Cordy Oilfield Services Inc.

TSX VENTURE : CKK


Cordy Oilfield Services Inc.

March 27, 2014 17:16 ET

Cordy Oilfield Services Inc. Reports Fourth Quarter and 2013 Annual Results

CALGARY, ALBERTA--(Marketwired - March 27, 2014) - CORDY OILFIELD SERVICES INC. (the "Corporation" or "Cordy") (TSX VENTURE:CKK) released today its fourth quarter and 2013 annual results.

Year ended December 31, 2013

Cordy generated consolidated revenue of $118.0 million in 2013. On a year over year comparative basis, consolidated revenue increased by $2.6 million. Consolidated revenue in the first, second, and fourth quarters of 2013 increased year over year by $1.8 million, $1.5 million and $1.3 million respectively, which was partially offset by a year over year decrease in consolidated revenue in the third quarter of $2.0 million.

  • The Heavy Construction segment had increased revenue of $4.3 million or 8 percent for the year ended December 31, 2013. This was primarily attributable to growth in the oil sands region.

  • The Environmental Services segment experienced the largest revenue increase of $5.5 million or 20 percent for the year ended December 31, 2013. The revenue increase is primarily attributable to increased activity in the oil sands region and the 2013 Alberta flood clean-up.

  • The Manufacturing and Supply segment had decreased revenue of $1.3 million or 9 percent for the year ended December 31, 2013, which was primarily attributable to a decline in drilling activity and loss of customers earlier in the year which was then partially offset by demand for PDC drill bits used in horizontal drilling in the latter part of the year.

  • The Pipeline and Facilities segment had decreased revenue of $5.9 million or 27 percent for the year ended December 31, 2013. During the year the focus was to eliminate lower margin projects and reduce operations from two locations to one, which resulted in a decrease in revenue.

Earnings before interest, taxes, depreciation, amortization and impairment and share-based payments ("EBITDAS") was $4.6 million for the year ended December 31, 2013 compared to $4.7 million for the year ended December 31, 2012, a decrease of $0.1 million.

  • The Heavy Construction segment had a positive impact on EBITDAS with the sector experiencing growth year over year increasing by $4.4 million to $6.6 million, primarily as a result of continued strength in construction in the oil sands region.

  • The Environmental Services segment EBITDAS remained constant at $4.4 million in 2013 and 2012.

  • The Manufacturing and Supply segment had an EBITDAS loss of $0.7 million compared to a loss of $1.2 million in 2012.

  • The Pipeline and Facilities segment EBITDAS decreased by $3.9 million to a loss of $1.2 million in 2013 compared to positive EBITDAS of $2.7 million in 2012.

For the twelve months ended December 31, 2013, Cordy had a net loss from continuing operations of $1.5 million, an improvement of $1.6 million from the net loss of $3.1 million in 2012.

Fourth quarter ended December 31, 2013

The Corporation's revenues from operations for the three months ended December 31, 2013 increased $1.3 million to $27.9 million, up from $26.6 million in the same period in 2012. The Corporation experienced revenue growth in the Heavy Construction, Manufacturing and Supply and Pipeline and Facilities segments. These increases in revenue were partially offset by a decrease in revenue in the Environmental Services segment which resulted from customer delays.

EBITDAS from continuing operations for the three months ended December 31, 2013 was a loss of $2.5 million compared to a loss of $3.2 million for the three months ended December 31, 2013, an improvement of $0.7 million.

The net loss from continuing operations was $2.7 million or a loss of $0.02 per share for the three months ended December 31, 2013 compared to a loss of $4.6 million or a loss of $0.04 per share for the three months ended December 31, 2012.

As at December 31
($ millions except share price and per share amounts) 2013 2012 Change ($) Q4 2013 Q4 2012 Change ($)
FINANCIAL RESULTS
Revenue 118.0 115.4 2.6 27.9 26.6 1.3
EBITDAS1 4.6 4.7 (0.1 ) (2.5 ) (3.2 ) 0.7
Net earnings (loss) and total comprehensive income (loss) from all operations (1.5 ) (3.1 ) 1.6 (2.7 ) (4.6 ) 1.9
Cash flows generated from (used in) operating activities from all operations 7.5 7.5 - 5.5 1.8 3.7
SHARE INFORMATION
Earnings per share from continuing operations ($) (0.02 ) (0.04 ) 0.02 (0.03 ) (0.04 ) 0.01
Earnings per share from all operations ($) (0.02 ) (0.04 ) 0.02 (0.03 ) (0.04 ) 0.01
1 Earnings before interest, taxes, depreciation, amortization, impairment and share-based payments (see reader advisory)
Revenue
Heavy Construction 55.4 51.1 4.3 15.9 12.5 3.4
Environmental Services 33.9 28.4 5.5 5.5 8.4 (2.9 )
Manufacturing and Supply 13.0 14.3 (1.3 ) 3.7 3.6 0.1
Pipeline and Facilities 15.7 21.6 (5.9 ) 2.8 2.1 0.7
Total 118.0 115.4 2.6 27.9 26.6 1.3
EBITDAS1
Heavy Construction 6.6 2.2 4.4 0.9 (0.3 ) 1.2
Environmental Services 4.4 4.4 - (1.0 ) 0.9 (1.9 )
Manufacturing and Supply (0.7 ) (1.2 ) 0.5 (0.3 ) (2.1 ) 1.8
Pipeline and Facilities (1.2 ) 2.7 (3.9 ) (1.0 ) (0.5 ) (0.5 )
Corporate (4.5 ) (3.4 ) (1.1 ) (1.1 ) (1.2 ) 0.1
Total 4.6 4.7 (0.1 ) (2.5 ) (3.2 ) 0.7
1 Earnings before interest, taxes, depreciation, amortization, impairment and share-based payments (see reader advisory).

OUTLOOK

Cordy has diverse business units which have had stronger first and third quarters. In fiscal 2013, Cordy experienced revenue growth in both its Heavy Construction and Environmental Service segments; however, our fourth-quarter results were below expectations, as there was an unanticipated slowdown due to customer delays as to when their projects were to commence. Our segments did not generate their expected fourth-quarter ramp-up in activity that is historically experienced due to customer delays in the fourth quarter of 2013 as well as the first quarter of 2014.

The Corporation is dependent, to a degree, on the overall health of western Canada's oil, natural gas, and mining sectors. Generally, these sectors have projected reduced capital expenditure budgets for 2014 and have delayed projects. These factors mean that our industry remains highly competitive with few opportunities to realize pricing gains in 2014.

Cordy continues to re-evaluate the allocation of our investment of people and equipment. During 2014, the Corporation will re-allocate its resources to focus on Heavy Construction, Environmental Services and Manufacturing as its primary business segments. Effective January 1, 2014, Cordy amalgamated its Pipeline segment into its Heavy Construction segment. As a result, Cordy now operates in three segments in 2014:

  • Heavy Construction;
  • Environmental Services; and
  • Manufacturing

The prospects for the oil sands region are anticipated to be the primary driver of potential growth for our Heavy Construction and Environmental Services segments. In 2014, we anticipate this will be slower in the first half of the year until customers fully ramp-up their projects. Heavy Construction customers in the natural gas sector are also anticipated to be slower in 2014 while mining sector and Environmental Service clients are anticipated to increase activity in the second half of 2014. Any significant growth will be dependent upon winning new customers or new projects from existing customers in 2014. In our Manufacturing segment, drilling activity in western Canada is the primary driver of our business. In 2014, we anticipate expanding sales of our PDC drill bits in both North America and select international locations.

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 in the long term.

Complete copies of Cordy's audited consolidated financial statements for the year ended December 31, 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.

Contact Information

  • For general information:
    Cordy Oilfield Services Inc.
    David Mullen, Chairman & Chief Executive Officer
    403-266-2067
    403-237-6278 (FAX)
    david.mullen@cordy.ca

    For investor relations information:
    Cordy Oilfield Services Inc.
    David Boomer, CA, CPA , Chief Financial Officer
    403-266-2067
    403-237-6278 (FAX)
    dave.boomer@cordy.ca
    www.cordy.ca