C.A.T. oil AG: Outstanding results in the first nine months of the year – guidance for the full year 2013 upgraded

C.A.T. oil AG (O2C, ISIN: AT0000A00Y78), one of the leading providers of oil and gas field services in Russia and Kazakhstan, achieved outstanding results in the first nine months of 2013. The Company increased its revenues by more than 30% to EUR 322.9 million (Q1-3 2012: EUR 246.3 million) and its EBITDA by almost one half to EUR 86.0 million (Q1-3 2012: EUR 58.8 million). The EBITDA margin widened to 26.6% in Q1-3 2013, up 2.7 percentage points compared to 23.9% a year ago, whereas the Q3 2013 EBITDA margin of 29.5% (Q3 2012: 28.3%) was close to historic quarterly peaks. As a result, net income surged 2.5 times yoy to EUR 38.2 million in Q1-3 2013 (Q1-3 2012: EUR 15.2 million). C.A.T. oil has successfully accomplished its 2013 investment program: operating capacities expanded by 30% for sidetracking and 10% for fracturing compared to the end of 2012. On the back of the excellent results in the first nine months of the year and dynamic business performance in the fourth quarter C.A.T. oil has upgraded its guidance for 2013: The Company now expects revenues to come in between EUR 420 and 430 million (previously EUR 405 to 425 million) and EBITDA between EUR 105 and 110 million (previously EUR 95 to EUR 105 million).

Manfred Kastner, C.A.T. oil CEO, commented: "We recorded the best performance ever for the first nine months and clearly exceeded our objectives. Especially the tremendous results of the third quarter speak for themselves. We are well underway to deliver a remarkable operating and financial performance also in the fourth quarter of the year. Moreover, the recent announcement of the transformative investment program for 2014 to 2016 clearly demonstrates our confidence in the business’ strong growth potential for years to come.”

Distinct top-line growth in all segments

C.A.T. oil’s consolidated revenues increased by 24.7% yoy to EUR 112.8 million in Q3 2013 (Q3 2012: EUR 88.5 million) and 31.1% yoy to EUR 322.9 million in Q1-3 2013 (Q1-3 2012: EUR 246.3 million) due to the strong business expansion. The total service job count went up by 21.3% yoy to 1,072 jobs in Q3 2013 (Q3 2012: 884 jobs) and 14.7% yoy to 2,938 jobs in Q1-3 2013 (Q1-3 2012: 2,561 jobs). Despite the weaker local currencies, average per job revenues increased by 5.1% yoy to TEUR 105 in Q3 2013 (Q3 2012: TEUR 100) and 14.3% yoy to TEUR 110 in Q1-3 2013 (Q1-3 2012: TEUR 96).

In the first nine months of the year, Well Services’ revenues staged a 29.7% yoy increase to EUR 173.1 million (Q1-3 2012: EUR 133.5 million) on the back of a 13.8% yoy rise in the service job count to 2,762 jobs (Q1-3 2012: 2,426 jobs) and a 13.9% yoy gain in the average per job revenue to TEUR 63 (Q1-3 2012: TEUR 55). The development was primarily attributed to the swift expansion of fracturing operations, the greater job size and complexity as well as favorable price environment during the reporting period.

Drilling, Sidetracking and IPM segment’s revenues advanced 35.7% yoy to EUR 149.6 million in Q1-3 2013 (Q1-3 2012: EUR 110.2 million) as the combined drilling and sidetracking output increased by 45.7% yoy to 217 thousand meters (Q1-3 2012: 149 thousand meters).

Sound efficiency and profitability gains

Despite strong business expansion, cost of sales inflated only by 21.5% yoy to EUR 88.2 million in Q3 2013 (Q3 2012: EUR 72.6 million) and 26.1% yoy to EUR 258.8 million in Q1-3 2013 (Q1-3 2012: EUR 205.3 million). Thanks to lean and efficient organizational and operating structures, C.A.T. oil boosted its earnings before interest, tax, depreciation and amortization (EBITDA) by 33.0% yoy to EUR 33.3 million in Q3 2013 (Q3 2012: EUR 25.0 million) and 46.1% yoy to EUR 86.0 million in Q1-3 2013 (Q1-3 2012: EUR 58.8 million). The EBITDA margin expanded to 29.5% in Q3 2013 (Q3 2012: 28.3%) and 26.6% in Q1-3 2013 (Q1-3 2012: 23.9%). The Company’s earnings before interest and tax (EBIT) rose by 78.9% yoy to EUR 21.2 million in Q3 2013 (Q3 2012: EUR 11.8 million) and almost doubled to EUR 48.4 million in Q1-3 2013 (Q1-3 2012: EUR 24.8 million). As a result, the EBIT margin widened to 18.8% in Q3 2013 (Q3 2012: 13.4%) and 15.0% in Q1-3 2013 (Q1-3 2012: 10.1%).

Stellar bottom-line growth

The outstanding operating performance enabled the Company to attain a stellar bottom-line growth: Net income recorded an increase of 98.4% yoy to EUR 17.0 million in Q3 2013 (Q3 2012: EUR 8.6 million) and 150.9% yoy to EUR 38.2 million in Q1-3 2013 (Q1-3 2012: EUR 15.2 million).

Solid cash generation and balance sheet

The Company’s funds from operations went up by 40.9% yoy to EUR 72.8 million in Q1-3 2013 (Q1-3 2012: EUR 51.7 million) and cash flow from operating activities advanced by 66.1% yoy to EUR 76.8 million (Q1-3 2012: EUR 46.2 million). The Company’s capital expenditures more than doubled to EUR 40.4 million in Q1-3 2013 (Q1-3 2012: EUR 19.0 million) reflecting good progress in execution of the 2013 investment program of EUR 45.0 million: From January to September C.A.T. oil increased its operating capacities by 30% for sidetracking and 10% for fracturing compared to the end of 2012. Cash flow from investing activities was a net outflow of EUR 38.1 million in Q1-3 2013 (Q1-3 2012: net outflow of EUR 17.6 million) and cash flow from financing activities was a net outflow EUR 41.4 million (Q1-3 2012: net outflow of EUR 29.8 million).

As of 30 September 2013, cash and cash equivalents stood at EUR 39.1 million, up 0.8% from EUR 38.8 million as of 31 December 2012. The Company had net cash of EUR 16.9 million as of the end of September 2013 compared to net debt of EUR 11.8 million as of the end of December 2012.

The Company maintained strong balance sheet with an equity ratio of 67.4% as of 30 September 2013 (31 December 2012: 67.0%).

Revenue and EBITDA guidance for 2013 upgraded

Based upon better than expected operating and financial results during the third quarter and the elevated activity levels during the fourth quarter, C.A.T. oil upgrades its revenue and EBITDA guidance for 2013. The upgrade comes along with further revision of the Company’s 2013 estimated average exchange rate to 42.5 rouble-to-euro from 42.0 rouble-to-euro as of end of August 2013 as the Russian rouble continued weakening during the second half of the year and devalued relative to the euro by around 10% year-to-date. Nonetheless, the Company raises its expectations for the 2013 revenues to EUR 420 to 430 million from EUR 405 to 425 million and EBITDA to EUR 105 to 110 million from EUR 95 to EUR 105 million.

www.catoilag.com

¹ As of 30 September 2013 and 31 December 2012 respectively