FLINT Announces Fourth Quarter and 2022 Annual Financial Results
Reports record Annual Revenues of $604.7 million and record Adjusted EBITDAS of $32.1 million
Calgary, Alberta (March 2, 2023) – FLINT Corp. (formerly ClearStream Energy Services Inc.) (“FLINT” or the
"Company") (TSX: FLNT) today announced its results for the three and twelve months ended December 31, 2022.
All amounts are in Canadian dollars and expressed in thousands of dollars unless otherwise noted.
“EBITDAS” and “Adjusted EBITDAS” are not standard measures under IFRS. Please refer to the Advisory
regarding Non-Standard Measures at the end of this press release for a description of these items and limitations
of their use.
“While activity levels moderated slightly in the fourth quarter due to the seasonality in our business, they remained
strong with fourth quarter revenues of $149.7 million, representing an increase of 46.9% from the fourth quarter of
2021. For the full year, we reported revenues of $604.7 million, an increase of 55.3% from 2021 and an annual
record for the company. The commitment of our workforce, which peaked at over 4,000 employees in 2022, to
safety and quality allowed the work to be delivered on time and on budget,” said Barry Card, Chief Executive
Officer.
“On December 1, 2022, we rebranded the company as FLINT. The rebranding marks the next step in our
transformation that began in 2019 when we acquired the legacy Flint business and brand. FLINT represents a
legacy, and we intend to build on this as we pursue our purpose to help our customers bring their resources to our
world and our mission to be the service company of choice. We are encouraged by the on-going momentum in
our served markets, as evidenced by the booking of new contract awards and renewals totaling $288.6 million in
the fourth quarter and $848.1 million in full-year 2022,” added Mr. Card.
ANNUAL HIGHLIGHTS
•
Revenues for the year ended December 31, 2022 were $604.7 million, representing an increase of
$215.3 million or 55.3% from 2021.
• Gross profit for the year ended December 31, 2022 was $63.1 million, representing an increase of $22.8
million or 56.5% from 2021.
• Gross profit margin for the year ended December 31, 2022 was 10.4%, which was consistent with 2021.
•
•
•
•
•
Adjusted EBITDAS for the year ended December 31, 2022 was $32.1 million, representing an increase of
$14.9 million or 87.3% from 2021.
Adjusted EBITDAS margin for the year ended December 31, 2022 was 5.3%, representing an increase of
0.9% from 2021.
Selling, general and administrative ("SG&A") expenses for year ended December 31, 2022 were
$37.2 million, representing an increase of $10.9 million or 41.5% from 2021. The increase in SG&A
expenses is largely due to the growth in the business and ongoing investments in the Company's
enterprise systems and digital strategy, which are expected to drive longer-term efficiencies, increase cost
competitiveness and improve scalability. As a percentage of revenue, SG&A expenses for the year ended
December 31, 2022 were 6.2%, down from 6.8% in 2021.
Liquidity, including cash and available credit facilities, was $37.0 million at December 31, 2022, as
compared to $33.7 million at December 31, 2021.
New contract awards and renewals totaled approximately $848.1 million for the year ended December 31,
2022.
Page 1
FOURTH QUARTER HIGHLIGHTS
•
Revenues for the three months ended December 31, 2022 were $149.7 million, representing an increase
of $47.8 million or 46.9% from Q4 2021.
• Gross profit for the three months ended December 31, 2022 was $17.1 million, representing an increase
of $7.3 million or 75.5% from Q4 2021.
• Gross profit margin for the three months ended December 31, 2022 was 11.4% compared to 9.5% for the
same period in 2021.
•
•
•
•
Adjusted EBITDAS for the three months ended December 31, 2022 was $8.8 million, representing an
increase of $4.3 million or 96.3% from Q4 2021.
Adjusted EBITDAS margin was 5.8% for the three months ended December 31, 2022 compared to 4.4%
for the same period in 2021.
SG&A expenses for the three months ended December 31, 2022 were $9.4 million, representing an
increase of $2.9 million or 45.6% from Q4 2021. As a percentage of revenue, SG&A expenses for the
three months ended December 31, 2022 were 6.3%, unchanged from Q4 2021.
New contract awards and renewals totaled approximately $288.6 million for the three months ended
December 31, 2022 and $47.0 million for the first two months of 2023. Approximately 55% of the work is
expected to be completed in 2023.
Maintenance and Construction Services
Revenue for the Maintenance and Construction Services segment was $555.2 million for the year ended
December 31, 2022, compared to $354.7 million for the same period in 2021, representing an increase of 56.5%.
Revenue for three months ended December 31, 2022 was $136.2 million compared to $94.0 million for the same
period in 2021, representing increase of 44.9%. The increase relative to 2021 was driven by strong market
momentum as we completed a record 30 turnaround projects.
Gross profit margin was 9.8% for the year ended December 31, 2022 compared to 8.6% for the same period in
2021. We continue to focus on consolidating various scopes of work with existing or new customers by bundling
our services in order to enable more efficient execution and lower costs for our customers on each work site.
Wear Technology Overlay Services
Revenues for the Wear Technology Overlay Services segment for the year ended December 31, 2022 were $54.2
million, compared to $37.8 million for the same period in 2021, representing an increase of 43.2%. The increase
was due to activity levels for wear technology overlay and fabrication services continuing to see a strong market
recovery as customers in the oil sands seek to operate at full capacity.
Gross profit margin was 15.7% for the year ended December 31, 2022, compared to 25.8% for the same period in
2021. The decrease was due to the mix of business, job margins being lower for certain projects and an increase
in material costs.
Environmental Services
We continue to enhance our professional services capabilities to service our growing customer base in this
market segment. Our customers in the energy sector continue to allocate expenditures for the closure,
reclamation and remediation of oil and gas wells, pipelines and facilities in Western Canada to comply with
regulatory requirements and to meet their commitments regarding ESG (environmental, social and governance)
matters.
Page 2
Corporate
On December 1, 2022, the Company amended its articles in accordance with the Business Corporations Act
(Alberta) to change its legal name from ClearStream Energy Services Inc. to FLINT Corp. As part of the name
change, the ticker symbol of the Company's common shares on the Toronto Stock Exchange also changed from
CSM to FLNT.
On January 1, 2023, Brad Naeth, Vice President, Wear Technology Overlay, was appointed Vice President, Wear
and Environmental Services. In this new role, Brad will be responsible for Environmental Services and will
continue to lead Wear Technology Overlay Services.
FOURTH QUARTER AND ANNUAL 2022 FINANCIAL RESULTS
($ thousands, except per share
amounts)
Revenue
Maintenance and Construction Services
Wear Technology Overlay Services
Eliminations(1)
Total
Gross Profit
Maintenance and Construction Services
Wear Technology Overlay Services
Total
Gross Profit Margin (% of revenue)
Three months ended
December 31,
Twelve months ended
December 31,
2022
2021 % Change
2022
2021 % Change
136,173
13,588
(14)
149,747
94,004
9,040
(1,089)
101,955
44.9 % 555,191
50.3 %
54,160
(98.7) % (4,678)
46.9 % 604,673
354,652
37,826
(3,076)
389,402
15,726
1,349
17,075
7,929
1,799
9,728
98.3 %
(25.0) %
75.5 %
54,653
8,480
63,133
56.5 %
43.2 %
52.0 %
55.3 %
78.7 %
(13.1) %
56.5 %
1.2 %
(10.1) %
— %
30,581
9,755
40,336
8.6 %
25.8 %
10.4 %
Maintenance and Construction Services
11.5 %
8.4 %
3.1 %
Wear Technology Overlay Services
9.9 %
19.9 %
(10.0) %
Total
11.4 %
9.5 %
1.9 %
9.8 %
15.7 %
10.4 %
Selling, general and administrative
expenses
% of revenue
Adjusted EBITDAS(2)
Maintenance and Construction Services
Wear Technology Overlay Services
Corporate
Total
% of revenue
(Loss) income from continuing operations
Net (loss) income per share (dollars) from
continuing operations (basic and diluted)
9,383
6.3 %
6,443
6.3 %
45.6 %
— %
37,204
6.2 %
26,298
6.8 %
41.5 %
(0.6) %
15,705
1,268
(8,215)
8,758
5.8 %
(4,848)
7,876
1,725
(5,139)
4,462
4.4 %
5
54,258
99.4 %
(26.5) %
8,171
59.9 % (30,376)
96.3 %
32,053
5.3 %
1.4 %
— % (12,431)
30,627
9,455
(22,968)
17,114
4.4 %
(9,296)
77.2 %
(13.6) %
32.3 %
87.3 %
0.9 %
33.7 %
(0.04)
0.00
— %
(0.11)
(0.08)
37.5 %
(1) The eliminations includes eliminations of inter-segment transactions. FLINT accounts for inter-segment sales based on transaction price.
(2) "Adjusted EBITDAS” is not a standard measure under IFRS. Please refer to the Advisory regarding Non-Standard Measures at the end of this press release for a
description of this measure and limitations of its use.
Revenue for the year ended December 31, 2022 was $604,673 compared to $389,402 for the same period in
2021, representing an increase of 55.3%. The increase in revenue was driven by the strong market momentum in
2022, representing an increase in activity across all areas of the business with the largest increase occurring in
the Maintenance and Construction Services segment.
Page 3
Gross profit for the year ended December 31, 2022 was $63,133 compared to $40,336 for the same period of
2021, representing an increase of 56.5%. The increase in gross profit was primarily driven by an increase in the
volume of work in the Maintenance and Construction Services segment. Gross profit margin for the year ended
December 31, 2022 was 10.4%, which was consistent with 2021.
SG&A expenses for the year ended December 31, 2022 were $37,204, in comparison to $26,298 for the same
period in 2021, representing an increase of 41.5%. As a percentage of revenue, SG&A expenses for the year
ended December 31, 2022 were 6.2% compared to 6.8% for the same period in 2021. The increase in SG&A
expenses is largely due to the growth in the business and ongoing investments in the Company's enterprise
systems and digital strategy, which are expected to drive longer-term efficiencies, increase cost competitiveness
and improve scalability.
For the year ended December 31, 2022, Adjusted EBITDAS was $32,053 compared to $17,114 for the same
period in 2021. As a percentage of revenue, Adjusted EBITDAS was 5.3% for the year ended December 31, 2022
compared to 4.4% for the same period in 2021.
Loss from continuing operations for the year ended December 31, 2022 was $12,431 in comparison to a loss of
$9,296 for the same period in 2021. The variance was driven by the reduction in government subsidies in 2022,
an increase in SG&A expenses and restructuring expenses and the impairment of goodwill and intangible assets
recognized in 2022, partially offset by a significant improvement in gross profit for the Maintenance and
Construction Services segment and the impairment of right-of-use assets recognized in 2021.
LIQUIDITY AND CAPITAL RESOURCES
On October 5, 2022, FLINT amended its asset-based revolving credit facility (the “ABL Facility”) with a Canadian
charted bank to increase the maximum borrowings available thereunder to $50 million. The amount available
under the ABL Facility will vary from time to time based on the borrowing base determined with reference to the
accounts receivable of FLINT and certain of its subsidiaries. The maturity date of the ABL Facility is April 14, 2025.
The expanded ABL Facility will provide additional working capital needed to finance higher levels of activity.
The Company anticipates that its liquidity (cash on hand and available credit facilities) and cash flow from
operations will be sufficient to meet its short-term contractual obligations and maintain compliance with its
financial covenants through December 31, 2023.
As at December 31, 2022, the issued and outstanding share capital included 110,001,239 common shares,
127,732 Series 1 preferred shares, and 40,111 Series 2 preferred shares.
The Series 1 preferred shares (having an aggregate value of $127.732 million) are convertible at the option of the
holder into common shares at a price of $0.35/share and the Series 2 preferred shares (having an aggregate
value of $40.111 million) are convertible into common shares at a price of $0.10/share.
The Series 1 and Series 2 preferred shares have a 10% fixed cumulative preferential cash dividend payable when
the Company has sufficient monies to be able to do so, including under the provisions of applicable law and
contracts affecting the Company. The Board of Directors of the Company does not intend to declare or pay any
cash dividends until such times as the Company's balance sheet and liquidity position supports the payment. As
at December 31, 2022, the accrued and unpaid dividends on the Series 1 and Series 2 shares totaled $76.7
million. Any accrued and unpaid dividends are convertible in certain circumstances at the option of the holder into
additional Series 1 and Series 2 preferred shares.
Page 4
OUTLOOK
The combination of rising global energy demand, the sanctions on Russian production in response to the war in
Ukraine and a multi-year period of underinvestment in upstream development has resulted in a tight market for oil
and gas, which should continue to provide support for commodity prices in 2023. At current commodity price
levels, we anticipate continued high demand for our services as customers seek to maintain or incrementally grow
production levels. However, broad economic concerns exist with respect to inflation, rising interest rates and
geopolitical instability, the combination of which may lead to a global recession. These concerns may negatively
impact the spending plans of our customers.
While our customers have been prioritizing debt repayment and returns to shareholders, they are starting to
increase spending on both maintenance projects (to enhance operational reliability) and capital projects (to
maintain or expand production capacity). We expect these activity levels to remain strong in 2023.
FLINT has continued to add new service offerings that encompass the full asset lifecycle and is now offering a
suite of more than 40 services. Through the extensive regional coverage provided by our 19 operating facilities,
we believe that FLINT is well-positioned to further consolidate the services required at various operating sites
while generating efficiencies and cost reductions for its customers. We are also continually working to improve our
service delivery to anticipate our customer’s requirements and proactively meet their needs.
Additional Information
Our audited consolidated financial statements for the year ended December 31, 2022 and the related
Management's Discussion and Analysis of the operating and financial results can be accessed on our website at
www.flintcorp.com and will be available shortly through SEDAR at www.sedar.com.
About FLINT Corp.
With a legacy of excellence and experience stretching back more than 100 years, FLINT provides solutions for the
Energy and Industrial markets including: Oil & Gas, Petrochemical, Mining, Power, Agriculture, Forestry,
Infrastructure and Water Treatment. With offices strategically located across Canada and a dedicated workforce,
we provide maintenance, construction, wear technology and environmental services that keep our clients moving
forward. For more information about FLINT, please visit www.flintcorp.com or contact:
Randy Watt
Chief Financial Officer
FLINT Corp.
(587) 318-0997
rwatt@flintcorp.com
Barry Card
Chief Executive Officer
FLINT Corp.
(587) 318-0997
bcard@flintcorp.com
Page 5
Advisory regarding Forward-Looking Information
Certain information included in this press release may constitute “forward-looking information” within the meaning of Canadian securities laws. In some cases,
forward-looking information can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”,
“continue” or the negative of these terms or other similar expressions concerning matters that are not historical facts. This press release contains forward-looking
information relating to: our business plans, strategies and objectives; contract renewals and project awards, including the estimated value thereof and the timing of
completing the associated work; the demand for wear technology overlay and fabrication services; that customers will continue to allocate expenditures for the
closure, reclamation and remediation of oil and gas wells, pipelines and facilities in Western Canada; that the investments being made to support our enterprise
systems and digital strategy will drive longer-term efficiencies, increase cost competitiveness and improve scalability; the sufficiency of our liquidity and cash flow
from operations to meet our short-term contractual obligations and maintain compliance with our financial covenants through December 31, 2023; our dividend
policy; the supply/demand fundamentals for oil and natural gas and its impact on the demand for our services; and that broad economic concerns may negatively
impact the spending plans of our customers.
Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events
and results discussed in the forward-looking information including, but not limited to, compliance with debt covenants, access to credit facilities and other sources
of capital for working capital requirements and capital expenditure needs, availability of labour, dependence on key personnel, economic conditions, commodity
prices, interest rates, future actions by governmental authorities in response to Covid-19 or another pandemic, regulatory change, weather and risks related to the
integration of acquired businesses. These factors should not be considered exhaustive. Risks and uncertainties about FLINT’s business are more fully discussed in
FLINT’s disclosure materials, including its annual information form and management’s discussion and analysis of the operating and financial results, filed with the
securities regulatory authorities in Canada and available at www.sedar.com. In formulating the forward-looking information, management has assumed that
business and economic conditions affecting FLINT will continue substantially in the ordinary course, including, without limitation, with respect to general levels of
economic activity, regulations, taxes and interest rates. Although the forward-looking information is based on what management of FLINT consider to be
reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with this forward-
looking information, and management’s assumptions may prove to be incorrect.
This forward-looking information is made as of the date of this press release, and FLINT does not assume any obligation to update or revise it to reflect new events
or circumstances except as required by law. Undue reliance should not be placed on forward-looking information. Forward-looking information is provided for the
purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not
be appropriate for other purposes.
Advisory regarding Non-Standard Measures
The terms ‘‘EBITDAS’’ and “Adjusted EBITDAS” (collectively, the ‘‘Non-standard measures’’) are financial measures used in this press release that are not
standard measures under IFRS. FLINT’s method of calculating the Non-Standard Measures may differ from the methods used by other issuers. Therefore, the
Non-Standard Measures, as presented, may not be comparable to similar measures presented by other issuers.
EBITDAS refers to income (loss) from continued operations in accordance with IFRS, before depreciation and amortization, interest expense, income tax expense
(recovery) and long-term incentive plan expenses. EBITDAS is used by management and the directors of FLINT as well as many investors to determine the ability
of an issuer to generate cash from operations. Management also uses EBITDAS to monitor the performance of FLINT’s reportable segments and believes that in
addition to income (loss) from continued operations and cash provided by operating activities, EBITDAS is a useful supplemental measure from which to determine
FLINT’s ability to generate cash available for debt service, working capital, capital expenditures and income taxes. FLINT has provided a reconciliation of income
(loss) from continuing operations to EBITDAS below.
Adjusted EBITDAS refers to EBITDAS excluding impairment of goodwill and intangible assets, restructuring expense, gain on sale of property, plant and
equipment, loss (recovery) of contingent consideration liability, one time incurred expenses, impairment of right-of-use assets and government subsidies. FLINT
has used Adjusted EBITDAS as the basis for the analysis of its past operating financial performance. Adjusted EBITDAS is a measure that management believes
(i) is a useful supplemental measure from which to determine FLINT’s ability to generate cash available for debt service, working capital, capital expenditures, and
income taxes, and (ii) facilitates the comparability of the results of historical periods and the analysis of its operating financial performance which may be useful to
investors. FLINT has provided a reconciliation of income (loss) from continuing operations to Adjusted EBITDAS below.
Investors are cautioned that the Non-Standard Measures are not alternatives to measures under IFRS and should not, on their own, be construed as an indicator
of performance or cash flows, a measure of liquidity or as a measure of actual return on the shares. These Non-Standard Measures should only be used with
reference to FLINT’s consolidated interim and annual financial statements, which are available on SEDAR at www.sedar.com or on FLINT’s website at
www.flintcorp.com.
Page 6
Depreciation expense
Long-term incentive plan expense
Interest expense
EBITDAS
Add (deduct):
Gain on sale of property, plant and
equipment
Impairment of intangible assets and
goodwill
Restructuring expenses
Three months ended
December 31, 2022
Income (loss) from continuing
operations
Add:
Maintenance and
Construction
Services
Wear Technology
Overlay Services
Corporate
Total
2022
2021
2022
2021
2022
2021
2022
2021
$ 13,760 $ 10,016 $ (3,252) $ 1,172 $ (15,356) $ (11,183) $ (4,848) $
5
Amortization of intangible assets
32
52
1,749
1,861
—
114
—
153
101
628
—
136
115
700
—
97
—
179
—
133
167
323
2,556
2,884
1,758
1,239
1,758
1,239
4,284
3,664
4,534
3,914
15,655 12,082
(2,387)
2,084
(9,135)
(5,957)
4,133
8,209
Income from government subsidies
—
(4,153)
One-time incurred expenses
Recovery on contingent
consideration liability
—
—
—
—
—
169
—
—
(119)
(53)
—
—
(119)
(53)
—
—
—
—
—
—
3,652
(110)
168
62
—
168
(359)
—
(308)
—
(4,820)
—
1,030
1,107
1,030
1,107
—
—
(149)
—
(149)
3,652
3
—
—
—
Adjusted EBITDAS
$ 15,705 $ 7,876 $ 1,268 $ 1,725 $ (8,215) $ (5,139) $ 8,758 $ 4,462
Twelve months ended
December 31, 2022
Income (loss) from continuing
operations
Add:
Maintenance and
Construction
Services
Wear Technology
Overlay Services
Corporate
Total
2022
2021
2022
2021
2022
2021
2022
2021
$ 46,522 $ 35,826 $ 1,231 $ 6,833 $ (60,184) $ (51,955) $ (12,431) $ (9,296)
Amortization of intangible assets
117
209
446
460
—
—
563
669
Depreciation expense
6,983
7,785
2,556
2,763
937
1,676 10,476 12,224
Long-term incentive plan expense
Interest expense
EBITDAS
Add (deduct):
Gain on sale of property, plant and
equipment
Impairment of intangible assets and
goodwill
Restructuring expenses
—
769
—
799
—
282
—
3,061
2,239
3,061
2,239
328 15,852 14,807 16,903 15,934
54,391 44,619
4,515 10,384 (40,334) (33,233) 18,572 21,770
(350)
(238)
—
—
217
—
3,652
—
—
—
—
—
(350)
(238)
—
3,652
—
2
4
282
3,894
768
4,115
1,052
Income from government subsidies
— (13,756)
—
(1,211)
—
(1,166)
— (16,133)
One-time incurred expenses
Impairment of right-of-use assets
Loss (recovery) on contingent
consideration liability
—
—
—
—
—
—
—
—
—
—
—
—
5,983
2,542
5,983
2,542
—
8,270
—
8,270
81
(149)
81
(149)
Adjusted EBITDAS
$ 54,258 $ 30,627 $ 8,171 $ 9,455 $ (30,376) $ (22,968) $ 32,053 $ 17,114
Page 7
Management’s Discussion and Analysis
March 2, 2023
The following is management’s discussion and analysis (“MD&A”) of the consolidated results of operations,
balance sheets and cash flows of FLINT Corp. (formerly ClearStream Energy Services Inc.) ("FLINT" or the
"Company") for the years ended December 31, 2022 and 2021. This MD&A should be read in conjunction with
FLINT’s audited consolidated financial statements and the notes thereto for the years ended December 31, 2022
and 2021.
All amounts in this MD&A are in Canadian dollars and expressed in thousands of dollars unless otherwise noted.
The accompanying audited consolidated financial statements of FLINT have been prepared by and are the
responsibility of management. The contents of this MD&A have been approved by the Board of Directors of FLINT
on the recommendation of its Audit Committee. This MD&A is dated March 2, 2023 and is current to that date
unless otherwise indicated.
The audited consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
This MD&A makes reference to certain measures that are not defined in IFRS and contains forward-looking
information. These measures do not have any standard meaning prescribed by IFRS and are therefore unlikely to
be comparable to similar measures presented by other issuers. See "Advisory regarding Forward-Looking
Information" and "Advisory regarding Non-Standard Measures".
References to “we”, “us”, “our” or similar terms, refer to FLINT, unless the context otherwise requires.
P A G E 1
Reportable Segments
The three segments listed below represent the reportable segments that the chief operating decision maker
considers when reviewing the performance of FLINT and deciding where to allocate resources.
FLINT’s operations, assets and employees are mainly located in Canada with some activity in the United States
through its Universal Weld Overlays division. FLINT utilizes EBITDAS and Adjusted EBITDAS as performance
measures for its segmented results. These measures are considered to be non-standard measures under IFRS.
Segment
Business Description
Maintenance and
Construction Services
the
Operational, maintenance,
conventional oil and gas, oil sands, and other industries as well as abandonment,
decommissioning, and reclamation services.
turnaround and construction services
to
Wear Technology Overlay
Services
Custom fabrication services supporting pipeline and infrastructure projects,
patented wear technology overlay services specializing in overlay pipe spools,
pipe bends and plate.
Corporate
Provision of typical head office functions, including strategic planning, corporate
finance, human resources and
communications,
information technology.
legal, marketing,
taxes,
P A G E 2
Advisory regarding Forward-Looking Information
Certain information included in this MD&A may constitute “forward-looking information” within the meaning of Canadian securities laws. In some cases, forward-
looking information can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”,
“continue” or the negative of these terms or other similar expressions concerning matters that are not historical facts. Specifically, this MD&A contains forward-
looking information relating to: our business plans, strategies and objectives; that the investments being made to support our enterprise systems and digital
strategy will drive longer-term efficiencies, increase cost competitiveness and improve scalability; the sufficiency of our liquidity and cash flow from operations to
meet our short-term contractual obligations and maintain compliance with our financial covenants through December 31, 2023; our dividend policy; the effect of
known claims and litigation on our financial position and results of operations; the supply/demand fundamentals for oil and natural gas and its impact on the
demand for our services; and that broad economic concerns may negatively impact the spending plans of our customers.
Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events
and results discussed in the forward-looking information including, but not limited to, compliance with debt covenants, access to credit facilities and other sources
of capital for working capital requirements and capital expenditure needs, availability of labour, dependence on key personnel, economic conditions, commodity
prices, interest rates, future actions by governmental authorities in response to Covid-19 or another pandemic, regulatory change, weather and risks related to the
integration of acquired businesses. These factors should not be considered exhaustive. Risks and uncertainties about FLINT’s business are more fully discussed in
FLINT’s disclosure materials, including its annual information form and management’s discussion and analysis of the operating and financial results, filed with the
securities regulatory authorities in Canada and available at www.sedar.com. In formulating the forward-looking information, management has assumed that
business and economic conditions affecting FLINT will continue substantially in the ordinary course, including, without limitation, with respect to general levels of
economic activity, regulations, taxes and interest rates. Although the forward-looking information is based on what management of FLINT consider to be
reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with this forward-
looking information, and management’s assumptions may prove to be incorrect.
This forward-looking information is made as of the date of this MD&A, and FLINT does not assume any obligation to update or revise it to reflect new events or
circumstances except as required by law. Undue reliance should not be placed on forward-looking information. Forward-looking information is provided for the
purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not
be appropriate for other purposes.
Advisory regarding Non-Standard Measures
The terms ‘‘EBITDAS’’ and “Adjusted EBITDAS” (collectively, the ‘‘Non-Standard Measures’’) are financial measures used in this MD&A that are not standard
measures under IFRS. FLINT’s method of calculating the Non-Standard Measures may differ from the methods used by other issuers. Therefore, the Non-
Standard Measures, as presented, may not be comparable to similar measures presented by other issuers.
EBITDAS refers to income (loss) from continued operations in accordance with IFRS, before depreciation and amortization, interest expense, income tax expense
(recovery) and long-term incentive plan expenses. EBITDAS is used by management and the directors of FLINT as well as many investors to determine the ability
of an issuer to generate cash from operations. Management also uses EBITDAS to monitor the performance of FLINT’s reportable segments and believes that in
addition to income (loss) from continued operations and cash provided by operating activities, EBITDAS is a useful supplemental measure from which to determine
FLINT’s ability to generate cash available for debt service, working capital, capital expenditures and income taxes. FLINT has provided a reconciliation of income
(loss) from continuing operations to EBITDAS below.
Adjusted EBITDAS refers to EBITDAS excluding impairment of goodwill and intangible assets, restructuring expense, gain on sale of property, plant and
equipment, loss (recovery) of contingent consideration liability, one time incurred expenses, impairment of right-of-use assets and government subsidies. FLINT
has used Adjusted EBITDAS as the basis for the analysis of its past operating financial performance. Adjusted EBITDAS is a measure that management believes
(i) is a useful supplemental measure from which to determine FLINT’s ability to generate cash available for debt service, working capital, capital expenditures, and
income taxes, and (ii) facilitates the comparability of the results of historical periods and the analysis of its operating financial performance which may be useful to
investors. FLINT has provided a reconciliation of income (loss) from continuing operations to Adjusted EBITDAS below.
Investors are cautioned that the Non-Standard Measures are not alternatives to measures under IFRS and should not, on their own, be construed as an indicator
of performance or cash flows, a measure of liquidity or as a measure of actual return on the shares. These Non-Standard Measures should only be used with
reference to FLINT’s consolidated interim and annual financial statements, which are available on SEDAR at www.sedar.com or on FLINT’s website at
www.flintcorp.com.
P A G E 3
2022 SUMMARY OF RESULTS – CONTINUING OPERATIONS ($000's)
Three months ended
December 31,
Twelve months ended
December 31,
For the year ended December 31,
2022
2021
2022
2021
Revenue
Cost of revenue
Gross profit
$
149,747 $
101,955 $
604,673 $
389,402
(132,672)
(92,227)
(541,540)
(349,066)
17,075
9,728
63,133
40,336
Selling, general and administrative expenses
Long-term incentive plan expense
Amortization of intangible assets
Depreciation expense
Income from long-term investments
Interest expense
Restructuring expenses
Impairment of intangible assets and goodwill
Impairment of right-of-use assets
Recovery (loss) on contingent consideration
liability
Gain on sale of property, plant and equipment
Income from government subsidies
(9,383)
(1,758)
(133)
(2,556)
36
(6,443)
(1,239)
(167)
(37,204)
(26,298)
(3,061)
(563)
(2,239)
(669)
(2,884)
(10,476)
(12,224)
70
141
(4,534)
(3,914)
(16,903)
—
(8,270)
(62)
(3,652)
—
—
119
—
(168)
—
—
149
53
4,820
(Loss) income from continuing operations
(4,848)
5
(12,431)
Add:
Amortization of intangible assets
Depreciation expense
Long-term incentive plan expense
Interest expense
EBITDAS (1)
Add (deduct):
Gain on sale of property, plant and equipment
Impairment of intangible assets and goodwill
Restructuring expenses
Income from government subsidies
One-time incurred expenses
Impairment of right-of-use assets
133
2,556
1,758
4,534
4,133
(119)
3,652
62
—
1,030
—
167
2,884
1,239
3,914
8,209
(53)
—
168
(4,820)
1,107
—
(Recovery) loss on contingent consideration
liability
Adjusted EBITDAS (1)
$
(1) EBITDAS and Adjusted EBITDAS are not standard measures under IFRS and they are defined in the section "Advisory regarding Non-Standard Measures".
32,053 $
8,758 $
4,462 $
(149)
81
—
(4,115)
(3,652)
(81)
350
—
563
10,476
3,061
16,903
18,572
(350)
3,652
4,115
5,983
—
—
(16,133)
534
(15,934)
(1,052)
—
149
238
16,133
(9,296)
669
12,224
2,239
15,934
21,770
(238)
—
1,052
2,542
8,270
(149)
17,114
P A G E 4
Net (loss) income per share (dollars)
2022
2021
2022
2021
Three months ended
December 31,
Twelve months ended
December 31,
Basic & Diluted:
Continuing operations
Discontinued operations
Net (loss) income
Selected Balance Sheet Accounts
Total assets
ABL facility
Term loan facility
Senior secured debentures
Other secured borrowings
Shareholders' deficit
2022 RESULTS
$
$
$
(0.04) $
(0.01) $
(0.05) $
0.00 $
0.00 $
0.00 $
(0.11) $
(0.01) $
(0.12) $
(0.08)
(0.00)
(0.08)
December 31, December 31,
2021
2022
$
233,978 $
9,334
40,157
119,048
14,143
205,454
—
40,436
109,744
15,571
$
42,229 $
29,250
Revenue for the year ended December 31, 2022 was $604,673 compared to $389,402 for the same period in
2021, representing an increase of 55.3%. The increase in revenue was driven by the strong market momentum in
2022, representing an increase in activity across all areas of the business with the largest increase occurring in
the Maintenance and Construction Services segment.
Gross profit for the year ended December 31, 2022 was $63,133 compared to $40,336 for the same period of
2021, representing an increase of 56.5%. The increase in gross profit was primarily driven by an increase in the
volume of work in the Maintenance and Construction Services segment. Gross profit margin for the year ended
December 31, 2022 was 10.4%, consistent with 2021.
Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2022 were $37,204, in
comparison to $26,298 for the same period in 2021, representing an increase of 41.5%. As a percentage of
revenue, SG&A expenses for the year ended December 31, 2022 was 6.2% compared to 6.8% for the same
period in 2021. The increase in SG&A expenses is largely due to the growth in the business and ongoing
investments in the Company's enterprise systems and digital strategy, which are expected to drive longer-term
efficiencies, increase cost competitiveness and improve scalability.
Non-cash items that impacted the 2022 results were depreciation, amortization and asset impairments. For the
year ended December 31, 2022, depreciation and amortization expenses were $11,039 compared to $12,893 for
the same period in 2021. The decrease in depreciation and amortization expenses is due to the passage of time
and regular reduction of asset values. The Company recognized an impairment of intangible assets and goodwill
in the year ended December 31, 2022 of $3,652 as a result of reduced forecasted demand in the Universal Weld
Overlay CGU ("UWO"). Customer spending for UWO's services are not forecasted to increase as much as
originally anticipated. The Company recognized an impairment of right-of-use assets in the year ended December
31, 2021 of $8,270, of which the primary purpose was to earn sub-lease income and where market conditions for
generating sub-lease income had become uncertain.
For the year ended December 31, 2022, interest expenses were $16,903 compared to $15,934 for the same
periods in 2021, representing an increase of 6.1%. The increase was due primarily to the Company utilizing its
asset-based revolving credit facility in 2022 with the increase in volume of work, compared to no amounts being
drawn on the facility in the comparable period in 2021.
P A G E 5
Restructuring expenses of $4,115 were recorded during the year ended December 31, 2022 compared to $1,052
for the same period in 2021. The non-recurring restructuring expenses in 2022 were primarily related to a
management change that occurred in March 2022.
Income from government subsidies includes the Canada Emergency Wage Subsidy ("CEWS") and the Canada
Emergency Rent Subsidy ("CERS") received from the Government of Canada to assist with the payment of
employee wages and rent as a result of the impact of the COVID-19 pandemic. The CEWS and CERS programs
ended in 2021. Therefore, the Company did not have any income from government subsidies during the year
ended December 31, 2022, compared to $16,133 for the same period in 2021.
Loss from continuing operations for the year ended December 31, 2022 was $12,431 in comparison to losses of
$9,296 for the same period in 2021. The variance was driven by the reduction in government subsidies in 2022,
an increase in SG&A expenses and restructuring expenses and the impairment of goodwill and intangible assets
recognized in 2022, partially offset by a significant improvement in gross profit for the Maintenance and
Construction Services segment and the impairment of right-of-use assets recognized in 2021.
For the year ended December 31, 2022, Adjusted EBITDAS was $32,053 compared to $17,114 for the same
period in 2021. As a percentage of revenue, Adjusted EBITDAS was 5.3% for the year ended December 31, 2022
compared to 4.4% for the same period in 2021.
FOURTH QUARTER 2022 RESULTS
Revenue for the three months ended December 31, 2022 was $149,747 compared to $101,955 for the same
period in 2021, representing an increase of 46.9%. The increase in revenue was driven by the strong market
momentum throughout 2022, representing an increase in activity across all areas of the business with the largest
increase occurring in the Maintenance and Construction Services segment.
Gross profit for the three months ended December 31, 2022 was $17,075 compared to $9,728 for the same
period of 2021, representing an increase of 75.5%. Gross profit margin for the three months ended December 31,
2022 was 11.4% compared to 9.5% for the same period in 2021. The increase in gross profit and gross profit
margin was primarily driven by an increase in the volume of work in the Maintenance and Construction Services
segment combined with the recovery of the increased costs realized in the business, which have been built into
contracts collaboratively with our customers.
SG&A expenses for the three months ended December 31, 2022 was $9,383, in comparison to $6,443 for the
same period in 2021, representing an increase of 45.6%. As a percentage of revenue, SG&A expenses for the
three months ended December 31, 2022 was 6.3%, consistent with the same period in 2021. The increase in
SG&A is primarily driven by costs incurred in relation to the Company's enterprise system and digital strategy as
well as increased costs related to the growth of the business in 2022.
Loss from continuing operations for the three months ended December 31, 2022 was $4,848 in comparison to
income of $5 for the same period in 2021. The income variance was driven by the reduction in government
subsidies in 2022 and the impairment of goodwill and intangible assets recognized in the fourth quarter of 2022,
offset by a significant improvement in gross profit for the Maintenance and Construction Services segment.
For the three months ended December 31, 2022, Adjusted EBITDAS was $8,758 compared to $4,462 for the
same period in 2021. As a percentage of revenue, Adjusted EBITDAS was 5.8% for the three months ended
December 31, 2022 compared to 4.4% for the same period in 2021.
P A G E 6
SEGMENT OPERATING RESULTS
MAINTENANCE AND CONSTRUCTION SERVICES
Three months ended
December 31,
Twelve months ended
December 31,
For the year ended December 31,
2022
2021
2022
2021
Revenue
Cost of revenue
Gross profit
$
136,173 $
94,004 $
555,191 $
354,652
(120,447)
(86,075)
(500,538)
(324,071)
15,726
7,929
54,653
30,581
Selling, general and administrative expenses
Amortization of intangible assets
Depreciation expense
Income from long-term investments
Interest expense
Restructuring expenses
Gain on sale of property, plant and equipment
Income from government subsidies
Income from continuing operations
Add:
Amortization of intangible assets
Depreciation expense
Interest expense
EBITDAS (1)
Add (deduct):
(57)
(32)
(123)
(52)
(536)
(117)
(488)
(209)
(1,749)
(1,861)
(6,983)
(7,785)
36
(114)
(169)
119
—
13,760
32
1,749
114
70
(153)
—
53
4,153
10,016
52
1,861
153
141
(769)
(217)
350
—
46,522
117
6,983
769
534
(799)
(2)
238
13,756
35,826
209
7,785
799
15,655
12,082
54,391
44,619
Gain on sale of property, plant and equipment
Restructuring expenses
(119)
169
(53)
—
(350)
217
Income from government subsidies
Adjusted EBITDAS (1)
$
(1) EBITDAS and Adjusted EBITDAS are not standard measures under IFRS and they are defined in the section "Advisory regarding Non-Standard Measures".
54,258 $
15,705 $
7,876 $
(4,153)
—
—
(238)
2
(13,756)
30,627
Revenues
Revenue for the Maintenance and Construction Services segment was $555,191 for the year ended December
31, 2022, compared to $354,652 for the same period in 2021, representing an increase of 56.5%. Revenue for
three months ended December 31, 2022 was $136,173 compared to $94,004 for the same period in 2021,
representing increase of 44.9%.
The increase in both the fourth quarter and full year revenues was due to strong market momentum in 2022
driven primarily by strong commodity pricing.
Gross Profit
Gross profit was $54,653 for the year ended December 31, 2022, compared to $30,581 for the same period in
2021, representing an increase of 78.7%. Gross profit margin was 9.8% for the year ended December 31, 2022
compared to 8.6% for the same period in 2021.
P A G E 7
Gross profit was $15,726 for the three months ended December 31, 2022, compared to $7,929 for the same
period in 2021, representing an increase of 98.3%. Gross profit margin was 11.5% for the three months ended
December 31, 2022 compared to 8.4% for the same period in 2021.
The increase in gross profit and gross profit margin for the three and twelve months ended December 31, 2022
was due to the increase in the volume of activity related to the ongoing market recovery in 2022 and the recovery
of the increased costs realized in the business, which have been built into contracts collaboratively with our
customers.
WEAR TECHNOLOGY OVERLAY SERVICES
Three months ended
December 31,
Twelve months ended
December 31,
For the year ended December 31,
2022
2021
2022
2021
Revenue
Cost of revenue
Gross profit
$
13,588 $
(12,239)
1,349
9,040 $
(7,241)
1,799
54,160 $
(45,680)
8,480
37,826
(28,071)
9,755
Selling, general and administrative expenses
Amortization of intangible assets
Depreciation expense
Interest expense
Restructuring expenses
Impairment of goodwill and intangible assets
Income from government subsidies
(Loss) income from continuing operations
Add:
Amortization of intangible assets
Depreciation expense
Interest expense
EBITDAS (1)
Add (deduct):
(81)
(101)
(628)
(136)
(3)
(3,652)
—
(3,252)
101
628
136
(74)
(115)
(700)
(97)
—
—
359
1,172
115
700
97
(2,387)
2,084
Impairment of goodwill and intangible assets
Restructuring expenses
3,652
3
—
—
(309)
(446)
(300)
(460)
(2,556)
(2,763)
(282)
(4)
(3,652)
—
1,231
446
2,556
282
4,515
3,652
4
(328)
(282)
—
1,211
6,833
460
2,763
328
10,384
—
282
(1,211)
9,455
Income from government subsidies
Adjusted EBITDAS (1)
$
(1) EBITDAS and Adjusted EBITDAS are not standard measures under IFRS and they are defined in the section "Advisory regarding Non-Standard Measures".
8,171 $
1,268 $
1,725 $
(359)
—
—
Revenues
Revenues for this segment for the year ended December 31, 2022 were $54,160, compared to $37,826 for the
same period in 2021, representing an increase of 43.2%. Revenues for this segment for the three months ended
December 31, 2022 were $13,588, compared to $9,040 for the same period in 2021, representing an increase of
50.3%.
The increase was due to activity levels for wear technology overlay and fabrication services continuing to see a
strong market recovery as customers in the oil sands seek to operate at full capacity.
P A G E 8
Gross Profit
Gross profit was $8,480 for the year ended December 31, 2022, compared to $9,755 for the same period in 2021,
representing a decrease of 13.1%. Gross profit margin was 15.7% for the year ended December 31, 2022,
compared to 25.8% for the same period in 2021.
Gross profit was $1,349 for the three months ended December 31, 2022, compared to $1,799 for the same period
in 2021, representing a decrease of 25.0%. Gross profit margin was 9.9% for the three months ended December
31, 2022, compared to 19.9% for the same period in 2021.
The decrease in gross profit margin was primarily due to the mix of business, job margins being lower for certain
projects and an increase in material costs.
CORPORATE
FLINT’s head office functions are located in Calgary, Alberta. The Corporate segment provides typical head office
functions, including strategic planning, corporate communications, taxes, legal, marketing, finance, human
resources and information technology, for the entire organization. The tables below reflect the costs of FLINT’s
corporate function, as well as other corporate overhead expenses.
For the year ended December 31,
Three months ended
December 31,
2021
2022
Twelve months ended
December 31,
2021
2022
Selling, general and administrative expenses
$
(9,245) $
(6,246) $
(36,359) $
(25,510)
Long-term incentive plan expense
Depreciation expense
Interest expense
Restructuring expenses
Impairment of right-of-use assets
Recovery (loss) on contingent consideration
liability
Income from government subsidies
Loss from continuing operations
Add:
Depreciation expense
Long-term incentive plan expense
Interest expense
EBITDAS (1)
Add (deduct):
Restructuring expenses
Income from government subsidies
One-time incurred expenses
Impairment of right-of-use assets
(1,758)
(179)
(4,284)
110
—
—
—
(1,239)
(323)
(3,061)
(937)
(2,239)
(1,676)
(3,664)
(15,852)
(14,807)
(168)
—
149
308
(3,894)
—
(81)
—
(768)
(8,270)
149
1,166
(15,356)
(11,183)
(60,184)
(51,955)
179
1,758
4,284
(9,135)
(110)
—
1,030
—
323
1,239
3,664
937
3,061
1,676
2,239
15,852
14,807
(5,957)
(40,334)
(33,233)
168
(308)
1,107
—
3,894
768
—
(1,166)
5,983
—
2,542
8,270
(Recovery) loss on contingent consideration
liability
Adjusted EBITDAS (1)
$
(1) EBITDAS and Adjusted EBITDAS are not standard measures under IFRS and they are defined in the section "Advisory regarding Non-Standard Measures".
(30,376) $
(5,139) $
(8,215) $
(149)
81
—
(149)
(22,968)
P A G E 9
Selling, General and Administrative Expenses
SG&A expenses were $36,359 for the year ended December 31, 2022 compared to $25,510 for the same period
in 2021. SG&A expenses as a percentage of revenue was 6.0% for the year ended December 31, 2022 compared
to 6.6% for the same period in 2021.
SG&A expenses were $9,245 for the three months ended December 31, 2022 compared to $6,246 for the same
period in 2021. SG&A expenses as a percentage of revenue were 6.2% for the three months ended December
31, 2022 compared to 6.1% for the same period in 2021.
The increase in SG&A expenses is largely due to the growth in the business and ongoing investments in the
Company's enterprise systems and digital strategy, which are expected to drive longer-term efficiencies, increase
cost competitiveness and improve scalability. In addition, certain elements of cost reductions in previous years
were reversed in order to support the increased volume of work in 2022.
LIQUIDITY AND CAPITAL RESOURCES
For the year ended December 31,
2022
2021
Cash flow (used in) provided by operating activities
$
(15,987) $
(1,394)
(1,165)
2,217
(1,224)
(9,790)
$
3,134 $
21,680
Cash flow used in investing activities
Cash flow used in financing activities
Consolidated cash, end of period
Operating Activities
Cash flow used in operating activities in 2022 is a result of a build-up in working capital, specifically accounts
receivable, due to an increase in the Company's revenues throughout the year.
The Company anticipates that its liquidity (cash on hand and available credit facilities) and cash flow from
operations will be sufficient to meet its short-term contractual obligations and maintain compliance with its
financial covenants through December 31, 2023.
Investing Activities
Cash flow used in investing activities during the year ended December 31, 2022 consisted of the purchase of
property, plant and equipment assets, partially offset by proceeds from the disposal of certain property, plant and
equipment assets.
Financing Activities
a. ABL Facility
FLINT has an asset-based revolving credit facility (the "ABL Facility") providing for maximum borrowings
up to $25,000 with a Canadian chartered bank (the "Lender"). The ABL Facility matures on April 14, 2025.
Pursuant to an amending agreement dated June 23, 2022, the ABL Facility was amended to increase the
maximum borrowings available thereunder to $30,000 during the period commencing on June 23, 2022
and ending on November 30, 2022. On October 5, 2022, the Company completed an amendment to the
ABL Facility increasing the maximum borrowing to $50,000 through maturity on April 14, 2025.
P A G E 10
The amount available under the ABL Facility will vary from time to time based on the borrowing base
determined with reference to the accounts receivable of the Company. The ABL Facility borrowing base
as at December 31, 2022 was $43,750 (December 31, 2021 - $15,000). The obligations under the ABL
Facility are secured by, among other things, a first ranking lien on all of the existing and after acquired
accounts receivable of the Company and the other guarantors, being certain of the Company's direct
subsidiaries. The interest rate on the ABL Facility is the Lender's prime rate plus 2.5% (December 31,
2021 - Lender's prime rate plus 2.5%).
As at December 31, 2022, $9,885 (December 31, 2021 - nil) was drawn on the ABL Facility, and there
were $2,147 (December 31, 2021 - $2,450) of letters of credit reducing the amount available to be drawn.
As at December 31, 2022, the net amount of deferred financing costs were $551 (December 31, 2021 -
$64).
The financial covenants applicable under the ABL Facility are as follows:
•
•
The Company must maintain a fixed charge coverage ratio equal to or greater than 1.00:1.00 for
each twelve month period calculated and tested as of the last day of each fiscal quarter; and
The Company must not expend or become obligated for any capital expenditures in an aggregate
amount exceeding $10,000 and for any non-financed capital expenditures in an aggregate
amount exceeding $4,000 for the fiscal year.
As at December 31, 2022, FLINT was in compliance with all financial covenants under the ABL Facility.
b. Term Loan Facility
FLINT has a term loan facility providing for maximum borrowings of up to $40,500 (the “Term Loan
Facility”) with Canso Investment Counsel Ltd., in its capacity as portfolio manager for and on behalf of
certain accounts that it manages (“Canso”). The Term Loan Facility matures on the earlier of (a) the date
that is 180 days following the maturity date of the ABL Facility and (b) October 14, 2025.
As at December 31, 2022, $40,500 (December 31, 2021 - $40,500) was outstanding under the Term Loan
Facility. The Term Loan Facility is required to be used for specific purposes and cannot be redrawn once
repaid. The interest rate on the Term Loan Facility is a fixed rate of 8.0% (December 31, 2021 - interest
rate on the ABL Facility plus 2.0%). The net amount of deferred financing costs were $343 as at
December 31, 2022 (December 31, 2021 - nil).
c. Other Secured Borrowings
On June 26, 2019, the Company received $19,000 from two secured loans with the Business
Development Bank of Canada (“BDC”) as a partial source of funds for the acquisition of certain assets of
the production services division of AECOM Production Services Ltd. (the "AECOM PSD Business").
The $13,500 loan is repayable over 300 monthly payments of $45, with the final payment to occur on
October 2, 2045. The interest rate on the loan is the BDC Floating Base Rate less 1.0%. Interest accrues
and is payable monthly. The Company allocated $195 in deferred financing costs to this loan that will be
amortized over the life of the loan.
The $5,500 loan is repayable over 72 monthly payments of $75, with the final payment to occur on
March 28, 2025. The interest rate on the loan is the BDC Floating Base Rate less 0.5%. Interest accrues
and is payable monthly. The Company allocated $85 in deferred financing costs to this loan that will be
amortized over the life of the loan.
The loans are secured by a first security interest on the real property and equipment acquired through the
acquisition of the AECOM PSD Business and a security interest in all other present and future property,
subject to the priorities granted to existing lenders under the ABL Facility, the Term Loan Facility, the
senior secured debentures and other existing commitments.
P A G E 11
The loan agreements with BDC require the Company to maintain a fixed charge coverage ratio equal to
or greater than 1.00:1.00 for each twelve month period calculated and tested as of the last day of each
fiscal year.
As at December 31, 2022, FLINT was in compliance with all financial covenants under the loan
agreements with BDC.
d. Senior Secured Debentures
On March 23, 2016, the Company issued 8.0% senior secured debentures due March 23, 2026 (the
"Senior Secured Debentures") pursuant to a trust indenture between FLINT, as issuer, and BNY Trust
Company of Canada, as debenture trustee, as amended and supplemented (the "Senior Secured
Indenture"), on a private placement basis to Canso. On June 2, 2020, the debenture trustee was changed
to Computershare Trust Company of Canada.
The Senior Secured Debentures bear interest at an annual rate of 8.0% payable in arrears on June 30
and December 31 of each year. The Senior Secured Debentures are redeemable at the option of the
Company and, in certain circumstances, are mandatorily redeemable. The Senior Secured Debentures
are secured by first-ranking liens over all of the property of the Company and its guarantor subsidiaries,
other than certain limited classes of collateral over which the Company has granted a prior-ranking lien in
favour of the ABL Facility, the Term Loan Facility and the other secured loans. The Senior Secured
Debentures provide for certain events of default and covenants of the Company, including financial and
reporting covenants and restrictive covenants limiting the ability of the Company and its subsidiaries to
make certain distributions and dispositions, incur indebtedness, grant liens and limitations with respect to
acquisitions, mergers,
transactions, reorganizations and hedging
arrangements (subject to certain exceptions).
investments, non-arm’s
length
On December 10, 2021, Canso, in its capacity as portfolio manager for and on behalf of certain accounts
that it manages and sole holder of the Senior Secured Debentures, agreed to accept the issuance of an
additional 4,449 Senior Secured Debentures on June 30, 2022 and 4,627 Senior Secured Debentures on
December 31, 2022 at a principal amount of $1,000 per Senior Secured Debenture in order to satisfy the
interest that would otherwise become due and payable on such dates (the "Payment in Kind
Transaction"). The terms of the new Senior Secured Debentures issued pursuant to the Payment in Kind
Transaction were the same as the existing Senior Secured Debentures in all material respects. In
connection with the Payment in Kind Transaction, the Company entered into the Seventh Supplemental
Senior Secured Indenture effective as of December 15, 2021.
CONTRACTUAL OBLIGATIONS
The table below summarizes the Company’s contractual obligations at December 31, 2022, on an undiscounted
basis:
Accounts payable and accrued liabilities
ABL Facility (1)
Term loan Facility (1)
Lease liabilities (2)
Other secured borrowings (1)
Senior secured debentures (1)
Total
(1) Carrying value is presented gross of debt issuance costs.
(2) Carrying value is presented as undiscounted cash flows.
Total
Less than
One Year
One to Five
Years
After Five
Years
$
57,893 $
57,893 $
— $
9,885
40,500
35,344
14,308
—
—
10,322
1,440
9,885
40,500
23,630
3,285
120,312
—
120,312
—
—
—
1,392
9,583
—
$
278,242 $
69,655 $
197,612 $
10,975
P A G E 12
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
FLINT prepares its consolidated financial statements in accordance with IFRS. The preparation of the
consolidated financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and
liabilities, and the reported amounts of revenues and expenses for the period of the consolidated financial
statements. Based on the current environment, significant market uncertainty exists that could impact the
estimates and assumptions made by FLINT. Significant accounting policies and methods used in the preparation
of the consolidated financial statements, including use of estimates and judgments, are described in note 1 of the
annual consolidated financial statements for the year ended December 31, 2022.
CONTINGENCIES
Contingencies are provided for when they are likely to occur and can be reasonably estimated. FLINT is subject to
claims and litigation proceedings arising in the normal course of operations. The known claims and litigation
proceedings are not expected to materially affect the Company's financial position or reported results of
operations.
SUMMARY OF QUARTERLY RESULTS
($000s except unit amounts)
2022
Q4
2022
Q3
2022
Q2
2022
Q1
2021
Q4
2021
Q3
2021
Q2
2021
Q1
Revenue ($)
149,747 171,883 173,195 109,848 101,955 108,647 96,596 82,204
Gross Profit ($)
17,075
20,617
15,701
9,740
9,728
12,124
10,440
8,045
Gross Profit Margin (%)
11.4 % 12.0 %
9.1 %
8.9 %
9.5 % 11.2 % 10.8 %
9.8 %
Net (loss) income from
continuing operations ($)
Net (loss) income ($)
Net (loss) income per share
from continuing operations ($)
Net (loss) income per share ($)
(4,848)
(5,379)
1,174
1,172
(974)
(976)
(7,783)
(7,796)
5
4
(2,227)
(2,228)
494
487
(7,569)
(7,572)
(0.04)
(0.05)
0.01
0.01
(0.01)
(0.01)
(0.07)
(0.07)
0.00
0.00
(0.02)
(0.02)
0.00
0.00
(0.07)
(0.07)
FLINT’s revenues are somewhat seasonal, in particular for the Maintenance and Construction Services segment.
Typically, there are scheduled shutdown turnaround projects in the spring and fall which increase revenues over
and above the standard maintenance and operational support services. In 2021, this trend was disrupted due to
the COVID-19 pandemic causing the postponement of scheduled spring shutdown turnaround projects to the third
quarter as shown by the increased revenue in the third quarter in comparison to the second quarter of 2021. The
seasonality trend has returned with larger volumes experienced in the second and third quarter of 2022.
TRANSACTIONS WITH RELATED PARTIES
As at December 31, 2022, directors and officers beneficially held an aggregate of 7,632,907 common shares,
representing approximately 6.9% of the issued and outstanding common shares.
SHARE CAPITAL
The authorized share capital of the Company consists of: (i) an unlimited number of common shares, and
(ii) preferred shares issuable in series to be limited in number to an amount equal to not more than one half of the
issued and outstanding common shares at the time of issuance of such preferred shares.
P A G E 13
The following table summarizes the number of preferred and common shares:
Balance as at December 31, 2021
Converted to common shares
Balance as at December 31, 2022
Preferred Shares
Series 1
Series 2
Common
Shares
127,735
(3)
127,732
40,111
109,992,668
—
8,571
40,111
110,001,239
The Series 1 and Series 2 Preferred Shares have a 10.0% fixed cumulative preferential cash dividend payable
when the Company shall have sufficient monies to be able to do so, including under the provisions of applicable
law and contracts affecting the Company. The Board of Directors of the Company does not intend to declare or
pay any cash dividends until such time as the Company’s balance sheet and liquidity position supports the
payment. Any accrued and unpaid dividends are convertible in certain circumstances at the option of the holder
into additional Series 1 and Series 2 Preferred Shares.
As at December 31, 2022, the accrued and unpaid dividends on the Series 1 and Series 2 preferred shares
totaled $76,671 (December 31, 2021 - $59,886). Assuming that the holders of the preferred shares exercise the
right to convert such accrued and unpaid dividends into additional preferred shares and then convert such
preferred shares into common shares, approximately 319,675,972 (December 31, 2021 - 242,857,143) common
shares would be issued, which represents approximately 290.6% (December 31, 2021 - 221.0%) of the common
shares outstanding as at December 31, 2022.
In addition, holders of the Series 1 and Series 2 Preferred Shares have the right, at their option, to convert their
Preferred Shares into Common Shares at a price of $0.35 and $0.10 per Common Share, respectively, subject to
adjustment in certain circumstances. During the twelve months ended December 31, 2022, 8,571 common shares
were issued upon conversion of three Series 1 Preferred Shares.
The Series 1 and Series 2 Preferred Shares are redeemable by the Company for cash at 110% of the purchase
price for such shares, plus accrued but unpaid dividends, once all of the outstanding Senior Secured Debentures
have been repaid and are subject to repayment in the event of certain change of control transactions.
Based upon the conversion rights of the Series 1 and Series 2 Preferred Shares there could be significant dilution
to the current holders of Common Shares. Up to approximately 766,059,000 (December 31, 2021 - 766,067,000)
additional Common Shares would be issuable upon conversion of the face amount of the Preferred Shares into
Common Shares, representing approximately 696.4% (December 31, 2021 - 696.5%) of the Common Shares
outstanding as at December 31, 2022.
As the terms of the preferred shares do not create an unavoidable obligation to pay cash, the preferred shares are
accounted for within shareholders' deficit, net of transaction costs.
OUTLOOK
The combination of rising global energy demand, the sanctions on Russian production in response to the war in
Ukraine and a multi-year period of underinvestment in upstream development has resulted in a tight market for oil
and gas, which should continue to provide support for commodity prices in 2023. At current commodity price
levels, we anticipate continued high demand for our services as customers seek to maintain or incrementally grow
production levels. However, broad economic concerns exist with respect to inflation, rising interest rates and
geopolitical instability, the combination of which may lead to a global recession. These concerns may negatively
impact the spending plans of our customers.
While our customers have been prioritizing debt repayment and returns to shareholders, they are starting to
increase spending on both maintenance projects (to enhance operational reliability) and capital projects (to
maintain or expand production capacity). We expect these activity levels to remain strong in 2023.
P A G E 14
FLINT has continued to add new service offerings that encompass the full asset lifecycle and is now offering a
suite of more than 40 services. Through the extensive regional coverage provided by our 19 operating facilities,
we believe that FLINT is well-positioned to further consolidate the services required at various operating sites
while generating efficiencies and cost reductions for its customers. We are also continually working to improve our
service delivery to anticipate our customer’s requirements and proactively meet their needs.
RISK FACTORS
An investment in the common shares of FLINT involves a number of risks. In addition to the other information
contained in this MD&A and FLINT’s other publicly-filed disclosure documents, investors should give careful
consideration to the following factors, which are qualified in their entirety by reference to, and must be read in
conjunction with, the detailed information appearing elsewhere in this MD&A. Any of the matters highlighted in
these risk factors could have a material adverse effect on FLINT’s results of operations, business prospects or
financial condition. The risks described below and referenced elsewhere in this MD&A are not exhaustive. The
Company operates in a very competitive and ever-changing environment. New risk factors emerge from time to
time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such
risk factors on the Company’s business.
•
•
•
•
•
•
•
•
•
•
•
•
Failure to comply with the covenants in the agreements governing the Company’s debt could adversely
affect the Company’s financial condition.
The Company’s credit facilities may not provide sufficient liquidity and a failure to renew the credit
facilities could adversely affect the Company’s financial condition.
The Company’s access to capital or borrowing to maintain operations and/or finance future development
and acquisitions may become restricted.
Difficulty in retaining, replacing or adding personnel could adversely affect the Company’s business. A
portion of the Company’s employees are unionized, and accordingly the Company is subject to the
detrimental effects of a strike or other labour action, in addition to competitive cost factors.
The Company relies on certain key personnel whose absence or loss could disrupt its operations and
have a material adverse effect on its business.
The Company’s growth potential is restricted by the use of the majority of its cash flow to service debt.
Common Shares issuable on conversion of Series 1 or Series 2 preferred shares, substantially all of
which are held by Canso Investment Counsel Ltd., in its capacity as portfolio manager for and on behalf
of certain accounts that it manages, could result in the holders of the Common Shares being substantially
diluted and Canso being in a position to unilaterally elect the directors of the Company should it so
choose.
The Company’s business depends on the oil and natural gas industry and particularly on the level of
exploration, development and production for North American oil and natural gas, which is volatile.
The Company’s financial performance depends on its performance under agreements with its customers
and its ability to renew customer contracts and attract new business.
The Company is subject to risk of default by counterparties to its contracts, and its counterparties may
deem the Company to be a default risk.
Future actions by governmental authorities in response to Covid-19 or another pandemic could adversely
affect the Company’s business and operations.
Failure to maintain the Company’s safety standards and record could lead to a decline in the demand for
its services.
P A G E 15
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
The Company is subject to a number of federal, provincial and regional health, safety and environmental
laws and regulations that may require it to make substantial expenditures or cause it to incur substantial
liabilities. Changes in legislation and regulations that affect the Company’s customers, or failure of
customers to comply with such regulations, could adversely affect demand for the Company’s services
and the Company’s financial performance.
The Company’s industry is intensely competitive. The Company’s reputation relative to its competition
significantly affects the Company’s long-term success and financial performance.
The Company has direct and indirect exposure to credit market volatility resulting from negative investor
sentiment about the development and regulation of energy production.
The Company is directly and indirectly subject to the influence of public perception on the regulatory
regime governing resource development.
The Company is susceptible to seasonal volatility in its operating and financial results due to adverse
weather conditions.
The Company’s reliance on equipment and parts suppliers exposes it to risks, including timing of delivery
and quality of parts and equipment.
The Company is subject to a number of additional business risks, which could adversely affect its ability
to complete projects and service contracts on time and on budget.
The direct and indirect restrictions and costs of various environmental laws and regulations, existing and
proposed, may adversely affect the Company’s business, operations and financial results.
The Company may participate in large contracts with a small number of customers, thus increasing the
risk of economic dependence and concentration of credit. The Company’s customer base is concentrated
and loss of a significant customer could cause the Company’s revenue to decline substantially.
The Company’s performance is sensitive to impacts of localized factors and trends that are specific to
Alberta and British Columbia because a large percentage of the Company’s revenues originate in those
provinces.
Since a significant portion of the Company’s work is in the oil sands sector, the Company’s performance is
sensitive to factors affecting the oil sands sector, including temporary or permanent shutdown of projects
due to downturns in oil and gas prices, natural disasters, mechanical breakdowns, technology failures or
pressure from environmental activism.
The Company may not be able to convert its backlog into revenue and cannot guarantee that the
revenues projected in its backlog will be realized or, if realized, will result in profits.
The Company’s current technology may become obsolete or experience a decrease in demand. To the
extent that the Company does not keep up with changes in technology, demand for its services may be
hindered.
The Company’s operations are subject to hazards inherent in the oilfield services industry, which risks
may not be covered to the full extent by the Company’s insurance policies.
The Company is and may become subject to legal proceedings, which could have a material adverse
effect on its business, financial condition and results of operations.
Conservation measures and technological advances could reduce demand for oil and natural gas,
resulting in reduced demand for the Company’s services.
P A G E 16
•
•
•
•
•
•
•
•
Business acquisitions involve numerous risks and the failure to realize anticipated benefits of acquisitions
and dispositions could negatively affect the Company’s results of operations.
Public announcement of strategic transactions could be delayed.
Improper access to confidential information could adversely affect the Company’s business.
Cyber attacks and loss of the Company’s information and computer systems could adversely affect the
Company’s business.
Income tax laws, regulations or administrative practices relating to the Company and its shareholders
may in the future be changed or interpreted in a manner that adversely affects the Company or its
shareholders.
The Company's business is subject to changes in general economic conditions over which it has little or
no control.
The trading activity and price of the Common Shares could be unpredictable and volatile.
The Company may issue additional Common Shares or securities exchangeable for or convertible into
Common Shares in the future, which could result in the dilution of the interests of the holders of Common
Shares.
For additional information regarding the risks that the Company is exposed to, see the disclosure provided under
the heading “Risk Factors” in the Company’s Annual Information Form for the year ended December 31, 2022,
which is available on the SEDAR website at www.sedar.com.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER
FINANCIAL REPORTING
Disclosure Controls and Procedures
National Instrument 52-109, “Certification of Disclosure in Issuers’ Annual and Interim Filings” (“NI 52-109”),
issued by the Canadian Securities Administrators requires chief executive officers ("CEO") and chief financial
officers ("CFO") to certify that they are responsible for establishing and maintaining the disclosure controls and
procedures for the issuer, that disclosure controls and procedures have been designed to provide reasonable
assurance that material information relating to the issuer is made known to them, that they have evaluated the
effectiveness of the issuer’s disclosure controls and procedures, and that their conclusions about effectiveness of
those disclosure controls and procedures at the end of the period covered by the relevant annual filings have
been disclosed by the issuer.
The Company's management, including its CEO and CFO, have evaluated the effectiveness of the Company’s
disclosure controls and procedures as at December 31, 2022 and have concluded that those disclosure controls
and procedures were effective to ensure that information required to be disclosed by the Company in its corporate
filings is recorded, processed, summarized and reported within the required time period for the year then ended.
The CEO and CFO have certified the appropriateness of the financial disclosures in the Company’s filings for the
year ended December 31, 2022 with securities regulators, including this MD&A and the accompanying audited
consolidated financial statements, and that they are responsible for the design of the disclosure controls and
procedures.
P A G E 17
Internal Controls over Financial Reporting
NI 52-109 also requires CEOs and CFOs to certify that they are responsible for establishing and maintaining
internal controls over financial reporting for the issuer, that those internal controls have been designed and are
effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements in accordance with IFRS, and that the issuer has disclosed any changes in its internal
controls during its most recent year end that has materially affected, or is reasonably likely to materially affect, its
internal control over financial reporting.
There have been no changes in internal controls over financial reporting during the year ended December 31,
2022 that have materially affected or are reasonably likely to materially affect internal controls over financial
reporting. Furthermore, the Company’s management, including its CEO and CFO, have evaluated the
effectiveness of the Company’s internal control over financial reporting as at December 31, 2022 and have
concluded that those controls were effective.
Due to the inherent limitations common to all control systems, management acknowledges that disclosure
controls and procedures and internal control over financial reporting may not prevent or detect all misstatements.
Accordingly, management’s evaluation of our disclosure controls and procedures and internal control over
financial reporting provide reasonable, not absolute, assurance that misstatements resulting from fraud or error
will be detected.
ADDITIONAL INFORMATION
Additional information relating to the Company is available in the Company's Annual Information Form for the year
ended December 31, 2022.
P A G E 18
CONSOLIDATED FINANCIAL STATEMENTS OF
FLINT CORP.
FORMERLY CLEARSTREAM ENERGY SERVICES INC.
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
P A G E 1
March 2, 2023
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The consolidated financial statements of FLINT Corp. (“FLINT”) and all of the information in the annual report are
the responsibility of management, including responsibility for establishing and maintaining disclosure controls and
procedures and internal control over financial reporting to provide reasonable assurance that the information used
internally by management and disclosed externally is complete and reliable in all material respects. Management
has evaluated the effectiveness of the disclosure controls and procedures and internal controls over financial
reporting and has concluded that they are effective.
The consolidated financial statements have been prepared by management in accordance with International
Financial Reporting Standards and include certain estimates that are based on management’s best judgments.
Actual results may differ from these estimates and judgments. Management has ensured that the consolidated
financial statements are presented fairly in all material respects.
Management has developed and maintains a system of internal control to provide reasonable assurance that
FLINT’s assets are safeguarded, transactions are accurately recorded, and the consolidated financial statements
report FLINT’s operating and financial results in a timely manner. Financial information presented elsewhere in the
annual report has been prepared on a consistent basis with that in the consolidated financial statements.
The Board of Directors of FLINT annually appoints an Audit Committee (the “Committee”) comprised of
Independent Directors. This Committee meets regularly with management and the auditors to review significant
accounting, reporting and internal control matters. The auditors have unrestricted access to the Committee. The
Committee reviews the consolidated financial statements, Management’s Discussion & Analysis, and the external
auditor's report. The Committee reports its findings to the Board of Directors for their consideration in approving
the consolidated financial statements for issuance to the shareholders. The Committee also considers, for review
by the Board of Directors and approval by the shareholders, the engagement or re-appointment of the external
auditors.
Ernst & Young LLP, an independent firm of Chartered Professional Accountants, was appointed by the
shareholders to audit the consolidated financial statements in accordance with Canadian generally accepted
auditing standards. Ernst & Young LLP has provided an independent auditor's report.
Barry Card
Chief Executive Officer
Calgary, Canada
March 2, 2023
Randy Watt
Chief Financial Officer
P A G E 2
To the Shareholders of FLINT Corp. (formerly ClearStream Energy Services Inc.)
INDEPENDENT AUDITOR’S REPORT
Opinion
We have audited the consolidated financial statements of FLINT Corp. (formerly ClearStream Energy Services
Inc.) and its subsidiaries (collectively, the “Company”), which comprise the consolidated balance sheets as at
December 31, 2022 and 2021 and the consolidated statements of loss and comprehensive loss, consolidated
statements of shareholders’ deficit and consolidated statements of cash flows for the years then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as at December 31, 2022 and 2021, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with International Financial
Reporting Standards (“IFRS”).
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor's responsibilities for the audit of the consolidated
financial statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of
the consolidated financial statements of the current period. These matters were addressed in the context of the
audit of the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do
not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report, including in relation to these matters. Accordingly, our audit included
the performance of procedures designed to respond to our assessment of the risks of material misstatement of
the consolidated financial statements. The results of our audit procedures, including the procedures performed to
address the matter below, provide the basis for our audit opinion on the accompanying consolidated financial
statements.
P A G E 3
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and indefinite life intangible assets
To test the estimated recoverable amounts of the CGUs,
our audit procedures included, among others, assessing
the significant assumptions discussed above and the
underlying data used by the Company in its analysis:
• We involved our valuation specialists to assess the
methodology applied and the various inputs utilised in
determining the discount rate by referencing current
industry, economic, and comparable company
information, and company and cash-flow specific risk
premiums;
the
• We
historical
accuracy
flow projections,
of
assessed
management’s cash
including
EBITDA, capital expenditures and working capital by
comparing them to actual historical performance;
• We compared the growth rates and costs of disposal
to current industry, market and economic trends;
• We performed sensitivity analyses on significant
the
assumptions
recoverable amounts of the CGUs that would arise
from changes in those assumptions; and
the changes
to evaluate
in
• We assessed
the Company’s
the adequacy of
disclosures included in the notes to the consolidated
financial statements in relation to this matter.
indefinite
As at December 31, 2022, the carrying amounts of
goodwill and indefinite life intangible assets were $4,297
and $1,574, respectively. For the year ended December
31, 2022, an impairment loss of $3,652 was recorded
with respect to goodwill and no impairment loss was
recorded with respect to indefinite life intangible assets.
Refer to Note 1 Significant accounting policies of the
consolidated financial statements for a description of the
Company’s accounting policy for impairment of long-
lived assets,
intangible assets and
life
goodwill. Refer to Note 4 Goodwill and intangible assets
of
the
financial statements
impairment disclosures. Goodwill and
Company’s
indefinite life intangible assets are tested at least
annually for impairment. If the carrying amount of a cash
generating unit (“CGU”) or group of CGUs exceeds its
recoverable amount, an
is
recognized for the difference. The recoverable amounts
of the Company’s CGUs were determined based on
their fair value less costs of disposal (“FVLCD”), which
was estimated using a discounted cash flow approach
impairment charge
the consolidated
for
Auditing the Company’s estimated recoverable amounts
for the Wear and UWO CGUs was complex due to the
subjective nature of the various management inputs and
assumptions. Significant assumptions included earnings
before
interest, depreciation and
amortization (“EBITDA”), capital expenditures, growth
rates, working capital, discount rates, and costs of
disposal, which are affected by expectations about
future market and economic conditions.
income
taxes,
Other information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion and Analysis
•
The information, other than the consolidated financial statements and our auditor’s report thereon, in the
Annual Report
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information, and in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
We obtained Management’s Discussion & Analysis and the Annual Report prior to the date of this auditor’s report.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.
P A G E 4
Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor's report. However, future events or conditions may cause the Company to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
P A G E 5
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the Company audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Ann Brockett.
Calgary, Canada
March 2, 2023
P A G E 6
Consolidated Balance Sheets
(In thousands of Canadian dollars)
Assets
Cash
Accounts receivable
Inventories
Prepaid expenses
Total current assets
Property, plant and equipment
Goodwill and intangible assets
Long-term investments
Total assets
Liabilities and shareholders' deficit
Accounts payable and accrued liabilities
Term loan facility
Deferred consideration
Earn-out contingent liability
Current portion of lease liabilities
Current portion of long-term incentive plan liability
Current portion of other secured borrowings
Total current liabilities
Long-term incentive plan liability
ABL facility
Term loan facility
Lease liabilities
Other secured borrowings
Senior secured debentures
Total liabilities
Common shares
Preferred shares
Contributed surplus
Deficit
Total shareholders' deficit
Total liabilities and shareholders' deficit
The accompanying notes are an integral part of these consolidated financial statements.
Signed on behalf of the Board of Directors,
December 31, December 31,
2021
2022
Notes
18
2
3
4
7
5
6
8
13
7
13
7
7
8
7
7
15
15
$
3,134 $
159,371
5,729
2,441
21,680
107,178
5,532
2,061
170,675
136,451
53,689
9,145
469
54,965
13,360
678
$
233,978 $
205,454
$
57,893 $
—
—
—
8,447
2,814
1,437
70,591
2,487
9,334
40,157
21,884
12,706
119,048
276,207
462,057
141,930
20,679
34,869
40,436
416
63
7,514
—
1,437
84,735
2,239
—
—
23,852
14,134
109,744
234,704
462,054
141,933
20,679
(666,895)
(653,916)
(42,229)
(29,250)
$
233,978 $
205,454
Fraser Clarke, Director
Sean McMaster, Director
P A G E 7
Consolidated Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars)
For the year ended December 31,
Revenue
Cost of revenue
Gross profit
Selling, general and administrative expenses
Long-term incentive plan expense
Amortization of intangible assets
Depreciation expense
Income from long-term investments
Interest expense
Restructuring expenses
Impairment of goodwill and intangible assets
Impairment of right-of-use assets
(Loss) recovery on contingent consideration liability
Gain on sale of property, plant and equipment
Income from government subsidies
Loss from continuing operations
Loss from discontinued operations (net of income taxes)
Notes
2022
2021
9
$
604,673 $
389,402
10
13
4
3
11
16
4
3
6
3
14
(541,540)
(349,066)
63,133
40,336
(37,204)
(26,298)
(3,061)
(563)
(10,476)
141
(16,903)
(4,115)
(3,652)
—
(81)
350
—
(12,431)
(548)
(2,239)
(669)
(12,224)
534
(15,934)
(1,052)
—
(8,270)
149
238
16,133
(9,296)
(12)
Net loss and comprehensive loss
$
(12,979) $
(9,308)
Net loss per share (dollars)
Basic & diluted:
Continuing operations
Discontinued operations
Net loss
The accompanying notes are an integral part of these consolidated financial statements.
$
$
$
(0.11) $
(0.01) $
(0.12) $
(0.08)
(0.00)
(0.08)
P A G E 8
Consolidated Statements of Shareholders’ Deficit
(In thousands of Canadian dollars, except number of shares)
Number of
Common
Shares
Notes
Common
Shares
Preferred
Shares
Contributed
Surplus
Deficit
Total
Shareholders'
Deficit
January 1, 2022
109,992,668 $ 462,054 $ 141,933 $
20,679 $ (653,916) $
(29,250)
Net loss
Conversion of preferred
shares to common shares
At December 31, 2022
—
15
8,571
—
3
—
(3)
—
(12,979)
(12,979)
—
—
—
(42,229)
110,001,239 $ 462,057 $ 141,930 $
20,679 $ (666,895) $
Number of
Common
Shares
Common
Shares
Preferred
Shares
Contributed
Surplus
Deficit
Total
Shareholders'
Deficit
January 1, 2021
Net loss
109,992,668 $ 462,054 $ 141,933 $
20,679 $ (644,608) $
(19,942)
—
—
—
—
(9,308)
(9,308)
At December 31, 2021
109,992,668 $ 462,054 $ 141,933 $
20,679 $ (653,916) $
(29,250)
The accompanying notes are an integral part of these consolidated financial statements.
P A G E 9
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
For the year ended December 31,
Operating activities:
Net loss
Adjustments for:
Long-term incentive plan expense
Amortization of intangible assets
Depreciation expense
Income from long-term investment
Accretion expense
Non-cash interest expense
Impairment of goodwill and intangible assets
Impairment of right-of-use assets
Payment of earn-out
Amortization of deferred financing costs
Loss (recovery) on contingent consideration liability
Gain on sale of property, plant and equipment
Changes in non-cash working capital
Cash flow (used in) provided by operating activities
Investing activities:
Acquisitions, net of cash acquired
Purchase of property, plant and equipment
Net proceeds on disposal of property, plant and equipment
Purchase of intangible assets
Proceeds from long-term investments
Payment of deferred consideration
Cash flow used in investing activities
Financing activities:
Repayment of other secured borrowings
Increase in ABL facility
Refinancing fees
Repayment of prior ABL facility
Repayment of lease liabilities
Cash flow used in financing activities
Decrease in cash
Cash, beginning of period
Cash, end of period
The accompanying notes are an integral part of these consolidated financial statements.
Notes
2022
2021
13
4
3
11
7
4
3
7, 11
3
19
3
3
4
5
7
7
7
7
$
(12,979) $
(9,308)
3,061
563
2,239
669
10,476
12,224
(141)
268
9,077
3,652
—
(157)
238
81
(350)
(534)
432
4,054
—
8,270
—
181
(149)
(238)
(29,776)
(15,987)
(15,623)
2,217
—
(2,099)
788
—
350
(433)
(1,197)
(1,500)
1,678
(22)
250
(433)
(1,394)
(1,224)
(1,440)
9,885
(1,068)
—
(8,542)
(1,165)
(18,546)
21,680
$
3,134 $
(1,935)
—
(132)
(126)
(7,597)
(9,790)
(8,797)
30,477
21,680
P A G E 10
Notes to Consolidated Financial Statements
(In thousands of Canadian dollars)
For the years ended December 31, 2022 and 2021
Reporting entity
FLINT Corp. (formerly ClearStream Energy Services Inc.) ("FLINT" or the "Company") is a corporation formed
pursuant to the Business Corporations Act (Alberta). The head office is located at Bow Valley Square 2,
Suite 3500, 205 - 5th Avenue S.W., Calgary, Alberta T2P 2V7. FLINT is a fully-integrated provider of upstream,
midstream, and downstream production services, which includes maintenance and turnarounds, wear
technologies, facilities construction, welding and fabrication, and environmental services with locations across
Western Canada.
Effective December 1, 2022, ClearStream Energy Services Inc. and certain subsidiaries underwent a rebrand to
better position the company in the market. The following table shows the new and old names for each entity that
changed its name:
New Name
FLINT Corp.
Old Name
ClearStream Energy Services Inc.
Structure
Parent
FLINT Energy Services Limited Partnership ClearStream Energy Services Limited Partnership
Subsidiary
FLINT Wear Technologies GP Inc.
ClearStream Wear Technologies GP Inc.
FLINT Wear Technologies LP
ClearStream Wear Technologies LP
FLINT Asset GP Ltd.
FLINT Real Estate LP
FLINT Equipment LP
ClearStream Energy Equipment Ltd.
ClearStream Real Estate LP
ClearStream Equipment LP
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Prior to December 1, 2022, the Company's common shares were traded publicly on the Toronto Stock Exchange
("TSX") under the symbol "CSM". As of December 1, 2022, the ticker symbol has been changed to “FLNT”. There
were no changes to the share capital structure of the parent’s interest in any of its subsidiaries as a result of this
rebranding.
These audited consolidated financial statements ("financial statements") were authorized for issuance in
accordance with a resolution of the Board of Directors of FLINT on March 2, 2023.
1.
Significant accounting policies
a. Basis of presentation
These consolidated financial statements are prepared on a historical cost basis in accordance with
International Financial Reporting Standards (“IFRS”). The accounting policies that follow have been
consistently applied to all years presented.
b. Principles of consolidation
These consolidated financial statements comprise the financial statements of the Company and its
subsidiaries as at December 31, 2022. The Company conducts business through numerous subsidiaries,
all of which are wholly-owned and therefore controlled, by the Company. The financial results of
subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases. All inter-company balances and transactions have been eliminated on
consolidation.
P A G E 11
c. Long-term investments
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control. The Company accounts for its investments in
joint ventures using the equity method. The Consolidated Statements of Loss and Comprehensive Loss
reflects the Company’s share of the results of operations of the joint venture. The financial statements of
the joint venture are prepared for the same reporting period as the Company. When necessary,
adjustments are made to bring the accounting policies in line with those of the Company.
At each reporting date, the Company determines whether there is objective evidence that the investment
in the joint venture is impaired. If there is such evidence, the Company calculates the amount of
impairment as the difference between the recoverable amount of the joint venture and its carrying value,
and then recognizes a loss in the Consolidated Statements of Loss and Comprehensive Loss.
d. Financial instruments
(i) Financial assets
When financial assets are recognized initially, they are measured at fair value, plus, in the case of
investments not at fair value through profit or loss, directly attributable transaction costs. The Company
considers whether a contract contains an embedded derivative when the entity first becomes a party to it.
Embedded derivatives are separated from the host contract which is not measured at fair value through
profit or loss when the analysis shows that the economic characteristics and risks of embedded
derivatives are not closely related to those of the host contract.
The Company determines the classification of its financial assets at initial recognition and, where allowed
and appropriate, re-evaluates this designation at each financial year end. Financial assets and financial
liabilities are recognized on the Company’s consolidated balance sheet when the Company becomes
party to the contractual provisions of the instrument. Financial assets are derecognized when the
contractual rights to the cash flows from the financial asset expire or when the contractual rights to those
assets are transferred. Financial liabilities are derecognized when the obligation specified in the contract
is discharged, cancelled or expired.
Cash
Cash is comprised of cash on deposit with financial institutions. These are measured at amortized cost.
Accounts receivable
Accounts receivable, which are non-derivative financial assets that have fixed or determinable payments
that are not quoted in an active market, are classified as amortized cost and subsequently measured
using the effective interest rate method, net of any impairment.
Impairment provisions for trade receivables are recognized based on lifetime expected credit losses.
During this process the probability of the non-payment of the trade receivables is assessed. This
probability is then multiplied by the amount of the expected loss arising from default to determine the
lifetime expected credit loss for the accounts receivable. For accounts receivable, which are reported net,
such provisions are recorded in a separate provision account with the loss being recognized in the
Consolidated Statements of Loss and Comprehensive Loss. On confirmation that the trade receivable will
not be collectable, the gross carrying value of the asset is written off against the associated provision.
P A G E 12
(ii) Financial liabilities
Financial liabilities include accounts payable and accrued liabilities, the ABL facility, term loan facility,
senior secured debentures, other secured borrowings, deferred consideration and earn-out contingent
liability. Accounts payable are obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Other liabilities are classified as current liabilities if payment is
due within one year or less. If not, they are presented as non-current liabilities. Other liabilities are
recognized initially at fair value and subsequently measured at amortized cost using the effective interest
rate method.
(iii) Fair value hierarchy
The Company uses a three level hierarchy to categorize the significance of the inputs used in measuring
the fair value of financial instruments. The three levels of the fair value hierarchy are:
Level 1 – Where financial instruments are traded in active financial markets, fair value is determined by
reference to the appropriate quoted unadjusted market price at the reporting date. Active markets are
those in which transactions occur in significant frequency and volume to provide pricing information on an
ongoing basis.
Level 2 – If there is no active market, fair value is established using inputs other than quoted prices that
are observable for the asset or liability either directly or indirectly, including quoted forward prices, time
value, volatility factors and broker quotations.
Level 3 – Valuations in this level are those with inputs that are not based on observable market data and
which are less observable, unavailable or where the observable data does not support the majority of the
instrument’s fair value. Level 3 instruments may include items based on pricing services or broker quotes
where the Company is unable to verify the observability of inputs into their prices. Level 3 instruments
include longer-term transactions, transactions in less active markets or transactions at locations for which
pricing information is not available. In these instances, internally developed methodologies are used to
determine fair value which primarily includes extrapolation of observable future prices to similar location,
similar instruments or later time periods.
If different levels of inputs are used to measure a financial instrument’s fair value, the classification within
the hierarchy is based on the lowest level input that is significant to the fair value measurement.
e.
Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes
the costs to purchase and other costs incurred in bringing the inventories to their present location. Costs
such as storage costs and administrative overheads that do not directly contribute to bringing the
inventories to their present location and condition are specifically excluded from the cost of inventories
and are expensed in the period incurred. The cost of inventories of items that are not ordinarily
interchangeable and goods or services produced and segregated for specific projects are assigned by
using specific identification of their individual costs. The weighted average cost formula is used for
inventories other than those dealt with by the specific identification of cost formula. Net realizable value is
the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
f. Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
P A G E 13
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, costs directly attributable to bringing
the asset to a working condition for its intended use, and the costs of dismantling and removing the items
and restoring the site on which they are located. Purchased software that is integral to the functionality of
the related equipment is capitalized as part of that equipment. Borrowing costs related to the acquisition
or construction of qualifying assets are capitalized.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.
The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year
and adjusted prospectively, if appropriate.
Depreciation is calculated following the method that best reflects usage and annual rates based on the
estimated useful lives of the assets as follows:
Asset class
Furniture, tools and equipment
Computer hardware
Automotive and heavy equipment
Buildings
Basis
Declining balance
Declining balance
Declining balance
Declining balance
Right-of-use assets
Straight-line
Leasehold improvements
Straight-line
Rate
10% - 50%
20% - 50%
10% - 30%
5% - 10%
The shorter of expected useful life
or term of lease
The shorter of expected useful life
or term of lease
g.
Intangible assets
Intangible assets acquired individually or as part of a group of other assets are recognized and measured
at cost. Intangible assets acquired in a transaction, including those acquired in business combinations,
are initially recorded at their fair value. Intangible assets with determinable useful lives, such as customer
relationships, management contracts, computer software and sales orders, are amortized over their
useful lives. Intangible assets having an indefinite life, such as brands, are not amortized but are subject
to an annual impairment test (refer to Note 1(h)). The Company expects to renew the registration of the
brand names indefinitely, and expects these assets to generate economic benefit in perpetuity. As such,
the Company assessed brand name intangible assets as having indefinite useful lives with an exception
of the Universal Weld Overlays ("UWO") brand name. The UWO brand name was assessed as having a
definite useful life and is being amortized according to the method and rate provided in the table below.
Some intangible assets are contained in a physical form, such as a compact disc in the case of computer
software. When the software is not an integral part of the related hardware, computer software is treated
as an intangible asset. Intangible assets with determinable lives are amortized using the following
methods and rates based on the estimated useful life of the asset as follows:
Asset class
Customer relationships
Computer software
UWO brand name
Basis
Straight line
Declining balance
Straight line
Rate / Term
10 years
50% - 100%
10 years
P A G E 14
h.
Impairment of long-lived assets, indefinite life intangible assets and goodwill
Assets with definite useful lives, including property, plant and equipment and intangible assets, are
amortized over their estimated useful lives. Long-lived assets are assessed for impairment at each
balance sheet date, or whenever events or changes in circumstances occur, whether there is an
indication that such assets may not be recoverable.
If indicators of impairment exist, an estimate of the recoverable amount is made. If the carrying amount of
an asset or cash generating unit (“CGU”) exceeds its recoverable amount, an impairment charge is
recognized in the Consolidated Statements of Loss and Comprehensive Loss for the amount by which the
carrying amount exceeds the recoverable amount.
Goodwill and indefinite life intangible assets are not amortized and are tested for impairment annually, or
more frequently, if events or changes in circumstances indicate that the asset might be impaired. For the
purposes of impairment testing, goodwill is allocated to the CGU or group of CGUs whose acquisition
gave rise to the goodwill. Assessment of goodwill impairment is performed at the level at which goodwill is
monitored for internal management purposes, which is the CGU level. Goodwill impairment is determined
by assessing whether the carrying amount of the CGU or relevant group of CGUs exceeds the
recoverable amount. Impairment of indefinite life intangible assets is determined by assessing whether
the carrying amount of the CGU to which those indefinite life intangible assets relate exceeds the
recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal (“FVLCD”) and its
value in use (“VIU”). If it is not possible to estimate the recoverable amount of an individual asset, the
CGU to which the asset belongs is tested for impairment. The FVLCD excludes any costs with respect to
restructuring, employee severance and termination benefits. The VIU is determined using the estimated
future cash flows generated from use and eventual disposition of an asset or CGU discounted to their
present value using a post-tax discount rate and excludes any costs with respect to restructuring,
employee severance and termination benefits.
Assets to be disposed of are presented separately in the Consolidated Balance Sheets and reported at
the lower of the carrying amount or FVLCD.
An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists,
FLINT estimates the assets' or CGUs' recoverable amount. A previously recognized impairment loss is
reversed only if there has been a change in the assumption used to determine the asset’s recoverable
amount since the last impairment loss was recognized. The reversal is limited such that the carrying
amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would
have been determined net of depreciation had the impairment loss not been recognized for the asset in
prior years. Such reversal is recognized in the Consolidated Statements of Loss and Comprehensive
Loss. Impairment losses relating to goodwill are not subsequently reversed.
i. Revenue recognition
Maintenance and Construction services revenue includes revenue from contracts entered into to provide
maintenance and construction services to various industries, including energy, mining, agriculture, pulp,
paper and petrochemical, and regulatory and environmental advisory services. The majority of the
revenue within the Maintenance and Construction segment relates to contracts with customers to perform
services based on cost plus an agreed-upon margin.
Wear Technology Overlay services revenue includes the sale of goods with respect to custom fabrication
services supporting pipeline and infrastructure projects and patented wear technology overlay services
specializing in pipe spools, pipe bends and plate. The majority of revenue within the Wear Technology
Overlay services segment relates to contracts with customers to construct goods to client specifications
for an agreed-upon price.
P A G E 15
(i)
Revenue from the rendering of services
Performance obligations arising from contracts with customers require FLINT to provide labour hours and
rental of equipment as requested. Each individual contract may contain multiple performance obligations
and at contract inception, consideration is variable as the total number of hours required is not fixed.
However, under the terms of its contracts with customers, FLINT has the right to consideration in an
amount that corresponds directly with the value to its customers of performance completed to date, and
therefore recognizes revenue over time based on the amount FLINT has the right to invoice.
(ii)
Revenue from the sale of goods
At the inception of each contract with a customer, FLINT identifies the distinct performance obligations
based on promises to transfer distinct goods to the customer. A contract’s transaction price is allocated to
each distinct performance obligation and recognized as revenue when, or as, the performance obligation
is satisfied. FLINT’s performance obligations are generally satisfied over time as work progresses
because of continuous transfer of control to the customer. For contracts with multiple performance
obligations, the contract’s transaction price is allocated to each performance obligation using the
Company’s best estimate of the standalone selling price of each distinct good in the contract.
Transfer of control is measured utilizing an input method to measure progress for contracts based on an
analysis of costs incurred to date compared to total estimated costs. These costs, once incurred, are
considered a measure of progress and are expensed in the period in which they are incurred. Total
estimated project costs and resulting contract income are affected by changes in the expected cost of
materials and labor, productivity, scheduling and other factors. Additionally, external factors such as
customer requirements and other factors outside of FLINT’s control may affect the progress and
estimated cost of a project’s completion and, therefore, the timing and amount of revenue and income
recognition. Changes in total estimated contract cost and losses, if any, are recognized in the period they
are determined.
Deferred revenue is recognized if a payment is received or a payment is due (whichever is earlier) from a
customer before the Company transfers the related goods or services. Deferred revenue is included
within accounts payable and accrued liabilities and are recognized as revenue when the Company
performs under the contract (i.e., transfers control of the related goods or services to the customer).
j.
Income taxes
Income tax expense or recovery comprises current and deferred taxes. Current tax is the expected tax
payable or recoverable on the taxable income for the year and is recognized in the period to which it
relates. Amounts included in current tax reflect the income tax expense or recovery relating to the taxable
income of FLINT and its subsidiaries.
Deferred tax is recognized using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes at the reporting date. Deferred tax is not recognized for the following
temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit, and differences relating to investments
in subsidiaries and interest in joint arrangements to the extent that it is probable that they will not reverse
in the foreseeable future.
In addition, deferred tax is not recognized for taxable temporary differences arising on the initial
recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse based on the tax laws that have been enacted or substantively
enacted by the reporting date.
P A G E 16
Deferred tax assets and liabilities are offset if FLINT has a legally enforceable right to offset current tax
assets/liabilities and if the corresponding deferred tax assets and liabilities relate to the income taxes
raised by the same taxation authority on either the same taxable entity or different taxable entities that
intend to settle their current tax assets and liabilities either on a net basis or simultaneously.
A deferred tax asset is recognized to the extent it is probable that future taxable profits will be available
against which the temporary difference can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent it is no longer probable that the related tax benefit will be
realized.
k. Leases
(i) Leases as a lessee
The Company assesses whether a contract is or contains a lease at inception. The Company recognizes
a right-of-use asset and corresponding lease liability with respect to all lease contracts in which it is a
lessee, except for leases with a term of twelve months or less or leases of low value assets.
A right-of-use asset and lease liability is recognized on the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made on or before the commencement date, less any lease incentives received. Right-of-
use assets are subsequently depreciated using the straight line method over the shorter of the estimated
useful lives of the assets and the lease term, including periods covered by an option to extend the lease if
the Company is reasonably certain to exercise that option.
Lease liabilities are initially measured at the present value of the lease payments that are not paid at the
lease commencement date. The associated lease payments are discounted using the rate implicit in the
lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate. Lease
liabilities are subsequently measured at amortized cost using the effective interest rate method. The lease
liability is re-measured when there is a change in future lease payments arising from a change in an index
or rate, if there is change in the Company’s estimate of the amount expected to be payable under a
residual value guarantee, or if the Company changes its assessment of whether it will exercise a
purchase, extension or termination option.
(ii) Leases as a lessor
The Company enters into sub-lease agreements as a lessor with respect to some of its leased properties.
When the Company is an intermediate lessor, it accounts for the head lease and the sublease as two
separate contracts. The sub-lease is classified as a finance or operating lease by reference to the right-of-
use asset arising from the head lease. Whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are
classified as operating leases. Rental income from operating leases is recognized on a straight line basis
over the term of the lease.
l.
Long-term incentive plan
Employees of the Company may receive remuneration in the form of performance incentive plan ("PIP")
awards for services rendered. Performance vesting conditions are adjusted at each reporting date to
reflect the estimated cash payment at the time of vesting of the award.
m. Loss per share
The loss per share of FLINT is computed by dividing FLINT’s loss by the weighted average number of
common shares outstanding during the reporting period. Diluted loss per share is determined by adjusting
the weighted average number of common shares outstanding for the effects of all potentially dilutive
common shares, using the treasury stock method.
P A G E 17
n. Provisions
A provision is recognized if, as a result of a past event, FLINT has a present legal or constructive
obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a discount rate that reflects current market
assessments of the time value of money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognized as interest expense.
o. Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate fair values of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange for control of the acquiree. Transaction costs directly
attributable to the acquisition are expensed. Identifiable assets acquired, liabilities and contingent
liabilities assumed in a business combination are measured initially at fair values at the date of
acquisition, irrespective of the extent of any non-controlling interest.
Goodwill is initially measured as the excess of the fair value of consideration paid over the fair value of
the net identifiable tangible and intangible assets acquired. If the fair value of consideration paid is less
than the fair value of the net identifiable tangible and intangible assets acquired, the difference is
recognized directly in Consolidated Statements of Loss and Comprehensive Loss as a bargain purchase
gain.
p. Government assistance
The Company recognizes government subsidies on an accrual basis when there is a reasonable
assurance that it will comply with the conditions required to qualify for the subsidy and that the collection
of the subsidy is also reasonably assured. Government subsidies are recognized on the Consolidated
Balance Sheet under accounts receivable and are recognized on the Consolidated Statements of Loss
and Comprehensive Loss over the periods in which the expense that the subsidy is intended to offset are
recognized.
q. Use of estimates and judgements
The preparation of the consolidated financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue
and expenses during the reporting periods. However, uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment in future periods to the carrying amount of the
of assets and liabilities within the next financial year.
Significant estimates and judgments made by management in the preparation of these consolidated
financial statements are outlined below.
(i) Depreciation and amortization
Measurement of the net book value of property, plant and equipment and intangible assets requires the
Company to make estimates of the expected useful lives of the assets, method of depreciation and
amortization and whether impairment in value has occurred. Residual values of the assets, estimates
useful lives and depreciation and amortization methodology are reviewed annually with prospective
application of any changes, if deemed appropriate. Changes to estimates and specifically those related to
automotive and heavy equipment, which could be significant, could be caused by a variety of factors,
including changes to the physical life of the assets or changes in the nature of the utilization of the assets.
A change in any of the estimates would result in a change in the amount of depreciation or amortization
and, as a result, a charge to net income recorded in the period in which the change occurs.
P A G E 18
(ii) Revenue recognition – percentage of completion
The nature of certain of the Company’s contracts with customers is such that revenue is earned over time
as the related good is produced. In these instances, revenue is recognized as work is completed and this
requires management to make a number of estimates and assumptions surrounding the expected
profitability of the contract, the estimated degree of completion based on hours and costs incurred and
other detailed factors. Although these factors are routinely reviewed as part of the project management
process, changes in these estimates or assumptions could lead to changes in revenues recognized in a
given period.
(iii) Determination of cash generating units
Assets are grouped into CGUs that have been identified as being the smallest identifiable group of assets
that generate cash inflows that are independent of cash flows of other assets or groups of assets. The
allocation of assets into CGUs requires significant judgment and interpretations. Factors considered in the
classification include the integration between assets, the ability of management to allocate finite
resources to complete future projects or contracts, and the way in which management monitors the
operations. The recoverability of the Company’s assets is assessed at the CGU level and therefore the
determination of a CGU could have a significant effect on impairment losses or reversals.
(iv) Income taxes
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences and carried forward tax losses can be utilized.
Assessing the recoverability of deferred taxes requires management to make significant estimates related
to expectations of future taxable income and the application of existing tax laws. The carrying amount of
deferred tax assets is reviewed each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred income taxes contain uncertainties because of the assumptions made about when deferred tax
assets are likely to reverse, and a judgment as to whether or not there will be sufficient taxable profits
available to offset the tax assets when they do reverse. This requires assumptions regarding future
profitability and is therefore inherently uncertain.
(v) Contingencies
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur.
The assessment of contingencies inherently involves the exercise of significant judgment and estimates
of the outcome of future events. Judgment and estimates are necessary to determine the likelihood that a
pending litigation or other claim will succeed or a liability will arise and to quantify the possible range of
the final settlement.
FLINT is subject to claims and litigation proceedings arising in the normal course of operations. The
known claims and litigation proceedings are not expected to materially affect the Company's financial
position or reported results of operations.
P A G E 19
(vi) Impairment of non-financial assets
With respect to property, plant and equipment and definite life intangible assets, judgment is applied by
management in assessing whether there are any indicators of impairment at each reporting date that
would require a full impairment test to be performed. Impairment indicators include, but are not limited to,
a significant decline in an asset’s market value, significant adverse changes in the technological, market,
economic or legal environment in which the assets are operated, evidence of obsolescence or physical
damage of an asset, significant changes in the planned use of an asset, or ongoing under-performance of
an asset. Application of these factors to the facts and circumstances of a particular asset requires a
significant amount of judgment.
Should an impairment test be required and in the annual impairment test for goodwill and indefinite life
intangible assets, the determination of the magnitude of impairment involves the use of estimates,
assumptions and judgments on highly uncertain matters particularly with respect to estimating the
recoverable amount of a CGU or a group of CGUs. Such estimates, assumptions and judgments include,
but are not limited to: the choice of discount rates that reflect appropriate asset-specific risks, timing of
revenue and customer turnover, inflation factors for projected costs and the level of capital expenditures
required in future periods to maintain operations.
(vii) Carrying amount of accounts receivable
Impairment provisions for trade receivables are recognized based on the simplified approach using the
lifetime expected credit losses, which is estimated taking into account historic collection patterns and
experiences with customers as well as any adjustments to reflect relevant, reasonable and supportable
information about future expectations.
(viii) Going Concern
These financial statements have been prepared on a going concern basis, which assumes the realization
of assets and discharge of liabilities and commitments in the normal course of business within the
foreseeable future. Management uses judgment to assess the Company’s ability to continue as a going
concern and the conditions that cast doubt upon the use of the going concern assumption.
(ix) Discount rate for the measurement of lease liabilities
Lease liability is measured at the present value of the lease payments that are not paid at the
commencement date. The lease payments are discounted using the implicit interest rate in the lease. If
the rate cannot be readily determined, the lessee’s incremental borrowing rate is used. The Company
estimates the incremental borrowing rate based on the economic environment, the nature and quality of
the asset, the Company’s credit rating and other factors.
(x) Long-term Incentive Plan
The PIP provides eligible participants with a cash settlement that varies depending on certain criteria,
including EBITDA-based performance conditions and other Company-based key performance indicators,
and is therefore subject to estimation uncertainty. Eligibility is based on service conditions ending two and
three years after the start of the performance period.
r. Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date
of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt
these new and amended standards and interpretations, if applicable, when they become effective. The
Company is currently assessing the impact of these amendments on our financial statements.
P A G E 20
(i)
(ii)
IAS 1 Presentation of Financial Statements has been amended to clarify how to classify debt and
other liabilities as either current or non-current. The amendment are effective for annual reporting
periods beginning on or after January 1, 2024 and must be applied retrospectively.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors has been amended to
clarify the distinction between changes in accounting estimates and changes in accounting
policies and the correction of errors. Also, they clarify how entities use measurement techniques
and inputs to develop accounting estimates. The amendments are effective for annual reporting
periods beginning on or after January 1, 2023 and apply to changes in accounting policies and
changes in accounting estimates that occur on or after the start of that period.
(iii) IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality
Judgements has been amended to clarify disclosure of accounting policies in which it provides
guidance and examples to help entities apply materiality judgements. The amendments aim to
help entities provide accounting policy disclosures that are more useful by replacing the
requirement for entities to disclose their ‘significant’ accounting policies with a requirement to
disclose their ‘material’ accounting policies and adding guidance on how entities apply the
concept of materiality in making decisions about accounting policy disclosures. The amendments
to IAS 1 are applicable for annual periods beginning on or after January 1, 2023 with earlier
application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory
guidance on the application of the definition of material to accounting policy information, an
effective date for these amendments is not necessary.
2. Inventories
Inventories comprise the following:
As at December 31,
Raw materials
Finished goods
Parts and supplies
Total
2022
3,882 $
1,847
—
5,729 $
2021
2,790
2,304
438
5,532
$
$
Included in cost of revenues for the year ended December 31, 2022 is the cost of inventories of $13,357
(December 31, 2021 - $9,432).
P A G E 21
3. Property, plant and equipment
Land and
buildings
Computer
hardware
Furniture,
tools and
equipment
Leasehold
improve-
ments
Right-of-
use assets
Automotive
and heavy
equipment
Total
Cost
As at January 1, 2021
Additions
Acquisitions
Impairment
Remeasurement
Disposals
Asset class transfer
As at December 31, 2021
Additions
Write off
Remeasurement
Disposals
Asset class transfer
As at December 31, 2022
$ 18,491 $
2,184 $ 12,565 $
—
—
—
—
—
—
200
—
—
—
(581)
—
1,050
24
—
—
(291)
574
$ 18,491 $
1,803 $ 13,922 $
—
—
—
—
—
103
—
—
(26)
—
1,597
—
—
(35)
—
$ 18,491 $
1,880 $ 15,484 $
Accumulated Depreciation
As at January 1, 2021
Depreciation
Disposals
Asset class transfer
As at December 31, 2021
Depreciation
Disposals
Asset class transfer
As at December 31, 2022
$
$
$
Net book value
1,153 $
661
—
—
1,814 $
613
—
—
2,427 $
1,347 $
296
(580)
—
8,850 $
1,273
(291)
545
1,063 $ 10,377 $
248
(26)
—
949
(34)
—
1,285 $ 11,292 $
15
—
—
—
(2,808)
—
2,223
—
(8,270)
253
(2,036)
(645)
235
211
—
—
(4,281)
71
3,542 $ 50,425 $ 46,458 $ 133,665
3,723
235
(8,270)
253
(9,997)
—
749 $ 41,950 $ 42,694 $ 119,609
9,184
(92)
546
(1,505)
—
732 $ 45,646 $ 45,509 $ 127,742
320
(92)
—
(1,191)
3,778
7,085
—
546
(157)
(3,778)
79
—
—
(96)
—
567
(2,808)
—
3,288
(2,842)
52
6,139
(2,036)
(597)
2,502 $ 19,771 $ 27,354 $ 60,977
12,224
(8,557)
—
261 $ 23,277 $ 27,852 $ 64,644
10,476
130
(1,067)
(96)
—
—
295 $ 26,287 $ 32,467 $ 74,053
5,843
(86)
(2,747)
2,693
(825)
2,747
As at December 31, 2021
$ 16,677 $
740 $
3,545 $
488 $ 18,673 $ 14,842 $ 54,965
As at December 31, 2022
$ 16,064 $
595 $
4,192 $
437 $ 19,359 $ 13,042 $ 53,689
a. Collateral:
As at December 31, 2022, property, plant and equipment included $13,261 subject to a general security
agreement under the Senior Secured Debentures (December 31, 2021 - $13,083) and $21,069 subject to
a general security agreement under the other secured borrowings, refer to note 7 (December 31, 2021 -
$23,211).
b. Disposals:
During the year ended December 31, 2022, the Company disposed of assets with a cost of $1,505
(December 31, 2021 - $9,997) and accumulated depreciation of $1,067 (December 31, 2021 - $8,557),
for cash proceeds of $788 (December 31, 2021 - $1,678), and recognized a net gain on sale of $350
(December 31, 2021 - $238).
P A G E 22
Right-of-use assets consist of the following:
Land and
buildings
Furniture, tools
and equipment
Automotive and
heavy equipment
Total
Cost
Balance as at January 1, 2021
Impairment
Remeasurement
Asset class transfer
Additions
Disposals
As at December 31, 2021
Remeasurement
Asset class transfer
Additions
Disposals
As at December 31, 2022
Accumulated Depreciation
Balance as at January 1, 2021
Disposals
Depreciation
Asset class transfer
As at December 31, 2021
Asset class transfer
Depreciation
Disposals
As at December 31, 2022
Net book value
As at December 31, 2021
As at December 31, 2022
$
$
$
$
$
$
$
$
43,237 $
(8,270)
253
—
1,001
(2,036)
34,185 $
546
—
1,304
—
36,035 $
18,714 $
(2,036)
4,145
—
20,823 $
—
3,829
—
24,652 $
13,362 $
11,383 $
69 $
—
—
—
—
—
69 $
—
—
—
—
69 $
55 $
—
10
—
65 $
—
2
—
67 $
4 $
2 $
7,119 $
—
—
(645)
1,222
—
7,696 $
—
(3,778)
5,781
(157)
9,542 $
1,002 $
—
1,984
(597)
2,389 $
(2,747)
2,012
(86)
1,568 $
50,425
(8,270)
253
(645)
2,223
(2,036)
41,950
546
(3,778)
7,085
(157)
45,646
19,771
(2,036)
6,139
(597)
23,277
(2,747)
5,843
(86)
26,287
5,307 $
7,974 $
18,673
19,359
During the years ended December 31, 2022 and 2021, the Company exercised options to extend the terms of
certain building lease agreements representing lease modifications in accordance with IFRS 16, and therefore the
lease liability and right-of-use assets were remeasured.
The Company recognized an impairment charge of $8,270 during the year ended December 31, 2021
representing right-of-use assets with the primary purpose of earning sub-lease income where the sub-lease came
to term without the tenant exercising extension options. In the short-term, sub-lease income is no longer expected
to be earned by the right-of-use assets. The recoverable amount was determined to be nil based on the estimated
value-in-use at the termination dates. The right-of-use land and building impaired are included in the Corporate
segment.
Information regarding lease liabilities can be found in Note 8.
P A G E 23
4. Goodwill and intangible assets
Goodwill
Customer
relationships
Computer
software
Brands
Intangible
Total
Total
Cost
Balance as at January 1, 2021
$ 100,681 $ 87,852 $
3,356 $ 16,487 $ 107,695 $ 208,376
Additions
Acquisitions
Disposals
—
—
—
—
165
(54,772)
21
—
—
—
—
—
21
165
21
165
(54,772)
(54,772)
Balance as at December 31, 2021
$ 100,681 $ 33,245 $
3,377 $ 16,487 $ 53,109 $ 153,790
Balance as at December 31, 2022
$ 100,681 $ 33,245 $
3,377 $ 16,487 $ 53,109 $ 153,790
Amortization and impairments
Balance as at January 1, 2021
Amortization
Disposal
$ (92,732) $
—
—
(84,221) $
(446)
54,772
(2,967) $ (14,613) $ (101,801) $ (194,533)
(669)
(193)
(669)
(30)
—
—
54,772
54,772
Balance as at December 31, 2021
$ (92,732) $
(29,895) $
(3,160) $ (14,643) $ (47,698) $ (140,430)
Amortization
Impairment
—
(3,652)
(446)
—
(87)
—
(30)
—
(563)
(563)
—
(3,652)
Balance as at December 31, 2022
$ (96,384) $
(30,341) $
(3,247) $ (14,673) $ (48,261) $ (144,645)
Net book value
As at December 31, 2021
As at December 31, 2022
$
$
7,949 $
3,350 $
217 $
1,844 $
5,411 $ 13,360
4,297 $
2,904 $
130 $
1,814 $
4,848 $
9,145
FLINT has five CGUs, two of which has intangible assets with an indefinite life. Goodwill is monitored by
management at the CGU level. As at December 31, 2022, the FLINT Wear Technologies LP ("Wear") CGU had
indefinite life intangible assets of $1,574 (December 31, 2021 - $1,574) and goodwill of $4,297 (December 31,
2021 - $4,297) and the UWO CGU had goodwill of nil (December 31, 2021 - $3,652).
On December 31, 2022, FLINT performed its annual impairment tests on indefinite life intangible assets and
goodwill for both the Wear and UWO CGUs. Based on the results of these tests, the Company concluded that the
carrying amount of UWO exceeded the recoverable amount by $3,652 and therefore the goodwill within that CGU
was impaired by $3,652. The primary driver for the impairment was the forecasted demand in the UWO services
not being as strong as originally anticipated. The carrying amount of UWO CGU prior to the impairment was
$10,486.
The impairment test for Wear resulted in the recoverable amount exceeding the carrying amount and therefore
there was no impairment. As at December 31, 2021, it was concluded that there was no impairment for both UWO
and Wear.
Valuation technique
The recoverable amounts of FLINT’s CGUs were calculated based on fair value less costs of disposal, which is
considered to be a level 3 fair value measurement. The fair value less costs of disposal is determined through a
discounted cash flow (“DCF”) approach for all CGUs. The DCF method involves projecting cash flows and
converting them into a present value equivalent through discounting. The discounting process uses a rate of
return that is commensurate with the risk associated with the business or asset and the time value of money. This
approach requires assumptions about earnings before interest, taxes, depreciation and amortization (“EBITDA”),
capital expenditures, growth rates, working capital and discount rates.
P A G E 24
Projected EBITDA and capital expenditures
Projected EBITDA and capital expenditures are based on FLINT’s internal budget for the following year and take
into consideration past experience, economic trends and market/industry trends at the time the budget is
developed. The annual budget is developed during the fourth quarter of the previous year and is updated
quarterly by senior management based on actual results. Anticipated future cash flows are updated to reflect any
subsequent changes in expected demand for products and services.
Decreased demand can lead to a decline in EBITDA. A decrease in EBITDA by 10% would result in an impairment
in the Wear CGU.
Growth rate and terminal value
FLINT used projected EBITDA and capital expenditures for the following year and applied a perpetual long-term
growth rate of 3-4% in years 2 through 5 and a terminal growth rate of 2% thereafter for the Wear and UWO
CGUs. The perpetual growth rates are management's estimate of long-term inflation and productivity growth in the
industry and geographic locations in which it operates.
Management does not believe that a reasonably possible change in the perpetual long-term growth rate for the
Wear CGU would result in the recoverable amount being less than the carrying amount.
Discount rate
FLINT assumed post-tax discount rates of 18.25-25.25% in order to calculate the present value of projected future
cash flows. The discount rates represent a weighted average cost of capital (“WACC”), which is an estimate of the
overall required rate of return on an investment for both debt and equity owners. The WACC serves as the basis
for developing an appropriate discount rate, adjusted for risks specific to each CGU.
Management does not believe that a reasonably possible change in the post-tax discount rate for the Wear CGU
would result in the recoverable amount being less than the carrying amount.
5. Deferred consideration
On June 28, 2019, the Company acquired 100% of the issued and outstanding shares of UWO. The total
purchase price of $16,024 included deferred consideration of $1,114 (undiscounted - $1,300), which represents
the fair value of three equal installments of $433 due on June 28, 2020, 2021 and 2022. As the final payment was
made during 2022, the deferred consideration as at December 31, 2021 of $416 reflected the final payment from
acquisition date as a result of the passage of time less the installment payments in 2020, 2021 and 2022 totaling
$1,114.
6. Earn-out contingent liability
On June 28, 2019, the Company acquired 100% of the issued and outstanding shares of UWO. The total
purchase price of $16,024 included an earn-out contingent liability of $861 (undiscounted - $1,612), which
represented the fair value of the expected amount estimated by management at the acquisition date to be paid to
the sellers on June 28, 2022. The maximum undiscounted earn-out was $2,000.
The earn-out contingent liability has decreased from $63 (undiscounted - $70) at December 31, 2021 to nil at
December 31, 2022. The earn-out contingent liability of $157 was fully paid in 2022 and is therefore no longer
subject to estimation uncertainty.
P A G E 25
7. ABL facility, term loan facility and other borrowings
During the year, FLINT completed the refinancing of its asset-based revolving credit facility (the "ABL Facility")
and also amended certain terms of its Term Loan Facility as described in detail below. As a result, the Term Loan
Facility has been classified as a long-term liability and financing costs incurred to separate the Term Loan Facility
from the ABL Facility were attributed to the Term Loan Facility as described below.
a. ABL Facility
FLINT has an ABL Facility providing for maximum borrowings up to $25,000 with a Canadian chartered
bank (the "Lender"). The ABL Facility matures on April 14, 2025. Pursuant to an amending agreement
dated June 23, 2022, the ABL Facility was amended to increase the maximum borrowings available
thereunder to $30,000 during the period commencing on June 23, 2022 and ending on November 30,
2022. On October 5, 2022, the Company completed an amendment to the ABL Facility increasing the
maximum borrowing to $50,000 through maturity on April 14, 2025.
The amount available under the ABL Facility will vary from time to time based on the borrowing base
determined with reference to the accounts receivable of the Company. The ABL Facility borrowing base
as at December 31, 2022 was $43,750 (December 31, 2021 - $15,000). The obligations under the ABL
Facility are secured by, among other things, a first ranking lien on all of the existing and after acquired
accounts receivable of the Company and the other guarantors, being certain of the Company's direct
subsidiaries. The interest rate on the ABL Facility is the Lender's prime rate plus 2.5% (December 31,
2021 - Lender's prime rate plus 2.5%).
As at December 31, 2022, $9,885 (December 31, 2021 - nil) was drawn on the ABL Facility, and there
were $2,147 (December 31, 2021 - $2,450) of letters of credit reducing the amount available to be drawn.
As at December 31, 2022, the net amount of deferred financing costs were $551 (December 31, 2021 -
$64).
The financial covenants applicable under the ABL Facility are as follows:
•
•
The Company must maintain a fixed charge coverage ratio equal to or greater than 1.00:1.00 for
each twelve month period calculated and tested as of the last day of each fiscal quarter; and
The Company must not expend or become obligated for any capital expenditures in an aggregate
amount exceeding $10,000 and for any non-financed capital expenditures in an aggregate
amount exceeding $4,000 for the fiscal year.
As at December 31, 2022, FLINT was in compliance with all financial covenants under the ABL Facility.
b. Term Loan Facility
FLINT has a term loan facility providing for maximum borrowings of up to $40,500 (the “Term Loan
Facility”) with Canso Investment Counsel Ltd., in its capacity as portfolio manager for and on behalf of
certain accounts that it manages (“Canso”). The Term Loan Facility matures on the earlier of (a) the date
that is 180 days following the maturity date of the ABL Facility and (b) October 14, 2025.
As at December 31, 2022, $40,500 (December 31, 2021 - $40,500) was outstanding under the Term Loan
Facility. The Term Loan Facility is required to be used for specific purposes and cannot be redrawn once
repaid. The interest rate on the Term Loan Facility is a fixed rate of 8.0% (December 31, 2021 - interest
rate on the ABL Facility plus 2.0%). The net amount of deferred financing costs were $343 as at
December 31, 2022 (December 31, 2021 - nil).
P A G E 26
c. Other Secured Borrowings
On June 26, 2019, the Company received $19,000 from two secured loans with the Business
Development Bank of Canada (“BDC”) as a partial source of funds for the acquisition of certain assets of
the production services division of AECOM Production Services Ltd. (the "AECOM PSD Business").
The $13,500 loan is repayable over 300 monthly payments of $45, with the final payment to occur on
October 2, 2045. The interest rate on the loan is the BDC Floating Base Rate less 1.0%. Interest accrues
and is payable monthly. The Company allocated $195 in deferred financing costs to this loan that will be
amortized over the life of the loan.
The $5,500 loan is repayable over 72 monthly payments of $75, with the final payment to occur on
March 28, 2025. The interest rate on the loan is the BDC Floating Base Rate less 0.5%. Interest accrues
and is payable monthly. The Company allocated $85 in deferred financing costs to this loan that will be
amortized over the life of the loan.
The loans are secured by a first security interest on the real property and equipment acquired through the
acquisition of the AECOM PSD Business and a security interest in all other present and future property,
subject to the priorities granted to existing lenders under the ABL Facility, the Term Loan Facility, the
senior secured debentures and other existing commitments.
The loan agreements with BDC require the Company to maintain a fixed charge coverage ratio equal to
or greater than 1.00:1.00 for each twelve month period calculated and tested as of the last day of each
fiscal year.
As at December 31, 2022, FLINT was in compliance with all financial covenants under the loan
agreements with BDC.
d. Senior Secured Debentures
Balance as at January 1, 2021
Accretion
Debentures issued to settle interest
Balance as at December 31, 2021
Accretion
Debentures issued to settle interest
Balance as at December 31, 2022
$
105,173
293
4,278
$
109,744
227
9,077
$
119,048
On March 23, 2016, the Company issued 8.0% senior secured debentures due March 23, 2026 (the
"Senior Secured Debentures") pursuant to a trust indenture between FLINT, as issuer, and BNY Trust
Company of Canada, as debenture trustee, as amended and supplemented (the "Senior Secured
Indenture"), on a private placement basis to Canso. On June 2, 2020, the debenture trustee was changed
to Computershare Trust Company of Canada.
The Senior Secured Debentures bear interest at an annual rate of 8.0% payable in arrears on June 30
and December 31 of each year. The Senior Secured Debentures are redeemable at the option of the
Company and, in certain circumstances, are mandatorily redeemable. The Senior Secured Debentures
are secured by first-ranking liens over all of the property of the Company and its guarantor subsidiaries,
other than certain limited classes of collateral over which the Company has granted a prior-ranking lien in
favour of the ABL Facility, the Term Loan Facility and the other secured loans.
P A G E 27
The Senior Secured Debentures provide for certain events of default and covenants of the Company,
including financial and reporting covenants and restrictive covenants limiting the ability of the Company
and its subsidiaries to make certain distributions and dispositions, incur indebtedness, grant liens and
transactions,
limitations with
reorganizations and hedging arrangements (subject to certain exceptions).
investments, non-arm’s
to acquisitions, mergers,
respect
length
On December 10, 2021, Canso, in its capacity as portfolio manager for and on behalf of certain accounts
that it manages and sole holder of the Senior Secured Debentures, agreed to accept the issuance of an
additional 4,449 Senior Secured Debentures on June 30, 2022 and 4,627 Senior Secured Debentures on
December 31, 2022 at a principal amount of $1,000 per Senior Secured Debenture in order to satisfy the
interest that would otherwise become due and payable on such dates (the "Payment in Kind
Transaction"). The terms of the new Senior Secured Debentures issued pursuant to the Payment in Kind
Transaction were the same as the existing Senior Secured Debentures in all material respects. In
connection with the Payment in Kind Transaction, the Company entered into the Seventh Supplemental
Senior Secured Indenture effective as of December 15, 2021.
8. Leases
As a lessee
The Company recognized the following amounts related to lease liabilities in the Consolidated Statements of
Loss and Comprehensive Loss.
For the year ended December 31,
Depreciation of right-of-use assets
Interest expense on lease liabilities
Expense relating to variable lease payments not included in the measurement of
the lease liability
$
2022
5,843 $
2,424
2021
6,139
2,616
486
369
Overall the variable payments constitute up to 9.10% (December 31, 2021 - 7.4%) of the Company's entire lease
payments. Variable payments are primarily based on management fees related to the use of the rented property.
The total cash outflow for leases for the year ended December 31, 2022 was $10,425 (December 31, 2021 -
$9,775).
P A G E 28
Maturity analysis - contractual undiscounted cash flows
As at December 31,
2023
2024
2025
2026
2027
After 2028
Total
Less: effects of discounting
Total discounted lease liabilities
Analyzed as:
Current
Non-current
9. Revenue
The following are amounts for each significant category of revenue recognized:
For the year ended December 31,
Rendering of services
Sales of goods
Total
10. Selling, general and administrative expenses
For the year ended December 31,
Salaries and benefits
Occupancy and office costs
Professional fees
Travel and advertising
Insurance
Total
$
10,322
8,900
6,922
4,654
3,154
1,392
35,344
(5,013)
30,331
8,447
21,884
$
$
$
$
2022
2021
$
$
547,575 $
340,606
57,098
48,796
604,673 $
389,402
2022
2021
$
24,562 $
17,461
3,306
6,191
1,604
1,541
2,590
3,519
1,137
1,591
$
37,204 $
26,298
P A G E 29
11. Interest expense
For the year ended December 31,
2022
Interest expense on senior secured debentures
$
9,077 $
Interest expense on ABL facility
Interest expense on term loan facility
Interest expense on lease liabilities
Deferred financing costs amortized
Interest expense - other
Interest expense on other secured borrowings
Accretion expense
Total
12. Income taxes
2021
8,557
208
3,240
2,616
181
88
612
432
1,016
3,130
2,424
238
(17)
767
268
$
16,903 $
15,934
The reconciliation of statutory income tax rates to FLINT’s effective tax rate is as follows:
For the year ended December 31,
Loss from continuing operations before tax
Tax rate
Income tax (recovery) expense at statutory rates
Permanent differences
Change in rates on temporary differences
Deferred tax asset not recognized
Income tax (recovery) expense
2022
2021
$
(12,431) $
(9,296)
23.37 %
23.77 %
$
(2,906) $
(2,210)
867
788
1,251
$
—
$
(22)
(187)
2,419
—
The statutory rate declined from 23.77% to 23.37% due to the differences in the amount of taxable income
attributable to various provinces
Deferred income taxes have been recognized in respect of the following temporary differences:
As at December 31,
Property, plant and equipment
Non-capital losses
Deferred tax liability
2022
2021
$
$
(24,244) $
(20,677)
24,244
20,677
— $
—
P A G E 30
A deferred tax asset has not been recognized in respect of the following deductible temporary differences:
As at December 31,
Intangible Assets
Senior secured debentures
Non-capital loss carryforward
Net capital loss carryforward
Lease liabilities
Other
2022
2021
$
9,038 $
5,007
72,967
80,606
30,331
6,027
9,201
4,779
68,049
80,606
31,366
5,008
Unrecognized deductible temporary differences
$
203,976 $
199,009
A deferred tax asset has been recognized in respect of $24,244 of non-capital losses and a deferred tax asset has
not been recognized in respect of $72,967 of non-capital losses. The total of $97,211 non-capital losses begin to
expire in 2035.
FLINT has approximately $80,606 of net capital losses that have not been recognized in the consolidated financial
statements as at December 31, 2022 (December 31, 2021 - $80,606). There is no expiry of capital losses.
13. Long-term Incentive Plan
In 2022, the Board of Directors approved the granting of an additional award that contains a three-year
performance period and has similar performance metrics and weightings as the award granted in 2021. PIP
awards are payable within one month following approval of the Company’s annual financial statements for those
years. In 2021, the Board of Directors approved a PIP that provides participants with a cash settlement based on
achieving certain performance criteria and is earned based on service requirements between two and three
years.
As at December 31, 2022, the carrying amount of $5,301 (December 31, 2021 - $2,239) represents the net
present value of estimated future cash payments expected to be earned under the program based on
management’s best estimate of the performance criteria over the performance periods ending December 31,
2022, 2023 and 2024, adjusted for the portion of the performance period that has been completed.
14. Income from government subsidies
Income from government subsidies includes CEWS and CERS received from the Government of Canada to assist
with the payment of employee wages and rent as a result of the impact of the COVID-19 pandemic. The CEWS
and CERS programs ended in 2021. Therefore the Company did not have any income from government subsidies
during the year ended December 31, 2022 (December 31, 2021 - $16,133) in the Consolidated Statements of
Loss and Comprehensive Loss.
At December 31, 2022, nil (December 31, 2021 - $464) of government subsidies were accrued and included in
accounts receivable.
15. Share capital and loss per share
The authorized share capital of the Company consists of: (i) an unlimited number of common shares, and
(ii) preferred shares issuable in series to be limited in number to an amount equal to not more than one half of
the issued and outstanding common shares at the time of issuance of such preferred shares.
P A G E 31
The following table summarizes the number of preferred and common shares outstanding:
Balance as at December 31, 2021
Converted to common shares
Balance as at December 31, 2022
Preferred Shares
Series 1
Series 2
Common
Shares
127,735
40,111
109,992,668
(3)
—
8,571
127,732
40,111
110,001,239
The Series 1 and Series 2 Preferred Shares have a 10.0% fixed cumulative preferential cash dividend payable
when the Company shall have sufficient monies to be able to do so, including under the provisions of applicable
law and contracts affecting the Company. The Board of Directors of the Company does not intend to declare or
pay any cash dividends until such time as the Company’s balance sheet and liquidity position supports the
payment. Any accrued and unpaid dividends are convertible in certain circumstances at the option of the holder
into additional Series 1 and Series 2 Preferred Shares.
As at December 31, 2022, the accrued and unpaid dividends on the Series 1 and Series 2 preferred shares
totaled $76,671 (December 31, 2021 - $59,886). Assuming that the holders of the preferred shares exercise the
right to convert such accrued and unpaid dividends into additional preferred shares and then convert such
preferred shares into common shares, approximately 319,675,972 (December 31, 2021 - 242,857,143) common
shares would be issued, which represents approximately 290.6% (December 31, 2021 - 221.0%) of the common
shares outstanding as at December 31, 2022.
In addition, holders of the Series 1 and Series 2 Preferred Shares have the right, at their option, to convert their
Preferred Shares into Common Shares at a price of $0.35 and $0.10 per Common Share, respectively, subject to
adjustment in certain circumstances. During the twelve months ended December 31, 2022, 8,571 common shares
were issued upon conversion of three Series 1 Preferred Shares.
The Series 1 and Series 2 Preferred Shares are redeemable by the Company for cash at 110% of the purchase
price for such shares, plus accrued but unpaid dividends, once all of the outstanding Senior Secured Debentures
have been repaid and are subject to repayment in the event of certain change of control transactions.
Based upon the conversion rights of the Series 1 and Series 2 Preferred Shares there could be significant dilution
to the current holders of Common Shares. Up to approximately 766,059,000 (December 31, 2021 - 766,067,000)
additional Common Shares would be issuable upon conversion of the face amount of the Preferred Shares into
Common Shares, representing approximately 696.4% (December 31, 2021 - 696.5%) of the Common Shares
outstanding as at December 31, 2022.
As the terms of the preferred shares do not create an unavoidable obligation to pay cash, the preferred shares are
accounted for within shareholders' deficit, net of transaction costs.
(in thousands, except number of shares and per share amounts)
2022
2021
Net loss - basic and diluted
Weighted average shares outstanding - basic and diluted
Net loss per common shares - basic and diluted
$
(12,979) $
(9,308)
110,000,472 109,992,668
$
(0.12) $
(0.08)
The only potentially dilutive securities as at December 31, 2022 were the preferred shares. All potentially dilutive
securities were anti-dilutive for the twelve months ended December 31, 2022 and therefore were not included in
the calculation of diluted earnings per share.
P A G E 32
16. Restructuring expenses
Restructuring expenses of $4,115 were recorded during the twelve months ended December 31, 2022
(December 31, 2021 - $1,052). The non-recurring restructuring expenses in 2022 were primarily related to a
management change that occurred in March 2022.
17. Related party disclosures
Compensation for key management personnel
FLINT’s key management personnel are comprised of officers and directors. The remuneration for these key
management personnel are as follows:
For the year ended December 31,
Short-term employment benefits
Termination benefits
Total compensation
18. Financial instruments and risk management
2022
5,362 $
3,600
8,962 $
2021
6,510
—
6,510
$
$
Financial instruments consist of cash, accounts receivable, accounts payable and accrued liabilities, the ABL
Facility, the Term Loan Facility, the Senior Secured Debentures and other secured borrowings.
a. Risk management
FLINT’s Board of Directors has overall responsibility for the establishment and oversight of FLINT’s risk
management framework. FLINT has exposure to credit risk, interest rate risk, customer concentration risk,
and liquidity risk.
(i) Credit risk
The Company has exposure to credit risk, which is the risk of financial loss to FLINT if a customer or
counterparty to a financial instrument fails to meet its contractual obligations and arises principally from
FLINT’s accounts receivable. The following table outlines FLINT’s maximum exposure to credit risk:
As at December 31,
Cash
Accounts receivable
Total
2022
3,134 $
159,371
162,505 $
2021
21,680
107,178
128,858
$
$
Cash is held at Canadian Schedule A Banks and are therefore considered low credit risk.
FLINT has a credit policy under which each new customer is analyzed individually for creditworthiness
before standard payment terms and conditions are offered. FLINT’s exposure to credit risk with its
customers is influenced mainly by the individual characteristics of each customer. When available, FLINT
reviews credit bureau ratings, bank accounts and financial information for each new customer. FLINT’s
customers are primarily Canadian energy companies engaged in upstream, midstream and downstream
activities, all of which have strong creditworthiness.
Of the total balance of accounts receivable at December 31, 2022, $87,505 (December 31, 2021 -
$72,205) related to trade receivables and $71,866 (December 31, 2021 - $34,973) related to accrued
revenue (i.e., for work performed but not yet invoiced) and other.
P A G E 33
Trade receivables are non-interest bearing and generally due on 30-90 day terms. As at December 31,
2022, approximately $15,630 of FLINT’s trade receivables had been outstanding longer than 90 days
(December 31, 2021 - $4,846). Subsequent to December 31, 2022, $10,531 of the $15,630 over 90 days
was collected. Management has fully evaluated the outstanding receivables as at December 31, 2022
and has determined that the lifetime expected credit losses of the trade receivables is immaterial at this
time.
(ii)
Interest rate risk
Interest rate risk arises from the possibility of the future cash flows of a financial instrument fluctuating as
a result of changes in the market rates of interest. FLINT is subject to interest rate risk on its ABL facility
and other secured borrowings. The required cash flow to service certain credit facilities will fluctuate as a
result of changes in market rates.
A 1% increase in interest rates in the year, assuming debt patterns are consistent with those that actually
occurred in 2022, when annualized, would have resulted in a 2022 net income sensitivity of approximately
$143 (December 31, 2021 - $563).
(iii) Customer concentration risk
Revenues of FLINT are concentrated, with its top three customers representing 34.4% of consolidated
revenue (December 31, 2021 - 28.6%) and 32.9% of consolidated accounts receivable (December 31,
2021 - 22.5%). More specifically, FLINT's largest customer accounted for 14.0% or $84,655 of FLINT's
consolidated revenue for the year ended December 31, 2022 (December 31, 2021 - 11.1% or $43,227).
(iv) Liquidity risk
Liquidity risk is the risk that FLINT will not be able to meet its financial obligations as they come due.
FLINT’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to its reputation.
Accounts payable and accrued liabilities
ABL Facility (1)
Term loan Facility (1)
Lease liabilities (2)
Other secured borrowings (1)
Senior secured debentures (1)
Total
(1) Carrying value is presented gross of debt issuance costs.
(2) Carrying value is presented as undiscounted cash flows.
Total
Less than
One Year
One to Five
Years
After Five
Years
$
57,893 $
57,893 $
— $
9,885
40,500
35,344
14,308
120,312
—
—
10,322
1,440
9,885
40,500
23,630
3,285
—
120,312
—
—
—
1,392
9,583
—
$
278,242 $
69,655 $
197,612 $
10,975
FLINT’s strategy is that long-term debt should always form part of its capital structure, assuming an
appropriate cost. As existing debt approaches maturity, FLINT will replace it with new debt, convert it into
equity or refinance or restructure, depending on the state of the capital markets at the time.
FLINT manages its liquidity risk by continuously monitoring forecast and actual gross profit and cash
flows from operations. The Company anticipates that its liquidity (cash on hand and available credit
facilities) and cash flows from operations will be sufficient to meet its short-term contractual obligations
and to maintain compliance with its financial covenants through December 31, 2023.
P A G E 34
19. Supplemental cash flow information
a. Changes in non-cash working capital
As at December 31,
Accounts receivables
Inventories
Prepaid expenses
Accounts payable and accrued liabilities
Total changes in non-cash working capital
b. Changes in liabilities arising from financing activities
2022
2021
$
(52,193) $
(17,393)
(197)
(380)
22,994
1,812
(171)
129
$
(29,776) $
(15,623)
Term loan
facility
ABL facility
Lease
liabilities
Senior
secured
debentures
Other
secured
borrowings
Total
liabilities
from
financing
activities
Balance as at January 1,
2021
Borrowings
Repayment
Interest settled for additional
senior secured debentures
Non-cash changes
Balance as at December 31,
2021
Borrowings
Deferred financing
Repayments
Interest settled for additional
senior secured debentures
Non-cash changes
Balance as at December 31,
2022
$ 40,626 $
— $ 36,462 $ 105,173 $ 17,703 $ 199,964
—
(126)
—
(64)
—
—
—
—
2,223
(7,597)
—
—
—
2,223
(1,935)
(9,658)
—
278
4,278
—
4,278
293
(197)
310
$ 40,436 $
— $ 31,366 $ 109,744 $ 15,571 $ 197,117
—
9,885
7,631
(343)
—
(551)
—
—
(8,542)
—
—
—
—
—
17,516
(894)
(1,440)
(9,982)
—
64
—
—
—
9,077
(124)
227
—
12
9,077
179
$ 40,157 $
9,334 $ 30,331 $ 119,048 $ 14,143 $ 213,013
20. Capital management
FLINT's capital structure is comprised of shareholders' equity and short and long-term debt. FLINT's objectives
when managing capital are to support its ability to continue as a going concern in order to provide optimal returns
for shareholders. Maintaining liquidity, managing financial risk and optimizing the cost of capital are key factors
that set the framework for FLINT capital management strategy.
FLINT is not subject to any externally imposed capital requirements other than standard and restrictive financial
covenants on its ABL facility, other borrowings and senior secured debentures.
21. Segment information
The Company has organized the business around differences in products and services provided to customers. All
or substantially all of FLINT’s operations, assets and employees are located in Canada.
P A G E 35
FLINT has five operating segments, which are aggregated into two reportable segments, as follows:
•
•
The Maintenance and Construction Services segment is a fully integrated provider of maintenance and
construction services to the energy and industrial markets. This segment provides maintenance services,
welding, fabrication, machining, construction, turnaround services, heavy equipment operators and a
resource/labour supply. The Maintenance and Construction reportable segment consists of the Union and
Non-union operating segments as well as the Environmental operating segment on the basis of the
similarities in their service offerings, customers and business environment.
The Wear Technology Overlay Services segment specializes in the supply and fabrication of overlay pipe
spools, pipe bends, wear plates and vessels for corrosion and abrasion resistant applications across
various end markets. This reportable segment consists of the Wear and UWO operating segments on the
basis of similarities in their service offerings, customers and technologies.
In addition to the reportable operating segments, the Corporate division is a standard head office function, which
deals with strategic planning, corporate communications, taxes, legal, marketing, finance, financing (including
interest expense), human resources and information technology for the entire organization. These costs are
managed on a group basis and therefore are not allocated to operating segments.
The eliminations column includes eliminations of inter-segment transactions. FLINT accounts for inter-segment
sales based on transaction price.
For the year ended December
31, 2022
Maintenance
and
Construction
Services
Wear
Technology
Overlay
Services
Corporate
Eliminations
Total
Revenue
Cost of revenue
Gross profit
$
555,191 $
54,160 $
(500,538)
(45,680)
54,653
8,480
— $
—
—
(4,678) $
604,673
4,678
(541,540)
—
63,133
Selling, general and
administrative expenses
Long-term incentive plan
expense
Amortization of intangible assets
Depreciation expense
Income from long-term
investments
Interest expense
Restructuring expenses
Impairment of intangible assets
and goodwill
Loss on contingent
consideration liability
Gain on sale of property, plant
and equipment
Income (loss) from continuing
operations
(536)
(309)
(36,359)
—
(37,204)
—
(117)
—
(446)
(6,983)
(2,556)
141
(769)
(217)
—
—
350
—
(282)
(4)
(3,652)
—
—
(3,061)
—
(937)
—
(15,852)
(3,894)
—
(81)
—
—
—
—
—
—
—
—
—
—
(3,061)
(563)
(10,476)
141
(16,903)
(4,115)
(3,652)
(81)
350
$
46,522 $
1,231 $
(60,184) $
— $
(12,431)
P A G E 36
For the year ended December
31, 2021
Maintenance
and
Construction
Services
Wear
Technology
Overlay
Services
Corporate
Eliminations
Total
Revenue
Cost of revenue
Gross profit
$
354,652 $
37,826 $
(324,071)
(28,071)
30,581
9,755
— $
—
—
(3,076) $
389,402
3,076
(349,066)
—
40,336
Selling, general and
administrative expenses
Long-term incentive plan
expense
Amortization of intangible assets
Depreciation expense
Income from long-term
investments
Interest expense
Restructuring expenses
Impairment of right-of-use
assets
Recovery of contingent
consideration liability
Gain on sale property, plant and
equipment
Income from government
subsidies
Income (loss) from continuing
operations
(488)
(300)
(25,510)
—
(26,298)
—
(209)
—
(460)
(2,239)
—
(7,785)
(2,763)
(1,676)
534
(799)
(2)
—
—
238
—
(328)
(282)
—
—
—
—
(14,807)
(768)
(8,270)
149
—
13,756
1,211
1,166
—
—
—
—
—
—
—
—
—
—
(2,239)
(669)
(12,224)
534
(15,934)
(1,052)
(8,270)
149
238
16,133
$
35,826 $
6,833 $
(51,955) $
— $
(9,296)
P A G E 37
CORPORATE INFORMATION
BOARD OF DIRECTORS
Sean McMaster (1) (2)
Chair of the Board
Jordan Bitove (2) (3)
Director
H. Fraser Clarke (1) (2)
Director
Karl Johannson (1) (2) (3)
Director
Dean MacDonald (3)
Director
OFFICERS
Barry Card
Chief Executive Officer
Randy Watt
Chief Financial Officer
Neil Wotton
Chief Operating Officer
Murray Desrosiers
Senior Vice President, Legal and Corporate Development
Deloris Hetherington
Vice President, Human Resources
Notes:
(1) Member of the Audit Committee
(2) Member of the Corporate Governance and Compensation Committee
(3) Member of the Health, Safety and Environment Committee
Brad Naeth
Vice President, Wear and Environmental Services
HEAD OFFICE
FLINT Corp.
Bow Valley Square 2
3500, 205 – 5th Avenue S.W.
Calgary, Alberta T2P 2V7
T: 587-318-0997
F: 587-475-2181
www.FLINTcorp.com
BANKER
TD Canada Trust
AUDITORS
Ernst & Young LLP
James Healey
Vice President, Finance and Corporate Controlling
Herb Thomas
Vice President, Operations
Angela Thompson
Vice President, Corporate Services
Clint Tisnic
Vice President, Operational Finance
LEGAL COUNSEL
Blake, Cassels & Graydon LLP
McCarthy Tetrault LLP
TRANSFER AGENT
Computershare Investor Services Inc.
EXCHANGE LISTING
Toronto Stock Exchange
Symbol: FLNT
P A G E 38