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Shawcor announces 1Q17 financial results

Published by
World Pipelines,


Shawcor Ltd. has declared a dividend of fifteen cents per share on the outstanding common shares of the corporation, payable on the 31May to shareholders of record at the close of business on the 19 May.

For Canadian resident shareholders, these dividends are designated as ‘eligible dividends’ for purposes of the enhanced dividend tax credit rules contained in Canada’s Income Tax Act and any corresponding provincial and territorial tax legislation.

The company’s financial highlights include:

  • 1Q17 revenue of CAN$360 million, an increase of 9% from the CAN$329 million reported in 4Q16 but 2% lower than the CAN$366 million reported in 1Q16.
  • Adjusted EBITDA in 1Q17 was CAN$43 million, an increase of 29% from the CAN$33 million reported in 4Q16 and increased by 17% versus the CAN$37 million reported in 1Q16.
  • Net income (attributable to shareholders of the company) in t1Q17 was CAN$15.1 million (or earnings per share of CAN$0.22 diluted) compared with net income of CAN$27.3 million (or CAN$0.42 per share diluted) in 4Q16 and net income of CAN$7.5 million (or CAN$0.12 per share diluted) in 1Q16. The decline in net income compared to 1Q16 reflected the one time gains on land sale and an arbitration award, which totalled approximately CAN$25 million, reported in 1Q16.
  • The company’s order backlog was CAN$648 million on 31 March, in line with the backlog on 31 December 2016 of CAN$650 million.

Steve Orr, CEO of Shawcor Ltd., remarked: “Shawcor’s financial performance in 1Q17 continued the trend of quarter over quarter improvement since the low point reached in 2Q16. Results were positively impacted by excellent project execution at our Asia Pacific pipe coating facilities as well as a steady strengthening in market demand for composite pipe and downhole tubular services in North America. Also, the launch of concrete weight coating for the Sur de Texas-Tuxpan (Tuxpan) project in Altamira (Mexico) contributed approximately CAN$20 million of revenue in the quarter.”

He added: “With production of the concrete coating work for the Tuxpan pipeline project now well underway in Altamira, the company expects to see a renewed acceleration in earnings growth in 2H17 as the Tuxpan project reaches full production.”

North America pipelines

Pipeline market demand in North America is closely tied to well completion activity. Demand for small diameter pipe coating and joint protection, composite pipe for gathering line applications, OCTG pipe inspection and refurbishment and gathering line girth weld inspection is expected to fluctuate with changes in global oil and gas prices and the resulting volume of wells drilled and completed.

An improvement in drilling rig counts in North America since 2Q16 has allowed for a modest improvement in revenue for Shawcor’s North American pipeline segment businesses and this trend is expected to continue in 2017.

Beyond 2017, the company expects that its North American pipeline and pipe services segment will benefit from new pipeline infrastructure in the form of tie-back infrastructure in the Gulf of Mexico and new onshore large diameter transmission lines to support increasing production of shale oil and the export of natural gas to Mexico and internationally through LNG.

Latin America pipelines

With the launch of concrete weight coating operations on the Tuxpan project, Shawcor expects revenue in the Latin America region to provide strong growth with full production from the two mobile plants expected to be reached by the end of 2Q17. On 31 March, the company booked revenue relating to the Tuxpan project included in the backlog of approximately CAN$340 million to be executed from 2Q17 to 1Q18.

Europe, Middle East, Africa and Russia pipelines

Shawcor’s pipeline segment in Europe, the Middle East, Africa and Russia has been most impacted by the continued deferral of capital spending on new pipeline infrastructure by national and international oil companies. Although project engineering and bidding activity remains strong and the company is pursuing significant revenue opportunities for girth weld inspection, pipeline joint protection and pipe end preservation on both the TurkStream and Nord Stream 2 pipelines, these opportunities are not likely to benefit revenue until 2018 or later.

Asia Pacific pipelines

Shawcor’s Asia Pacific region has benefitted over the past two quarters from the execution of the flow assurance work for the Shah Deniz project and the anti-corrosion coating for pipe destined for Mexico for the Tuxpan project. With the region’s involvement in the coating of these projects now complete, revenue will decrease as project activity will be limited until the PTT 5th Transmission pipeline project commences later in the year.


Read the full release here.

Read the article online at: https://www.worldpipelines.com/business-news/10052017/shawcor-announces-1q17-financial-results/


 

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