ESI Announces 2019 Fourth Quarter Earnings

CALGARY, April 2, 2020 /CNW/ - ESI Energy Services Inc. (CSE: OPI) ("ESI" or the "Company") announces 2019 fourth quarter and Year-end financial results.

Robert Dunstan, ESI's President and CEO, announces lower levels of revenue and net income, as well as slightly lower working capital and long-term debt, for the twelve-month period ended December 31, 2019 compared with the same period in 2018. EBITDA and funds flow from operations during the year were $1,669,000 and $1,772,000, respectively, compared with $5,073,000 and $5,156,000, during the same period in 2018. 

Highlights

About ESI

ESI is a publicly traded company listed on the Canadian Securities Exchange under the stock symbol "OPI". ESI is a pipeline equipment rental and sales company with principal operations in Leduc, Alberta and Phoenix, Arizona. The Company, through its operating subsidiaries, ESI Energy Services Inc. ("ESI") and ESI Pipeline Services Inc. ("ESIPSI"), supplies (rents and sells) backfill separation machines ("Padding Machines") to mainline pipeline contractors, oilfield pipeline and construction contractors, utility construction contractors and renewables (wind and solar) contractors.     

Q4 2019 Highlights

Revenue for the three-month period ended December 31, 2019 decreased by 53 percent to $2,295,000 compared to $4,833,000 during the same period in 2018.  Most of this revenue was generated by padding machine rentals. Substantially all the padding revenue was generated in the United States.  Activity levels for padding machines in Canada remained slow.

Approximately 74 percent of the revenue generated during the three-month period ended December 31, 2019 came from padding machine rentals. Activity levels for large padding machines were down from 60 padding months during the fourth quarter of 2018 to 17 padding months during the fourth quarter of 2019, a decrease of 72 percent.  Activity levels for small padders were up by 38 percent to 18 padding months during the fourth quarter of 2019, compared with 13 padding months during the same period in 2018. 

Gross margin for the three-month period ended December 31, 2019 decreased by 70 percent to $1,075,000 compared to $3,631,000 for the same period in 2018.  This decrease was primarily due to lower rental revenue from large padding machines in 2019 compared with 2018.

The Company generated net loss of $1,018,000 during the fourth quarter of 2019 compared with net income of $1,978,000 reported during the same period in 2018, a decrease of 151 percent.  The net loss during the fourth quarter of 2019 compared with net income for the same period in 2018 was primarily due to a 73 percent decrease in rental revenue from large padding machines.

Funds flow from operations was $503,000 during the fourth quarter of 2019, a decrease of 82 percent compared to $2,796,000 during the same period in 2018. The decrease was primarily due to lower rental revenue from large padding machines during the fourth quarter of 2019.

2019 YTD Highlights

Revenue for the twelve-month period ended December 31, 2019 decreased by 24 percent to $11,069,000 compared to $14,557,000 during the same period in 2018.  Consistent with the first nine months of 2019, virtually all this revenue was generated from padding revenue in the United States.  Activity levels for padding machines and oilfield services in Canada remained slow.

78 percent of the revenue generated during the year ended December 31, 2019 came from padding machine rentals, most of it from large padding machines. Activity levels for large padding machines were down from 161 padding months in 2018 to 97 padding months during the same period in 2019, a decrease of 40 percent.  Activity levels for small padders were up by 69 percent to 71 padding months in 2019, compared to 42 padding months during the same period in 2018.

Gross margin for the twelve-month period ended December 31, 2019 decreased by 41 percent to $5,039,000 from $8,470,000 during the same period in 2018.  The decrease was primarily due to lower rental revenue from large padding machines in 2019 compared with 2018.

Net loss of $1,719,000 was reported during the twelve months of 2019, which was $3,495,000 lower than the net income of $1,776,000 during the same period in 2018. The increase in net loss was primarily due to 41 percent decrease in rental revenue from large padding machines. The increase in foreign exchange loss was offset by the higher gain on disposal of property and equipment during 2019.

Funds flow from operations was $1,772,000 for the year ended December 31, 2019, a decrease of 66 percent compared to $5,156,000 during the same period in 2018. The decrease in funds flow was primarily due to lower rental revenue from large padding machines during 2019.

Working capital decreased by $867,000 to $12,734,000 at December 31, 2019 compared to $13,601,000 at December 31, 2018. The decrease in working capital during 2019 was primarily attributable to a decrease of $2,386,000 in accounts receivable during 2019.

Long term debt decreased by $232,000 to $1,840,000 at December 31, 2019 compared to $2,072,000 at December 31, 2018.

Forward-Looking Statements

Certain statements contained in this news release may constitute forward-looking information, including statements regarding trends in large padding machine rentals, building additional micro padders and general improved trends in our business. These statements relate to future events or future performance. The use of the word "will", "expected" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current beliefs or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Company. The forward-looking information contained in this release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Due to the risks, uncertainties and assumptions inherent in forward-looking information, investors should not place undue reliance on forward- looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

SOURCE ESI Energy Services Inc.