2022-05-16 | TSX:BRY | Press release
Edmonton, Alberta–(Newsfile Corp. – May 16, 2022) – Bri-Chem Corp. (TSX:BRY) (“Bri-Chem” or “Company”), a North American oilfield chemical distribution and blending company, is pleased to report its first quarter 2022 financial results.
|Three months completed|
|(in thousands except per share amounts)||2022||2021||$||%|
|As a % of turnover||ten%||7%|
|Adjusted operating income||3,045||559||2,486||445%|
|Adjusted net profit (1)||1,671||154||1,517||985%|
|Diluted per share|
|Adjusted net profit||$||0.06||$||0.01||$||0.05||532%|
Key highlights for the first quarter of 2022 include:
- Consolidated sales for the three months ended March 31, 2022 amounted to $23.5 million, an increase of 105% over the same period last year due to a better performance of the distribution divisions of fluids in Canada and the United States as the industry faces a significant resurgence following the easing of global economic restrictions that were in place due to the coronavirus (“COVID-19”) health pandemic ), as well as persistent supply constraints.
- Adjusted EBITDA for the first quarter of 2022 was $2.4 million compared to $851,000 in the first quarter of 2021, representing a 187% year-over-year increase. The increase is mainly related to the increase in sales compared to the previous year as well as an increase in the consolidated gross margin as a percentage of sales.
- Adjusted operating income was $3 million for the three months ended March 31, 2022, compared to operating income of $559,000 in the same quarter last year, representing an increase of 445 %.
- Net earnings per diluted share for the three months ended March 31, 2022 was $0.29 per share, compared to $0.01 per diluted share for the same period last year. Net income increased in the first quarter of 2022 due to a significant recovery in business activity following the easing of global economic restrictions, a recovery of deferred tax assets of 5.2 million dollars, as the Company has determined that the use of this deferred tax asset balance is more likely than not given the high levels of activity in our U.S. operations and a reversal of impairment of assets of $893,000 whereby the Company determined that the recoverable value of these assets exceeded their current carrying value.
- Working capital as of March 31, 2022 was $6.6 million compared to $9.9 million as of March 31, 2021, a decrease of 33%. The decrease is primarily related to the reclassification of the term loan to current liabilities, offset by notable increases in accounts receivable and inventory balances in response to increasing market momentum.
- Subsequent to the end of the first quarter of 2022, the Company entered into a new 20-year term mortgage loan for $6,000,000 with Canadian Western Bank to refinance its existing term loan. In addition, the Company has entered into an amending agreement with CIBC and the senior ABL facility is now committed until October 31, 2024.
Summary for the three months ended March 31, 2022:
Consolidated sales for the three months ended March 31, 2022 were $23.5 million, compared to $11.5 million for the same period in 2021, representing an increase of $12 million over the periods comparable. The increase is attributable to increased drilling activity in most operating regions in Canada and the United States.
Bri-Chem’s Canadian drilling fluids distribution division generated sales of $3.4 million for the quarter ended March 31, 2022, compared to $2.4 million for the comparable prior period. The increase in sales is mainly related to higher levels of drilling activity in 2022 than in 2021. The number of active land drilling rigs in the first quarter of 2022 averaged 198, compared to 138 in the same period l year, an increase of 43.2% compared to the first quarter of 2021 (Source: Baker Hughes). Bri-Chem’s drilling fluids distribution division in the United States generated sales of $14.5 million for the three months ended March 31, 2022, compared to sales of $4.7 million for the comparable period of 2021, representing a quarterly increase of 210%. This increase is related to the corresponding increase in rig activity in the first quarter of 2022. The number of active land rigs in operation in the first quarter of 2022 averaged 616, compared to an average of 386 in the first quarter. 2021, which represents an increase of 59.5%. (Source: Baker Hughes)
Bri-Chem’s Canadian compounding and packaging division generated sales of $3.4 million for the three months ended March 31, 2022, compared to sales of $1.7 million in the first quarter of 2021. The increase in sales is related to increased cementing and stimulation activities in response to increased drilling. U.S. compounding and packaging sales for the quarter ended March 31, 2022 were $2.2 million, compared to $2.8 million a year earlier. The quarterly decline in sales is the result of a short-term spike in larger cementing and stimulation work undertaken in the first quarter of 2021.
Adjusted operating profit for the three months ended March 31, 2022 was $3 million, compared to $559,000 in the same period last year. Adjusted EBITDA was $2.4 million for the first quarter of 2022, compared to $851,000 for the first quarter of 2021. Adjusted EBITDA as a percentage of sales was 10% for the quarter. The increase is primarily related to increased drilling activity in most operating regions in Canada and the United States as well as an increase in consolidated gross margin as a percentage of sales.
During the fourth quarter of 2021 and the first quarter of 2022, global commodity prices continued to strengthen and the North American outlook for industry drilling and completions activity in 2022 is expected to continue to strengthen. increase throughout the year. The company is well positioned to benefit from the expected service industry recovery cycle as management has proactively built inventory to continue to support customers during this period of increased drilling activity, particularly in our regions. in the southern United States, which are experiencing above-average activity. growth. Challenges continue to persist in the North American market with respect to available manpower and domestic and foreign product sourcing, however, Bri-Chem has been productive in locating and validating additional sources of product supply in response to this awareness. Bri-Chem remains focused on positioning the company to take advantage of increased industry spending and is carefully evaluating warehouse expansion opportunities that will provide stable returns on invested capital.
Bri-Chem has established itself, through a combination of strategic acquisitions and organic growth, as the North American industry leader in the wholesale distribution and blending of drilling, completion, stimulation and and oil field production. We sell, blend, package and distribute a full line of drilling fluids from 25 strategically located warehouses across Canada and the United States. Additional information about Bri-Chem is available at www.sedar.com or on the Bri-Chem website at www.brichem.com.
To receive updates from Bri-Chem, send your email to [email protected]
For more information, please contact:
Tony Pagnocco CPA, CA
Such. : (780) 571-8587
E: [email protected]
Certain statements contained in this press release constitute forward-looking information or forward-looking statements (collectively, “forward-looking statements”). These statements relate to future events or future performance. Use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “plan”, “estimate” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking statements and are based on the Company’s current beliefs or assumptions as to the outcome and timing of such future events. Actual future results may differ materially.
Although the Company believes that the expectations and assumptions on which these forward-looking statements are based are reasonable, undue reliance should not be placed on forward-looking statements as the Company cannot guarantee that they will prove to be accurate. By their nature, these forward-looking statements are subject to various risks and uncertainties, which could cause actual results to differ materially from the anticipated results or expectations expressed herein. These risks and uncertainties include, but are not limited to, general economic conditions, current and expected industry conditions, access to debt and equity financing on acceptable terms, price levels and volatility. commodity prices, market forces, the ability to obtain equipment from suppliers, the ability to obtain and retain qualified personnel, competition from other industry players and regulatory conditions. Readers are cautioned not to place undue reliance on such forward-looking information, which is given as of the date it is expressed in this press release or otherwise. Except as required by applicable law, the Company undertakes no obligation to publicly update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
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