CALGARY, Aug. 9, 2017 /CNW/ - MATRRIX Energy Technologies
Inc. ("MATRRIX" or the "Corporation") (TSX-V: MXX) announces
financial results for the three month and six month periods
June 30, 2017.
(All monetary amounts contained herein are expressed in
thousands of Canadian dollars, except for per share amounts)
OVERALL HIGHLIGHTS
For the three and six month periods ended June 30, 2017, the Corporation experienced an
overall increase in operating days related to horizontal drilling
and motor rental activity in Canada relative to the comparative 2016
periods. The Corporation's overall increase in operational activity
was due to the addition of new customers and the increase in
overall activity in the Western Canadian Sedimentary Basin
("WCSB").
The Corporation continues to be in a strong financial position
with positive working capital of $3,756 ($0.12/per
share) including $2,705 ($0.08/per share) of cash and cash equivalents on
hand as at June 30, 2017.
SECOND QUARTER 2017 SUMMARY (Compared with the second
quarter of 2016)
- revenue of $1,061, up from
$7
- operating days of 170, up from Nil
- net loss of ($976), improved from
($1,373)
- adjusted EBITDA of ($353),
improved from ($662)
SIX MONTHS ENDED 2017 SUMMARY (Compared with the six
months ended in 2016)
- revenue of $2,611, up from
$925
- operating days of 402, up from 94
- net loss of ($1,667), improved
from ($2,190)
- adjusted EBITDA of ($407),
improved from ($723)
OUTLOOK
MATRRIX will continue to deploy horizontal and directional
drilling technology in Canada,
while actively seeking investment opportunities to acquire existing
drilling service businesses and equipment that meet strategic
objectives. As at the date of this MD&A, 25 sub-surface
Horizontal and Directional Systems are owned and available within
MATRRIX for deployment to the field within the WCSB.
The Corporation continues to assess opportunities to enter the
land-based contract drilling business to complement its business of
supplying horizontal and directional drilling technologies for the
oil and gas industry in North
America. MATRRIX intends to purchase contract drilling
companies and/or drilling rig assets, and will transact when and if
an appropriate opportunity exists.
The oil and gas industry in North
America now uses well established horizontal drilling
practices to exploit conventional and unconventional oil and
liquids-rich natural gas plays in most basins within North America. Oil prices have rebounded from
lows experienced in early 2016, positively affecting capital
expenditures and drilling programs initiated by the Corporation's
oil and gas clients.
WCSB oil and gas producers continually assess capital
expenditures as oil and gas prices fluctuate. Assuming further
strengthening of commodity prices, we expect an overall improvement
in the outlook for oil and gas service companies including
MATRRIX.
Supply of oil and gas services equipment continues to exceed
demand, and until activity meets a reasonable threshold to improve
the supply / demand imbalance, the market for the Corporation's
services could remain highly competitive. The Corporation continues
to drive efficiency and scalability into all aspects of its
business, with a view that fixed expenses will be spread over a
larger revenue base as the Corporation's revenue grows.
The Corporation is optimistic that its strategic initiative to
enter the land based contract drilling business is very timely, and
if successful will yield opportunities for MATRRIX and its clients
to realize improvements on efficiency, cost, and return on equity
within a potentially "lower for longer" commodity price
environment.
Canada
Assuming commodity prices continue to strengthen, the
Corporation expects industry activity levels in Western Canada to improve within 2017 and into
2018. With a vision for how the industry needs to evolve, MATRRIX
continues to drive operational results and efficiency improvements
through use of its proprietary D2ROXTM
software platform, combined with solid engineering and field
execution.
Strong knowledge of sub-surface drilling parameters is critical,
a skill inherent to the Corporation and a competitive advantage to
MATRRIX within our market. We intend to leverage that knowledge and
use of systems and processes to drive predictability, repeatability
and risk management into all aspects of our drilling operation, for
the benefit of active current and potential MATRRIX clients. That
same culture and discipline will form the foundation for our
drilling contracting business, once established.
The Corporation continues to balance costs with forecasted
activity levels, while prudently managing our cash reserves in
light of opportunities for growth.
OTHER MARKETS
The Corporation will evaluate, assess, and execute (if it deems
appropriate) an expansion program into markets outside of
North America, with a goal to
improving geographic diversity. Opportunities will be evaluated
based upon expected financial impact and risk to the Corporation
through delivery of appropriate levels of revenue, income, and
returns in each geographic region.
In considering geographic expansion, the Corporation will assess
the potential of partnering with established organizations that
have significant, existing operations in certain regions of
interest.
President Richard Ryan
states:
"While the second quarter is historically quiet due to spring
break-up in Canada, we used this
pause in field activity to further strengthen our systems and
processes approach to field execution, while broadening exposure to
those clients in Western Canada
unfamiliar with MATRRIX and our unique approach to horizontal
drilling.
Assuming commodity prices continue to improve, and based on
current business booked, we expect firming activity levels through
Q3, into Q4 and ultimately through the busier Q1 drilling season in
western Canada.
The best measure of success is positive feedback from Clients.
With an approach that delivers field results exceeding
expectations, we're confident in our vision.
D2ROXTM is proprietary to MATRRIX, central to
our service offering, and utilized in all aspects of our service
delivery. We're focused on measurable results, while delivering
predictable, repeatable field operations and operational
support.
Our team is focused on creating sustainable value for clients
and shareholders in the midst of this evolving market for drilling
services. With zero debt and strong working capital and cash
positions, we intend to leverage our unique position to predict,
drive and evolve change within the drilling segment of the market
we serve."
FINANCIAL HIGHLIGHTS
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
Revenue
|
1,061
|
7
|
nm
|
|
2,611
|
932
|
180%
|
EBITDA (i)
|
(365)
|
(702)
|
48%
|
|
(422)
|
(833)
|
49%
|
EBITDA per
share
|
|
|
|
|
|
|
|
|
Basic
|
(0.01)
|
(0.02)
|
50%
|
|
(0.01)
|
(0.03)
|
67%
|
|
Diluted
|
(0.01)
|
(0.02)
|
50%
|
|
(0.01)
|
(0.03)
|
67%
|
Adjusted EBITDA
(ii)
|
(353)
|
(662)
|
47%
|
|
(407)
|
(723)
|
44%
|
Adjusted EBITDA per
share
|
|
|
|
|
|
|
|
|
Basic
|
(0.01)
|
(0.02)
|
50%
|
|
(0.01)
|
(0.02)
|
50%
|
|
Diluted
|
(0.01)
|
(0.02)
|
50%
|
|
(0.01)
|
(0.02)
|
50%
|
Net loss
|
(976)
|
(1,373)
|
29%
|
|
(1,667)
|
(2,190)
|
24%
|
Net loss per
share
|
|
|
|
|
|
|
|
|
Basic
|
(0.03)
|
(0.04)
|
25%
|
|
(0.05)
|
(0.07)
|
29%
|
|
Diluted
|
(0.03)
|
(0.04)
|
25%
|
|
(0.05)
|
(0.07)
|
29%
|
Funds flow from
operations (iii)
|
(338)
|
(676)
|
50%
|
|
(387)
|
(736)
|
47%
|
Gross Margin
(iv)
|
273
|
(121)
|
326%
|
|
877
|
321
|
173%
|
Assets
|
13,034
|
16,143
|
(19%)
|
|
13,034
|
16,143
|
(19%)
|
Liabilities
|
839
|
220
|
281%
|
|
839
|
220
|
282%
|
Capital expenditures
(net of lost in hole replacements)
|
77
|
-
|
100%
|
|
77
|
34
|
126%
|
Directional and
horizontal systems available
|
25
|
25
|
-
|
|
25
|
25
|
-
|
Weighted Average
common shares outstanding
|
32,185
|
32,185
|
-
|
|
32,185
|
32,185
|
-
|
Weighted Average
diluted common shares outstanding
|
32,185
|
32,185
|
-
|
|
32,185
|
32,185
|
-
|
nm - not
meaningful
|
|
|
|
|
|
|
|
NON-GAAP MEASURES
This press release contains references to (i) EBITDA; (ii)
Adjusted EBITDA; (iii) Funds Flow; and (iv) Gross Margin. These
financial measures are not measures that have any standardized
meaning prescribed by IFRS and are therefore referred to as
non-GAAP measures. The non-GAAP measures used by the Corporation
may not be comparable to similar measures used by other
companies.
(i)
|
EBITDA is not a
measure recognized under IFRS and does not have a standardized
meanings prescribed by IFRS. EBITDA is defined as "income (loss)
before interest expense, income taxes, depreciation and
amortization.
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
Net loss
|
(976)
|
(1,373)
|
29%
|
|
(1,667)
|
(2,190)
|
24%
|
|
Depreciation
|
611
|
671
|
(9%)
|
|
1,245
|
1,357
|
(8%)
|
EBITDA
|
(365)
|
(702)
|
48%
|
|
(422)
|
(833)
|
49%
|
(ii)
|
Adjusted EBITDA is
defined as "income (loss) before interest income, interest expense,
taxes, business acquisition transaction costs, depreciation and
amortization, shared based compensation expense, gains on disposal
of property and equipment, impairment expenses, interest and other
income, and foreign exchange." Management believes that in addition
to net and total comprehensive income (loss), Adjusted EBITDA is a
useful supplemental measure as it provides an indication of the
results generated by the Corporation's principal business
activities prior to consideration of how these activities are
financed, how assets are depreciated, amortized and impaired: the
impact of foreign exchange, or how the results are affected by the
accounting standards associated with the Corporation's stock based
compensation plan.
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
EBITDA
|
(365)
|
(702)
|
48%
|
|
(422)
|
(833)
|
49%
|
|
Gain from equipment
lost in hole
|
-
|
-
|
-
|
|
(30)
|
-
|
100%
|
|
Interest and other
income
|
(6)
|
(10)
|
(40%)
|
|
(13)
|
(18)
|
(28%)
|
|
Share based
payments
|
22
|
50
|
(56%)
|
|
54
|
121
|
(55%)
|
|
Foreign exchange
(gain) loss
|
(4)
|
-
|
(100%)
|
|
4
|
7
|
(43%)
|
Adjusted
EBITDA
|
(353)
|
(662)
|
47%
|
|
(407)
|
(723)
|
44%
|
(iii)
|
Funds flow from
operations is defined as "cash provided by operating activities
before the change in non-cash working capital". Funds flow from
operations is a measure that provides shareholders and potential
investors additional information regarding the Corporation's
liquidity and its ability to generate funds to finance its
operations. Management utilizes this measure to assess the
Corporation's ability to finance operating activities and capital
expenditures.
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
Operating cash
flow
|
(365)
|
(245)
|
49%
|
|
(910)
|
(240)
|
279%
|
Changes in non-cash
working capital
|
27
|
(431)
|
106%
|
|
523
|
(496)
|
(205%)
|
Funds flow
|
(338)
|
(676)
|
50%
|
|
(387)
|
(736)
|
47%
|
(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
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(000's CAD
$)
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
Loss from
operations
|
(329)
|
(777)
|
58%
|
|
(348)
|
(998)
|
65%
|
Depreciation
|
602
|
656
|
(8%)
|
|
1,225
|
1,319
|
(7%)
|
Gross
margin
|
273
|
(121)
|
326%
|
|
877
|
321
|
173%
|
Gross margin
%
|
26%
|
nm
|
-
|
|
34%
|
34%
|
-
|
nm - not
meaningful
|
|
|
|
|
|
|
|
FORWARD-LOOKING INFORMATION
Certain statements contained in this press release constitute
forward-looking information. This information relates to
future events or the Corporation's future performance. All
information other than statements of historical fact is
forward-looking information. The use of any of the words
"anticipate", "plan", "contemplate", "continue", "estimate",
"expect", "intend", "propose", "might", "may", "will", "could",
"believe", "predict" and "forecast" are intended to identify
forward-looking information.
In particular, this press release contains forward-looking
information pertaining to the following: the Corporation's
intentions to enter the land based contract drilling business; the
Corporation's continued evaluation of opportunities to purchase
contract drilling companies and/or drilling rig assets; the
Corporation's expectation is that 2017 will be a recovery year for
the industry; the Corporation's expectation that the market for the
Corporation's services will remain competitive until the
supply/demand imbalance is improved and the expectation that
industry activity levels in Western
Canada will grow through 2017 and into 2018.
This forward-looking information involves material assumptions
and known and unknown risks and uncertainties, certain of which are
beyond the Corporation's control. The Corporation's Annual
Information Form and other documents filed with securities
regulatory authorities (accessible through the SEDAR website
www.sedar.com) describe the risks, the material assumptions and
other factors that could influence actual results and which are
incorporated herein by reference. Actual results, performance or
achievements could differ material from those expressed in, or
implied by, this forward-looking information and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking information will transpire or occur, or if any of
them do so, what benefits the Corporation will derive
therefrom.
The forward-looking information contained herein is provided as
at the date hereof and the Corporation does not undertake any
obligation to update publicly or to revise any of the included
forward-looking information, whether as a result of new
information, future events or otherwise, except as may be required
by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE MATRRIX Energy Technologies Inc.