August 29, 2018 - 11:11 PM EDT
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New West Energy Services Inc. Announces Financial Results for Second Quarter 2018

Canada NewsWire

CALGARY, Aug. 29, 2018 /CNW/ - New West Energy Services Inc. (TSX Venture: NWE), an oil and gas and environmental services company focused on Western Canada, today announced its financial results for the six months ended June 30, 2018.

New West Energy Services Inc. (CNW Group/New West Energy Services Inc.)

NOTE REGARDING CHANGE IN FINANCIAL YEAR-END

NWE has changed its financial year-end from April 30 to December 31 to better conform with other similar energy services companies in the industry and to line up the company's quarterly filings with more traditional quarters.  Consequently, in this new financial year commencing January 1, 2018, NWE is reporting unaudited second quarter interim financial results for the six months ended June 30, 2018 compared to the six months ended July 31, 2017.

Going forward, NWE will use a customary quarterly reporting calendar based on a December 31 financial year-end, with fiscal quarters ending on the last day in March, June, September and December each year.

FINANCIAL HIGHLIGHTS

Gerry E. Kerkhoff, President and Chief Executive Officer of NWE stated "New West reported continued top line growth in the first quarter with revenue closing in on $8 million but struggled in the second quarter due to a longer spring breakup and lower activity across all drilling, completions and production sectors.  As a result of our reduced revenue in the second quarter and an increase proportionally in direct costs associated with our fluid transportation division, our gross margin decreased considerably."

Mr. Kerkhoff continued: "Importantly, looking forward we have increased our revenue generating units by around 45% by completing approximately $630,000 in major equipment repairs, near $400,000 of which occurred in the second quarter with the remaining amount occurring subsequent to the quarter end.  Management anticipates our gross margin to improve in the second half of 2018 and into 2019 as a higher proportion of our revenue is generated by higher margin owned equipment, reducing considerably our previous reliance on lower margin third-party contractors and owner operators, and service rates increase due to expected stronger demand."

  • Revenue was $10,530,892 in the six months ended June 30, 2018 compared to $9,073,471 in the six months ended July 31, 2017, and $2,622,753 in the three months ended June 30, 2018 compared to $4,196,883 in the three months ended July 31, 2017.  This increase in the six-month period reflects much stronger revenue in the first quarter of 2018 compared to 2017, with the decrease in the three-month period being due primarily to a longer spring breakup and generally lower activity across all drilling, completions and production sectors.

  • Gross margin was 15% in the six months ended June 30, 2018 compared to 23% in the six months ended July 31, 2017, and 10% in the three months ended June 30, 2018 compared to 24% in the three months ended July 31, 2017.  This decrease in gross margin is due primarily to a significant reduction in revenue in the second quarter of 2018 with an increase proportionally in direct costs in the Vacuum Truck and Fluid Transportation Services division, including higher fuel and labour costs relative to NWE's service rates and proportionally higher repair and maintenance costs for equipment. 

  • General and administrative expenses were $1,876,126 in the six months ended June 30, 2018 compared to $1,599,206 in the six months ended July 31, 2017, and $932,012 in the three months ended June 30, 2018 compared to $846,564 in the three months ended July 31, 2017. This increase was mainly due to expenses associated with the hiring of personnel and the establishment of operations in Grande Prairie servicing the completions and production sectors.

  • Normalized EBITDAC was negative $204,780 in the six months ended June 30, 2018 compared to $536,192 in the six months ended July 31, 2017, and negative $642,590 in the three months ended June 30, 2018 compared to $174,861 in the three months ended July 31, 2017.


                    For the six months ended June 30,   


                    For the six months ended July 31, 


2018


2017


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total












$

$

$

$


$

$

$

$

Revenue

8,354,010

2,176,882

-

10,530,892


6,755,416

2,318,055

-

9,073,471

Direct costs

7,410,917

1,484,496

-

8,895,413


5,356,095

1,588,147

-

6,944,242

Gross margin

943,093

692,386

-

1,635,479


1,399,321

729,908

-

2,129,229

G & A expenses

995,958

717,777

162,391

1,876,126


728,704

685,983

184,519

1,599,206

Share base pmts

-

-

16,511

16,511


-

-

540,269

540,269

Finance charges

297,226

32,455

47,543

377,224


371,033

19,927

80,521

471,481

Depreciation

736,781

-

-

736,781


867,357

-

-

867,357

Disposal of assets

71,881

-

-

71,881


10,566

-

-

10,566

Net loss before tax

(1,158,753)

(57,846)

(226,445)

(1,443,044)


(578,339)

23,998

(805,309)

(1,359,650)

Total assets 

10,843,330

534,160

31,997

11,409,487


14,490,405

950,513

49,181

15,490,099

EBITDAC*

(16,998)

(25,391)

(162,391)

(204,780)


670,617

50,094

(184,519)

536,192
































                  For the three months ended June 30,  


               For the three months ended July 31, 


2018


2017


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total


Vacuum Truck &
Fluid
Transportation
Services

Environmental
Services

Corporate

Total












$

$

$

$


$

$

$

$

Revenue

2,088,190

534,563

-

2,622,753


2,918,283

1,278,600

-

4,196,883

Direct costs

2,046,952

322,246

-

2,369,198


2,321,167

860,460

-

3,181,627

Gross margin

41,238

212,317

-

253,555


597,116

418,140

-

1,015,256

G & A expenses

497,206

346,388

88,418

932,012


444,908

324,707

76,949

846,564

Share base pmts

-

-

16,511

16,511


-

-

263,529

263,529

Finance charges

119,104

16,150

23,909

159,163


171,887

6,066

41,173

219,126

Depreciation

365,699

-

-

365,699


459,716

-

-

459,716

Disposal of assets

(6,733)

-

-

(6,733)


10,566

-

-

10,566

Net loss before tax

(934,038)

(150,221)

(128,838)

(1,213,097)


(489,961)

87,367

(381,651)

(784,245)

Total assets 

10,843,330

534,160

31,997

11,409,487


14,490,405

950,513

49,181

15,490,099

EBITDAC*

(420,101)

(134,071)

(88,418)

(642,590)


152,208

99,602

(76,949)

174,861

 

* Normalized EBITDAC is earnings from continuing operations before interest, taxes, depreciation, amortization and share-based payments and is a measure of NWE's operating profitability. The calculation is further adjusted to normalize EBITDAC by removing any non-reoccurring transactions that are not in the normal course of operations.  ** Copies of NWE's financial statements, MD&A and other public filings are available under the company's profile on SEDAR at www.sedar.com.

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.

Cautionary Note Regarding Forward-Looking Information

Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information and financial outlook.  Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions.  Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations or future actions.  Forward-looking information in this news release includes, without limitation, statements with respect to: the use of proceeds of its loans; the use of the acquired equipment; planned changes in NWE's business and revenues; the competitive environment in which NWE operates; and the assessment of future plans and operations.  Actual events or results may differ materially.  The forward-looking information in this news release is based on assumptions which includes, but is not limited to: NWE realizing the expected benefits of its loans and acquired equipment; the general state of the economy and the oil and gas industry not worsening; NWE not losing any key personnel; NWE sustaining or increasing their level of revenues and EBITDAC  NWE growing its businesses long term and managing its growth; NWE complying with existing regulations and not becoming subject to more stringent regulations; and, NWE's insurance being sufficient to cover losses that may occur as a result of its operations.  The forward-looking information in this news release is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.  The factors which could cause results to differ from current expectations include, but are not limited to: failure to realize the expected benefits of its loans and acquired equipment; potential undisclosed liens associated with the acquired equipment; NWE's results being dependent upon the general state of the economy and the oil and gas industry; NWE being dependent on key personnel, the loss of which could harm its business; NWE may not be able to sustain or increase their revenues or EBITDAC; NWE may be unable to grow its business long term or to manage any growth; NWE may be unable to integrate the acquired equipment into its business; competition in NWE's markets may lead to reduced revenues and EBITDAC; NWE may fail to comply with existing regulations or become subject to more stringent regulations; NWE's insurance may be insufficient to cover losses that may occur as a result of NWE's operations; the market price of NWE's common shares will fluctuate; and, there is a possibility of dilution of existing holders of NWE's common shares due to future financings or acquisitions.  Although NWE has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements in this news release, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of NWE.  Accordingly, readers should not place undue reliance on the forward-looking information in this news release.  The forward-looking information is made as of the date of this news release, and NWE does not assume any obligation to publicly update or revise such forward-looking information to reflect new information, subsequent or otherwise, except as may be required by applicable law.  The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.

SOURCE New West Energy Services Inc.

View original content with multimedia: http://www.newswire.ca/en/releases/archive/August2018/29/c8882.html

Contact Information: New West Energy Services Inc., Attention: Gerry E. Kerkhoff, President and Chief Executive Officer, Phone: 403.984.9798 or 1.888.977.2327 (BEAR), Fax: 403.984.9799, Email: [email protected], Website: www.newwestenergyservices.com; or The Howard Group Inc. (Investor Relations), Attention: Dave Burwell, Vice President, Phone: 403.221.0915 or 1.888.221.0915, Email: [email protected], Website: www.howardgroupinc.comCopyright CNW Group 2018


Source: Canada Newswire (August 29, 2018 - 11:11 PM EDT)

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