $95.4 million and $606.7 million respectively, for a
total of $901.1 million available to fund the cash outflows
relating to its financial obligations. We believe we have
sufficient funding through the use of these sources to meet
foreseeable borrowing requirements.
During the first quarter of 2014, Trican received approval from
the Toronto Stock Exchange to purchase its own common shares, for
cancellation, in accordance with a Normal Course Issuer Bid
("NCIB") that expires on March 12, 2015. There were no common
shares purchased through the NCIB during the first quarter of
2014.
OUTLOOK
Canadian Operations
Canadian pressure pumping demand is expected to remain strong
during the second half of 2014. Increased customer cash-flows in
the first quarter are expected to carry into the second half of the
year, assuming that commodity prices and exchange rates remain
relatively consistent with current levels.
Utilization of our Canadian equipment is expected to benefit
from a Horn River project during the third quarter of 2014, which
will be similar to the project completed during the third quarter
of 2013. We also expect to complete a small project in the Liard
basin during the third quarter of 2014. This will be the first
fracturing project completed by Trican in the Liard basin and
reflects potential customer interest in this region in light of
Canadian LNG export opportunities. We also expect activity in the
Duvernay play to continue to increase and contribute to higher
year-over-year pressure pumping demand in Canada.
With strong Canadian activity levels anticipated for the second
half of 2014, we expect to implement a pricing increase in the
second quarter that is expected to be phased in during the second
half of 2014. Rising costs combined with lower pricing have led to
Canadian financial results that are below our return on capital
targets and we believe that a price increase is required and
justified given the current operating environment in Canada. Due to
an expected increase in customer demand, we plan to deploy an
additional fracturing crew in Canada in late 2014. The equipment
for this crew is expected to come from our existing fleet of parked
equipment.
As expected, second quarter activity in Canada will be impacted
by spring break-up conditions. Second quarter operating margins are
expected to be negatively impacted by lower year-over-year pricing
and higher costs compared to the second quarter of 2013; however,
we expect second quarter utilization to increase year-over-year due
to a strong activity in early April combined with incremental
multi-well projects planned for May and June.
U.S. Operations
Although the U.S. pressure pumping market remains over-supplied
with equipment and very competitive, market fundamentals are
continuing to improve. While these improvements are expected to
benefit our U.S. operations, our focus continues to be on
optimizing equipment location, adding crews to select regions from
our parked fleet, improving utilization in certain regions, and
reducing costs, where possible.
The Marcellus play continues to be our most profitable U.S.
region, and we expect solid financial results in this area for the
remainder of 2014. We expect to add a fourth fracturing crew into
the Marcellus play during the latter half of the second quarter of
2014, which will be supported by new customer commitments. We will
continue to explore additional expansion prospects in Marcellus
throughout 2014.
Fracturing demand in the Permian region increased throughout the
first quarter and we expect this trend to continue throughout 2014.
We are currently operating three fracturing crews in this region
and, although utilization has recently increased, continued
utilization improvement and cost reduction is the focus for our
Permian operations. We have recently obtained pricing improvements
in the Permian region and we will look for additional opportunities
to increase pricing as the year progresses.
Although natural gas prices have recently strengthened, the rig
count in both the Barnett and Haynesville regions are expected to
remain low for the remainder of 2014. Activity levels are up
slightly in Haynesville and, as a result, we deployed one crew back
into this play late in the quarter for the remainder of 2014. We
expect utilization of our Longview fracturing crew to be stable for
the remainder of 2014, and we are committed to maintaining our
presence in this region.
Overall activity levels in the various Oklahoma oil and gas
plays have remained steady. Despite stable pressure pumping demand,
equipment utilization and financial results have not met
expectations for our two operating bases in Oklahoma over the past
several quarters. As a result, we have closed our operating base in
Woodward, Oklahoma during the second quarter of 2014. We are
currently looking at opportunities to deploy the Woodward
fracturing crew into the Permian region. Customer commitments in
Woodward will be covered by our base in Shawnee, Oklahoma, which is
expected to improve the utilization for this location.
Equipment utilization has improved substantially in the Bakken
region over the last several months. Our focus is to maintain these
utilization levels going forward by continuing to offer innovative
technology and strong service quality in this region. We will also
look to add an additional crew into this region if utilization
remains high.
Eagle Ford activity and demand is expected to remain stable for
the remainder of 2014.
International Operations
Consistent with our previous guidance, 2014 Russian revenue is
expected to increase by 5% compared to 2013 with a slight
improvement in operating margins. We continue to see an increase in
horizontal drilling and completions activity in Russia. We expect
30% of our 2014 Russian pressure pumping revenue to be generated
from horizontal wells compared to 20% in 2013.
Customer acceptance of our completion tools technology in the
North Sea has been strong and we expect the completion tools
business to grow during 2014 as we increase our customer base in
the region.
Although the Australian market continues to develop slowly, we
will continue to focus on expanding market share through sales and
marketing initiatives. We believe in the long-term potential of
this market and are committed to growing our presence in the
region.
Algeria continues to be a challenging market. We are currently
exploring opportunities to obtain more profitable contracts in the
region or redeploy the Algerian assets into a more profitable area.
We expect to have more clarity on our future in Algeria once
existing customer contract commitments have been completed.
We began active operations in Colombia during April 2014 and
will look to expand our customer base in this region throughout
2014. We expect active operations in Saudi Arabia to commence in
the second quarter of 2014.
NON-IFRS
DISCLOSURE
Adjusted net income, operating income and funds provided by
operations do not have any standardized meaning as prescribed by
IFRS and, therefore, are considered non-IFRS measures.
Adjusted net income and funds provided by operations have been
reconciled to net income and operating income has been reconciled
to gross profit, being the most directly comparable measures
calculated in accordance with IFRS. The reconciling items have been
presented net of tax.
| (thousands; unaudited) |
Three months ended |
|
|
March 31, 2014 |
|
March 31, 2013 |
Dec. 31, 2013 |
|
| Adjusted net income (loss) |
($6,330 |
) |
$27,551 |
($9,873 |
) |
| Deduct: |
|
|
|
|
|
|
Fluid
end depreciation adjustment |
|
|
|
|
|
|
(net
of $2.4 million tax recovery)* |
- |
|
- |
7,513 |
|
|
Intangible amortization adjustment |
|
|
|
|
|
|
(net
of $0.5 million tax recovery)** |
- |
|
- |
1,595 |
|
|
|
Non-cash share-based compensation expense |
2,151 |
|
2,188 |
2,209 |
|
|
|
|
|
|
|
| Profit (loss) for the period (IFRS financial
measure) |
($8,481 |
) |
$25,363 |
($20,830 |
) |
| * Depreciation and amortization expense for the fourth quarter
of 2013 included a $14.3 million charge for accelerated
depreciation on fluid ends in Canada. $9.5 million of this
adjustment ($7.2 million net of tax) relates to periods prior to
October 1, 2013 and has been excluded from adjusted net income for
the fourth quarter of 2013. |
|
| ** Depreciation and amortization expense for the fourth quarter
included $3.1 million in amortization on the intangible assets
relating to the purchase of i-TEC. The purchase price accounting
was not finalized until the fourth quarter of 2013; therefore, a
catch-up entry was required to ensure that adequate amortization
had been recorded as of December 31, 2013. $2.1 million of this
adjustment ($1.6 million net of tax) relates to periods prior to
October 1, 2013 and has been excluded from adjusted net income for
the fourth quarter of 2013. |
|
| (thousands; unaudited) |
Three months ended |
|
|
March 31, 2014 |
|
March 31, 2013 |
|
Dec. 31, 2013 |
|
| Funds provided by operations |
$37,999 |
|
$58,127 |
|
$30,380 |
|
| Charges to income not involving cash |
|
|
|
|
|
|
|
Depreciation and amortization |
(52,751 |
) |
(47,059 |
) |
(70,085 |
) |
|
Amortization of debt issuance costs |
(216 |
) |
(216 |
) |
(216 |
) |
|
Stock-based compensation |
(2,151 |
) |
(2,188 |
) |
(2,209 |
) |
|
Loss
on disposal of property and equipment |
90 |
|
460 |
|
15 |
|
|
Net
finance costs |
(9,816 |
) |
(7,532 |
) |
(8,122 |
) |
|
Unrealized foreign exchange (gain) / loss |
2,773 |
|
3,296 |
|
(1 |
) |
|
Income tax recovery / (expense) |
6,568 |
|
(9,727 |
) |
16,431 |
|
|
Interest paid |
5,659 |
|
2,791 |
|
12,956 |
|
|
Income tax paid |
3,365 |
|
27,411 |
|
21 |
|
|
|
|
|
|
|
|
| Profit (loss) for the period (IFRS financial
measure) |
($8,481 |
) |
$25,363 |
|
($20,830 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (thousands; unaudited) |
Three months ended |
|
|
March 31, 2014 |
|
March 31, 2013 |
|
Dec. 31, 2013 |
|
| Operating income |
$42,404 |
|
$86,670 |
|
$35,500 |
|
| Add: |
|
|
|
|
|
|
|
Administrative expenses |
33,989 |
|
30,282 |
|
26,064 |
|
| Deduct: |
|
|
|
|
|
|
|
Depreciation expense |
(52,751 |
) |
(47,059 |
) |
(70,085 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit (IFRS financial measure) |
$23,642 |
|
$69,893 |
|
($8,521 |
) |
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking information and
financial outlook based on Trican's current expectations,
estimates, projections and assumptions that were made by the
Company in light of information available at the time the statement
was made. Forward-looking information and financial outlook that
address expectations or projections about the future, and other
statements and information about the Company's strategy for growth,
expected and future expenditures, costs, operating and financial
results, future financing and capital activities are
forward-looking statements. Some forward-looking information and
financial outlook are identified by the use of terms and phrases
such as "anticipate," "achieve", "achievable," "believe,"
"estimate," "expect," "intention", "plan", "planned", and other
similar terms and phrases. This forward-looking information and
financial outlook speak only as of the date of this document and we
do not undertake to publicly update this forward-looking
information and financial outlook except in accordance with
applicable securities laws. This forward-looking information and
financial outlook includes, among others:
- The expectation to raise prices in Canada during the second
quarter of 2014 to help address the recent declines in Canadian
operating margins;
- The expectation that Canadian pricing increases will be phased
in during the second half of 2014;
- The belief that strong March results reflect improving
fundamentals for the U.S. pressure pumping market;
- The expectation that operating margins will improve
sequentially for our U.S. business throughout 2014;
- The expectation that, during the latter half of the second
quarter of 2014, we will deploy a fourth fracturing crew into the
Marcellus play that will be supported by customer commitments;
- The belief that the closure of the Woodward base will improve
the financial performance of our U.S. operations in the second half
of 2014;
- The intention to begin coiled tubing operations in Saudi Arabia
in the second quarter of 2014;
- The expectation that revenue and profitability will improve
throughout 2014 for our U.S. completion tools division;
- The expectation that the conflict between Russia and the
Ukraine will not disrupt our Russian operations throughout
2014;
- Our plan to monitor the Russian/Ukraine conflict closely and
react appropriately if the conflict escalates further;
- The expectation that activity in Colombia will increase;
- The expectation that Canadian pressure pumping demand will
remain strong during the second half of 2014;
- The expectation that increased Canadian customer cash-flows in
the first quarter will carry into the second half of the year,
assuming that commodity prices and exchange rates remain relatively
consistent with current levels;
- The expectation that utilization of our Canadian equipment will
benefit from a Horn River project during the third quarter of 2014,
which will be similar to the project completed during the third
quarter of 2013;
- The expectation that we will complete a small project in the
Liard basin during the third quarter of 2014 and that this reflects
potential customer interest in this region;
- The expectation that activity in the Duvernay play will
continue to increase and contribute to higher year-over-year
pressure pumping demand in Canada;
- The belief that a Canadian price increase is required and
justified given the current operating environment in Canada;
- The plan to deploy an additional fracturing crew in Canada from
our parked equipment in late 2014;
- The expectation that second quarter Canadian operating margins
will be negatively impacted by lower year-over-year pricing and
higher costs compared to the second quarter of 2013;
- The expectation that second quarter utilization will increase
year-over-year in Canada due to a strong activity in early April
combined with incremental multi-well projects planned for May and
June;
- The belief that U.S. market fundamentals are continuing to
improve, which will benefit our U.S. operations;
- The intention to focus on optimizing equipment location, adding
crews to select regions from our parked fleet, improving
utilization in certain regions, and reducing costs, where possible,
for our U.S. operations;
- The expectation that the Marcellus region will continue to be
our most profitable U.S. region for the remainder of 2014;
- The intention to explore additional expansion prospects in the
Marcellus region throughout 2014;
- The expectation that fracturing demand in the Permian region
will continue to increase throughout 2014;
- The intention to focus on improving utilization for our Permian
operations.
- The intention to look for opportunities to increase pricing for
our Permian fracturing crews;
- The expectation that the rig count in both the Barnett and
Haynesville regions will remain low for the remainder of 2014;
- The expectation that utilization of our Longview fracturing
crew will be stable for the remainder of 2014;
- The intention to maintain our presence in the Haynesville
region;
- The expectation that customer commitments in Woodward will be
covered by our base in Shawnee, Oklahoma, and that the utilization
for this location will improve;
- The plan to add an additional crew into the Bakken play if
utilization remains high in the region;
- The expectation that Eagle Ford activity and demand will remain
stable for the remainder of 2014;
- The expectation that 2014 Russian revenue will increase by 5%
compared to 2013 with a slight improvement in operating
margins;
- The expectation that 30% of our 2014 Russian pressure pumping
revenue will be generated from horizontal wells compared to 20% in
2013;
- The expectation that the North Sea completion tools business
will grow during 2014 as we increase in our customer base in the
region;
- The intention to expand our Australian market share through
sales and marketing initiatives.
- The belief that the long-term potential of the Australian
market is strong and that we are committed to growing our presence
in the region;
- The plan to explore opportunities to obtain more profitable
contracts in Algeria or redeploy the Algerian assets into a more
profitable area;
- The expectation that we will have more clarity on our future in
Algeria once existing customer contract have been completed;
- The expectation that remaining expenditures on approved capital
budgets will be approximately $65 million to $75 million;
- The expectation that $22.3 million in dividends will be paid in
July 2014;
- The belief that we have sufficient funding to meet foreseeable
borrowing requirements.
Forward-looking information and financial outlook is based on
current expectations, estimates, projections and assumptions, which
we believe are reasonable but which may prove to be incorrect.
Trican's actual results may differ materially from those expressed
or implied and therefore such forward-looking information and
financial outlook should not be unduly relied upon. In addition to
other factors and assumptions which may be identified in this
document, assumptions have been made regarding, among other things:
industry activity; the general stability of the economic and
political environment; effect of market conditions on demand for
the Company's products and services; the ability to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; the ability to operate its business in a safe,
efficient and effective manner; the performance and characteristics
of various business segments; the effect of current plans; the
timing and costs of capital expenditures; future oil and natural
gas prices; currency, exchange and interest rates; the regulatory
framework regarding royalties, taxes and environmental matters in
the jurisdictions in which the Company operates; and the ability of
the Company to successfully market its products and services.
Forward-looking information and financial outlook is subject to
a number of risks and uncertainties, which could cause actual
results to differ materially from those anticipated. These risks
and uncertainties include: fluctuating prices for crude oil and
natural gas; changes in drilling activity; general global economic,
political and business conditions; weather conditions; regulatory
changes; the successful exploitation and integration of technology;
customer acceptance of technology; success in obtaining issued
patents; the potential development of competing technologies by
market competitors; and availability of products, qualified
personnel, manufacturing capacity and raw materials. The foregoing
important factors are not exhaustive. In addition, actual results
could differ materially from those anticipated in forward-looking
information and financial outlook provided herein as a result of
the risk factors set forth under the section entitled "Risks
Factors" in our Annual Information Form dated March 21, 2014.
Readers are also referred to the risk factors and assumptions
described in other documents filed by the Company from time to time
with securities regulatory authorities.
Additional information regarding Trican including Trican's most
recent annual information form is available under Trican's profile
on SEDAR (www.sedar.com).
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION |
|
|
|
|
|
|
|
| (Stated in thousands; unaudited) |
March 31, 2014 |
December 31, 2013 |
|
| ASSETS |
|
|
|
| Current assets |
|
|
|
|
Cash
and cash equivalents |
$95,406 |
$63,869 |
|
|
Trade
and other receivables |
606,697 |
459,210 |
|
|
Current tax assets |
5,354 |
5,186 |
|
|
Inventory |
236,916 |
232,898 |
|
|
|
Prepaid expenses |
29,919 |
34,407 |
|
|
|
974,292 |
795,570 |
|
| Property and equipment |
1,351,912 |
1,374,212 |
|
| Intangible assets |
42,370 |
44,285 |
|
| Deferred tax assets |
142,340 |
122,745 |
|
| Other assets |
15,187 |
17,360 |
|
| Goodwill |
59,475 |
59,475 |
|
|
|
|
$2,585,576 |
$2,413,647 |
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
| Current liabilities |
|
|
|
|
Bank
loans |
$11,104 |
$- |
|
|
Trade
and other payables |
354,611 |
301,920 |
|
|
Deferred consideration |
- |
650 |
|
|
Current tax liabilities |
91 |
14 |
|
|
|
Current portion of loans and borrowings |
82,913 |
79,770 |
|
|
|
448,719 |
382,354 |
|
|
|
|
|
|
| Loans and borrowings |
698,300 |
593,786 |
|
| Deferred tax liabilities |
91,443 |
87,005 |
|
|
|
|
|
|
| Shareholders' equity |
|
|
|
|
Share
capital |
560,032 |
559,723 |
|
|
Contributed surplus |
65,164 |
63,074 |
|
|
Accumulated other comprehensive gain/(loss) |
2,301 |
(1,020 |
) |
|
|
Retained earnings |
716,691 |
725,172 |
|
| Total equity attributable to equity holders of the
Company |
1,344,188 |
1,346,949 |
|
| Non-controlling interest |
2,926 |
3,553 |
|
|
|
|
$2,585,576 |
$2,413,647 |
|
|
|
|
|
|
| CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME |
|
|
|
|
| (Stated in thousands, except per share amounts;
unaudited) |
2014 |
|
2013 |
|
| Three months ended March 31, |
|
|
|
|
|
|
|
|
|
| Revenue |
$643,217 |
|
$618,376 |
|
| Cost of sales |
619,575 |
|
548,483 |
|
| Gross profit |
23,642 |
|
69,893 |
|
| Administrative expenses |
33,989 |
|
30,282 |
|
| Other income |
(2,193 |
) |
(1,114 |
) |
| Results from operating activities |
(8,154 |
) |
40,725 |
|
| Finance income |
(411 |
) |
(956 |
) |
| Finance costs |
10,227 |
|
8,488 |
|
| Foreign exchange gain |
(2,292 |
) |
(1,726 |
) |
| (Loss) / profit before income tax |
(15,678 |
) |
34,919 |
|
| Income tax (recovery) / expense |
(6,568 |
) |
9,727 |
|
| (Loss) / profit for the period |
($9,110 |
) |
$25,192 |
|
|
|
|
|
|
| Other comprehensive (loss) / income |
|
|
|
|
|
|
|
|
|
|
Unrealized (loss) / gain on hedging instruments |
(1,534 |
) |
100 |
|
|
Foreign currency translation differences |
4,857 |
|
7,029 |
|
| Total comprehensive (loss) / income for the period |
($5,787 |
) |
$32,321 |
|
|
|
|
|
|
| (Loss) / profit attributable to: |
|
|
|
|
| Owners of the Company |
(8,481 |
) |
25,363 |
|
| Non-controlling interest |
(629 |
) |
(171 |
) |
| (Loss) / profit for the period |
($9,110 |
) |
$25,192 |
|
|
|
|
|
|
| Total comprehensive (loss) / income attributable
to: |
|
|
|
|
|
Owners of the Company |
(5,158 |
) |
32,331 |
|
|
Non-controlling interest |
(629 |
) |
(10 |
) |
| Total comprehensive (loss) / income for the period |
($5,787 |
) |
$32,321 |
|
|
|
|
|
|
|
|
|
|
|
| (Loss) / earnings per share |
|
|
|
|
|
Basic |
($0.06 |
) |
$0.17 |
|
|
Diluted |
($0.06 |
) |
$0.17 |
|
| Weighted average shares outstanding - basic |
148,927 |
|
148,593 |
|
| Weighted average shares outstanding - diluted |
148,927 |
|
148,892 |
|
|
|
|
|
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
|
|
|
|
|
|
|
|
| (Stated in thousands; unaudited) |
|
|
|
|
| Three months ended March 31, |
2014 |
|
2013 |
|
| Cash Provided By / (Used In): |
|
|
|
|
| Operations |
|
|
|
|
|
(Loss) / profit for the period |
($9,110 |
) |
$25,192 |
|
|
Charges to income not involving cash: |
|
|
|
|
|
|
Depreciation and amortization |
52,751 |
|
47,059 |
|
|
|
Amortization of debt issuance costs |
216 |
|
216 |
|
|
|
Stock-based compensation |
2,151 |
|
2,188 |
|
|
|
Loss
on disposal of property and equipment |
(90 |
) |
(460 |
) |
|
|
Net
finance costs |
9,816 |
|
7,532 |
|
|
|
Unrealized foreign exchange gain |
(2,773 |
) |
(3,296 |
) |
|
|
Income tax (recovery) / expense |
(6,568 |
) |
9,727 |
|
|
|
46,393 |
|
88,158 |
|
|
Change in inventories |
(6,063 |
) |
(13,203 |
) |
|
Change in trade and other receivables |
(145,540 |
) |
(101,438 |
) |
|
Change in prepayments |
5,086 |
|
2,839 |
|
|
Change in trade and other payables |
74,650 |
|
73,020 |
|
| Cash (used in) / provided by operating activities |
(25,474 |
) |
49,376 |
|
|
|
|
|
|
|
Interest paid |
(5,659 |
) |
(2,791 |
) |
|
Income taxes paid |
(3,365 |
) |
(27,411 |
) |
|
(34,498 |
) |
19,174 |
|
|
|
|
|
|
| Investing |
|
|
|
|
|
Interest received |
1,615 |
|
- |
|
|
Purchase of property and equipment |
(16,716 |
) |
(30,986 |
) |
|
Proceeds from the sale of property and equipment |
590 |
|
929 |
|
|
Purchase of other assets |
- |
|
(4,000 |
) |
|
Payment of deferred consideration |
(650 |
) |
- |
|
|
Business acquisitions |
- |
|
(31,009 |
) |
|
(15,161 |
) |
(65,066 |
) |
|
|
|
|
|
| Financing |
|
|
|
|
|
Net proceeds from issuance of share capital |
248 |
|
- |
|
|
Funds received from bank loans |
11,104 |
|
- |
|
|
Funds drawn on revolving credit facility |
92,449 |
|
26,354 |
|
|
Dividend paid |
(22,338 |
) |
(21,968 |
) |
|
81,463 |
|
4,386 |
|
|
|
|
|
|
| Effect of exchange rate changes on cash |
(267 |
) |
(420 |
) |
|
|
|
|
|
| Increase / (decrease) in cash and cash equivalents |
31,537 |
|
(41,926 |
) |
| Cash and cash equivalents, beginning of period |
63,869 |
|
113,506 |
|
| Cash and cash equivalents, end of period |
$95,406 |
|
$71,580 |
|
|
|
|
|
|
LOANS AND BORROWINGS
Long term debt
|
|
March 31, 2014 |
|
December 31, 2013 |
|
| Notes
payable |
$472,865 |
|
$456,935 |
|
|
Finance lease obligations |
23,613 |
|
25,904 |
|
|
Revolving credit facilities |
321,047 |
|
212,625 |
|
|
Hedge receivable |
(13,134 |
) |
(9,970 |
) |
|
Total |
804,391 |
|
685,494 |
|
|
Current portion of finance lease obligations (1) |
12,074 |
|
11,938 |
|
|
Russian demand revolving credit facility |
11,104 |
|
- |
|
|
Current portion of loans and borrowings |
82,913 |
|
79,770 |
|
|
Non-current |
$698,300 |
|
$593,786 |
|
| (1) Current portion of finance lease obligations is included in
trade and other payables. |
Trican has a $500.0 million four-year extendible revolving
credit facility ("Revolving Credit Facility") with a syndicate of
banks. The Revolving Credit Facility is unsecured and bears
interest at the applicable Canadian prime rate, U.S. prime rate,
Banker's Acceptance rate, or at LIBOR, plus 50 to 325 basis points,
dependent on certain financial ratios of the Company. On October
17, 2013 the Revolving facility was extended until 2017. The
Revolving Credit Facility requires Trican to comply with certain
financial and non-financial covenants that are typical for this
type of arrangement. Trican was in compliance with these covenants
at March 31, 2014 (2013 - in compliance).
Notes payable
The Notes payable require the Company to comply with certain
financial and non-financial covenants that are typical for this
type of arrangement. At March 31, 2014, the Company was in
compliance with these covenants (2013 - in compliance).
EARNINGS PER SHARE
| Three
months ended March 31, |
|
|
|
|
Basic earnings per share |
2014 |
|
2013 |
|
(Loss) / Income available to common shareholders |
($8,481 |
) |
$25,363 |
|
Weighted average number of common shares |
148,927,411 |
|
148,593,420 |
|
Basic (loss) / earnings per share |
($0.06 |
) |
$0.17 |
|
|
|
|
| Three
months ended March 31, |
|
|
|
|
Diluted earnings per share |
2014 |
|
2013 |
|
(Loss) / Income available to common shareholders |
($8,481 |
) |
$25,363 |
|
Weighted average number of common shares |
148,927,411 |
|
148,593,420 |
|
Diluted effect of stock options |
- |
|
298,170 |
|
Diluted weighted average number of common shares |
148,927,411 |
|
148,891,590 |
|
Diluted (loss) / earnings per share |
($0.06 |
) |
$0.17 |
At March 31, 2014, 10.5 million (2013 - 6.6 million) options
were excluded from the diluted weighted average number of ordinary
shares calculation as their effect would have been
anti-dilutive.
INCOME TAXES
| (Stated in thousands) |
|
|
|
|
|
Three months ended March 31, |
2014 |
|
2013 |
|
|
Current income tax expense |
$3,188 |
|
$12,422 |
|
|
Deferred income tax recovery |
(9,756 |
) |
(2,695 |
) |
|
|
($6,568 |
) |
$9,727 |
|
|
|
|
|
|
The net income tax provision differs from that expected by
applying the combined federal and provincial income tax rate of
25.26% (2013 - 25.17%) to income before income taxes for the
following reasons:
|
(Stated in thousands) Three months ended March 31, |
2014 |
|
2013 |
|
|
Expected combined federal and provincial income tax |
($3,960 |
) |
$8,789 |
|
|
Statutory and other rate differences |
(3,221 |
) |
(1,217 |
) |
|
Non-deductible expenses |
1,595 |
|
1,524 |
|
| Stock
based compensation |
543 |
|
551 |
|
|
Translation of foreign subsidiaries |
(730 |
) |
(39 |
) |
|
Adjustments related to prior years |
(842 |
) |
- |
|
|
Other |
47 |
|
119 |
|
|
|
($6,568 |
) |
$9,727 |
|
|
|
|
|
|
OPERATING SEGMENTS
|
|
Canadian Operations |
United States Operations |
|
International Operations |
|
Corporate |
|
Total |
|
|
Three months ended March 31, 2014 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$353,342 |
$211,040 |
|
$78,835 |
|
$- |
|
$643,217 |
|
| Gross
profit / (loss) |
52,322 |
(19,754 |
) |
(1,440 |
) |
(7,486 |
) |
23,642 |
|
|
Finance income |
- |
- |
|
- |
|
(411 |
) |
(411 |
) |
|
Finance costs |
- |
- |
|
- |
|
10,227 |
|
10,227 |
|
| Tax
expense / (recovery) |
7,444 |
(13,094 |
) |
(918 |
) |
- |
|
(6,568 |
) |
|
Depreciation and amortization |
18,961 |
25,880 |
|
6,914 |
|
996 |
|
52,751 |
|
|
Assets |
1,038,701 |
1,155,341 |
|
345,861 |
|
45,673 |
|
2,585,576 |
|
|
Goodwill |
45,248 |
- |
|
14,227 |
|
- |
|
59,475 |
|
|
Property and equipment |
499,545 |
728,905 |
|
110,891 |
|
12,571 |
|
1,351,912 |
|
|
Capital expenditures |
4,550 |
2,236 |
|
8,009 |
|
1,921 |
|
16,716 |
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2013 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$338,649 |
$209,616 |
|
$70,111 |
|
$- |
|
$618,376 |
|
| Gross
profit / (loss) |
81,341 |
931 |
|
(5,239 |
) |
(7,140 |
) |
69,893 |
|
|
Finance income |
- |
- |
|
- |
|
(956 |
) |
(956 |
) |
|
Finance costs |
- |
- |
|
- |
|
8,488 |
|
8,488 |
|
| Tax
expense / (recovery) |
13,994 |
(3,247 |
) |
(1,020 |
) |
- |
|
9,727 |
|
|
Depreciation and amortization |
16,683 |
22,90 |
|
6,993 |
|
476 |
|
47,059 |
|
|
Assets |
1,010,906 |
1,131,254 |
|
330,878 |
|
60,619 |
|
2,533,657 |
|
|
Goodwill |
63,279 |
- |
|
21,163 |
|
- |
|
84,442 |
|
|
Property and equipment |
554,351 |
769,147 |
|
110,326 |
|
15,195 |
|
1,449,019 |
|
|
Capital expenditures |
13,314 |
15,563 |
|
2,109 |
|
- |
|
30,986 |
|
The Corporate division does not represent an operating segment
and is included for informational purposes only. Corporate division
expenses consist of salary expenses, stock-based compensation and
office costs related to corporate employees, as well as public
company costs.
Trican Well Service Ltd.Dale DusterhoftChief Executive
Officer(403) 266-0202(403) 237-7716ddusterhoft@trican.caTrican Well
Service Ltd.Michael BaldwinSr. Vice President, Finance &
CFO(403) 266-0202(403) 237-7716mbaldwin@trican.caTrican Well
Service Ltd.Gary SummachDirector of Reporting and Investor
Relations(403) 266-0202(403) 237-7716gsummach@trican.caTrican Well
Service Ltd.2900, 645 - 7th Avenue S.W.Calgary, Alberta T2P
4G8www.trican.ca
Trican Well Service (TSX:TCW)
Historical Stock Chart
From Jun 2024 to Jul 2024
Trican Well Service (TSX:TCW)
Historical Stock Chart
From Jul 2023 to Jul 2024
