Gemini Corporation

Gemini Corporation

November 22, 2006 17:00 ET

Gemini Corporation Reports 2006 Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 22, 2006) - Gemini Corporation (TSX VENUTRE:GKX) today announced its third quarter financial results for the period ended September 30, 2006.

Revenue in the third quarter totalled $17,401,000 compared to the $21,480,000 generated in the third quarter of 2005. Gemini's revenues for the nine months ended September 30, 2006 total $63,737,000, a 23% increase over the 2005 nine month total of $51,674,000. Revenues in the third quarter declined as a result of ongoing weakness experienced in the natural gas sector. Engineering revenues and profitability continued to be impacted by client decisions to leave projects on hold due to falling natural gas prices. In addition, certain construction and maintenance projects which were planned to commence in the third quarter were slower to get started than expected resulting in a revenue shortfall.

Gross profits as a percent of revenue for the third quarter of 2006 improved to 23.4% from 17.9% in the second quarter of this year. This level of profitability almost equals the 24% gross profit level achieved in the third quarter of 2005 and is a clear indication that efforts to improve margins from the lows experienced in the second quarter are beginning to show results. Although gross profit percentages improved in the quarter, the year to date gross profit total of $12,317,000 is $839,000 lower than last year's total of $13,156,000 to the end of the third quarter. Management is continuing to take steps to further improve Gemini's profit performance by focusing on increasing staff utilization rates through personnel changes and normal attrition. It is now doubtful that the shortfall in gross profits will be fully recovered before the end of 2006 as previously indicated in the second quarter reporting notwithstanding client feedback continues to indicate strong demand for the future.

Net earnings for the third quarter declined to $309,000 (0.8 cents per share) compared to the $1,296,000 (3.9 cents per share) achieved in the same period last year. Year to date net earnings now total $1,452,000 (4.1 cents per share) compared to $2,785,000 (8.5 cents per share) to the end of the third quarter of 2005. Continuing project uncertainty and the competitive construction environment are expected to dampen earnings for the remainder of 2006. Steps currently being taken to adapt to this changing environment will begin to produce improved bottom line performance in 2007.

"This has been a challenging year due to the uncertainty of project release dates introduced by fluctuating commodity prices and the substantial increase in project completion costs", said Carl Johnson, Gemini's President and CEO. "Our decisions to retain staff in anticipation of third and fourth quarter demand have resulted in unacceptable profitability declines. Actions are well underway to fix this problem so that we enter 2007 as a leaner, more efficient organization. Although this year has proven to be one of the most difficult to forecast, our markets remain strong and clients are confident in the future project demand which we expect will result in improved performance as we enter 2007."

About Gemini Corporation

Gemini Corporation offers a wide range of interrelated services including project management, engineering, fabrication, construction, operations and maintenance of oil & gas and industrial facilities within Canada and internationally. The Corporation is a leading provider of engineered solutions and field services through either stand-alone or integrated, full-service approaches to a broadening client base in the energy, environmental and industrial sectors.

Shares of Gemini trade on the TSX Venture Exchange under the symbol "GKX". For more information about the Corporation and its services, go to Gemini's 2006 third-quarter report will be filed with SEDAR at by November 29, 2006.


Operating Highlights ($'000) Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2006 2005 2006 2005

Revenue $ 17,401 $ 21,480 $ 63,738 $ 51,674
Gross profit 4,064 5,159 12,318 13,156
Earnings before interest & taxes 687 2,265 2,708 4,958
Net earnings 310 1,296 1,453 2,785
Earnings per share (basic) $ 0.008 $ 0.039 $ 0.041 $ 0.085
Earnings per share (diluted) $ 0.008 $ 0.037 $ 0.040 $ 0.080

Operating cash flow (i)
(excludes working capital
changes) $ 851 $ 1,691 $ 3,001 $ 3,754
Operating cash flow per share $ 0.025 $ 0.052 $ 0.088 $ 0.117

Balance Sheet Highlights ($'000) September 30, 2006 December 31, 2005

Working capital $ 8,448 $ 7,322
Total assets 26,291 30,843
Shareholders' equity 12,792 10,848

(i) Operating cash flow is a non-GAAP financial measure which does not
have a standard meaning and therefore may not be comparable to similar
measures presented by other companies.


This news release contains 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.

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