Mr. Dean MacDonald reports

CLEARSTREAM ANNOUNCES FIRST QUARTER 2018 FINANCIAL RESULTS

Clearstream Energy Services Inc. has released its results for the three months ended March 31, 2018.

EBITDAS (net earnings determined in accordance with international financial reporting standards, before depreciation and amortization, interest expense, income tax expense (recovery), and stock-based compensation) and adjusted EBITDAS (net earnings determined in accordance with IFRS, before depreciation and amortization, interest expense, income tax expense (recovery), and stock-based compensation excluding income from equity investments, the gain on sale of assets held for sale, impairment of goodwill and intangible assets, restructuring costs, and gain on sale of property plant and equipment) are not standard measures under IFRS.

First quarter 2018 highlights:

• Revenue increased by $7.1-million or 9 per cent, and adjusted EBITDAS increased by $100,000 or 6 per cent for the first quarter of 2018 compared with the same period 2017.
• Clearstream completed a refinancing transaction with its major stakeholders that improved the financial stability of the company. As part of this transaction, $108.6-million of long-term debt was exchanged for a newly created series of preferred shares. In addition, Clearstream issued $19-million of preferred shares in exchange for cash proceeds that will be used to finance existing and future interest obligations.
• Clearstream completed the sale of its transportation business during the first quarter of 2018 for total proceeds of $3.4-million, and $2.3-million of these proceeds was used to repay long-term debt.
• Gross profit margins declined to 7.9 per cent compared with 8.4 per cent on a year-over-year basis. Clearstream's service lines continue to remain competitive, which has led to pricing declines and lower gross profit margins.

                      OVERVIEW OF FINANCIAL RESULTS
                 ($ millions, except per-share amounts)             
                                                          Q1 2018       Q1 2017

Revenue                                                     $84.8         $77.7
Gross profit                                                  6.8           6.5
Selling, general and administrative expenses                 (4.7)         (4.5)
Adjusted EBITDAS                                              2.2           2.1
(Loss) from continuing operations                            (3.0)         (3.6)
(Loss) per share from continuing operations,
basic and diluted                                           (0.03)        (0.03)

Revenues for the three months ended March 31, 2018, were $84.8-million compared with $77.7-million for the same period in 2017, an increase of 9 per cent. The increase was due largely to increased demand in the Fort McMurray region, including the commencement of a large turnaround project in March.

Gross profit for the three months ended March 31, 2018, was $6.8-million compared with $6.5-million for the same period in 2017, and gross margins were 8.0 per cent compared with 8.4 per cent for the same period in 2017. Gross margins declined on a year-over-year basis as lower margins for the wear and fabrication segment more than offset slightly higher margins for maintenance and construction.

Selling, general and administrative (SG&A) costs for the three months ended March 31, 2018, were $4.7-million compared with $4.5-million in 2017 and remained relatively consistent on a year-over-year basis. As a percentage of revenue, SG&A costs have declined to 5.5 per cent from 5.8 per cent for the three months ended March 31, 2018.

The loss from continuing operations for the first quarter of 2018 was $2.8-million compared with $3.6-million in the same period of 2017 due to a reduction in interest expenses.

Outlook

Demand for Clearstream's services is typically strong during the second quarter when many oil and gas facilities undergo significant maintenance. Clearstream has several facility maintenance projects scheduled for the second quarter of 2018, and revenue is expected to increase significantly compared with the first quarter of 2018.

With recent improvements in oil prices, demand for Clearstream's services is expected to increase in 2018 compared with 2017 as its clients slowly increase maintenance budgets to uphold production levels. However, Clearstream's business remains very competitive as more service companies are focused on increasing exposure to maintenance-related service lines. Under this competitive landscape, pricing is not expected to increase during 2018, and profit margins are expected to remain at current levels.

Clearstream will continue to focus on the key aspects of its business, including safety, quality, recruiting and cost control.

About Clearstream Energy Services Inc.

With a legacy of excellence and experience stretching back more than 50 years, Clearstream provides solutions to the energy and industrial markets, including: oil and gas, petrochemical, mining, power, agriculture, forestry, infrastructure, and water treatment. With offices strategically located across Canada and over 3,000 employees, the company constructs, transports and provides maintenance services that keep its clients moving forward.

 
      CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE (LOSS)
        (in thousands of dollars, except per-share amounts)

                                               Three months ended March 31,
                                                         2018         2017

Revenue                                               $84,794      $77,689
Cost of revenue                                       (77,975)     (71,149)
Gross profit                                            6,635        6,540
Selling, general and administrative expenses           (4,675)      (4,528)
Share-based compensation                                  (79)        (309)
Amortization of intangible assets                        (757)        (863)
Depreciation                                           (1,161)      (1,231)
Income from equity investment                              32           37
Interest expense                                       (3,748)      (5,032)
Gain on sale of assets held for sale                    1,032          123
Restructuring costs                                       (60)        (277)
Other (loss)                                             (282)           -
Gain on sale of property, plant and equipment              52        1,917
(Loss) before taxes                                    (2,827)      (3,623)
Income tax expense -- current                            (161)           -
(Loss) from continuing operations                      (2,988)      (3,623)
(Loss) from discontinued operations (net
of taxes)                                                (187)        (370)
Net (loss) and comprehensive (loss)                    (3,175)      (3,993)
(Loss) per share
Basic and diluted
Continuing operations                                   (0.03)       (0.03)
Discontinued operations                                 (0.00)       (0.00)
Net (loss)                                              (0.03)       (0.04)

We seek Safe Harbor.