Hanwei Energy Confirms New Canadian Pipe Order and Reports Second Quarter Fiscal 2016 Financial and Operational Results
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 10, 2015) - Hanwei Energy Services Corp. (TSX:HE) ("Hanwei" or the "Company") today provided a Canadian sales update and reported its financial results for the six months ended September 30, 2015. All amounts are in Canadian Dollars unless otherwise noted.
Update on FRP Pipe Sales in Canada
Hanwei has confirmed as of the date of this news release a new $2.4 million order from a Canadian customer that will be produced and shipped in two batches within the Company's current fiscal year ending March 31, 2016. As previously disclosed, the Company's Canadian market for its FRP pipe products is considered a new growth market. The Company's business strategy in this market utilizes a distribution model with inventory purchased by the Company's Canadian distributor. This allows the Company's FRP pipes and fittings to be readily available to end users in Alberta and Saskatchewan from yards located in Weyburn, Saskatchewan, and Taber and Edmonton in Alberta. Despite the current oil and gas industry downturn, approximately 45,000 meters of Hanwei pipe has been installed in Alberta and Saskatchewan over last 18 months.
Financial and Operational Summary for the six-month period ended September 30, 2015
The Company has two reportable segments for its continuing operations: its FRP pipe manufacturing and its oil and gas production. The pipe segment produces and sells fiberglass reinforced plastic ("FRP") pipe to the oil and gas industry and other infrastructure applications. The oil and gas segment is engaged in the exploration and production of oil and natural gas in Western Canada.
As of September 30, 2015 the Company had:
- Cash balance (inclusive of short-term investments) of $7.7 million
- Net Asset Value per share for its continuing operations of $0.21 (on total shares outstanding of approximately 194.2 million)
For the six months ending September 30, 2015:
- The Company generated positive cash flow from operating activities of $1.0 million as compared to cash used in operating activities of $2.7 million for the same period of the prior year.
- Total revenues were approximately $3.0 million as compared to $7.1 million for the same period of the prior year. Decline in revenues were primarily caused by the worldwide weakness in oil prices which adversely impacted the Company's revenues from oil production as well as FRP pipe manufacturing.
- FRP pipe sales were $1.9 million for the six months ended September 30, 2015 as compared to $5.5 million for the same period of the prior year.
- The Company's Kazakhstan market was the most significantly impacted with numerous projects placed on hold or delayed. Sales for the Kazakhstan market were $0.1 million for the six months ended September 30, 2015 as compared to $2.7 million for the same period of the prior year.
- For the Chinese market, sales were maintained at $1.7 million for the six months ended September 30, 2015 as compared to $1.6 million for the same period of the prior year.
- Sales for the Canadian market were $47,000 for the six months ended September 30, 2015 as compared to $1.2 million for the same period of the prior year. The reduction was primarily due to delays in order confirmations due to the industry downturn. As before noted, Hanwei has confirmed a new $2.4 million order subsequent to the six-month period ended September 30, 2015.
- Oil and gas production revenues net of royalties were $1.2 million and the same as that of the prior year.
- EBITDA from continuing operations for the six months ended September 30, 2015 was negative $1.6 million as compared to negative EBITDA of $0.2 million for the same period of the prior year. The decrease in EBITDA was primarily driven by the reduction in Kazakhstan FRP sales and timing of Canadian FRP orders against the fixed overhead costs of the FRP pipe business unit. EBITDA from the oil and gas business unit was $19,000 for the six months ended September 30, 2015.
- The Company had a loss from continuing operations of $2.5 million as compared to loss from continuing operations of $1.8 million for the same period of the prior year. The increase in loss from continuing operations was primarily due to the aforementioned reduction in FRP pipe sales.
- As of September 30, 2015, the Company had a total principal amount of all bank loans of $7.0 million representing a 24% debt to equity ratio (total bank debt divided by total shareholders' equity) as compared to 32% as at March 31, 2015.
Hanwei will host a conference call to discuss its operational and financial results for the second quarter ended September 30, 2015. Graham Kwan, Executive Vice President and Rick Huang, Chief Financial Officer of Hanwei will host the call. Management invites analysts and investors to participate on the conference call:
- Date: Thursday, November 12, 2015
- Time: 11:30 am, Eastern Time (8:30 am Pacific Time)
- Dial in number: 1-888-539-3696 or 1-719-325-2215
A replay of the conference call will be available on the Company's website.
About Hanwei Energy Services Corp.
Hanwei Energy Services Corp.'s principal business operations are in two complimentary key segments of the oil and gas industry as both an equipment supplier to the industry (as a leading manufacturer of high pressure, fiberglass reinforced plastic ("FRP") pipe products and associated technologies serving major energy customers in the global energy market) and as an operator of its producing oil and gas mineral assets at its lands in Alberta.
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
FORWARD-LOOKING INFORMATION AND NON-GAAP MEASURES
Certain information in this press release is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions a description of which is set out in the risk factors section of the Company's Annual Information Form dated June 17, 2015 and Management Discussion and Analysis for the year ended March 31, 2015 both of which are filed with Canadian securities regulators and available on SEDAR at www.sedar.com. The forward-looking information in this press release describes the Company's expectations as of the date of this press release.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE PRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, THE COMPANY DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME, EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LEGISLATION.
Source: Marketwired (Canada)
(November 10, 2015 - 6:10 PM EST)
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