Cordy Oilfield Services Inc. Reports First Quarter 2020 Results
July 07 2020 - 8:11PM
CORDY OILFIELD SERVICES INC. (the “Corporation” or “Cordy”) (CKK:
TSX-V) released today its first quarter 2020 results.
|
Three months ended March 31, |
($
000's) |
2020 |
|
2019 |
|
($) Change |
|
Revenue |
|
|
|
Environmental Services |
7,490 |
|
5,026 |
|
2,464 |
|
Heavy Construction |
149 |
|
129 |
|
20 |
|
Corporate |
7 |
|
1 |
|
6 |
|
|
7,646 |
|
5,156 |
|
2,490 |
|
Direct operating
expenses |
|
|
|
Environmental Services |
5,798 |
|
3,753 |
|
2,045 |
|
Heavy Construction |
71 |
|
71 |
|
- |
|
Corporate |
- |
|
- |
|
- |
|
|
5,869 |
|
3,824 |
|
2,045 |
|
|
|
|
|
General and
administrative expenses |
|
|
|
Environmental Services |
130 |
|
106 |
|
24 |
|
Heavy Construction |
- |
|
- |
|
- |
|
Corporate |
201 |
|
254 |
|
(53 |
) |
|
331 |
|
360 |
|
(29 |
) |
Operating
earnings(1) |
|
|
|
Environmental Services |
1,562 |
|
1,167 |
|
395 |
|
Heavy Construction |
78 |
|
58 |
|
20 |
|
Corporate |
(194 |
) |
(253 |
) |
59 |
|
|
1,446 |
|
972 |
|
474 |
|
|
|
|
|
Depreciation |
465 |
|
496 |
|
(31 |
) |
Finance costs |
110 |
|
185 |
|
(75 |
) |
Gain on disposal |
- |
|
- |
|
- |
|
Earnings before tax |
871 |
|
291 |
|
580 |
|
Income tax expense |
- |
|
- |
|
- |
|
Net earnings |
871 |
|
291 |
|
580 |
|
(1) Operating earnings is a non-IFRS term and is
defined as earnings before interest, taxes, depreciation,
amortization, see reconciliation on page 8 of this document. |
FIRST QUARTER ENDED MARCH 31,
2020
For the three month period ended March 31, 2020,
Cordy's consolidated revenues increased by 48 percent, from the
comparative period in 2019. Cordy's consolidated operating earnings
increased $0.5 million or 49 percent from the comparative period.
Cordy’s net income was $0.9 million for the three months ended
March 31, 2020, as compared to $0.3 million for the three months
ended March 31, 2019, representing a 199% increase over the prior
period.
The Environmental Services segment saw a
significant increase in revenue for the three month period ended
March 31, 2020, from the comparative period in 2019. The increase
was directly related to market share gains in the oil and gas
sector. Cordy’s revenue consisted of 82 percent oilfield services
(2019 – 43 percent) in Q1. Overall, operating earnings increased 49
percent. As a percentage of revenue, operating earnings remained at
19 percent in 2020 as compared to 19 percent in 2019.
OUTLOOK
Cordy’s results for the current quarter were
consistent with our expectations, despite the major negative impact
the COVID-19 virus had on economic activity, and Cordy’s business,
starting in mid-March. The Company’s optimism and initial forecast
for a much improved 2020 has quickly soured as measures enacted to
prevent the spread of the virus have resulted in global business
disruption with significant economic repercussions. These events
are expected to continue to negatively impact Cordy’s business for
the remainder of 2020.
Despite the COVID-19 related challenges, the
Corporation believes its unique capital structure, whereas its debt
agreements contain no financial covenants, and government programs,
in particular the Canadian Emergency Wage Subsidy, greatly enhance
its ability to manage through the economic uncertainty.
Management believes the overall impact and
influence of the current economic conditions will continue to have
a negative on impact on demand for the Company’s services for the
remainder of 2020. The quantum of the impact remains highly
uncertain and will be directly correlated to the capital spending
of the Company’s customers. Management has taken several steps,
including implementing aggressive operating cost reductions,
revising terms of its lease and lending agreements, and
participating in various government emergency relief programs, to
improve its short-term liquidity and mitigate risks associated with
the decrease in demand for the Company’s services.
Although the balance of 2020 is clouded with
risk and uncertainty, there is optimism for the long term. Major
infrastructure spending has been announced by provincial and
federal governments that should have significant positive impacts
on the western Canadian economy. Additionally, several major oil
and gas pipelines, including Trans Mountain, Costal Gas Link and
Keystone XL have cleared major hurdles and opposition. The service
companies in our industry that can survive and recover from
COVID-19, will be well positioned to benefit from these projects
and participate in building a sustainable economic future in
western Canada.
For general and investor relations information,
please contact:
Investor RelationsDarrick EvongChief Executive
Officer IR@cordy.caTel: 403-262-7667
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
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.
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