Cordy Oilfield Services Inc.
TSX VENTURE : CKK

Cordy Oilfield Services Inc.

November 20, 2014 15:07 ET

Cordy Oilfield Services Inc. Reports Third Quarter Results

CALGARY, ALBERTA--(Marketwired - Nov. 20, 2014) - CORDY OILFIELD SERVICES INC. (the "Corporation" or "Cordy") (TSX VENTURE:CKK) released today its third quarter results for the period ending September 30, 2014.

For the three month period ended September 30, 2014

Cordy's consolidated revenues decreased by $10.9 million to $21.6 million as compared to consolidated revenues of $32.5 million in the period ended September 30, 2013. The period over period decrease is attributable to the following:

  • The Heavy Construction segment experienced an increase in activity in the mining sector yet it was not sufficient to offset the reduced activity in the oil sands area or with oil and gas clients who slowed their capital projects.

  • The Environmental Services and Manufacturing and Supply segments were impacted by customer slowdowns in capital projects resulting in reduced demand for Cordy's services and products.

Results for Cordy revenue by segment are as follows:

  • Heavy Construction segment revenues decreased $5.0 million and net earnings decreased $6.9 million in the third quarter of 2014 versus 2013. Operations in the oil sands region and pipeline construction were slower due to reduced customer demand and customer delays, offset by increased activity in the mining sector.

  • Environmental Services segment revenues decreased $3.7 million and net earnings declined $0.6 million in the second quarter of 2014 versus 2013 due to the conclusion of a two-year SAGD project which resulted in a decrease of $1.2 million compared to the same period in the prior year, the increased activity experienced in 2013 due to the Alberta flood and reduced activity from customers in the third quarter of 2014..

  • Manufacturing and Supply segment revenues decreased $2.2 million and net loss decreased $2.4 million in the second quarter of 2014 versus 2013 due to a loss of several large customers, reduced demand from existing customers and no international sales.

For the three month period ended September 30, 2014, the Corporation had an EBITDAS loss of $2.4 million as compared to earnings of $3.1 million in the period ended September 30, 2013, a decrease of $5.5 million. By segment, the Corporation's EBITDAS were as follows:

  • The Heavy Construction segment EBITDAS declined by $3.0 million to a loss of $0.2 million, primarily as a result of decreased customer demand, delayed projects in the oil sands region and increased costs.

  • The Environmental Services segment EBITDAS declined by $1.5 million to a loss of $0.5 million in 2014 versus 2013, due to reduced activity.

  • The Manufacturing and Supply segment EBITDAS declined by $1.7 million to a loss of $1.5 million in 2014 versus 2013, due to reduced activity and a $0.8 million inventory provision.

The Corporation reported a net loss of $8.9 million for the three months ended September 30, 2014, an increased loss of $10.3 million from net earnings of $1.4 million for the three months ended September 30, 2013. $5.0 million of this loss is attributed to the derecognition of the deferred tax asset.

The periods ending September 30, Three months Nine months
$ $
($ millions) 2014 2013 change 2014 2013 change
Revenue
Heavy Construction 15.4 20.4 (5.0 ) 40.2 52.5 (12.3 )
Environmental Services 4.5 8.2 (3.7 ) 17.8 28.4 (10.6 )
Manufacturing and Supply 1.7 3.9 (2.2 ) 7.3 9.3 (2.0 )
21.6 32.5 (10.9 ) 65.3 90.2 (24.9 )
EBITDAS
Heavy Construction 0.2 3.2 (3.0 ) (0.4 ) 5.6 (6.0 )
Environmental Services (0.5 ) 1.0 (1.5 ) 0.2 5.3 (5.1 )
Manufacturing and Supply (1.5 ) 0.2 (1.7 ) (1.6 ) (0.5 ) (1.1 )
Corporate (0.6 ) (1.3 ) 0.7 (2.9 ) (3.3 ) 0.4
(2.4 ) 3.1 (5.5 ) (4.7 ) 7.1 (11.8 )
Net earnings (loss) (8.9 ) 1.4 (10.3 ) (13.1 ) 1.3 (14.4 )
Cash flow generated (used in) from operating activities (0.6 ) (2.2 ) 1.6 (0.5 ) 2.0 (2.5 )
Earnings per share (0.10 ) 0.01 (0.11 ) (0.15 ) 0.01 (0.16 )

OUTLOOK

The modest pace of the western Canadian economy has impacted Cordy's opportunity to expand services and product sales. The oil and gas sector in western Canada remains one of the best sectors in the Canadian economy; however, oilfield service activity is slowing. As a result, a majority of our business units experienced a challenging quarter.

Based upon our third quarter results, which were below expectations, as well as the current weakening commodity pricing environment, we expect the balance of 2014 activity and our resulting financial performance to be below our 2013 results.

Despite this performance, as at September 30, 2014 the Corporation has a further $14.5 million of unencumbered accounts receivable and $12.7 million of unencumbered property, plant and equipment. We expect to see uncertain markets for the remainder of 2014 therefore, Management will continue to re-examine cash flow needs with a focus on sales, cost constraints, and available financing.

Complete copies of Cordy's unaudited interim condensed consolidated financial statements for the quarter ended September 30, 2014 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:
    David Mullen
    Chairman & Chief Executive Officer
    403-266-2067
    403-237-6278 (FAX)
    david.mullen@cordy.ca

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