Home > Market Activity > Get Quotes > News > News Article

Pason Systems Inc.

Exchange: TSX Exchange | Dec 18, 2017, 3:59 AM EST

PSI
$ 17.06 real time data Change Down
Change:
-0.21 (-1.22%)
Volume:
233,441
Real-time price
Day Low 17.005
Day High 17.31


 Back
,
Pason Reports Second Quarter 2017 Results
Pason Reports Second Quarter 2017 Results

Canada NewsWire

CALGARY, Aug. 9, 2017 /CNW/ - Pason Systems Inc. (TSX:PSI) announced today its 2017 second quarter results.

Performance Data


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change

(CDN 000s, except per share data)

($)

($)

(%)

($)

($)

(%)

Revenue

55,792

27,173

105

114,841

72,986

57

Income (loss)

6,895

(11,319)

14,048

(22,179)


Per share – basic

0.08

(0.13)

0.17

(0.26)


Per share – diluted

0.08

(0.13)

0.17

(0.26)

EBITDA (1)

21,050

(2,231)

44,519

(2,584)


As a % of revenue

37.7

(8.2)

38.8

(3.5)

Adjusted EBITDA (1)

19,361

(1,470)

44,269

7,293

507


As a % of revenue

34.7

(5.4)

38.5

10.0

29

Funds flow from operations

18,795

(974)

39,869

2,361

1,589


Per share – basic

0.22

(0.01)

0.47

0.03

1,467


Per share – diluted

0.22

(0.01)

0.47

0.03

1,467

Cash from operating activities

24,201

2,993

709

54,032

14,324

277

Free cash flow (1)

19,628

(2,461)

48,139

1,680

2,765

Capital expenditures

5,099

4,929

3

6,233

11,509

(46)

Working capital

197,191

197,843

197,191

197,843

Total assets

412,991

456,894

(10)

412,991

456,894

(10)

Total long-term debt

Cash dividends declared

0.17

0.17

0.34

0.34

Shares outstanding end of period (#000's)

84,814

84,280

1

84,814

84,280

1


(1) Non-IFRS financial measures are defined in the Management's Discussion and Analysis section.

 

Q2 2017 vs Q2 2016

The Company generated consolidated revenue of $55.8 million in the second quarter of 2017, an increase of 105% from the same period in 2016. Stable commodity prices and continued optimism has led to increased drilling activity in Canada and the US market. Revenue in the second quarter of 2017, when compared to 2016, also benefited by a lower Canadian dollar relative to the US dollar.  Revenue from the International business unit increased modestly compared to the second quarter of 2016.

Consolidated adjusted EBITDA increased to $19.4 million in the second quarter, up from a negative $1.5 million in the second quarter of 2016. Strong operational performance in North America gross profit performance led to the rebound in these key measures.

The Company recorded net income of $6.9 million ($0.08 per share) in the second quarter of 2017, compared to a net loss of $11.3 million ($0.13 per share) recorded in the same period in 2016. The increase in Canadian and US revenue combined with cost reduction programs previously implemented and a significant decline in depreciation expense from prior year levels led to the increase in income from 2016 levels. In addition, the strengthening Canadian dollar toward the end of the second quarter of 2017 led to a lower effective tax rate for the second quarter of 2017.  

President's Message

The second quarter of each year generally has the lowest drilling activity due to spring break-up in Canada, when many areas are not accessible because of ground conditions.  As a result, financial performance in the second quarter is usually weaker than in the first. This was again the case this year. However, due to higher drilling activity in the United States, in Canada, and in certain International markets, as well as lower operating costs, Pason's financial performance improved significantly from the second quarter of 2016.

Revenue for the quarter was up 105% to $55.8 million from the previous year period. Income for the second quarter of 2017 was $6.9 million, or $0.08 per share, compared to a loss of $11.3 million in the previous year. Adjusted EBITDA was $19.4 million, resulting in an adjusted EBITDA margin of 35%. Free Cash Flow for the quarter was $19.6 million. At June 30, 2017, our working capital position stood at $197 million, including cash at $167 million. There is no debt on our balance sheet. We are maintaining our quarterly dividend at $0.17 per share.

The key drivers of improved financial performance were: 1) higher drilling activity in the United States - especially in the Permian region - as well as in Canada; 2) increased US market share; and 3) a significant reduction in operating costs and depreciation.

The impact of previously implemented cost reduction programs is highlighted by comparing this quarter's results with the second quarter of 2015. While revenue was essentially at the same level, EBITDA increased from $7.5 million the second quarter of 2015 to $21.1 million in the second quarter of 2017. Our recorded net income was also much improved.  We expect to continue to reap the benefits of our lower fixed cost structure into the foreseeable future.

Since the beginning of this year, growth in land-based drilling activity in North America has exceeded our expectations. The US land rig count now stands at 930 and the average for Canada year-to-date is at 180.

While we don't expect to see immediate reductions in operator capital budgets - and thus drilling activity - we believe growth will be muted going forward. Operator capital budgets are likely to be significantly impacted by future commodity prices, and the potential to return to lower commodity prices, as well as continued pipeline and LNG uncertainty in Canada, may create headwinds to continued growth in industry activity.

Pason's two main objectives for 2017 remain unchanged: 1) to fully participate in the industry's upturn while containing growth of the cost base; and 2) to become a key enabler of drilling automation and big data strategies.

We continue to invest approximately $30 million annually in R&D and IT. In addition to continuously enhancing the functionality and performance of existing products, our development efforts are focused on products that directly improve the efficiency, effectiveness and safety of drilling operations and wellbore quality.

Examples of this include our ePVT Adaptive Alarms and Digital Trip Sheets, AC AutoDriller, abbl Directional Advisor and the deployment of the advanced Exxon Drilling Advisory System. We are building on our acquisition of Verdazo Analytics to provide customers with a holistic platform to analyze drilling, production, and operational data. The deployment of an enhanced Live Rig View (LRV) web service to our cloud-based offering benefits office-based users of Pason data.

Our capital expenditures will be relatively modest going forward with a larger portion of our current development efforts focused on software and analytics. Our very capable and flexible rigsite IT and communications platform can host new Pason and third party software. For 2017, we intend to spend up to $25 million in capital expenditures.

Pason's market position remains very strong and the outlook for our new products and services looks promising. We are the service provider of choice for many leading operators and drilling contractors with Pason equipment installed on over 65% of all active land drilling rigs in the Western Hemisphere and a growing presence in the Middle East.

(signed)
Marcel Kessler
President and Chief Executive Officer
August 9, 2017

Management's Discussion and Analysis

The following discussion and analysis has been prepared by management as of August 9, 2017, and is a review of the financial condition and results of operations of Pason Systems Inc. (Pason or the Company) based on International Financial Reporting Standards (IFRS) and should be read in conjunction with the consolidated financial statements and accompanying notes.

Certain information regarding the Company contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements.

All financial measures presented in this report are expressed in Canadian dollars unless otherwise indicated.

Additional IFRS Measures

In its interim condensed consolidated financial statements, the Corporation uses certain additional IFRS measures. Management believes these measures provide useful supplemental information to readers.

Funds flow from operations

Management believes that funds flow from operations, as reported in the Consolidated Statements of Cash Flows, is a useful additional measure as it represents the cash generated during the period, regardless of the timing of collection of receivables and payment of payables. Funds flow from operations represents the cash flow from continuing operations, excluding non-cash items. Funds flow from operations is defined as net income adjusted for depreciation and amortization expense, non-cash stock-based compensation expense, deferred taxes, and other non-cash items impacting operations.

Cash from operating activities

Cash from operating activities is defined as funds flow from operations adjusted for changes in working capital items.

Non-IFRS Financial Measures

These definitions are not recognized measures under IFRS, and accordingly, may not be comparable to measures used by other companies. These Non-IFRS measures provide readers with additional information regarding the Company's ability to generate funds to finance its operations, fund its research and development and capital expenditure program, and pay dividends.

Revenue per EDR Day

Revenue per EDR day is defined as the daily revenue generated from all products that the Company has on rent on a drilling rig that has the Company's base EDR installed. This metric provides a key measure on the Company's ability to increase production adoption and evaluate product pricing.

EBITDA

EBITDA is defined as net income before interest expense, income taxes, stock-based compensation expense, depreciation and amortization expense, and gains on disposal of investments.

Adjusted EBITDA

Adjusted EBITDA is defined as EBITDA, adjusted for foreign exchange, impairment of property, plant, and equipment, restructuring costs, and other items which the Company does not consider to be in the normal course of continuing operations.

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, and deferred development costs.

Overall Performance


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change

(000s)

($)

($)

(%)

($)

($)

(%)

Revenue








Electronic Drilling Recorder

27,147

11,462

137

52,803

30,617

72


Pit Volume Totalizer/ePVT

7,723

3,465

123

16,299

9,821

66


Communications

4,926

2,258

118

11,849

6,589

80


Software

4,887

1,791

173

9,903

4,922

101


AutoDriller

3,021

1,517

99

6,850

4,283

60


Gas Analyzer

3,679

1,853

99

8,291

5,477

51


Other

4,409

4,827

(9)

8,846

11,277

(22)

Total revenue

55,792

27,173

105

114,841

72,986

57

 

Electronic Drilling Recorder (EDR) and Pit Volume Totalizer (PVT) rental day performance for Canada and the United States is reported below:

Canada


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change


#

#

(%)

#

#

(%)

EDR rental days

9,200

4,400

109

33,000

19,400

70

PVT rental days

8,800

4,000

120

30,600

18,000

70















United States


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change


#

#

(%)

#

#

(%)

EDR rental days

43,700

18,400

138

79,000

43,600

81

PVT rental days

34,900

14,400

142

62,600

33,400

87

 

The Pason EDR remains the Company's primary product. The EDR provides a complete system of drilling data acquisition, data networking, and drilling management tools and reports at both the wellsite and customer offices. The EDR is the base product from which all other wellsite instrumentation products are linked. By linking these products, a number of otherwise redundant elements such as data processing, display, storage, and networking are eliminated. This ensures greater reliability and a more robust system of instrumentation for the customer.

Total revenue increased 105% and 57% for the three and six months ending June 2017, over the same period in 2016. This increase is attributable to an increase in drilling activity in the Company's North American markets. The second quarter 2017 results benefited from a weaker Canadian dollar relative to the US dollar.

Industry activity in the US market increased 118% in the second quarter of 2017 compared to the corresponding period in 2016 (68% on a year-to-date basis), while second quarter Canadian rig activity increased 141% (93% on a year-to-date basis). Canadian EDR days, which includes some non-oil and gas-related activity, increased 109% in the second quarter of 2017 from 2016 levels (70% on a year-to-date basis), while US EDR days increased by 138% from the second quarter of 2016 (81% on a year-to-date basis).

For the first half of 2017, the Pason EDR was installed on 55% of the land rigs in the US compared to 51% during the same time period in 2016.

The Canadian business unit continued to see increased competition from a number of competitors. For the first half of 2017, the Pason EDR was installed on 89% of the land rigs in the Canadian market; for the same period in 2016 the number of EDR days exceeded the number of reported industry days.

For the purposes of market share, the Company uses the number of EDR days billed and oil and gas drilling days as reported by accepted industry sources.

The Canadian market saw continued pricing pressure during the second quarter of 2017 relative to the same period in 2016.

The revenue generated from the Company's other wellsite instrumentation products tracked the percentage increase in drilling activity. The notable exceptions were:

  • increased product adoption of EDR peripherals, including workstations and Pason Rig Display
  • continued increase in customer adoption of the communication solutions previously rolled out in the Canadian and US markets
  • increased ePVT adoption rates in the US
  • increased AutoDriller rentals in both Canada and the US due to the significant increase in drilling activity which led to more mechanical rigs being deployed in 2017 compared to 2016
  • decreased revenue of service rig recorders in Latin America due to the drop in drilling activity which impacted other revenue

Included in the software category is revenue from the Company's data analytics subsidiary, Verdazo.

Other revenue is down due to the sale of the net operating assets of 3PS, Inc. (3PS) effective January 1, 2017.

For the second quarter of 2017, the Company saw an increase in rig count in its Australian and Andean operating areas, compared to the corresponding period in 2016. Rig count continues to be depressed in  Argentina and Mexico. In the Middle East, the Company is realizing an increase in its share of net income from its Saudi Arabia joint venture as a result of a continuing increases in rig count and market penetration.

Discussion of Operations

United States Operations


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change

(000s)

($)

($)

(%)

($)

($)

(%)

Revenue








Electronic Drilling Recorder

20,400

7,383

176

35,524

18,070

97


Pit Volume Totalizer/ePVT

5,594

2,174

157

10,197

5,350

91


Communications

3,389

1,172

189

5,972

2,717

120


Software

3,331

1,338

149

5,799

3,095

87


AutoDriller

1,816

617

194

3,224

1,582

104


Gas Analyzer

2,278

1,077

112

4,043

2,675

51


Other

2,387

2,630

(9)

4,402

6,528

(33)

Total revenue

39,195

16,391

139

69,161

40,017

73

Operating costs

16,302

10,749

52

30,512

25,994

17

Depreciation and amortization

4,170

5,463

(24)

9,171

12,236

(25)

Segment operating profit

18,723

179

10,360

29,478

1,787

1,550

 


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

2017

2016


$

$

$

$

Revenue per EDR day - USD

661

624

649

621

Revenue per EDR day - CAD

889

804

866

827

 

Momentum in the US land-based drilling count continued in the second quarter of 2017.  Although the majority of the absolute rig count gains were seen in the Permian and certain plays in Oklahoma, the Eagle Ford and Bakken participated in the increase.

US segment revenue increased by 139% in the second quarter of 2017 over the 2016 comparable period. For the first six months, revenue increased 73% compared to the prior year.  Included in the prior year results was revenue (included in other revenue) from 3PS, the net operating assets of which were sold effective January 1, 2017. Removing 3PS revenue from the comparative figures, revenue increased by 165% in the second quarter of 2017 compared to 2016 (151% increase when measured in USD). The value of the Canadian dollar relative to the US dollar had a positive impact on revenue when measured in Canadian dollars in the second quarter of 2017. For the first half of 2017, revenue increased by 90% (89% when measured in USD) when removing 3PS revenue.

Industry activity in the US market during the second quarter of 2017 increased 118% from the prior year, and 68% for the first six months. US market share was 55% for the second quarter of 2017 compared to 51% during the same period of 2016, primarily driven by market share growth in key US regions combined with changes in the mix of active customers.

EDR rental days increased by 138% for the quarter ended June 30, 2017, over the same time period in 2016, while revenue per EDR day in the second quarter of 2017 increased to US$661, an increase of US$37 over the same period in 2016. This increase is due to an uptick on adoption of certain key products,  combined with continued customer acceptance of enhanced communication solutions. Pricing discounts were similar to 2016 levels. 

Revenue per EDR day for the first half of 2017 was US$649, up US$28 from the same period in 2016.

Operating costs increased by 52% in the second quarter relative to the same period in the prior year. When measured in USD, and removing 3PS costs, operating costs increased by 68%, which is a direct result of the business unit investing in field costs to meet the significant increase in drilling activity with the largest increases in labour costs and repairs.

Depreciation expense for the second quarter of 2017 decreased 24% over 2016 amounts due to the reduction in the capital program.

Segment profit increased by $18.5 million in the second quarter of 2017 compared to the corresponding period in 2016.

Canadian Operations


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change

(000s)

($)

($)

(%)

($)

($)

(%)

Revenue








Electronic Drilling Recorder

3,769

1,853

103

12,205

7,687

59


Pit Volume Totalizer/ePVT

1,502

827

82

4,979

3,359

48


Communications

1,489

759

96

5,341

3,188

68


Software

1,458

401

264

3,934

1,696

132


AutoDriller

709

301

136

2,658

1,405

89


Gas Analyzer

1,079

502

115

3,661

2,150

70


Other

473

357

32

1,688

1,340

26

Total revenue

10,479

5,000

110

34,466

20,825

66

Operating costs

5,559

3,995

39

11,353

9,319

22

Depreciation and amortization

5,645

6,331

(11)

11,579

13,913

(17)

Segment operating (loss) profit

(725)

(5,326)

86

11,534

(2,407)

 


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

2017

2016


$

$

$

$

Revenue per EDR day- CAD

1,044

1,103

994

1,053

 

The second quarter showed significant improvement in WCSB rig count, with virtually all operators increasing their activity.

Canadian segment revenue increased by 110% for the quarter ended June 30, 2017 compared to the same period in 2016. This increase is the result of a 141% increase in the number of drilling industry days in the second quarter compared to 2016 levels. Included in the software category is revenue earned by Verdazo.

EDR rental days increased 109% in the second quarter of 2017 compared to 2016 (70% for the first six months of 2017).

Revenue per EDR day decreased by $59 to $1,044 during the second quarter of 2017 compared to 2016, resulting from selective price discounts on certain products. Revenue per EDR day for the first half of 2017 was $994, down $59 from the same period in 2017. The Canadian business unit continues to see competitive pricing pressure relative to prior periods. 

Operating costs increased by 39% in the second quarter of 2017 relative to the same period in 2016 (22% on a year-to-date basis), due to increased repair costs combined with the inclusion of Verdazo operating costs.

Depreciation and amortization expense decreased by approximately 11% for the three months ended June 30, 2017. The 2017 amounts include the amortization of investment tax credits received in the second quarter of 2017, offset by the amortization of intangibles that were recognized on the acquisition of Verdazo.

The second quarter 2017 operating loss of $0.7 million is an improvement of $6.1 million from the prior year.  Segment operating profit for the first six months of 2017 is $11.5 million compared to a loss of $2.4 million in the prior year.

International Operations


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change

(000s)

($)

($)

(%)

($)

($)

(%)

Revenue








Electronic Drilling Recorder

2,703

2,226

21

5,074

4,860

4


Pit Volume Totalizer/ePVT

627

464

35

1,123

1,112

1


Communications

323

327

(1)

536

684

(22)


Software

98

52

88

170

131

30


AutoDriller

496

599

(17)

968

1,296

(25)


Gas Analyzer

322

274

18

587

652

(10)


Other

1,549

1,840

(16)

2,756

3,409

(19)

Total revenue

6,118

5,782

6

11,214

12,144

(8)

Operating costs

4,773

4,188

14

8,965

9,719

(8)

Depreciation and amortization

1,008

1,784

(43)

2,046

3,791

(46)

Segment operating profit (loss)

337

(190)

203

(1,366)

 

The international rig count was up in several of the Company's international markets, most notably Australia and portions of the Andean region in South America. As a result, revenue in the International operations segment increased 6% in the second quarter of 2017 compared to the same period in 2016. For the first half of 2017 revenue decreased by 8% from prior years levels as a result of lower activity in the Company's Argentina and Mexico markets.

Operating costs increased by 14% in the second quarter relative to the same period in the prior year as result of increased operating costs in certain key markets. The Company anticipates that future pricing arrangements will reflect these price increases.

Depreciation expense decreased by approximately 43% for the three months ended June 30, 2017.

The segment operating profit was $0.3 million for the second quarter of 2017, an improvement from the $0.1 million loss recorded in the corresponding period in 2016. The year-to-date profit was $0.2 million compared to a loss of $1.4 million in the prior year.

Corporate Expenses


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

Change

2017

2016

Change

(000s)

($)

($)

(%)

($)

($)

(%)

Other expenses







Research and development

6,261

5,629

11

12,138

12,257

(1)

Corporate services

3,536

4,082

(13)

7,604

8,404

(10)

Stock-based compensation

3,177

2,238

42

5,724

3,200

79

Other








Restructuring costs

10,861


Foreign exchange (gain) loss

(689)

396

(466)

(2,323)

80


Other

(1,000)

365

216

1,339

(84)

Total corporate expenses

11,285

12,710

(11)

25,216

33,738

(25)

 

In the first quarter of 2016, the Company initiated additional cost reduction initiatives to address the prolonged downturn in oil and gas drilling activity. As a result, the Company recorded a restructuring charge of $10.9 million in the first quarter of 2016.

Q2 2017 vs Q1 2017

Consolidated revenue was $55.8 million in the second quarter of 2017 compared to $59.0 million in the first quarter of 2017, a decrease of $3.2 million, or 5%. The second quarter is usually the Company's weakest due to the spring break-up in Canada.  US activity levels continued to increase from first quarter 2017 levels. The Canadian segment earned revenue of $10.5 million in the second quarter of 2017 compared to $24.0 million in the first quarter of 2017, a decrease of $13.5 million. Revenue in the US market increased by $9.2 million, from $30.0 million in the first quarter of 2017 to $39.2 million in the second quarter of 2017. The International segment experienced a revenue increase of $1.0 million.

The Company recorded a net profit in the second quarter of 2017 of $6.9 million ($0.08 per share) compared to a profit of $7.2 million ($0.08 per share) in the first quarter of 2017.

Sequentially, EBITDA decreased from $23.5 million in the first quarter of 2017 to $21.1 million in the second quarter of 2017. Adjusted EBITDA, which adjusts for foreign exchange and certain non-recurring charges, decreased from $24.9 million in the first quarter of 2017 to $19.4 million in the second quarter of 2017. Funds flow from operations decreased from $21.1 million in the first quarter of 2017 to $18.8 million in the second quarter of 2017.

Second Quarter Conference Call

Pason will be conducting a conference call for interested analysts, brokers, investors and media representatives to review its second quarter 2017 results at 9:00 am (Calgary time) on Thursday, August 10, 2017. The conference call dial-in number is 1-888-231-8191 or 1-647-427-7450. You can access the seven-day replay by dialing 1-855-859-2056 or 1-416-849-0833, using password 35710957.

Pason Systems Inc. is a leading global provider of specialized data management systems for drilling rigs. Our solutions, which include data acquisition, wellsite reporting, remote communications, web-based information management, and analytics, enable collaboration between the rig and the office. Pason's common shares trade on the Toronto Stock Exchange under the symbol PSI.

Additional information, including the Company's Annual Report and Annual Information Form for the year ended December 31, 2016, is available on SEDAR at www.sedar.com or on the Company's website at www.pason.com.

Condensed Consolidated Interim Balance Sheets

As at

June 30, 2017

December 31, 2016

(CDN 000s) (unaudited)

($)

($)

Assets



Current




Cash and cash equivalents

166,520

146,479


Trade and other receivables

47,414

50,721


Prepaid expenses

3,473

3,826


Income taxes recoverable

7,101

15,066


Assets held for sale

8,413


Total current assets

224,508

224,505

Non-current




Property, plant and equipment

134,220

150,504


Intangible assets and goodwill

39,655

43,698


Deferred tax assets

14,608

16,544


Total non-current assets

188,483

210,746

Total assets

412,991

435,251

Liabilities and equity



Current




Trade payables and accruals

22,889

24,347


Stock-based compensation liability

4,428

1,516


Liabilities held for sale

223


Total current liabilities

27,317

26,086

Non-current




Stock-based compensation liability

3,829

2,941


Onerous lease obligation

2,697

2,917


Deferred tax liabilities

13,282

16,656


Total non-current liabilities

19,808

22,514

Equity




Share capital

143,795

139,730


Share-based benefits reserve

23,679

23,026


Foreign currency translation reserve

58,705

69,443


Retained earnings

139,687

154,452


Total equity

365,866

386,651

Total liabilities and equity

412,991

435,251

 

Condensed Consolidated Interim Statements of Operations


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

2017

2016

(CDN 000s, except per share data) (unaudited)

($)

($)

($)

($)






Revenue

55,792

27,173

114,841

72,986

Operating expenses






Rental services

24,099

16,986

45,582

40,757


Local administration

2,535

1,946

5,248

4,275


Depreciation and amortization

10,823

13,578

22,796

29,940


37,457

32,510

73,626

74,972






Operating profit (loss)

18,335

(5,337)

41,215

(1,986)

Other expenses






Research and development

6,261

5,629

12,138

12,257


Corporate services

3,536

4,082

7,604

8,404


Stock-based compensation expense

3,177

2,238

5,724

3,200


Other (income) expense

(1,689)

761

(250)

9,877


11,285

12,710

25,216

33,738






Income (loss) before income taxes

7,050

(18,047)

15,999

(35,724)


Income tax provision (recovery)

155

(6,728)

1,951

(13,545)

Net income (loss)

6,895

(11,319)

14,048

(22,179)

Income (loss) per share






Basic

0.08

(0.13)

0.17

(0.26)


Diluted

0.08

(0.13)

0.17

(0.26)

 

Condensed Consolidated Interim Statements of Other Comprehensive Income


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

2017

2016

(CDN 000s) (unaudited)

($)

($)

($)

($)

Net income (loss)

6,895

(11,319)

14,048

(22,179)

Items that may be reclassified subsequently to net income:






Foreign currency translation adjustment

(9,733)

(262)

(11,328)

(24,865)


Reclassification of foreign currency translation gain on disposition of 3PS assets

590


Other comprehensive (loss) gain

(9,733)

(262)

(10,738)

(24,865)

Total comprehensive (loss) income

(2,838)

(11,057)

3,310

(47,044)


 

Condensed Consolidated Interim Statements of Changes in Equity


Share Capital

Share-Based
Benefits
Reserve

Foreign
Currency
Translation
Reserve

Retained
Earnings

Total Equity

(CDN 000s) (unaudited)

($)

($)

($)

($)

($)

Balance at January 1, 2016

128,067

23,367

85,603

252,411

489,448


Net loss

(22,179)

(22,179)


Dividends

(28,621)

(28,621)


Other comprehensive loss

(24,865)

(24,865)


Exercise of stock options

4,546

(1,424)

3,122


Expense related to vesting of options

1,417

1,417

Balance at June 30, 2016

132,613

23,360

60,738

201,611

418,322


Net loss

(18,442)

(18,442)


Dividends

(28,717)

(28,717)


Other comprehensive income

8,705

8,705


Exercise of stock options

5,867

(1,913)

3,954


Expense related to vesting of options

1,579

1,579


Shares issued pursuant to business acquisition

1,250

1,250

Balance at December 31, 2016

139,730

23,026

69,443

154,452

386,651


Net income

14,048

14,048


Dividends

(28,813)

(28,813)


Other comprehensive loss

(10,738)

(10,738)


Exercise of stock options

4,065

(985)

3,080


Expense related to vesting of options

1,638

1,638

Balance at June 30, 2017

143,795

23,679

58,705

139,687

365,866


 

Condensed Consolidated Interim Statements of Cash Flows


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

2017

2016

(CDN 000s) (unaudited)

($)

($)

($)

($)

Cash from (used in) operating activities






Net income (loss)

6,895

(11,319)

14,048

(22,179)

Adjustment for non-cash items:






Depreciation and amortization

10,823

13,578

22,796

29,940


Stock-based compensation

3,177

2,238

5,724

3,200


Non-cash restructuring costs

4,833


Deferred income taxes

(1,052)

(5,688)

(1,941)

(10,976)


Unrealized foreign exchange (gain) loss and other

(1,048)

217

(758)

(2,457)

Funds flow from (used in) operations

18,795

(974)

39,869

2,361

Movements in non-cash working capital items:






Decrease in trade and other receivables

3,659

6,826

1,816

18,090


Decrease in prepaid expenses

700

868

258

1,004


Decrease (increase) in income taxes recoverable

2,774

(840)

9,566

(3,583)


(Decrease) increase in trade payables, accruals and stock-based compensation liability

(780)

(5,641)

3,134

461


Effects of exchange rate changes

(522)

3,212

985

2,306

Cash generated from operating activities

24,626

3,451

55,628

20,639


Income tax paid

(425)

(458)

(1,596)

(6,315)

Net cash from operating activities

24,201

2,993

54,032

14,324

Cash flows from (used in) financing activities






Proceeds from issuance of common shares

2,374

2,512

3,080

3,122


Payment of dividends

(14,419)

(14,327)

(28,813)

(28,621)

Net cash used in financing activities

(12,045)

(11,815)

(25,733)

(25,499)

Cash flows (used in) from investing activities






Additions to property, plant and equipment

(4,439)

(3,912)

(5,280)

(8,795)


Development costs

(660)

(1,017)

(953)

(2,714)


Proceeds on disposal of investment and property, plant and equipment

11

447

14

556


Acquisition

(4,750)


Proceeds on sale of net operating assets

7,123


Changes in non-cash working capital

515

(972)

326

(1,691)

Net cash from (used in)  investing activities

(4,573)

(5,454)

(3,520)

(12,644)

Effect of exchange rate on cash and cash equivalents

(4,409)

165

(4,738)

(10,045)

Net  increase (decrease) in cash and cash equivalents

3,174

(14,111)

20,041

(33,864)

Cash and cash equivalents, beginning of period

163,346

176,093

146,479

195,846

Cash and cash equivalents, end of period

166,520

161,982

166,520

161,982


 

Operating Segments

The Company operates in three geographic segments: Canada, the United States, and International (Latin America, Offshore, the Eastern Hemisphere, and the Middle East). The amounts related to each segment are as follows:

Three Months Ended June 30, 2017

Canada

United States

International

Total


($)

($)

($)

($)

Revenue

10,479

39,195

6,118

55,792

Rental services and local administration

5,559

16,302

4,773

26,634

Depreciation and amortization

5,645

4,170

1,008

10,823

Segment operating (loss) profit

(725)

18,723

337

18,335

Research and development




6,261

Corporate services




3,536

Stock-based compensation




3,177

Other income




(1,689)

Income taxes




155

Net Income




6,895

Capital expenditures

171

4,929

(1)

5,099

Goodwill

1,259

6,995

2,600

10,854

Intangible assets

28,146

655

28,801

Segment assets

119,681

240,334

52,976

412,991

Segment liabilities

22,209

10,182

14,734

47,125






Three Months Ended June 30, 2016










Revenue

5,000

16,391

5,782

27,173

Rental services and local administration

3,995

10,749

4,188

18,932

Depreciation and amortization

6,331

5,463

1,784

13,578

Segment operating (loss) profit

(5,326)

179

(190)

(5,337)

Research and development




5,629

Corporate services




4,082

Stock-based compensation




2,238

Other expense




761

Income taxes




(6,728)

Net loss




(11,319)

Capital expenditures

966

3,884

79

4,929

Goodwill

24,218

2,600

26,818

Intangible assets

26,666

171

414

27,251

Segment assets

130,076

271,808

55,010

456,894

Segment liabilities

24,800

8,363

5,409

38,572

 

Six Months Ended June 30, 2017

Canada

United States

International

Total


($)

($)

($)

($)

Revenue

34,466

69,161

11,214

114,841

Rental services and local administration

11,353

30,512

8,965

50,830

Depreciation and amortization

11,579

9,171

2,046

22,796

Segment operating profit

11,534

29,478

203

41,215

Research and development




12,138

Corporate services




7,604

Stock-based compensation




5,724

Other expenses




(250)

Income tax expense




1,951

Net income




14,048

Capital expenditures

118

6,215

(100)

6,233

Goodwill

1,259

6,995

2,600

10,854

Intangible assets

28,146

655

28,801

Segment assets

119,681

240,334

52,976

412,991

Segment liabilities

22,209

10,182

14,734

47,125






Six Months Ended June 30, 2016










Revenue

20,825

40,017

12,144

72,986

Rental services and local administration

9,319

25,994

9,719

45,032

Depreciation and amortization

13,913

12,236

3,791

29,940

Segment operating (loss) profit

(2,407)

1,787

(1,366)

(1,986)

Research and development




12,257

Corporate services




8,404

Stock-based compensation




3,200

Other expense




9,877

Income tax recovery




(13,545)

Net loss




(22,179)

Capital expenditures

2,683

8,658

168

11,509

Goodwill

24,218

2,600

26,818

Intangible assets

26,666

171

414

27,251

Segment assets

130,076

271,808

55,010

456,894

Segment liabilities

24,800

8,363

5,409

38,572

 

Other (Income) Expenses


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

2017

2016


($)

($)

($)

($)

Foreign exchange loss (gain)

(689)

396

(466)

(2,323)

Restructuring costs

10,861

Other

(1,000)

365

216

1,339

Other (income) expenses

(1,689)

761

(250)

9,877

 

In the first quarter of 2016, the Company initiated additional cost reduction initiatives to address the prolonged downturn in oil and gas drilling activity. As a result, the Company recorded a restructuring charge of $10.9 million in the first quarter of 2016.

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. Pason's common shares trade on the Toronto Stock Exchange under the symbol PSI.TO.

Certain information regarding the Company contained herein may constitute forward-looking information under applicable securities law. The words "anticipate", "expect", "believe", "may", "should", "will", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward-looking information and statements. Forward-looking statements in this document may include statements, express or implied regarding the anticipated business prospects and financial performance of Pason; expectations or projections about future strategies and goals for growth and expansion; expected and future cash flows and revenues; and expected impact of future commitments. These forward-looking statements are based upon various underlying factors and assumptions, including the state of the economy and the oil and gas exploration and production business, in particular; the Company's business prospects and opportunities; and estimates of the financial and operational performance of Pason.

Forward-looking information and statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking information and statements. Risk factors that could cause actual results or events to differ materially from current expectations include, among others, the ability of Pason to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the operating performance of Pason's assets and businesses, the price of energy commodities, competitive factors in the energy industry, changes in laws and regulations affecting Pason's businesses, technological developments, and general economic conditions.

Readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such forward looking statements, although considered reasonable by management as of the date hereof, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Additional information on risks and uncertainties and other factors that could affect Pason's operations or financial results are included in Pason's reports on file with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or through Pason's website (www.pason.com). Furthermore, any forward looking statements contained in this news release are made as of the date of this news release, and Pason does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

SOURCE Pason Systems Inc.

View original content: http://www.newswire.ca/en/releases/archive/August2017/09/c5448.html

about Pason Systems Inc., visit the company's website at www.pason.com or contact: Marcel Kessler, President and CEO, 403-301-3400, marcel.kessler@pason.com; Jon Faber, Chief Financial Officer, 403-301-3400, jon.faber@pason.comCopyright CNW Group 2017

Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. View delay times for all exchanges. Market Data powered by QuoteMedia. See the QuoteMedia Terms of Use.