HIGHLIGHTS FOR THE QUARTER
- The Company posted its ninth consecutive quarter of revenue growth earning
$3.1 million of revenue in the second quarter of 2022. - Adjusted EBTIDA of
$359 thousand in the second quarter of 2022 represents the seventh consecutive quarter of positive adjusted EBITDA. - Divergent’s balance sheet continues to strengthen with positive working capital of
$461 thousand .
INDUSTRY OUTLOOK
Divergent’s overall outlook for our services for the remainder of 2022 remains positive. Global demand for energy remains strong as the world's major economies continue to rely on petroleum products in everyday life. Macroeconomic factors including continued inflationary pressures, escalation of geopolitical tension, and the lifting of COVID-19 restrictions all point to continued strong commodity pricing through 2022. At these commodity price levels we anticipate generally robust oilfield service activity levels throughout the remainder of the year as our customers remain very positive on their current capital spending plans for the second half of 2022.
Our customer base in
The positive commodity pricing trends the industry is currently experiencing is in part caused by a structural shortfall in supply which will be difficult for the industry to overcome for some time. As a result, the demand for energy services and the ability for the sector to improve over the next few years is seen as highly likely. In this environment the Company intends to seek and evaluate strategic growth opportunities to both diversify its product offerings and drive continuous margin improvements.
FINANCIAL AND OPERATING HIGHLIGHTS – THREE AND SIX MONTHS ENDED
Select Financial Information for the three and six months ended
(All figures in ‘000’s of US dollars except number of shares and per share data, unless otherwise stated)
Unaudited Condensed Consolidated Statements of Net Income and Comprehensive Income
Three months ended | Six months ended | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Revenue | |||||||||||||
Cost of sales | (2,461) | (1,678) | (4,369) | (2,961) | |||||||||
Provision reversal for slow moving inventory | - | 36 | - | 160 | |||||||||
Gross profit | 681 | 349 | 1,389 | 911 | |||||||||
General and administration | (391) | (397) | (797) | (843) | |||||||||
Depreciation and amortization | (4) | (3) | (6) | (5) | |||||||||
Share-based compensation | (13) | (6) | (25) | (7) | |||||||||
Results from operating activities | 273 | (57) | 561 | 56 | |||||||||
Finance income (expense) | 120 | (251) | (156) | 1,883 | |||||||||
Net income (loss) | 393 | (308) | 405 | 1,939 | |||||||||
Other comprehensive income (loss) being foreign exchange gains and losses | (254) | 95 | (141) | 186 | |||||||||
Total comprehensive income (loss) for the period | ( | ||||||||||||
Income (loss) per share | |||||||||||||
Net income (loss) – basic and dilutive | ( |
Unaudited Condensed Consolidated Statements of Financial Position
ASSETS | (Unaudited) | (Audited) | |||||||
Current assets | |||||||||
Cash | |||||||||
Prepaid expenses, deposits and advances | 55 | 104 | |||||||
Trade receivables | 1,592 | 877 | |||||||
Inventories | 488 | 711 | |||||||
2,567 | 2,299 | ||||||||
Non-current assets | |||||||||
Property and equipment | 132 | 133 | |||||||
Right-of-use assets | 466 | 535 | |||||||
Total Assets | |||||||||
LIABILITIES | |||||||||
Current liabilities | |||||||||
Accounts payable and accrued liabilities | |||||||||
Current portion of lease obligations | 174 | 156 | |||||||
Interest payable | 157 | 183 | |||||||
Promissory notes | 346 | 216 | |||||||
2,106 | 1,993 | ||||||||
Non-current liabilities | |||||||||
Lease obligations | 259 | 353 | |||||||
Promissory notes | 1,914 | 2,061 | |||||||
Government loans | 28 | 26 | |||||||
Debentures | 689 | 654 | |||||||
Total Liabilities | |||||||||
SHAREHOLDERS’ DEFICIT | |||||||||
Share capital | |||||||||
Contributed surplus | 5,997 | 5,972 | |||||||
Warrants | 99 | 99 | |||||||
Accumulated other comprehensive loss | (1,159) | (1,018) | |||||||
Accumulated deficit | (26,381) | (26,786) | |||||||
Total Shareholders’ Deficit | ( | ( | |||||||
Total Liabilities and Shareholders’ Deficit |
The Company’s complete set of
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FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements, including, without limitation, statements pertaining to anticipated future operational activity levels of Divergent and of a majority of its customers, and statements pertaining to interest payments on the Company’s debentures. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties, including: the risk that the anticipated slowdown in sales and service of submersible pumps by Divergent’s customers lasts longer than expected or impacts Divergent’s revenues more severely than expected, the risk that the COVID-19 pandemic and the low oil and gas price environment cause additional negative effects on Divergent’s business, the risk that the suspension of trading of the Company’s common shares by the TSXV cannot be lifted in a timely manner or at all, and the risk that the Company cannot remedy the outstanding interest payments under the terms of its debenture indenture in a timely manner or at all . There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Company's disclosure documents on the SEDAR website at www.sedar.com. Forward-looking statements are based on estimates and opinions of management of the Company at the time the information is presented, including expectations provided to Divergent by its customers. The Company may, as considered necessary in the circumstances, update or revise such forward-looking statements, whether as a result of new information, future events or otherwise, but the Company undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.
This press release contains financial outlook information ("FOFI") about prospective revenue reductions, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date hereof and was provided for the purpose of providing an update regarding an anticipated material reduction in near-term revenue. Divergent disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein.
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