New West Energy Services Inc. Announces Second Quarter 2020 Financial Results

CALGARY, AB, Aug. 31, 2020 /CNW/ - New West Energy Services Inc. (TSXV: NWE), an oil and gas and environmental services company focused on Western Canada, today announced its second quarter 2020 financial results.

ACCOUNTING TREATMENT OF DISCONTINUED OPERATIONS

NWE completed on August 6, 2019 a reorganization where it discontinued its fluid transportation operations in Grande Prairie and, going forward, will focus on vacuum and water truck services out of Medicine Hat, as well as environmental services out of the company's headquarters in Calgary.  As such, NWE's financial results distinguish between continuing and discontinued operations. 

FINANCIAL HIGHLIGHTS

• Continuing operations revenue was $1,975,884 in the six months ended June 30, 2020, compared to $4,840,266 in the same period the year prior.  This reduction was due to a decrease in drilling activity associated with the effects of COVID-19 and the collapse in oil prices.  Discontinued operations revenue was zero in the six months ended June 30, 2020, as NWE completed its August 6, 2019 reorganization and ceased its fluid transportation operations in Grande Prairie, and $1,139,827 in the same period the year prior.
  
  
• Continuing operations revenue was $83,413 in the three months ended June 30, 2020, compared to $1,644,195 in the same period the year prior.  This reduction was due to a decrease in drilling activity associated with the effects of COVID-19 and the collapse in oil prices.  Discontinued operations revenue was zero in the three months ended June 30, 2020, as NWE completed its August 6, 2019 reorganization and ceased its fluid transportation operations in Grande Prairie, and $35,097 in the same period the year prior.
  
  
• Continuing operations gross margin was 37% in the six months ended June 30, 2020 compared to 38% in the same period the year prior, representing a consistency between reporting periods.  Discontinued operations gross margin is not applicable for the six months ended June 30, 2020 as there were no operations during the time period, and was a negative 9% in the same period the year prior.  
  
  
• Continuing operations gross margin was 56% in the three months ended June 30, 2020 compared to 37% in the same period the year prior. This increase was due mainly to a reduction in direct costs relative to revenues and receipt of the Canadian Emergency Wage Subsidy.  Discontinued operations gross margin is not applicable for the three months ended June 30, 2020 as there were no operations during the time period, and was negative 381% in the same period the year prior.  
  
  
• Continuing general and administrative expenses were $664,611 in the six months ended June 30, 2020 compared to $1,218,050 in same period the year prior.  This decrease was due mainly to a reduction in overhead costs, the implementation of cost cutting measures and receipt of the Canadian Emergency Wage Subsidy.  Discontinued general and administrative expenses were zero in the six months ended June 30, 2020 as there were no operations during the time period, and were $606,515 in same period the year prior.
  
  
• Continuing general and administrative expenses were $236,612 in the three months ended June 30, 2020 compared to $634,531 in same period the year prior.  This decrease was due mainly to a reduction in overhead costs, the implementation of cost cutting measures and receipt of the Canadian Emergency Wage Subsidy.  Discontinued general and administrative expenses were zero in the three months ended June 30, 2020 as there were no operations during the time period, and were $263,760 in same period the year prior.   
  
  
• Normalized EBITDAC was $72,909 in the six months ended June 30, 2020 compared to $632,505 in the same period last year, and negative $190,259 in the three months ended June 30, 2020 compared to negative $18,864 in the same period last year.

 

Continuing operations	For the six months ended June 30,					For the six months ended June 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	1,299,114	676,770	-	1,975,884		3,210,860	1,629,406	-	4,840,266
Direct costs	780,524	457,840	-	1,238,364		2,058,602	931,109	-	2,989,711
Gross margin	518,590	218,930	-	737,520		1,152,258	698,297	-	1,850,555
G & A expenses	282,505	297,140	84,966	664,611		392,743	678,266	147,041	1,218,050
Finance charges	78,549	13,230	11,580	103,359		68,557	32,507	90,194	191,258
Depreciation	259,570	-	-	259,570		253,998	-	-	253,998
Income (loss) from operations	(102,034)	(91,440)	(96,546)	(290,020)		436,960	(12,476)	(237,235)	187,249
EBITDAC	236,085	(78,210)	(84,966)	72,909		759,515	20,031	(147,041)	632,505
Discontinued operations	For the six months ended June 30,					For the six months ended June 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	-	-	-	-		1,139,827	-	-	1,139,827
Direct costs	-	-	-	-		1,246,352	-	-	1,246,352
Gross margin	-	-	-	-		(106,525)	-	-	(106,525)
G & A expenses	-	-	-	-		606,515	-	-	606,515
Finance charges	-	-	-	-		176,089	-	-	176,089
Depreciation	-	-	-	-		396,839	-	-	396,839
Disposal of assets	-	-	-	-		26,524	-	-	26,524
Debt extinguishment	31,525	-	-	31,525		-	-	-	-
Loss from operations	(31,525)	-	-	(31,525)		(1,312,492)	-	-	(1,312,492)
Continuing operations	For the three months ended June 30,					For the three months ended June 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	60,250	23,163	-	83,413		1,213,661	430,534	-	1,644,195
Direct costs	31,097	5,963	-	37,060		783,990	244,538	-	1,028,528
Gross margin	29,153	17,200	-	46,353		429,671	185,996	-	615,667
G & A expenses	100,834	90,536	45,242	236,612		218,896	333,904	81,731	634,531
Finance charges	18,457	5,676	5,850	29,983		33,325	12,632	45,341	91,298
Depreciation	129,785	-	-	129,785		132,461	-	-	132,461
Income (loss) from operations	(219,923)	(79,012)	(51,092)	(350,027)		44,989	(160,540)	(127,072)	(242,623)
EBITDAC	(71,681)	(73,336)	(45,242)	(190,259)		210,775	(147,908)	(81,731)	(18,864)
Discontinued operations	For the three months ended June 30,					For the three months ended June 30,
	2020					2019
	Fluid Transportation Services	Environmental Services	Corporate	Total		Vacuum Truck & Fluid Transportation Services	Environmental Services	Corporate	Total
	$	$	$	$		$	$	$	$
Revenue	-	-	-	-		35,097	-	-	35,097
Direct costs	-	-	-	-		168,881	-	-	168,881
Gross margin	-	-	-	-		(133,784)	-	-	(133,784)
G & A expenses	-	-	-	-		263,760	-	-	263,760
Finance charges	-	-	-	-		97,388	-	-	97,388
Depreciation	-	-	-	-		198,796	-	-	198,796
Disposal of assets	-	-	-	-		26,524	-	-	26,524
Debt extinguishment	6,540	-	-	6,540		-	-	-	-
Loss from operations	(6,540)	-	-	(6,540)		(720,252)	-	-	(720,252)

* Normalized EBITDAC is earnings from continuing operations before interest, taxes, depreciation, amortization and share-based payments and is a measure of NWE's operating profitability. The calculation is further adjusted to normalize EBITDAC by removing any non-reoccurring transactions that are not in the normal course of operations.

** Copies of NWE's financial statements, MD&A and other public filings are available under the company's profile on SEDAR at www.sedar.com.

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 release.

Cautionary Note Regarding Forward-Looking Information

Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information and financial outlook.  Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions.  Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations or future actions.  Forward-looking information in this news release includes, without limitation, statements with respect to: the use of proceeds of its loans; the use of the acquired equipment; planned changes in NWE's business and revenues; the competitive environment in which NWE operates; and the assessment of future plans and operations.  Actual events or results may differ materially.  The forward-looking information in this news release is based on assumptions which includes, but is not limited to: NWE realizing the expected benefits of its loans and acquired equipment; the general state of the economy and the oil and gas industry not worsening; NWE not losing any key personnel; NWE sustaining or increasing their level of revenues and EBITDAC  NWE growing its businesses long term and managing its growth; NWE complying with existing regulations and not becoming subject to more stringent regulations; and, NWE's insurance being sufficient to cover losses that may occur as a result of its operations.  The forward-looking information in this news release is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.  The factors which could cause results to differ from current expectations include, but are not limited to: failure to realize the expected benefits of its loans and acquired equipment; potential undisclosed liens associated with the acquired equipment; NWE's results being dependent upon the general state of the economy and the oil and gas industry; NWE being dependent on key personnel, the loss of which could harm its business; NWE may not be able to sustain or increase their revenues or EBITDAC; NWE may be unable to grow its business long term or to manage any growth; NWE may be unable to integrate the acquired equipment into its business; competition in NWE's markets may lead to reduced revenues and EBITDAC; NWE may fail to comply with existing regulations or become subject to more stringent regulations; NWE's insurance may be insufficient to cover losses that may occur as a result of NWE's operations; the market price of NWE's common shares will fluctuate; and, there is a possibility of dilution of existing holders of NWE's common shares due to future financings or acquisitions.  Although NWE has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements in this news release, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of NWE.  Accordingly, readers should not place undue reliance on the forward-looking information in this news release.  The forward-looking information is made as of the date of this news release, and NWE does not assume any obligation to publicly update or revise such forward-looking information to reflect new information, subsequent or otherwise, except as may be required by applicable law.  The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.

SOURCE New West Energy Services Inc.

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