CALGARY, May 17, 2017 /CNW/ - MATRRIX Energy
Technologies Inc. ("MATRRIX" or the "Corporation") (TSX-V: MXX)
announces financial results for the three month period ended
March 31, 2017.
(All monetary amounts contained herein are expressed in
thousands of Canadian dollars, except for per share amounts)
OVERALL HIGHLIGHTS
For the three month period ended March
31, 2017, the Corporation experienced a 119% increase in
operating days related to horizontal drilling and motor rental
activity in Canada relative to the
comparative 2016 period. The Corporation's overall increase in
operational activity was due to the addition of new customers
related to the increase in overall activity in the Western Canadian
Sedimentary Basin ("WCSB") as compared to the comparative 2016
period.
The Corporation continues to be in a strong financial positon
with positive working capital of $4,143 ($0.13/per
share) including $3,119 ($0.10/per share) of cash and cash equivalents on
hand as at March 31,
FIRST QUARTER 2017 SUMMARY (Compared with the first
quarter of 2016)
- revenue of $1,549, up 67% from
$925
- operating days of 232, up 119% from 106
- net loss of ($693), improved 15%
from ($816)
- adjusted EBITDA of ($55),
improved 7% from ($59)
OUTLOOK
The current business strategy of MATRRIX is to deploy horizontal
and directional drilling technology in Canada, while actively seeking investment
opportunities to acquire existing drilling services businesses
and/or equipment. As at the date of this MD&A, 25
Horizontal and Directional Systems are available within MATRRIX for
deployment to the field in the WCSB.
The Corporation has announced it intends to investigate entering
the land-based contract drilling business to complement its
business of supplying horizontal and directional drilling
technologies for the oil and gas industry in North America. MATRRIX continues to evaluate
opportunities to purchase contract drilling companies and/or
drilling rig assets and will transact when and if an appropriate
opportunity exists.
The oil and gas industry in North
America extensively uses horizontal drilling to exploit
conventional and unconventional oil and liquids-rich natural gas
plays in most basins within North
America. Oil prices have significantly rebounded from lows
experienced in early 2016, which have positively affected capital
expenditures and drilling programs by the Corporation's oil and gas
clients, while improving the outlook for oil and gas service
companies including MATRRIX.
The Corporation expects 2017 to be a recovery year for the
industry. Supply of oil and gas services equipment continues to
exceed demand, and until activity meets a reasonable threshold to
improve the supply / demand imbalance, we expect the market for the
Corporation's services to remain highly competitive. To that end,
the Corporation continues to drive efficiency and scalability into
its systems and processes, with a view that fixed expenses will be
spread over a larger revenue base as the Corporation's revenue base
recovers.
Canada
Predicated upon improvements in oil and gas prices, and
improvements in market access, the Corporation expects industry
activity levels in Western Canada
to grow through 2017 and into 2018.
MATRRIX continues to have success leveraging and building
relationships with active current and potential customers in
Western Canada, and expects growth
in revenue and earnings within an improving industry environment.
The Corporation continues to effectively balance costs with
forecasted activity levels, while managing equipment vendor
relationships, and perpetually improving operational results and
efficiency through use of its proprietary
D2ROXTM software platform
OTHER MARKETS
The Corporation will evaluate, assess, and execute (if it deems
appropriate) an expansion program into markets outside of
North America, with a goal to
improving geographic diversity. Opportunities will be evaluated
based upon expected financial impact and risk to the Corporation
through delivery of appropriate levels of revenue, income, and
returns in each geographic region.
In considering geographic expansion, the Corporation will assess
the potential of partnering with established organizations that
have significant, existing operations in certain regions of
interest.
President Richard Ryan
states:
"In the Canadian market, fundamentals and service company
activity levels continue to improve, the catalyst being stronger
oil prices and stronger levels of industry investment when compared
to 2016.
The company's first quarter 2017 activity levels were certainly
improved from the comparable period in 2016. Certain MATRRIX
clients experienced delays in accessing pressure pumping and
cementing equipment during Q1 2017, causing wells scheduled for
that period to be delayed into Q2 2017 and beyond.
With respect to improving quality of well-bore life cycles, we
are very encouraged by client feedback regarding the effect of
D2ROXTM on client drilling operations.
D2ROXTM is a proprietary web based software
platform, designed and utilized by MATRRIX in all aspects of
service delivery, resulting in high quality field operations and
highly accurate wellbore placement for MATRRIX clients.
As activity continues to improve, it's our intention to use
D2ROXTM to drive scalable growth, maintain
high levels of service quality, while automating certain routine
aspects of the sales / engineering / operations / accounting cycle
of MATRRIX drilling services. The D2ROXTM
foundation is designed to operate in both Canadian and American
units, and will accommodate needs of the MATRRIX drilling rig
division, assuming the company is successful in launching that
service offering.
We have zero debt and strong working capital and cash positions.
We're very encouraged by the firming market, our activity increases
and sales momentum, and the growth opportunities that exist for the
company. Our team is working hard to leverage market improvements,
remaining focused on measurable, sustainable value for clients and
shareholders while returning to a mindset of growth and
profitability."
FINANCIAL HIGHLIGHTS
|
Three Months
Ended
|
|
March
31,
|
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
Revenue
|
1,549
|
925
|
67%
|
|
EBITDA (i)
|
(59)
|
(130)
|
55%
|
|
EBITDA per
share
|
|
|
|
|
Basic
|
(0.00)
|
(0.00)
|
-
|
|
Diluted
|
(0.00)
|
(0.00)
|
-
|
|
Adjusted EBITDA
(ii)
|
(55)
|
(59)
|
7%
|
|
Adjusted EBITDA per
share
|
|
|
|
|
Basic
|
(0.00)
|
(0.00)
|
-
|
|
Diluted
|
(0.00)
|
(0.00)
|
-
|
|
Net loss
|
(693)
|
(816)
|
15%
|
|
Net loss per
share
|
|
|
|
|
Basic
|
(0.02)
|
(0.03)
|
33%
|
|
Diluted
|
(0.02)
|
(0.03)
|
33%
|
|
Funds flow from
operations (iii)
|
(49)
|
(76)
|
36%
|
|
Gross Margin
(iv)
|
603
|
442
|
36%
|
|
Assets
|
13,790
|
17,536
|
(21%)
|
|
Liabilities
|
673
|
288
|
(134%)
|
|
Capital expenditures
(net of lost in hole replacements)(1)
|
-
|
38
|
(100%)
|
|
Directional and
horizontal systems available
|
25
|
25
|
-
|
|
Weighted Average
common shares outstanding
|
32,185
|
32,185
|
-
|
|
Weighted Average
diluted common shares outstanding
|
32,185
|
32,185
|
-
|
|
(1)
Non-GAAP measure
|
|
|
|
NON-GAAP MEASURES
This press release contains references to (i) EBITDA; (ii)
Adjusted EBITDA; (iii) Funds Flow; and (iv) Gross Margin. These
financial measures are not measures that have any standardized
meaning prescribed by IFRS and are therefore referred to as
non-GAAP measures. The non-GAAP measures used by the Corporation
may not be comparable to similar measures used by other
companies.
|
(i)
|
EBITDA is not a
measure recognized under IFRS and does not have a standardized
meanings prescribed by IFRS. EBITDA is defined as "income (loss)
before interest expense, income taxes, depreciation and
amortization.
|
|
Three Months
Ended
|
|
March
31,
|
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
Net loss
|
(693)
|
(816)
|
15%
|
|
Depreciation
|
634
|
686
|
(8%)
|
|
EBITDA
|
(59)
|
(130)
|
55%
|
|
(ii)
|
Adjusted EBITDA is
defined as "income (loss) before interest income, interest expense,
taxes, business acquisition transaction costs, depreciation and
amortization, shared based compensation expense, gains on disposal
of property and equipment, impairment expenses, interest and other
income, and foreign exchange." Management believes that in addition
to net and total comprehensive income (loss), Adjusted EBITDA is a
useful supplemental measure as it provides an indication of the
results generated by the Corporation's principal business
activities prior to consideration of how these activities are
financed, how assets are depreciated, amortized and impaired: the
impact of foreign exchange, or how the results are affected by the
accounting standards associated with the Corporation's stock based
compensation plan.
|
|
Three Months
Ended
|
|
March
31,
|
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
EBITDA
|
(59)
|
(130)
|
55%
|
|
Gain from equipment
lost in hole
|
(30)
|
-
|
100%
|
|
Interest and other
income
|
(7)
|
(8)
|
(13%)
|
|
Share based
payments
|
32
|
71
|
(55%)
|
|
Foreign exchange
(gain) loss
|
9
|
8
|
13%
|
|
Adjusted
EBITDA
|
(55)
|
(59)
|
7%
|
|
(iii)
|
Funds flow from
operations is defined as "cash provided by operating activities
before the change in non-cash working capital". Funds flow from
operations is a measure that provides shareholders and potential
investors additional information regarding the Corporation's
liquidity and its ability to generate funds to finance its
operations. Management utilizes this measure to assess the
Corporation's ability to finance operating activities and capital
expenditures.
|
|
Three Months
Ended
|
|
March
31,
|
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
Operating cash
flow
|
(545)
|
(9)
|
5,956%
|
|
Changes in non-cash
working capital
|
496
|
(67)
|
840%
|
|
Funds flow
|
(49)
|
(76)
|
36%
|
|
(iv)
|
Gross margin is
defined as "gross profit from services revenue before stock based
compensation and depreciation". Gross margin is a measure that
provides shareholders and potential investors additional
information regarding the Corporation's cash generating and
operating performance. Management utilizes this measure to assess
the Corporation's operating performance.
|
|
Three Months
Ended
|
|
March
31,
|
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
Loss from
operations
|
(20)
|
(221)
|
91%
|
|
Depreciation
|
623
|
663
|
(6%)
|
|
Gross
margin
|
603
|
442
|
36%
|
|
Gross margin
%
|
39%
|
48%
|
(19%)
|
FORWARD-LOOKING INFORMATION
Certain statements contained in this press release constitute
forward-looking information. This information relates to
future events or the Corporation's future performance. All
information other than statements of historical fact is
forward-looking information. The use of any of the words
"anticipate", "plan", "contemplate", "continue", "estimate",
"expect", "intend", "propose", "might", "may", "will", "could",
"believe", "predict" and "forecast" are intended to identify
forward-looking information.
In particular, this press release contains forward-looking
information pertaining to the following: the Corporation's
intentions to enter the land based contract drilling business; the
Corporation's continued evaluation of opportunities to purchase
contract drilling companies and/or drilling rig assets; the
Corporation's expectation is that 2017 will be a recovery year for
the industry; the Corporation's expectation that the market for the
Corporation's services will remain competitive until the
supply/demand imbalance is improved and the expectation that
industry activity levels in Western
Canada will grow through 2017 and into 2018.
This forward-looking information involves material assumptions
and known and unknow risks and uncertainties, certain of which are
beyond the Corporation's control. The Corporation's Annual
Information Form and other documents filed with securities
regulatory authorities (accessible through the SEDAR website
www.sedar.com) describe the risks, the material assumptions and
other factors that could influence actual results and which are
incorporated herein by reference. Actual results, performance or
achievements could differ material from those expressed in, or
implied by, this forward-looking information and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking information will transpire or occur, or if any of
them do so, what benefits the Corporation will derive
therefrom.
The forward-looking information contained herein is provided as
at the date hereof and the Corporation does not undertake any
obligation to update publicly or to revise any of the included
forward-looking information, whether as a result of new
information, future events or otherwise, except as may be required
by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE MATRRIX Energy Technologies Inc.