Cabo Drilling Corp. ("Cabo" or the "Company") (TSX VENTURE:CBE)(FRANKFURT:DHL)
reports the Company's results for its fiscal year 2013 third quarter ended March
31, 2013.
3rd QUARTER HIGHLIGHTS
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(CDN $000s, except earnings 3 months 3 months 9 months 9 months
per share) ending ending ending ending
Mar 31/13 Mar 31/12 Mar 31/13 Mar 31/12
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Revenue 10,616 14,046 33,619 45,339
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Earnings (Loss) Before
Interest, Taxes,
Depreciation, Stock Based
Compensation and Other
Items (EBITDA) 1,072 1,551 3,527 6,075
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Net Earnings (Loss) Before
Taxes 107 230 504 3,130
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Net Earnings (Loss) After
Taxes 20 430 145 2,389
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Earnings (Loss) per Share
($) (Basic and Diluted)
Before Interest, Taxes,
Depreciation, Stock-based
Compensation and Other
Items (EBITDA) 0.01 0.02 0.04 0.08
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Earnings (Loss) per Share
($) (Basic and Diluted) 0.00 0.01 0.00 0.03
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Cash from Operations(i) 458 1,386 2,143 3,968
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Gross Margin % 19.7% 18.7% 20.2% 19.8%
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Gross Margin % Adjusted(ii) 25.7% 23.4% 25.8% 24.1%
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Working Capital 13,841 9,639 13,841 9,639
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(i)before changes in non-cash working capital items
(ii)gross margin adjusted to exclude depreciation expense
The Company reports:
-- Quarterly revenue for the 3rd quarter fiscal 2013 of $10.62 million, a
24% decrease compared to $14.05 million in the 3rd quarter fiscal 2012.
-- 3rd quarter fiscal 2013 earnings before interest, taxes, amortization,
stock-based compensation and other items (EBITDA) of $1.07 million
compared to 3rd quarter fiscal 2012 earnings before interest, tax,
amortization, stock based compensation and other items (EBITDA) of $1.55
million, resulting in 3rd quarter fiscal 2013 earnings before interest,
taxes, amortization, stock-based compensation and other items of $0.01
per share and $0.02 per share in the 3rd quarter of fiscal 2012.
-- Net before tax income for the 3rd quarter of fiscal 2013 of $106,810
compared to a 3rd quarter fiscal 2012 before tax income of $230,300.
-- Net after tax earnings for the 3rd quarter of fiscal 2013 of $19,730
compared to net after tax earnings for the 3rd quarter of fiscal 2012 of
$429,692, resulting in 3rd quarter fiscal 2013 net after tax earnings of
$0.00 per share compared to a net after tax earnings for 3rd quarter
fiscal 2012 of $0.01 per share.
-- Gross margin percentage for the 3rd quarter fiscal 2013 was 19.7%
compared with a gross margin of 18.7% in 3rd quarter fiscal 2012 and
19.1% in the 2nd quarter of fiscal 2013.
-- Cash from operations, before changes in non-cash working capital items,
was $2.14 million for the nine months ending March 31, 2013 compared to
$3.97 million for the nine months ending March 31, 2012.
-- A current asset balance of $23.74 million and working capital of $13.84
million.
-- Total assets of $39.33 million and total liabilities of $15.00 million.
"Cabo Drilling generated revenues of $33.62 million during the first nine months
of fiscal 2013. This represents a 26% decrease compared to the $45.34 million
recorded in the nine month period in fiscal 2012," stated Mr. Versfelt. "The
primary reason for the decrease is due to reduced demand for drilling as a
result of projects being scaled back or projects being delayed."
"Revenues from our international divisions continue to represent a significant
portion of Cabo Drilling's operations with 35% of revenues for the first nine
months of fiscal 2013, as compared to 29% during the comparable period in fiscal
2012," commented Mr. Versfelt. "Management expects the international revenues to
continue to represent a significant portion of overall revenues in the remaining
period of fiscal 2013."
"Gross margin, adjusted to include depreciation, was 19.7% or $2.09 million in
the third quarter of fiscal 2013, as compared to 18.7% in the third quarter of
fiscal 2012. In accordance with IFRS, depreciation expenses of $638,888 are
included in direct costs as compared to $666,994 in the third quarter of fiscal
2012," said Mr. Versfelt. "Adjusted gross margin, when depreciation expense is
excluded from direct costs is 25.7% in the third quarter of fiscal 2013, as
compared to 23.4% in the third quarter of fiscal 2012."
"The Company reports $3.53 million in EBITDA (10.5%) for the first nine months
of fiscal 2013, compared to $6.08 million in the first nine months of fiscal
2012 (12.2% after adjustment for one time gain on the settlement of a debenture
of $710,889)," stated Mr. Versfelt.
"For the third quarter ended March 31, 2013 the Company recorded a net income of
$19,730 compared to $429,692 in the three month period ended March 31, 2012 and
net income of $144,791 during the nine month period ended March 31, 2013
compared to $2.39 million in the comparable period in 2012 which included the
one time gain on the settlement of the $710,889 debenture," stated Mr. Versfelt.
"Working capital increased to $13.84 million during the nine months ending March
31, 2013, from $12.72 million at June 30, 2012 and total liabilities decreased
by $3.56 million during the nine months to $15.00 million at March 31, 2013."
"Overall, Cabo Drilling management expects average drill utilization in fiscal
2013 to remain near the 40-45% level, with gross margins at 25-26%, prior to
depreciation expenses included in direct costs," commented Mr. Versfelt.
"General and administration expenses should remain in the $7 million range. Cabo
Drilling is budgeting annual gross revenues of approximately $43-45 million for
fiscal 2013."
Third quarter ended March 31, 2013
Revenue for the quarter ending March 31, 2013, decreased $3.43 million, or 24%,
to $10.62 million, compared to $14.05 million in the third quarter of fiscal
2012, and increased 16% from the $9.16 million reported in the second quarter of
fiscal 2013. The primary reason for the decrease is due to reduced demand for
drilling as a result of projects being scaled back or projects being delayed.
Latin America division revenues increased by 6% with slightly higher drill
utilization in Panama as compared to the third quarter of fiscal 2012 and
revenues increased to $4.47 million, as compared to $4.22 million in the
comparable period in fiscal 2012. The Canadian and USA divisions recorded a
significant decrease in revenues of 40% to $5.67 million in the third quarter of
fiscal 2013, as compared to $9.43 million in the third quarter of fiscal 2012.
Direct costs for the quarter ended March 31, 2013, were $8.52 million compared
to $11.42 million in the quarter ending March 31, 2012, as adjusted to include
depreciation in accordance with IFRS. The decrease is a direct result of the
decreased activity in the third quarter of fiscal 2013. Gross margins, under
IFRS reporting, for the quarter ended March 31, 2013, were 19.7% compared to
18.7% during the quarter ending March 31, 2012 and higher than the 19.1%
recorded in the second quarter of fiscal 2013. The small increase in gross
margin from year to year is directly related to higher fixed costs in the
Canadian operations that were offset mostly by higher margins in the Panama and
Colombia operations. Management restructured two of its Canadian operations,
which is beginning to result in improved margins and profitability.
In accordance with IFRS, $638,888 of depreciation expense of property, plant and
equipment is included in direct costs for the quarter ending March 31, 2013, as
compared to $666,994 in the third quarter of fiscal 2012.
General and administrative expenses decreased by $283,258 from $1.90 million in
the third quarter of fiscal 2012 to $1.65 million in the third quarter of fiscal
2013. The decrease is a result of lower salaries and travel costs.
General and administration costs represent 16% of revenues during the third
quarter of fiscal 2013, as compared to 19% reported in the second quarter of
fiscal 2013, and 14% in the third quarter of fiscal 2012. Management expects
general and administration costs to remain around $1.60 million per quarter for
the remainder of fiscal 2013 and into 2014.
Net income after tax for the third quarter of fiscal 2013 is $19,730 compared to
a net income after tax of $429,692 in the third quarter of fiscal 2012.
Marketable securities increased $565,910, from $338,698 at June 30, 2012, to
$904,608 at March 31, 2013. Marketable securities consist primarily of 1.50
million shares in Standard Gold Inc. and 3.56 million shares of International
Millennium Mining Corp. We have adjusted the value of our holdings at March 31,
2013, as recorded in the comprehensive income statement. At March 31, 2013, the
balance of $904,608 consists of shares in public corporations.
Accounts receivable decreased by $1.79 million to $8.58 million at March 31,
2013, from $10.37 million at June 30, 2012. The decrease is primarily due to
reduced activity during the first nine months of fiscal 2013.
Property, plant & equipment decreased to $12.60 million at March 31, 2013 from
$13.47 million at June 30, 2012, a decrease of $875,704 during the first nine
months of fiscal 2013, resulting from equipment depreciation offset by equipment
purchases of $1.11 million. The Company has a capital expenditure budget of
$1.80 million for fiscal 2013, with an emphasis on modernizing its drill fleet.
Consolidated Financial Results for nine months ending March 31, 2013
Revenue for the nine months ending March 31, 2013 decreased approximately 26% to
$33.62 million, compared to $45.34 million in the comparable period in fiscal
2012. Revenues from our international divisions continue to represent a
significant portion of Cabo Drilling's operations with 35% of revenues for the
first nine months of fiscal 2013, as compared to 29% during the comparable
period in fiscal 2012. Management expects the international revenues to continue
to represent a significant portion of overall revenues in the remaining period
of fiscal 2013.
Surface drilling decreased by 24% during the nine month period ending March 31,
2013 to $23.73 million, due to projects completing earlier than anticipated or
being delayed in the Canadian operations. Underground drilling decreased by 25%
during the nine month period ending March 31, 2013 to $6.00 million, as compared
to $8.03 million during the comparable period in fiscal 2012. The decrease is
due to an underground contract not being renewed in the Atlantic division.
Direct costs for the nine months ended March 31, 2013 were $26.83 million
compared to $36.36 million in the comparable period in fiscal 2012. Gross
margins for the nine months ended March 31, 2013 were 20.2% compared to 19.8%
during the nine months ended March 31, 2012, when direct costs include
depreciation expenses (or 25.8% compared to 24.1% for the respective periods,
when direct costs are adjusted to exclude depreciation expense). Although
margins in Canada were lower, the Company was able to maintain higher margins in
the international operations.
General and administrative expenses decreased by approximately 8% or $453,586
from $5.64 million in the first nine months of fiscal 2012 to $5.19 million in
the first six months of fiscal 2013. The decrease is primarily a result of
decreased salary costs from restructuring the Canadian operations, lower travel
expenditures and lower bad debt allowance.
Net income after tax for the first nine months of fiscal 2013 was $144,791
compared to net income after tax of $2.39 million earned in the comparable
period of fiscal 2012. The main differences are the $710,889 extraordinary gain
recorded in the first quarter of fiscal 2012 and higher taxes as a result of
higher revenues reported in the first nine months of fiscal 2012, as compared to
the first nine months of fiscal 2013.
Cash flow from operations (before changes in non-cash operating working capital
items) was $2.14 million during the first nine months of fiscal 2013, compared
to $3.97 during the first nine months of fiscal 2012.
Virtually all metal prices are adjusting downward to levels last seen throughout
2009 and into early 2010. In addition, the materials sector has become the least
favoured sector in the global financial sector. All areas of the mineral
exploration and mining sectors are undergoing a significant revaluation and
reduction of capital expenditures, as well as increases in cost control
programs. The dearth of financings in the junior exploration sector over the
last two years is also causing multi-billion dollar cutbacks of global
exploration expenditures. Does this mean that the entire mining industry is
faced with a long-term major adjustment, or are we looking at an overdue
correction? We believe it is the latter, and have adjusted our budgets and plans
on this basis. We do not anticipate a material turn in the markets until
sometime in 2014, but we see a number of positive consequences of this type of
environment.
The better managed juniors with good mining projects will survive and will, over
time, encourage the private and public sectors to provide financing for their
projects. The mid-tier and major mining companies will become stronger and will,
in many cases, acquire good projects previously developed by undercapitalized
juniors. Concurrently, the USA economy, emerging market economies and European
economies are anticipated to become stronger and increase their demand for
metals, from a decreasing supply.
At the same time small, largely single operator, drilling companies, whose
financial health is significantly impacted by the financial position of the
juniors, will realized that continually underbidding projects during the slow
times cannot be sustained. In addition, the availability of experienced drilling
personnel will improve, thereby increasing the possibility of higher
productivity, improved safety and decreased consumable costs.
Cabo Drilling has reduced costs over the past two years and has improved its
balance sheet. Productivity has improved, our safety record is one of the best
in the industry and our client relationships are very good. With a continued
focus on safety, high environmental stewardship and improved productivity, plus
the improved availability of good to excellent drilling personnel, we believe we
will experience better projects with better margins and high safety with high
quality clients.
Resignation of Director
The Company also announces that Roy Graydon resigned as a director of the
Company effective May 22, 2013. Mr. Graydon decided to step down from the board
of Cabo Drilling due to other work commitments. Mr. Versfelt, Cabo's President &
CEO stated, "We appreciate the contributions Mr. Graydon has made to the Company
over the past 18 months and I personally wish Mr. Graydon the greatest amount of
success and enjoyment with his future endeavours."
About Cabo Drilling Corp. (TSX VENTURE:CBE)(FRANKFURT:DHL)
Cabo Drilling Corp. is a drilling services company headquartered in New
Westminster, British Columbia, Canada. The Company provides mining specialty
drilling services through its Canadian divisions in Surrey, British Columbia;
Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling
(America) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama,
Republic of Panama; Cabo Drilling Panama-Pacifico Corp. of Panama, Republic of
Panama doing business as Cabo Drilling Colombia Corp.; Balkan States Drilling
SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's
common shares trade on the Frankfurt Exchange under the symbol: DHL and on the
TSX Venture Exchange under the symbol: CBE.
ON BEHALF OF THE BOARD
John A. Versfelt, Chairman, President and CEO
Further information about the Company can be found on the Cabo website
(http://www.cabo.ca) and SEDAR (www.sedar.com).
This news release may contain forward-looking statements including but not
limited to, those relating to worldwide demand for gold and base metals and
overall commodity prices, the level of activity in the minerals and metals
industry and the demand for the Company's services, the Canadian and
international economic environments, the impact of operational changes, changes
in jurisdictions in which the Company operates (including changes in
regulation), failure by counterparties to fulfill contractual obligations, and
other factors as may be set forth, as well as objectives or goals.
Forward-looking statements address future events and conditions and therefore,
involve inherent risks and uncertainties. Actual results may differ materially
from those currently anticipated in such statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Cabo Drilling Corp.
John A. Versfelt
Chairman, President and CEO
(604) 527-4201
(604) 527-9126 (FAX)
ir@cabo.ca
Cabo Drilling Corp.
Sheri Barton
Corporate Communications
403-217-5830
www.cabo.ca
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