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QIS Update #22 2012 - August 28th 2012



QIS Update #22 – August 28, 2012  

Included in this update:

  • Dalmac Energy reports record fiscal 2012 financial results
  • NTG Clarity Networks announces second quarter 2012 results


 

Please feel free to email us anytime at info@qiscapital.com or call us at (250) 377-1182. We look forward to your comments, questions, and feedback.


 

Dalmac Energy Inc. (DAL:TSX-V)
Website: www.dalmacenergy.com
Current Price: $0.55 (coverage commenced Nov 15/11 - $0.37)

 

John Babic, President and CEO of Dalmac Energy Inc. is pleased to announce financial and operating results for the fourth quarter and year ended April 30, 2012.

 

Fourth Quarter and Annual Financial Highlights:

 

  • Record Q4 revenues of $11.0M;
  • Record annual revenues of $35.7M;
  • Record annual net income of $2.6M ($0.13 per share);
  • Fiscal 2012 pre-tax net earnings increased 60% to $3.5M or $0.17 per share;
  • Long-term debt, excluding finance leases, decreased by 43%;
  • Continued high utilization rates.

Revenues for fiscal 2012 increased by 36% to a record $35.7 million in comparison to the $26.2 million reported in fiscal 2011. Revenues for Q4 improved by 32% to $11.0 million compared to $8.3 million and the gross margin for the current year remained stable at 31% compared to 33%. The gross margin for Q4'12 was 30% compared to 29% in Q4'11.

 

Pre-tax net earnings for fiscal 2012 continued to show marked improvement over the previous year. Pre-tax net earnings increased by 60% over Fiscal 2011 to $3.5 million ($0.17/share) compared to $2.2 million ($0.12/share). The company's net earnings after-tax increased by 37%, to $2.6 million ($0.13/share) compared with $1.9 million ($0.11/share). Net income for Q4'12 increased 109% to $686,000 from $329,000 in Q4'11. Future tax liabilities for fiscal 2012 were $1,112,627 compared to $265,378 in Fiscal 2011.

 

LATEST FINANCIAL RESULTS (in 000s)
  3 Mos. Ended Apr. 30 Year Ended Apr. 30
  2012 2011 2012 2011
Revenues $10,954 $8,291 $35,663 $26,234
Gross Margin 3,315 2,414 11,003 8,547
Gross Margin % 30% 29% 31% 33%
EBITDAS 1,814 1,357 6,382 5,227
      per share $0.09 $0.07 $0.32 $0.29
Net Income 686 329 2,629 1,910
      per share $0.03 $0.02 $0.13 $0.11

 

In comparison to the prior year, expenses for Q4'12 increased by 25% to $2.2 million and the YE'12 expenses increased by 18% to $7.5 million which are consistent with the increase in revenues for the period.

 

Long-term debt, excluding finance leases, decreased by 43% during fiscal 2012 to $2.2 million from the $3.9 million reported at YE'11. Through a focused effort to improve the balance sheet, Dalmac achieved positive working capital at YE'12 compared to a deficiency of $2.3 million at YE'11.

 

Subsequent to year-end, the company announced that it had entered into a commitment letter with PNC Bank, Canada branch, for a senior secured finance facility of up to $17 million, with an interest rate considerably lower than the company's loan rates at the time. This finance facility will continue to improve Dalmac's working capital conditions and will lead to further interest savings during fiscal 2013.

 

Outlook:

 

The year ending April 2012 was a record year which generated the strongest financial performance in the company's history. All divisions are benefiting from increased oil prices and technology driven industry conditions which are creating increased demand for all our operational services. Based on current oil prices and the continued expansion of horizontal drilling and multi stage fracturing, the company expects continued strong demand for its services.

 

The ability to attract and retain personnel in a very tight labor market is critical to the company's success. Dalmac has been able to fully crew all its service units throughout the past year and expects the same to continue into the new fiscal year. This process requires a constant commitment to ongoing training practices and procedures.

 

Responding to the current surge in demand for its services, Dalmac plans on increasing the size of its fleet over the next 12 months by purchasing about $6.5 million dollars of additional oilfield equipment to manage the growth. The company is confident that current positive industry indicators will continue to translate into higher revenues and earnings for Dalmac throughout the remainder of calendar 2012 and well into 2013.

 

Conference call

 

A conference call to discuss the results will be held today, Tuesday, August 28, 2012, at 1:30 p.m. EST/11:30 a.m. MST. To participate in the conference call, please dial 416-644-3414 local in Toronto or toll-free 1-800-814-4859 and request the Dalmac Energy conference.

 

QIS Capital Comments:

 

A record year for Dalmac Energy. The company exceeded forecasts for both revenues and earnings for the year. Net income was $2.6 million or $0.13 per share despite Dalmac having to record future tax liabilities of over $1 million. The balance sheet was also much improved with positive working capital at the end of the period and a 43% reduction in debt during the year. The balance sheet should look even better as soon as the senior secured financing is in place.

 

The outlook provided by management was very positive and projects continued record results. Based on our conversations, it sounds that the first quarter ended July 31, 2012 – typically the slowest period for the company – was also a busy period which should provide an excellent start on the year. We expect to see first quarter numbers by the end of September. Dalmac is presently trading at just over 4 times trailing earnings. Our subscribers are reminded of the conference call scheduled for today at 1:30EST, 10:30PST. We would appreciate your support in attending the call and believe this will provide you with a good insight of the company’s excellent prospects and outlook. Participants in the call can dial 416-644-3414 local in Toronto or toll-free 1-800-814-4859 and request the Dalmac Energy conference.


 

NTG Clarity Networks Inc. (NCI:TSX-V)
Website: www.ntgclarity.com
Current Price: $0.10 (coverage commenced Feb. 4/10 - $0.045)

 

NTG Clarity Networks Inc. has reported second quarter 2012 revenues of $1,223,697, compared to $1,464,371 in the same period last year. Gross margin for the period was 39% compared to 35% for the same period in 2011.

 

The company reported a net income for the three months ended June 30, 2012 of $207,771 or $0.01 per share, compared to a net income of $163,387 for the comparable period last year. The increase in profitability was due in large part to product sales that have higher margins.

 

As at June 30, 2012, NTG had positive working capital of $750,743 and long-term debt of only $124,479.

 

LATEST FINANCIAL RESULTS
  3 Mos. Ended Jun. 30 6 Mos. Ended Jun. 30
  2012 2011 2012 2011
Revenues $1,223,697 $1,464,371 $2,284,168 $3,229,130
Cost of Sales 744,991 955,259 1,396,072 2,016,081
Gross Profit 478,706 509,112 888,096 1,213,049
Selling and G&A Exp. 183,260 359,712 494,983 636,428
Forex Loss (gain) (56,277) (66,997) (17,630) 10,656
Interest Expense 54,085 42,640 99,609 83,716
Net Income 207,771 163,387 148,341 441,273
per share $0.008 $0.006 $0.006 $0.018

 

BALANCE SHEET
(as at Dec. 31, 2011)
Current Assets $ 4,308,136
Total Assets 6,534,469
Current Liabilities 3,557,393
Long-Term Debt 124,479
Shareholders' Equity 2,852,597

 

Management is very pleased with the company's second quarter performance and is optimistic that this positive trend will continue throughout the remainder of 2012. NTG's performance improved during Q2 as a result of new contract announcements during the first half of the year along with ongoing operations. In January 2012, NTG secured a one year contract to supply a leading mobile operator in the Gulf region with professional services resources valued at $1.3 million. This contract has since been expanded. Also, subsequent to the quarter end, in August 2012, NTG received a PO to upgrade and expand the NTS/BSS installation at a major customer site. This project has a value of $1.9 million. These contracts will continue to be rolled out during the second half of 2012.

 

In an unrelated matter, the company announced the following members of the Board of Directors will have stock options issued to replace expired options; Sinclair Stevens; 100,000 options, M. Zafar Farooqui; 100,000 options, M. Adel Zaghloul; 132,500 options, Kristine Lewis; 100,000 options and Ashraf Zaghloul; 200,000 options. Each option will be exercisable at a price of $0.10 per share and will vest upon issuance.

 

QIS Capital Comments:

 

It appears that NTG Clarity is making a comeback after a very challenging year. These second quarter results are in line with financial performance before the loss of contracts and will hopefully put the company back on-track for future growth. Based on the announced contracts mentioned in the press release, NTG Clarity should be able to follow up with another two solid quarters as the contracts are completed. Based on annualized earnings of $0.02 to $0.03 per share, the company is presenting trading at about 3 to 5 times earnings.

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Disclaimer: This article is for informational purposes only. The information contained within this article should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The company profiled assumes no liability for the information presented. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author(s) owns directly or indirectly 8,500 shares and 200,000 options of Dalmac Energy Inc. and 357,000 shares of NTG Clarity Networks Inc. QIS Capital may have a financial relationship with these companies and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2012 QIS Capital Corporation.

 

 

 

 

 

 

 


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