Feb. 23, 2011 (Canada NewsWire Group) --
Stock Exchange: TSX
Symbol: PSI
CALGARY, Feb. 23 /CNW/ - Pason Systems Inc. ("Pason" or "the Company") today announced its 2010 fourth quarter and year end results.
PERFORMANCE DATA
| Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
| 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
| (000s, except per share data) | ($) | ($) | (%) | ($) | ($) | (%) | ||||||||||||||||||
| Revenue | 73,494 | 41,013 | 79 | 249,562 | 145,861 | 71 | ||||||||||||||||||
| EBITDA (1) | 36,016 | 13,620 | 164 | 117,524 | 46,651 | 152 | ||||||||||||||||||
| As a % of revenue | 49.0 | 33.2 | 48 | 47.1 | 32.0 | 47 | ||||||||||||||||||
| Per share - basic | 0.44 | 0.17 | 158 | 1.44 | 0.57 | 152 | ||||||||||||||||||
| Per share - diluted | 0.44 | 0.17 | 158 | 1.44 | 0.57 | 152 | ||||||||||||||||||
| Funds flow from operations (1) | 27,899 | 12,238 | 128 | 93,973 | 41,354 | 127 | ||||||||||||||||||
| Per share - basic | 0.34 | 0.15 | 127 | 1.15 | 0.51 | 125 | ||||||||||||||||||
| Per share - diluted | 0.34 | 0.15 | 127 | 1.15 | 0.51 | 125 | ||||||||||||||||||
| Earnings (loss) | 8,233 | 2,480 | 232 | 35,532 | (5,510) | -- | ||||||||||||||||||
| Per share - basic | 0.10 | 0.03 | 232 | 0.44 | (0.07) | -- | ||||||||||||||||||
| Per share - diluted | 0.10 | 0.03 | 232 | 0.44 | (0.07) | -- | ||||||||||||||||||
| Capital expenditures | 26,214 | 9,148 | 187 | 50,164 | 21,493 | 133 | ||||||||||||||||||
| Working capital | 127,567 | 119,824 | 6 | 127,567 | 119,824 | 6 | ||||||||||||||||||
| Total assets | 424,172 | 373,097 | 14 | 424,172 | 373,097 | 14 | ||||||||||||||||||
| Total long-term debt | -- | -- | -- | -- | -- | -- | ||||||||||||||||||
| Shareholders' equity | 312,367 | 308,335 | 1 | 312,367 | 308,335 | 1 | ||||||||||||||||||
| Cash dividends declared | 0.17 | 0.14 | 21 | 0.33 | 0.26 | 27 | ||||||||||||||||||
| Common shares outstanding (#) | ||||||||||||||||||||||||
| Basic | 81,620 | 81,487 | -- | 81,525 | 81,476 | -- | ||||||||||||||||||
| Diluted | 82,007 | 81,487 | -- | 81,525 | 81,476 | -- | ||||||||||||||||||
| Shares outstanding end of period (#) | 81,714 | 81,487 | -- | 81,714 | 81,487 | -- | ||||||||||||||||||
| (1) | EBITDA is defined as earnings before interest expense, income taxes, stock-based compensation expense and depreciation and amortization expense. Funds flow from operations is defined as earnings adjusted for depreciation and amortization expense, stock-based compensation expense, future income taxes and other non-cash items impacting operations as presented in the Consolidated Statements of Cash Flows. These definitions are not recognized measures under Canadian generally accepted accounting principles, and accordingly, may not be comparable to measures used by other companies. |
SUMMARY DATA
| Three Months Ended December 31, | Years Ended December 31, | ||||||
| 2010 | 2009 | Change | 2010 | 2009 | Change | ||
| (000s, except per share data) | ($) | ($) | (%) | ($) | ($) | (%) | |
| Revenue | |||||||
| Drilling recorder rentals | 30,024 | 14,519 | 107 | 99,857 | 56,716 | 76 | |
| Pit volume totalizer rentals | 13,532 | 7,151 | 89 | 45,610 | 27,632 | 65 | |
| Communications rentals | 9,547 | 5,260 | 82 | 31,201 | 15,954 | 96 | |
| Automatic driller rentals | 8,761 | 4,486 | 95 | 28,567 | 14,966 | 91 | |
| Total gas rentals | 4,846 | 2,784 | 74 | 16,601 | 10,110 | 64 | |
| Hazardous gas alarm rentals | 789 | 578 | 37 | 2,945 | 2,044 | 44 | |
| Mobilization income | 1,956 | 1,589 | 23 | 8,270 | 4,660 | 77 | |
| Other income | 4,039 | 4,646 | (13) | 16,511 | 13,779 | 20 | |
| Total revenue | 73,494 | 41,013 | 79 | 249,562 | 145,861 | 71 | |
| Expenses | |||||||
| Rental services | 26,059 | 20,154 | 29 | 96,684 | 73,143 | 32 | |
| Manufacturing and distribution | 534 | 59 | 805 | 1,450 | 431 | 236 | |
| Research and development | 3,561 | 3,736 | (5) | 16,472 | 13,140 | 25 | |
| Corporate services | 2,945 | 2,190 | 34 | 9,309 | 6,722 | 38 | |
| Local administration | 942 | 1,442 | (35) | 6,076 | 4,889 | 24 | |
| Stock-based compensation | 6,685 | 494 | 1,253 | 12,175 | 5,684 | 114 | |
| Depreciation and amortization | 18,424 | 13,713 | 34 | 55,764 | 55,842 | -- | |
| Total expenses | 59,150 | 41,788 | 42 | 197,930 | 159,851 | 24 | |
| Foreign exchange (loss) gain | (3,437) | 188 | -- | (2,047) | (886) | 131 | |
| Earnings (loss) | 8,233 | 2,480 | 232 | 35,532 | (5,510) | -- | |
| Per share - basic | 0.10 | 0.03 | 232 | 0.44 | (0.07) | -- | |
| Funds flow from operations (1) | 27,899 | 12,238 | 128 | 93,973 | 41,354 | 127 | |
| Per share - basic | 0.34 | 0.15 | 127 | 1.15 | 0.51 | 125 | |
| (1) For the purposes of funds flow per share calculations, funds flow from operations is defined as earnings adjusted for depreciation and amortization expense, stock-based compensation expense, future income taxes and other non-cash items impacting operations as presented in the Consolidated Statements of Cash Flows. This definition is not a recognized measure under Canadian generally accepted accounting principles, and accordingly, may not be comparable to measures used by other companies. | |||||||
QUARTERLY REVIEW
Current Quarter versus Q4 2009
The Company's fourth quarter revenue rose 79% to $73.5 million, funds flow from operations was up 128% to $27.9 million and earnings increased 232% compared to the last quarter of 2009. Earnings per share was $0.10 versus $0.03 in 2009. This improvement was primarily driven by a turnaround in the U.S., where segment revenue jumped 125% (up 173% when measured in USD) and earnings reversed from a loss of $2.6 million in the prior year to a profit of $18.3 million in 2010. The Company was aided by greater industry drilling days, that were up 56% over the prior year's fourth quarter. Pricing and increased product deployment gains also increased U.S. revenue per industry drilling day for the quarter to $277 compared to $184 in the prior year.
Canadian segment profit and revenue was up in line with the year over year improvement in industry drilling days. Revenue increased 58% to $27.5 million and segment profit rose by 63% to $12.4 million. Revenue per industry day for the quarter was $748 and up from the $695 recorded last year due to product price increases in the fourth quarter. Overall fourth quarter results were weighed down by disappointing International results. The International segment turned in a $2.7 million loss compared to a profit of $0.7 million in the prior year.
- Historically, Mexico has been our most profitable International market but drilling activity collapsed in that country during the second half reducing our results for the quarter to a loss of $0.5 million versus a profit of $0.3 million in 2009.
- Australia was hit by record flooding, which restricted drilling activity and movement. This resulted in a loss of $0.3 million compared to a profit of $0.2 million in 2009.
- Our International segment includes the offshore portion of the business acquired from Petron which was significantly affected by the reduction in Gulf of Mexico drilling activity caused by the BP oil spill. Additionally, the refurbishments and interest in sold systems on offshore and eastern hemisphere land rigs declined markedly. This contributed to a $2.3 million loss in the business unit we have been calling Pason Offshore.
Current Quarter versus Q3 2010
Pason continued its sequential improvement in activity over the prior quarter with small fourth quarter gains in revenue (+7%), EBITDA (+4%) and funds flow from operations (+4%). This was achieved from industry drilling days that were up 20% sequentially in Canada and up 4% in the U.S.
However, net earnings declined to $8.2 million and $0.10 per share compared to $12.5 million and $0.16 per share in the third quarter. This decline resulted from the following factors:
- Assets related to the 2009 purchase of Petron Industries were written down causing a $3.3 million non-cash after-tax charge, which negatively impacted earnings per share by $0.04. Over half of this write-down consisted of a reversal of the asset value increase that was booked at the time of purchase to partially account for the difference between the purchase consideration and the net book value of Petron assets. While Pason has clearly achieved value with the retained Petron customers and employees, the decision to use Pason equipment on all U.S. rigs required a reduction of the asset value.
- Stock-based compensation expense increased by $3.7 million compared to the third quarter of 2010 as a result of an increase in our share price.
- As required by Canadian generally accepted accounting principles, gains and losses from foreign exchange changes relating to monetary assets and liabilities must be taken into earnings in the period in which they occurred. The strengthening Canadian dollar against the U.S dollar resulted in an after-tax foreign exchange loss of $2.1 million, impacting earnings by $0.03 a share. The equivalent amount in the third quarter of 2010 was effectively nil.
FOURTH QUARTER CONFERENCE CALL
A conference call to review the 2010 fourth quarter and year-end results has been scheduled for 9:00 a.m. (Calgary time) on Thursday, February 24, 2011. The dial-in # is 1-888-231-8191, Conference ID 37324043 (replay # 1-800-642-1687 Password 37324043).
Shareholders are also invited to attend the Company's Annual General Meeting on Monday, May 9, 2011 at 3.30 p.m. (Calgary time) in the offices of Pason Systems Inc., 6120 Third Street S.E., Calgary, Alberta.
For additional information, the Company's 2010 Management Discussion and Analysis ("MD&A") and Audited Consolidated Financial Statements have been posted on SEDAR.
Pason is a leading international provider of specialized rental and sold oilfield instrumentation systems for use on land and offshore rigs. Our tightly integrated package of products and services, including data acquisition, wellsite reporting software, remote communications and Internet information management tools, maximizes rig uptime and minimizes operating costs.
Pason's common shares trade on the Toronto Stock Exchange under the symbol PSI. Visit us at www.pason.com to learn about what's new at Pason.
Certain information regarding the Company contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements.
CONSOLIDATED BALANCE SHEETS
| December 31, | 2010 | 2009 | ||||||||||||||||||||||||||||||||||
| (000s) | ($) | ($) | ||||||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||
| Cash | 110,400 | 109,849 | ||||||||||||||||||||||||||||||||||
| Accounts receivable | 79,880 | 39,102 | ||||||||||||||||||||||||||||||||||
| Prepaid expenses | 1,489 | 1,416 | ||||||||||||||||||||||||||||||||||
| Income taxes recoverable | -- | 2,928 | ||||||||||||||||||||||||||||||||||
| Future income tax assets | 15,551 | 9,037 | ||||||||||||||||||||||||||||||||||
| 207,320 | 162,332 | |||||||||||||||||||||||||||||||||||
| Capital assets | 162,797 | 170,678 | ||||||||||||||||||||||||||||||||||
| Intangible assets | 29,397 | 19,557 | ||||||||||||||||||||||||||||||||||
| Future income tax asset | 16,382 | 14,558 | ||||||||||||||||||||||||||||||||||
| Goodwill | 8,276 | 5,972 | ||||||||||||||||||||||||||||||||||
| 424,172 | 373,097 | |||||||||||||||||||||||||||||||||||
| LIABILITIES | ||||||||||||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||||||||||||
| Accounts payable and accrued liabilities | 51,398 | 29,780 | ||||||||||||||||||||||||||||||||||
| Income taxes payable | 9,021 | -- | ||||||||||||||||||||||||||||||||||
| Current portion of stock-based compensation liability | 5,444 | 1,320 | ||||||||||||||||||||||||||||||||||
| Dividend payable | 13,890 | 11,408 | ||||||||||||||||||||||||||||||||||
| 79,753 | 42,508 | |||||||||||||||||||||||||||||||||||
| Stock-based compensation liability | 4,878 | 906 | ||||||||||||||||||||||||||||||||||
| Future income tax liabilities | 27,174 | 21,348 | ||||||||||||||||||||||||||||||||||
| 111,805 | 64,762 | |||||||||||||||||||||||||||||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||
| Share capital | 75,040 | 71,864 | ||||||||||||||||||||||||||||||||||
| Contributed surplus | 12,331 | 14,029 | ||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive loss | (28,699) | (22,651) | ||||||||||||||||||||||||||||||||||
| Retained earnings | 253,695 | 245,093 | ||||||||||||||||||||||||||||||||||
| 312,367 | 308,335 | |||||||||||||||||||||||||||||||||||
| 424,172 | 373,097 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||
| (000's, except per share data) | ($) | ($) | ($) | ($) | |||||||||
| Revenue | |||||||||||||
| Equipment rentals and other | 73,494 | 41,013 | 249,562 | 145,861 | |||||||||
| Expenses | |||||||||||||
| Rental services | 26,059 | 20,154 | 96,684 | 73,143 | |||||||||
| Manufacturing and distribution | 534 | 59 | 1,450 | 431 | |||||||||
| Research and development | 3,561 | 3,736 | 16,472 | 13,140 | |||||||||
| Corporate services | 2,945 | 2,190 | 9,309 | 6,722 | |||||||||
| Local administration | 942 | 1,442 | 6,076 | 4,889 | |||||||||
| Stock-based compensation | 6,685 | 494 | 12,175 | 5,684 | |||||||||
| Depreciation and amortization | 18,424 | 13,713 | 55,764 | 55,842 | |||||||||
| 59,150 | 41,788 | 197,930 | 159,851 | ||||||||||
| Earnings (loss) before the undernoted items | 14,344 | (775) | 51,632 | (13,990) | |||||||||
| Foreign exchange (loss) gain | (3,437) | 188 | (2,047) | (886) | |||||||||
| Earnings (loss) before income taxes | 10,907 | (587) | 49,585 | (14,876) | |||||||||
| Income taxes | |||||||||||||
| Current | 8,457 | 448 | 19,824 | 1,796 | |||||||||
| Future | (5,783) | (3,515) | (5,771) | (11,162) | |||||||||
| 2,674 | (3,067) | 14,053 | (9,366) | ||||||||||
| Earnings (loss) | 8,233 | 2,480 | 35,532 | (5,510) | |||||||||
| Retained earnings, beginning of period | 259,352 | 254,021 | 245,093 | 271,788 | |||||||||
| Dividends | (13,890) | (11,408) | (26,930) | (21,185) | |||||||||
| Retained earnings, end of period | 253,695 | 245,093 | 253,695 | 245,093 | |||||||||
| Earnings (loss) per share | |||||||||||||
| Basic | 0.10 | 0.03 | 0.44 | (0.07) | |||||||||
| Diluted | 0.10 | 0.03 | 0.44 | (0.07) | |||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
| Three Months Ended | Years Ended | ||||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||
| (000s) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||
| Earnings (loss) | 8,233 | 2,480 | 35,532 | (5,510) | |||||||||||||||||||||||||
| Other comprehensive loss, net of tax | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | (3,148) | (4,414) | (6,048) | (25,101) | |||||||||||||||||||||||||
| Total comprehensive income (loss) | 5,085 | (1,934) | 29,484 | (30,611) | |||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
| Three Months Ended | Years Ended | ||||
| December 31, | December 31, | ||||
| 2010 | 2009 | 2010 | 2009 | ||
| (000s) | ($) | ($) | ($) | ($) | |
| Accumulated other comprehensive (loss) income, beginning of period | (25,551) | (18,237) | (22,651) | 2,450 | |
| Other comprehensive loss, net of tax | |||||
| Foreign currency translation adjustment | (3,148) | (4,414) | (6,048) | (25,101) | |
| Accumulated other comprehensive loss, end of period | (28,699) | (22,651) | (28,699) | (22,651) | |
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||
| (000s) | ($) | ($) | ($) | ($) | |||||||
| Cash flows related to the following activities: | |||||||||||
| Operating | |||||||||||
| Earnings (loss) | 8,233 | 2,480 | 35,532 | (5,510) | |||||||
| Adjustments for non-cash items: | |||||||||||
| Depreciation and amortization | 18,424 | 13,713 | 55,764 | 55,842 | |||||||
| Stock-based compensation | 5,131 | (96) | 8,051 | 1,894 | |||||||
| Future income taxes | (5,783) | (3,515) | (5,771) | (11,162) | |||||||
| Unrealized foreign exchange | 1,894 | (344) | 397 | 290 | |||||||
| 27,899 | 12,238 | 93,973 | 41,354 | ||||||||
| Changes in non-cash working capital | (4,375) | (6,369) | (14,618) | 43,868 | |||||||
| Cash flow from operating activities | 23,524 | 5,869 | 79,355 | 85,222 | |||||||
| Financing | |||||||||||
| Issue of common shares under the stock option plan | 2,538 | 8 | 2,736 | 274 | |||||||
| Purchase of stock options | (1,849) | -- | (1,854) | (240) | |||||||
| Payment of dividends | -- | -- | (24,448) | (19,554) | |||||||
| Repayment of debt | -- | (4,684) | -- | (4,684) | |||||||
| 689 | (4,676) | (23,566) | (24,204) | ||||||||
| Investing | |||||||||||
| Additions to capital assets | (23,924) | (8,619) | (45,777) | (18,318) | |||||||
| Deferred development costs, net of investment tax credits received | (2,290) | (529) | (4,387) | (3,175) | |||||||
| Proceeds on disposal of capital assets | (22) | (6) | 72 | 528 | |||||||
| Business acquisitions, net of cash acquired | (6,115) | (20,934) | (8,944) | (20,934) | |||||||
| Changes in non-cash working capital | 7,266 | 1,179 | 5,973 | (5,116) | |||||||
| (25,085) | (28,909) | (53,063) | (47,015) | ||||||||
| Effect of exchange rate changes on cash | (1,540) | 2,050 | (2,175) | (4,764) | |||||||
| Net (decrease) increase in cash | (2,412) | (25,666) | 551 | 9,239 | |||||||
| Cash, beginning of period | 112,812 | 135,515 | 109,849 | 100,610 | |||||||
| Cash, end of period | 110,400 | 109,849 | 110,400 | 109,849 | |||||||
| Represented by: | |||||||||||
| Cash | 96,510 | 98,441 | 96,510 | 98,441 | |||||||
| Cash held in trust | 13,890 | 11,408 | 13,890 | 11,408 | |||||||
| 110,400 | 109,849 | 110,400 | 109,849 | ||||||||
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<table border="0" valign="top"><tr><td><b>Jim Hill </b><br/> Chairman, President and CEO <br/> Phone: (403) 301-3401 <br/> Fax: (403) 301-3499<br/> E-mail: <a href="mailto:jim.hill@pason.com">jim.hill@pason.com</a> </td> <td><br/> <br/> <br/> <br/></td> <td><br/> <br/> <br/> <br/></td> <td><b>David Elliott</b><br/> Chief Financial Officer<br/> Phone: (403) 301-3441<br/> Fax: (403) 301-3499<br/> E-Mail: <a cr="true" href="mailto:david.elliott@pason.com">david.elliott@pason.com</a></td></tr></table><br />