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As at December 14, 2018

SaskWorks Diversified (Class A - Series A) $20.5877 SaskWorks Resources (Class R - Series A) $11.6324

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MATRRIX Announces Third Quarter 2018 Results

CALGARYNov. 13, 2018 /CNW/ – MATRRIX Energy Technologies Inc. (“MATRRIX” or the “Corporation”) (TSX-V: MXX) announces financial results for the three and nine month periods ended September 30, 2018. The following should be read in conjunction with the Corporation’s unaudited interim condensed consolidated financial statements and the notes thereto for the three and nine month periods ended September 30, 2018 and related management’s discussion and analysis, which are available on SEDAR at www.sedar.com.

All monetary amounts contained herein are expressed in thousands of Canadian dollars, except for per share amounts.

THIRD QUARTER 2018 SUMMARY (Compared with the third quarter 2017)

  • Adjusted EBITDA of $157, up 216% from an adjusted EBITDA loss of ($135);
  • Revenue of $4,785, up 148% from $1,933;
  • Net loss of ($905), increased 22% from a net loss of ($743);
  • Gross margin of 26%, decreased 13% from 30%.

NINE MONTHS ENDED SEPTEMBER 30, 2018 SUMMARY (Compared with the nine months ended September 30, 2017)

  • Adjusted EBITDA of $691, up 227% from an adjusted EBITDA loss of ($543);
  • Revenue of $14,307 up 215% from $4,544;
  • Net loss of ($2,125), improved 12% from a net loss of ($2,411);
  • Gross margin of 28%, decreased 14% from 32%.

FINANCIAL HIGHLIGHTS

Three months ended

Nine months ended

September 30,

September 30,

(000’s CAD $)

2018

2017

%
Change

2018

2017

%
Change

Revenue

4,785

1,933

148%

14,307

4,544

215%

Adjusted EBITDA (i)

157

(135)

216%

691

(543)

227%

Adjusted EBITDA per share

Basic

nm

0.01

(0.02)

150%

Diluted

nm

0.01

(0.02)

150%

Net loss

(905)

(743)

(22%)

(2,125)

(2,411)

12%

Net loss per share

Basic

(0.01)

(0.02)

50%

(0.02)

(0.07)

71%

Diluted

(0.01)

(0.02)

50%

(0.02)

(0.07)

71%

Funds flow

135

(116)

216%

339

(503)

167%

Gross Margin (i)

1,247

582

114%

3,959

1,458

172%

Capital expenditures related to acquisitions

nm

8,511

nm

Capital expenditures

2,364

nm

9,845

77

nm

Weighted Average common shares outstanding

131,577

33,862

289%

130,623

32,750

299%

Weighted Average diluted common shares outstanding

131,577

33,862

289%

130,623

32,750

299%

nm – calculation is not meaningful

 

Revenue

Consolidated revenue for the three and nine month periods ended September 30, 2018 was $4,785 and $14,307, respectively, as compared to $1,933 and $4,544 for the corresponding 2017 periods. The increase in revenue was primarily related to the new contract drilling rig segment offset by decreases in operating activity in the Corporation’s horizontal and directional drilling segment.

Adjusted EBITDA

Adjusted EBITDA for the three and nine month periods ended September 30, 2018 was $157 and $691, respectively, as compared to ($135) and ($543) for the corresponding 2017 periods. The increase in EBITDA was primarily related to the profitability of the new contract drilling rig segment. For the three and nine month periods ended September 30, 2018, the contract drilling rig segment contributed $150 and $1,637 for the respective periods.

Net Loss

Consolidated net loss for the three and nine month periods ended September 30, 2018 was ($905) and ($2,125), respectively, as compared to net losses of ($743) and ($2,411), respectively, for the 2017 corresponding periods.

Capital Expenditures

Capital expenditures for the three and nine month periods ended September 130, 2018 were $2,364 and $14,703, respectively, as compared to $nil and $77 for the corresponding 2017 periods. The Q3 2018 capital expenditures were related to rig upgrades. As of the date of this press release, the Corporation has committed $2,348 for rig upgrades as part of its 2018 capital program.

OUTLOOK

Currently, the Corporation has both of its Alberta drilling rigs (or 100%) which had been recently upgraded and mobilized from Saskatchewan and five out of seven (or 63%) of its Saskatchewan drilling rigs operating. The Corporation forecasts to have all of its Alberta and Saskatchewan drilling rigs working into the latter half of Q4 2018, continuing through Q1 2019 and into spring breakup.

Despite the steady rise in oil prices for the first nine months in 2018, a lack of consistent market access has caused differentials to widen significantly across the WCSB. Therefore, the Corporation continues to believe activity in the WCSB will remain challenged with similar activity levels in Q4 2018 and Q1 2019 as compared to Q4 2017 and Q1 2018 respectively. Currently, none of the Corporation’s customers are producing Canadian heavy oil.

The Corporation has made significant capital investments over the past year with the strategy of ensuring geographical diversification of its business and is well positioned to capture new customer demand while growing with its current customer base. The Corporation will continue its strategic plan of purchasing high quality assets at prices that will provide a high rate of return for shareholders.

The Corporation will continue to seek increased market share with the horizontal and directional drilling segment.

Management believes the Corporation’s strong balance sheet provides flexibility to grow organically and execute on strategic acquisition opportunities that align with its profitable growth strategy. The Corporation remains focused on reducing variable direct operating and administrative expenses without sacrificing the quality of its service offering. By providing high quality assets and crews management believes the Corporation will continue to help its customers grow and create long-term shareholder value.

NON-GAAP MEASURES

This press release contains references to (i) Adjusted EBITDA and (ii) gross margin. These financial measures are not measures that have any standardized meaning prescribed by International Financial Reporting Standards (“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)

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, foreign exchange, non recurring restructuring charges, accretion of debentures and other income/expenses, and any other items that the Corporation considers appropriate to adjust given the irregular nature and relevance to comparable operations.” 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. Investors should be cautioned, however, that Adjusted EBITDA should not be construed as an alternative to net income (loss) and comprehensive income (loss) determined in accordance with IFRS as an indicator of the Corporation’s performance. The Corporation’s method of calculating Adjusted EBITDA may differ from that of other organizations and, accordingly, its Adjusted EBITDA may not be comparable to that of other companies.

 

Three months ended

Nine months ended

September 30,

September 30,

(000’s CAD $)

2018

2017

%
Change

2018

2017

%
Change

Net loss

(905)

(743)

(22%)

(2,125)

(2,411)

12%

Depreciation

841

592

42%

2,373

1,837

29%

Interest on Convertible Debenture

65

nm

195

nm

Gain from disposition of property and equipment

nm

(313)

nm

Gain from equipment lost in hole

(12)

nm

(635)

(42)

(1,412%)

Interest and other income

(2)

(6)

67%

(29)

(19)

(53%)

Share based payments

52

71

(27%)

199

124

60%

   Transaction costs

46

nm

539

nm

Foreign exchange (gain) loss

29

(37)

178%

59

(32)

284%

Accretion of debentures

31

nm

98

nm

Non-recurring restructuring charges

nm

330

nm

Adjusted EBITDA

157

(135)

216%

691

(543)

227%

nm – not meaningful

(ii)

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

Nine months ended

September 30,

September 30,

(000’s CAD $)

2018

2017

%
Change

2018

2017

%
Change

Income (loss) from operations

407

(6)

6,883%

1,589

(355)

548%

Depreciation

840

588

43%

2,370

1,813

31%

Gross margin

1,247

582

114%

3,959

1,458

172%

Gross margin %

26%

30%

(13%)

28%

32%

(14%)

nm – not meaningful

 

FORWARD-LOOKING INFORMATION

Certain statements contained in this press release constitute forward-looking statements or forward-looking information (collectively, “forward-looking information”). Forward-looking 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.

This press release contains forward-looking information pertaining to, among other things: the Corporation’s 2018 capital program, including the amount committed for rig upgrades; the expectation that all of the Corporation’s drilling rigs in Alberta and Saskatchewan will be working into the latter half of Q4 2018, through Q1 2019 and into spring breakup; that industry activity will remain challenged with similar activity levels in Q4 2018 and Q1 2019 as compared to Q4 2017 and Q1 2018, respectively; the Corporation’s strategic plan, including with respect to asset purchases; the expectation that the Corporation’s strategic plans of acquiring assets may provide a high rate of return for shareholders; the Corporation’s expectation to increase market share of the horizontal and directional drilling rig segment; and the Corporation’s focus on reducing variable direct operating and administrative expenses and creating shareholder value.

This forward-looking information involves material assumptions and known and unknown risks and uncertainties and other factors, certain of which are beyond the Corporation’s control, that may cause actual results or events to differ materially from those anticipated in such forward-looking information. This press release, the Corporation’s management’s discussion and analysis for the three and nine month periods ended September 30, 2018, the Corporation’s annual information form for the year ended December 31, 2017 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, which include, among other things, anticipated financial performance; the implementation of the Corporation’s growth strategy; the ability to execute the Corporation’s 2018 capital program; business prospects; conditions in general economic and financial markets; the ability to get additional market share with the horizontal and directional drilling segment; industry conditions; current commodity prices and royalty regimes; regulatory developments; the impact of increasing competition; future exchange rates; the availability and cost of labour and services; the sufficiency of budgeted capital expenditures in carrying out planned activities; timing and amount of capital expenditures; the ability of the Corporation to renew existing contracts and enter into new contracts; utilization and pricing of the Corporation’s systems and rigs, including the ability of the Corporation to have all of its Alberta and Saskatchewan drilling rigs working by the latter half of Q4 2018 through to spring breakup in 2019; supply and demand for oil and natural gas services relating to drilling and ancillary services; effects of regulation by governmental agencies; tax laws; future operating costs; and the ability to obtain financing on acceptable terms, which are subject to change based on, amongst other factors, commodity prices, market conditions and potential timing delays. Although management of the Corporation considers these assumptions to be reasonable based on information currently available to it, such assumptions may prove to be incorrect.  Actual results, performance or achievements could differ material from those expressed in, or implied by, 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.

Statements, including forward-looking information, are made as of the date of this press release and the Corporation does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.

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.

View original content: http://www.newswire.ca/en/releases/archive/November2018/13/c1179.html

Lyle Whitmarsh, President & Chief Executive Officer, MATRRIX Energy Technologies Inc., Tel: (403) 984-5042Copyright CNW Group 2018

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