Commercial Solutions Inc.

Commercial Solutions Inc.

May 13, 2013 19:32 ET

Commercial Solutions Announces Second Quarter Fiscal 2013 Results

EDMONTON, ALBERTA--(Marketwired - May 13, 2013) -

All figures in CADFor the three months ended March 31For the six months ended March 31
20132012% Change$ Change20132012% Change$ Change
Revenue$ 27,763,199$ 30,508,231-9.0%$ (2,745,032)$ 55,168,842$ 60,029,591-8.1%$ (4,860,749)
EBITDA *$ 753,553$ 1,518,321-50.4%$ (764,768)$ 1,157,773$ 2,776,089-58.3%$ (1,618,316)
Net Earnings (loss)$ 100,761$ 603,656-83.3%$ (502,895)$ (59,564)$ 971,674-106.1%$ (1,031,238)
Basic EPS **$ 0.00$ 0.03 $ (0.00)$ 0.05
Diluted EPS **$ 0.00$ 0.03 $ (0.00)$ 0.04
*EBITDA is defined as Earnings (Loss) Before Interest, Taxes, Depreciation & Amortization
**EPS is defined as Earnings (Loss) Per Share

COMMERCIAL SOLUTIONS INC. ("Commercial" or "Company") (TSX:CSA) a major Canadian distributor of bearings, power transmission equipment, oilfield, industrial, and safety products today announced its financial results for the three-month and six-month periods ended March 31, 2013. A complete copy of the Company's report will be available on the Internet at

Financial highlights from second quarter of fiscal 2013 are as follows:

Commercial reported revenues of $27.8 million, a $2.7 million decline from the same period in the prior year. EBITDA for the quarter was $0.8 million in comparison to $1.5 million in the same period last year. The Company reported net earnings of $0.1 million for the quarter compared to $0.6 million during the same quarter of fiscal 2012.

For the six months ended March 31, 2013, the Company reported revenues of $55.2 million, a $4.9 million decline from the same period in the prior year. EBITDA for the six months was $1.2 million in comparison to $2.8 million in the same period last year. The Company reported net loss of $0.06 million for the six months ended March 31, 2013 compared to $1.0 million net earnings during the same period in the prior fiscal year.

The decrease in earnings was primarily due to lower revenues and lower gross margin rates partially offset by lower operating expenses. After normalizing for the one-time legal expenses directly related to the potential sale of the Company, operating expenses were $0.5 million lower for the six months ended March 31, 2013 in comparison to the same period in the prior year. The decrease is primarily the result of lower salaries and wages coupled with a smaller workforce as the Company is tightly managing all variable expenses. Gross margins rates were lower overall as high dollar capital equipment with lower gross margin percentages constituted a higher portion of sales compared to the prior year.

The lower revenues for the quarter were primarily the result of the reduction in drilling activity coupled with reduced capital spending in the oil and gas industry in Western Canada. Rig utilization data for Western Canada for the six months ended March 31, 2013 was 52.1% compared to 64.4% in the same period of the prior year. The slowdown in the Western Canadian oilfield sector was largely due to the uncertain economic conditions in the period. The largest challenge facing this sector is the pricing differential on its crude oil and the infrastructure issues in delivering its oil and gas products to the USA and international markets. Partially offsetting this reduction was the increase in sales at the Company's USA entity as the Company continues to develop its geographic diversity.

Jim Barker, President & CEO of Commercial stated, "Although the overall short-term outlook for the oil and gas sector in Western Canada is below the fiscal 2012 activity levels, we are optimistic on the long-term prospects of the oil and gas industry. Canada's oil and gas industry is resource rich but market constrained. Until Canada finds a solution to the infrastructure issues of delivering Canada's oil and gas products to USA and international markets, we will continue to be impacted by the status of economic, political, infrastructure barriers and other market factors. However, despite these uncertainties, we view the future growth in the oil and gas sector as a whole is simply a question of timing for 2013 and beyond and we will continue to explore profitable growth ventures in this sector. Additionally, as we have worked hard to organize our business to serve other industries, we expect to benefit from this as both the agriculture and the forestry markets are expected to show growth and recovery. Very strong agricultural commodity prices are expected to drive an increase in overall planting acreage in Alberta and Saskatchewan this fiscal year, subject to weather conditions. The forestry sector in British Columbia has also shown growth as recovery in the USA is now underway with new housing starts accelerating. Growth in these other sectors is expected to compliment new growth in our USA operation as the Company develops its operations in Texas."

About Commercial

Headquartered in Edmonton, Alberta, Commercial is one of Canada's major independent industrial distributors with 23 Services Centres and approximately 265 employees located primarily in Western Canada. Commercial offers more than 160,000 items critical to maintenance repair and operations (MRO) and original equipment manufacturer (OEM) customers. The Company represents 450 leading manufacturers and serves over 11,000 customer accounts within a broad cross-section of industries, including oil and gas, forestry, agriculture, firefighting, food processing, chemical processing, mining, utilities, manufacturing, and construction. Commercial trades under the symbol "CSA" on the Toronto Stock Exchange. For further information on the Company, please visit and for detailed financial information visit

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