Third Quarter 2017 – Polarcus reports strong quarter in a continued weak market
27 Oct 2017
Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) announces the release of its third quarter 2017 financial statements.
HEADLINES Q3 2017:
Revenues of USD 58.5 million, up 62% from Q2 2017
Gross cost of sales of USD 40.3 million, down 3% from Q2 2017
EBITDA of USD 14.5 million, up from negative USD 8.9 million in Q2 2017
Total cash balance of USD 31.6 million in addition to USD 25 million undrawn working capital facility
Backlog of USD 125 million
Polarcus recorded vessel utilization of 92%, up from 75% in Q2 2017, driven by robust activity over the summer. Revenues increased 62% from Q2 to USD 58.5 million.
A weak seismic market has continued for the third straight year. In this period, the industry has seen the number of active vessels in the global 3D fleet more than halve. Early in Q4 2017, it is estimated that of these remaining active vessels, half are idle.
The summer saw a short-lived balance of supply and demand but with oil company exploration spend still cautious, the winter period is expected to be challenging.
Through this prolonged downturn, Polarcus has managed its cost base in an extremely disciplined fashion. The Company again delivered sequentially lower operating costs in Q3 2017, achieving a 3% reduction in gross cost of sales compared to Q2 2017; this in combination with significantly increased fleet utilization. General and administrative costs were also reduced by 16% during the quarter, further exemplifying the Company’s strong focus on cost management across the business.
Polarcus expects these challenging market conditions to continue into 2018 and has, after the quarter-end, undertaken to further streamline and re-shape the organization to deliver improved flexibility and optimized productivity. The key focus is to strengthen the overall organization through maintaining regional sales offices comprising experienced and well-networked sales and marketing teams, and consolidating fleet operations and support services at the Company’s headquarters. This strategic re-shape of the organization enables Polarcus to reduce costs effectively when global fleet activity is decreased. As a consequence, the Company will benefit from an estimated USD 8 million in annualized cost savings and a right-sized organization for the current market outlook.
With increased revenue from the combination of long term bareboat charters and a technical support contract, Polarcus continues to see a fixed revenue stream of USD 10.5 million per quarter.
Total cash at quarter-end amounted to USD 31.6 million excluding the USD 25 million undrawn working capital facility. The cash balance was impacted by a negative net working capital movement during the quarter, mainly because of overdue customer payments falling into the next quarter, the majority of which has been received since quarter-end.
In this environment, Polarcus continues to adapt and deliver to our clients innovative approaches to operational excellence, which remains key for short-term agility and long-term success.
Chief Executive Officer
|Quarter ended||Nine months ended||Year ended|
|(In millions of USD)||30-Sep-17||30-Jun-17||30-Sep-16||30-Sep-17||30-Sep-16||31-Dec-16|
|EBITDA (before non-recurring items)||14.5||(8.9)||12.9||16.1||54.0||51.4|
|EBIT (before non-recurring items)||(3.6)||(28.0)||(11.4)||(49.6)||(18.1)||(54.1)|
|Net profit / (loss) for the period||(9.1)||(33.7)||(17.4)||(80.8)||117.3||20.3|
|Basic earnings/(loss) per share (USD)||(0.06)||(0.22)||(0.33)||(0.63)||2.82||0.46|
|Net cash flows from operating activities||2.6||(1.4)||25.3||15.6||50.7||48.1|
|PP&E cash investment||1.7||2.2||2.1||5.6||15.4||16.4|
|Multi-client projects cash investment||1.2||1.4||7.7||13.7||32.1||44.6|
|Net interest bearing debt||263.5||257.8||247.9||263.5||247.9||270.7|
Non-recurring items include impairments, the cost of onerous contract provisions and restructuring costs.
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 3D seismic vessels incorporating leading-edge maritime technologies for improved safety and efficiency. Polarcus offers contract seismic surveys and multi-client projects with advanced onboard processing solutions and employs over 400 professionals worldwide. The Company’s principal office is in Dubai, United Arab Emirates. For more information, visit www.polarcus.com