Cabo Drilling Corp. ("Cabo" or the "Company") (TSX VENTURE:CBE) today reported
results for its fiscal year 2013 first quarter ended September 30, 2012.
1st QUARTER HIGHLIGHTS
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(CDN $000s, except earnings per Q1 - 2013 Q1 - 2012 FY 2012
share) Sept. 30/12 Sept. 30/11 June 30/12
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Revenue 13,843 16,929 58,951
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Earnings Before Interest, Taxes,
Amortization, Stock Based
Compensation and Other Items
(EBITDA) 1,829 3,054 6,383
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Net Earnings Before Taxes 769 2,263 1,524
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Net Earnings After Taxes 560 1,520 1,655
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Earnings per Share ($) (Basic and
Diluted) Before Interest, Taxes,
Amortization, Stock-based
Compensation and Other Items
(EBITDA) 0.02 0.04 0.09
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Earnings per Share ($) (Basic and
Diluted) 0.01 0.02 0.02
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Cash from Operations(i) 1,354 1,471 3,722
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Gross Margin % 21.3% 20.7% 18.2%
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Gross Margin % Adjusted(ii) 26.0% 24.6% 22.7%
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Working Capital (deficiency) 13,831 8,618 12,723
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(i) before changes in non-cash working capital items
(ii) gross margin adjusted to exclude amortization expense
The Company reports:
-- Quarterly revenue for the 1st quarter fiscal 2013 of $13.84 million, an
18% decrease compared to $16.93 million in the 1st quarter fiscal 2012.
-- 1st quarter fiscal 2013 earnings before interest, taxes, amortization,
stock-based compensation and other items of $1.83 million compared to
1st quarter fiscal 2012 earnings before interest, tax, amortization,
stock based compensation and other items (EBITDA) of $3.05 million,
resulting in 1st quarter fiscal 2013 earnings before interest, taxes,
amortization, stock-based compensation and other items of $0.02 per
share, compared to $0.04 per share in the 1st quarter of fiscal 2012.
-- Net before tax income for the 1st quarter of fiscal 2013 of $768,965
compared to before tax income for the 1st quarter fiscal 2012 of $2.26
million.
-- Net after tax earnings for the 1st quarter of fiscal 2013 of $559,737
compared to net after tax earnings for the 1st quarter of fiscal 2012 of
$1.52 million, resulting in 1st quarter fiscal 2013 net after tax
earnings of $0.01 per share compared to net after tax earnings for 1st
quarter fiscal 2012 of $0.02 per share.
-- Gross margin percentage for the 1st quarter fiscal 2013 was 21.3%,
with amortization included in direct costs, compared with a gross margin
of 20.7% in 1st quarter fiscal 2012 and 13.7% in the 4th quarter of
fiscal 2012.
-- Cash from operations, before changes in non-cash working capital items,
was $1.35 million for the 1st quarter fiscal 2013 compared to 1st
quarter fiscal 2012 cash from operations of $1.47 million.
-- A current asset balance of $25.0 million and working capital of $13.8
million.
-- Total assets of $40.5 million and total liabilities of $16.4 million.
"Cabo Drilling generated gross revenues of $13.84 million during the 1st quarter
of fiscal 2013," stated Mr. Versfelt, Cabo Drilling's President and CEO. "This
represents a decrease of 18% compared to the first quarter of fiscal 2012 and an
increase of 2%, compared to the fourth quarter of fiscal 2012."
"Gross margin, adjusted to include amortization, was 21.3% or $2.94 million in
first quarter of fiscal 2013, as compared to 20.7% in the first quarter of
fiscal 2012," reported Mr. Versfelt. "In accordance with IFRS, amortization
expenses of $655,113 are included in direct costs as compared to $651,969 in the
first quarter of fiscal 2012. Adjusted gross margin, when amortization expense
is excluded, is 26.0% in first quarter of fiscal 2013, as compared to 24.6% in
the first quarter of fiscal 2012."
"The Company recorded earnings of $559,737 during the 1st quarter of fiscal
2013, or $0.01 earnings per share compared to earnings of $1.52 million or $0.02
per share in the 1st quarter of fiscal 2012," noted Mr. Versfelt. "EBITDA for
the first quarter of fiscal 2013 (13.2%) was $1.83 million, compared to $3.05
million in the first quarter of fiscal 2012 (13.8% after adjustment for one time
gain). The $3.05 million in fiscal 2012 includes a one time gain on the
settlement of a debenture of $710,889."
"Cabo Drilling's working capital increased to $13.83 million during the first
quarter of fiscal 2013, from $12.72 million at the fourth quarter of fiscal
2012," commented Mr Versfelt. "Total liabilities decreased by $2.22 million
during the quarter to $16.36 million at September 30, 2012."
"Approximately 49% of revenues came from gold related projects, 17% from copper,
26% from iron and the remaining 8% from other base metals," stated Mr. Versfelt.
"Overall, Cabo Drilling Management expects average drill utilization in fiscal
2013 to remain near the 50%-55% level, with gross margins at 25-26%, prior to
amortization expenses included in direct costs," stated Mr. Versfelt. "General
and administration expenses should remain in the $7 million range and Cabo
Drilling is budgeting gross revenues of approximately $50-56 million for fiscal
2013."
First quarter ended September 30, 2012
Revenue for the quarter ending September 30, 2012, decreased $3.09 million or
18% to $13.84 million, compared to $16.93 million in the first quarter of fiscal
2012, and increased slightly from the $13.61 million in the fourth quarter of
fiscal 2012. The primary reason for the decrease is due to reduced demand for
drilling in the second half of calendar 2012. The Latin America division
decreased activity with lower drill utilization in Colombia, decreasing revenues
by 32% to $2.64 million, as compared to $3.87 million in the comparable period
in fiscal 2012. The Canadian and USA divisions also recorded a decrease in
revenues of 12% to $11.16 million in the first quarter of fiscal 2013, as
compared to $12.75 million in the first quarter of fiscal 2012. Management
expects the second quarter results to be lower in fiscal 2013 (October through
December 2012), as compared to fiscal 2012, but also expects a strong second
half of fiscal 2013 (January through June, 2013).
Surface drilling revenues decreased 23%, from $11.34 million in the first
quarter of fiscal 2012 to $8.73 million during the first quarter of fiscal 2013,
largely due to the early completion of drilling projects with major mining
clients, projects which should restart after 2013 budgets are approved and the
new drilling season begins. Revenues from reverse circulation programs decreased
by 34% to $2.15 million in the three months ending September 30, 2012, as
compared to $3.26 million in the comparable period in fiscal 2012 for similar
reasons. Underground drilling increased by 25% in the first quarter of fiscal
2013 to $2.68 million as compared to $2.15 million in the first quarter of
fiscal 2012, as a result of increased underground drill utilization.
Direct costs for the quarter ended September 30, 2012, were $10.90 million
compared to $13.42 million in the quarter ending September 30, 2011, as adjusted
to include depreciation in accordance with IFRS. The decrease is a direct result
of the decreased activity in the first quarter of fiscal 2013. Gross margins for
the quarter ended September 30, 2012, were 21.3% compared to 20.7% during the
quarter ending September 30, 2011. The increased gross margin is a direct result
of improvements in the Canadian operations and increased revenue from the
International divisions. Management restructured two of its Canadian operations,
which is beginning to result in improved margins and profitability.
In accordance with IFRS, $655,113 of depreciation expense of property, plant and
equipment is included in direct costs for the quarter ending September 30, 2012,
as compared to $651,969 in the quarter ending September 30, 2012.
General and administrative expenses increased by $7,222 from $1.757 million in
the first quarter of fiscal 2012 compared to $1.764 million in the first quarter
of fiscal 2013. During the quarter, the Company incurred $42,200 in divisional
restructuring charges, a bad debt allowance of $45,000 and an additional $62,400
of professional fees and consulting fees that did not occur in the first quarter
of fiscal 2012.
General and administration costs represent 13% of revenues during the first
quarter of fiscal 2013, as compared to 15% reported in the fourth quarter of
fiscal 2012, and 10% in the first quarter of fiscal 2012. Management expects
general and administration costs to remain around $1.70 million per quarter for
the remainder of fiscal 2013.
Net income for the first quarter of fiscal 2013 is $559,737 compared to a net
income of $ $1.52 million in the first quarter of fiscal 2012. The main
difference is the gain recorded in the first quarter of fiscal 2012 of $710,889
and lower revenues reported in the first quarter of fiscal 2013, as compared to
the first quarter of fiscal 2012.
The Company's cash (cash and cash equivalents) position at September 30, 2012,
is $1.86 million compared to $1.24 million at June 30, 2012.
Marketable securities decreased $10,620, from $338,698 at June 30, 2012, to
$328,078 at September 30, 2012. Marketable securities consist primarily of
1,500,000 shares in Standard Gold Inc. We have adjusted the value of our
holdings at September 30, 2012, as recorded in the comprehensive income
statement. At September 30, 2012, the balance of $328,078 consists of shares in
public corporations.
Accounts receivable decreased by $1.21 million or 12% to $9.16 million at
September 30, 2012, from $10.37 million at June 30, 2012. The decrease is
primarily due to reduced activity during the first quarter of fiscal 2013.
Property, plant & equipment decreased to $12.82 million at September 30, 2012
from $13.47 million at June 30, 2012, a decrease of $651,512 during the first
quarter of fiscal 2013. The Company purchased $130,764 of equipment during the
first quarter of fiscal 2013. The Company has a capital expenditure budget of
$1.80 million for fiscal 2013 with an emphasis on modernizing its drill fleet.
Cash flow from operations (before changes in non-cash operating working capital
items) was $1.35 million during the 1st quarter of fiscal 2013, compared $1.47
million in the 1st quarter of fiscal 2012.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Cabo Drilling Corp.
Sheri Barton
Corporate Communications
(403) 217-5830
Cabo Drilling Corp.
John A. Versfelt
Chairman, President and CEO
(604) 527-4201
(604) 527-9126 (FAX)
ir@cabo.ca
www.cabo.ca
Cabo Drilling (TSXV:CBE)
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