CALGARY, Alberta, May 20, 2021 (GLOBE NEWSWIRE) -- CORDY OILFIELD SERVICES INC. (the “Corporation” or “Cordy”) (CKK: TSX-V) released today its first quarter results.
ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS
Three months ended March 31,
Direct operating expenses
General and administrative expenses
Gain on disposal
Earnings before tax
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.
The first quarter of 2021 included multiple challenges. Most notably, risk and uncertainty surrounding the ongoing COVID-19 pandemic (“COVID-19”) continued to impact spending of customers in the oil and gas industry, which saw drilling activity, on a rig released basis, drop over 30% compared to Q1-2020. Additionally, in early January, the announcement of new workforce restrictions caused several major projects significant delays when retuning to work after the holiday season.
The decrease in activity described above had a direct impact on Cordy’s top line revenue, while exposure to the unanticipated delays on certain major projects, caused cost overruns that put strain on the Company’s first quarter margins.
First Quarter Financial Summary:
For the three month period ended March 31, 2021, Cordy’s consolidated revenues decreased by 15 percent, from the comparative period in 2020. Cordy’s consolidated operating earnings decreased $0.7 million or 48 percent from the comparative period. Cordy’s net loss was $0.2 million for the three months ended March 31, 2021, as compared to net income of $0.9 million for the three months ended March 31, 2020, representing a 118% decrease over the prior period.
As a percentage of revenue, operating earnings decreased to 11 percent of revenue in 2021 as compared to 19 percent in 2020.
The Canadian Emergency Wages Subsidy (“CEWS”) for the three months ended March 31, 2021 was $0.6 million where
$0.5 million was recognized as reduction to Direct Operation Expenses (“DOE”); and
$0.1 million was recognized as reduction to general and administrative (“G&A”) expenses.
The risk and uncertainties around the immediate and prolonged effects of COVID-19 remain as demonstrated by the decrease in revenue and, margin compression, realised by Cordy in the first quarter as compared to 2020. The Company will continue to face COVID-19 related challenges as it navigates economic fallout from the government restrictions, the availability and uptake of vaccinations, and stricter lock downs, due to COVID-19 case surges.
As the Company progresses though its second quarter, the risks and uncertainty around COVID-19 remain front and center. Western Canada, particularly Alberta, has seen a surge in COVID-19 cases (the “Third Wave”) and a new level of aggressive restrictions to flatten the curve.
Over the near term, despite contending with challenges associated with the Third Wave, Management sees existing projects continuing to progress through the second quarter and contributing to a year-over-year improvement compared to Q2-2020. With the availability of vaccinations and vaccination uptake continuing to increase, coupled with aggressive restrictions now in place, the Third Wave will subside. The Company is optimistic that its current projects will continue, and the year-over-year improvement it’s forecasting in Q2 will continue though the third quarter.
Visibility into the fourth quarter and beyond is still highly variable, but the Company is seeing optimism from its Oil and Gas customers, suggesting an increase in spending for the balance of 2021 and 2022 winter drilling season.
Management continues to evaluate its growth opportunities and access to growth capital, while aggressively managing its costs and focusing on the health and safety of its employees, contractors, and customers, ensuring it is doing its part in mitigating the spread, and limiting the impact of COVID-19.
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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.