Evidently ADES has continued to perform despite external challenges, with Q1 revenue up 22% year-on-year
() saw its first quarter financial results put in a strong performance despite a challenging operating environment for the oil and gas services contractor.
Revenue for the three months ended March 31, 2020, was up 22% year-on-year at US$132.7mln supporting by previously acquired assets, though organic revenue growth was marked at 7%.
ADES ended the quarter with an order backlog of US$1.34bn and noted that revenue trends continued through the month of April.
It comes against operational challenges caused by the coronavirus (COVID-19) pandemic and the challenging crude market which has seen sharply lower sales prices, and triggered cost-cutting among many oil producers.
Nonetheless, ADES highlighted a rig utilisation rate of 96% in the first quarter versus 92% in the comparative period of 2019.
“The group’s activities have not been significantly impacted by the COVID-19 pandemic to date and operations are running within the normal course of business,” the company said in its results statement.
“However, we continue to monitor the situation closely, with robust health and safety protocols and business continuity plans in place to mitigate potential risks posed by the pandemic.”
ADES told investors it expects to see a similar underlying earnings (EBITDA) performance for 2020 to that achieved in full-year 2019, after making a strong start to 2020.
The oil price volatility is expected to translate into a modest utilisation rate over the full year, for ADES, and the company said it is well-equipped to weather the current conditions due.
It highlighted its resilient balance sheet, strong liquidity position, long-dated order book and low-cost business model.
At the end of March, ADES had US$72.5mln of cash and net debt stood at US$640.3mln, and that is expected to reduce over 2020.
Dr Mohamed Farouk, ADES chief executive commented: “The board remains cautious on the near-term outlook, though longer term, we remain confident in ADES’s prospects underpinned by the group’s strong fundamentals, operating business model and MENA region focus.
“Considering this resilient outlook, the Board believes the current share price to be heavily undervalued and presents a strong investment opportunity. The board is thus proposing an extension to our current share buyback programme at the group’s upcoming annual general meeting.”