|By Marketwired .||
|August 25, 2014 06:30 PM EDT||
CALGARY, ALBERTA -- (Marketwired) -- 08/25/14 -- Ceiba Energy Services Inc. ("Ceiba" or the "Company") (TSX VENTURE:CEB) has filed its Financial Statements and related Management's Discussion and Analysis for the three and six months ended June 30, 2014 on the Company's profile at www.sedar.com.
Ceiba continues to deliver strong growth in received volumes, revenue, and adjusted EBITDA. Revenue in Q2 2014 of $1,884,087, an increase of $640,510 (54%) compared to Q1 2014 and an increase of $1,240,776 (193%) compared to Q2 2013. Adjusted EBITDA improved to $322,085 in Q2 2014 from $15,282 in Q1 2014 and negative $1,006,899 in Q2 2013.
OPERATIONAL AND FINANCIAL HIGHLIGHTS
For the three months ended 2014 Q2 2014 Q2 ($ unless June 30, 2014 March 31, vs. 2014 June 30, 2013 vs. 2013 noted) (Q2) 2014 (Q1) Q1 (Q2) Q2 ---------------------------------------------------------------------------- Total received volume (m3) 103,000 76,800 +34% 26,300 +292% Revenue 1,884,087 1,243,577 +52% 643,311 +193% Gross margin(1) 1,016,569 563,116 +81% 231,372 +339% Gross margin %(1) 54% 45% +9% 36% +18% Adjusted EBITDA(1) 322,085 15,282 NMF (1,006,899) N/A Total assets 37,265,577 27,858,494 N/A 22,701,733 N/A Net working capital(1) 24,268 (6,960,560) N/A 7,117 N/A Convertible debentures 8,086,072 8,002,030 N/A 7,750,284 N/A For the six months ended June 30, 2014 vs. ($ unless June 30, noted) June 30, 2014 June 30, 2013 2013 ---------------------------------------------------------- Total received volume (m3) 179,800 58,700 +206% Revenue 3,127,665 1,388,022 +125% Gross margin(1) 1,579,685 507,695 +211% Gross margin %(1) 51% 37% +14% Adjusted EBITDA(1) 337,367 (1,311,495) N/A Total assets Net working capital(1) Convertible debentures (1) Refer to "NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS" below NMF = not meaningful
-- Overall, the Company continued to successfully execute its growth strategy, receiving a record 103,000 m3 of fluid in Q2 2014, an increase of 26,200 m3 (34%) over Q1 2014 and an increase of 76,700 m3 (292%) over Q2 2013. Volume growth compared to the prior quarter came from all our facilities and was as a result of continued sales efforts by Company staff to make producers aware of our new facilities and strong producer drilling activities in Q1 2014 which led to strong production during Q2 2014. -- The Company continued to ramp up the Chamberlain custom treating facility, which opened for business in the last week of November 2013, processing 26,800 m3 of emulsion fluid in the quarter, an increase of 9,200 m3 (52%) over the prior quarter. Chamberlain is expected to continue to increase in volume throughput going forward through normal Company sales activities. -- The Company entered into new agreements with Astra Energy Canada Inc. effective April 1, 2014 as disclosed in our July 7, 2014 press release. The new Astra agreements have resulted in higher revenues for Ceiba as it is now receiving more value for its oil sales. -- Higher volume and the new Astra agreements contributed to record revenue in Q2 2014 of $1,884,087, an increase of $640,510 (54%) compared to Q1 2014 and an increase of $1,240,776 (193%) compared to Q2 2013. -- The Company achieved gross margins in Q2 2014 of $1,016,569 (54% of revenue). Gross margins increased $453,453 (81%) compared to Q1 2014 and $785,197 (339%) compared to Q2 2013. Gross margin percentage improved by 9% compared to Q1 2014 and 18% compared to Q2 2013. The improvement in gross margin and gross margin percentage was the result of higher volumes and higher revenue compared to operating costs which have some fixed components. -- Ceiba achieved its second consecutive quarter of positive Adjusted EBITDA. Adjusted EBITDA improved to $322,085 in Q2 2014 from $15,282 in Q1 2014. The increase in Adjusted EBITDA was the result of higher gross margin offset slightly by higher general and administrative costs.
-- The Company completed a bought deal private placement of equity including full exercise of over-allotment option for gross proceeds of $9,197,700. The receipt of the net proceeds from this bought deal contributed to Ceiba having a working capital surplus of $24,267 at June 30, 2014 compared to a working capital deficit of $6,960,560 at March 31, 2014.
Activities subsequent to June 30, 2014
-- On July 24, 2014, the Company filed a final short form prospectus qualifying the distribution of the common shares in the capital of Ceiba, which are issuable upon the exercise of the warrants issued in a bought deal private placement which closed on April 15, 2014. Each warrant was deemed exercised on July 24, 2014 and converted into 21,390,000 common shares on a one-for-one basis without further payment. -- On July 24, 2014, the Company closed a $16,100,000 bought deal financing of 23,000,000 common shares at $0.70 per common share on a private placement basis. -- On July 26, 2014, the Company repaid and canceled its term credit facilities. -- On July 30, 2014, the Company repaid the mezzanine debt in full. -- With approximately $15 million of cash pro forma the July private placement and repayment of the term credit facilities and mezzanine debt, the Company will move forward with its previously announced capital expansions and will work with potential lenders to develop traditional credit facilities. The repayment of the term credit facilities and mezzanine debt will result in approximately $700,000 of interest savings on an annualized basis.
FUTURE PLANS AND OUTLOOK
The Company plans to continue to execute its growth strategy which includes continued sales efforts for all its currently operating facilities. With the New Astra Agreements, Ceiba assumes responsibility for the sales efforts for its waste fluid and waste disposal sites. Ceiba believes that these sales efforts will result in higher volumes at all of its sites. Ceiba is also developing its Athabasca Class 1B waste fluid and water disposal site and expanding services at Silver Valley and Chamberlain through their conversion to Class 1B facilities. These projects are expected to be completed in late 2014 and the first half of 2015. Currently, the Silver Valley facility is running at approximately 85% disposal capacity and the Company believes that developing the Silver Valley II site as a Class 1B facility will increase capacity and expand revenue streams which may double revenue given the robust market activity in the region. Ceiba is also evaluating the prospect of upgrading its Ponoka property into a Class 1B facility. The Company has planned approximately $13,000,000 for growth capital for the remainder of 2014 and in 2015 at its existing operations. The Company will also actively pursue suitable locations to develop new facilities in under serviced or constrained markets and evaluate potential acquisitions that are consistent with the Company's long-term strategy.
Demand for the Company's services is dependent on oil and gas production in areas where it has facilities. Uncertainty in oil, gas and natural gas liquids pricing may influence capital spending decisions relating to production and ultimately demand for the Company's services. Demand for the Company's services is also affected by seasonal variations in the Western Canadian Sedimentary Basin. Any adverse changes in the global economy/markets may impact the oil prices and hence the oil field industry in the region. This may impact the ability of the Company to raise capital to support its future growth plans and working capital needs.
NON-GAAP MEASURES AND OPERATIONAL DEFINITIONS
Certain supplementary measures in this MD&A do not have any standardized meaning as prescribed under GAAP and, therefore, are considered non-GAAP measures. These measures are described and presented in order to provide information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent GAAP measure. However, they should not be used as an alternative to GAAP measures because they may not be consistent with calculations of other companies. These non-GAAP measures, and certain operational definitions used by the Company, are further explained below.
Gross Margin and Gross Margin %
Gross margin is calculated as revenue less operating expenses which includes direct product costs for services but excludes depreciation, depletion and amortization and general and administrative. Management analyzes gross margin as a key indicator of cost control and operating efficiency. Gross margin % is calculated as Gross margin as a percentage of revenue.
EBITDA and Adjusted EBITDA
EBITDA refers to net income before finance cost, taxes and depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before costs associated with non-recurring business acquisition costs and share based compensation. These measures do not have standardized definition prescribed by IFRS and therefore may not be comparable to similar captioned terms presented by other users.
Management believes that EBITDA and adjusted EBITDA are key indicators for the results generated by the Company's core business activities as they eliminate non-recurring items, certain non-cash items and the impact of finance and tax structure variables that exist between entities.
Three months ended June 30, Six months ended June 30, ------------------------------------------------- 2014 2013 2014 2013 ------------------------------------------------- Total loss and comprehensive loss for the period (687,856) (2,002,902) (1,436,013) (2,960,171) Add back: Finance costs 601,299 287,017 1,078,062 530,476 Depreciation 190,501 71,807 442,256 138,978 Deferred tax recovery - - (387,000) - ------------------------------------------------- EBITDA 103,944 (1,644,078) (302,695) (2,290,717) Add back: Stock-based compensation 90,179 406,226 212,272 679,921 Accretion 56,816 33,071 102,238 62,981 Transaction costs 71,146 197,882 325,552 236,320 ------------------------------------------------- Adjusted EBITDA 322,085 (1,006,899) 337,367 (1,311,495) ------------------------------------------------- -------------------------------------------------
Net Working Capital
Net Working Capital is calculated as total current assets less total current liabilities. Management analyzes net working capital as a measure of our ability to settle short term liabilities with currently available assets.
About Ceiba Energy Services Inc.
Ceiba provides specialized services to the energy sector, specifically to companies involved in the exploration, extraction and production of oil and natural gas in Western Canada. Ceiba develops and constructs facilities in proximity to its customers to provide treatment of crude oil emulsion, terminalling, storage and marketing of oil and disposal of production water.
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 the accuracy of this release.
Certain information regarding Ceiba in this news release, including management's assessment of its future development plans and access to various external sources of capital, may constitute forward looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with facility construction and oilfield services operations, general risks associated with oil and gas exploration, development, production, marketing and disposal of waste, loss of markets, environmental risks, competition from other service providers, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in 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 Ceiba's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements or information contained in this news release are made as of the date hereof and Ceiba does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Ceiba Energy Services Inc.
Ceiba Energy Services Inc.
CFO and Corporate Secretary
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