CALGARY, Alberta, Dec. 21, 2017 (GLOBE NEWSWIRE) -- 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 second quarter ended October 31, 2017.
HIGHLIGHTS
- In the six months ending October 31, 2017, revenue was $9,711,943, representing an increase of 226% compared to the same period last year, driven by a 335% increase in revenue from the Vacuum Truck and Fluid Transportation Services division and a 91% increase in revenue from the Environmental Services division.
- In the three months ending October 31, 2017, revenue was $5,515,060, representing an increase of 248% compared to the same period last year, driven by a 444% increase in revenue from the Vacuum Truck and Fluid Transportation Services division and a 56% increase in revenue from the Environmental Services division.
- This significant revenue increase was primarily due to securing new clients in the completions and productions sectors utilizing the fluid hauling equipment acquired in March 2017 for $4.8 million and increased drilling, completions and production activity in Western Canada.
- Gross margin in the six-month period was 22% and in the three-month period was 21%, representing, in both cases, an increase of 3 percentage points from the same period last year. These increases were primarily due to a significant increase in revenues relative to the increase in variable costs.
- General and administrative expenses in the six-month period were $1,756,874, representing an increase of 26% from the same period last year, and these expenses in the three-month period were $910,310, representing an increase of 28% from the same period last year. These increases were mainly due to additional expenses associated with the hiring of key personnel needed to facilitate NWE’s growth.
- Normalized EBITDAC* in the six-month period was $418,434 compared to negative $834,847 from the same period last year, representing an increase $1,253,281, and Normalized EBITDAC in the three-month period was $243,573 compared to negative $425,269 from the same period last year, representing an increase $668,842.
Gerry E. Kerkhoff, President and Chief Executive Officer of NWE stated, “New West continues to see considerable increases in top line growth through our diversification from the drill bit to the completions and production sector. We continue to expand our client base and are increasingly taking on larger projects with correspondingly higher revenues.”
Mr. Kerkhoff continued, “Our rapid revenue growth in 2017 has come with some expected growing pains. Our gross margin, while improving, continues to be depressed due to higher than normal repair and maintenance expenses associated with the fluid hauling equipment acquired in March 2017. That said, a major portion of the repair and maintenance expenses needed on the acquired equipment have already been made and it is expected that such expenses will decrease going forward. Higher fuel and labour costs relative to our service rates have also affected our gross margin. Lastly, we have also been focused on hiring full time employees and operators to fulfill our larger projects, which will decrease our utilization of low-margin third-party contractors. With the oil and gas sector showing increasing signs of recovery, we expect to see improvement in 2018 in our service rates and margins and anticipate increasingly strong top and bottom line results.”
* 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.
Contact:
Gerry E. Kerkhoff
New West Energy Services Inc.
President & Chief Executive Officer
Phone - 403.984.9798 or 1.888.977.2327 (BEAR)
Fax - 403.984.9799
Email - gkerkhoff@newwestenergyservices.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”, “should” 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.