Logan International Reports 2013 Second Quarter Financial Results
Marketwired
CALGARY, ALBERTA--(Marketwired - Aug 13, 2013) - Logan International Inc. (LII.TO) ("Logan" or the "Company") today announced the results of its second quarter ended June 30, 2013. Revenue in the quarter was $52.6 million as compared to $40.2 million in the prior year quarter. Net earnings were $4.8 million, $.14 per diluted share, in this year's second quarter as compared to $2.4 million, $.07 per diluted share, in last year's second quarter. This year's second quarter Modified EBITDA (a non-GAAP measure) increased to $13.2 million from $8.3 million in last year's second quarter. Nearly every one of our business entities contributed to the improvements in revenue, net earnings and Modified EBITDA.
Logan recorded year to date revenue of $101.8 million in 2013 as compared to $81.1 million in the corresponding period of last year and reported net earnings of $10.0 million, $.30 per diluted share, as compared to $5.2 million, $.15 per diluted share, in the corresponding period last year. Current year-to-date Modified EBITDA was $25.4 million as compared to prior year-to-date Modified EBITDA of $16.8 million.
This year's reports include the operating results of the Sup-R-Jar business which was acquired in April 2013. In addition, the prior year to date report includes the results of operations of Xtend Energy Services ("Xtend") since March 1, 2012 (acquisition date).
Logan's Chief Executive Officer Gerald Hage stated, "We are extremely pleased to report record quarterly operating results. Our quarterly revenues increased by over 30% and our quarterly Modified EBITDA increased by almost 60% - each achieved despite the effects of the seasonal slowdown in Canada. Operating highlights include the continued brisk demand for Logan Oil Tools' fishing and stroking tools, an exceptionally strong performance by the Xtend Energy Services U.S. operations, and sales of Logan Completion Systems products into China and Mexico. Also contributing to the quarter's performance was an increase in sales of Dennis Tool Company inserts into China, Russia and Algeria. In addition, we are optimistic about the remainder of 2013 as industry fundamentals are expected to maintain at the current levels. Finally, as we announced during the quarter, we are undergoing a strategic review to enhance shareholder value. We have not yet completed the review."
Logan manufactures and sells a comprehensive line of quality fishing and intervention tools, including retrieving, surface, stroking and remedial tools for a variety of well workover, intervention, drilling, and completion activities (Logan Oil Tools, Inc.); manufactures and sells high-performance poly-crystalline diamond compact (PDC) cutters and bearings (Dennis Tool Company); manufactures and sells packers, bridge plugs, and other completion products (Kline Oilfield Equipment, Inc.); provides proprietary multi-zonal completion technology and conventional completion production products and services (Logan Completion Systems Inc.); provides proprietary and patented products and services that are focused on production optimization in sand-laden heavy oil wells (Scope Production Development Ltd.); and provides proprietary tools that enhance the effectiveness of horizontal drilling (Xtend Energy Services Inc. and Logan Jars, LLC). Common shares of Logan are traded on the Toronto Stock Exchange (TSX) under the ticker symbol "LII".
Selected Consolidated Financial Information
(in thousands of US dollars, except per share data)
Three month periods ended
Six month periods ended
June 30,
June 30,
2013
2012
2013
2012
Revenue
$
52,602
$
40,176
$
101,796
$
81,070
Net earnings for the period
4,809
2,361
10,047
5,180
Earnings per share:
Basic
$
0.14
$
0.07
$
0.30
$
0.16
Diluted
$
0.14
$
0.07
$
0.30
$
0.15
EBITDA (1)
$
12,148
$
7,164
$
23,918
$
13,969
Modified EBITDA (1)
$
13,244
$
8,290
$
25,383
$
16,815
June 30,
December 31,
2013
2012
Working Capital
$
84,669
$
74,295
Total Assets
$
294,748
$
275,976
Debt (2)
$
71,553
$
60,192
Shareholders' Equity
$
182,788
$
175,393
Note: The purchase of Xtend was completed on March 1, 2012 and, accordingly, the Company's six month period ended June 30, 2012 operating results included four months of Xtend. In addition, the purchase of the Sup-R-Jar product line occurred on April 17, 2013. All of this product line's operating results after this date are included in the Company's three and six month periods ended June 30, 2013.
(1)
Management calculates: (a) EBITDA as earnings before net finance cost, taxes, depreciation and amortization ("EBITDA"), and (b) Modified EBITDA as EBITDA before acquisition accounting adjustments, transaction fees, share-based compensation payments and severance costs. Neither of these measurements should be considered an alternative to, or more meaningful than, "net earnings from continuing operations" or "cash flow from operating activities" as determined in accordance with International Financial Reporting Standards ("IFRS") as an indicator of the Company's financial performance. EBITDA and Modified EBITDA do not have standardized definitions as prescribed by IFRS; therefore, the Company's presentation of these measurements may not conform to similar presentations by other companies. Management calculates EBITDA and Modified EBITDA each period and evaluates the Company's operating performance based on these measurements. Management believes that Modified EBITDA, which eliminates significant non-cash or non-recurring items of revenue or cost, more accurately presents the results of the Company's ongoing operations and its ability to generate the cash required to fund or finance future growth, acquisitions and capital investments. A reconciliation of EBIT DA and Modified EBIT DA with net earnings for each period follows.
Three month periods ended
Six month periods ended
June 30,
June 30,
2013
2012
2013
2012
Net earnings for the period
$
4,809
$
2,361
$
10,047
$
5,180
Addbacks:
Depreciation and amortization
3,411
2,665
6,202
5,068
Finance cost, net
1,582
1,010
2,832
1,307
Income tax expense
2,346
1,128
4,837
2,414
EBITDA
12,148
7,164
23,918
13,969
Adjustments:
Acquisition accounting adjustments
612
-
612
354
Transaction fees
198
560
290
1,209
Share-based compensation payments
124
566
401
1,283
Modified EBITDA
$
13,082
$
8,290
$
25,221
$
16,815
EBITDA and Modified EBITDA are provided as measures of the Company's operating performance without regard to financing decisions, share-based compensation payments, age and cost of equipment used and income tax impacts, all of which are factors that are not controlled at the operating management level. The acquisition accounting adjustments reverse the effect of the increase or step-up in cost basis of inventories acquired in a business combination. The transaction fees include the professional and other fees incurred in connection with acquisitions in 2012 and 2013. The share-based compensation payments relate to expense recognized from stock appreciation rights as well as the Company's stock option and restricted share unit plans.
(2) Includes bank and other borrowed debt and capital leases.
Forward-Looking Statements
This press release contains forward-looking statements. These statements relate to future events or future performance of Logan. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect Logan's current views with respect to certain events and are subject to certain risks, uncertainties and assumptions. Although Logan believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Many factors could cause Logan's actual results, performance, or achievements to materially differ from those described in this press release. Readers are referred to Logan's Annual Information Form filed on www.sedar.com which identifies significant risk factors which could cause actual results to differ from those contained in the forward-looking statements. Should one or more risks or uncertainties materialize or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this press release. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. These statements speak only as of the date of this press release. Logan does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein in any jurisdiction.
