EPCC $0.12 Background..
EPiC Energy Resources Announces Third Quarter 2009 Results
PR Newswire - Nov 11 at 08:00
Company Symbols: NASDAQ-OTCBB:EPCC
HOUSTON, Nov. 11 /PRNewswire-FirstCall/ -- EPiC Energy Resources, Inc. (OTC Bulletin Board: EPCC) ("EPiC") a provider of engineering, management consulting, training and data management services to the energy industry, today announced its financial and operating results for the three and nine months ended September 30, 2009.
Since its inception, EPiC has grown through three accretive acquisitions. In August 2007, EPiC acquired The Carnrite Group, LLC ("Carnrite"), a management consulting company focused on providing strategic and operational consulting services to the broad energy industry. In December 2007, EPiC acquired Pearl Investment Company ("Pearl"), a diversified engineering and energy services company. In February 2008, EPiC acquired Epic Integrated Solutions, LLC ("EIS"), a global training and documentation company.
Despite the challenging economic environment, EPiC continues to work to expand its revenue base, both domestically and internationally, and manage costs aggressively. EPiC believes achievement of these major milestones will better position us to weather the economic downturn and emerge stronger when our industry and the economy improves.
Third Quarter 2009 Financial Results:
-- Revenues were $13.4 million for the third quarter of 2009, a 59%
decrease compared to the $21.3 million for the third quarter of 2008.
-- Consulting fee revenue was $6.4 million for the third quarter of
2009, a 55% decrease compared to $14.2 million for the third quarter
of 2008.
-- Reimbursed materials revenue was $7.0 million for the third quarter
of 2009 compared to $7.1 million for the third quarter of 2008.
-- Income from Operations was $632,000 for the third quarter of 2009, a
3% increase compared to $615,000 for the third quarter of 2008.
-- EBITDA was $1.4 million for the third quarter of 2009, a 17.7% decrease
compared to $1.7 million for the third quarter of 2008. EBITDA is a
non-GAAP measure and is defined and reconciled to net income later in
this press release.
-- For the third quarter of 2009, EPiC had net income of $1.2 million, or
$0.03 per weighted average common share outstanding, compared to a net
loss of $3.3 million, or ($0.08) per share in the third quarter of 2008.
Nine months ended September 30, 2009 Financial Results:
-- Revenues were $32.9 million for the nine months ended September 30,
2009, a 41% decrease compared to $55.4 million for the nine months ended
September 30, 2008.
-- Consulting fee revenue was $21.2 million for the nine months ended
September 30, 2009, a 32% decrease as compared to $31.2 million for
the nine months ended September 30, 2008.
-- Reimbursed materials revenue was $11.7 million for the nine months
ended September 30, 2009 as compared to $24.2 million for the nine
months ended September 30, 2008.
-- Income (Loss) from Operations was $0.1 million for the nine months ended
September 30, 2009, compared to a $1.3 million loss for the nine months
ended September 30, 2008.
-- EBITDA was $3.3 million for the nine months ended September 30, 2009, a
333% increase compared to $0.8 million for the nine months ended
September 30, 2008. EBITDA is a non-GAAP measure and is defined and
reconciled to net income later in this press release.
-- For the nine months ended September 30, 2009, EPiC had a net loss of
$3.8 million, or $0.09 per weighted average common share outstanding, a
55% improvement compared to a net loss of $8.4 million, or $0.19 per
share for the nine months ended September 30, 2008. Net loss for the
year was negatively impacted by non-cash expenses of stock compensation,
amortization of intangible assets, and a loss on the write down of an
asset held for sale. Excluding these non-cash expenses, net loss for
the nine months ended September 30, 2009 would have been $1.3 million or
$0.03 per diluted share.
-- Net cash flows from operations for the nine months ended September 30,
2009 was $2.2 million. Net cash flow used in financing activities for
the nine months ended September 30, 2009 was $6.3 million, all of which
was related to debt payments.
As of September 30, 2009, Epic's combined backlog for consulting services to be performed in the future was approximately $19.8 million. This compares with a combined backlog of approximately $28.3 million as of September 30, 2008.
Conference Call
EPiC will host a conference call to discuss its third quarter 2009 results on November 11, 2009, at 10:00 a.m. Eastern Time (9:00 a.m. Central). To access the call, please dial (866) 253-6505 at least 10 minutes prior to the start time. A telephonic replay of the conference call will be available on our website at www.1epic.com as well. For more information, please contact Mike Kinney at (281)863-9635 or email at mkinney@1epic.com.
About EPiC
EPiC Energy Resources is a Houston-based integrated energy services company. EPiC provides consulting, engineering, construction management, operations, maintenance, specialized training and data management services focused primarily on the upstream and midstream energy infrastructure. Services are provided through Pearl, a diversified engineering and energy services company; Carnrite, a management consulting company focused on providing strategic and operational consulting services to the broad energy industry; and EIS, a global training and data management services company. EPiC is headquartered at 1450 Lake Robbins Drive, Suite 160, The Woodlands, Texas 77380. Office - 281-419-3742, www.1epic.com.
Forward-Looking Statements
Certain statements included in this release constitute forward-looking statements. These forward-looking statements are based on management's belief and assumptions derived from currently available information. Although EPiC Energy Resources ("EPiC") believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Actual results could differ materially from forward-looking statements expressed or implied herein as a result of a variety of factors including, but not limited to: a decline in the price of, or demand for, oil and gas, demand for EPiC's services, loss or unavailability of key personnel, inability to recruit or retain personnel, competition for customers and contracts, various potential losses associated with fixed-price contracts, general economic conditions, and other financial, operational and legal risks and uncertainties detailed from time to time in EPiC's SEC filings. EPiC does not undertake any obligation to publicly update forward-looking statements contained herein to reflect subsequent events or circumstances.
(1) This earnings release contains references to the non-GAAP financial measure of earnings (net income) before interest, taxes, depreciation and amortization, or "EBITDA." EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, Epic believes EBITDA is a useful supplemental financial measure used by its management and directors and by external users of its financial statements, such as investors, to assess:
-- The financial performance of its assets without regard to financing
methods, capital structure or historical cost basis;
-- The ability of its assets to generate cash sufficient to pay interest on
its indebtedness; and
-- Its operating performance and return on invested capital as compared to
those of other companies in the well servicing industry, without regard
to financing methods and capital structure.
EBITDA has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income and operating income, and these measures may vary among other companies. Limitations to using EBITDA as an analytical tool include:
-- EBITDA does not reflect current or future requirements for capital
expenditures or capital commitments;
-- EBITDA does not reflect changes in, or cash requirements necessary to
service interest or principal payments on, debt;
-- EBITDA does not reflect income taxes;
-- Although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and EBITDA does not reflect any cash requirements for such
replacements; and
-- Other companies in its industry may calculate EBITDA differently than
Epic does, limiting its usefulness as a comparative measure.
The following table presents a reconciliation of net income to EBITDA, which is the most comparable non-GAAP performance measure, for each of the periods indicated (in thousands):
(Unaudited) (Unaudited)
Three months Nine months
Ended Ended
Reconciliation of Net Income September 30, September 30,
to EBITDA: 2009 2008 2009 2008
---------------------------- ---- ---- ---- ----
Net Income (Loss) $1,180 $(3,296) $(3,769) $(8,369)
Interest expense 1,566 1,629 5,439 4,714
Income taxes 32 11 32 11
Depreciation and amortization 730 1,032 2,591 1,966
Loss on write down of assets - - 480 -
Other (income ) expenses (2,145) 2,281 (1,468) 2,441
------ ----- ------ -----
EBITDA $1,363 $1,657 $3,305 $763
====== ====== ====== ====
-Financials to Follow-
EPIC ENERGY RESOURCES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September December
30, 31,
2009 2008
---- ----
ASSETS (unaudited)
Current Assets
Cash and cash equivalents $479 $4,785
Accounts receivable:
Billed, net of allowance of $6,338 and
$6,570, respectively 10,146 10,690
Unbilled 1,362 388
Prepaid expenses and other current assets 532 2,027
--- -----
Total current assets 12,519 17,890
Property and equipment, net 3,704 5,136
Assets held for sale:
Proved oil and gas properties (full cost
method), net of accumulated depletion
and impairments of $0 and $9,257,
respectively - 1,332
Other mineral reserves - 783
Other asset held for sale 3,395 3,875
Other assets 49 45
Debt issuance costs, net of accumulated
amortization of $807 and $481, respectively 1,222 1,548
Goodwill 18,837 18,837
Other intangible assets, net 11,277 12,666
------ ------
Total assets $51,003 $62,112
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $1,426 $5,404
Accrued liabilities 2,977 3,762
Deferred revenue 10,065 2,684
Customer deposits 1,014 4,505
Current liabilities associated with
assets held for sale 328 4,383
Current portion of long-term debt 6,404 7,504
----- -----
Total current liabilities 22,214 28,242
Long-term liabilities associated with
assets held for sale 3,707 3,949
Long-term debt, net 4,615 6,372
Derivative liability 1,268 -
Deferred tax liability 1,775 1,775
----- -----
Total liabilities 33,579 40,338
------ ------
STOCKHOLDERS' EQUITY
Common stock, no par value: 100,000,000
shares authorized; 44,105,781 and
43,495,160 shares issued and
outstanding, respectively 33,639 41,783
Additional paid-in capital 1,786 15,014
Accumulated deficit (18,001) (35,023)
------- -------
Total stockholders' equity 17,424 21,774
------ ------
Total liabilities and stockholders' equity $51,003 $62,112
======= =======
EPIC ENERGY RESOURCES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data and per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
REVENUES
Consulting fees $6,362 $14,176 $21,164 $31,192
Reimbursed expenses 6,990 7,105 11,691 24,164
----- ----- ------ ------
Total revenues 13,352 21,281 32,855 55,356
OPERATING EXPENSES
Reimbursed expenses 5,325 10,391 8,213 22,092
Compensation and
benefits 4,690 5,979 14,700 19,376
General and
administrative 884 1,465 2,831 6,730
Professional and
subcontracted services 796 1,449 2,975 5,431
Occupancy, communication
and other 295 350 916 1,031
Depreciation and
amortization 730 1,032 2,591 1,966
Impairment charges - - 480 -
--- --- --- ---
Total operating
expenses 12,720 20,666 32,706 56,626
Income (loss) from
operations 632 615 149 (1,270)
OTHER INCOME (EXPENSE)
Derivative gain (loss) 2,145 - (481) -
Interest expense (1,566) (1,629) (5,439) (4,714)
Interest and other
income (expense) 1 (2,167) 86 (2,110)
--- ------ -- ------
Total other
income
(expense), net 580 (3,796) (5,834) (6,824)
--- ------ ------ -----
Income (loss) from
continuing operations
before taxes 1,212 (3,181) (5,685) (8,094)
Income tax expense 32 11 32 11
--- --- --- ---
Income (loss)
from continuing
operations 1,180 (3,192) (5,717) (8,105)
----- ------ ------ ------
DISCONTINUED OPERATIONS
Loss from operations of
oil and gas segment - (104) (162) (264)
Gain on sale of oil
and gas properties - - 2,110 -
--- --- ----- ---
Income (loss)
from
discontinued
operations - (104) 1,948 (264)
--- ---- ----- ----
Net income (loss) $1,180 $(3,296) $(3,769) $(8,369)
====== ======= ======= =======
Income (loss) per
common share - basic
and diluted:
Income (loss) from
continuing
operations $0.03 $(0.07) $(0.13) $(0.18)
Income (loss) from
discontinued
operations - (0.01) 0.04 (0.01)
--- ----- ---- -----
Net income (loss) $0.03 $(0.08) $(0.09) $(0.19)
===== ====== ====== ======
Weighted average
common shares
outstanding -
basic and
diluted 44,105,781 43,041,827 44,063,189 42,993,378
EPIC ENERGY RESOURCES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
------ ------ ------- ------- -----
BALANCE,
January 1, 2009 43,495,160 $41,783 $15,014 $(35,023) $21,774
Cumulative effect
of change in
accounting principle - (8,144) (13,395) 20,791 (748)
--- ------ ------- ------ ----
BALANCE,
January 1, 2009,
as adjusted 43,495,160 33,639 1,619 (14,232) 21,026
Amortization
of stock
options and
stock bonuses - - 167 - 167
Issuance of
vested shares 610,621 - - - -
Net loss - - - (3,769) (3,769)
--- --- --- ------ ------
BALANCE,
September 30,
2009 44,105,781 $33,639 $1,786 $(18,001) $17,424
========== ======= ====== ======== =======
EPIC ENERGY RESOURCES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
-------------
2009 2008
---- ----
OPERATING ACTIVITIES:
Net loss $(3,769) $(8,369)
Adjustments to reconcile net loss to net
cash provided by operating activities:
(Income) loss from discontinued operations (1,948) 264
Depreciation and amortization 2,591 1,966
Allowance for doubtful accounts 206 661
Amortization of debt discount and debt
issuance costs 3,835 2,624
Impairment of asset held for sale 480 -
Stock-based compensation expense 167 875
Loss on sale of property and equipment 254 486
Derivative loss 481 -
Gain on early extinguishment of debt (94) -
Changes in operating assets and liabilities:
Accounts receivable (636) (7,508)
Prepaid expenses and other current assets 1,495 28
Other non-current assets (3) 157
Accounts payable (3,978) 7,027
Accrued liabilities (733) 1,450
Customer deposits (3,491) 1,488
Deferred revenue 7,381 2,214
----- -----
Net cash provided by operating activities 2,238 3,363
----- -----
INVESTING ACTIVITIES:
Increase in restricted cash - 2,491
Purchases of property and equipment (205) (1,352)
Proceeds from sale of property and equipment 52 -
Acquisition of EIS, net of cash received - (232)
--- ----
Net cash provided by (used in) investing
activities (153) 907
---- ---
FINANCING ACTIVITIES:
Bank overdrafts - (3,442)
Payments on debt (6,103) (825)
------ ----
Cash used in financing activities (6,103) (4,267)
------ ------
DISCONTINUED OPERATIONS:
Net cash used in operating activities (63) -
Net cash used in financing activities (225) -
---- ---
Net cash used in discontinued operations (288) -
---- ---
Net decrease in cash and cash equivalents (4,306) 3
Cash and cash equivalents, beginning of period 4,785 3,483
----- -----
Cash and cash equivalents, end of period $479 $3,486
==== ======
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest $2,262 $2,115
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Settlement of notes payable and accrued
interest through sale of oil and gas properties $3,993 $-
Cumulative net effect of change in accounting
principle $748 $-
Settlement of notes payable through sale of
property and equipment $128 $-
Stock issued for EIS acquisition $- $1,050
Notes payable used to acquire property and
equipment $- $488
SOURCE EPiC Energy Resources, Inc.
