PASON SYSTEMS $17.26 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.0 million; Market cap: $1.4 billion; Dividend yield: 2.8%) rents equipment for monitoring and managing oil and gas rigs. It also sells communication systems, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia.
In the three months ended September 30, 2012, Pason’s revenue rose 4.9%, to $93.1 million from $88.7 million a year earlier. Cash flow per share was unchanged at $0.50.
Higher international sales and steady drilling activity in the U.S. offset lower revenue in Canada. Pason’s U.S. sales rose 13.8%, to $54.6 million, and international sales jumped 34.0% to $9.4 million. Canadian revenue declined 13.8%, to $29.0 million.
Pason raised its semi-annual dividend by 9.1% with the January 2013 payment, to $0.24 from $0.22. The shares yield 2.8%.
Overseas sales are key to growth
Pason’s systems are installed on roughly 91% of all active land rigs in Canada and 55% of the land rigs in the U.S. But there’s still room for international expansion. Demand is also rising for more modern equipment, such as Pason’s hazardous gas alarm system.
Pason’s shares have risen 33% over the past year, even with lower oil and gas prices. It’s still heavily reliant on the resource sector, but its international growth should keep its revenue and cash flow high.
Pason Systems is still a buy.
