Sudden significant downturn in market
activity increases costs and impairs profitability
CALGARY, May 14, 2015 /CNW/ - Gemini Corporation
(GKX-TSXV) announces its first quarter financial results for the
period ended March 31, 2015.
Revenue in the first quarter of 2015 totalled $41 million, which was a 46% increase over the
$28 million achieved in the first
quarter of 2014. The first quarter revenue growth was attributable
to the Field Solutions segment and more particularly the previously
announced rail loading facility project and certain fabrication
work. The Engineered Solutions segment has been the most severely
impacted by the downturn in industry activity with revenue being
reduced to less than 40% of the level achieved in the first quarter
of 2014. Early indications from clients regarding activity levels
for the second quarter are that they should be starting to improve
as capital spending decisions are finalized in relation to the
significantly reduced 2015 budget plans.
First quarter gross profit for 2015 was $2.7 million compared to $3.7 million in the same period last year. This
represented a decline in gross profit as a percentage of revenue to
7% from 13% in the same period of 2014. The principal drivers
impacting gross profit were escalating costs on rail loading
facility project combined with the effects of the underutilization
of staff and employment terminations required to right size certain
parts of the business in response to the downturn in activity. In
addition, the competitive market conditions are creating pricing
challenges that are compressing margins on virtually all current
projects. The Corporation has responded to these conditions by
significantly reducing headcounts, reducing pay rates and salaries,
suspending certain benefit programs, subletting surplus leased
space and is looking to its supply chain for cost reductions on
products and services.
The Corporation's 2015 first quarter net loss was $1.7 million (2.3¢ per share) compared to a net
loss of $0.2 million (0.3¢ per share)
in the same period last year.
"Our focus on securing work over the last 6 months has been
successful in replacing most of the backlog lost from clients
cutting capital expenditures in 2015" stated Doug Lautermilch, Gemini's President and CEO.
"During this period when we focussed on building up backlog we were
also forced to make significant cost adjustments to match our
capacity to market demands. I am proud of our organization's
response to this very challenging environment and we intend to
continue taking action to address the financial impacts."
About Gemini Corporation
Gemini Corporation is a
professional services firm that designs, builds and maintains
energy and industrial facilities. We provide regulatory,
environmental, engineering, fabrication, installation and
maintenance solutions for clients through stand-alone or integrated
service delivery models. Our design-build capabilities
differentiate Gemini and provide tremendous value-added benefits
for clients, such as cost certainty, schedule compression and one
point of accountability. The Corporation's principal target markets
are midstream oil and gas, oil and gas production, in-situ heavy
oil, and oil and gas processing across western Canada.
Shares of Gemini trade on the TSX Venture Exchange under the
symbol "GKX". For more information about the Corporation and its
services, go to www.geminicorp.ca.
Gemini's 2015 first-quarter report will be filed on SEDAR at
http://www.sedar.com by May 15,
2015.
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
Operating
Highlights ($'000)
|
Three Months
Ended
(Unaudited)
|
March
31,
2015
|
March
31,
2014
|
Revenue
|
$ 40,894
|
$ 28,218
|
Gross
profit
|
2,694
|
3,680
|
Income (loss) from
operating activities
|
(2,160)
|
(129)
|
Net income
(loss)
|
$ (1,767)
|
$ (178)
|
|
|
|
Earnings per share
(basic & diluted)
|
$ (0.023)
|
$ (0.003)
|
|
Financial
Position Highlights ($'000)
|
March
31,
2015
|
December 31,
2014
|
Working
capital
|
$ 15,510
|
$ 19,635
|
Total
assets
|
61,578
|
65,342
|
Shareholders'
equity
|
29,314
|
30,712
|
Disclaimer
This news release may contain forward
looking information that represents Gemini's internal projections,
expectations, estimates or beliefs concerning, among
other things, future operating results and various components
thereof or Gemini's future economic performance. All statements
other than the statements of historical fact may be forward-looking
statements. In some cases, forward-looking statements can be
identified by terminology such as "may", "will", "should",
"expects", "projects", "plans", "anticipates", and similar
expressions. The projections, estimates and beliefs contained in
such forward-looking statements are based on management's
assumptions relating to Gemini's performance and competition within
the sectors in which it competes, the continuation of the current
regulatory and tax regimes in the jurisdictions in which Gemini
operates, and necessarily involve known and unknown risks and
uncertainties, including risks and assumptions relating to client
service demand, field service costs, labour rates,
and other factors that may cause actual performance and financial
results in future periods to differ materially from any projections
of future performance or results expressed or implied by such
forward-looking statements. Accordingly, readers are cautioned that
events or circumstances could cause results to differ materially
from those predicted or suggested. The Corporation does not
undertake to update any forward-looking information in this
document whether as to new information, future events or
otherwise.
The TSX Venture Exchange does not accept responsibility for
the adequacy or accuracy of this release.
SOURCE Gemini Corporation