CALGARY, ALBERTA–(Marketwired – Aug. 3, 2017) – CEMATRIX Corporation (TSX VENTURE:CVX) (the “Corporation” or the “Company” or “CEMATRIX“) announces the release of its consolidated financial results for the three and six months ended June 30, 2017.
Mid-Year Review
“The future of CEMATRIX continues to look extremely positive, as infrastructure markets continue to grow and there are signs that planned construction activity is increasing in the oil and gas sector. Infrastructure market sales growth and new sales from the Lafarge/CEMATRIX arrangement are taking longer than anticipated but CEMATRIX is making progress, as reflected in the continued growth in its sales pipeline,” stated Jeff Kendrick, President and CEO of CEMATRIX.
The results for the first six months of 2017 are lower than expected because three projects, that were delayed from 2016 and scheduled to be completed in the first six months of 2017, have been delayed further in whole, or in part by, due to contractor onsite project delays. The total uncompleted contracted sales value of these delayed projects is approximately $2.4 million. One of the projects commenced again in July, another is now scheduled for August and the third, with a sales value of $0.8 million, may not go until the late fall, if not later.
Management knew coming into 2017 that oil and gas sales would be down substantially from those reported in 2016 due to the completion of a couple of large projects in Alberta in 2016 and the affect that low commodity prices would have on any new projects in this sector, but did not think that it would be as slow as has been experienced. Even so, management had expected that growth in additional infrastructure sales and sales to be generated by its new partnership with the largest cement supplier in the world would more than offset this decline. Unfortunately, both the growth in infrastructure markets and the sales benefit of the joint agreements with Lafarge Canada are taking longer than anticipated to develop.
Contracted sales are $9.1 million as compared to $11.3 million at the same time last year. The current sales pipeline is $108 million compared to $80 million at this time last year. The sales pipeline is comprised of projects on which CEMATRIX has been asked to submit a design or quote, or both.
Sales for the six months ended June 30, 2017 were $4,735,701, down $1,190,060, or 20.1%, in comparison to the same period in 2016. Although volumes are up slightly the average selling price has declined due the shift in sales to lower priced infrastructure work from the higher priced oil and gas projects. Infrastructure sales were up $1,603,918, or 52.5% due mainly to a couple of large tunnel grouting jobs that carried over from 2016. The increase in infrastructure sales was not sufficient to offset the decline in oil and gas sales of $2,793,978, or 97.4%, but it would have been if the delayed projects had gone ahead as scheduled prior to the end of the quarter. During the first six months of 2016 the Company benefitted from two large projects in the Alberta oil and gas sector.
As a result of the lower sales, the gross margins earned during the period decreased by $540,969, or 44.2%. The gross margin percentage in 2017 of 14.4% was down from the 20.6% in 2016. This decline is generally due to the shift to infrastructure work in 2017, which has lower margins than oil and gas projects, and the impact of a change in production method for a specific project from dry mix to wet mix which has a higher material cost. This production method change was implemented for the benefit of the introduction of the new Lafarge/CEMATRIX regional expansion program.
The decrease in the gross margin was partially offset by lower operating expenses such that the loss before income taxes for the six months ended June 30, 2017 was $414,814 compared to a loss of $125,758 in the same period in 2016.
Financial Results
Selected financial information for the three and six months ended June 30, 2017 and 2016 is as follows:
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||||||||||
| 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||
| Revenue | $ | 2,208,230 | $ | 2,755,072 | $ | (546,842 | ) | $ | 4,735,701 | $ | 5,925,761 | $ | (1,190,060 | ) | ||||||||||
| Gross margin | $ | 147,169 | $ | 492,677 | $ | (345,508 | ) | $ | 681,854 | $ | 1,222,823 | $ | (540,969 | ) | ||||||||||
| Operating expenses | (508,474 | ) | (607,516 | ) | 99,042 | (1,032,150 | ) | (1,205,049 | ) | 172,899 | ||||||||||||||
| Operating income (loss) | (361,305 | ) | (114,839 | ) | (246,466 | ) | (350,296 | ) | 17,774 | (368,070 | ) | |||||||||||||
| Non-cash stock based compensation | 49,502 | (39,241 | ) | 88,743 | 21,093 | (63,320 | ) | 84,413 | ||||||||||||||||
| Finance costs | (53,906 | ) | (46,893 | ) | (7,013 | ) | (104,427 | ) | (119,289 | ) | 14,862 | |||||||||||||
| Other income | 16,929 | 29,941 | (13,012 | ) | 18,816 | 39,077 | (20,261 | ) | ||||||||||||||||
| Loss before income taxes | (348,780 | ) | (171,032 | ) | (177,748 | ) | (414,814 | ) | (125,758 | ) | (289,056 | ) | ||||||||||||
| Provision of deferred taxes | 99,118 | 33,223 | 65,895 | 112,757 | (15,000 | ) | 127,757 | |||||||||||||||||
| Loss attributable to common shareholders | (249,662 | ) | (137,809 | ) | (111,853 | ) | (302,057 | ) | (140,758 | ) | (161,299 | ) | ||||||||||||
| Unrealized foreign exchange loss on translation of foreign subsidiary | (5,773 | ) | (10,310 | ) | 4,537 | (5,237 | ) | (29,848 | ) | 24,611 | ||||||||||||||
| Comprehensive Loss | $ | (255,435 | ) | $ | (148,119 | ) | $ | (107,316 | ) | $ | (307,294 | ) | $ | (170,606 | ) | $ | (136,688 | ) | ||||||
| Loss per common share | $ | (0.007 | ) | $ | (0.004 | ) | $ | (0.003 | ) | $ | (0.009 | ) | $ | (0.004 | ) | $ | (0.005 | ) | ||||||
This press release should be read in conjunction with the Corporation’s unaudited Consolidated Financial Statements and Management Discussion and Analysis for the three and six months ended June 30, 2017, both of which can be found on SEDAR.
CEMATRIX is an Alberta corporation with its head offices in Calgary, Alberta. The Corporation, through its wholly owned subsidiary, will continue to be a rapidly growing, cash flow positive company that manufactures and supplies technologically advanced cellular concrete products developed from proprietary formulations. This unique cement based material with superior thermal protection, delivers a cost-effective, innovative solution to a broad range of problems facing the infrastructure, industrial (including oil and gas) and commercial markets.
Neither 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.
Forward-looking information: This news release contains certain information that is forward looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as “anticipate”, expect”, “would’ or other similar words). Forward looking statements in this document are intended to provide CEMATRIX security holders and potential investors with information regarding CEMATRIX and its subsidiaries’ future financial and operations plans and outlook. All forward looking statements reflect CEMATRIX’s beliefs and assumptions based on information available at the time the statements were made. Readers are cautioned not to place undue reliance on this forward looking information. CEMATRIX undertakes no obligation to update or revise forward looking information except as required by law. For additional information on the assumptions made and the risks and uncertainties which may cause actual results to differ from the anticipated results, refer the CEMATRIX’s Management Discussion and Analysis dated August 2, 2017 under CEMATRIX’s profile on SEDAR at www.sedar.com and other reports filed by CEMATRIX with Canadian securities regulators.
Jeff Kendrick
President and Chief Executive Officer
(403) 219-0484
The Howard Group
Jeff Walker
Investor Relations
(888) 221-0915 or (403) 221-0915
[email protected]
