Cordy Oilfield Services Inc. Reports Fourth Quarter and 2017 Annual Results
April 12, 2018 - 7:39 PM EDT
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Cordy Oilfield Services Inc. Reports Fourth Quarter and 2017 Annual Results
CALGARY, Alberta, April 12, 2018 (GLOBE NEWSWIRE) -- CORDY OILFIELD SERVICES INC. (the “Corporation” or “Cordy”) (TSX-V:CKK) released today its fourth quarter and 2017 annual results.
Three months ended December 31
Twelve months ended December 31
($ 000’s)
2017
2016
($) Change
2017
2016
($) Change
Revenue
Environmental Services
2,580
2,590
(10
)
10,659
9,399
1,260
Heavy Construction
155
49
106
471
354
117
Corporate
4
1
3
52
22
30
2,739
2,640
99
11,182
9,775
1,407
Direct operating expenses
Environmental Services
2,012
2,022
(10
)
8,078
6,937
1,141
Heavy Construction
(1,010
)
(126
)
(884
)
(1,028
)
286
(1,314
)
Corporate
1,148
17
1,131
1,161
5
1,156
2,150
1,913
237
8,211
7,228
983
General and administrative expenses
Environmental Services
(1
)
260
(261
)
394
525
(131
)
Heavy Construction
(52
)
54
(106
)
(46
)
78
(124
)
Corporate
299
369
(70
)
1,065
1,318
(253
)
246
683
(437
)
1,413
1,921
(508
)
Operating earnings (loss)
Environmental Services
569
308
261
2,187
1,937
250
Heavy Construction
1,217
121
1,096
1,545
(10
)
1,555
Corporate
(1,443
)
(385
)
(1,058
)
(2,174
)
(1,301
)
(873
)
343
44
299
1,558
626
932
Depreciation
550
662
(112
)
2,211
2,693
(482
)
Financing expense
110
385
(275
)
870
1,398
(528
)
Impairments
-
37
(37
)
-
37
(37
)
Gain (loss) on disposal
(5
)
(6
)
1
(81
)
52
(133
)
Share-based recovery
-
(18
)
18
(40
)
(34
)
(6
)
Loss before tax
(312
)
(1,016
)
704
(1,402
)
(3,520
)
2,118
Income tax expense
-
-
-
-
-
-
Net loss
(312
)
(1,016
)
704
(1,402
)
(3,520
)
2,118
YEAR ENDED DECEMBER 31, 2017
In 2017, Cordy's consolidated revenues increased by $1.4 million or 14 percent, from the same period in 2016. 2017 saw a recovery of crude oil prices, as they rose to the highest levels in years, Cordy saw increased demand for services as conventional investment increased. Increased commodity prices coupled with efforts on organic growth from within the organization have resulted in the year over year increase.
Cordy’s operating earnings increased by $0.9 million or 149 percent over 2016. Cordy completed its restructuring initiatives in September 2016; Cordy right sized the business and focused on earning margins in the new market realities facing service companies. All costs, at all levels of business were scrutinized, the cost conscious culture that management implemented is continuing to benefit margins.
Cordy’s net loss for 2017 improved by $2.1 million or 60 percent as compared to 2016. Cordy’s improving operating results, coupled with reduced interest rate on debt continue to improve earnings.
The following significant transactions occurred in the year:
During the fourth quarter of 2017, the Corporation entered into two Amended Leases with its equipment lender which amend the terms of amounts payable under its existing finance leases. Part of the renegotiation included a reduced interest rate to 5 percent.
Cordy has reduced operating and overhead costs, this has been achieved through staff reductions, pay cuts, consolidation of operations and multiple cost cutting measures implemented by management. Cordy will continue to monitor and reduce costs to remain competitive.
Cordy increased efforts on organic sales growth in 2017 through the hiring of sales personnel, coupled with an organization wide sales effort at all levels of the business.
Cordy completed the acquisition of Hornet Hydrovac at the end of 2017, this will continue to diversify Cordy’s client base while strategically aligning the Corporation to further capitalize on municipal infrastructure projects.
CORPORATE OUTLOOK
Fresh off the appointment of a new executive team in late 2016, as well as a $2.3 million equity injection, in which the new management team participated, 2017 marked Cordy’s first year post organizational realignment. The oil and gas industry began to show signs of recovery, with oil prices rebounding in late 2017, to their highest levels since mid-2015. Evidence continues to suggest that the oil and gas industry is in the early stages of recovery; however, confidence in oilfield services remains shaky and investment uncertain.
The Company benefited, in 2017, from increased provincial and municipal infrastructure spending, as management continued to focus on its diversification strategy, specifically, general industrial and municipal support services. The acquisition of Hornet Hydrovac in December 2017, increased Cordy’s market share in the municipal market and aligns with management’s strategy to build a broader client base in non-oilfield related businesses.
In mid-2017, Cordy and its lender agreed on revised terms for its equipment finance leases (the “Revised leases”) which included; flexible payments during periods of increased working capital requirements, a reduction in Cordy’s interest rate from 8.5% to 4.95%, and support from its lender in the form of additional financing, when required, to support the Company’s diversification strategy. The Revised Leases provide the foundation for the attainment of its business objectives for the foreseeable future.
Looking to 2018, management believes the Canadian Oil and Gas industry it serves will continue to experience a slow recovery amidst the absence of infrastructure, namely pipeline capacity. To make matters worse, relentless pipeline opposition continues to stifle new infrastructure, causing delays, cancellations and limiting growth in the industry. Despite the continued uncertainty in the oil and gas industry, management anticipates modest year over year growth. In addition, Cordy will continue to seek out acquisitions and consolidation opportunities that complement its diversification strategy and provide platforms for organic growth.
For general and investor relations information, please contact:
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.
