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CWC ENERGY SERVICES CORP. ANNOUNCES FOURTH QUARTER AND YEAR END 2021 OPERATIONAL AND FINANCIAL RESULTS

·22 min read

CALGARY, AB, March 2, 2022 /CNW/ - (TSXV: CWC) CWC Energy Services Corp. ("CWC" or the "Company") announces the release of its operational and financial results for the three months and year ended December 31, 2021. The Financial Statements and Management Discussion and Analysis ("MD&A") for the three months and year ended December 31, 2021 are filed on SEDAR at www.sedar.com.

CWC Energy Services Corp. Logo (CNW Group/CWC Energy Services Corp.)
CWC Energy Services Corp. Logo (CNW Group/CWC Energy Services Corp.)

Financial Highlights



Three months ended


Year ended

$ thousands, except shares, per share amounts, and margins


December 31,


December 31,


2021


2020

Change %


2021


2020


2019

FINANCIAL RESULTS












Revenue












Contract Drilling


12,533


5,327

135%


31,712


19,859


28,497

Production Services


21,160


14,738

44%


70,923


48,034


79,949



33,693


20,065

68%


102,635


67,893


108,446

Other income (expense)


(927)


2,363

(139%)


3.835


6,786


-

Adjusted EBITDA(1)


6.135


5,034

22%


18,872


11,098


12,166

Adjusted EBITDA margin (%)(1)


18%


25%



18%


16%


11%

Impairment of assets


-


-

n/m(3)


(1,296)


(25,451)


-

Net income (loss)


2,866


(769)

n/m(3)


4,573


(24,490)


(1,700)

Net income (loss) margin (%)(2)


18%


(4%)

14%


4%


(36%)


(2%)

Capital expenditures


25,039


591

n/m(3)


29,278


5,138


5,349

Per share information:












Weighted average number of shares outstanding – basic

506,011,580

504,081,811


505,337,978

507,104,004

511,106,531

Weighted average number of shares outstanding - diluted

514,870,615

504,081,811


513,203,787

507,104,004

511,106,531

Adjusted EBITDA(1) per share - basic and diluted

$

0.01

$

0.01


$

0.04

$

0.02

$

0.02

Net income (loss) per share - basic and diluted

$

0.01

$

(0.01)


$

0.01

$

(0.05)

$

(0.00)




















As at December 31,

$ thousands, except ratios







2021


2020


2019

FINANCIAL POSITION AND LIQUIDITY












Working capital (excluding debt)(1)







18,96


12,069


18,534

Working capital (excluding debt) ratio(1)







3.1:1


2.9:1


3.3:1

Total assets







226,645


202,223


243,398

Total long-term debt (including current portion)






45,847


30,231


40,552

Shareholders' equity







163,269


157,977


182,032

(1) Please refer to the "Non-GAAP and Other Financial Measures" section for further information.

(2) Net income (loss) margin is a Non-GAAP Measure which is calculated as net income (loss) divided by total revenue.

(3) Not meaningful.

Working capital (excluding debt) for December 31, 2021 has increased $6.9 million (57%) since December 31, 2020 driven by increases in accounts receivable ($10.0 million (62%)) offset by decreases in prepaid expenses and deposits ($0.3 million (17%)) and increases in accounts payable ($2.7 million (43%)). Long-term debt (including current portion) of $45.8 million has increased $15.6 million (52%) from December 31, 2020 primarily due to the purchase of ten (10) triple drilling rigs in Q4 2021 partially offset by the payment of long-term debt from operating cash flows throughout 2021.

Highlights for the Three Months Ended December 31, 2021

  • Average Q4 2021 crude oil price, as measured by West Texas Intermediate ("WTI"), of US$73.51/bbl was 4% higher than the Q3 2021 average price of US$70.64/bbl (Q4 2020: US$42.63/bbl) and the price differential between Canadian heavy crude oil, as represented by Western Canadian Select ("WCS"), and WTI maintained a differential in the range of US$14.30/bbl to US$19.30/bbl during the fourth quarter of 2021. Natural gas prices, as measured by AECO of $4.44/GJ was 30% higher than the Q3 2021 average of $3.42/GJ (Q4 2020: $2.52/GJ).

  • On November 9, 2021, CWC announced the acquisition of ten (10) high-spec triple drilling rigs and related ancillary equipment from a privately held contract drilling company based in Casper, Wyoming for total cash consideration including transaction costs of US$18.5 million (approximately C$23.5 million). The purchase further expands CWC's presence in the U.S. and more than doubles the size of the Company's active drilling fleet to nineteen (19) drilling rigs comprised of seven (7) conventional heavy double drilling rigs in Canada and five (5) AC triple, five (5) DC triple and two (2) conventional heavy double drilling rigs in the U.S.

  • CWC's Canadian drilling rig utilization in Q4 2021 of 60% (Q4 2020: 39%) was more than double the Canadian Association of Energy Contractors ("CAOEC") industry average of 29% (Q4 2020: 16%). Canadian activity levels were higher in Q4 2021 with 387 drilling rig operating days (Q4 2020: 248 drilling rig operating days) from seven (7) Canadian drilling rigs as global demand for crude oil and natural gas returned when public health measures to slow the spread of COVID-19 were relaxed as a result of vaccinations becoming readily available. Average revenue per operating day of $25,103 resulted in revenue of $9.7 million (Q4 2020: $5.3 million) from the Canadian drilling operations. Due to the acquisition of the ten (10) triple drilling rigs on November 9, 2021, CWC had a quarterly weighted average(2) of eight (8) U.S. drilling rigs and 79 operating days in Q4 2021 (Q4 2020: nil operating days from two (2) U.S. drilling rigs) resulting in U.S. Contract Drilling revenue of $2.8 million with an average revenue per operating day of US$28,425, as travel restrictions implemented between Canada and the U.S. eased and our Canadian rig crews were able to return to the U.S.

  • Service rig utilization in Q4 2021 of 68% (Q4 2020: 42%) was driven by 29,737 operating hours which were 34% higher than the 22,273 operating hours in Q4 2020 with a Q4 2021 average revenue per hour of $712 (Q4 2020: $645) resulting in Production Services revenue of $21.2 million (Q4 2020: $14.7 million). During Q4 2021, the Company earned $1.3 million in revenue on 87 oil and gas sites requiring well decommissioning under the Alberta Site Rehabilitation Program ("SRP") and two (2) oil and gas sites under the Saskatchewan Accelerated Site Closure Program ("ASCP"). The $1.0 billion Alberta SRP, the $400 million ASCP and the $100 million B.C. Dormant Sites Reclamation Program ("DSRP") provide grants to eligible oilfield service contractors to perform well, pipeline, and oil and gas site closure and reclamation work, creating jobs and supporting the environment until December 31, 2022. CWC's Production Services segment is well positioned to continue to provide well decommissioning work on these inactive wells.

  • Revenue of $33.7 million, an increase of $13.6 million (68%) compared to $20.1 million in Q4 2020.

  • Adjusted EBITDA(1) of $6.1 million, an increase of $1.1 million (22%) compared to $5.0 million in Q4 2020. Adjusted EBITDA net of Canada Emergency Wage Subsidy ("CEWS") and Canada Emergency Rent Subsidy ("CERS") of $7.1 million, an increase of $4.4 million (164%) compared to $2.7 million in Q4 2020.

  • Net income of $2.9 million, an increase of $3.7 million compared to a net loss of $0.8 million in Q4 2020.

Highlights for the Year Ended December 31, 2021

  • CWC's Canadian drilling rig utilization for 2021 of 41% (2020: 27%) significantly exceeded the CAOEC industry average of 25% (2020: 16%). Canadian activity levels for 2021 increased by 53% to 1,054 drilling rig operating days from seven (7) Canadian drilling rigs (2020: 689 drilling rig operating days). Average revenue per operating day of $23,433 resulted in revenue of $24.7 million from the Canadian drilling operations. U.S. drilling rig activity levels for 2021 were 198 drilling rig operating days (2020: 144 drilling rig operating days) from an annual weighted average(3) of three (3) U.S. drilling rigs for a utilization of 16% (2020: 20% from two (2) U.S. drilling rigs). U.S. Contract Drilling revenue of $7.0 million represented 22% of CWC's total Contract Drilling revenue in 2021 with an average revenue per operating day of US$28,198.

  • CWC's service rig utilization for 2021 of 60% (2020: 34%) was driven by 105,570 operating hours, which were 45% higher than the 72,610 operating hours in 2020 with an average revenue per hour of $663 (2020: $644) resulted in Production Services revenue of $70.9 million (2020: $48.0 million).

  • Revenue of $102.6 million, an increase of $34.7 million (51%) compared to $67.9 million in 2020.

  • Adjusted EBITDA(1) of $18.9 million, an increase of $7.8 million (70%) compared to $11.1 million in 2020. 2021 Adjusted EBITDA(1) is the highest level of Adjusted EBITDA(1) that the Company has achieved since 2014 when the downturn in the global oil and gas industry first started.

  • Net income of $4.6 million, an increase of $29.0 million compared to a net loss of $24.5 million in 2020. The increase is primarily due to a charge for impairment of assets of $25.5 million taken in Q1 2020.

  • On August 27, 2021, CWC announced the sale of its swabbing rig assets and business for gross proceeds of $0.7 million, thereby further focusing the Company on its core assets and services of drilling rigs and service rigs.

  • For the year ended December 31, 2021, the Company purchased 2,249,500 (2020: 8,994,000) common shares under the Normal Course Issuer Bid ("NCIB") which were cancelled and returned to treasury (2020: 9,113,500 common shares were cancelled and returned to treasury).

(1) Please refer to the "Non-GAAP and Other Financial Measures" section for further information.

(2) Quarterly weighted average number of rigs is calculated as (2 rigs x 40 days) + (12 rigs x 52 days) / 92 days

(3) Annual weighted average number of rigs is calculated as (2 rigs x 313 days) + (12 rigs x 52 days) / 365 days

Operational Overview

Contract Drilling

The Contract Drilling division operates under the trade name CWC Ironhand Drilling and is comprised of ten (10) electric triple drilling rigs with depth ratings from 3,600 to 7,600 metres and nine (9) telescopic double drilling rigs with depth ratings from 3,200 to 5,000 metres. 18 of 19 rigs have top drives and eight (8) have pad rig walking systems. All of the drilling rigs are ideally suited for the most active depths for horizontal drilling in the Western Canadian Sedimentary Basin ("WCSB"), including the Montney, Cardium, Duvernay and other deep basin horizons. The Company has expanded its drilling rig services into select United States basins including the Permian, Eagle Ford, Niobrara, Denver-Julesburg ("DJ"), Powder River and Bakken.


Three months ended


OPERATING HIGHLIGHTS

Dec. 31 2021

Sep. 30, 2021

Jun. 30, 2021

Mar. 31, 2021

Dec. 31, 2020

Sep. 30, 2020

Jun. 30, 2020

Mar. 31, 2020

Drilling Rigs – Canada









Total drilling rigs, end of period

7

7

7

7

7

7

7

7










Revenue per operating day(1)

$25,103

$22,061

$24,392

$22,497

$21,452

$19,214

$19,382

$22,849

Drilling rig operating days

387

296

54

317

248

28

68

344

Drilling rig utilization %(2)

60%

46%

9%

50%

39%

4%

11%

54%

CAOEC industry average utilization %

29%

27%

15%

27%

16%

9%

4%

35%










Wells drilled

30

25

7

28

23

4

4

26

Average days per well

12.9

11.9

9.0

11.3

10.8

7.1

17.1

13.2

Meters drilled (thousands)

129.2

101.2

22.0

112.4

88.5

13.7

20.2

99.6

Meters drilled per day

334

341

405

354

356

483

295

290

Average meters per well

4,305

4,048

3,664

4,014

3,848

3,412

5,053

3,831












Three months ended

OPERATING HIGHLIGHTS

Dec. 31 2021

Sep. 30, 2021

Jun. 30, 2021

Mar. 31, 2021

Dec. 31, 2020

Sep. 30, 2020

Jun. 30, 2020

Mar. 31, 2020

Drilling Rigs – United States









Total drilling rigs, end of period

12

2

2

2

2

2

2

2










Revenue per operating day (US$)(1)

$28,425

$26,806

$28,196

$80,000(3)

-

-

-

$25,139

Drilling rig operating days

79

58

61

2

-

-

-

144

Drilling rig utilization %(2)

11%

31%

33%

1%

-

-

-

79%










Wells drilled

5

6

5

-

-

-

-

10

Average days per well

15.7

9.6

12.1

-

-

-

-

14.4

Meters drilled (thousands)

15.1

11.8

19.3

-

-

-

-

40.5

Meters drilled per day

193

205

319

-

-

-

-

282

Average meters per well

3,015

1,969

3,867

-

-

-

-

4,053

(1)

Revenue per operating day is calculated based on operating days (i.e. spud to rig release basis). New or inactive drilling rigs are added based on the first day of field service.

(2)

Drilling rig utilization is calculated based on operating days (i.e. spud to rig release basis).

(3)

Revenue is enhanced by one-time recovery of mobilization costs.

Canadian Contract Drilling revenue of $9.7 million for Q4 2021 (Q4 2020: $5.3 million) was achieved with a utilization rate of 60% (Q4 2020: 39%), compared to the CAOEC industry average of 29% (Q4 2020: 16%). CWC completed 387 Canadian drilling rig operating days in Q4 2021, compared to 248 Canadian drilling rig operating days in Q4 2020 as global demand for crude oil and natural gas returned when public health measures to slow the spread of COVID-19 were relaxed as a result of vaccinations becoming readily available.

U.S. Contract Drilling revenue of $2.8 million for Q4 2021 (Q4 2020: $nil) was achieved with a utilization rate of 11% with 79 U.S. drilling rig operating days (Q4 2020: nil) as travel restrictions implemented between Canada and the U.S. eased and our Canadian rig crews were able to return to the U.S. The lower utilization rate in Q4 2021 was a result of the purchase of ten (10) triple drilling rigs on November 9, 2021 and starting up operations with no previous base of assets, employees or customers.

Production Services

With a fleet of 144 service rigs, CWC is one of the largest well servicing companies in Canada as measured by active fleet and operating hours. CWC's service rig fleet consists of 75 single, 55 double and 14 slant rigs providing services which include completions, maintenance, workovers and well decommissioning with depth ratings from 1,500 to 5,000 metres. In 2021, CWC chose to park 77 of its service rigs and focus its sales and operational efforts on the remaining 67 active service rigs due to the reduction in the number of service rigs currently required to service the WCSB and the tight labour market experienced in the industry for service rig crews.


Three months ended

OPERATING HIGHLIGHTS

Dec. 31,

2021

Sep. 30,
2021

Jun. 30,

2021

Mar. 31,

2021

Dec. 31,

2020

Sep. 30,

2020

Jun. 30,

2020

Mar. 31,

2020

Service Rigs









Active service rigs, end of period

67

67

68

66

81

82

82

83

Inactive service rigs, end of period

77

77

77

79

64

63

63

62

Total service rigs, end of period

144

144

145

145

145

145

145

145










Operating hours

29,737

28,293

20,463

27,087

22,273

15,859

4,037

30,442

Revenue per hour

$712

$675

$623

$630

$645

$605

$619

$666

Service rig utilization %(1)

68%

64%

47%

64%

42%

29%

8%

56%

(1)

In accordance with CAOEC methodology, service rig utilization is calculated based on 10 operating hours a day x number of days per quarter x 5 days a week divided by 7 days in a week to reflect maximum utilization available due to hours of service restrictions on rig crews. Service rigs requiring their 24,000 hour recertification, refurbishment or have been otherwise removed from service for greater than 90 days are excluded from the utilization calculation until their first day back in field service.

Production Services revenue of $21.2 million in Q4 2021, up $6.4 million (44%) compared to $14.7 million in Q4 2020. The revenue increase in Q4 2021 was a result of the global demand for crude oil and natural gas returning when public health measures to slow the spread of COVID-19 were relaxed as a result of vaccinations becoming readily available.

CWC's service rig utilization in Q4 2021 of 68% (Q4 2020: 42%) with 29,737 operating hours was 34% higher than the 22,273 operating hours in Q4 2020. Average revenue per hour of $712 in Q4 2021 was $67 per hour (10%) higher than the $645 per hour in Q4 2020 as the Company implemented pricing adjustments to partially offset increased labour costs in response to continuing industry labour shortages and higher inflation from our suppliers.

On September 10, 2021, the Company sold its non-core swabbing rig assets and business for gross proceeds of $0.7 million. Prior to the sale, the swabbing rig business contributed revenue of $0.8 million and Adjusted EBITDA of $0.1 million for the year ended December 31, 2021.

Capital Expenditures


Three months ended



Year ended




December 31,

Change

Change

December 31,

Change

Change

$ thousands

2021

2020

$

%

2021

2020

$

%

Capital expenditures









Contract drilling

24,778

309

24,469

n/m(1)

27,793

2,023

25,770

n/m(1)

Production services

250

282

(32)

(11%)

1,470

3,089

(1,619)

(52%)

Other equipment

11

-

11

n/m(1)

15

26

(11)

(42%)


25,039

591

24,448

n/m(1)

29,278

5,138

24,140

n/m(1)










Growth capital

23,664

252

23,412

n/m(1)

25,393

1,741

23,652

n/m(1)

Maintenance and infrastructure capital

1,375

339

1,036

306%

3,885

3,397

488

14%

Total capital expenditures

25,039

591

24,448

n/m(1)

29,278

5,138

24,140

470%

(1) Not meaningful

Capital expenditures of $25.0 million in Q4 2021, an increase of $24.4 million compared to $0.6 million in Q4 2020.

Capital expenditures of $29.3 million for the year ended December 31, 2021, an increase of $24.1 million compared to $5.1 million in the same period of 2020. The increased capital expenditures for the quarter and year ended December 31, 2021 were primarily due to the purchase of ten (10) triple drilling rigs.

Outlook

The outlook for contract drilling and well servicing in Canada and the U.S. continues to improve as the removal of economic restrictions due to the COVID-19 health pandemic has supported a continuing increase in crude oil and natural gas prices. To support the cautious re-opening of the global economy, in July 2021 OPEC+ agreed to add back 4 million barrels per day of curtailed production in increments of 400,000 barrels per day each month into 2022. This moderate and gradual add back of oil production was reconfirmed in OPEC's meeting on February 2, 2022, thus supporting the continuation of higher crude oil prices, as measured by WTI, currently over US$95/bbl. With a strong crude oil price and global demand for crude oil continuing to rise in 2022, CWC believes North American oilfield service activity will continue to increase in 2022. Such optimism is reflected in the Canadian Association of Petroleum Producers ("CAPP") January 20, 2022 forecast that capital spending in the Canadian oil and natural gas industry will increase 22% to $32.8 billion in 2022 as oilfield activity levels have now recovered to their pre COVID-19 health pandemic levels.

CWC is currently experiencing a strong Q1 2022 with both activity and pricing increasing for both the drilling rig and service rig segments. However, as demand for our services increases for the remainder of 2022, CWC believes the labour market for rig crews will continue to be extremely tight, resulting in inflationary pressure on field labour costs, which will warrant further rate increases to our E&P customers.

In June 2021, CWC released its inaugural Environmental, Social and Governance ("ESG") Report. Our commitment to ESG and sustainability has shown improvement over the last three years as outlined in our report. We will continue to work towards advancing these efforts further in future years, especially in the area of emission reductions and establishing goals and targets. One of the initial steps CWC has taken towards meeting its ESG targets has been to convert some of our field equipment to have carbon reduction bi-fuel capabilities. In addition, CWC is proud to say that 2% of its revenue in 2021 came from work on carbon capture, helium and salt water disposal wells using our current equipment, thereby reflecting the diversity and versatility of the nature of work for CWC's drilling rigs. Management is confident that CWC will continue to be regarded as a leader on ESG and sustainability matters in the oilfield services industry as the nature of the work for our equipment evolves.

About CWC Energy Services Corp.

CWC Energy Services Corp. is a premier contract drilling and well servicing company operating in Canada and the United States with a complementary suite of oilfield services including drilling rigs and service rigs. The Company's corporate office is located in Calgary, Alberta, with operational locations in Nisku, Grande Prairie, Slave Lake, Sylvan Lake, Drayton Valley, Lloydminster, Provost and Brooks, Alberta and U.S. offices in Denver, Colorado and Casper, Wyoming. The Company's shares trade on the TSX Venture Exchange under the symbol "CWC".

Forward-Looking Information

This News Release contains certain forward-looking information and statements within the meaning of applicable Canadian securities legislation. Certain statements contained in this News Release, including most of those contained in the section titled "Outlook" and including statements which may contain such words as "anticipate", "could", "continue", "should", "seek", "may", "intend", "likely", "plan", "estimate", "believe", "expect", "will", "objective", "ongoing", "project" and similar expressions are intended to identify forward-looking information or statements. In particular, this News Release contains forward-looking statements including management's assessment of future plans and operations, planned levels of capital expenditures, expectations as to activity levels, expectations on the sustainability of future cash flow and earnings, expectations with respect to crude oil and natural gas prices, activity levels in various areas, expectations regarding the level and type of drilling and production and related drilling and well services activity in the WCSB and U.S. basins, expectations regarding entering into long term drilling contracts and expanding its customer base, and expectations regarding the business, operations, revenue and debt levels of the Company in addition to general economic conditions. Although the Company believes that the expectations and assumptions on which such forward-looking information and statements are based are reasonable, undue reliance should not be placed on the forward-looking information and statements because the Company can give no assurances that they will prove to be correct. Since forward-looking information and statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks including the implications of the COVID-19 health pandemic on the Company's business, operations and personnel. These factors and risks include, but are not limited to, the risks associated with the COVID-19 health pandemic and their implications on the demand and supply in the drilling and oilfield services sector (i.e. demand, pricing and terms for oilfield drilling and services; current and expected oil and gas prices; exploration and development costs and delays; reserves discovery and decline rates; pipeline and transportation capacity; weather, health, safety and environmental risks), significant expansion measures to stop the spread of COVID-19 further restricting or prohibiting the operations of the Company's facilities and operations, actions to ensure social distancing due to COVID-19, integration of acquisitions, competition, and uncertainties resulting from potential delays or changes in plans with respect to acquisitions, development projects or capital expenditures and changes in legislation, including but not limited to tax laws, royalties and environmental regulations, stock market volatility and the inability to access sufficient capital from external and internal sources. Accordingly, readers should not place undue reliance on the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through SEDAR at www.sedar.com. The forward-looking information and statements contained in this News Release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. Any forward-looking statements made previously may be inaccurate now.

Non-GAAP and Other Financial Measures


Three months ended

Year Ended

$ thousands, except shares, per share amounts and margins

December 31,

December 31,

2021

2020

2021

2020

2019

NON-GAAP MEASURES






Adjusted EBITDA:






Net income (loss)

2,866

(769)

4,573

(24,490)

(1,700)

Add:






Stock based compensation

263

685

782

1,094

921

Finance costs

294

309

1,086

2,135

2,431

Depreciation and amortization

2,774

2,652

10,563

11,001

13,168

Impairment of assets

-

-

1,296

25,451

-

(Gain) loss on sale of equipment

(208)

(16)

(251)

844

290

Income tax expense (recovery)

146

2,173

823

(4,937)

(2,944)

Adjusted EBITDA(1)

6,135

5,034

18,872

11,098

12,166

Adjusted EBITDA per share – basic and diluted(1)

$

0.01

$

0.01

$

0.04

$

0.02

$

0.02

Adjusted EBITDA margin (Adjusted EBITDA/Revenue)(1)

18%

25%

18%

16%

11%

Weighted average number of shares outstanding - basic

506,011,580

504,081,811

505,337,978

507,104,004

511,106,531

Weighted average number of shares outstanding - diluted

514,870,615

504,081,811

513,203,787

507,104,004

511,106,531

Gross margin:






Revenue

33,693

20,065

102,635

67,893

108,446

Less: Direct operating expenses

22,168

14,078

72,288

49,149

79,609

Gross margin(2)

11,525

5,987

30,347

18,744

28,837

Gross margin percentage(2)

34%

30%

30%

28%

27%

$ thousands

December 31, 2021

December 31, 2020

December 31, 2019

Working capital (excluding debt):




Current assets

27,911

18,323

26,642

Less: Current liabilities

(9,709)

(7,004)

(9,249)

Add: Current portion of long-term debt

764

750

1,141

Working capital (excluding debt) (3)

18,966

12,069

18,534

Working capital (excluding debt) ratio(3)

3.1:1

2.9:1

3.3:1

Net debt:




Long-term debt

45,083

29,481

39,411

Less: Current assets

(27,911)

(18,323)

(26,642)

Add: Current liabilities

9,709

7,004

9,249

Net debt (4)

26,881

18,162

22,018

(1)

Adjusted EBITDA (earnings before interest and finance costs, income tax expense, depreciation, amortization, gain or loss on disposal of asset, impairment of assets, goodwill impairment, transaction costs, stock based compensation and other one-time non-cash gains and losses) is not a recognized measure under IFRS. Management believes that in addition to net income, Adjusted EBITDA is a useful supplemental measure as it provides an indication of the Company's ability to generate cash flow in order to fund working capital, service debt, pay current income taxes, repurchase common shares under the Normal Course Issuer Bid, and fund capital programs. Investors should be cautioned, however, that Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of the Company's performance. CWC's method of calculating Adjusted EBITDA may differ from other entities and accordingly, Adjusted EBITDA may not be comparable to measures used by other entities. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenue and provides a measure of the percentage of Adjusted EBITDA per dollar of revenue. Adjusted EBITDA per share is calculated by dividing Adjusted EBITDA by the weighted average number of shares outstanding as used for calculation of earnings per share.

(2)

Gross margin is calculated from the statement of comprehensive income (loss) as revenue less direct operating costs and is used to assist management and investors in assessing the Company's financial results from operations excluding fixed overhead costs. Gross margin percentage is calculated as gross margin divided by revenue. The Company believes the relationship between revenue and costs expressed by the gross margin percentage is a useful measure when compared over different financial periods as it demonstrates the trending relationship between revenue, costs and margins. Gross margin and gross margin percentage are non-GAAP measures and do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures provided by other companies.

(3)

Working capital (excluding debt) is calculated based on current assets less current liabilities excluding the current portion of long-term debt. Working capital (excluding debt) is used to assist management and investors in assessing the Company's liquidity. Working capital (excluding debt) does not have any meaning prescribed under IFRS and may not be comparable to similar measures provided by other companies. Working capital (excluding debt) ratio is calculated as current assets divided by the difference of current liabilities less the current portion of long-term debt.

(4)

Net debt is calculated based on long-term debt less current assets plus current liabilities. Net debt is not a recognized measure under IFRS and does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures provided by other companies. Management believes net debt is a useful indicator of a company's debt position.

SOURCE CWC Energy Services Corp.

Cision
Cision

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