Flint Energy Services has raised revenues from facility infrastructure and maintenance services offset decreases in production services and oilfield services. Canadian operations generated CAD424.2 million in revenues and were up CAD20.9 million as a result of raised activity during the quarter, while the US operations generated CAD105.9 million in revenue, down CAD6.4 million as a result of decreased drilling activity in the US. Revenues from the US were 20% of Flint Energy Services revenues for the quarter, down as a result of lower US revenues and increased revenues from Canadian operating segments.
Gross margin for the quarter was CAD88.7 million (16.7%) compared to CAD91.8 million (17.8%) in the year-ago quarter. The decline in the gross margin percentages was attributed to a decline in activity and raised competitive pressures. Also, increased revenue activity in the facility infrastructure and maintenance services operating segments as a percentage of total revenue, which is generally at lower margins, contributed to the decline in gross margin.
General and administrative expenses for the first quarter of 2009 were CAD42.3 million compared to CAD38.1 million in the year-ago quarter. Flint Energy Services realized additional costs in information technology of CAD2 million in the quarter to support increasing system requirements as portions of the oilfield services, tubular management and US operations are integrated into its enterprise resource planning (ERP) system, JD Edwards, and partly related to Flint Energy Services’ international financial reporting standards (IFRS) convergence project, and the consolidation of administration and support services as part of the restructuring. These are one-time costs and have been partly counterbalanced by the suspension of the 2009 annual pay increases for executives, management, and salaried employees. Besides, Flint Energy Services has implemented unpaid leave for salaried employees and selective layoffs of administrative staff have been made as cost control measures.
EBITDA for the period of CAD46.4 million (8.8%) for the first quarter of 2009, was down compared to CAD53.7 million (10.4%) in the year-ago quarter.
Amortization of property, plant, equipment and intangible assets for the first quarter of 2009 was CAD14 million compared to CAD17.8 million in the year-ago quarter. This decline of CAD3.8 million was partly because of decreased amortization charges on intangible assets of CAD2.2 million as a result of the intangible assets impairment charge in 2008.
Interest expenses for the first quarter of 2009 decreased CAD1.3 million from CAD6.6 million in the comparative quarter to CAD5.3 million, as a result of reductions in the average long-term debt balance.
Taxes for the quarter were CAD7.6 million compared to CAD10.4 million for the comparable period previous year. Current taxes were CAD18.4 million compared to CAD17.9 million, equalized by future recoveries of CAD10.8 million as opposed to CAD7.5 million last year.
Flint Energy Services restructured its business segments as part of the process to streamline operations. The company started reporting in the new structure, which comprises of four operating segments, in 2009. The new segments are: production services, facility infrastructure, oilfield services, and maintenance services.
For the first quarter of 2009 Flint Energy Services net working capital was CAD342.7 million compared to CAD313.1 million at December 31, 2008, representing a raise of CAD29.6 million. This raise in working capital is mainly attributed to a decrease in accounts payable, a raise in the existing portion of long-term debt and an increase in accounts receivable counterbalanced by a decrease in revenue in excess. At March 31, 2009, the revolving operating loan was CAD52.9 million compared to CAD40.9 million as at December 31, 2008.
During the quarter, Flint Energy Services continued its efforts to progress the effectiveness of billing and collections, which has resulted in major decreases in revenue in excess of billing during the quarter. Revenue in excess of billing for the first quarter of 2009 was CAD123.5 million, a decline of CAD46.2 million from CAD169.7 million at the end of 2008. Flint Energy Services expects seeing continued improvements in the billing and collections processes as further efficiencies are created during the restructuring of operations.
