CALGARY, ALBERTA–(Marketwired – April 18, 2017) –
CORDY OILFIELD SERVICES INC. (the “Corporation” or “Cordy”) (TSX VENTURE:CKK) released today its fourth quarter and 2016 annual results.
| Three months ended December 31 | Twelve months ended December 31 | |||||||||||
| ($ 000’s) | 2016 | 2015 | ($) Change | 2016 | 2015 | ($) Change | ||||||
| Revenue | ||||||||||||
| Environmental Services | 2,590 | 2,302 | 288 | 9,399 | 16,076 | (6,677 | ) | |||||
| Heavy Construction | 49 | 603 | (554 | ) | 354 | 4,623 | (4,269 | ) | ||||
| Corporate | 1 | 74 | (73 | ) | 22 | 78 | (56 | ) | ||||
| 2,640 | 2,979 | (339 | ) | 9,775 | 20,777 | (11,002 | ) | |||||
| Direct operating expenses | ||||||||||||
| Environmental Services | 2,022 | 2,182 | (160 | ) | 6,937 | 14,831 | (7,894 | ) | ||||
| Heavy Construction | (126 | ) | 562 | (688 | ) | 286 | 5,286 | (5,000 | ) | |||
| Corporate | 17 | 1,055 | (1,038 | ) | 5 | 1,058 | (1,053 | ) | ||||
| 1,913 | 3,799 | (1,886 | ) | 7,228 | 21,175 | (13,947 | ) | |||||
| General and administrative expenses | ||||||||||||
| Environmental Services | 260 | 186 | 74 | 525 | 1,077 | (552 | ) | |||||
| Heavy Construction | 54 | 30 | 24 | 78 | 278 | (200 | ) | |||||
| Corporate | 369 | 437 | (68 | ) | 1,318 | 2,458 | (1,140 | ) | ||||
| 683 | 653 | 30 | 1,921 | 3,813 | (1,892 | ) | ||||||
| Operating earnings (loss) | ||||||||||||
| Environmental Services | 308 | (66 | ) | 374 | 1,937 | 168 | 1,769 | |||||
| Heavy Construction | 121 | 11 | 110 | (10 | ) | (941 | ) | 931 | ||||
| Corporate | (385 | ) | (1,418 | ) | 1,033 | (1,301 | ) | (3,438 | ) | 2,137 | ||
| 44 | (1,473 | ) | 1,517 | 626 | (4,211 | ) | 4,837 | |||||
| Other income | – | – | – | – | (173 | ) | 173 | |||||
| Depreciation | 662 | 768 | (106 | ) | 2,693 | 1,976 | 717 | |||||
| Financing expense | 385 | 642 | (257 | ) | 1,398 | 2,065 | (667 | ) | ||||
| Impairments | 37 | – | 37 | 37 | – | 37 | ||||||
| Gain (loss) on disposal | (6 | ) | (192 | ) | 186 | 52 | (855 | ) | 907 | |||
| Share-based recovery | (18 | ) | – | (18 | ) | (34 | ) | (257 | ) | 223 | ||
| Loss before tax | (1,016 | ) | (2,691 | ) | 1,712 | (3,520 | ) | (6,967 | ) | 3,484 | ||
| Income tax expense | – | (60 | ) | 60 | – | 25 | (25 | ) | ||||
| Net loss from continuing operations | (1,016 | ) | (2,631 | ) | 1,615 | (3,520 | ) | (6,992 | ) | 3,472 | ||
YEAR ENDED DECEMBER 31, 2016
In 2016, Cordy’s consolidated revenues decreased by $11.0 million, from the same period in 2015, despite decreased revenues Cordy saw increased operating earnings of $4.8 million compared to prior period. The steep and rapid decline in commodity prices negatively impacted industry cash flows, reducing capital investment and drilling activity in western Canada. The significant year over year decrease in revenue can be attributed to Cordy’s proactive step in selling off and shutting down business units that would be hit the hardest in the economic downturn and focused on its historically higher performing businesses. In 2016 Cordy took the following steps to improve margins and focus on its core business.
- Cordy finalized the consolidation of all equipment debt to a single lender; this has resulted in a reduced interest rate and more favourable payment terms. Subsequent to year end Cordy has negotiated an increased monthly payment of $0.2 million for a decreased interest rate of 6%.
- The consolidation of the Heavy Construction to a single location in Calgary. The consolidation of operations has reduced redundant rental and facility costs, as well as decreasing general operating costs.
- Cordy has reduced operating and overhead costs, this has been achieved through staff reductions, pay cuts, and multiple cost cutting measures implemented by management. Cordy will continue to monitor and reduce costs to remain competitive.
The Environmental Services segment saw a year over year decline in revenue of $6.7 million resulting from the volatility in the commodity market. This volatility has produced a twofold effect on the segment; overall volume has decreased along with a decrease in rates. Despite the reduction in revenue, the segment was able to increase operating earnings by $1.8 million, as compared to prior year. This indicates that the segment has been agile in its response to market conditions and management continues to evaluate costs, equipment mix and new markets for Environmental’s services.
CORPORATE RESTRUCTURING AND OUTLOOK
Until very recently, optimism for the oil and gas industry was decisively negative. The slow recovery of oil prices, coupled with pipeline infrastructure project approvals have allowed positivity to slowly creep back into the oil and gas sector. The partial recovery, brings with it optimism that the demand for Cordy’s oilfield services will continue to increase.
2016 marked the completion of Cordy’s restructuring initiatives; Cordy has positioned itself to take full advantage of an eventual recovery. Key highlights related to this include:
- Announcement of new executive management team.
- Completion of rights offering, $1.3 million of funds raised.
- Completion of private placement, $1.0 million of funds raised.
- Consolidation of the Construction and Environmental divisions to a single location.
- Subsequent to the end of 2016 Cordy was able to renegotiate lending terms with our major equipment financer. These terms include an increased payment of $0.1 million monthly, for a reduced interest rate to 6%.
Cordy is well positioned going into 2017, equipped with a newer fleet of vehicles and opportunity for new market share as competitors were unable to survive the prolonged downturn. Cordy continues to cut costs, push sales and position itself to be a major player in these new market realities. Although revenue continues to be impacted, margins continue to improve as management’s strategy, centred around a focus on cost discipline and right sizing the business, is coming to fruition. Cordy’s focus for 2017 will include reducing idle equipment through aggressive sale strategy and seeking an acquisition of a synergis- tic company. Cordy will continue to exploit the Environmental Services segment’s diversity in the municipal and industrial ser- vices sector, while continuing to serve and look for opportunities in the oil and gas sector.
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 perfor- mance. 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, facili- ties 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 expres- sions. 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.
Darrick Evong
Chief Executive Officer
403-262-7667
403-237-6278 (FAX)
Darrick.Evong@cordy.ca
www.cordy.ca