Gemini Corporation

Gemini Corporation

March 29, 2007 16:08 ET

Gemini Corporation Reports Fiscal 2006 Results

Revenues strong but market uncertainties reduce margins

CALGARY, ALBERTA--(CCNMatthews - March 29, 2007) - Gemini Corporation, (TSX VENTURE:GKX) a leading provider of engineered solutions and field services to the energy, environmental and industrial markets, today announced its financial results for the fiscal year ended December 31, 2006.

Revenue for the year totalled $85,455,000, a 17% increase over the $72,779,000 generated in 2005. Fourth quarter revenues of $21,718,000 for 2006 were also up over the $21,106,000 achieved in the same period last year. These increases were driven by Gemini's Field Service segment which accounted for 67% of the 2006 consolidated revenues compared to 60% in 2005. The largest contributor to this shift in revenues generated from Field Services versus Engineering was the bitumen pipeline project commenced early in the year. This project provided the opportunity to deploy Field Service personnel from fabrication, construction and maintenance on the various portions of the work undertaken. Another component of the revenue shift was the decrease in Engineering revenues driven by the softening of natural gas prices and high field installation costs. These factors contributed to client decisions to delay, and in some circumstances, cancel projects that had been expected to provide a stable workload throughout the year.

Both segments have launched more aggressive sales efforts to increase the proportion of oil-related projects in the heavy oil and conventional oil and gas markets. This focus is expected to enable Engineering to regain momentum and Field Services to maintain its high level of capacity utilization as the 2007 year unfolds. Environmental opportunities for each of the segments are also growing and are expected to play a much more prominent role in future revenues. Finally, the prospects for sizable new opportunities in the Fort Saskatchewan region of Alberta's Heartland are significant. This region is experiencing explosive growth in upgrader and other facilities to support northeastern Alberta oil sands development. Gemini's land purchase and planned facility in this area is garnering a great deal of interest from both existing and new clients. Production on this facility's first order is planned to commence in the second quarter of 2007.

Gross profits of $15,862,000 for 2006 were down $1,715,000 from the 2005 results. The reduction in gross profits was principally a result of lower staff utilization within the Engineering segment. The inconsistency of client demand due to project delays made it extremely difficult for management to predict staffing requirements. In addition, the tight labour market for engineering professionals led management to conclude that staffing reductions were inappropriate based upon client feedback that projects would be released later in 2006. Unfortunately, these project releases did not materialize and actions were taken late in the year to balance staffing with existing workloads.

Net earnings for 2006 were reduced to one third of the level achieved in 2005. This brought earnings per share to 3.1 cents compared to 10.2 cents in 2006 versus 2005, respectively. A significant proportion of this reduction was attributable to the gross profit performance previously noted. Another contributing factor was an increase in administrative costs to support the overall growth in business, notwithstanding the fact that these costs declined as a percent of revenue to 14.2% in 2006 from 14.9% in 2005. Efforts are continuing to identify further process changes and streamlining opportunities to reduce these costs further as a percent of revenues.

"2006 has been a challenging year as a result of uncertainties in certain markets we serve", said Carl Johnson, Gemini's President and CEO. "The decline in natural gas prices and high field installation costs forced clients to rethink various projects and this significantly reduced our Engineering profitability. We've made changes to improve our utilization rates and our more aggressive sales efforts are expected to result in increased oil-related projects for the future. Sales efforts with new clients always take time to develop and as a result we are anticipating a modest first quarter with momentum building as the year progresses. We're confident in our strategy and feel we can regain our profitability path in 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 annual report will be filed with SEDAR at by April 10, 2007.


Three Months Ended Year Ended
Operating Highlights ($'000) Dec 31, Dec 31, Dec 31, Dec 31,
2006 2005 2006 2005
Revenue $ 21,718 $ 21,106 $ 85,455 $ 72,779

Gross profit 3,545 4,422 15,862 17,577

Earnings before interest & taxes (67) 986 2,638 5,944

Net earnings (297) 587 1,156 3,372

Earnings per share (basic) $ (0.009) $ 0.017 $ 0.031 $ 0.102

Earnings per share (diluted) $ (0.009) $ 0.016 $ 0.031 $ 0.097

Operating cash flow(1) $ 245 $ 757 $ 3,246 $ 4,511
(excludes working capital changes)
Operating cash flow per share $ 0.007 $ 0.023 $ 0.095 $ 0.139

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

Working capital $ 8,145 $ 7,322

Total assets 27,245 30,843

Shareholders' equity 12,649 10,848

(1) 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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