ESI Energy Services Inc. (CSE: OPI) ("ESI" or the "Company") announces its 2017 first quarter financial results.
Robert Dunstan, ESI's President and CEO, is pleased to announce higher levels of revenue, EBITDA, funds flow from operations as well as increased working capital and lower long-term debt, for the first three months of 2017 compared with the same period in 2016.
A significant increase in activity levels from large padding machine rentals, driven by higher levels of mainline pipeline construction activity in the United States, was primarily responsible for the increase in revenue, EBITDA and funds flow from operations during the first quarter of 2017.
Revenue for the three month period ended March 31, 2017 increased by 42 percent to $2,138,000 compared to $1,507,000 during the same period in 2016. Virtually all of this revenue was generated in the United States. Activity levels for padding machines and oilfield services in Canada were extremely slow.
Over 90 percent of the revenue generated during the first quarter of 2017 came from padding machines. Activity levels for large padding machines were up by a multiple of 4, from five padding months during the first quarter of 2016 to 19 padding months during the first quarter of 2017. This trend in large padding machine rentals is expected to continue into the second and third quarters of 2017. Activity levels for mini-padders were down by 28 percent to 23 padding months during the first quarter of 2017 from 32 padding months during the same period in 2016. The increase in large padding machine activity is due to a substantial increase in mainline pipeline activity during the current period compared with the same period in 2016. A number of projects that were previously stalled in 2016 due to environmental and regulatory issues are currently under way.
Gross margin for the three month period ended March 31, 2017 was up by almost 100 percent. This increase was primarily due to the 42 percent increase in revenue during the period. Since most of the Company's costs are fixed, gross margin, EBITDA, funds flow and net income tend to increase exponentially once fixed period costs have been recovered.
Net loss decreased significantly during the first quarter of 2017 from a loss of $1,955,000 during the three month period ended 2016 to a loss of $1,052,000.The decrease in net loss was primarily due to the 42 percent increase in revenue during the period.
Funds flow from operations was $281,000 during the first quarter of 2017 compared with a loss of $559,000, during the same period in 2016.
Working capital increased by $2,015,000 and long-term debt decreased by $1,036,000 at March 31, 2017 compared with December 31, 2016. The increase in working capital was attributable to cash proceeds received from the sale of eight pipe layers during the first quarter of 2017 for gross proceeds of $3,500,000.
Overall, the first quarter of 2017 was a significant improvement over the same period in the prior year. As a result, the Company is well positioned going forward in 2017.
ESI is a publically traded company listed on the Canadian Securities Exchange under the stock symbol "OPI". ESI is a pipeline equipment rental and sales company with principal operations in Leduc, Alberta and Phoenix, Arizona. The Company, through its operating subsidiaries, ESI Pipeline Services Ltd. ("ESIPSL") and Ozzie's Pipeline Padder, Inc. ("OPI"), supplies (rentals and sales) backfill separation machines ("Padding Machines") to mainline pipeline contractors and utility contractors as well as oilfield pipeline and construction contractors.
SOURCE: ESI Energy Services Inc.
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