Cordy Oilfield Services Inc. Reports Third Quarter and Year to Date Results
November 28 2013 - 3:36PM
Marketwired Canada
CORDY OILFIELD SERVICES INC. (the "Corporation" or "Cordy") (TSX VENTURE:CKK)
released today its third quarter results for the period ending September 30,
2013.
Throughout 2013 and the current quarter, Cordy continues to experience revenue
growth from its two largest segments, Heavy Construction and Environmental
Services.
THREE MONTHS ENDING SEPTEMBER 30, 2013
The Corporation's revenues from operations for the three months ended September
30, 2013 decreased $2.0 million to $32.5 million, down from $34.5 million in the
same period in 2012. The Corporation experienced revenue growth in Heavy
Construction, Environmental Services, and Manufacturing and Supply segments from
increased demand from the 2013 Alberta flood, continued strength in the Cold
Lake Oil Sands Region ("Oil Sands Region"), and new customers in the
Manufacturing and Supply segment. The decrease in revenue is as a result of
management streamlining its Pipeline and Facilities segment from two locations
to one and a drop in pipeline construction in 2013 versus 2012.
Earnings before interest, taxes, depreciation, amortization and impairment, and
share-based payments ("EBITDAS") from continuing operations for the three months
ended September 30, 2013 was $3.1 million compared to $4.2 million for the three
months ended September 30, 2012, a decrease of $1.1 million. The decrease was
primarily attributable to the decrease in the Pipeline and Facilities segment,
however, Environmental Services EBITDAS decreased $0.3 million as a result of
the increased cost of renting equipment as opposed to carrying owned equipment.
Our rental arrangements allow for flexibility of service but impacted expenses
directly in the period. There was also one-time severance costs of $0.6 million
that contributed to the decrease. Heavy Construction partially offset the
decrease in EBITDAS due to continued strength in the Oil Sands Region.
The net earnings from continuing operations of $1.3 million or $0.01 per share
for the three months ended September 30, 2013 remains unchanged from the three
months ended September 30, 2012.
NINE MONTHS ENDING SEPTEMBER 30, 2013
The Corporation's revenues from operations for the nine months ended September
30, 2013 were $90.2 million, a $1.4 million increase from the comparative 2012
period. The Corporation experienced growth primarily in the Oil Sands Region in
the first quarter of 2013 as well as an increase in the second quarter due to
the 2013 Alberta flood which increased demand for our equipment and services as
part of the flood clean-up. Cordy's Manufacturing and Supply segment experienced
an increase in revenue in the third quarter due to new customers for PDC drill
bits used in horizontal drilling. Overall, increases in the Heavy Construction
and Environmental Services segments have continued to result in an increase in
revenue year to date.
Cordy had EBITDAS of $7.1 million for the nine months ended September 30, 2013
compared to $8.0 million for the nine months ended September 30, 2012, a
decrease of $0.9 million. The decrease was attributable to one-time severance
costs of $0.6 million in the third quarter and $0.3 million of professional and
legal fees incurred in the second quarter of 2013. For the nine month period
ended September 30 2013, Cordy experienced a decline in EBITDAS primarily due to
our Pipeline and Facilities segment as the segment has switched its focus to
pipeline spills as opposed to pipeline construction. For the nine month period
ended September 30 2013, the Environmental Services and Heavy Construction
segments increased their EBITDAS due to increased activity in the Oil Sands
Region and the Alberta flood clean-up which offset the decline in the Pipeline
and Facilities segment.
For the nine months ended September 30, 2013, Cordy had net earnings from
continuing operations of $1.3 million, a decrease of $0.2 million from the nine
months ended September 30, 2012 earnings of $1.5 million.
For the quarters ended
September 30,
($ millions except share price Change Q3 YTD Q3 YTD Change
and per share amounts) Q3 2013 Q3 2012 ($) 2013 2012 ($)
----------------------------------------------------------------------------
FINANCIAL RESULTS
Revenue 32.5 34.5 (2.0) 90.2 88.8 1.4
EBITDAS1 3.1 4.2 (1.1) 7.1 8.0 (0.9)
Net earnings (loss) and total
comprehensive income (loss)
from all operations 1.3 1.3 - 1.3 1.5 (0.2)
Cash flow s generated from
(used in) operating
activities from all
operations (2.2) 0.2 (2.4) 2.0 5.7 (3.7)
----------------------------------------------------------------------------
SHARE INFORMATION
Earnings per share from
continuing operations ($) 0.01 (0.01) 0.01 0.02 (0.01)
Earnings per share from all
operations ($) 0.01 (0.01) 0.01 0.02 (0.01)
----------------------------------------------------------------------------
1 Earnings before interest, taxes, depreciation, amortization, impairment
and share-based payments (see reader advisory).
For the quarters ended
September 30,
($ millions except share
price and per share Change Q3 YTD Q3 YTD Change
amounts) Q3 2013 Q3 2012 ($) 2013 2012 ($)
----------------------------------------------------------------------------
SEGMENT RESULTS
Revenue
Heavy Construction 16.2 14.7 1.5 39.6 38.7 0.9
Environmental Services 8.2 7.6 0.6 28.4 19.9 8.5
Manufacturing and Supply 3.9 3.4 0.5 9.3 10.8 (1.5)
Pipeline and Facilities 4.2 8.8 (4.6) 12.9 19.4 (6.5)
-------------------------------------------------
Total 32.5 34.5 (2.0) 90.2 88.8 1.4
EBITDAS(1)
Heavy Construction 3.1 1.7 1.4 5.9 2.5 3.4
Environmental Services 1.0 1.3 (0.3) 5.3 3.4 1.9
Manufacturing and Supply 0.2 0.1 0.1 (0.5) 1.0 (1.5)
Pipeline and Facilities 0.1 1.9 (1.8) (0.3) 3.3 (3.6)
Corporate (1.3) (0.8) (0.5) (3.3) (2.2) (1.1)
-------------------------------------------------
Total 3.1 4.2 (1.1) 7.1 8.0 (0.9)
(1) Earnings before interest, taxes, depreciation, amortization, impairment and
share-based payments (see reader advisory).
OUTLOOK
Cordy has diverse business units within four segments. Historically these
business segments have had stronger first and fourth quarters. The Corporation
is dependent, to a degree, on the overall health of western Canada's oil,
natural gas, and mining sectors. For the balance of 2013 and into the first
quarter of 2014, the prospects for the Oil Sands Region are expected to be the
primary driver for our Heavy Construction and Environmental Services segments.
Our Pipeline and Facilities segment is expected to slow down over the balance of
2013 and into the first quarter of 2014. In our Manufacturing and Supply
segment, the objective is to increase sales of PDC drill bits used in horizontal
drilling. There is no assurance that the increased demand for PDC drill bits
experienced in the third quarter of 2013 will be sustainable over the balance of
2013 and into the first quarter of 2014. Management continues to seek
opportunities to expand or realign Cordy's operations in sectors where its
business segments operate and to refinance the business to support the
Corporation.
SUBSEQUENT EVENT
Cordy has obtained a $6 million secured loan on November 27, 2013. The Loan will
be due and payable on the six month anniversary of the closing date (the
"Maturity Date") and will bear interest at the rate of 14% per annum, calculated
daily. At Cordy's option, the term of the Loan may be extended for an additional
six months upon the payment of a renewal fee of $300,000. There are certain
affirmative and negative covenants which the Corporation is in compliance with
as at November 27, 2013.
As partial consideration for the advance of the loan, the lender is to be issued
a standby fee of 1,500,000 common shares of the Corporation (the "Standby Fee
Shares").
The proceeds from the secured loan have been used to repay and eliminate amounts
owed to Cordy's prior senior secured lender.
Complete copies of Cordy's reviewed unaudited interim condensed consolidated
financial statements for the quarter ended September 30, 2013 and the associated
Management's Discussion and Analysis are available on our website www.cordy.ca
or on SEDAR at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
READER ADVISORY
Effective January 1, 2011, Cordy began reporting its financial results in
accordance with International Financial Reporting Standards (IFRS). Prior-year's
comparative amounts were changed to reflect results as if Cordy had always
prepared its financial results using IFRS.
This News Release contains certain statements that constitute forward-looking
statements. These statements relate to future events or the Corporation's future
performance. All statements, other than statements of historical fact, that
address activities, events or developments that the Corporation or a third party
expects or anticipates will or may occur in the future, are forward-looking
statements. These include the Corporation's future growth, results of
operations, performance and business prospects and opportunities; prevailing
economic conditions; commodity prices; sourcing, pricing and availability of raw
materials, components and parts, equipment, suppliers, facilities and skilled
personnel; dependence on major customers; uncertainties in weather and
temperature affecting the duration of the service periods and the activities
that can be completed; regional competition; and other factors, many of which
are beyond the Corporation's control. These other factors include future prices
of oil and natural gas and oil and natural gas industry activity, including the
effect of changes in commodity prices on oil and natural gas exploration and
development activity, the ability to complete strategic acquisitions and realize
the anticipated benefits of any acquisitions that are completed, the
Corporation's outlook regarding the competitive environment it operates in, and
the assumptions underlying any of the foregoing. Forward-looking statements are
often, but not always, identified by the use of words such as "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may", "will",
"project", "predict", "potential", "targeting", "intend", "could", "might", "
should", "believe" and similar expressions. These statements involve known and
unknown risks, uncertainties and other factors, many of which are beyond the
Corporation's control, including those discussed under "Risks and Uncertainties"
and elsewhere in this News Release, that may cause actual results or events to
differ materially from those anticipated in such forward-looking statements. The
Corporation believes that the expectations reflected in those forward-looking
statements are reasonable, but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements included in this
News Release should not be unduly relied upon. These statements speak only as of
the date of this News Release. The Corporation does not intend, and does not
assume any obligation, to update these forward- looking statements, whether as a
result of new information, future events or otherwise, except as required under
applicable securities laws. The forward-looking statements contained in this
News Release are expressly qualified by this cautionary statement.
Cordy uses the measures Earnings Before Interest, Taxes, Depreciation,
Amortization and Impairment and Share Based Compensation (EBITDAS) in this news
release. This measure does not have any standardized meaning prescribed by
International Financial Reporting Standards (IFRS). It is, therefore, considered
to be non-IFRS term and may not be comparable to similar measures presented by
other entities. Management of Cordy uses these non-IFRS measures to improve its
ability to compare financial results among reporting periods and to enhance its
understanding of operating performance, liquidity and ability to generate funds
to finance operations. This non-IFRS measure is also provided to readers as
additional information on Cordy's operating performance, liquidity and ability
to generate funds to finance operations. EBITDAS is an approximate measure of
the Cordy's pre-tax operating cash flow and is generally used to better measure
performance and evaluate trends of individual assets. EBITDAS comprises earnings
before deducting interest and other financial charges, income taxes,
depreciation and amortization, net income attributable to non-controlling
interests and preferred share dividends.
FOR FURTHER INFORMATION PLEASE CONTACT:
For general information:
Cordy Oilfield Services Inc.
David Mullen, Chairman & Chief Executive Officer
403-266-2067
403-266-2087 (FAX)
david.mullen@cordy.ca
For investor relations information:
Cordy Oilfield Services Inc.
David Boomer, CA, Chief Financial Officer
403-266-2067
403-266-2087 (FAX)
dave.boomer@cordy.ca
www.cordy.ca
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