Q3 2016 Corporate Restructuring and OutlookMD&A Outlook from Q3 2016
The third quarter of 2016 marks a big milestone for Cordy following the announcement of a new executive management team, the subsequent completion of a rights offering for $1.3 million of proceeds and the announcement of up to an additional $1.0 million private placement. The funds raised in the rights offering, potential funds from a private placement and friendly lending terms from our major equipment financer will help provide a runway into 2017 and opportunity for new market share as competitors are unable to survive the prolonged downturn. As the economy and the oil and gas industry adjust to the reality of low commodity prices, Cordy continues to cut costs, push sales and position itself to be a major player in these new market realities. Although revenue continues to be impacted, margins continue to improve as management’s strategy, centred around a focus on cost discipline and right sizing the business, is coming to fruition. For the remainder of 2016, we anticipate a competitive environment, and continued pricing pressures; this will limit topline growth in Cordy’s business units. The Company will continue to rely on the Environmental Services segment’s diversity in the municipal and industrial services sector, until the Oil and Gas industry shows some signs of recovery, which management does not anticipate until the second half of 2017. Over the next six months Cordy will focus on increasing our utilization, which currently sits at 30% for the three months ended September 30, 2016, management will work to improve this to 65% over the coming winter season. Cordy will also continue to focus on debt repayment with cash from operations and continue discussions with our lenders on achieving better lending terms for Cordy.
I think the next quarterly report comes out in April so we want to be watching to see if they have increased the utilization rate for Q4 of 2016 higher than 30% which it sat at in Q3 of 2016.