CALGARY, Aug. 8, 2018
/CNW/ - Pason Systems Inc. (TSX:PSI) announced today its 2018
second quarter results.
Performance Data
|
Three Months Ended
June 30,
|
Six Months Ended June
30,
|
|
2018
|
2017
(Restated)
|
Change
|
2018
|
2017
(Restated)
|
Change
|
(CDN 000s, except per
share data)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
68,271
|
55,792
|
22
|
142,084
|
114,841
|
24
|
Net Income
(1)
|
5,479
|
5,968
|
(8)
|
17,838
|
12,772
|
40
|
|
Per share –
basic (1)
|
0.06
|
0.07
|
(9)
|
0.21
|
0.15
|
39
|
|
Per share –
diluted (1)
|
0.06
|
0.07
|
(9)
|
0.21
|
0.15
|
38
|
EBITDA
(2)
|
23,614
|
21,050
|
12
|
55,834
|
44,519
|
25
|
|
As a % of
revenue
|
34.6
|
37.7
|
(310) bps
|
39.3
|
38.8
|
50 bps
|
Adjusted EBITDA
(2)
|
29,458
|
19,361
|
52
|
64,211
|
44,269
|
45
|
|
As a % of
revenue
|
43.1
|
34.7
|
840 bps
|
45.2
|
38.5
|
670 bps
|
Funds flow from
operations
|
27,836
|
18,795
|
48
|
61,794
|
39,869
|
55
|
|
Per share –
basic
|
0.33
|
0.22
|
47
|
0.73
|
0.47
|
54
|
|
Per share –
diluted
|
0.32
|
0.22
|
45
|
0.72
|
0.47
|
54
|
Cash from operating
activities
|
27,617
|
24,201
|
14
|
51,961
|
54,032
|
(4)
|
Free cash flow
(2)
|
23,133
|
19,628
|
18
|
42,039
|
48,139
|
(13)
|
Capital
expenditures
|
4,771
|
5,099
|
(6)
|
10,568
|
6,233
|
70
|
Working
capital
|
224,749
|
197,191
|
14
|
224,749
|
197,191
|
14
|
Total
assets
|
424,423
|
412,991
|
3
|
424,423
|
412,991
|
3
|
Total long-term
debt
|
—
|
—
|
—
|
—
|
—
|
—
|
Cash dividends
declared
|
0.17
|
0.17
|
—
|
0.34
|
0.34
|
—
|
Shares outstanding
end of period (#000's)
|
85,378
|
84,814
|
1
|
85,378
|
84,814
|
1
|
|
|
(1)
|
As disclosed in Note
2 to the consolidated financial statements, the Company identified
an immaterial non-cash re-classification error with respect to a
component of its deferred income tax expense associated with
accounting for the deferred tax on its net investment in foreign
operations related to an inter-company financing. The
reclassification is between the deferred tax provision in the
statement of operations and foreign currency translation reserve in
equity. This adjustment has been corrected on a retrospective
basis with all prior period comparative figures being
restated.
|
|
|
(2)
|
Non-IFRS financial
measures are defined in the Management's Discussion and Analysis
section.
|
Q2 2018 vs Q2 2017
The Company generated consolidated revenue of $68.3 million in the second quarter of 2018, an
increase of 22% from the same period in 2017. Stable oil prices
have resulted in an increase in the number of active drilling rigs
in the US. In Canada, a more
challenging industry outlook has led to declines in activity
compared to the prior year. The International business unit saw
increases in activity in each of the Company's major markets.
Consolidated adjusted EBITDA increased to $29.5 million in the second quarter, an increase
of 52% from the second quarter of 2017. For the first six
months, consolidated adjusted EBITDA was $64.2 million, an increase of 45% over the 2017
comparative period. Significant increases in gross profit in the US
business unit led to the improvement in this key measure.
The Company recorded net income of $5.5
million ($0.06 per share) in
the second quarter of 2018, compared to net income of $6.0 million ($0.07
per share) recorded in the same period in 2017. Net income was
negatively impacted in the second quarter of 2018 from (a) the
Company recording a significant unrealized foreign exchange loss on
inter-company advances made to the Company's Argentinian subsidiary
as a result of a significant devaluation of the Argentina peso relative to the Canadian dollar
and (b) the effective income tax rate for the second quarter of
2018 being higher than the statutory rate due the unrealized
foreign exchange loss recorded on the inter-company advances
described above
President's Message
Pason achieved strong results in the second quarter of 2018 and
our teams continue to perform well in all geographies. We generated
revenue of $68.3 million in the
period, an increase of 22% compared to the same quarter last year.
The main drivers of revenue growth were increased drilling activity
and market share gains in the United
States, and higher activity levels in all Pason's
international markets. These improvements were partially offset by
a decline in Canadian drilling activity and by a stronger Canadian
dollar relative to the US dollar.
Adjusted EBITDA was $29.5 million
for the quarter, an increase of 52%. Adjusted EBITDA as a
percentage of revenue was 43% compared to 35% one year ago. The
drivers of this improvement were the significant increase in
revenue with high incremental margins. Pason recorded net income
for the quarter of $5.5 million
($0.06 per share) compared to
$6.0 million ($0.07 per share) in the prior year quarter. Net
income was negatively affected by an unrealized foreign exchange
loss caused by the significant devaluation of the Argentine peso
relative to the Canadian dollar.
Capital expenditures for the quarter were $4.8 million and free cash flow was $23.1 million. At June 30,
2018, our working capital position stood at $224.7 million, including cash and short-term
investments of $177.2 million. There
is no debt on our balance sheet. We are increasing our quarterly
dividend to $0.18 per share.
In the first quarter of 2018, we began reporting our revenue
along five product categories to better reflect the changing nature
of Pason's business as follows:
- Drilling Data contains all products and services associated
with acquiring, displaying, storing, and delivering drilling data.
Revenue in this segment increased 25% in the second quarter
compared to the previous year period and accounted for 52% of our
total revenue. This increase was driven by a 17% increase in total
US land drilling activity and US market share gains from 56% to
61%. Drilling industry days in Canada decreased by 9%, while segment revenue
was essentially flat.
- Mud Management & Safety includes products such as the Pit
Volume Totalizer (PVT), Gas Analyzer, Hazardous Gas Alarm, and the
Electronic Choke Actuator. In the second quarter, Mud Management
& Safety generated 28% of total revenue.
- Communications includes satellite and terrestrial Internet
bandwidth, Wireless Rigsite, VOIP and Intercom services and
accounted for 9% of total revenue. Revenue in this segment is
showing lower growth because of the transition from satellite to
terrestrial bandwidth with lower pricing and better user experience
for customers.
- Drilling Intelligence bundles Pason's offers targeted at
enabling our customers' drilling optimization and automation
efforts. It contains products such as autodrillers, abbl
Directional Advisor®, the ExxonMobil Drilling Advisory System® and
Pivot, a pipe oscillation system for improving slide drilling.
Drilling Intelligence is our highest growth segment (at 36%) and it
generated 6% of total revenue in the second quarter. Our level of
confidence in the successful commercialization of new drilling
intelligence products continues to grow. There currently are over
130 drilling rig installations of new Drilling Intelligence
software in North America.
- Analytics & Other includes our Verdazo Discovery Analytics
product suite, various reports, and other revenue streams. This
segment is not as directly correlated to drilling activity and
accounted for 4% of revenue.
We have increased our investment in R&D and IT by 7% in the
first half of 2018 compared to the previous year period with a
focus on machine learning algorithms. Our capital expenditures will
be relatively modest going forward with a larger portion of
development efforts focused on software and analytics. We intend to
spend up to $25.0 million in capital
expenditures in 2018. Our highly capable and flexible IT and
communications platform can host additional new Pason and
third-party software at the rig site and in the cloud.
The Permian Basin in Texas and
New Mexico is the most active
basin in the United States. It has
been the focal point for the industry's recovery since the downturn
and the key driver of revenue growth for Pason. There is the
potential for a slowdown in drilling activity in the Permian the
second half of 2018 due to takeaway capacity issues. However, we
have not yet seen any signs of a slowdown and we would expect
activity levels to plateau, rather than decline significantly.
In Canada, the ongoing crude
oil and natural gas takeaway capacity issues continue to create an
environment of extreme caution for E&P companies. The industry
is watching for signals from Shell on plans for the $40-billion LNG Canada project on the West Coast.
Shell has recently called the project "very promising" but it is
still under study. A positive final investment decision could be a
catalyst for an increase in Canadian gas drilling activity.
The outlook for our international business is positive. Market
fundamentals continue to evolve favorably as the global balance of
crude oil supply and demand tightens. Despite OPEC's recent
decision to increase production, global supply continues to weaken
from geopolitical pressure to remove Iranian oil from the market
and no resolution to falling production in Venezuela. Spare production capacity, which is
limited to a few OPEC countries, is at a low level. It is becoming
apparent that the new projects expected to come online during the
next few years will not be sufficient to meet the increasing
demand. These developments underline the growing need for
international E&P spending to increase significantly.
Pason's market positions remain very strong. 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
position in the Middle East. We
continue to be very well positioned to participate in the
industry's recovery and growth.
(signed)
Marcel Kessler
President and Chief Executive Officer
August 8, 2018
Management's Discussion and Analysis
The following discussion and analysis has been prepared by
management as of August 8, 2018, 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
Company 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.
Management believes that EBITDA and Adjusted EBITDA are useful
supplemental measures as they provide an indication of the results
generated by the Company's principal business activities prior to
the consideration of how these results are taxed in multiple
jurisdictions, how the results are impacted by foreign exchange or
how the results are impacted by the Company's accounting policies
for equity-based compensation plans.
Free cash flow
Free cash flow is defined as cash from operating activities plus
proceeds on disposal of property, plant, and equipment, less
capital expenditures (including changes to non-cash working capital
associated with capital expenditures), and deferred development
costs. This metric provides a key measure on the Company's ability
to generate cash from it's principal business activities after
funding the capital expenditure program, and provides an indication
of the amount of cash available to finance, among other items, the
Company's dividend and other investment opportunities.
Overall Performance
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
|
Drilling
Data
|
35,420
|
28,317
|
25
|
72,715
|
57,085
|
27
|
|
Mud Management and
Safety
|
19,304
|
16,423
|
18
|
40,564
|
33,937
|
20
|
|
Communications
|
6,111
|
5,380
|
14
|
13,909
|
11,873
|
17
|
|
Drilling
Intelligence
|
4,374
|
3,221
|
36
|
8,955
|
7,214
|
24
|
|
Analytics and
Other
|
3,062
|
2,451
|
25
|
5,941
|
4,732
|
26
|
Total
revenue
|
68,271
|
55,792
|
22
|
142,084
|
114,841
|
24
|
The Pason Electronic Drilling Recorder (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.
EDR rental day performance for Canada and the
United States is reported below:
Pason Electronic
Drilling Recorder (EDR) Rental Days
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
|
#
|
#
|
(%)
|
#
|
#
|
(%)
|
Canada
|
8,300
|
9,200
|
(10)
|
29,400
|
33,000
|
(11)
|
United
States
|
56,300
|
43,700
|
29
|
107,200
|
79,000
|
36
|
Total revenue increased 22% and 24% for the three and six months
ending June 2018, over the same
period in 2017. This increase is attributable to an increase in
drilling activity in the Company's US and major International
markets, partially offset by lower Canadian activity. The second
quarter and year-to-date 2018 results, as compared to
corresponding period in 2017, were negatively impacted by a
stronger Canadian dollar relative to the US dollar.
Industry activity in the US market increased 17% in the second
quarter of 2018 compared to the corresponding period in 2017, while
second quarter Canadian rig activity decreased 9%. US EDR days
increased by 29% in the second quarter of 2018 compared to the
corresponding period in 2017, while second quarter Canadian EDR
days, which includes some non-oil and gas-related activity,
decreased 10% from 2017 levels. Both the US and the Canadian
business units saw increases in revenue per EDR day when measured
in local currencies.
In the second quarter of 2018, the Pason EDR was installed on
61% of the land rigs in the US market compared to 56% during the
same time period of 2017.
In the second quarter of 2018, the Pason EDR was installed on
86% of the land rigs in the Canadian market compared to 87% during
the same period of 2017. 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.
Revenue generated from the Company's other wellsite
instrumentation products was largely driven by the increase in
drilling activity in the US market combined with increases in the
adoption of certain EDR peripherals and an increase in revenue from
the Company's Drilling Intelligence products, including the
continued roll-out of the Drilling Advisory System™ technology
licensed from ExxonMobil™.
For the second quarter of 2018, the Company saw an increase in
activity in all major regions of the International segment with the
largest increases in Australia and
Argentina.
Discussion of Operations
United States Operations
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
|
Drilling
Data
|
26,973
|
20,466
|
32
|
50,671
|
35,742
|
42
|
|
Mud Management and
Safety
|
14,643
|
12,090
|
21
|
27,879
|
21,589
|
29
|
|
Communications
|
4,200
|
3,388
|
24
|
7,898
|
5,985
|
32
|
|
Drilling
Intelligence
|
2,909
|
1,973
|
47
|
5,053
|
3,457
|
46
|
|
Analytics and
Other
|
1,553
|
1,278
|
22
|
2,885
|
2,388
|
21
|
Total
revenue
|
50,278
|
39,195
|
28
|
94,386
|
69,161
|
36
|
Rental services
and local administration
|
17,455
|
16,302
|
7
|
34,340
|
30,512
|
13
|
Depreciation and
amortization
|
4,100
|
4,170
|
(2)
|
7,928
|
9,171
|
(14)
|
Segment gross
profit
|
28,723
|
18,723
|
53
|
52,118
|
29,478
|
77
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
2018
|
2017
|
|
$
|
$
|
$
|
$
|
Revenue per EDR day -
USD
|
685
|
661
|
682
|
649
|
Revenue per EDR day -
CAD
|
884
|
889
|
872
|
866
|
US land-based drilling continued its sequential increase quarter
over quarter resulting from the improvement of global commodity
price fundamentals and WTI trading consistently above US$65 per barrel. These fundamentals continue to
support strong rig activity.
US segment revenue increased by 28% in the second quarter of
2018 over the 2017 comparable period (33% when measured in USD).
For the first six months of 2018, revenue increased 36% compared to
the prior period (42% when measured in USD). The value of the
Canadian dollar relative to the US dollar had a negative impact on
revenue when measured in Canadian dollars in 2018 compared to
2017.
Industry activity in the US market increased by 17% in the
second quarter of 2018 over the 2017 comparable period. For
the first six months of 2018, industry activity increased by 24%
compared to the prior period. US market share was 61% for the
second quarter of 2018 compared to 56% during the same period of
2017. For the first six months of 2018, US market share was
61% compared to 55% during the same period of 2017. The
increase in market share is driven by market share growth in key US
regions combined with changes in the mix of active customers.
EDR rental days increased by 29% in the second quarter of 2018
over the 2017 comparable period, while revenue per EDR day in the
second quarter of 2018 increased to US$685, an increase of US$24 over the same period in 2017. The increase
in EDR rental days and revenue per EDR day was driven by higher
adoption of certain peripheral products and selective price
increases on certain products.
Revenue per EDR day for the first six months of 2018 was
US$682, up US$33 from the same period of 2017.
Operating costs increased by 7% in the second quarter of 2018
over the 2017 comparative period (13% when measured in USD). For
the first six months of 2018, operating costs increased 13% over
the 2017 comparative period (19% when measured in USD). The
increase in operating costs is attributable higher field staff
levels and higher direct costs to support additional activity.
Depreciation expense decreased by 2% in the second quarter of
2018 over the 2017 comparative period due to the reduction in the
capital program since 2014.
Segment gross profit increased by $10.0
million in the second quarter of 2018 over the 2017
comparative period.
Canadian Operations
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
|
Drilling
Data
|
4,180
|
4,157
|
1
|
14,100
|
14,602
|
(3)
|
|
Mud Management and
Safety
|
2,962
|
3,117
|
(5)
|
9,623
|
10,109
|
(5)
|
|
Communications
|
1,506
|
1,670
|
(10)
|
5,275
|
5,353
|
(1)
|
|
Drilling
Intelligence
|
1,117
|
746
|
50
|
3,235
|
2,778
|
16
|
|
Analytics and
Other
|
900
|
789
|
14
|
1,856
|
1,624
|
14
|
Total
revenue
|
10,665
|
10,479
|
2
|
34,089
|
34,466
|
(1)
|
Rental services
and local administration
|
6,136
|
5,559
|
10
|
13,464
|
11,353
|
19
|
Depreciation and
amortization
|
4,223
|
5,645
|
(25)
|
8,608
|
11,579
|
(26)
|
Segment gross
profit (loss)
|
306
|
(725)
|
—
|
12,017
|
11,534
|
4
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
2018
|
2017
|
|
$
|
$
|
$
|
$
|
Revenue per EDR day -
CAD
|
1,184
|
1,044
|
1,102
|
994
|
The second quarter Canadian rig activity showed year-over-year
decrease in activity. Drilling industry days decreased by 9%
for both the second quarter of 2018 and for the first six months of
2018 compared to the same period in 2017. Rig activity reflected
the challenging industry outlook and, for the second quarter of
2018, wet conditions persisted across
several areas of the WCSB.
Canadian segment revenue increased by 2% in the second quarter
of 2018 over the 2017 comparative period. For the first six months
of 2018, revenue decreased by 1% compared to the prior period.
EDR rental days decreased 10% in the second quarter of 2018
compared to 2017. On a year-to-date basis EDR rental days decreased
11% over 2017 levels.
Revenue per EDR day increased by $140 to $1,184
during the second quarter of 2018 compared to 2017. For the first
six months of 2018, revenue per EDR day increased by $108 to $1,102. The
increase is driven by higher adoption of certain EDR peripherals
and the successful introduction of ExxonMobil DAS™.
Operating costs increased by 10% in the second quarter of 2018
relative to the same period in 2017 (19% on a year-to-date basis),
with repair costs and other direct field costs responsible for the
increase.
Depreciation and amortization expense decreased by 25% for the
three months ended June 30, 2018. The decrease is a result of
lower capital programs since 2014 and a drop in amortization
expense of previously deferred research and development costs as
fewer project costs are being capitalized for accounting
purposes.
Segment gross profit for the second quarter of 2018 was
$0.3 million compared to a loss of
$0.7 million for the same quarter in
2017.
International Operations
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Revenue
|
|
|
|
|
|
|
|
Drilling
Data
|
4,267
|
3,694
|
16
|
7,944
|
6,741
|
18
|
|
Mud Management and
Safety
|
1,699
|
1,216
|
40
|
3,062
|
2,239
|
37
|
|
Communications
|
405
|
322
|
26
|
736
|
535
|
38
|
|
Drilling
Intelligence
|
348
|
502
|
(31)
|
667
|
979
|
(32)
|
|
Analytics and
Other
|
609
|
384
|
59
|
1,200
|
720
|
67
|
|
7,328
|
6,118
|
20
|
13,609
|
11,214
|
21
|
Rental services
and local administration
|
4,765
|
4,773
|
—
|
9,448
|
8,965
|
5
|
Depreciation and
amortization
|
897
|
1,008
|
(11)
|
1,859
|
2,046
|
(9)
|
Segment gross
profit
|
1,666
|
337
|
394
|
2,302
|
203
|
1,034
|
The international rig count was up in all of the Company's major
international markets with the largest increases in Australia and Argentina. The increase in activity
in Argentina was offset by a weaker Argentinian Peso compared
to the prior year. Revenue in the International operations segment
increased in the second quarter of 2018 by 20% compared to the same
period in 2017. For the first six months of 2018, revenue increased
by 21% compared to the prior period.
Operating costs were consistent in the second quarter compared
to the same period in 2017. For the first six months of 2018,
operating costs increased by 5% compared to the prior period.
Depreciation expense decreased by 11% for the three months ended
June 30, 2018.
Segment gross profit was $1.7
million for the second quarter of 2018, an improvement from
the $0.3 million profit recorded in
the corresponding period in 2017. For the first six months of 2018,
segment gross profit was $2.3 million
compared to $0.2 million in 2017.
Corporate Expenses
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2018
|
2017
|
Change
|
2018
|
2017
|
Change
|
(000s)
|
($)
|
($)
|
(%)
|
($)
|
($)
|
(%)
|
Other
expenses
|
|
|
|
|
|
|
Research and
development
|
6,617
|
6,261
|
6
|
12,976
|
12,138
|
7
|
Corporate
services
|
3,840
|
3,536
|
9
|
7,645
|
7,604
|
1
|
Stock-based
compensation
|
3,855
|
3,177
|
21
|
6,389
|
5,724
|
12
|
Other
|
|
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
5,787
|
(689)
|
—
|
8,191
|
(466)
|
—
|
|
Other
|
57
|
(1,000)
|
—
|
186
|
216
|
(14)
|
Total corporate
expenses
|
20,156
|
11,285
|
79
|
35,387
|
25,216
|
40
|
The Company recorded a significant unrealized foreign exchange
loss in the second quarter of 2018 on inter-company advances made
to the Company's Argentinian subsidiary as a result of a
significant devaluation of the Argentina peso relative to the Canadian
dollar.
Q2 2018 vs Q1 2018
Consolidated revenue was $68.3
million in the second quarter of 2018 compared to
$73.8 million in the first quarter of
2018, a decrease of $5.5 million or
8%. The second quarter of the year is typically the weakest for the
Company due to the seasonality of Canadian drilling activity. US
and international activity levels continued to increase and this
partially offset the anticipated drop in Canadian activity.
Revenue in the US segment was $50.3
million in the second quarter of 2018 compared to
$44.1 million in the first quarter of
2018, an increase of $6.2 million or
14% as industry activity, market share and revenue per EDR day all
increased. The Canadian segment earned revenue of $10.7 million in the second quarter of 2018
compared to $23.4 million in the
first quarter of 2018, a decrease of $12.7
million or 54% as the decrease in industry activity was
partially offset by an increase in revenue per EDR day. The
International segment earned revenue of $7.3
million in the second quarter of 2018 compared to
$6.3 million in the first quarter of
2018, an increase of $1.0 million or
16%.
Adjusted EBITDA, which adjusts for foreign exchange and certain
non-recurring charges, was $29.5
million in the second quarter of 2018 compared to
$34.8 million in the first quarter of
2018. Funds flow from operations was $27.8
million in the in the second quarter of 2018 compared to
$34.0 million in the first quarter of
2018.
The Company recorded a net profit in the second quarter of 2018
of $5.5 million ($0.06 per share) compared to a profit of
$12.4 million ($0.14 per share) in the first quarter of 2018.
The Company recorded a significant unrealized foreign exchange loss
in the second quarter of 2018 on inter-company advances made to the
Company's Argentinian subsidiary as a result of a significant
devaluation of the Argentina peso
relative to the Canadian dollar and this combined with a higher
effective tax rate for the second quarter of 2018 due to the
unrealized foreign exchange loss recorded on these inter-company
advances negatively impacted net income.
Second Quarter Conference Call
Pason will be conducting a conference call for interested
analysts, brokers, investors and media representatives to review
its second quarter 2018 results at 9:00
am (Calgary time) on
Thursday, August 9, 2018. The
conference call dial-in number is 1-888-231-8191 or 1-647-427-7450.
You can access the seven-day replay by dialing 1-855-859-2056 or
1-416-849-0833, using password 2786457.
Pason Systems Inc. is a leading global provider of specialized
data management systems for drilling rigs. Our solutions, which
include data acquisition, wellsite reporting, remote
communications, web-based information management, and analytics,
enable collaboration between the rig and the office. Pason's common
shares trade on the Toronto Stock Exchange under the symbol
PSI.
Additional information, including the Company's Annual Report
and Annual Information Form for the year ended December 31, 2017, is available on SEDAR at
www.sedar.com or on the Company's website at www.pason.com.
Condensed Consolidated Interim Balance Sheets
As
at
|
|
June 30,
2018
|
December 31,
2017
|
(CDN 000s)
(unaudited)
|
|
($)
|
($)
|
Assets
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
|
111,342
|
154,129
|
|
Short-term
investments
|
|
65,840
|
—
|
|
Trade and other
receivables
|
|
62,012
|
55,069
|
|
Income tax
recoverable other
|
|
17,881
|
17,881
|
|
Prepaid
expenses
|
|
2,909
|
4,028
|
|
Income taxes
recoverable
|
|
7,639
|
3,946
|
|
Total current
assets
|
|
267,623
|
235,053
|
Non-current
|
|
|
|
|
Property, plant and
equipment
|
|
123,647
|
127,685
|
|
Intangible assets and
goodwill
|
|
33,153
|
34,318
|
|
Deferred tax
assets
|
|
—
|
1,390
|
|
Total non-current
assets
|
|
156,800
|
163,393
|
Total
assets
|
|
424,423
|
398,446
|
Liabilities and
equity
|
|
|
|
Current
|
|
|
|
|
Trade payables and
accruals
|
|
19,576
|
20,391
|
|
Income taxes payable
other
|
|
17,881
|
17,881
|
|
Stock-based
compensation liability
|
|
5,417
|
3,089
|
|
Total current
liabilities
|
|
42,874
|
41,361
|
Non-current
|
|
|
|
|
Stock-based
compensation liability
|
|
4,486
|
2,758
|
|
Onerous lease
obligation
|
|
2,302
|
2,326
|
|
Deferred tax
liabilities
|
|
15,556
|
4,515
|
|
Total non-current
liabilities
|
|
22,344
|
9,599
|
Equity
|
|
|
|
|
Share
capital
|
|
155,275
|
150,887
|
|
Share-based benefits
reserve
|
|
26,001
|
24,425
|
|
Foreign currency
translation reserve
|
|
57,246
|
40,358
|
|
Retained
earnings
|
|
120,683
|
131,816
|
|
Total
equity
|
|
359,205
|
347,486
|
Total liabilities
and equity
|
|
424,423
|
398,446
|
Condensed Consolidated Interim Statements of
Operations
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
2018
|
2017
(Restated)
|
2018
|
2017
(Restated)
|
(CDN 000s, except per
share data) (unaudited)
|
|
($)
|
($)
|
($)
|
($)
|
|
|
|
|
|
|
Revenue
|
|
68,271
|
55,792
|
142,084
|
114,841
|
Operating
expenses
|
|
|
|
|
|
|
Rental
services
|
|
25,209
|
24,099
|
51,248
|
45,582
|
|
Local
administration
|
|
3,147
|
2,535
|
6,004
|
5,248
|
|
Depreciation and
amortization
|
|
9,220
|
10,823
|
18,395
|
22,796
|
|
|
37,576
|
37,457
|
75,647
|
73,626
|
|
|
|
|
|
|
Gross
profit
|
|
30,695
|
18,335
|
66,437
|
41,215
|
Other
expenses
|
|
|
|
|
|
|
Research and
development
|
|
6,617
|
6,261
|
12,976
|
12,138
|
|
Corporate
services
|
|
3,840
|
3,536
|
7,645
|
7,604
|
|
Stock-based
compensation expense
|
|
3,855
|
3,177
|
6,389
|
5,724
|
|
Other expense
(income)
|
|
5,844
|
(1,689)
|
8,377
|
(250)
|
|
|
20,156
|
11,285
|
35,387
|
25,216
|
|
|
|
|
|
|
Income before
income taxes
|
|
10,539
|
7,050
|
31,050
|
15,999
|
|
Income tax
provision
|
|
5,060
|
1,082
|
13,212
|
3,227
|
Net
income
|
|
5,479
|
5,968
|
17,838
|
12,772
|
Income per
share
|
|
|
|
|
|
|
Basic
|
|
0.06
|
0.07
|
0.21
|
0.15
|
|
Diluted
|
|
0.06
|
0.07
|
0.21
|
0.15
|
Condensed Consolidated Interim Statements of Other
Comprehensive Income
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
2018
|
2017
|
2018
|
2017
(Restated)
|
(CDN 000s)
(unaudited)
|
|
($)
|
($)
|
($)
|
($)
|
Net
income
|
|
5,479
|
5,968
|
17,838
|
12,772
|
Items that may be
reclassified subsequently to net income:
|
|
|
|
|
|
|
Tax (recovery)
expense on net investment in
foreign operations related to an inter-company
financing
|
|
(777)
|
927
|
(1,766)
|
1,276
|
|
Foreign currency
translation adjustment
|
|
8,874
|
(9,733)
|
18,654
|
(10,738)
|
Other
comprehensive gain (loss)
|
|
8,097
|
(8,806)
|
16,888
|
(9,462)
|
Total
comprehensive income (loss)
|
|
13,576
|
(2,838)
|
34,726
|
3,310
|
Condensed Consolidated Interim Statements of Changes in
Equity
|
|
Share
Capital
|
Share-Based
Benefits
Reserve
|
Foreign
Currency
Translation
Reserve
|
Retained
Earnings
|
Total
Equity
|
(CDN 000s)
(unaudited)
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
Balance at January
1, 2017 - Previously reported
|
|
139,730
|
23,026
|
69,443
|
154,452
|
386,651
|
|
Correction of
error
|
|
—
|
—
|
(9,871)
|
9,871
|
—
|
Balance at January
1, 2017 - Currently reported
|
|
139,730
|
23,026
|
59,572
|
164,323
|
386,651
|
|
Net income - as
restated
|
|
—
|
—
|
—
|
12,772
|
12,772
|
|
Dividends
|
|
—
|
—
|
—
|
(28,813)
|
(28,813)
|
|
Other comprehensive
loss - as restated
|
|
—
|
—
|
(9,462)
|
—
|
(9,462)
|
|
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
|
50,110
|
148,282
|
365,866
|
|
Net income - as
restated
|
|
—
|
—
|
—
|
12,418
|
12,418
|
|
Dividends
|
|
—
|
—
|
—
|
(28,884)
|
(28,884)
|
|
Other comprehensive
loss
|
|
—
|
—
|
(9,752)
|
—
|
(9,752)
|
|
Exercise of stock
options
|
|
5,342
|
(1,262)
|
—
|
—
|
4,080
|
|
Expense related to
vesting of options
|
|
—
|
2,008
|
—
|
—
|
2,008
|
|
Verdazo
Acquisition
|
|
1,750
|
—
|
—
|
—
|
1,750
|
Balance at December
31, 2017
|
|
150,887
|
24,425
|
40,358
|
131,816
|
347,486
|
|
Net income
|
|
—
|
—
|
—
|
17,838
|
17,838
|
|
Dividends
|
|
—
|
—
|
—
|
(28,971)
|
(28,971)
|
|
Other comprehensive
income
|
|
—
|
—
|
16,888
|
—
|
16,888
|
|
Exercise of stock
options
|
|
4,388
|
(716)
|
—
|
—
|
3,672
|
|
Expense related to
vesting of options
|
|
—
|
2,292
|
—
|
—
|
2,292
|
Balance at June
30, 2018
|
|
155,275
|
26,001
|
57,246
|
120,683
|
359,205
|
Condensed Consolidated Interim Statements of Cash
Flows
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
|
2018
|
2017
(Restated)
|
2018
|
2017
(Restated)
|
(CDN 000s)
(unaudited)
|
|
($)
|
($)
|
($)
|
($)
|
Cash from (used
in) operating activities
|
|
|
|
|
|
|
Net income
|
|
5,479
|
5,968
|
17,838
|
12,772
|
Adjustment for
non-cash items:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
9,220
|
10,823
|
18,395
|
22,796
|
|
Stock-based
compensation
|
|
3,855
|
3,177
|
6,389
|
5,724
|
|
Deferred income
taxes
|
|
3,361
|
(125)
|
10,664
|
(665)
|
|
Unrealized foreign
exchange loss (gain) and
other
|
|
5,921
|
(1,048)
|
8,508
|
(758)
|
Funds flow from
operations
|
|
27,836
|
18,795
|
61,794
|
39,869
|
Movements in non-cash
working capital items:
|
|
|
|
|
|
|
Increase (decrease)
in trade and other
receivables
|
|
2,150
|
3,659
|
(6,747)
|
1,816
|
|
Decrease in prepaid
expenses
|
|
794
|
700
|
1,275
|
258
|
|
Decrease in income
taxes recoverable
|
|
1,205
|
2,774
|
1,270
|
9,566
|
|
Increase (decrease)
in trade payables, accruals
and stock-based compensation liability
|
|
387
|
(780)
|
(978)
|
3,134
|
|
Effects of exchange
rate changes
|
|
76
|
(522)
|
310
|
985
|
Cash generated
from operating activities
|
|
32,448
|
24,626
|
56,924
|
55,628
|
|
Income tax
paid
|
|
(4,831)
|
(425)
|
(4,963)
|
(1,596)
|
Net cash from
operating activities
|
|
27,617
|
24,201
|
51,961
|
54,032
|
Cash flows from
(used in) financing activities
|
|
|
|
|
|
|
Proceeds from
issuance of common shares
|
|
3,444
|
2,374
|
3,672
|
3,080
|
|
Payment of
dividends
|
|
(14,491)
|
(14,419)
|
(28,971)
|
(28,813)
|
Net cash used in
financing activities
|
|
(11,047)
|
(12,045)
|
(25,299)
|
(25,733)
|
Cash flows (used
in) from investing activities
|
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
(3,514)
|
(4,439)
|
(8,325)
|
(5,280)
|
|
Development
costs
|
|
(1,257)
|
(660)
|
(2,243)
|
(953)
|
|
Proceeds on disposal
of investment and
property, plant and equipment
|
|
76
|
11
|
96
|
14
|
|
Purchase of
short-term investments
|
|
(65,840)
|
—
|
(65,840)
|
—
|
|
Acquisition
|
|
—
|
—
|
—
|
(4,750)
|
|
Proceeds on sale of
net operating assets
|
|
—
|
—
|
—
|
7,123
|
|
Changes in non-cash
working capital
|
|
211
|
515
|
550
|
326
|
Net cash used in
investing activities
|
|
(70,324)
|
(4,573)
|
(75,762)
|
(3,520)
|
Effect of exchange
rate on cash and cash equivalents
|
|
2,254
|
(4,409)
|
6,313
|
(4,738)
|
Net (decrease)
increase in cash and cash equivalents
|
|
(51,500)
|
3,174
|
(42,787)
|
20,041
|
Cash and cash
equivalents, beginning of period
|
|
162,842
|
163,346
|
154,129
|
146,479
|
Cash and cash
equivalents, end of period
|
|
111,342
|
166,520
|
111,342
|
166,520
|
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 following table
represents a disaggregation of revenue from contracts with
customers along with the reportable segment for each category:
Three Months Ended
June 30, 2018
|
Canada
|
United
States
|
International
|
Total
|
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
|
Drilling
Data
|
4,180
|
26,973
|
4,267
|
35,420
|
|
Mud Management and
Safety
|
2,962
|
14,643
|
1,699
|
19,304
|
|
Communications
|
1,506
|
4,200
|
405
|
6,111
|
|
Drilling
Intelligence
|
1,117
|
2,909
|
348
|
4,374
|
|
Analytics and
Other
|
900
|
1,553
|
609
|
3,062
|
Total
Revenue
|
10,665
|
50,278
|
7,328
|
68,271
|
Rental services and
local administration
|
6,136
|
17,455
|
4,765
|
28,356
|
Depreciation and
amortization
|
4,223
|
4,100
|
897
|
9,220
|
Segment gross
profit
|
306
|
28,723
|
1,666
|
30,695
|
Research and
development
|
6,617
|
Corporate
services
|
3,840
|
Stock-based
compensation
|
3,855
|
Other
expense
|
5,844
|
Income
taxes
|
5,060
|
Net income
|
5,479
|
Capital
expenditures
|
1,087
|
3,537
|
147
|
4,771
|
As at June 30,
2018
|
|
|
|
Property plant and
equipment
|
40,312
|
68,432
|
14,903
|
123,647
|
Goodwill
|
1,259
|
7,342
|
2,600
|
11,201
|
Intangible
assets
|
21,952
|
—
|
—
|
21,952
|
Segment
assets
|
110,409
|
272,311
|
41,703
|
424,423
|
Segment
liabilities
|
45,763
|
14,713
|
4,742
|
65,218
|
Three Months Ended
June 30, 2017
(Restated)
|
Canada
|
United
States
|
International
|
Total
|
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
|
Drilling
Data
|
4,157
|
20,466
|
3,694
|
28,317
|
|
Mud Management and
Safety
|
3,117
|
12,090
|
1,216
|
16,423
|
|
Communications
|
1,670
|
3,388
|
322
|
5,380
|
|
Drilling
Intelligence
|
746
|
1,973
|
502
|
3,221
|
|
Analytics and
Other
|
789
|
1,278
|
384
|
2,451
|
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 gross (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
|
1,082
|
Net income
|
5,968
|
Capital
expenditures
|
171
|
4,929
|
(1)
|
5,099
|
As at June 30,
2017
|
|
|
|
|
Property plant and
equipment
|
46,493
|
69,103
|
18,624
|
134,220
|
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, 2018
|
Canada
|
United
States
|
International
|
Total
|
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
|
Drilling
Data
|
14,100
|
50,671
|
7,944
|
72,715
|
|
Mud Management and
Safety
|
9,623
|
27,879
|
3,062
|
40,564
|
|
Communications
|
5,275
|
7,898
|
736
|
13,909
|
|
Drilling
Intelligence
|
3,235
|
5,053
|
667
|
8,955
|
|
Analytics and
Other
|
1,856
|
2,885
|
1,200
|
5,941
|
Total
Revenue
|
34,089
|
94,386
|
13,609
|
142,084
|
Rental services
and local administration
|
13,464
|
34,340
|
9,448
|
57,252
|
Depreciation and
amortization
|
8,608
|
7,928
|
1,859
|
18,395
|
Segment gross
profit
|
12,017
|
52,118
|
2,302
|
66,437
|
Research and
development
|
12,976
|
Corporate
services
|
7,645
|
Stock-based
compensation
|
6,389
|
Other
expenses
|
8,377
|
Income tax
expense
|
13,212
|
Net
income
|
17,838
|
Capital
expenditures
|
3,050
|
6,800
|
718
|
10,568
|
As at June 30,
2018
|
Property plant and
equipment
|
40,312
|
68,432
|
14,903
|
123,647
|
Goodwill
|
1,259
|
7,342
|
2,600
|
11,201
|
Intangible
assets
|
21,952
|
—
|
—
|
21,952
|
Segment
assets
|
110,409
|
272,311
|
41,703
|
424,423
|
Segment
liabilities
|
45,763
|
14,713
|
4,742
|
65,218
|
Six Months Ended
June 30, 2017
(Restated)
|
Canada
|
United
States
|
International
|
Total
|
|
($)
|
($)
|
($)
|
($)
|
Revenue
|
|
|
|
|
|
Drilling
Data
|
14,602
|
35,742
|
6,741
|
57,085
|
|
Mud Management and
Safety
|
10,109
|
21,589
|
2,239
|
33,937
|
|
Communications
|
5,353
|
5,985
|
535
|
11,873
|
|
Drilling
Intelligence
|
2,778
|
3,457
|
979
|
7,214
|
|
Analytics and
Other
|
1,624
|
2,388
|
720
|
4,732
|
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 gross
profit
|
11,534
|
29,478
|
203
|
41,215
|
Research and
development
|
12,138
|
Corporate
services
|
7,604
|
Stock-based
compensation
|
5,724
|
Other
income
|
(250)
|
Income tax
expense
|
3,227
|
Net income
|
12,772
|
Capital
expenditures
|
118
|
6,215
|
(100)
|
6,233
|
As at June 30,
2017
|
|
|
|
|
Property plant and
equipment
|
46,493
|
69,103
|
18,624
|
134,220
|
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
|
Correction of Error
During the fourth quarter of 2017, the Company adjusted for a
re-classification of an immaterial non-cash error in the
recognition of a component of its deferred income tax expense. The
error was a result of the Company recognizing in the statement of
operations the deferred income tax effect of the future taxable
foreign exchange gain adjustment associated with its net investment
in foreign operations related to an inter-company financing, when
the amount should have been adjusted through the foreign currency
translation reserve within equity. Accordingly, this adjustment has
been corrected on a retrospective basis with all prior period
comparative figures being restated.
The cumulative impact of this error as of January 1, 2017 was to increase retained earnings
and reduce Foreign Currency Translation Reserve by $9,871.
For the second quarter of 2017, the income tax provision
increased by $927. For the six month
period ended June 30, 2017, the
income tax provision increased by $1,276.
Other Expenses (Income)
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
|
|
2018
|
2017
|
|
2018
|
2017
|
|
|
($)
|
($)
|
|
($)
|
($)
|
Foreign exchange loss
(gain)
|
|
5,787
|
(689)
|
|
8,191
|
(466)
|
Other
|
|
57
|
(1,000)
|
|
186
|
216
|
Other expenses
(income)
|
|
5,844
|
(1,689)
|
|
8,377
|
(250)
|
The Company recorded a significant unrealized foreign exchange
loss in the second quarter of 2018 on inter-company advances made
to the Company's Argentinian subsidiary as a result of a
significant devaluation of the Argentina peso relative to the Canadian
dollar.
Short-term investments
During the second quarter of 2018, the Company invested in a USD
$50,000 term deposit bearing an
interest rate of 2.30% maturing in November, 2018. This is
reflected on the Condensed Consolidated Interim Balance Sheet as
Short-term investments.
Events After the Reporting Period
On August 8, 2018, the Company announced a quarterly
dividend of $0.18 per share on the
Company's common shares. The dividend will be paid on September 28, 2018 to shareholders of record at
the close of business on September 14,
2018.
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, and web-based information management, 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.