Mr. Tony Pagnucco reports

BRI-CHEM ANNOUNCES 2022 FIRST QUARTER FINANCIAL RESULTS

Bri-Chem Corp. has released its first quarter 2022 financial results.

Key Q1 2022 highlights include:

• Consolidated sales for the three months ended March 31, 2022, were $23.5-million, an increase of 105 per cent compared with the same period last year due to stronger performance in the fluid distribution divisions in Canada and the United States as the industry is facing a significant resurgence following the easing of global economic restrictions that were in place due to the coronavirus (COVID-19) health pandemic, as well as continued supply constraints.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter 2022 was $2.4-million versus $851,000 in Q1 2021, representing a 187-per-cent increase year over year. The increase is primarily related to increased sales over the prior year, as well as an increase in consolidated gross margin as a percentage of sales.
• Adjusted operating earnings were $3-million for the three months ended March 31, 2022, compared with operating earnings of $559,000 in the prior-year comparable quarter, representing a 445-per-cent increase.
• Net earnings per diluted share for the three months ended March 31, 2022, were 29 cents per share compared with one cent per diluted share for the same period last year. Net earnings increased in the first quarter of 2022 due to a significant resurgence of business activity following the easing of global economic restrictions, a $5.2-million deferred tax asset recovery as the company has determined the utilization of this deferred tax asset balance is more probable than not given strong activity levels in its U.S. operations and an asset impairment reversal of $893,000 whereby the company determined that the recoverable amount of these assets exceeded their present carrying value.
• Working capital, as at March 31, 2022, was $6.6-million compared with $9.9-million at March 31, 2021, a decrease of 33 per cent. The decrease predominantly relates to reclassifying the term loan to current liabilities, offset by notable increases in accounts receivable and inventory balances in response to increasing market momentum.
• Subsequent to the end of first quarter 2022, the company entered into a new 20-year mortgage term loan for $6-million with Canadian Western Bank to refinance its existing term loan. In addition, the company entered into an amending agreement with CIBC, and the senior ABL facility is now committed until Oct. 31, 2024.

Outlook

During the fourth quarter of 2021 and into Q1 2022, global commodity prices have continued to strengthen and the North American outlook for industry drilling and completion activity in 2022 is expected to continue to increase throughout the year. The company is well positioned to benefit from the anticipated service industry recovery cycle as management has pro-actively built up its inventory to continue to support its customers during this time of increased drilling activity, particularly in the southern U.S. regions, which are experiencing above-average activity growth. Challenges continue to persist in the North American market relating to available labour and supply of both domestic and foreign product; however, Bri-Chem has been productive in locating and validating additional sources of product supply in response to this realization. Bri-Chem remains focused on positioning the company to capitalize on increased industry spending and is carefully assessing warehouse expansion opportunities that will provide stable returns on invested capital.

About Bri-Chem Corp.

Bri-Chem has established itself, through a combination of strategic acquisitions and organic growth, as the North American industry leader for wholesale distribution and blending of oil field drilling, completion, stimulation and production chemical fluids. The company sells, blends, packages and distributes a full range of drilling fluid products from 25 strategically located warehouses throughout Canada and the United States.

We seek Safe Harbor.