Current Report Filing (8-k)

 

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

______________________

 

FORM 8-K

 

CURRENT REPORT 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 

______________________

 

Date of Report (Date of earliest event reported): November 18, 2014

 

Aly Energy Services, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		033-92894		75-2440201
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

3 Riverway, Suite 920 

Houston, Texas 77056

(Address of principal executive offices)

 

Registrant’s telephone number, including area code: 713-333-4000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

Item 8.01. Other Events.

 

On November 18, 2014, we issued a press release regarding our third quarter earnings. A copy of the press release is furnished herewith as Exhibit 99.1.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits.

 

99.1	Press release dated November 18, 2014

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	Aly Energy Services, Inc.
Dated: November 18, 2014	By:	/s/ Munawar H. Hidayatallah
	Name:	Munawar H. Hidayatallah
	Title:	Chairman and CEO

 

 

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EXHIBIT 99.1

 

ALY ENERGY ANNOUNCES THIRD QUARTER

RECORD REVENUES, OPERATING INCOME AND NET INCOME

 

HOUSTON, TX--(Marketwired - Nov 18, 2014) - Aly Energy Services, Inc. ("Aly Energy") (OTCQB: ALYE) today reported results for the third quarter of 2014. Revenues for the third quarter of 2014 increased by 206.8% to $13.5 million compared to $4.4 million for the third quarter of 2013 and Adjusted EBITDA increased 230.0% in the third quarter of 2014 to $3.3 million compared to $1.0 million in the third quarter of 2013. Aly Energy reported record net income available to common stockholders for the third quarter of 2014 of approximately $1.0 million, after preferred stock dividends and accretion aggregating to approximately $0.1 million, compared to a net income available to common stockholders of approximately $39,000, after preferred dividends and accretion aggregating to approximately $62,000, for the same period in 2013.

 

Revenues for the first nine months of 2014 increased 105.1% to $27.9 million compared to $13.6 million for the first nine months of 2013 and Adjusted EBITDA increased 132.4% in the first nine months of 2014 to $7.9 million compared to $3.4 million for the first nine months of 2013. Aly Energy reported net income available to common stockholders for the first nine months of 2014 of $1.8 million, after preferred stock dividends and accretion aggregating to approximately $0.3 million, compared to a net income available to common stockholders of approximately $0.4 million, after preferred stock dividends and accretion aggregating to approximately $0.2 million, for the first 9 months of 2013.

 

Revenues, Adjusted EBITDA, and net income available to common stockholders in the third quarter and for the first nine months of 2014 include the results generated from the acquisitions of United Centrifuge, LLC (“United Centrifuge”) and Evolution Guidance Systems Inc. (“Evolution”) beginning on April 15, 2014 and July 1, 2014, respectively.

 

Pro forma Adjusted EBITDA for the first nine months of 2014, which reflects the results of Aly Energy as if the acquisition of United Centrifuge had occurred on January 1, 2014, was approximately $9.7 million. We have not included results for Evolution prior to July 1, 2014 within the pro forma calculation as the inclusion of such results would not have had a material impact. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the United Centrifuge transaction been effected on the assumed date of January 1, 2014.

 

EBITDA and Adjusted EBITDA are non-GAAP financial measures that are not necessarily comparable from one company to another. Adjusted EBITDA is defined as earnings before net interest expense, income taxes, depreciation and amortization, certain non-cash items, such as stock compensation expense, bad debt expense, and fair value adjustments, and certain non-routine items, including transaction costs. Management believes that Adjusted EBITDA is useful to investors to assess and understand operating performance, especially when comparing those results with previous and subsequent periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of the Company’s normal operating results. For a reconciliation of Adjusted EBITDA to net income, please see the tables at the end of this release.

 

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Micki Hidayatallah, Aly Energy's Chairman and Chief Executive Officer stated, “In the third quarter, Aly Energy generated record revenues, record operating profits and record net income. This was a result of the successful implementation of our growth strategy. During the third quarter of 2014, we expanded our product offerings to include directional drilling and measurement-while-drilling (“MWD”) services.

 

“We also expanded our operations into the New Mexico Permian Basin, Mississippian Lime and Tuscaloosa Marine Shale, while simultaneously increasing and diversifying our customer base. We continue to strive to increase market share through the product differentiation of our vertical mud circulating tanks, steel drive overs, 450 barrel mud mixing plants and, most importantly, the exclusive design of our centrifuges and our MWD kits which offer longer operating hours with a lower failure rate.

 

“In the fourth quarter, we anticipate that we will see further growth in revenues, cash flow and profitability generated by increased utilization of personnel and equipment.”

 

Conference Call

 

Aly Energy has scheduled a conference call to be held on Tuesday, November 18, 2014 at 9:00am Central Standard Time. Investors and analysts are invited to participate in the call by dialing 1- 877-300-8521 or 1-412-317-6026 internationally. Interested parties may also listen by webcast at http://public.viavid.com/index.php?id=112043.

 

About Aly Energy

 

Aly Energy, through its subsidiaries Aly Operating, Inc., Austin Chalk Petroleum Services Corp., Aly Centrifuge Inc. and Evolution Guidance Systems Inc., provides equipment and services including surface rental equipment for mud delivery, solids control, fluid management, and directional drilling and measurement-while-drilling services. Aly Energy has operating yards in Houston, Giddings, San Angelo, Dilley and Celina, Texas from which it services the Eagle Ford shale and the Permian Basin, as well as other strategic fields. Aly Energy's primary products include mud-circulating tanks (400 and 500 barrel capacity), mud pumps (diesel and electric), oil skimming systems, secondary containment systems and stairs, mud mixing plants, centrifuge units and shakers, and MWD kits with exclusive technology. Aly Energy fabricates several of these products in-house.

 

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Forward-Looking Statements

 

This press release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding Aly Energy's business, financial condition, results of operations and prospects. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this press release.

 

Although forward-looking statements in this press release reflect the good faith judgment of our management, such statements can only be based on facts and factors that our management currently knows. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, demand for oil and natural gas drilling services in the areas and markets in which Aly Energy operates, competition, obsolescence of products and services, the ability to obtain financing to support operations, environmental and other casualty risks, and the effect of government regulation.

 

Further information about the risks and uncertainties that may affect our business are set forth in our most recent filings on Form 10-K (including without limitation in the "Risk Factors" section) and in our other SEC filings and publicly available documents. We urge readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Aly Energy undertakes no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this press release.

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2014				2013				2014				2013
Components of EBITDA:
Net Income		$	1,112			$	101			$	2,118			$	549
Non-GAAP Adjustments:
Depreciation and Amortization of Property and Equipment			829				409				2,416				1,244
Amortization Expense			516				131				993				392
Interest Expense, Net			376				182				891				450
Income Tax Expense			621				107				1,387				383
EBITDA		$	3,454			$	930			$	7,805			$	3,018
Adjustments to EBITDA:
Stock-Based Compensation Expense			-				68				-				76
Bad Debt Expense			37				-				94				-
Fair Value Adjustments to Contingent Payment Liability			(270	)			-				(183	)			-
Non-Recurring Expenses			35				12				154				262
Adjusted EBITDA		$	3,256			$	1,010			$	7,870			$	3,356

  

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ALY ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS 

(in thousands, except shares and per share data) 

 

		September 30, 2014				December 31, 2013
		(Unaudited)
Assets
Current Assets
Cash and Cash Equivalents		$	-			$	1,440
Accounts Receivable, Net of Allowance for Doubtful Accounts of $149 and $90, as of September 30, 2014 and
December 31, 2013, respectively			11,514				3,327
Unbilled Receivables			2,680				882
Inventory			241				43
Prepaid Expenses and Other Current Assets			1,287				279
Deferred Tax Assets			46				-
Total Current Assets			15,768				5,971
Property and Equipment, Net			54,449				21,423
Intangible Assets, Net			10,990				4,121
Goodwill			11,055				8,834
Deferred Loan Costs, Net			802				515
Deferred Tax Assets			20				131
Other Assets			14				17
Total Assets		$	93,098			$	41,012
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable		$	4,545			$	1,131
Accounts Payable - Affiliates			930				-
Accrued Expenses			3,872				964
Deferred Tax Liabilities			15				277
Current Portion of Long-Term Debt			9,138				2,881
Current Portion of Contingent Payment Liability			904				-
Total Current Liabilities			19,404				5,253
Long-Term Debt, Net of Current Portion			19,258				8,532
Deferred Tax Liabilities			10,019				6,945
Contingent Payment Liability			2,430				-
Other Long-Term Liabilities			30				35
Total Liabilities			51,141				20,765
Commitments and Contingencies (See Note 5)
Aly Operating Preferred Stock, $0.01 par value, 4,000,000 shares authorized, issued and outstanding at
September 30, 2014 and December 31, 2013			4,317				4,132
Aly Centrifuge Preferred Stock, $0.01 par value, 15,000 shares authorized, 9,000 shares issued and
outstanding as of September 30, 2014 and 0 shares authorized, issued and outstanding as of December 31, 2013			9,512				-
			13,829				4,132
Stockholders' Equity
Common Stock, $0.001 par value, 200,000,000 shares authorized, 109,670,242 shares issued, and 109,665,742
shares outstanding as of September 30, 2014 and 100,000,000 shares authorized, 90,042,044 shares issued,
and 90,037,544 shares outstanding as of December 31, 2013			110				92
Treasury Stock, 4,500 Shares at Cost			(2	)			(2	)
Additional Paid-In-Capital			24,644				14,767
Retained Earnings			3,376				1,258
Total Stockholders' Equity			28,128				16,115
Total Liabilities and Stockholders' Equity		$	93,098			$	41,012

  

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ALY ENERGY SERVICES, INC. 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

(in thousands, except shares and per share data)
(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2014				2013				2014				2013
Revenues		$	13,491			$	4,372			$	27,851			$	13,562
Cost of Revenues			8,436				2,805				16,982				8,667
Gross Profit			5,055				1,567				10,869				4,895
Selling, General and Administrative Expenses			2,946				1,177				6,473				3,516
Operating Income			2,109				390				4,396				1,379
Interest Expense, Net			376				182				891				450
Other Expense/(Income)			-				-				-				(3	)
Income Before Income Tax			1,733				208				3,505				932
Income Tax Expense			621				107				1,387				383
Net Income			1,112				101				2,118				549
Preferred Stock Dividends			141				53				297				155
Accretion of Preferred Stock, Net			(34	)			9				(24	)			27
Net Income Available to Common Stockholders		$	1,005			$	39			$	1,845			$	367
Basic Net Income per Common Share		$	0.01			$	0.00			$	0.02			$	0.01
Diluted Net Income per Common Share		$	0.01			$	0.00			$	0.02			$	0.01
Basic Average Common Shares Outstanding			107,876,513				74,293,584				99,369,609				71,168,268
Diluted Average Common Shares Outstanding			117,876,503				74,293,584				104,728,055				71,168,268

 

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ALY ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except shares and per share data)

(Unaudited)

 

		Nine Months Ended September 30,
		2014				2013
Cash Flows from Operating Activities
Net Income		$	2,118			$	549
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and
Amortization of Property and Equipment			2,416				1,244
Amortization of Deferred Loan Costs			203				123
Amortization of Intangible Assets			993				392
Stock-Based Compensation Expense			-				76
Bad Debt Expense			94				-
Fair Value Adjustments to Contingent Liability			(183	)			-
Loss on Disposal of Asset			16				-
Deferred Taxes			(31	)			94
Changes in Operating Assets and Liabilities, Net of Effects of Business Combination
Accounts Receivable			(4,636	)			859
Unbilled Receivables			(1,741	)			-
Inventory			(198	)			(45	)
Prepaid Expenses and Other Assets			(990	)			133
Accounts Payable			1,403				501
Accounts Payable - Affiliates			(821	)			(761	)
Accrued Expenses and Other Liabilities			2,443				(162	)
Net Cash Provided by Operating Activities			1,086				3,003
Cash Flows from Investing Activities
Purchase of Property and Equipment			(10,245	)			(8,167	)
Cash Paid for Acquisition of United Centrifuge, Net of Cash Acquired			(15,063	)			-
Cash Acquired from Acquisition of Evolution Guidance Systems			167				-
Cash Acquired from Reverse Merger			-				266
Net Cash Used in Investing Activities			(25,141	)			(7,901	)
Cash Flows from Financing Activities
Proceeds from Issuance of Common Stock, Net of Transaction Cost			9,110				-
Proceeds on Borrowing on Debt			28,069				6,725
Repayment of Debt			(14,079	)			(2,677	)
Financing Costs			(485	)			(163	)
Net Cash Provided By Financing Activities			22,615				3,885
Net Decrease in Cash and Cash Equivalents			(1,440	)			(1,013	)
Cash and Cash Equivalents, Beginning of Period			1,440				1,660
Cash and Cash Equivalents, End of Period		$	-			$	647

 

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