Cabo Drilling Corp. Announces Record 2nd Quarter Results
29.02.2012 | Marketwire
2nd QUARTER HIGHLIGHTS
(CDN $000s, except earnings per share) 3 months ending
Dec 31/11 3 months ending
Dec 31/10 6 months ending
Dec 31/11 6 months ending
Dec 31/10
Revenue 14,363 10,583 31,293 20,856
Earnings (Loss) Before Interest, Taxes, Amortization, Stock Based Compensation and Other Items (EBITDA)
1,469
1,239
4,524
2,250
Net Earnings (Loss) Before Taxes 637 487 2,899 794
Net Earnings (Loss) After Taxes 440 393 1,960 591
Earnings (Loss) per Share ($) (Basic and Diluted) Before Interest, Taxes, Amortization, Stock-based Compensation and Other Items (EBITDA)
0.02
0.02
0.06
0.04
Earnings (Loss) per Share ($) (Basic and Diluted) 0.01 0.01 0.03 0.01
Cash from Operations* 1,104 985 2,581 1,853
Gross Margin % 24.1 % 26.1 % 24.3 % 25.1 %
Working Capital 8,855 6,271 8,855 6,271
*before changes in non-cash working capital items
The Company reports:
- Record increased quarterly revenue for the 2nd quarter fiscal 2012 of $14.36 million, a 36% improvement compared to $10.58 million in the 2nd quarter fiscal 2011.
- 2nd quarter fiscal 2012 earnings before interest, taxes, amortization, stock-based compensation and other items (EBITDA) of $1.47 million compared to 2nd quarter fiscal 2011 earnings before interest, tax, amortization, stock based compensation and other items (EBITDA) of $1.24 million, resulting in 2nd quarter fiscal 2012 earnings before interest, taxes, amortization, stock-based compensation and other items of $0.02 per share and $0.02 per share in the 2nd quarter of fiscal 2011.
- Net before tax income for the 2nd quarter of fiscal 2012 of $636,638 compared to a 2nd quarter fiscal 2011 before tax income of $486,772.
- Net after tax earnings for the 2nd quarter of fiscal 2012 of $439,638 compared to a net after tax earnings for the 2nd quarter of fiscal 2011 of $393,132, resulting in 2nd quarter fiscal 2012 net after tax earnings of $0.01 per share compared to a net after tax earnings for 2nd quarter fiscal 2011 of $0.01 per share.
- Gross margin percentage for the 2nd quarter fiscal 2012 was 24.1% compared with a gross margin of 26.1% in 2nd quarter fiscal 2011 and 24.6% in the 1st quarter of fiscal 2012.
- Cash from operations, before changes in non-cash working capital items, was $2.58 million for the 2nd quarter fiscal 2012 compared to 2nd quarter fiscal 2011 cash from operations of $1.85 million.
- A current asset balance of $26.15 million and working capital of $8.9 million.
- Total assets of $41.73 million and total liabilities of $18.90 million.
"Cabo Drilling reported record revenue for the first six months of fiscal 2012 of $31.29 million," stated Mr. Versfelt, Cabo's President & CEO. "This represents a 50% increase over the $20.86 million recorded in fiscal 2011. The Company is on track to exceed the $43.22 million reported for all of fiscal 2011, by the end of the third quarter of fiscal 2012."
"Gross margin decreased to 24.1% or $3.46 million during the second quarter, fiscal 2012, compared to 26.1% in the fourth quarter of fiscal 2011 and 24.6% in the first quarter of fiscal 2012," said Mr. Versfelt. "The decreased margin during the second quarter of fiscal 2012 is a direct result of the increased wage and material costs."
"EBITDA improved to $1.47 million or $0.02 per share for the quarter ending December 31, 2011 from $1.24 million in the comparable period of fiscal 2011," stated Mr. Versfelt. "For the six months ending December 31, 2011, EBITDA improved to $4.53 million or $0.06 per share, compared to $2.25 million or $0.04 per share for the same period in 2011. Net income after taxes for the second of quarter, fiscal 2012, increased to $439,638 compared to $393,132 for the second quarter ended September 30, 2011 and net income for the six months ended December 31, 2011 of fiscal 2012 was $1.96 million compared to net income of $590,856 earned in the comparable period of fiscal 2011, an increase of 232%."
"Cabo continues to achieve new milestones," commented Mr. Versfelt. "Revenue for the first six months in fiscal 2012 continues to set records with our 2012 revenue to date increasing 50% over our revenue in the comparable period in fiscal 2011. Surface drilling increased by 51% during the six month period ending December 31, 2011 to $26.27 million on the strength of increased reverse circulation drilling carried out by the Ontario division and the increased core drilling revenues in the Colombia division. Underground drilling increased by 67% during the six month period ending December 31, 2011 to $4.44 million as compared to $2.65 million during the comparable period in fiscal 2011 from underground drilling operations in Ontario, Atlantic and Albania divisions."
"Cabo Drilling is experiencing a general environment of renewed drilling contracts for 2012, with increased rates, covering increased wages and supply costs," stated Mr. Versfelt. "Cabo Drilling is also experiencing a higher level of new drill program bid requests earlier than normal for 2012 which is a sign of continued high demand for drilling services."
Second quarter ended December 31, 2011
Cabo Drilling's gross revenues for the three months ending December 31, 2011 increased by 36% to $14.36 million, compared to $10.58 million in the comparable three month period in fiscal 2011. The Canadian divisions represented 70% of total revenues for the second quarter of fiscal 2012, as compared to 75% during the first quarter of fiscal 2012. International revenues increased to $4.3 million, slightly higher than the previous quarter of $4.23 million and $1.69 million higher (64%) than the comparable quarter in fiscal 2011. All the Company's divisions reported improved revenues compared to the same period last year.
Direct costs for the three month period ended December 31, 2011 were $10.91 million compared to $7.82 million in the comparable three month period ended December 31, 2010. Gross margins for the three month period ended December 31, 2011 were 24%, compared to 26% during the quarter ended December 31, 2010 and 25% in the first quarter of fiscal 2012. The decreased margin during the second quarter of fiscal 2012 is a direct result of the increased wage and material costs, which the Company expects to recover in future periods through increased pricing.
General and administration costs increased to $1.89 million in the quarter ended December 31, 2011 compared to $1.54 million incurred in second quarter of fiscal 2011 and the $1.76 million in the first quarter of fiscal 2012. This increase is attributable to increased administration costs in the international locations, increased travel costs, increased professional fees (legal and accounting) and one time charges incurred in arranging new debt facilities.
General and administration includes stock based compensation expense in the amount of $6,500 in the quarter ended December 31, 2011 compared to $23,033 in the second quarter of 2011.
General and administration costs as a percentage of revenue have decreased to 13% in the second quarter of fiscal 2012 as compared to 15% in the second quarter of fiscal 2011.
Depreciation of property, plant and equipment for the three months ending December 31, 2011 increased to $664,324 from $629,709 in the second quarter of fiscal 2011 and $651,969 incurred during the quarter ended September 30, 2011. This increase is directly related to capital expenditures in fiscal 2011 and 2012.
Net income for the second quarter of fiscal 2012 was $439,638 compared to net income of $393,132 in the second quarter of fiscal 2011 and a net income of $1.52 million in the first quarter of fiscal 2012.
The Company's cash (cash and cash equivalents) position at December 31, 2011, is $814,995 compared to $102,723 at June 30, 2011. Available for sale assets increased $902,210, from $75,600 at June 30, 2011, to $977,810 at December 31, 2011. The increase can be attributed to the receipt of 1,500,000 shares of Standard Gold Inc. in settlement of the convertible debenture. On September 8, 2011 the market value of the Standard Gold Inc. was $0.92 per share. The value of these shares has been adjusted at December 31, 2011 to $0.65 per share with the decrease in market value recorded as other comprehensive loss. At December 31, 2011, the balance of $977,810 consists of shares in public corporations.
Accounts receivable decreased by $1.20 million or 11% to $9.39 million at December 31, 2011 from $10.59 million at June 30, 2011. The decrease is primarily due to increased collections during the second quarter of fiscal 2012.
Property, plant & equipment increased by $747,357 at December 31, 2011 to $13.74 million from $12.99 million at June 30, 2011. The Company increased capital equipment by $1.95 million during the first six months of fiscal 2012. Included in this amount is over $500,000 in new trucks. Other significant equipment capital expenditures included reverse circulation and helicopter support drills. During the first six months of fiscal 2012, the Company acquired one new drill, financed by an equipment manufacturer, and completed major overhauls of four other drills that were mobilized to new projects. These acquisitions and capital expenditures generally occur in three year cycles. Consequently, we do not expect significant acquisitions for trucks and major drill overhauls through the end of fiscal 2012 and fiscal 2013.
Consolidated Financial Results for six months ending December 31, 2011
Revenue for the six months ending December 31, 2011 increased approximately 50% to a record $31.29 million, compared to $20.86 million in the comparable period in fiscal 2011. Revenues from our international divisions continue to represent a significant part of Cabo Drilling's operations. Twenty-eight percent (28%) of revenues for the six months is attributable to international operations, which is 5% greater than the comparable six month period last year.
Surface drilling increased by 51% during the six month period ending December 31, 2011 to $26.27 million on the strength of increased reverse circulation drilling carried out by the Ontario division and the increased core drilling revenues in the Colombia division. Underground drilling increased by 67% during the six month period ending December 31, 2011 to $4.44 million as compared to $2.65 million during the comparable period in fiscal 2011. The increase came primarily from underground drilling operations in Ontario, Atlantic and Albania divisions.
Direct costs for the six months ended December 31, 2011 were $23.68 million compared to $15.63 million in the comparable period in fiscal 2011. Gross margins for the six months ended December 31, 2011 were 24% compared to 25% during the six months ended December 31, 2010. The lower margins are attributed to increased wages primarily in Ontario and Pacific divisions and are expected to be recovered in future periods through price increases.
General and administrative expenses increased by approximately 21.5% or $643,885 from $3.0 million in the first six months of fiscal 2011 to $3.6 million in the first six months of fiscal 2012. The increase is consistent with a generally higher level of overall business activity and a direct result of increased travel costs, increased professional fees, higher administration costs in the international divisions and increased costs incurred in securing new credit facilities.
General and administration includes stock based compensation expense in the amount of $6,500 in the first six months of 2012 compared to $23,033 in the first six months of 2011.
Net income for the first six months of fiscal 2012 was $1.96 million compared to net income of $590,856 earned in the comparable period of fiscal 2011, an increase of 232%.
Cash flow from operations (before changes in non-cash operating working capital items) was $2.58 million during the first six months of fiscal 2012, compared to $1.85 during the first six months of fiscal 2011.
The mineral drilling industry is dependent on demand for and supply of precious, base and strategic metals as well as precious stones. Demand and supply factors for these commodities can change dramatically up and down, as we have witnessed in the past, causing dynamic shifts in the supply of drills and drilling personnel from under supply to over supply. The financial stress in European financial credit markets, as well as significant global currency and economic shifts, have caused substantial uncertainty in the global financial markets. While this uncertainty has not caused major changes in the non-ferrous metal markets, the Company remains very vigilante to any substantial market moves that can impact the demand for its services. Management has initiated comprehensive cost and spending controls, as well as risk management procedures throughout the Company. Senior management is focused on careful cash management, realignment of debt, high customer relations and high employee relations.
Stock Options Granted
The Company also announces that it has increased the total incentive stock options from 3,360,000 shares to 5,050,000 shares, which options exercise period shall expire June 30, 2014, under the terms of its Stock Option Plan, subject to the acceptance of the TSX Venture Exchange. Eight hundred and forty-five thousand (845,000) of these stock options are exercisable at $0.225 per share and the remainder are $0.25 per share. Subject to regulatory acceptance, the Company has also extended the expiry date of 3,300,000 options from June 30, 2012 to June 30, 2014. Fifty percent (50%) of the total 5,050,000 share options are exercisable at $0.225 per share and the balance are exercisable at $0.25 per share.
Further to the Company's announcement January 31, 2011, regarding the granting of a total of 400,000 incentive stock options to new employees and consultants, the Company reported incorrectly that these options were to expire on January 31, 2013. The correct expiry date for these options at the date of grant was June 30, 2012. As indicated above, the Company has extended the expiry date of these options, subject to regulatory acceptance, to June 30, 2014.
About Cabo Drilling Corp. (TSX VENTURE:CBE)
Cabo Drilling Corp. is a drilling services company headquartered in North Vancouver, British Columbia, Canada. The Company provides mining specialty drilling services through its Canadian divisions in Surrey, British Columbia; Montréal, Quebec; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling (Nevada) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Panama-Pacifico Corp. of Panama, Republic of Panama doing business as Cabo Drilling Colombia Corp.; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.
ON BEHALF OF THE BOARD
John A. Versfelt
Chairman, President and CEO
Further information about the Company can be found on the Cabo website (http://www.cabo.ca) and SEDAR (www.sedar.com).
This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Contact Information
Cabo Drilling Corp.
Sheri Barton, Corporate Communications
403-217-5830
Cabo Drilling Corp.
Mr. John A. Versfelt, Chairman, President & CEO
604-984-8894
ir@cabo.ca
www.cabo.ca