Calfrac Reports $91 Million of Adjusted EBITDA With Best Margin Percentage Since 2012

CALGARY, AB, Nov. 2, 2022 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or "the Company") (TSX: CFW) announces its financial and operating results for the three and nine months ended September 30, 2022. The following press release should be read in conjunction with the management's discussion and analysis and unaudited consolidated interim financial statements and notes thereto as at September 30, 2022. Readers should also refer to the "Forward-looking statements" legal advisory and the section regarding "Non-GAAP Measures" at the end of this press release. All financial amounts and measures are expressed in Canadian dollars unless otherwise indicated. Additional information about Calfrac is available on the SEDAR website at www.sedar.com, including the Company's Annual Information Form for the year ended December 31, 2021 dated March 18, 2022.

CEO'S MESSAGE 
The third quarter was the culmination of hard work and commitment to the Company's Brand Promise as the Calfrac team efficiently executed its customers' development programs to generate the Company's best quarterly Adjusted EBITDA margin in over a decade. The top priority of the Company's leadership has been to align the organization's strategy to focus on increasing cash flow while maintaining its strong safety and service quality performance, and these latest financial results demonstrate that these efforts are progressing according to plan. The Company looks to further that momentum in the fourth quarter as operators are continuing to maintain a steady pace of development in a tight oilfield services market. Calfrac is encouraged by the strong operating cash flow that its returns-focused strategy is producing and looks to build upon it throughout 2023.

Calfrac's Chief Executive Officer, Pat Powell commented: "I am proud of the tremendous effort that our employees have shown this quarter and so far this year. While we have to remain focused on finishing this year strong, I am looking forward to 2023 and building on the solid foundation that we have laid this year. This quarter, Calfrac delivered premier service to our clients and made significant strides towards the Company's financial goals."

Calfrac also announces today that Mr. Lindsay Link, President, Chief Operating Officer and a director, will retire from the Company and the board of directors on January 4, 2023. Mr. Link has been President and Chief Operating Officer of Calfrac since June 2019, after joining the Company as President, U.S. Operating Division in February 2013 and subsequently serving as Chief Operating Officer in January 2015. 

Ron Mathison, Chairman of Calfrac, commented "Lindsay has played an important role in growing our U.S. franchise as well as helping the Company navigate the unprecedented operational challenges of the past few years, positioning Calfrac to take advantage of the current market recovery. On behalf of Calfrac, I would like to thank Lindsay for his dedication and leadership and wish him well in his retirement."

"I am proud of the Calfrac Team. Their commitment and teamwork day in and day out enabled us to consistently deliver on our core values of safety and service quality regardless of the challenges we faced," said Mr. Link. "I look forward to working together with Pat and the rest of the team over the next few months as I transition to retirement, and watching the Company succeed into the future on the strength of the culture that we worked together to create."

SELECT FINANCIAL HIGHLIGHTS – CONTINUING OPERATIONS


Three months ended Sep. 30,

Nine months ended Sep. 30,


2022

2021

Change

2022

2021

Change

(C$000s, except per share amounts)

($)

($)

( %)

($)

($)

( %)

(unaudited)


Revised



Revised


Revenue

438,338

262,865

67

1,051,373

650,588

62

Adjusted EBITDA(1)

91,322

29,758

207

151,405

39,500

283

Consolidated cash flows provided by (used in) operating
activities

13,753

(17,935)

NM

38,694

(18,969)

NM

Capital expenditures

24,745

24,133

3

52,130

51,707

1

Net income (loss)

45,352

(7,054)

NM

20,546

(65,599)

NM

   Per share – basic

1.15

(0.19)

NM

0.53

(1.75)

NM

   Per share – diluted

0.60

(0.19)

NM

0.31

(1.75)

NM

 

As at

September 30,

December 31,

Change


2022

2021


(C$000s)

($)

($)

( %)

(unaudited)




Cash and cash equivalents

11,879

NM

Working capital, end of period

207,974

121,934

71

Total debt, end of period

412,030

388,479

6

(1) Refer to "Non-GAAP Measures" on page 7 for further information.

(2) During the first quarter of 2022, management committed to a plan to sell its Russian division, resulting in the associated assets and liabilities being classified as held for sale and presented as discontinued operations. Results from discontinued operations have not been included in the table above, unless otherwise noted.

 

During the quarter, Calfrac:

  • exceeded the high end of its published guidance for revenue and Adjusted EBITDA from continuing operations by $8.3 million and $6.3 million, respectively;

  • generated revenue of $438.3 million, an increase of 67 percent from the third quarter in 2021, resulting primarily from improved fracturing activity in North America and improved pricing in all of the Company's operating divisions;

  • reported Adjusted EBITDA of $91.3 million versus $29.8 million in the comparable period in 2021, mainly as a result of significantly improved performance in North America;

  • generated consolidated cash flow from operating activities of $13.8 million, which included $13.2 million of interest paid and cash used for working capital of $57.9 million;

  • reported net income of $45.4 million or $0.60 per share diluted compared to a net loss of $7.1 million or $0.19 per share diluted in the third quarter in 2021;

  • amended and restated its credit agreement, which included an extension of the maturity date to July 1, 2024;

  • incurred capital expenditures of $24.7 million, focused on maintenance activities to primarily support the Company's fracturing operations, including $4.5 million of reactivation costs in the United States; and

  • reported period-end working capital of $208.0 million and a cash balance of $11.9 million.

FINANCIAL OVERVIEW – CONTINUING OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 VERSUS 2021

UNITED STATES


Three months ended Sep. 30,

Nine months ended Sep. 30,


2022

2021

Change

2022

2021

Change

(C$000s, except operational and exchange rate information)




($)

($)

( %)

(unaudited)







Revenue

237,075

138,339

71

563,216

317,940

77

Adjusted EBITDA(1)

54,866

13,812

297

98,660

8,316

NM

Adjusted EBITDA (%)

23.1

10.0

131

17.5

2.6

NM

Fracturing revenue per job ($)

56,038

33,308

68

49,650

29,387

69

Number of fracturing jobs

4,228

4,156

2

11,340

10,820

5

Active pumping horsepower, end of period (000s)

601

576

4

601

576

4

US$/C$ average exchange rate(2)

1.3056

1.2600

4

1.2830

1.2514

3

(1) Refer to "Non-GAAP Measures" on page 7 for further information.

(2) Source: Bank of Canada.

OUTLOOK
The Company's financial results for the United States division exemplified its operational strength with the best third quarter profitability on a fleet basis since 2014. Calfrac leveraged consistent utilization and improved pricing across its nine fracturing fleets to generate significant free cash flow. To meet the increasing demand for the Company's services as well as capitalize on the early phase of an anticipated multi-year margin expansion cycle, Calfrac began reactivating an additional fleet and initiating a strategic transition to Tier IV DGB equipment. The Company anticipates both investments to start paying dividends before year-end. Calfrac believes that its practical approach towards capital allocation will increase cash flow and generate sustainable returns for its stakeholders.

THREE MONTHS ENDED SEP. 30, 2022 COMPARED TO THREE MONTHS ENDED SEP. 30, 2021

REVENUE
Revenue from Calfrac's United States operations increased significantly to $237.1 million during the third quarter of 2022 from $138.3 million in the comparable quarter of 2021. The 71 percent increase in revenue can be attributed to a combination of a 68 percent increase in revenue per job period-over-period combined with a 2 percent increase in the number of fracturing jobs completed. The higher revenue per job was the result of improved pricing for its services as the Company passed through higher input costs to its customers while also achieving net pricing gains, combined with the impact of job mix. The slight increase in job count was mainly due to the Company operating all nine of its marketed fleets for the entire quarter with consistent utilization. Activity in the Rockies region increased relative to the comparable quarter in 2021 while activity in North Dakota and Pennsylvania was relatively consistent with the comparable quarter in 2021.

ADJUSTED EBITDA
The Company's operations in the United States generated Adjusted EBITDA of $54.8 million during the third quarter of 2022 compared to $13.8 million in the same period in 2021. This increase in Adjusted EBITDA was largely driven by strong net pricing gains and a dedicated focus on cost control which supported significant margin expansion relative to the comparable quarter in 2021. The Company was able to achieve an Adjusted EBITDA margin of 23 percent compared to 10 percent in the comparable quarter in 2021 through strong pricing and utilization for its nine active fracturing fleets across its three operating districts. 

NINE MONTHS ENDED SEP. 30, 2022 COMPARED TO NINE MONTHS ENDED SEP. 30, 2021

REVENUE
Revenue from Calfrac's United States operations increased to $563.2 million in the first nine months in 2022 from $317.9 million in the same period in 2021 primarily due to higher pricing and a 5 percent increase in the number of completed fracturing jobs. A total of four active fleets were operating in the United States at the beginning of the year but increased to eight fleets exiting the first quarter with a ninth fracturing crew commencing operations in May. The higher fracturing revenue per job was reflective of improved pricing as the Company passed on higher input costs to its clients and was able to attain net pricing increases during the second and third quarters.

ADJUSTED EBITDA
The Company's United States division generated Adjusted EBITDA of $98.7 million in the first nine months of 2022 compared to $8.3 million in the same period of 2021 primarily due to a larger number of operating fleets, a higher number of operating days per fleet and improved pricing, offset partially by a slow start to the year and adverse weather in April 2022. 

CANADA


Three months ended Sep. 30,

Nine months ended Sep. 30,


2022

2021

Change

2022

2021

Change

(C$000s, except operational information)




($)

($)

( %)

(unaudited)







Revenue

137,082

76,574

79

315,805

212,924

48

Adjusted EBITDA(1)

36,697

14,968

145

57,079

33,991

68

Adjusted EBITDA (%)

26.8

19.5

37

18.1

16.0

13

Fracturing revenue per job ($)

32,570

23,823

37

26,440

21,156

25

Number of fracturing jobs

3,864

2,949

31

10,685

9,139

17

Active pumping horsepower, end of period (000s)

270

202

34

270

202

34

(1) Refer to "Non-GAAP Measures" on page 7 for further information.

OUTLOOK
The Company's operations in Canada achieved strong utilization and increased pricing during the third quarter and generated significant year-over-year profitability growth. Calfrac anticipates consistent activity for its four large fracturing fleets and five coiled tubing units through the end of the year and into 2023. As visibility for next year improves, the Company expects to leverage steady pricing with robust demand to produce strong financial returns as operators prioritize safe and reliable service providers.

THREE MONTHS ENDED SEP. 30, 2022 COMPARED TO THREE MONTHS ENDED SEP. 30, 2021

REVENUE
Revenue from Calfrac's Canadian operations during the third quarter of 2022 was $137.1 million compared to $76.6 million in the same period of 2021 primarily due to higher pricing and activity. The number of fracturing jobs increased by 31 percent from the comparable period in 2021 due to improved utilization of its four active fleets. Revenue per fracturing job was 37 percent higher than the comparable quarter due to a combination of pricing increases and the impact of job mix during the quarter. The number of coiled tubing jobs increased by 6 percent versus the third quarter in 2021. The 76 percent increase in the coiled tubing revenue per job as compared to the same quarter in 2021 was due to a combination of higher pricing and the type of work completed during the quarter.

ADJUSTED EBITDA
Adjusted EBITDA in Canada during the third quarter of 2022 was $36.7 million compared to $15.0 million in the same period of 2021. The Canadian division's Adjusted EBITDA as a percentage of revenue improved to 27 percent compared to 20 percent in the third quarter of 2021 as a result of higher utilization and pricing for its four active fleets. The Company introduced price increases during the first and second quarters to address significant input cost inflation that was in effect for the entire third quarter in 2022. The improvement in financial performance was significant and did not include any benefit from the Canadian Emergency Wage Subsidy program in the third quarter of 2022, while the comparable quarter included a benefit of $2.4 million.

NINE MONTHS ENDED SEP. 30, 2022 COMPARED TO NINE MONTHS ENDED SEP. 30, 2021

REVENUE
Revenue from Calfrac's Canadian operations during the first nine months in 2022 was $315.8 million, an increase from $212.9 million in the comparable period in 2021, primarily due to improved pricing and increased activity. Revenue per fracturing job was 25 percent higher than the comparable period in 2021 as price increases were implemented during the period to recover the significant inflation in operating costs. The number of fracturing jobs increased by 17 percent as the Company's four fracturing fleets were highly utilized in the first quarter prior to the onset of spring break-up conditions and improved significantly beginning in the month of June. This positive momentum in activity was maintained throughout the third quarter. The number of coiled tubing jobs increased by 7 percent from the comparable period in 2021 due to higher activity while revenue per job increased by 55 percent due to improved pricing and changes in job mix.

ADJUSTED EBITDA
The Company's Canadian division generated Adjusted EBITDA of $57.1 million compared to $34.0 million in the comparable period in 2021. The improvement in Adjusted EBITDA was the result of higher pricing and activity relative to the comparable period in 2021. The Company introduced price increases during the first quarter that were in effect for the entire second and third quarters, which combined with higher utilization of its four crewed fleets, resulted in a 68 percent improvement in Adjusted EBITDA. 

ARGENTINA


Three months ended Sep. 30,

Nine months ended Sep. 30,


2022

2021

Change

2022

2021

Change

(C$000s, except operational and exchange rate information)




($)

($)

( %)

(unaudited)







Revenue

64,181

47,952

34

172,352

119,724

44

Adjusted EBITDA(1)

8,720

6,589

32

16,409

15,923

3

Adjusted EBITDA (%)

13.6

13.7

(1)

9.5

13.3

(29)

Fracturing revenue per job ($)

84,843

54,820

55

70,133

55,336

27

Number of fracturing jobs

471

534

(12)

1,415

1,332

6

Active pumping horsepower, end of period (000s)

140

121

16

140

121

16

US$/C$ average exchange rate(2)

1.3056

1.2600

4

1.2830

1.2514

3

(1) Refer to "Non-GAAP Measures" on page 7 for further information.

(2) Source: Bank of Canada.

 

OUTLOOK
Calfrac's division in Argentina combined operational excellence with a renewed contract for a dedicated fracturing fleet in the Vaca Muerta shale play to generate significant year-over-year financial improvement during the third quarter. As the pressure pumping market tightens in Argentina, the Company expects the positive momentum experienced in the third quarter to continue throughout the remainder of the year and into 2023 enabling Calfrac to deliver strong financial returns.

THREE MONTHS ENDED SEP. 30, 2022 COMPARED TO THREE MONTHS ENDED SEP. 30, 2021

REVENUE
Calfrac's Argentinean operations generated revenue of $64.2 million during the third quarter of 2022 compared to $48.0 million in the comparable quarter in 2021 primarily due to higher fracturing and cementing revenue. Fracturing revenue increased due to a combination of higher pricing, as the Company entered into a new contract at the beginning of the third quarter at pricing levels that covered higher costs caused by inflationary pressures during the quarter, and the completion of larger jobs on average. This was partially offset by the completion of 12 percent fewer jobs than the comparable period in 2021. Activity in the Company's cementing operations increased by 39 percent and revenue per job increased by 33 percent due to changes in job mix as a greater number of pre-fracturing projects, which are typically larger job sizes, were completed in the third quarter of 2022. The number of coiled tubing jobs decreased by 27 percent due to reduced customer activity in Neuquén while revenue per job improved by 50 percent primarily due to job mix and higher pricing due to inflation.

ADJUSTED EBITDA
The Company's operations in Argentina achieved Adjusted EBITDA of $8.7 million during the third quarter of 2022 compared to $6.6 million in the comparable quarter of 2021, while the Company's EBITDA margins as a percentage of revenue remained consistent at approximately 14 percent. The Company entered into a new contract at the beginning of the third quarter with pricing adjusted for inflation, which allowed it to maintain consistent EBITDA margins relative to the comparable period in 2021.

NINE MONTHS ENDED SEP. 30, 2022 COMPARED TO NINE MONTHS ENDED SEP. 30, 2021

REVENUE
Calfrac's Argentinean operations generated revenue of $172.4 million during the first nine months of 2022 compared to $119.7 million in the comparable period in 2021. Activity in the first nine months of 2022 improved from the comparable period in 2021 across all service lines with the vast majority of the improvement occurring in the Neuquén region. Activity in the Vaca Muerta shale play continued to increase while activity in southern Argentina was relatively consistent for the first half of 2022 but improved significantly in the third quarter. Overall fracturing activity increased by 6 percent compared to the first nine months in 2021 along with 27 percent higher revenue per job resulting primarily from inflation. Revenue from the Company's coiled tubing and cementing service lines continued to improve relative to the same period in 2021. The number of coiled tubing jobs increased by 32 percent as activity increased in Neuquén and southern Argentina while revenue per job was 24 percent higher primarily due to job mix and inflation. Activity in the Company's cementing operations increased by 29 percent and revenue per job increased by 50 percent due to changes in job mix as a greater number of pre-fracturing projects, which are typically larger job sizes, were completed in the first half of 2022.

ADJUSTED EBITDA
The Company's operations in Argentina generated Adjusted EBITDA of $16.4 million during the first nine months of 2022 compared to $15.9 million in the comparable period of 2021. Utilization of the Company's equipment improved across all service lines compared to the same period in 2021. The Company's operating margins as a percentage of revenue decreased from 13 percent to 10 percent primarily due to inflationary salary increases for one major contract that were paid in pesos but not fully offset by the devaluation in the official peso exchange rate during the first half of 2022. However, the Company was able to implement pricing increases to offset these cost pressures beginning in the third quarter. The Company also incurred $0.6 million of severance costs during the first nine months of 2022 that were added back in the calculation of Adjusted EBITDA.

CAPITAL EXPENDITURES


Three months ended Sep. 30,

Nine months ended Sep. 30,


2022

2021

Change

2022

2021

Change

(C$000s)

($)



($)

($)

($)

Canada

3,874

5,766

(33)

10,250

8,606

19

United States

18,069

14,689

23

36,039

34,667

4

Argentina

2,802

3,678

(24)

5,841

8,434

(31)

Continuing Operations

24,745

24,133

3

52,130

51,707

1

Capital expenditures were $24.7 million for the quarter ended September 30, 2022. Calfrac's Board of Directors have approved a 2022 capital budget of approximately $97.0 million of which $52.1 million has been incurred during the first nine months in 2022. The Company's fourth-quarter capital expenditures are expected to be comprised of maintenance items, combined with additional expenditures related to fleet reactivations and the commencement of Tier IV dual-fuel upgrades in the United States.

OTHER DEVELOPMENTS
On September 29, 2022, the Company amended and restated its credit agreement, which included an extension of the maturity date to July 1, 2024. The Company's revolving credit facilities consist of an operating facility of $45.0 million and a syndicated facility of $205.0 million.

Subsequent to September 30, 2022, $8.6 million of 1.5 Lien Notes were converted into common shares. Following this conversion, the remaining principal amount outstanding was $47.4 million.

SUMMARY OF QUARTERLY RESULTS – CONTINUING OPERATIONS

Three Months Ended

Dec. 31,

Mar. 31,

Jun. 30,

Sep. 30,

Dec. 31,

Mar. 31,

Jun. 30,

Sep. 30,


2020

2021

2021

2021

2021

2022

2022

2022

(C$000s, except per share and operating data)

($)

($)

($)

($)

($)

($)

($)

($)

(unaudited)









Financial









Revenue

153,773

213,954

173,769

262,865

229,661

294,524

318,511

438,338

Adjusted EBITDA(1)

9,554

10,821

(1,080)

29,758

7,961

20,831

39,252

91,322

Net income (loss)

121,616

(23,029)

(35,516)

(7,055)

(29,132)

(18,030)

(6,776)

45,352

Per share – basic(2)

14.91

(0.62)

(0.95)

(0.19)

(0.77)

(0.47)

(0.18)

1.15

Per share – diluted(2)

2.22

(0.62)

(0.95)

(0.19)

(0.77)

(0.47)

(0.18)

0.60

Capital expenditures

6,053

10,503

17,166

24,133

14,868

12,145

15,241

24,745

(1) Refer to "Non-GAAP Measures" on page 7 for further information.

(2) Comparative amounts were adjusted to reflect the Company's fifty-to-one common share consolidation that occurred on December 18, 2020.

(3) All comparative amounts exclude the impact from the Company's Russia operations, which have been classified as held for sale and presented as discontinued operations.

 

NON-GAAP MEASURES 
Certain supplementary measures presented in this press release do not have any standardized meaning under IFRS and, because IFRS have been incorporated as Canadian generally accepted accounting principles (GAAP), these supplementary measures are also non-GAAP measures. These measures have been described and presented to provide shareholders and potential investors with additional information regarding the Company's financial results, liquidity and ability to generate funds to finance its operations. These measures may not be comparable to similar measures presented by other entities, and are explained below.

Adjusted EBITDA is defined in the Company's credit agreement for covenant purposes as net income or loss for the period adjusted for interest, income taxes, depreciation and amortization, unrealized foreign exchange losses (gains), non-cash stock-based compensation, and gains and losses that are extraordinary or non-recurring. Adjusted EBITDA is presented because it is used in the calculation of the Company's bank covenants. Adjusted EBITDA for the period was calculated as follows:

Three Months Ended Sep. 30,

Nine Months Ended Sep. 30,


2022

2021

2022

2021

(C$000s)



($)

($)

(unaudited)


Revised


Revised

Net income (loss) from continuing operations

45,352

(7,054)

20,546

(65,599)

Add back (deduct):





Depreciation

29,394

33,098

89,733

95,991

Unrealized foreign exchange gains

(10,073)

(3,157)

(13,086)

(315)

(Gain) loss on disposal of property, plant and equipment

(406)

159

4,382

513

Litigation settlements in Canadian division

8,258

11,258

(700)

Restructuring charges

597

198

1,563

671

Stock-based compensation

366

1,079

2,319

1,356

Interest

10,804

9,677

31,537

28,077

Income taxes

7,030

(4,242)

3,153

(20,494)

Adjusted EBITDA from continuing operations (1)

91,322

29,758

151,405

39,500

(1) For bank covenant purposes, EBITDA includes $11.0 million income from discontinued operations for the nine months ended September 30, 2022 (nine months ended September 30, 2021 – $12.7 million) and the deduction of an additional $7.5 million of lease payments for the nine months ended September 30, 2022 (nine months ended September 30, 2021 – $6.5 million) that would have been recorded as operating expenses prior to the adoption of IFRS 16.

 

CONSOLIDATED BALANCE SHEETS


September 30, 2022

December 31, 2021

(C$000s) (unaudited)

($)

($)

ASSETS



Current assets



Cash and cash equivalents

11,879

Accounts receivable

280,226

189,835

Income taxes recoverable

2,859

Inventories

100,194

101,840

Prepaid expenses and deposits

16,486

12,999


408,785

307,533

Assets classified as held for sale

46,975


455,760

307,533

Non-current assets



Property, plant and equipment

554,392

563,423

Right-of-use assets

22,723

22,005


577,115

585,428

Total assets

1,032,875

892,961

LIABILITIES AND EQUITY



Current liabilities



Bank overdraft

1,351

Accounts payable and accrued liabilities

192,527

127,441

Income taxes payable

296

Current portion of lease obligations

7,988

8,004


200,811

136,796

Liabilities directly associated with assets classified as held for sale

19,561


220,372

136,796

Non-current liabilities



Long-term debt

412,030

388,479

Lease obligations

12,838

12,560

Deferred income tax liabilities

28,769

26,286


453,637

427,325

Total liabilities

674,009

564,121

Total equity

358,866

328,840

Total liabilities and equity

1,032,875

892,961

 

CONSOLIDATED STATEMENTS OF OPERATIONS 


Three Months Ended Sep. 30,

Nine Months Ended Sep. 30,


2022

2021

2022

2021

(C$000s, except per share data) (unaudited)

($)

($)

($)

($)



Revised


Revised

Revenue

438,338

262,865

1,051,373

650,588

Cost of sales

365,536

256,106

956,526

674,735

Gross profit (loss)

72,802

6,759

94,847

(24,147)

Expenses





Selling, general and administrative

17,128

10,209

41,933

29,976

Foreign exchange (gains) losses

(7,106)

(1,990)

(6,704)

3,380

(Gain) loss on disposal of property, plant and equipment

(406)

159

4,382

513

Interest

10,804

9,677

31,537

28,077


20,420

18,055

71,148

61,946

Income (loss) before income tax

52,382

(11,296)

23,699

(86,093)

Income tax expense (recovery)





Current

1,647

52

2,633

222

Deferred

5,383

(4,294)

520

(20,716)


7,030

(4,242)

3,153

(20,494)

Net income (loss) from continuing operations

45,352

(7,054)

20,546

(65,599)

Net income (loss) from discontinued operations

4,746

5,513

(28,178)

11,105

Net income (loss) for the period

50,098

(1,541)

(7,632)

(54,494)






Earnings (loss) per share – basic





Continuing operations

1.15

(0.19)

0.53

(1.75)

Discontinued operations

0.12

0.15

(0.73)

0.30


1.27

(0.04)

(0.20)

(1.45)






Earnings (loss) per share – diluted





Continuing operations

0.60

(0.19)

0.31

(1.75)

Discontinued operations

0.12

0.14

(0.27)

0.20


0.66

(0.04)

(0.02)

(1.45)

 

CONSOLIDATED STATEMENTS OF CASH FLOWS


Three Months Ended Sep. 30,

Nine Months Ended Sep. 30,


2022

2021

2022

2021

(C$000s) (unaudited)

($)

($)

($)

($)

CASH FLOWS PROVIDED BY (USED IN)





OPERATING ACTIVITIES





Net income (loss) for the period

50,098

(1,541)

(7,632)

(54,494)

Adjusted for the following:





Depreciation

29,394

33,248

89,932

96,287

Stock-based compensation

366

1,079

2,319

1,356

Unrealized foreign exchange gains

(9,629)

(3,607)

(18,697)

(620)

(Gain) loss on disposal of property, plant and equipment

(409)

159

4,378

513

Impairment of property, plant and equipment

5,634

Impairment of inventory

1,201

28,749

(Recovery) impairment of other assets

(2,312)

7,336

Interest

10,801

9,677

31,534

28,075

Interest paid

(13,229)

(12,379)

(27,693)

(24,053)

Deferred income taxes

5,383

(4,294)

520

(20,716)

Changes in items of working capital

(57,911)

(40,277)

(77,686)

(45,317)

Cash flows provided by (used in) operating activities

13,753

(17,935)

38,694

(18,969)

FINANCING ACTIVITIES





Bridge loan proceeds

15,000

Issuance of long-term debt, net of debt issuance costs

12,825

28,716

19,782

50,907

Bridge loan repayments

(15,000)

Long-term debt repayments

(15,000)

(5,000)

(15,000)

(6,050)

Lease obligation principal repayments

(2,328)

(2,129)

(6,587)

(5,674)

Proceeds on issuance of common shares from the exercise of warrants and stock options

621

1

1,884

90

Cash flows (used in) provided by financing activities

(3,882)

21,588

79

39,273

INVESTING ACTIVITIES





Purchase of property, plant and equipment

(18,479)

(21,530)

(45,588)

(46,988)

Proceeds on disposal of property, plant and equipment

882

275

1,657

923

Proceeds on disposal of right-of-use assets

716

266

1,627

1,025

Cash flows used in investing activities

(16,881)

(20,989)

(42,304)

(45,040)

Effect of exchange rate changes on cash and cash equivalents

7,388

2,714

27,811

949

Increase (decrease) in cash and cash equivalents

378

(14,622)

24,280

(23,787)

Cash and cash equivalents (bank overdraft), beginning of period

22,551

20,665

(1,351)

29,830

Cash and cash equivalents, end of period

22,929

6,043

22,929

6,043

 

ADVISORIES

FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of applicable securities laws.  The use of any of the words "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "forecast" or similar words suggesting future outcomes, are forward-looking statements.

In particular, forward-looking statements in this press release include, but are not limited to, statements with respect to the activity, demand, utilization and outlook for the Company's operating divisions in Canada, the United States and Argentina; the supply and demand fundamentals and prospects of the pressure pumping industry; input costs, margin and service pricing trends, projections and strategies; the Company's service quality, operational execution, financial performance and competitive position; operating and financial strategies, performance, priorities, metrics, estimates and targets; the planned sale of the Company's Russia division, including its accounting treatment; capital expenditure programs, including planned equipment investments; the Company's debt, liquidity and financial position; future oil and natural gas development activity in the Company's operating jurisdictions; and the Company's intentions and expectations with respect to the foregoing. These statements are derived from certain assumptions and analyses made by the Company based on its experience and perception of historical trends, current conditions, expected future developments and other factors that it believes are appropriate in the circumstances, including, but not limited to, the economic and political environment in which the Company operates, the effect of the military conflict in the Ukraine and related Canadian, U.S. and international sanctions and restrictions involving Russia and counter-sanctions and restrictions by Russia on the Company's ownership and planned sale of the Russian division and the broader markets for the Company's services, the Company's expectations for its current and prospective customers' capital budgets and geographical areas of focus, the effect of environmental, social and governance factors on customer and investor preferences and capital deployment, the Company's existing contracts and the status of current negotiations with key customers and suppliers, the continued effectiveness of cost reduction measures instituted by the Company and the likelihood that the current tax and regulatory regime will remain substantially unchanged.

Forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from the Company's expectations. Such risk factors include but are not limited to: volatility of industry conditions including the level of exploration, development and production for oil and natural gas in Canada, the U.S. and Argentina and market prices for oil and natural gas impacting the demand for oilfield services; sourcing, pricing and availability of raw materials, component parts, equipment, suppliers, facilities and skilled personnel; oilfield equipment utilization levels; risks associated with foreign operations, including risks relating to unsettled political conditions, war, including the ongoing Russia and Ukraine conflict and any expansion of that conflict, foreign exchange rates and controls, international trade and regulatory controls and sanctions, and doing business with national oil companies; failure to receive any applicable regulatory approvals, including in respect of the sale of the Company's Russian division; the impacts of the Russia-Ukraine conflict on the supply and demand for oil and gas produced in Russia and globally; and those other risk factors discussed or incorporated by reference under the heading "Business Risks" below.

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and there can be no assurance that actual results or developments anticipated by the Company will be realized, or that they will have the expected consequences or effects on the Company or its business or operations. These statements speak only as of the respective date of this press release or the document incorporated by reference herein. The Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities laws.

BUSINESS RISKS
The business of Calfrac is subject to certain risks and uncertainties. Prior to making any investment decision regarding Calfrac, investors should carefully consider, among other things, the risk factors set forth in the Company's most recently filed Annual Information Form, which is specifically incorporated by reference herein. The Annual Information Form is available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR), which can be accessed at www.sedar.com. Copies of the Annual Information Form may also be obtained on request without charge from Calfrac at Suite 500, 407 - 8th Avenue S.W., Calgary, Alberta, Canada, T2P 1E5, or at www.calfrac.com, or by facsimile at 403-266-7381.

The ongoing conflict between Russia and Ukraine has added a level of risk and uncertainty and additional restrictions around the operations of the Company's Russian subsidiary. As a result of these changes in circumstances, the risks, restrictions, and uncertainties surrounding banking and limitations on the ability to repatriate funds to Canada from Russia, the Company's ownership and control over its Russian subsidiary, the physical security of property, plant and equipment in Russia, collectability of accounts receivable, the regulatory approvals to complete a sale transaction  and overall business and operational risks are being monitored and addressed as circumstances evolve. For additional information related to Calfrac's assets held for sale, see note 3 of the interim consolidated financial statements for the three and nine months ended September 30, 2022.

ADDITIONAL INFORMATION
Calfrac's common shares and warrants are publicly traded on the Toronto Stock Exchange under the trading symbols "CFW" and "CFW.WT", respectively.

Calfrac provides specialized oilfield services to exploration and production companies designed to increase the production of hydrocarbons from wells with continuing operations focused throughout western Canada, the United States and Argentina. During the first quarter of 2022, management committed to a plan to sell the Company's Russian division, resulting in the associated assets and liabilities being classified as held for sale and presented in the Company's financial statements as discontinued operations. The results of the Company's discontinued operations are excluded from the discussion and figures presented above unless otherwise noted. See Note 3 to the Company's consolidated interim financial statements for the three and nine months ended September 30, 2022 for additional information on the Company's discontinued operations. 

Further information regarding Calfrac Well Services Ltd., including the most recently filed Annual Information Form, can be accessed on the Company's website at www.calfrac.com or under the Company's public filings found at www.sedar.com.

THIRD QUARTER CONFERENCE CALL
Calfrac will be conducting a conference call for interested analysts, brokers, investors and news media representatives to review its 2022 third-quarter results at 10:00 a.m. (Mountain Time) on Wednesday, November 2, 2022. The conference call dial-in number is 1-888-664-6383 or 416-764-8650. The seven-day replay numbers are 1-888-390-0541 or 416-764-8677 (once connected, enter (206612#). A webcast of the conference call may be accessed via the Company's website at www.calfrac.com.

SOURCE Calfrac Well Services Ltd.

For further information: Pat Powell, Chief Executive Officer, Mike Olinek, Chief Financial Officer, Telephone: 403-266-6000 Fax: 403-266-7381, www.calfrac.com