CALGARY, Alberta, July 07, 2020 (GLOBE NEWSWIRE) -- CORDY OILFIELD SERVICES INC. (the “Corporation” or “Cordy”) (CKK: TSX-V) released today its first quarter 2020 results.
|Three months ended March 31,|
|($ 000's)||2020||2019||($) Change|
|Direct operating expenses|
|General and administrative expenses|
|Gain on disposal||-||-||-|
|Earnings before tax||871||291||580|
|Income tax expense||-||-||-|
|(1)Operating earnings is a non-IFRS term and is defined as earnings before interest, taxes, depreciation, amortization, see reconciliation on page 8 of this document.|
FIRST QUARTER ENDED MARCH 31, 2020
For the three month period ended March 31, 2020, Cordy's consolidated revenues increased by 48 percent, from the comparative period in 2019. Cordy's consolidated operating earnings increased $0.5 million or 49 percent from the comparative period. Cordy’s net income was $0.9 million for the three months ended March 31, 2020, as compared to $0.3 million for the three months ended March 31, 2019, representing a 199% increase over the prior period.
The Environmental Services segment saw a significant increase in revenue for the three month period ended March 31, 2020, from the comparative period in 2019. The increase was directly related to market share gains in the oil and gas sector. Cordy’s revenue consisted of 82 percent oilfield services (2019 – 43 percent) in Q1. Overall, operating earnings increased 49 percent. As a percentage of revenue, operating earnings remained at 19 percent in 2020 as compared to 19 percent in 2019.
Cordy’s results for the current quarter were consistent with our expectations, despite the major negative impact the COVID-19 virus had on economic activity, and Cordy’s business, starting in mid-March. The Company’s optimism and initial forecast for a much improved 2020 has quickly soured as measures enacted to prevent the spread of the virus have resulted in global business disruption with significant economic repercussions. These events are expected to continue to negatively impact Cordy’s business for the remainder of 2020.
Despite the COVID-19 related challenges, the Corporation believes its unique capital structure, whereas its debt agreements contain no financial covenants, and government programs, in particular the Canadian Emergency Wage Subsidy, greatly enhance its ability to manage through the economic uncertainty.
Management believes the overall impact and influence of the current economic conditions will continue to have a negative on impact on demand for the Company’s services for the remainder of 2020. The quantum of the impact remains highly uncertain and will be directly correlated to the capital spending of the Company’s customers. Management has taken several steps, including implementing aggressive operating cost reductions, revising terms of its lease and lending agreements, and participating in various government emergency relief programs, to improve its short-term liquidity and mitigate risks associated with the decrease in demand for the Company’s services.
Although the balance of 2020 is clouded with risk and uncertainty, there is optimism for the long term. Major infrastructure spending has been announced by provincial and federal governments that should have significant positive impacts on the western Canadian economy. Additionally, several major oil and gas pipelines, including Trans Mountain, Costal Gas Link and Keystone XL have cleared major hurdles and opposition. The service companies in our industry that can survive and recover from COVID-19, will be well positioned to benefit from these projects and participate in building a sustainable economic future in western Canada.
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Chief Executive Officer
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.
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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