Mr. David Mullen reports
CORDY OILFIELD SERVICES INC. REPORTS THIRD QUARTER RESULTS
Cordy Oilfield Services Inc. has released its third quarter results for the period ended Sept. 30, 2014.
For the three-month period ended Sept. 30, 2014
Cordy's consolidated revenues decreased by $10.9-million to $21.6-million as compared with consolidated revenues of $32.5-million in the period ended Sept. 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 that 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-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 $600,000 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 with the same period in the prior year,
the increased activity experienced in 2013 is 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 Sept. 30, 2014, the corporation had an EBITDAS (earnings before interest, taxes, depreciation, amortization and impairment, and share-based compensation) loss of $2.4-million, as compared with earnings of $3.1-million in the period ended Sept. 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-million to a
loss of $200,000, 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 $500,000 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
an $800,000 inventory provision.
The corporation reported a net loss of $8.9-million for the three months ended Sept. 30, 2014, an increased loss of $10.3-million from net earnings of $1.4-million for the three months ended Sept. 30, 2013. Of this loss $5-million is attributed to the derecognition of the deferred tax asset.
HIGHLIGHTS
(in millions of dollars, except per-share amounts)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Revenue
Heavy construction $ 15.4 $ 20.4 $ 40.2 $ 52.5
Environmental services 4.5 8.2 17.8 28.4
Manufacturing and supply 1.7 3.9 7.3 9.3
------ ------ ------ ------
21.6 32.5 65.3 90.2
EBITDAS
Heavy construction 0.2 3.2 (0.4) 5.6
Environmental services (0.5) 1.0 0.2 5.3
Manufacturing and supply (1.5) 0.2 (1.6) (0.5)
Corporate (0.6) (1.3) (2.9) (3.3)
------ ------ ------ ------
(2.4) 3.1 (4.7) 7.1
Net earnings (loss) $ (8.9) $ 1.4 $(13.1) $ 1.3
Cash flow generated from
(used in) operating
activities (0.6) (2.2) (0.5) 2.0
Earnings per share $(0.10) $ 0.01 $(0.15) $(0.16)
Note: EBITDAS stands for earnings before interest, taxes,
depreciation, amortization and impairment, and
share-based compensation.
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, oil field service activity is slowing. As a result, a majority of the company's business units experienced a challenging quarter.
Based upon its third quarter results, which were below expectations, as well as the current weakening commodity pricing environment, the company expects the balance of 2014 activity and its resulting financial performance to be below its 2013 results.
Despite this performance, as at Sept. 30, 2014, the corporation has a further $14.5-million of unencumbered accounts receivable, and $12.7-million of unencumbered property, plant and equipment. It expects 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 Sept. 30, 2014, and the associated management's discussion and analysis are available on the company's website or on SEDAR.
Reader advisory
Effective Jan. 1, 2011, Cordy began reporting its financial results in accordance with international financial reporting standards. Prior-year comparative amounts were changed to reflect results as if Cordy had always prepared its financial results using IFRS.
We seek Safe Harbor.
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