LEADER ENERGY SERVICES LTD. CALGARY, ALBERTA--(Marketwired - Nov 26, 2014) - Leader Energy Services Ltd. ("Leader" or the "Company") (TSX VENTURE:LEA) has released its financial and operating results for the three and nine month periods ended September 30, 2014. Leader's third quarter condensed interim financial statements and MD&A will be filed to SEDAR on November 26, 2014. For further information please refer to these filings.
| Performance Summary | ||||||||||||
| (000's) (unaudited) | ||||||||||||
| Quarter ended | Sept. 30, 2014 |
Sept. 30, 2013 | $ Change | % Change | ||||||||
| Revenue | $ | 4,779 | $ | 5,260 | $ | (481 | ) | (9 | )% | |||
| Operating Expenses | 3,217 | 4,022 | (805 | ) | (20 | )% | ||||||
| 1,562 | 1,238 | 324 | 26 | % | ||||||||
| General and Administrative | 865 | 1,066 | (201 | ) | (19 | )% | ||||||
| Amortization | 815 | 1,007 | (192 | ) | (19 | )% | ||||||
| Finance cost | 963 | 895 | 68 | 8 | % | |||||||
| Other | 14 | 18 | (4 | ) | (22 | )% | ||||||
| Net loss | $ | (1,095 | ) | $ | (1,748 | ) | $ | 653 | n/a | |||
| Loss per share - Basic | $ | (0.04 | ) | $ | (0.06 | ) | $ | 0.02 | n/a | |||
| Loss per share - Diluted | $ | (0.04 | ) | $ | (0.06 | ) | $ | 0.02 | n/a | |||
| EBITDA* | $ | 683 | $ | 154 | $ | 529 | 344 | % | ||||
| Adjusted EBITDA* | $ | 691 | $ | 178 | $ | 513 | 288 | % | ||||
| 9 months ended | Sept. 30, 2014 |
Sept. 30, 2013 | $ | Change | % Change | |||||||
| Revenue | $ | 15,800 | $ | 16,200 | $ | (400 | ) | (2 | )% | |||
| Operating Expenses | 12,004 | 12,778 | (774 | ) | (6 | )% | ||||||
| 3,796 | 3,422 | 374 | 11 | % | ||||||||
| General and Administrative | 2,777 | 3,066 | (289 | ) | (9 | )% | ||||||
| Amortization | 2,825 | 3,000 | (175 | ) | (6 | )% | ||||||
| Finance cost | 2,830 | 2,914 | (84 | ) | (3 | )% | ||||||
| Loss on settlement of loans and borrowings | - | 233 | (233 | ) | n/a | |||||||
| Asset impairment | 2,419 | - | 2,419 | n/a | ||||||||
| Other | 57 | 78 | (21 | ) | (27 | )% | ||||||
| Net loss | $ | (7,112 | ) | $ | (5,869 | ) | $ | (1,243 | ) | n/a | ||
| Loss per share - Basic | $ | (0.24 | ) | $ | (0.20 | ) | $ | (0.04 | ) | n/a | ||
| Loss per share - Diluted | $ | (0.24 | ) | $ | (0.20 | ) | $ | (0.04 | ) | n/a | ||
| EBITDA* | $ | (1,457 | ) | $ | 45 | $ | (1,412 | ) | n/a | |||
| Adjusted EBITDA* | $ | 987 | $ | 361 | $ | 626 | 173 | % | ||||
EBITDA refers to net income before finance costs, taxes, depreciation, and amortization. As the Company has not recorded any provision for income taxes, taxes have been excluded from the reconciliation. Adjusted EBITDA is calculated as EBITDA before non-cash losses on the settlement of loans and borrowings, asset impairment and share based payments. EBITDA and Adjusted EBITDA are not measures that have a standardized meaning and accordingly may not be comparable to similar measures used by other companies. Management believes that EBITDA and Adjusted EBITDA are useful measures of cash flow generated from operations as they eliminate non-cash items, non-recurring items and the effects of finance costs and financial restructuring.
In the third quarter of 2014, the Company reported revenues from well stimulation services of $4.8 million as compared to $5.3 million reported in the third quarter of 2013. Despite wet weather and a slow start to the third quarter, the Company experienced a consistent increase in activity during the months of July through September as compared to activity levels in the spring. During the current quarter, the Company reported an increase in full-service coiled tubing activity buoyed by several large jobs in the quarter. This improvement in coiled tubing activity was more than offset by a reduction in stand-alone nitrogen work. In the third quarter of 2013, the Company experienced an increase in stand-alone work utilizing significant volumes of nitrogen for gas lift activities. In the current quarter, the Company continued to provide stand-alone services, however a lower number of jobs and 40% less nitrogen lead to an overall 9% reduction in revenue in the quarter.
For the three months ended September 30, 2014, the Company reported a net loss of $1.1 million ($0.04 per basic and diluted share) compared to a loss of $1.7 million ($0.06 per basic and diluted share) for the three months ended September 30, 2013. For the nine month period ended September 30, 2014, the Company reported a loss of $7.1 million ($0.24 per basic and diluted share) as compared to a loss of $5.9 million ($0.20 per basic and diluted share) for the comparative period in 2013. Excluding the asset impairment of $2.4 million reported in the second quarter, the Company reported a loss of $4.7 million for the nine month period ended September 30, 2014. The increase in operational profit combined with lower general and administrative expenditures, lower amortization expenses and lower finance and related expenditures accounted for the reduced loss of $1.2 million for the nine month period.
Asset Sale
The Company is in the process of arranging certain pieces of equipment for sale. Upon the conclusion of the asset sale, the Company expects to retain three coiled tubing units plus one reel trailer, five nitrogen pumpers and one fluid pumper.
Outlook
Declining oil prices have created short-term uncertainty for WCSB activity levels. October revenue was lower than anticipated, and the Company anticipates lower comparative revenue for the balance of the fourth quarter of 2014 and first quarter of 2015. Recent operational and administrative cost reductions should allow the Company to generate EBITDA over the next six months that is comparable to that experienced during the respective prior year periods.
The Company's liquidity continues to be a significant risk. With the assistance of a consultant, Leader has initiated a review of the business of the Company to reduce expenses, improve performance, and create shareholder value. During the third quarter, the Company has undertaken a number of initiatives to reduce costs and improve cash flow, including:
- Minimizing all discretionary expenditures;
- Reducing general and administrative expenditures;
- Centralized control of all field operations spending;
- Selling certain assets to reduce outstanding debt and corresponding interest costs and align the Company's equipment base with customer demand and field personnel availability.
In addition, the Company is examining all strategic alternatives to continue operations and enhance shareholder value, including but not limited to the merger, amalgamation, joint venture, reverse takeover or sale of the Company or its business with or to another entity, or an equity transaction.
Forward-looking information
This press release contains certain statements or disclosures relating to the Company that are based on the expectations of the Company as well as assumptions made by and information currently available to the Company which may constitute forward-looking information under applicable securities laws. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that the Company anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking information.
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 news release.
