Note that all references to "Segment" and "Segment reporting" are adjusted for IFRS 15 effects and non-recurring items. Non-recurring items adjusted include impairments, onerous contract provisions and restructuring costs. See Note 3 in the accompanying financial statements for more details on the adjustments.
Polarcus Limited ("Polarcus" or the "Company") (OSE: PLCS) announces the release of its first quarter 2019 financial statements.
HEADLINES Q1 2019
- IFRS revenues of USD 75.2 million and EBITDA of USD 18.3 million
- Segment revenues of USD 67.1 million reflecting improved day rates and utilization along with the commencement of Polarcus' first hybrid (streamer-node) project
- Segment EBITDA of USD 10.2 million with cash from operations of USD 5.8 million
- Total cash balance of USD 29.0 million (excluding the undrawn USD 40 million WC facility)
- Robust vessel utilization of 92% with strong operational performance maintained
- Backlog of USD 170 million, up from USD 150 million at the same time last year
Polarcus CEO, Duncan Eley commented:
"Polarcus' Q1 2019 financial results reflect substantial improvements in the industry compared to 12 months earlier. Underlying performance of our fleet remains strong in terms of safety, environmental leadership, technical uptime and operational efficiency. Building on this performance, we will strive to create value through our innovative marine acquisition solutions in addition to focusing on cost management, capital discipline and ensuring our contracts incorporate optimal pricing and terms as the marine seismic market continues to improve."
Segment revenues of USD 67.1 million in Q1 2019 increased 67% year-on-year and grew for the fifth consecutive quarter. The increase was driven by improved day rates and strong utilization as well as revenue from the first Polarcus hybrid project (towed streamer and ocean bottom node) that commenced during the quarter using third party vessels. Utilization of the Company's core fleet of seismic vessels increased significantly to 88% in Q1 2019, up from 74% in the same quarter of the previous year.
Gross cost of sales of USD 55.0 million increased 40% year-on-year mainly driven by additional third party vessel operating costs. Excluding these costs, gross cost of sales increased by 16%, reflecting higher utilization and project specific costs. General and administrative costs decreased to USD 3.0 million compared to USD 4.2 million in Q1 2018.
There was a solid improvement in underlying profitability year-on-year with Segment EBITDA of USD 10.2 million in Q1 2019, compared to negative USD 12.9 million in Q1 2018 before the results were positively affected by USD 13.9 million in non-cash accounting gains from the 2018 financial restructuring and capitalization of multi-client project costs of USD 11.2 million. In Q1 2019 no costs were capitalized to multi-client and the growth in underlying EBITDA was driven by improved day rates and utilization.
Cash generated from operations during the quarter was USD 5.8 million, compared to USD 5.6 million in Q1 2018. There was a negative net working capital movement of USD 3.4 million during the quarter. Total cash at quarter end was USD 29.0 million (excluding the undrawn USD 40 million working capital facility), compared to USD 31.2 million at the end of Q4 2018.
The Company maintained strong operational performance in the first quarter with technical down time of 3.1% combined with high utilization. The quarter also saw commencement of the Company's first hybrid project taking place in the Middle East. Offering hybrid project capabilities, Polarcus capitalizes on its operational expertise, delivering a seamless sub-surface image, benefitting from the respective strengths of complementary seismic acquisition techniques and defines a new revenue stream for the Company.
The Company's secured backlog at 31 March 2019 is estimated at USD 170 million compared to USD 150 million at the same time last year. The level of tenders and enquiries has been encouraging and we continue to maintain a balance between building backlog and securing new contracts with more attractive margins. The Company's fleet is 60% booked for the remainder of 2019 providing the opportunity to increase earnings further.
Average pricing for 2019 proprietary contracts secured to date shows continued improvement. Financial performance in the first quarter of 2019 was in line with expectations, however, improved performance is expected in the second half of 2019, following a number of vessel relocations scheduled for Q2 2019.
The Company will continue to focus on achieving improved margins on new contracts with better terms, minimizing costs and delivering operational efficiencies, as the seismic market continues to improve.
|Quarter ended||Year ended|
|(In millions of USD)||31-Mar-19||31-Mar-18||31-Dec-18|
|Net working capital movement||(3.4)||(2.2)||(11.9)|
Duncan Eley, CEO
+971 50 553 2198
Hans-Peter Burlid, CFO
+971 50 559 8175
Polarcus (OSE: PLCS) is an innovative marine geophysical company with a pioneering environmental agenda, delivering high-end towed streamer data acquisition and imaging services from Pole to Pole. Polarcus operates a fleet of high performance seismic vessels with 3D and 4D imaging capabilities, which incorporate leading-edge maritime technologies for improved safety and efficiency. Polarcus offers contract seismic surveys and multi-client projects with advanced onboard processing solutions. The Company services its clients globally from its head office in Dubai and regional offices located in Houston, London and Singapore. For more information, visit www.polarcus.com
The information included herein may contain forward-looking statements. Forward-looking statements include all statements that are not historical facts, including but not limited to statements expressing or implying the Company's intent, belief or current expectations with respect to, among other things, forecasts, estimates, and predictions. Such forward-looking statements necessarily involve risks and uncertainties and are dependent on assumptions, information, data or methods that may be incorrect or imprecise. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized. Some factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, developments in the oil and gas industry, the demand for seismic services, the demand for data from the Company's multi-client library, currency risks, political risks, regulatory risks, and unexpected operational setbacks. For a further description of other relevant risk factors we refer to our 2018 Annual Report. The reservation is also made that inaccuracies or mistakes may occur in the information given above concerning the current status of the Company or its business. Any reliance on the information given above is at the risk of the reader, and Polarcus disclaims any and all liability in this respect.
This information is subject to the disclosure requirements pursuant to section 5 -12 of the Norwegian Securities Trading Act.