CORDY OILFIELD SERVICES INC. (the “Corporation”
or “Cordy”) (CKK: TSX-V) released today its second quarter 2020
results.
|
Three months ended June 30, |
Six months ended June 30, |
($ 000's) |
2020 |
2019 |
($) Change |
2020 |
2019 |
($) Change |
Revenue |
|
|
|
|
|
|
Environmental Services |
2,043 |
|
3,478 |
|
(1,435 |
) |
9,533 |
|
8,504 |
|
1,029 |
|
Heavy Construction |
63 |
|
161 |
|
(98 |
) |
212 |
|
291 |
|
(79 |
) |
Corporate |
8 |
|
5 |
|
3 |
|
15 |
|
5 |
|
10 |
|
|
2,114 |
|
3,644 |
|
(1,530 |
) |
9,760 |
|
8,800 |
|
960 |
|
Direct operating expenses |
|
|
|
|
|
|
Environmental Services |
1,320 |
|
2,721 |
|
(1,401 |
) |
7,117 |
|
6,474 |
|
643 |
|
Heavy Construction |
26 |
|
81 |
|
(55 |
) |
98 |
|
152 |
|
(54 |
) |
Corporate |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
1,346 |
|
2,802 |
|
(1,456 |
) |
7,215 |
|
6,626 |
|
589 |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
|
|
|
|
Environmental Services |
114 |
|
198 |
|
(84 |
) |
243 |
|
303 |
|
(60 |
) |
Heavy Construction |
1 |
|
- |
|
1 |
|
1 |
|
1 |
|
- |
|
Corporate |
221 |
|
237 |
|
(16 |
) |
423 |
|
491 |
|
(68 |
) |
|
336 |
|
435 |
|
(99 |
) |
667 |
|
795 |
|
(128 |
) |
Operating earnings (loss) |
|
|
|
|
|
|
Environmental Services |
609 |
|
559 |
|
50 |
|
2,173 |
|
1,727 |
|
446 |
|
Heavy Construction |
36 |
|
80 |
|
(44 |
) |
113 |
|
138 |
|
(25 |
) |
Corporate |
(213 |
) |
(232 |
) |
19 |
|
(408 |
) |
(486 |
) |
78 |
|
|
432 |
|
407 |
|
25 |
|
1,878 |
|
1,379 |
|
499 |
|
|
|
|
|
|
|
|
Depreciation |
652 |
|
496 |
|
156 |
|
1,117 |
|
992 |
|
125 |
|
Finance costs |
357 |
|
215 |
|
142 |
|
467 |
|
400 |
|
67 |
|
Gain (loss) on disposal |
- |
|
(397 |
) |
397 |
|
- |
|
(397 |
) |
397 |
|
Share-based recovery |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Earnings (loss) before tax |
(577 |
) |
93 |
|
(670 |
) |
294 |
|
384 |
|
(90 |
) |
Income tax expense |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Net earnings (loss) |
(577 |
) |
93 |
|
(670 |
) |
294 |
|
384 |
|
(90 |
) |
Second Quarter Financial
Summary:
- Revenue for the three and six
months ended June 30th, 2020 down 42 percent for the quarter but
still up 11% for the year;— total revenue of $2.1 million for
the quarter, a decrease of $1.5 million, or 42 percent compared to
$3.6 million in 2019;— total revenue of $9.8 million for the
first half, an increase of $1.0 million, or 11 percent compared to
$8.8 million in 2019;
- Operating earnings for the three
and six months ended June 30, 2020 no change on the quarter and up
36% for the year;— total operating earnings of $0.4 million
for the quarter, no change compared to $0.4 million in
2019;— total operating earnings of $1.9 million for the first
half, an increase of $0.5 million, or 36% compared to $1.4 million
in 2019;
- Net (loss) earnings for the three
and six months ended June 30, 2020 down on the quarter and down 23
percent on for the year;— net loss of ($0.6) million for the
quarter, a decrease of $0.7 million, compared to net earnings of
$0.1 million in 2019— net earnings of $0.3 million for the
first half, a decrease of $0.1 million, or 23% compared to $0.4
million in 2019
- Received $0.5 million from Canadian
Emergency Wages Subsidy (“CEWS”) during the
quarter;— $0.4 million recognized as reduction to Direct
Operation Expenses (“DOE”)— $0.1 million
recognized as a reduction to general and administrative
(“G&A”) expense
Financial Position /
Liquidity:
- consolidated and revised the terms
of its equipment leases reducing its current portion of lease
liability by $0.2 million;
- increased the borrowing amount
under its credit facility from 50% up to an amount totalling 90% of
eligible receivables, improving the Corporations short-term
liquidity.
- generated $3.0 million of funds
from operations during the quarter..
OVERALL PERFORMANCE
The second quarter of 2020 will not soon be
forgotten, as it presented the business with some of its toughest
challenges to date. Most notably, the global spread of COVID-19
created unprecedented uncertainty and volatility in the oil and gas
industry, particularly in the Western Canadian Sedimentary Basin.
The demand for oil significantly deteriorated, as non-essential
business around the globe, came to a grinding halt, and swiftly
drove pricing into uneconomical territory, impacting the capital
programs that drive a significant portion of Cordy’s business.
Compounding the crisis, the Company had to quickly redesign its day
to day business model, implementing new health and safety
protocols, to mitigate the risk of contracting or spreading
COVID-19 for our people, our customers, and their families.
Despite the challenges, Cordy was able to manage
through, what it believes was, the toughest stretch of 2020. The
reopening of the economies around the globe has resulted in a
return of oil and gas pricing to economical levels, and general
business activity has started to slowly rebound as businesses and
customers, adapt to the new rules of doing business in the COVID-19
era.
OUTLOOK
In terms of Cordy’s business, the worst of the
economic impact of COVID-19 appears to have passed. Specifically,
as global economies have re-opened, commodity prices have rebounded
from the severe lows experienced during the height of the shut
down, and there is some optimism that the oilfield industry in
western Canada will gradually increase activity in the new year.
While this still presents challenges for the Company, there appears
to be some light at the end of the tunnel.
In Alberta, as government imposed business and
social restrictions were lifted, general business activity, in the
municipal and industrial spaces, began to slowly improve. The
Company’s municipal and industrial customers went back to work and
demand for our services is gradually increasing. Despite the risks
still associated with the pandemic, Cordy is hopefully that the
current trend will continue.
During the balance of the 2020 the company
anticipates business continuing to be a challenge, particularly on
the energy services side of the business, which generated
approximately 40% of the Company’s revenue in the second half of
2019. Although there is optimism for the new year, activity will
remain depressed for the balance of 2020.
Despite the negative outlook on the drilling
front for the second half of 2020, Cordy’s diversification focus,
growing both the industrial and municipal service side of the
business, continues to provide the company with opportunity. As
part of its post COVID-19 recovery plan to stimulate the economy,
the Alberta government has announced $10 billion in infrastructure
stimulus packages, which the Premier has called the ‘largest
infrastructure build in provincial history”. The announced
infrastructure projects will require the types of support services
Cordy provides.
In the near term, the Company continues to be
reliant on government support payments to fund its operations. The
Company is uncertain about the extent these programs will be
available in the future, or whether the opportunities available to
the company will materialize before the dissolution of these
programs.
For the balance of 2020, and the foreseeable
future, Cordy will continue to aggressively manage costs, while
continuing to focus on the health and safety of its employees,
contractors, and customers, ensuring it is doing its part in
mitigating the spread of COVID-19.
For general and investor relations information,
please contact:
Darrick Evong Chief Executive Officer IR@cordy.ca
Tel: 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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