Pason Reports First Quarter 2013 Results, Provides Outlook

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Pason Systems Inc. (PSI.TO), provider of instrumentation systems to land-based and offshore drilling rigs worldwide, announced its 2013 first quarter results.

Net earnings increased by 2% to $29.6 million, or $0.36 per share, compared to $29.1 million, or $0.35 per share, in the first quarter of 2012.

First quarter net earnings were impacted by the following factors: A $3.2 million decrease in stock-based compensation due to a smaller increase in our stock price during the first quarter of 2013 compared to the first quarter of 2012; A $1.0 million increase in R&D costs as we completed the hiring of staff to support our Electronic Drilling Recorder ( EDR ) evolution projects; A drop in foreign exchange loss of $1.5 million.

Outlook: "There continues to be uncertainty regarding the outlook for North American drilling activity going forward. The natural gas glut generated by unconventional plays does limit gas-directed drilling activity, thereby challenging our ability to significantly grow revenue in the short term. However, the outlook has improved somewhat and industry observers are expecting a modest recovery in North America during the second half of 2013 and beyond. As with every year, the duration of spring break-up in Canada will be a key driver of second quarter 2013 results. We expect the International business unit to continue to realize profitable growth this year.

"Our capital expenditure budget for the next 12 months is $79 million, $56 million of which is directed towards equipment that can generate incremental revenue or save operating costs, $10 million for maintenance capital, and $13 million for capitalized R&D.

"Our cash-generating capacity, cash position at $168.9 million, and working capital position at $190.5 million are strong enough to comfortably cover new business development, planned equipment upgrades, and the dividend."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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