Winalta Announces Fourth Quarter and Annual Results for 2012

CALGARY, April 5, 2013 /CNW/ - Winalta Inc. ("Winalta" or the "Company") announces results for the three months and year ended December 31, 2012. Revenue of $19.8 million and EBITDA of $9.2 million, showed decreases of $1.8 million and $1.6 million, respectively, to revenue of $21.6 million and EBITDA of $10.8 million for the comparative 12 month period 2011. EBITDA margins remained strong at 47%, while the 8% decrease in revenue was due to decreases in utilization and third party revenue as a result of decreased drilling activity in the industry as a whole.

Cash flow from operating activities of $9.8 million in 2012 compares favourably to $9.6 million in 2011. The Company added $5.3 million in new rental assets in the year (22 Wellsites and 14 Dedicated Geo-labs units) representing a 15% increase in fleet size over 2011.

Adjusting for tax loss recognition, 2012 net income of $3.2 million or $0.08 per share showed a $0.7 million decrease from $3.9 million or $0.10 per share in 2011.

Year End Highlights

• 2012 cash flow from operating activities increased $0.2 million to $9.8 million
• Net earnings of $3.6 million or $0.09 per share fully diluted
• EBITDA margin of 47% compared to EBITDA margin of 50% in 2011

Selected Financial Information

Years ended December 31 (all numbers in thousands unless per share)					2012					2011
Revenue					19,833					21,611
Earnings before income taxes					3,147					3,935
Net earnings (loss) from continuing operations					3,620					7,237
Earnings (loss) per share - continuing operations					0.09					0.18
Net loss from discontinued operations					-					-
Loss per share - discontinued operations					-					-
EBITDA (1)					9,229					10,835
EBITDA per share					0.23					0.27
Total assets					41,582					40,910
Total liabilities					17,191					18,635
Dividends paid					1,603					-

Revenue
Winalta's revenue decreased by $1.8 million, a decrease of 8% for 2012 (the "Period") compared to 2011 (the "Comparative Period"). This 8% decrease in revenue year over year is attributable to decreases in utilization and third party revenue.

Revenue Drivers 2012 versus 2011
						% Increase					2012					2011
Fleet size (# of units)						13%					324					288
Utilization (annual)						(32%)					48%					71%

Fleet Expansion
Over the past 12 months, the Company has added 22 Wellsite units and 14 Dedicated Geo-Labs. The Company continues to expand its fleet, maintaining a low average age of equipment which enables it to keep its status as a premium provider of surface rental equipment.

General and Administrative
For the Period, administrative costs were $4.0 million, down from $4.2 million, for the Comparative Period.  The Company has continued to focus on cost controls and reductions occurred in salaries and benefits of $292 thousand; stock based compensation of $118 thousand; professional fees of $101 thousand; and, office rent expense of $111 thousand.  These reductions were offset by an increase of $50 thousand in marketing; additional meals and entertainment expenses of $31 thousand; $22 thousand in administrative expenses; $140 thousand relating to the Sylvan Lake subsidiary company and a one time item cost of $176 thousand relating to the land project in Stony Plain, Alberta.

Depreciation and Amortization
The increase in depreciation and amortization expense of $227 thousand in the Period reflects the acquisition of $5.7 million of equipment in the trailing 12 months.

Finance Costs
The decrease in finance costs of $1.0 million in the Period was the result of the Company replacing a bridge financing and renegotiating its financing facility with its primary lender to more favourable terms.  The current rate for the operating loan facility is prime plus 1.25% per annum and the revolving term loan facility is prime plus 1.75% per annum.

FOURTH QUARTER RESULTS

REVENUE

Revenues were down by $1.7 million for the three months ending December 31, 2012 from the comparative quarter ended December 31, 2011.  The decrease in revenues can be attributed to a 36% decrease in utilization of Company owned assets along with a comparable decrease in third party related revenues and a reduction in third party camps that the Company marketed during the winter drilling season of 2011.  The decrease in third party related revenue is expected to continue as the company Winalta was sub-renting equipment from has established it own sales team to market their equipment directly.

Administrative Costs
Expenses increased by $129 thousand for the three months ending December 31, 2012 over the same period in 2011.  The Company saw increases in the following areas: $196 thousand in corporate expenses as there was a recovery that occurred in 2011 realized from the Company's restructuring plan; the recovery of professional fees from restructuring of $167 thousand; $16 thousand for the cancelation of a service contract and $18 thousand for the allowance of bad debt.  These increases were offset by a decrease of $267 thousand in profit sharing.

Outlook
The fourth quarter of 2012 resulted in some challenges for the Company due to adverse weather conditions and volatile market conditions relating to gas and oil price fluctuations which impacted drilling activities.  Demand for our services improved over the third quarter 2012 utilization rate however, anticipated activity in the fourth quarter did not materialize to the same degree as expected as customers continued to control spending.  Management continues to monitor these factors as this would impact quarterly results as changing conditions directly impact drilling activities and Company asset utilizations.  The Company continues to be cautiously optimistic in regards to the 2013/2014 winter drilling season as the Company has seen an increase in equipment utilization towards the end of 2012 which has continued into the start of 2013.  This, combined with the continued Western Canadian economic activity in both oil and gas exploration, should continue to provide opportunities for the Company.  The Company believes the economy will continue at the same pace for the foreseeable future, as further supported by Petroleum Services Association of Canada forecast for 2013, which should translate to improved utilization rates for Winalta's equipment.  In conjunction with the expected demand, the Company is continuing to expand its fleet of oilfield Wellsite units and Dedicated Geo-Labs units in order to meet anticipated demand and to maintain a modern fleet of units.  The additions to the fleet will allow the Company to continue to support its customer base in meeting their needs as well as expanding to new customers.  The Company continues to explore other complementary product lines, such as the Integrated Wellsite Systems to support SAGD drilling programs, which the Company believes will generate additional revenues without the seasonal impacts associated with the traditional gas and oil exploration activities.

Winalta Oilfield Rentals, specializes in innovative and high-quality modular buildings for the Western Canadian Oil and Gas Industry. Winalta's rental fleet is comprised of single-unit Wellsites, Integrated Wellsite Systems (IWS), Dedicated Geo Labs, and Drill Camps. The Company also provides complementary services which include installation, dismantling, and repair and maintenance of the modular structures in its fleet.

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.

Forward-looking information
Certain information set forth in this press release, including management's assessment of the potential for increased cash flows, continued growth of the Company's rental fleet, demand for the Company's rental units and the Company's expectation regarding the status of the economy and its impact on the Company, may constitute forward-looking statements. By their nature, forward-looking statements involve material assumptions and are subject to numerous risks and uncertainties, including with respect to market and economic conditions and their impact on the Company's business, some of which, are beyond the Company's control. Readers are cautioned not to place undue reliance on the forward-looking statements as the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and actual results, performance or outcomes could materially differ from those expressed or implied in such forward-looking statements and accordingly, no assurance can be given that any of the events anticipated by forward looking statements will transpire or occur, or if any of them do so, what benefit Winalta will derive therefrom. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws. 

SOURCE Winalta Inc.

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