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Subtitle: • Despite the rouble devaluation, revenues improved 7.0% yoy to EUR 120.7 million in Q3 2014 • The Q3 2014 EBITDA went up 16.6% yoy to EUR 38.8 million with the EBITDA margin expanding to 32.2% • Net income surged 40.9% yoy to EUR 23.9 million in Q3 2014 • CEO Manfred Kastner: “Due to our stellar performance during the third quarter and the first nine months as well as a good start into Q4 we reiterate our 2014 guidance despite the challenging environment.”
quarterly report
Vienna, 27 November 2014 - C.A.T. oil AG (O2C, ISIN: AT0000A00Y78), one of the leading providers of oil and gas field services in Russia and Kazakhstan, successfully continued on its profitable growth track in the third quarter. The Company successfully boosted revenues and achieved a significant earnings growth despite persisting geopolitical instabilities. C.A.T. oil benefited from positive demand dynamics among its customers and high operating activities. Moreover, the Group further improved efficiency and maintained tight cost management.
Manfred Kastner, CEO of C.A.T. oil, commented: "Although we faced more headwinds due to geopolitics, negative currency effects and lower oil prices, we were able to further accelerate our operating performance and earnings growth. Driven by ongoing strong demand for our services we reached an all-time high in Q3 activity levels. With our strong earnings growth and profitability we delivered best-in-class levels in the Russian OFS sector. Thus, due to our stellar performance during the third quarter and the first nine months as well as a good start into Q4 we reiterate our 2014 guidance despite the challenging environment."
Improved Q3 2014 revenues despite negative currency effects
The Russian rouble, which the prevailing majority of C.A.T. oil's service contracts are denominated in, devaluated against the Euro by more than 15% yoy during the first nine months of the year. Therefore, the Company's top-line growth lagged behind the increase in operating activity levels. Nonetheless, the Company was able to boost its revenues by 7.0% yoy to EUR 120.7 million (Q3 2013: EUR 112.8 million). The total service job count increased by 17.3% yoy to 1,258 jobs in Q3 (Q3 2013: 1,072 jobs) but the average per job revenue declined 8.8% yoy to TEUR 96 (Q3 2013: TEUR 105) due to the lower value of the rouble. On a nine month basis revenues stayed effectively flat yoy at EUR 323.9 million (Q1-3 2013: EUR 322.9 million). The Company's total service job count rose by 12.8% yoy to 3,315 jobs (Q1-3 2013: 2,938 jobs).
Growth in the Q3 2014 operating activities across all operating and reporting segments
Well Services' revenues increased by 9.5% yoy to EUR 65.6 million in Q3 2014 (Q3 2013: EUR 59.9 million). Driven by a strong expansion in fracturing operations, the segment's job count rose by 17.7% yoy to 1,186 jobs (Q3 2013: 1,008 jobs). The average per job revenue decreased 7.0% yoy to TEUR 55 (Q3 2013: TEUR 59), reflecting the rouble devaluation. The share of multi-stage fracturing jobs in the total fracturing job count surged to 27.6% in Q3 2014 (Q3 2013: 6.7%). Drilling, Sidetracking and IPM was also able to offset partly negative currency effects by further maximising operating activity levels and enhance revenues by 3.8% yoy to EUR 55.7 million in Q3 2014 (Q3 2013: EUR 53.6 million). The segment's job count staged a 12.1% yoy rise in the job count to 72 wells and sidetracks (Q3 2013: 64 jobs), whereas the total drilling and sidetracking footage accelerated by 47,7% yoy to 113.2 thousand meters (Q3 2013: 76.6 thousand meters). The share of horizontal wells and sidetracks contracted insignificantly to 39.2% of the total (Q3 2013: 40.8%)
Profitability at the record level with the EBITDA margin widened to 32.2% While the revenue growth was hampered by the continued rouble devaluation, C.A.T. oil benefited from high capacity utilization, efficiency gains and disciplined cost management and was again able to strengthen its earnings power. Cost of sales increased only by 1.9% yoy to EUR 89.9 million in the very busy Q3 2014 (Q3 2013: EUR 88.2 million) but decreased by 3.1% yoy to EUR 250.8 million in Q1-3 (Q1-3 2013: EUR 258.8 million).
Earnings before interest, tax, depreciation and amortization (EBITDA) rose by 16.6% yoy to EUR 38.8 million in Q3 2014 (Q3 2013: EUR 33.3 million), with the EBITDA margin reaching a record level of 32.2% (Q3 2013: 29.5%). In Q1-3 2014, EBITDA rose by 9.1% yoy to EUR 93.8 million (Q1-3 2013: EUR 86.0 million) and the EBITDA margin widened to 28.9% compared to 26.6% in the corresponding reporting period of the previous year.
Earnings before interest and tax (EBIT) accelerated at a faster pace by 23.3% yoy to EUR 26.1 million in Q3 2014 (Q3 2013: EUR 21.2 million) and by 20.7% yoy to EUR 58.4 million in the first nine months (Q1-3 2013: EUR 48.4 million). The EBIT margin expanded to 21.6% in Q3 2014 (Q3 2013: 18.8%) and 18.0% in Q1-3 2014 (Q1-3 2013: 15.0%).
C.A.T. oil's weighted average headcount was 2,920 employees in Q1-3 2014 (Q1- 3 2013: 2,673 employees). The increase in the headcount by 9.2% yoy reflected additions of managerial, engineering and crew personnel to the Company's Drilling, Sidetracking and IPM operating and reporting segment.
Net income surged by 40.9% yoy in Q3 2014
The Group's net income increased considerably by 40.9% yoy to EUR 24.0 million in Q3 (Q3 2013: EUR 17.0 million) and 28.8% yoy to EUR 49.2 million in Q1-3 2014 (Q1-3 2013: EUR 38.2 million).
Strong financial position despite a material ramp up in investments
C.A.T. oil's gross cash flow surged by 10.0% yoy to EUR 31.9 million in Q3 2014 (Q3 2013: EUR 29.0 million) and by 10.8% yoy to EUR 80.7 million in the nine month period (Q1-3 2013: EUR 72.8 million). Cash flow from operating activities however diminished by 16.8% yoy to EUR 24.3 million in Q3 2014 (Q3 2013: EUR 29.2 million) and 33.9% yoy to EUR 50.7 million in Q1-3 2014 (Q1-3 2013: EUR 76.8 million) because of the higher working capital requirements. Cash payments for the ordered operating capacities more than quadrupled yoy to EUR 39.6 million in Q3 2014 (Q3 2013: EUR 9.3 million) and more than doubled yoy to EUR 81.7 million in Q1-3 2014 (Q1-3 2013: EUR 40.4 million). Cash flow from investing activities resulted in a net outflow of EUR 39.5 million in Q3 2014 (Q3 2013: EUR 8.9 million) and EUR 81.2 million in Q1-3 2014 (Q1-3 2013: EUR 38.1 million). Cash flow from financing activities was a net inflow of EUR 8.8 million (Q3 2013: net outflow of EUR 34.6 million) and EUR 23.1 million in Q1- 3 2014 (Q1-3 2013: net outflow of EUR 41.4 million).
As of 30 September 2014, cash and cash equivalents were down 25.8% to EUR 31.7 million from EUR 42.6 million as of 31 December 2013. C.A.T. oil maintained a solid balance sheet with an equity ratio of 60.3% as of 30 September 2014 (31 December 2013: 71.4%).
2015 capacity expansions in line with market developments
Assuming the average rouble-to-euro exchange rate of 50 for 2014 and 57 for 2015-16, C.A.T. oil's 2014-2016 total order book stood at EUR 747 million as of 27 November 2014 (28 August 2014: EUR 785 million assuming the 2014-16 flat average rouble-to-euro exchange rate of 48). The tender campaign for the next year and beyond has just begun and C.A.T. oil is highly motivated to win additional assignments. Based upon the initial talks with customers the Company expects healthy demand for its services in 2015.
The EU and US sanctions do not impede C.A.T. oil's business as it has never been engaged in the restricted activity areas such as Arctic offshore, deep water or shale oil projects, and C.A.T. oil does not plan to change the course of its business going forward. At the same time geopolitics, lower energy prices and soft rouble are currently major challenges for the sector. The Company has therefore decided to watch carefully the market developments and hold up the decision on its 2015 capital expenditures until the end of Q1 2015. This should allow the Company to get greater insights of customers' future plans and ensure the best possible utilization of its operating capacities.
Year-to-date, the Company added two drilling and two sidetracking rigs as well as one fracking fleet to its operations and plans to put one more drilling rig into operations before the yearend. The remaining three drilling rigs and two sidetracking rigs will be mobilized to customers' sites in Q1 2015.
Management reiterates guidance
Based on C.A.T. oil's strong nine month results and the good start into Q4, management is confident in the Company's robust operating and financial performance. Despite the adjustment of the 2014 forecast average rouble-to-euro exchange rate to 50 from 48 (as of 28 August 2014), management reiterates its guidance for the Full Year 2014. The Company continues aiming at revenues between EUR 420 and 450 million which are expected to come out at the lower end of the range due to the currency headwinds. Furthermore, the Company confirms its EBITDA target of EUR 113-121 million. Based on the top-line growth, efficiency gains and a favorable revenue mix, management sees a good chance of hitting the upper part of the forecast EBITDA range.
In respect to the announced, but not yet launched mandatory takeover offer of Joma Industrial Source Corp. the Company refers to updates on its website, www.catoilag.com, where news, press releases and other publications in this context can be found.
www.catoilag.com
Press contact: FTI Consulting Carolin Amann Phone: +49 (0)69 92037-132 Email: carolin.amann@fticonsulting.com
Steffi Susan Kim Phone: +49 (0)69 92037-115 Email: steffi.kim@fticonsulting.com
About C.A.T. oil AG: C.A.T. oil AG is one of the leading independent oil and gas field service contractors in Russia and Kazakhstan and is listed on the Frankfurt Stock Exchange (SDAX). C.A.T. oil provides a range of high quality services, which enable oil and gas producers to extend lifecycle of their fields or bring yet unexploited oil and gas reserves to production. Since its foundation in 1991 in Celle, Germany, C.A.T. oil has built up a leading hydraulic fracturing service, a very effective method of well stimulation by cracking rock formations with pressurized fluids, in Russia and Kazakhstan. Following its IPO in 2006, the Company developed a second core service of sidetrack drilling in 2006-08 and has established a strong presence in Russia's sidetrack drilling market. Sidetrack drilling is a term used to describe drilling of a new wellbore from the upper section of an existing well. In 2011-12, the Company launched the next phase of its growth and diversification strategy and set up high class drilling operations as a third core service offering. High class drilling is the classical technology of drilling vertical, inclined and horizontal wells for extraction of oil and gas. In total, the Company has already invested more than EUR 450 million in growth and diversification since its IPO in 2006. Following the successful set up of high class drilling in 2011-12, C.A.T. oil introduced its new segment reporting in 2013 clustering its activities in "Well Services" (fracturing, cementing and completion operations) and "Drilling, Sidetracking and IPM (Integrated Project Management)". C.A.T. oil's customer base includes the leading Russian and Kazakh oil and gas producers such as Rosneft, Lukoil, Gazprom Neft, Tomskneft VNK, Slavneft, Russneft and KazMunaiGaz. The Company has long-standing relationships with these customers and has been a reliable service provider since its market entrance in the early nineties. C.A.T. oil has its headquarters in Vienna. The Company's 9M 2014 weighted average headcount stood at 2,920 people, most of which are based in Russia and Kazakhstan.
Key financial figures for Q1-Q3 2014
[million EUR] Q1-Q3 2014 Q1-Q3 2013 Change (%) Revenues 323.9 322.9 0.3 Cost of sales 250.8 258.8 -3.1 Gross profit 73.1 64.1 14.0 EBITDA 93.8 86.0 9.1 EBITDA margin (%) 28.9 26.6 EBIT 58.4 48.4 20.7 EBIT margin (%) 18.0 15.0 Net income 49.2 38.2 28.8 Earnings per share 1.01 0.78 (EUR) Equity Ratio (%)[1] 60.3 71.4
Cash flow from 50.7 76.8 -33.9 operating activities Cash flow from -81.2 -38.1 113.3 investing activities Cash flow from 23.2 -41.4 -155.8 financing activities Cash and cash 31.7 42.6 -25.8 equivalents [1]
Total job count 3,315 2,938 12.8 Per-job revenue (thou. 98 110 -11.1 EUR) Employees 2,920 2,673 9.2

[1] As of 30 September 2014 and 31 December 2013 respectively
Key financial figures for Q3 2014
[in million EUR] Q3 2014 Q3 2013 Change (%) Revenues 120.7 112.8 7.0 Cost of sales -89.9 -88.2 1.9 Gross profit 30.9 24.7 25.3 EBITDA 38.8 33.3 16.6 EBITDA margin (%) 32.2 29.5 EBIT 26.1 21.2 23.3 EBIT margin (%) 21.6 18.8 Net income 24.0 17.0 40.9 Earnings per share 0.49 0.35 (EUR)
Cash flow from 24.3 29.2 -16.8 operating activities Cash flow from -39.5 -8.9 343.3 investing activities Cash flow from 8.8 -34.6 -125.5 financing activities
Total job count 1,258 1,072 17.3 Per-job revenue 96 105 -8.8 (thou. EUR)

end of announcement euro adhoc
company: C.A.T. oil AG Kärntner Ring 11-13 A-1010 Wien phone: +43(0) 1 535 23 20 - 0 FAX: +43(0) 1 535 23 20 - 20 mail: ir@catoilag.com WWW: http://www.catoilag.com sector: Oil & Gas - Upstream activities ISIN: AT0000A00Y78 indexes: SDAX, Classic All Share, Prime All Share

stockmarkets: regulated dealing/prime standard: Frankfurt language: English
Digital press kit: http://www.ots.at/pressemappe/EASY_61923/aom

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