Polarcus second quarter and preliminary half year results 2019: Significant earnings increase and strong operational performance
24 Jul 2019
Note that all references to “segment” and “segment reporting” are adjusted for IFRS 15 effects and non-recurring items. Non-recurring items adjusted in 2018 include impairments, onerous contract provisions and restructuring costs. See Note 3 in the accompanying interim financial statements for further details.
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its second quarter and preliminary half year results 2019.
Polarcus CEO, Duncan Eley commented:
“Polarcus achieved increased earnings in Q2 2019 with revenue and EBITDA improving significantly year-on-year. During the quarter we commenced the industry’s largest 4D project in 2019 and were awarded a substantial wide-azimuth project in the Americas. These project awards demonstrate that our top-tier clients value Polarcus’ safe, efficient and high-quality services. Tender activity remains elevated and we expect strong levels of demand to continue. We look ahead to a third quarter with higher fleet utilization and associated further improvements to revenue and EBITDA.”
HEADLINES Q2 2019
- Segment revenues of USD 64.8 million, up 34% from Q2 2018
- Segment EBITDA of USD 16.0 million, up 122% from Q2 2018
- Cash from operations of USD 4.9 million, increased by USD 11.1 million compared to Q2 2018
- Total cash balance of USD 23.8 million (excluding the USD 40 million WC facility)
- Vessel utilization of 72% impacted by vessel repositioning early in the quarter
- Strong operational performance with low technical downtime
- Multi-client late sales of USD 3.6 million
- Backlog of USD 200 million, up from USD 150 million at the same time last year
Segment revenues of USD 64.8 million in Q2 2019, increased 34% year-on-year driven by a 50% improvement in day rates compared to the same quarter last year. Revenue growth was achieved despite a reduction in utilization of the company’s fleet to 72% compared to 85% in Q2 2018 as vessels were repositioned early in the quarter for new projects. The revenue increase was also supported by the first Polarcus hybrid project (towed streamer and ocean bottom node) that was completed during the quarter and USD 3.6 million in multi-client late sales compared to zero in Q2 2018.
Cost of sales of USD 45.1 million increased 19% year-on-year mainly due to the operating costs related to the hybrid project, offset by deferred costs associated with transits and mobilisations to new projects. General and administrative costs increased to USD 3.8 million compared to USD 3.4 million in Q2 2018.
Segment EBITDA increased by 122% during the quarter to USD 16.0 million compared with USD 7.2 million in Q2 2018. The significant improvement in EBITDA was driven by improved revenue combined with continued focus on cost management. During the quarter, USD 3.7 million was recognised as other income from an insurance claim relating to damaged seismic equipment.
Cash generated from operations during the quarter improved to USD 4.9 million, compared to negative USD 6.2 million in Q2 2018. Cash from operations was impacted by a USD 11.1 million negative net working capital movement. Total cash at the quarter end was USD 23.8 million (excluding the USD 40 million working capital facility), compared to USD 29.0 million at the end of the previous quarter.
The Company was awarded a multi-vessel wide-azimuth project totaling 6 vessel months which will commence in August 2019. This award demonstrates the Company’s highly-rated credentials with top tier clients to execute operationally complex projects, underpinned by the safe, efficient and high-quality services that Polarcus delivers.
The Company’s secured backlog at 30 June 2019 is estimated at USD 200 million compared to USD 150 million at the same time last year. We continue to focus on identifying opportunities where we can secure an appropriate premium for our technical and operational differentiation.
An oil price around recent levels is a positive driver for E&P spending. This will increase demand for seismic data acquisition from both E&P companies and multi-client companies.
The reshaping of the seismic industry has led to an expanded client base of more multi-client companies without vessels. As Polarcus becomes one of only three seismic vessel owners operating globally, the marine acquisition segment is positioned to achieve further improved pricing.
The Company’s fleet is 80% booked for the second half of 2019 and backlog of USD 200 million. With a young and well-performing fleet, Polarcus is poised to capitalise on the stronger market and will continue to focus on achieving higher margins on new contracts, minimizing costs and delivering operational efficiencies. The Company reiterates its view that it will deliver improved EBITDA and cashflow in 2019 compared to 2018.
|Quarter ended||Six months ended||Year ended|
|(In millions of USD)||30-Jun-19||30-Jun-18||30-Jun-19||30-Jun-18||31-Dec-18|
|Net working capital movement||(11.1)||(11.2)||(14.5)||(13.4)||(11.9)|
|As per IFRS|
|EBITDA (before non-recurring items)||16.0||3.4||34.3||6.1||55.9|
|EBIT (before non-recurring items)||8.7||(5.1)||11.5||(9.8)||(25.1)|
|Net profit/(loss) for the period||0.6||(8.1)||(4.7)||(5.3)||(31.8)|
|Basic earnings/(loss) per share (USD)||0.001||(0.016)||(0.009)||(0.014)||(0.071)|
|Net cash flows from operating activities||4.9||(6.2)||10.7||(0.6)||11.3|
|Total assets (period end)||470.4||527.7||470.4||527.7||465.6|
|Total liabilities (period end)||396.8||423.2||396.8||423.2||387.3|
|Total Equity (period end)||73.6||104.4||73.6||104.4||78.3|
|PP&E cash investment||1.8||1.5||2.2||77.6||82.2|
|Multi-client projects cash investment||–||4.1||–||15.8||18.7|
|Total cash (period end)||23.8||34.7||23.8||34.7||31.2|
|Net interest bearing debt (period end)||314.6||307.3||314.6||307.3||306.1|
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.