CALGARY, May 22, 2015 /CNW/ - MATRRIX Energy
Technologies Inc. ("MATRRIX" or the "Corporation") (TSX-V: MXX)
announces financial results for the three month period ended
March 31, 2015.
OVERALL HIGHLIGHTS
For the three months ended March 31,
2015 the Corporation experienced a significant decline in
drilling and motor rental activity in both Canada and the US. The anticipated decline in
overall operational activity was due to the overall decrease in
capital expenditures by the Corporation's key customers and the
industry as a whole, due to weak commodity prices.
The Corporation remains in a strong financial position with
positive working capital of $7,589
including $5,422 of cash on hand as
at March 31, 2015.
FIRST QUARTER 2015 SUMMARY (Compared with the first
quarter of 2014)
- Achieved total operating days of 199, down 77% from 873
- Achieved consolidated revenue of $2,103, down 81% from $10,854
- Consolidated gross margin of 10%, down 68% from 30%
- Recorded net loss of $1,302 down
220% from net income of $1,082
- Adjusted EBITDA of ($678), down
135% from $1,924
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|
FINANCIAL
HIGHLIGHTS
|
|
|
Three Months
Ended
|
|
March 31,
2015
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March 31,
2014(1)
|
%Change
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Revenue
|
|
2,103
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10,854
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(81%)
|
EBITDA
|
(i)
|
(500)
|
1,731
|
(129%)
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EBITDA per
share
|
|
|
|
|
|
Basic
|
(0.02)
|
0.05
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(129%)
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|
Diluted
|
(0.02)
|
0.05
|
(129%)
|
Adjusted
EBITDA
|
(ii)
|
(678)
|
1,924
|
(135%)
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Adjusted EBITDA per
share
|
|
|
|
|
|
Basic
|
(0.02)
|
0.06
|
(135%)
|
|
Diluted
|
(0.02)
|
0.06
|
(135%)
|
Net Income
(loss)
|
(1,302)
|
1,082
|
(220%)
|
Net Income (loss) per
share
|
|
|
|
|
Basic
|
(0.04)
|
0.04
|
(201%)
|
|
Diluted
|
|
(0.04)
|
0.04
|
(201%)
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Funds flow
|
(iii)
|
(713)
|
1,876
|
(138%)
|
Gross
Margin
|
(iv)
|
204
|
3,276
|
(94%)
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Capital expenditures
(net of lost in hole replacements)
|
50
|
1,035
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(95%)
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Directional and
horizontal systems available
|
26
|
23
|
13%
|
Weighted Average
common shares outstanding
|
32,185
|
32,185
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-
|
Weighted Average
diluted common shares outstanding
|
32,185
|
32,189
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-
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(1)
– Amounts related to this period are revised amounts as discussed
in the December 31, 2014 Corporation's MD&A.
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OUTLOOK
The principal business strategy of MATRRIX is to purchase and
deploy drilling technology in Canada and the
United States, and to actively seek investment opportunities
to acquire existing drilling technology services businesses.
As at the date of this MD&A, 25 Systems are available for
deployment to the field in Canada
and the United States.
The industry in North America
now focuses on horizontal drilling to develop conventional and
unconventional oil and liquids-rich natural gas plays across
North America. There always exists
uncertainty over commodity prices and related customer capital
expenditure programs. Macro-economic factors have significantly
affected capital spending and overall drilling activity levels in
North America, which is the
Corporation's only operating area. The Corporation expects to
continue to experience significant reductions in activity and
pricing during the first half of 2015, and expects pricing and
activity pressure to continue in 2015, until commodity prices
improve and operators return to reasonable levels of activity.
Canada
While activity and financial results were at record levels for
the Corporation in 2014, an abrupt negative change in operating
days and pricing leverage occurred in Q1 2015. At this juncture, we
expect activity and pricing pressure in the Canadian market to
persist throughout 2015. This leads the Corporation to expect its
overall Canadian results to be down materially in 2015. However,
with potentially large field developments of LNG for eventual
export from Canada, there is
optimism for improvements in activity beyond 2015, subject to
marked improvements in oil and gas commodity pricing and the
approval of LNG infrastructure projects, although the timing and
likelihood of those projects is uncertain. MATRRIX continues to
build relationships with active current and potential customers in
Canada to maximize revenue in this
challenging environment. The Corporation is keenly focused on
managing costs through reductions in staffing and compensation
levels, managing equipment vendor relationships, and a continuous
effort to improve operational efficiency.
USA
Although MATRRIX did not experience any operating activity in
the US during Q1 2015, we will continue to focus on providing
provide performance drilling operations in Texas (Permian Basin) while marketing
horizontal and directional drilling services in both Texas and Oklahoma. Activity levels in both of these
regions have been negatively impacted by reductions in drilling
activity as a result of capital spending reductions due to low
commodity prices. As such, the Corporation is carefully executing
its strategy to maintain and expand its revenue base in these
areas, through maximizing service quality, while maintaining
reasonable field margins with an eye to strong operational
efficiency and optimizing drilling operations.
The Corporation's Oklahoma
operation consists of a small group of focused and qualified
individuals, driving to develop a foothold in the region. We
believe the current rig count in Oklahoma has close to bottomed, and with the
recent recovery of commodity prices, it's our goal to use the
anticipated rise in activity to capitalize on the opportunity for
growth. Costs for the Oklahoma
operation are minimal, and reflect a prudent use of funds with
apurpose to establishing a solid, long term presence in the
market.
MATRRIX has a strong balance sheet, and strives to maintain
operational excellence for existing customers, while actively
pursuing new sales opportunities within the context of the highly
competitive environment in which the Corporation operates.
President Richard Ryan
stated:
"First quarter 2015 results are reflective of a severe downturn
in drilling activity for the industry, catalyzed by the drop in
commodity prices that occurred in the last half of 2014.
Unfortunately for MATRRIX, our high concentration of revenue from a
small list of clients led to a disproportionate decrease in
activity for us, as these clients either consolidated their
activity with fewer service providers, or reduced their drilling
activity to minimum levels, in some cases to zero. Our response to
control costs was swift, but it can never completely match the
change in revenue base as we always strive to ensure strong client
service. In Q1 2015, we reduced headcount by over 40%, implemented
reductions in wages for both field and support staff, and acted on
opportunities to reduce costs. Our focus for 2015 is to continue to
execute at a high level, regardless of activity, using unique
systems and processes developed within MATRRIX since our inception
in mid-2011. We intend to preserve our clean balance sheet and
position the organization for the anticipated upturn in the
industry, while recognizing the timing of that upturn is
uncertain."
The Corporation's financial statements and management's
discussion and analysis for the three months ended March 31, 2015 will be available on SEDAR at
www.sedar.com.
NON-GAAP MEASURES
This MD&A 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.
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|
Three Months
Ended
|
(000's CAD
$)
|
March 31,
2015
|
March 31,
2014
|
%
Change
|
Net income
(loss)
|
(1,302)
|
1,082
|
(220%)
|
|
Depreciation
|
802
|
649
|
24%
|
EBITDA
|
(500)
|
1,731
|
(129%)
|
(ii) Adjusted EBITDA
is defined as "income (loss) before interest income, interest
expense, taxes, business acquisition transaction costs, reverse
takeover adjustments, depreciation and amortization, shared based
compensation expense, gains on disposal of property and equipment
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 the
results are taxed in various jurisdictions, or how the results are
affected by the accounting standards associated with the
Corporation's stock based compensation plan.
|
Three Months
Ended
|
(000's CAD
$)
|
March 31,
2015
|
March 31,
2014
|
%
Change
|
EBITDA
|
(500)
|
1,731
|
(129%)
|
|
(Gain)/loss from
disposition of property and equipment
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-
|
146
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(100%)
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Gain from equipment
lost in hole
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(142)
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(41)
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(250%)
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Interest and other
income
|
-
|
(3)
|
(100%)
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Share based
payments
|
78
|
91
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(15%)
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|
Foreign exchange loss
(gain)
|
(114)
|
-
|
-
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Adjusted
EBITDA
|
(678)
|
1,924
|
(135%)
|
(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.
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|
Three Months
Ended
|
(000's CAD
$)
|
March 31,
2015
|
March 31,
2014
|
%
Change
|
Operating cash
flow
|
|
3,139
|
(230)
|
1,466%
|
Changes in non-cash
working capital
|
(3,852)
|
2,106
|
(283%)
|
Funds flow
|
|
(713)
|
1,876
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(138%)
|
(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
|
(000's CAD
$)
|
March 31,
2015
|
March 31,
2014
|
%
Change
|
Gross
profit
|
|
(575)
|
2,657
|
(122%)
|
Depreciation
|
|
778
|
619
|
26%
|
Gross
margin
|
|
204
|
3,276
|
(94%)
|
|
|
10%
|
30%
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(68%)
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MAILING OF AGM MATERIALS
The Corporation would also like to announce that it has mailed
its management information circular and proxy materials in respect
of its annual general meeting ("AGM") to be held on Tuesday, June 16, 2015. The Corporation
would like to thank Messrs. Seaman and Jespersen who will be
retiring at the conclusion of their terms as directors of the
Corporation. Mr. Ryan stated: " We thank Don and Kent for
their hard work and dedication as directors of MATRRIX since its
founding". At the AGM it is expected that Mr. Thane Russell
will be nominated for election as a director of the
Corporation. Mr. Russell is currently the Vice President,
Business Development and Technology of Absolute Completion
Technologies. Copies of the meeting materials will be filed
on SEDAR.
FORWARD-LOOKING INFORMATION
This press release contains certain statements or disclosures
relating to MATRRIX that are based on the expectations of MATRRIX
as well as assumptions made by and information currently available
to MATRRIX which may constitute forward-looking information under
applicable securities laws. In particular, this press release
contains forward-looking information related to: the Corporation's
ability to continue to build and maintain customer relationships
and increase its customer base with operators active in areas with
oil and/or liquids rich opportunities and strong capital
expenditure programs; expectation of significant reductions in
activity and pricing to continue for 2015, and for the foreseeable
future; customers are extremely cautious about capital spending in
2015, and industry activity levels in Western Canada are currently expected to
decline by 50% and that, coupled with competitive and pricing
pressure, leads the Corporation to expect its overall Canadian
results will be down materially in 2015; the advancement of
potentially large field developments of LNG for eventual export
from Canada provide optimism for
improvements in activity beyond 2015, subject to marked
improvements in oil and gas commodity pricing and the approval of
LNG infrastructure projects, the timing and likelihood of those
projects uncertain; the Corporation managing costs through
reductions in staffing and compensation levels, managing equipment
vendor relationships, and its continuous effort to improve
operational efficiency; in the US the Corporation is carefully
executing its strategy to maintain and expand its revenue base,
though maximizing service quality, while maintaining reasonable
field margins with an eye to strong operational efficiency and
optimizing drilling operations; the Corporation's strategy to focus
its US directional and horizontal operations in the Permian along
with its existing performance motor drilling operations to increase
operational efficiencies; the Corporation's ability to maintain a
strong balance sheet and operational excellence; the Corporation's
expectation that 2015 will be a challenging year for the industry
and MATRRIX; the Corporation's expectation relating to significant
reductions in customer activity and capital spending in both
Canada and the USA. Since forward-looking information
addresses future events and conditions, by its very nature it
involves inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number
of factors and risks. Readers are cautioned that the foregoing list
of factors is not exhaustive.
The forward-looking information contained in this press release
is made as of the date hereof and MATRRIX undertakes no obligation
to update publicly or revise any forward-looking information,
whether as a result of new information, future events or otherwise,
unless so 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.