Cabo Drilling Corp. ("Cabo" or the "Company") (TSX VENTURE:CBE) reports results
for its fourth quarter and fiscal year ended June 30, 2012.
SELECTED ANNUAL HIGHLIGHTS
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Years Ended June 30$ (000's) 2012 2011 2010
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Revenue 58,951 43,420 28,986
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Earnings Before Interest,
Taxes, Amortization, Stock
Based Compensation and Other
Items (EBITDA) 6,383 2,646 1,546
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Net Income (loss) Before Taxes 1,524 (271) (2,208)
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Net Income (loss) After Taxes 1,655 (840) (1,496)
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Income per Share ($) (Basic and
Diluted) Before Interest,
Taxes, Amortization, Stock-
based Compensation and Other
Items (EBITDA) 0.09 0.04 0.03
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Income (loss) Per Share
(Weighted Average) 0.02 (0.01) (0.03)
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Cash Flow from Operations(i) 3,722 1,402 1,057
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Gross Margin (IFRS) % 18.2% 16.7% 13.7%
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Gross Margin adjusted % 22.7% 22.3% 25.3%
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Total Assets 42,428 41,356 33,992
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Total Liabilities 18,582 19,843 15,247
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Working Capital 12,723 8,239 5,744
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(i)before changes in non-cash working capital items
The Company reports:
-- Fiscal revenue for the year ended June 30, 2012, of $58.95 million, a
36% increase compared to $43.42 million in fiscal 2011, and quarterly
revenue for the 4th quarter of fiscal 2012 of $13.61 million, a 5%
improvement compared to $13.03 million in the 4th quarter fiscal 2011.
-- Fiscal 2012 income before interest, taxes, amortization, stock-based
compensation and other items ("EBITDA") of $6.38 million compared to
fiscal 2011 EBITDA of $2.65 million, resulting in fiscal 2012 EBITDA of
$0.09 per share compared to $0.04 per share in fiscal 2011, and 4th
quarter fiscal 2012 EBITDA of $293,734 compared to 4th quarter fiscal
2011 EBITDA of $426,004, resulting in 4th quarter fiscal 2012 EBITDA of
$0.00 per share and $0.00 per share in the 4th quarter of fiscal 2011.
-- Net income after taxes for fiscal 2012 of $1.66 million compared to a
net loss after taxes of $840,030 in fiscal 2011, resulting in fiscal
2012 net after tax income of $0.02 per share compared to a net after tax
loss for fiscal 2011 of $0.01 per share and an after tax loss for the
4th quarter of fiscal 2012 of $734,090 compared to a net after tax loss
for the 4th quarter of fiscal 2011 of $807,284, resulting in 4th quarter
fiscal 2012 net after tax loss of $0.01 per share and a net after tax
loss for 4th quarter fiscal 2011 of $0.01 per share.
-- Cash from operations, before changes in non-cash working capital items,
was $3.72 million for fiscal 2012 compared to fiscal 2011 cash from
operations of $1.40 million.
-- A current asset balance of $25.93 million and working capital of $12.72
million.
"Cabo Drilling generated record revenues for fiscal 2012 of $58.95 million,"
stated Mr. Versfelt, Cabo's President & CEO. "This represents a 36% increase
over the $43.42 million recorded in the comparable period in fiscal 2011. The
Company's quarterly gross revenue for the three months ended June 30, 2012 also
increased by 5% to $13.61 million compared to $13.03 million in the comparable
three month period in fiscal 2011."
"Gross margin, adjusted to include amortization, was 18.2% or $10.75 million in
fiscal 2012, as compared to 16.7% in fiscal 2011," commented Mr. Versfelt. "In
accordance with IFRS, amortization expenses of $2.62 million are included in
direct costs as compared to $2.48 million in fiscal 2011. Adjusted gross margin,
when amortization expense is excluded, is 22.7% in fiscal 2012, as compared to
22.3% in fiscal 2011. Gross margin was also negatively affected, in the fourth
quarter, by an inventory adjustment of $355,491."
"EBITDA improved to $6.38 million, or $0.09 per share, for the year ending June
30, 2012, from $2.65 million, or $0.04 per share, in fiscal 2011," stated Mr.
Versfelt. "EBITDA was negatively affected by the inventory adjustment in the
fourth quarter of fiscal 2012 and $241,720 in foreign exchange losses."
"The Company incurred $498,631 in non-recurring finance costs during the year,
and in the fourth quarter, the Company revised the fair value of the 1,500,000
shares of a public company received in September 2011, in settlement of a
debenture receivable in the amount of $669,111, to be equal to the settlement
amount of the debenture, and the reported gain of $710,989 was reversed," stated
Mr. Versfelt. "However, net income for fiscal 2012 was $1,655,203 compared to a
loss of $840,030 in fiscal 2011, which resulted in $0.02 earnings per share in
fiscal 2012 compared to a loss of $0.01 per share in fiscal 2011."
"Drill utilization increased to over 65% during the peak period in fiscal 2012
with approximately 60% of Cabo's revenues generated from gold related projects,
15% from copper, 11% from iron and the balance from other base metals,"
commented Mr. Versfelt. "Cabo Drilling continues to build a strong client base
within the mining and exploration industry, with its attention to strong
customer relations, and remains focused on being one of the safest and most
environmentally responsible drilling companies in the world."
"Overall, Cabo Drilling management expect average drill utilization in fiscal
2013 to remain near the 50% level, with gross margins at 25-26%, due to the
reduced demand for exploration drilling in the second half of calendar 2012,"
commented Mr. Versfelt. "For fiscal 2013 Cabo Drilling is budgeting gross
revenues of approximately $50-58 million and anticipates general and
administration expenses will remain in the $7 million range with average
amortization levels decreased to 10%."
Consolidated Annual Financial Results
Revenue for the year ending June 30, 2012 increased $15.53 million or 36% to
$58.95 million, compared to $43.42 million in fiscal 2011. The primary reason
for the increase is due to the increased demand for drilling worldwide. The
Latin America division increased activity with higher drill utilization in
Panama and additional drills in Colombia, increasing revenues by 93% to $17.04
million as compared to $8.82 million in fiscal 2011. The Canadian and USA
divisions recorded a 23% increase in revenues with higher revenues in all
Canadian divisions. Management expects international operations from its bases
in Panama, Colombia and Albania to continue to represent approximately 25-30% of
its total revenues in fiscal 2013.
Surface drilling revenues increased 35% from $33.26 million to $45.02 million
during fiscal 2012, compared to an increase of 17% in underground activity from
$6.55 million in fiscal 2011 to $7.68 million in fiscal 2012. This increase in
surface drilling is a result of increased revenues from all divisions during
fiscal 2012. Geotechnical drilling decreased by 35% during fiscal 2012, due to
restructuring in our Forages Cabo division.
Direct costs for the year ended June 30, 2012, were $48.20 million compared to
$36.18 million in the fiscal year ending June 30, 2011, as adjusted to include
depreciation in accordance with IFRS. The increase is a direct result of the
increased activity in fiscal 2012. Gross margin for the year ended June 30,
2012, were 18.2% compared to 16.7% during the fiscal year ending June 30, 2011.
The increased gross margin is a direct result of improvements to the Canadian
operations and increased revenue from the Company's international divisions.
Management restructuring in two of the Canadian operations is showing
improvements, with the full impact to be more evident in fiscal 2013.
In accordance with IFRS, $2.62 million of amortization expense of property,
plant and equipment is included in direct costs for the year ending June 30,
2012, as compared to $2.49 million in fiscal 2011. The increase is due to the
additional capital expenditures during the year.
General and administrative expenses increased by approximately 8%, or $532,247,
from $7.08 million in fiscal 2011 to $7.61 million in fiscal 2012. The increase
is a result of the higher bank fees, increased professional fees and stock based
compensation. Included in general and administration costs are several
non-recurring charges such as $20,000 bad debt expenses and approximately
$80,000 in bank fees and $42,100 in legal and professional fees incurred while
arranging additional financings.
The Company incurred a significant increase in finance costs during fiscal 2012
to $1.28 million as compared to $412,334 incurred during the year end June 30,
2011. Included in the current year costs are some non-recurring costs: $498,631
in non-recurring finance costs, $176,494 in fair value of bonus shares and
warrants from the debentures issued during the year and $603,285 in interest
costs as compared to $412,334 in fiscal 2011.
Net income for fiscal 2012 is $1.66 million compared to a net loss of $840,030
in fiscal 2011.
The Company's cash (cash and cash equivalents) position at June 30, 2012, is
$1.24 million compared to $102,723 at June 30, 2011. Included in the $1.24
million is $300,000 restricted cash held as security for a corporate credit card
facility.
Cash flow from operations (before changes in non-cash operating working capital
items) was $3.72 million during fiscal 2012, compared to $1.40 million during
fiscal 2011.
Consolidated Fourth Quarter Financial Results
Revenue for the three months ending June 30, 2012, increased to $13.61 million,
compared to $13.03 million in the comparable period in fiscal 2011 and compared
to $14.05 million in the third quarter of fiscal 2012. Revenues from the
Canadian divisions represented 71% of the revenues for the fourth quarter of
fiscal 2012, as compared to 77% during the fourth quarter of fiscal 2011.
Direct costs, adjusted to include amortization of capital assets for the three
month period ended June 30, 2012, were $11.75 million compared to $11.05 million
in the comparable period in fiscal 2011 and $11.46 million in the third quarter
of fiscal 2012. Gross margins for the three month period ended June 30, 2012,
were 13.7%, compared to 18.4% during the third quarter of fiscal 2012 and 15.2%
during the fourth quarter of fiscal 2011. The decrease is a result of higher
than normal costs incurred in preparation for the Summer and Fall 2012 drilling
season in the Pacific Division, the costs incurred for demobilizing drill
projects in Ontario and New Mexico, projects being shut down due to forest fires
in Ontario and political unrest in Colombia.
Amortization of property, plant and equipment for the three months ending June
30, 2012, increased to $637,193 compared to $592,608 during the fourth quarter
of fiscal 2011, and decreased compared to $664,994 in the third quarter of
fiscal 2012.
General and administration costs decreased to $2.10 million in the fourth
quarter of fiscal 2012 from $2.23 million recorded during the fourth quarter of
fiscal 2011. Included in general and administration during the quarter are
capital taxes for Panama, stock based compensation, higher bank fees incurred
from HSBC, additional legal costs on finalizing new credit facilities and
increased travel costs.
Net loss for the fourth quarter of fiscal 2012 was $734,090 compared to a net
loss of $807,284 in the fourth quarter of fiscal 2011. The fourth quarter net
income was negatively impacted by $1.07 million due to an inventory writedown of
$355,491 and the $718,193 loss on the Standard Gold Inc. shares.
The drilling services business is always challenging. In times of high demand,
like 2011 and the first half of 2012, good drill crews are difficult to recruit
and to retain at cost effective prices because many drilling company owners
and/or senior managers are prepared to pay unreasonable wages and bonuses. In
slower times, like the second half of 2012, good drill crews are available at a
more reasonable price; however, unless drilling companies have developed quality
relationships with well financed mining and exploration companies and/or mining
and exploration companies that are not prepared to compromise their ore reserve
or deposit development programs, thereby creating potential balance sheet
problems, they will begin to offer their services at less than healthy prices.
There is no easy formula to manage a drilling company, but good old fashioned
business practices, like quality customer relations, high respect for employees
and quality human relations, superb safety procedures and practises, careful
attention to the protection of the environment and community relations, plus
effective cost controls and management of equipment and drilling practices,
invoiced to the customer at a fair price and in an honest manner, will enhance a
drilling company's ability to grow profitably at all times.
About Cabo Drilling Corp. (TSX VENTURE:CBE)
Cabo Drilling Corp. is a drilling services company headquartered in New
Westminster, British Columbia, Canada. The Company provides mining specialty
drilling services through its Canadian divisions in Surrey, British Columbia;
Montreal, Quebec; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well
as Cabo Drilling (America) 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, those relating to worldwide demand for gold and base metals and
overall commodity prices, the level of activity in the minerals and metals
industry and the demand for the Company's services, the Canadian and
international economic environments, the impact of operational changes, changes
in jurisdictions in which the Company operates (including changes in
regulation), failure by counterparties to fulfill contractual obligations, and
other factors as may be set forth, as well as objectives or goals.
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.
Cabo Drilling (TSXV:CBE)
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