CBE SENT THIS EMAILCabo Announces 2nd Quarter Results
North Vancouver, BC â?" Cabo Drilling Corp. (â?oCaboâ? or the
â?oCompanyâ?) (TSX-V:CBE) today reported results for its fiscal year
2011 second quarter ended December 31, 2010.
2nd QUARTER HIGHLIGHTS
(CDN
00s, except earnings per share)
3 months ending
Dec 31/10
3 months ending
Dec 31/09
6 months ending
Dec 31/10
6 months ending
Dec 31/09
Revenue
10,583
7,983
20,856
14,324
Earnings (Loss) Before Interest, Taxes, Amortization, Stock Based
Compensation and Other Items (EBITDA)
1,242
839
2,253
1,318
Net Earnings (Loss) Before Taxes
486
(147)
794
(611)
Net Earnings (Loss) After Taxes
393
(150)
591
(614)
Earnings (Loss) per Share ($) (Basic and Diluted) Before Interest,
Taxes, Amortization, Stock-based Compensation and Other Items
(EBITDA)
0.02
0.02
0.04
0.02
Earnings (Loss) per Share ($) (Basic and Diluted)
0.01
(0.01)
0.01
(0.01)
Cash from Operations*
985
729
1,853
1,117
Gross Margin %
26.1%
28.5%
25.1%
28.8%
Working Capital
6,271
6,076
6,271
6,076
*before changes in non-cash working capital items
The Company reports:
Increased quarterly revenue for the 2nd quarter fiscal 2011 of
$10.58 million, a 24.6% improvement compared to $7.98 million in the
2nd quarter fiscal 2010.
2nd quarter fiscal 2011 earnings before interest, taxes,
amortization, stock-based compensation and other items (EBITDA) of
$1.24 million compared to 2nd quarter fiscal 2010 earnings before
interest, tax, amortization, stock based compensation and other items
(EBITDA) of $839,383, resulting in 2nd quarter fiscal 2011 earnings
before interest, taxes, amortization, stock-based compensation and
other items of
.02 per share and
.02 per share in the 2nd quarter
of fiscal 2010.
Net before tax income for the 2nd quarter of fiscal 2011 of $486,772
compared to a 2nd quarter fiscal 2010 before tax loss of $147,386.
Net after tax earnings for the 2nd quarter of fiscal 2011 of
$393,132 compared to a net after tax loss for the 2nd quarter of
fiscal 2010 of $150,093, resulting in 2nd quarter fiscal 2011 net
after tax earnings of
.01 per share compared to a net after tax
loss for 2nd quarter fiscal 2010 of
.01 per share.
Gross margin percentage for the 2nd quarter fiscal 2011 was 26.1%
compared with a gross margin of 28.5% in 2nd quarter fiscal 2010 and
24.0% in the 1st quarter of fiscal 2011.
Cash from operations, before changes in non-cash working capital
items, was $985,199 for the 2nd quarter fiscal 2011 compared to 2nd
quarter fiscal 2010 cash from operations of $728,657.
A current asset balance of $20.41 million and working capital of
$6.3 million.
Total assets of $35.64 million and total liabilities of $15.87
million.
â?oCabo has now recorded three consecutive quarters of increased
revenues,â? stated Mr. Versfelt, Caboâ?Ts President & CEO.
â?oRevenue for the quarter ending December 31, 2010 increased $2.60
million or 33% to $10.58 million, compared to $7.98 million in the
comparable period in fiscal 2010. Revenues for the first six months
of fiscal 2011 were $20.86 million, a 46% improvement compared to the
first six months of fiscal 2010.â?
â?oGross margin improved from 24.0% in the first quarter of fiscal
2011 to 26.1% in the second quarter of fiscal 2011,â? added Mr.
Versfelt. â?oManagement expects gross margins in the 25-27% range for
the balance of fiscal 2011.â?
â?oDrilling activity and revenues in all regions where Cabo Drilling
is working has been steady with average utilization at approximately
44% for the quarter,â? said Mr. Versfelt. â?oManagement expects
utilization to increase to around 60% in the fourth quarter of fiscal
2011.
â?oEBITDA improved quarter over quarter to $1.24 million for the
second quarter ending December 31, 2010 from $839,383 in the second
quarter of fiscal 2010 and from $1.01 million in the first quarter of
fiscal 2011,â? noted Mr. Versfelt. â?oBoth before and after tax
earnings of $476,097 and $393,132 respectively for the second quarter
of fiscal 2011 were the highest earnings that the Company experienced
since the December 31, 2008 quarter.â?
Second quarter ended December 31, 2010
Revenue for the quarter ending December 31, 2010 increased $2.60
million or 33% to $10.58 million, compared to $7.98 million in the
comparable period in fiscal 2010. The primary reason for the increase
is the increased activity in Canada and the international activity in
Colombia, Panama and Albania. All Canadian divisions recorded
increases in the second quarter of fiscal 2011 as compared to the
second quarter of fiscal 2010.
The Company recorded a 3% increase in revenues comparing the $10.27
million recorded in the first quarter of fiscal 2011 to the $10.58
million in the second quarter of fiscal 2011.
Surface drilling revenues increased 104% from $4.21 million in the
second quarter of fiscal 2010 to $8.62 million during the second
quarter in fiscal 2011. Underground activity decreased from $1.99
million in the second quarter of fiscal 2010 to $1.57 million during
the comparable period in fiscal 2011. The increased activity in
surface revenues was a result of several new multi-drill programs in
the Pacific and Ontario Divisions compared to fiscal 2010 and the
addition of the second drill in Colombia. Underground revenues
decreased as a result of the less than normal activity during the
quarter in the Ontario Division. Geotechnical drilling increased by
166% during the second quarter of fiscal 2011, due to increased
demand in the Montreal Division for such services.
Direct costs for the quarter ended December 31, 2010 were $7.82
million compared to $5.71 million in the quarter ended December 31,
2009. The increase is a direct result of the increased drilling
services activity in fiscal 2011. Gross margin for the quarter ended
December 31, 2010 was 26.1% compared to 28.5% during the quarter
ending December 31, 2009. The decreased gross margin is a direct
result of increased pricing pressures experienced in the expanding
markets. Field wage costs increased without a corresponding increase
in prices for drilling and the Company experienced higher operating
costs in the Ontario and Pacific Divisions primarily due to our
clients experiencing technical difficulties. Management expects gross
margins to remain in the 25% to 26% range during fiscal 2011.
General and administrative expenses increased by approximately 5.7 %
or $82,088 from $1.43 million in the second quarter of fiscal 2010 to
$1.52 million in the second quarter of fiscal 2011. The increase from
the second quarter of fiscal 2010 is a direct result of increased
salary costs of 5%, and some additional travel and marketing costs
when comparing the second quarter of fiscal 2011. General and
administration costs represent 14% of revenues during the second
quarter of fiscal 2011 as compared to 18% in the second quarter of
fiscal 2010.
An increase in general and administration costs of $59,216 from $1.46
million incurred in the first quarter of fiscal 2010 as compared to
the $1.52 million in the second quarter of fiscal 2011 is largely due
to increased travel during the second quarter of fiscal 2011.
Amortization of property, plant and equipment for the quarter ending
December 31, 2010 decreased by $199,700 to $629,709 during the second
quarter of fiscal 2011 as compared to $829,409 in the comparable
period in fiscal 2010. The decrease in amortization expense on the
drilling equipment is due to the change in estimated life of our
drill fleet. This change effectively extends the amortization period
by three years for the drilling equipment.
EBITDA increased to $1.24 million in the second quarter of 2011,
compared to $839,383 in the same period of the prior year, an
increase of $402,211, or 48%, a result of a increased revenues.
EBITDA in the second quarter of fiscal 2011 represents 12% of sales,
compared to 11% in the previous comparable period in fiscal 2010.
Net income for the second quarter of fiscal 2011 was $393,132
compared to a net loss of $150,093 in the second quarter of fiscal
2010 and a net income of $197,544 during the first quarter of fiscal
2011.
The Companyâ?Ts cash (cash and cash equivalents) position at December
31, 2010, is $689,316 compared to $43,502 at June 30, 2010. Short term
investments and marketable securities increased $47,940, from $37,560
at June 30, 2010, to $85,500 at December 31, 2010. The increase can
be attributed to the acquisition of $65,000 of marketable securities
as payment of an outstanding receivable. At December 31, 2010, the
balance of $85,500 consists of shares in Canadian public
corporations.
Accounts receivable increased by $363,124 or 5% to $7.25 million at
December 31, 2010 from $6.89 million at June 30, 2010. The increase
is primarily due to increased activity during the first six months of
fiscal 2011.
Property, plant & equipment decreased to $12.64 million at December
31, 2010 from $12.74 million at June 30, 2010, a decrease of $95,619
during the first six months of fiscal 2011. The decrease is largely
due to amortization and taking into account a $130,205 in capital
expenditures. The Company is budgeting for an increase in the
utilization of its fleet without significant capital expansion in
fiscal 2011. The Company invested over $4.54 million in new property
plant and equipment during fiscal 2009 and 2010. This will favourably
position the Company in the present drilling cycle with a modernized
and upgraded drill fleet.
Cash flow from operations (before changes in non-cash operating
working capital items) was $985,199 during the 2nd quarter of fiscal
2011, compared $728,657 in the 2nd quarter of fiscal 2010.
Consolidated Financial Results for six months ending December 31,
2010
Revenue for the six months ending December 31, 2010 increased
approximately 46% to $20.86 million, compared to $14.32 million in
the comparable period in fiscal 2010. All divisions have shown
increased revenues during this period with the Pacific Division and
new operations in Colombia leading the way. Revenues from our
international divisions continue to represent a significant part of
our operations with 23% of revenues from the international divisions,
although this is down in percentage terms, by 3%, compared to last
year.
Direct costs for the six months ended December 31, 2010 were $15.63
million compared to $10.21 million in the comparable period in fiscal
2009. Gross margins for the six months ended December 31,2010 were
25.1% compared to 28.8% during the six months ended December 31,
2009. The overall lower margins are a result of lower margins earned
on projects in the Ontario and Pacific Divisions, primarily because
of increased wages in those areas, that could not be passed on to the
clients.
General and administrative expenses increased by approximately 6.2%
or $173,855 from $2.80 million in the first six months of fiscal 2010
to $2.97 million in the first six months of fiscal 2011. The increase
is a direct result of increased travel costs and higher
administration wage costs in the Pacific Division due to the addition
of new people.
Net income for the first six months of fiscal 2011 was $590,676
compared to a net loss of $613,588 recorded in the comparable period
of fiscal 2010.
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 two years,
causing dynamic shifts in the supply of drills and drilling personnel
from under supply to over supply and back to under supply. Management
has put in place comprehensive cost and spending controls, as well as
risk management procedures throughout the Company. Senior management
is focused on careful cash management, reduction of debt, high
customer relations and high employee relations.
About Cabo Drilling Corp. (TSX-V: CBE)
Cabo Drilling Corp. is a drilling services company headquartered in
North Vancouver, British Columbia, Canada. The Company provides
mining related and specialty drilling services through its Canadian
divisions in Surrey, British Columbia; Montréal, Quebec; Kirkland
Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling
(Panama) Corp. of Panama, Republic of Panama; Balkan States Drilling
SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc.
The Companyâ?Ts 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
â?oJohn A. Versfeltâ