Here is another stock that has been giving me problems.
NRX.CA,I believe I got it through Crossy.
The brokers had a rough time finding it and placing orders,
WELL I just found a pink symbol.
Now it is NRXPF.PK.$2.34 us
Norex Reports Record Fourth Quarter and Fiscal Year Results
8/9/2006
CALGARY, ALBERTA, Aug 9, 2006 (CCNMatthews via COMTEX News Network) --
Norex Exploration Services Inc. (TSX VENTURE:NRX) ("Norex" or the "Company") announced results for the fourth quarter and year ended April 30, 2006.
Financial Overview Three months ended Year ended(000's $ except April 30, April 30, per share % % amounts) 2006 2005 Increase 2006 2005 Increase------------------------------------------------------------------------Revenue $ 48,022 $ 6,875 599% $ 66,340 $ 14,139 369%Gross Margin 11,248 1,193 843% 15,662 2,074 655%EBITDA $ 9,881 $ 996 892% $ 13,225 $ 1,283 931% Per share $ 0.28 $ 0.16 75% $ 0.75 $ 0.21 257%Net Income $ 5,576 $ 824 577% $ 6,938 $ 651 966% Per share basic $ 0.16 $ 0.14 14% $ 0.39 $ 0.11 255% Per share diluted $ 0.15 $ 0.14 7% $ 0.39 $ 0.11 255%
Non-GAAP financial measures
Management's discussion and analysis includes references to financial measures commonly used in the oil and gas service industry. EBITDA is provided to assist investors in determining the ability of Norex to generate cash from operations and is calculated from the statement of operations as net income for the period plus interest on debt and capital leases, income taxes, unrealized foreign exchange gains and losses, amortization and stock-based compensation expense. Gross margin is provided to assist investors in determining Norex's ability to generate earnings from its field operations and is calculated by subtracting direct field expenses from revenue. These measures do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies.
The Company is pleased to report the following financial and operational achievements for the quarter and the year:
Fourth Quarter Highlights
- Revenue for the quarter increased almost 600% to $48.0 million compared to $6.9 million of revenue for the fourth quarter of fiscal 2005.
- EBITDA for the quarter increased almost tenfold to $9.9 million ($0.28 per share) for the current quarter compared to $1.0 million ($0.16 per share) for the quarter ended April 30, 2005. Net income increased to $5.6 million ($0.16 per share) for the quarter ended April 30, 2006 compared to $0.8 million ($0.14 per share) for the same quarter of the prior year.
- On February 1, 2006 the Company merged with Conquest Seismic Services Ltd. ("Conquest") to create one of the largest seismic acquisition companies operating in Canada. We are now the largest operator of state-of-the-art ARAM ARIES(R) equipment in Canada.
Annual Highlights
- Revenue for the year ended April 30, 2006 increased almost 370% to $66.3 million compared to $14.1 million for the prior year. The Company experienced high utilization rates during the third and fourth quarters, including improved utilization of its crews stationed in eastern Canada. Revenue also increased as a result of the three acquisitions completed in the fiscal year.
- EBITDA for the year increased to $13.2 million ($0.75 per share) for the current year compared to $1.3 million ($0.21 per share) for the year ended April 30, 2005. Net earnings increased to $6.9 million ($0.39 per share) for the year ended April 30, 2006 compared to $0.65 million ($0.11 per share) in the prior year.
- On May 31, 2005 the Company purchased Geophysical Applications Processing Services Ltd. to expand its operations in eastern Canada and the United States.
- On November 23, 2005, Norex announced the purchase of certain assets of Norcana Resource Services Ltd., a competitor to Norex in the seismic acquisition business in western Canada.
- On December 6, 2005, the Company announced a private placement of common shares and warrants for proceeds up to $15 million.
"We are extremely pleased with our record quarterly results, capping a year of transition and significant growth for Norex. Our corporate acquisition strategy and the resurgence in seismic activity in North America provided the foundation for our record performance. Without the tremendous dedication and hard work of our employees, however, these results would not have been possible. To all the members of the growing Norex family I want to express my gratitude for their outstanding effort." commented Mr. Paul Crilly, President and CEO.
Fourth Quarter Review
Results of Operations
Revenue for the fourth quarter ended April 30, 2006 increased to $48.0 million compared to $6.9 million for the fourth quarter ended April 30, 2005. Geophysical Applications Processing Services Ltd. ("GAPS") which was purchased May 31, 2005 and comprises the Company's Eastern Canada and United States operations, contributed $2.5 million of revenue to the current quarter results. Conquest Seismic Services Ltd. ("Conquest") which was purchased February 1, 2006 contributed $32.5 million of revenue to the current quarter results. Increased revenue in the quarter was also attributable to a general increase in seismic industry activity levels as exploration spending and pricing both continued to improve.
The gross margin for the current quarter was $11.2 million or 23.4% of revenue compared to $1.2 million or 17.3% of revenue for the fourth quarter ended April 30, 2005. The improved gross margins are attributable to the factors identified above and the economies of scale of higher revenue covering our fixed field infrastructure costs. The Company also benefited from an increase in vibro-seis work in the quarter. Vibro-seis jobs typically produce better margins as our equipment generates increased revenue compared to the subcontracting of shot hole drilling and explosives services required for dynamite-based acquisition.
General and administrative expenses in the current quarter were $1.35 million compared to $0.2 million in the fourth quarter of the prior year. The acquisitions of GAPS and Conquest along with the addition of their general and administrative expenses, recruitment costs related to managerial changes and an increase in public company costs accounted for the increase in expenses in the quarter.
Amortization expense for the fourth quarter increased to $1.05 million from $0.14 million for the comparative prior period, reflecting amortization on $18.0 million of property and equipment and $3.2 million of intangible assets acquired through corporate and asset acquisitions in the year. The Company made $5.4 million of other capital expenditures primarily related to field recording equipment, during the year.
As a result of additional term debt and capital leases related to the GAPS and Conquest acquisitions, interest on long term debt increased to $240,000 in the quarter compared to $29,000 in the fourth quarter of the prior year.
The Company reported $72,000 of stock-based compensation expense related to the granting of stock options to directors, officers and employees in the year ended April 30, 2006.
As a result of the increased profitability, the Company recorded a provision for income taxes of $2.9 million in the quarter of which $2.5 million is related to current taxes and $0.4 million is related to future taxes. The Company did not incur a tax expense in the comparative period of the prior year due to tax losses carried forward from previous periods.
The increased revenue and higher field margins resulted in an increase in net earnings to $5.6 million ($0.16 per share) in the fourth quarter compared to net earnings of $0.8 million ($0.14 per share) in the fourth quarter of fiscal 2005.
Year-to-date Review
Results of Operations
Revenue for the year ended April 30, 2006 increased to $66.3 million compared to $14.1 million for the year ended April 30, 2005. Strong third and fourth quarter activity levels compared to the prior year and incremental revenue from the Conquest and GAPS acquisitions of $38.2 million accounted for the majority of the increase in revenues over the comparable period of the prior year. Increased revenue was also attributable to a general increase in seismic industry activity levels as exploration spending and pricing both continued to improve during the third and fourth quarters of fiscal 2006.
The gross margin for the year ended April 30, 2006 was $15.7 million or 23.6% of revenue compared to $2.1 million or 14.7% of revenue for the same prior year period. Higher utilization of the company's personnel and equipment, economies of scale relating to the GAPS and Conquest acquisitions and pricing improvements in the third and fourth quarters contributed to the gross margin improvement.
General and administrative expenses for the year ended April 30, 2006 were $2.4 million compared to $0.8 million in the prior year. The acquisitions of GAPS and Conquest along with the addition of their general and administrative expenses, restructuring and recruitment costs related to managerial changes and an increase in public company costs accounted for the increase in expenses in the year.
Amortization expense for the year increased to $2.0 million from $0.5 million for the prior year, reflecting amortization on $18 million of property and equipment and $3.2 million of intangible assets acquired through corporate acquisitions in the year. The Company made $5.4 million of other capital expenditures primarily related to field recording equipment, during the year.
Interest on long-term debt and capital leases increased from $0.1 million for the year ended April 30, 2005 to $0.4 million for the year ended April 30, 2006 due to additional term debt and capital leases related to the GAPS and Conquest acquisitions.
Stock-based compensation of $139,000 was recorded for the year ended April 30, 2006 as a result of 2,355,000 options issued to directors, officers and employees in the current year.
Net earnings of $6.9 million ($0.39 per share) were generated in the current year compared to net earnings of $0.65 million ($0.11 per share) in the year ended April 30, 2005. The Company recorded an income tax provision of $3.7 million in the current year, as its tax losses of previous years have been fully utilized. The provision comprised of $3.0 million related to current taxes and $0.7 million related to future taxes. Improved profitability experienced in the third and fourth quarters of fiscal 2006 accounted for the improvement in earnings compared to the same period of the prior year.
Liquidity and Capital Resources
As at April 30, 2006, the Company had working capital of $3.0 million compared to a deficit of $49,000 at April 30, 2005. The improved working capital position was attributable to improved third and fourth quarter earnings and $12.4 million of net proceeds from the Company's December 6, 2005 equity financing and the subsequent exercise of related share purchase warrants.
On February 1, 2006 in conjunction with purchase of Conquest, the Company increased its operating line of credit with the Royal Bank of Canada to a maximum of $10 million bearing interest at prime plus 0.5% (previously prime plus 1.5%), repayable on demand.
On February 1, 2006, the Company also assumed $9.7 million of long-term debt and capital leases in conjunction with the purchase of Conquest.
In May 2005, in conjunction with the purchase of GAPS, the Company signed a new banking agreement for the provision of a $1.5 million term loan bearing interest at prime plus 2% repayable based on a three-year amortization of monthly payments of $41,667.
The Company has no off-balance sheet arrangements.
The Company has budgeted $8.0 million for capital expenditures primarily related to field equipment during calendar year 2006. Of this amount $2.1 million has been spent up to April 30, 2006. The Company intends to finance additional capital expenditures in the future through a combination of internally generated cashflow, additional term indebtedness and capital leases. The Company may also raise additional equity to fund its capital expenditures. The exercise of 2,993,959 common share warrants currently outstanding, if and when exercised, may provide for $2.5 million of gross proceeds to fund the Company's working capital and capital expenditure requirements. These warrants expire on December 6, 2006.
Capital Spending
During the year ended April 30, 2006, the Company incurred $5.4 million on capital expenditures comprised primarily of seismic recording equipment, vehicles and other ancillary field equipment. The Company also acquired $18.0 million of property and equipment and $3.2 million of intangible assets through corporate and asset acquisitions in the year.
Share Capital
As at April 30, 2006, the Company's issued share capital consisted of 35,393,693 common shares (April 30, 2005 - 6,078,675). In May 2005, the Company issued 1,748,712 common shares in conjunction with the acquisition of GAPS and a related shareholder loan conversion. An additional 1,923,077 common shares were issued in August 2005 in connection with a private placement. On November 23, 2005, the Company issued 1,000,000 shares as consideration for the purchase of certain assets from Norcana Resource Services Ltd. On December 6, 2005, the Company completed a private placement of 14,925,373 common shares at $0.67 per share and 5,970,149 warrants entitling the holders thereof to purchase one common share for each warrant for $0.84 per share. On January 31, 2006, 2,976,190 of the warrants were exercised for gross proceeds of $2.5 million. The remaining warrants expire on December 5, 2006. On February 1, 2006, the Company issued 6,666,666 common shares as partial consideration for the purchase of Conquest. In March 2006, the Company issued 75,000 shares on the exercise of stock options pursuant to the Company's stock option plan.
As at the date of this MD&A, the Company has 35,393,693 common shares and 2,993,959 share purchase warrants outstanding.
As at April 30, 2006, the Company had 2,265,000 stock options outstanding (April 30, 2005 - 325,000) with a weighted average exercise price of $1.16 each. Subsequent to the year ended April 30, 2006, 150,000 options were issued in May, 2006 and 230,000 options were cancelled in July, 2006 resulting in 2,185,000 stock options outstanding as at the date of this MD&A.
Related party transactions
During the year ended April 30, 2006, the Company was charged $104,000 (year ended April 30, 2005 - $182,250) by officers and directors for administrative and consulting services. These amounts are recorded at the exchange amount agreed to by the related parties. These charges were discontinued in the third quarter of the current fiscal year in conjunction with changes to the Company's executive team.
In conjunction with the acquisition of GAPS, the Company converted $210,002 of shareholder loans into 494,123 common shares of the Company and repaid $1,625 of loans in cash.
In connection with the acquisition of Conquest on February 1, 2006, there were amounts totalling $123,545 outstanding from officers of the Company at April 30, 2006. These amounts were received subsequent to year-end.
Outlook
Management is focused on integrating operations and administrative functions of Conquest, increasing the utilization of the Company's current and new equipment, potential acquisitions and geographic expansion. Management expects favorable seismic industry conditions to continue as clients increase exploration activities to replace depleting reserves. New and more complex geological zones of interest together with better seismic acquisition technology is contributing to a general increase of activity levels in our industry. Seismic data is the primary tool to evaluate the potential existence of oil and gas reservoirs prior to drilling. As land prices increase, sometimes dramatically in certain western Canadian locations, seismic information is a critical risk mitigation tool for our customers prior to committing capital for land purchases and leases.
Through the acquisitions of Conquest and GAPS, the Company has acquired an experienced management team, highly skilled field personnel, a large fleet of equipment and has solidified its relationships with both customers and suppliers. As a result the Company is generally seeing an increase in the number and size of jobs it is quoting services for, particularly for the upcoming fall and winter. However, the seismic industry in western Canada still remains seasonal, with the summer months typically being less active than winter months. The Company strategically purchased GAPS in May 2005 to expand its geographic base to central and eastern Canada. As activity levels in these regions are typically their highest in summer and fall, GAPS provides a means to temper somewhat the seasonal shifts experienced in western Canada.
The Company also continues to see a growing demand for vibro-seis based acquisition services. As such, the Company has ordered four large buggy vibrators which will be received in mid-August, 2006. This increased vibro-seis capacity, bringing Norex's fleet of vibro-seis machines to twelve, will allow the Company to bid on additional vibro-seis jobs in both Canada and the United States.
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