Wavefront Announces Second Quarter 2018 Financial Results

Wavefront Technology Solutions (TSXV:WEE), a global leader in the advancement of dynamic fluid injection technology for oil and gas well stimulation announced its financial results for the second quarter ending Feb. 28, 2018.

As quoted in the press release:

“Wavefront’s Powerwave Odyssey Custom Stimulation (POCS) approach to well stimulation is earning a positive reputation for performance and increasing business opportunities. The Company’s financial results for the reporting period clearly reflect that trend,” said Wavefront President, CEO, and Board Chair, Brett Davidson. “Although further work and resources are required to achieve the long term goals of the Company we are pleased that Wavefront’s strategic focus in the Middle East market continues to produce results.”

The financial highlights for the reporting period are as follows:

• Total revenues for the second quarter ended February 28, 2018 amounted to $856,633, an increase of $376,418 or 78.4% over the comparative quarter ended February 28, 2017, and an increase over the prior quarter (i.e., the three months ended November 30, 2017) of $579,966 or 209.6%.
  Revenue attributed to all Powerwave product lines were $795,160, an increase of $501,234 or 170.5% over revenues in the comparative quarter of $293,926.
  The most dramatic impact in Powerwave stimulation revenues came from international markets, specifically revenues generated in the Kingdom of Saudi Arabia and Kuwait, which saw revenues increase by $607,646 or 2,753.5% over the comparative quarter ended February 28, 2017.  Second quarter 2018 Powerwave stimulation revenues also increased over the prior quarter (i.e., the three months ended November 30, 2017) by $570,677 or 254.2%.  The increases in Powerwave stimulation revenues are a result of the Company’s focus in the Middle East and to revenue streams that have a shorter overall sales cycle and favourable profit margins.

• The strengthening of the Powerwave product mix combined with a strong Middle East marketing focus has increased the Company’s overall gross profit margin¹ with the current quarter having an 82.5% gross profit²compared to 62.4% for the comparative quarter ended February 28, 2017.

• Consistent with the Company’s focus on Powerwave well stimulations that have more favourable profit margins and as a result of the growing trend of unprofitable financial results related to the tubing pump and bailer CGU, effective February 28, 2018, the Company disposed of certain assets including: tubing pump and bailer tools at various locations along with certain other property plant and equipment, and inventory. Together with the disposal of property, plant and equipment, and inventory, the purchaser was also assigned and assumed the Lloydminster field office lease (together the “Disposition”).
  Total consideration for the Disposition was $75,000, was paid by the purchaser subsequent to the reporting period, with an offsetting recorded net loss on disposal of the property plant and equipment, and inventory of $258,017. The $75,000 consideration was recorded as a receivable as at February 28, 2018.

• Other expenses (i.e., not including costs of goods sold) for the second quarter ended February 28, 2018, amounted to $1,229,634, compared to $1,228,076 in February 28, 2017. Excluding the Disposition (noted above) and costs of goods sold, other expenses for the three months ended February 28, 2018, amounted to $971,617, compared to $1,228,067 in February 28, 2017, a decrease of $256,459.
• The basic and diluted net loss for the second quarter ended February 28, 2018 decreased by $419,540 to $511,095 ($0.006 per share), compared to $930,635 ($0.011 per share) for the comparative quarter ended February 28, 2017.
  Excluding the loss on disposal of property, plant and equipment and inventory of $258,017, the adjusted net loss³ for the second quarter ended February 28, 2018 decreased by $677,557 or 72.8% to $253,078 (or $0.003 per share), compared to the comparative quarter ended February 28, 2017.

• Total current assets decreased by $1,217,613 to $2,555,968 from the prior year end.  Of the net decrease, $1,426,259 relates to a reduction of cash resources, of which $6,141 was used for the acquisition of additional Powerwave tools, equipment and leasehold improvements, and $1,433,801 was used to fund operations, and of the inventory reduction $104,465 was due to the Disposition.
• As of April 25, 2018, Wavefront had $1,374,634 of cash and cash equivalents on hand. The cash and cash equivalents on hand as at April 25, 2018 increased by $356,644 since the end of the second quarter ending February 28, 2018.

The above financial highlights should be read in conjunction with the unaudited condensed consolidated interim financial statements and management discussion and analysis of results for Wavefront for the second quarter ended February 28, 2018, which were filed on SEDAR on April 27, 2018.

Davidson further stated, “Wavefront is committed to increasing shareholder value through strict cost management, a very sharp focus on key markets, and growing top line revenue through technology offerings having a shorter sales cycle and healthy profit margins. We are confident we have moved in the right direction.”

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