Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

March 21, 2011 21:36 ET

Cordy Announces Fourth Quarter and Annual Results

CALGARY, ALBERTA--(Marketwire - March 21, 2011) - Cordy Oilfield Services Inc. ("Cordy", the "Company" or the "Corporation") (TSX VENTURE:CKK) reported its consolidated operating and financial results for the quarter and year ended December 31, 2010 with comparison to the same period in the previous year.



Selected Financial Information Quarter ended Year ended
December 31 December 31
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($ millions, except per share amounts) 2010 2009 2010 2009
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Revenue 21.1 14.9 66.6 56.2
EBITDAS (1) 1.8 (3.4) 1.1 (4.3)
Net Earnings (Loss) (1.9) (6.7) (6.5) (13.3)
EPS -- Basic and Diluted (0.02) (0.08) (0.08) (0.16)
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Total Assets 68.4 78.5 68.4 78.5
Total Liabilities 18.8 22.4 18.8 22.4
Cash and Equivalents 2.0 0.2 2.0 0.2
Shareholders' Equity 49.6 56.1 49.6 56.1
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(1) Earnings before interest, taxes, depreciation, amortization and
impairment and stock-based compensation ("EBITDAS"). Refer to the "Non
GAAP Measures" section for further details.


2010 PERFORMANCE OVERVIEW

Cordy's improved performance and its ability to withstand the economic slowdown was primarily a result of the diversification of Cordy's service offering, management's strategy to focus the corporation on its core areas of expertise, and its ability to meet its $7.7 million of regularly scheduled debt repayments during 2010.

For the twelve month period ended December 31, 2010, Cordy's revenue increased by $10.4 million (or 19%) to $66.6 million compared to $56.2 million in 2009. Cordy's earnings before interest, taxes, depreciation, amortization and impairment and stock-based compensation improved from negative $4.3 million in 2009 to positive $1.1 million in 2010. The Corporation reduced the net loss for the period ending December 31, 2010 by $6.8 million to $6.5 million compared to $13.3 million for the year ended December 31, 2009. During 2010, the corporation incurred approximately $2.0 million in additional expenses related to restructuring one of its business units.

Cordy's four operating segments provided offsetting cash flows which allowed the Company to sustain weaker than normal operating margins. The diversification of Cordy's service offering and the scalability of its operations proved to be invaluable during the year, allowing for the Company to scale back operations when needed and quickly ramp-up operations to take advantage of opportunities when they arose. Additionally, due to the Company's broad asset base, management was able to identify and dispose of assets which were no longer within Cordy's operating scope, providing additional liquidity to withstand the slower activity during the first six months of 2010.

A strong focus on its areas of expertise contributed to the significant improvement in Cordy's operational results of its business units in 2010. Demand for certain of the Company's services increased during the last six months of 2010 as oil and natural gas drilling activity in western Canada increased. This increased demand for services led to an improvement in operating results and margins in the latter half of the year. Management's focus on cost reductions, new and improved processes, operating efficiencies and improved execution also contributed to the improved results achieved for the year.

For the three months ended December 31, 2010, Cordy:

- generated revenue of $21.1 million, a $6.2 million (or 41.6 percent) increase over the same prior period revenue of $14.9 million. The primary driver being increased activity levels in Cordy's Heavy Construction and Environmental operating segments during the winter months;

- realized EBITDAS of $1.8 million (or 9 percent of revenue), an increase of 153 percent or $5.2 million over EBITDAS from the prior period of a negative $3.4 million. From a margin perspective, the primary driver of the increase was the increased activity throughout the four operating segments;

- generated cash flow from operating activities of $2.5 million which was an increase of $0.9 million or 56 percent from the same period of 2009.

For the twelve months ended December 31 2010, Cordy:

- generated revenue of $66.6 million which was a 19 percent or $10.4 million increase over the same prior period of 2009. The primary driver being increased activity in the markets where Cordy operates.

- realized EBITDAS of $1.1 million (or 2 percent of revenue), an increase of 126 percent or $5.4 million over EBITDAS for the prior period of a negative $4.3 million. From a margin perspective, the primary driver of the increase was the increased demand for services throughout Cordy's four operating segments. The positive increase on EBITDAS would have been greater but was negatively impacted by mobilization and de-mobilization costs related to considerable wet weather experienced during the summer months and increased rental payments for additional equipment needed to meet demand for its services. The EBITDAS results were further negatively impacted as the Company incurred approximately $2.0 million in non-recurring restructuring expenses related to one of its business units.

- generated cash flow from operating activities of $3.2 million which was an increase of $1.4 million or 83 percent from the same prior period of 2009; and

- realized a loss on sale of equipment of $1.7 million. The loss was the result of several factors, the most significant being the disposal of non-core, and certain unique assets as well as the sale of a fleet of older under-utilized assets.

- increased its cash position by $2.8 million compared to the end of the third quarter of 2010 and by $1.8 million compared to the prior year.

- repaid $7.7 million of debt, excluding capital leases, reducing total long term debt to $7.5 million, down $4.5 million (or 40 percent) from December 31, 2009. Through the Company's aggressive debt repayment strategy, Cordy reduced its long term debt by a total of $12.7 million (or 63 percent) during the past two fiscal years.

- acquired $4.7 million of new equipment, adding to the Company's relatively modern equipment fleet while retaining a favourable debt to asset ratio:

- reduced its debt to capitalization ratio to 13.9 percent (December 31, 2009 - 18.1 percent)

- disposed of non-core assets, decreasing tangible capital assets by $4.3 million (net of depreciation), while realizing an increase in revenue of $10.4 million or 19 percent compared to the same prior period;

- entered into a rental arrangement with Lyncorp International Ltd., a corporation wholly-owned and controlled by David Mullen, Chief Executive Officer, Chairman and a director of the Corporation, which provides Cordy with access to a number of new pieces of heavy equipment that are otherwise in short supply.

OUTLOOK

There appears to be a sense of optimism within the energy services and construction sector at the start of 2011. Last year, management expected 2010 to remain a challenging and uncertain period for service companies. While this proved largely accurate, 2010 was marked by a strengthening in the price of oil resulting in increased drilling and completion activity in the western Canadian conventional oil sector. For 2011 the expected increase in economic activity should allow for improved financial performance. This renewed sense of optimism is encouraging compared to the challenging and uncertain periods experienced during the previous two fiscal years.

Management remains cautiously optimistic the positive financial trends experienced in the second half of 2010 will continue into 2011. Strong business activity during the first two months of 2011 appears to validate this optimism. It is anticipated the increase in demand for Cordy's services may result in the ability to alleviate the downward pricing pressures that have been experienced during the previous two years. An increase in the demand for services, as a result of an improved economy, may result in higher labour costs which may offset the effect of increased pricing.

For the upcoming year, Cordy will continue to repay its long term debt as scheduled. Nearly half of the existing long term debt is scheduled to be repaid in 2011. Cordy's reduced debt obligations will further increase the Company's ability to service new debt and fund growth opportunities. Cordy's debt repayment strategy has placed the Company in a strong financial position as it increasingly begins to see positive indications the market is improving.

During 2011, Management expects its business units will experience year-over-year growth compared to 2010. The areas of the highest growth are expected to be the Heavy Construction and Environmental operating segments. These two segments should benefit from the expected increase in activity in the energy services sector.

Cordy has:

- a strong balance sheet;

- an experienced, dedicated, and passionate management team;

- proven it can withstand economic adversary and dissenting shareholders;

Entering into 2011, Cordy is poised to:

- leverage operational improvements and effectiveness to achieve improved financial results;

- aggressively pursue organic growth with one of the newest heavy equipment fleets in the construction sector;

- actively look for acquisitions that create value for shareholders.

Management will continue to look for areas to improve shareholder value by increasing operating margins, improving asset utilization, and a focus on operational efficiency.

The Company is now in a position to either take advantage of the upswing in the economy, should it continue, or withstand another economic malaise, should it occur.

Additional information on Cordy is available on our website www.cordy.ca or on SEDAR at www.sedar.com.

Certain statements contained in this news release 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, including 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, component 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 control of the Corporation, including future prices of oil and natural gas and oil and gas industry activity including the effect of changes in commodity prices on oil and gas exploration and development activity, ability to complete strategic acquisitions and realize the perceived benefits of any acquisitions that are completed and the Corporation's outlook regarding the competitive environment it operates in, and the assumptions underlying any of the foregoing, are forward-looking statements. 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 control of the Corporation, 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.

Throughout this news release certain measures have been used that are not a recognized measure under Canadian generally accepted accounting principles ("GAAP"). The specific measure used is earnings before interest, taxes, depreciation, amortization, impairment and stock-based compensation ("EBITDAS").

Neither 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.

Contact Information

  • For general information:
    Cordy Oilfield Services Inc.
    David Mullen, Chairman and CEO
    (403) 266-2067
    (403) 266-2087 (FAX)
    dmullen@cordy.ca
    or
    For investor relations information:
    Cordy Oilfield Services Inc.
    H. Allen Cameron, President
    (403) 266-2067
    (403) 266-2087 (FAX)
    acameron@cordy.ca
    www.cordy.ca