EDMONTON, ALBERTA--(Marketwire - Dec. 17, 2010) -
Fiscal 2010 Fourth Quarter and Annual Results - Highlights
- Fourth quarter revenues improved by 14.9% over the same quarter in the prior year
- Despite decrease in annual revenues by 15.6% from $106.0 million to $89.5 million, the Company increased its EBITDA by $3.7 million in the year as it reported positive EBITDA of $1.3 million in comparison to an EBITDA loss of $2.4 million in the prior year
- Annual operating costs decreased by 24.8% to $24.1 million versus $32.0 million in the prior year
- Annual basic and diluted loss per share of
.10 compared to loss of
.21 after normalizing for goodwill impairment charges in fiscal 2009
- Free cash flow was $4.9 million in the current year due to higher earnings and management of working capital
COMMERCIAL SOLUTIONS INC. ("Commercial" or "Company")(TSX:CSA)a leading Canadian distributor of bearings, power transmission equipment, oilfield, industrial, safety products today announced its financial results for the three-month and twelve-month periods ended September 30, 2010. A complete copy of the Company's report is available on the Internet atwww.sedar.com.
Financial highlights from fiscal 2010 are as follows:
For the three-month period ended September 30, 2010, Commercial reported revenue of $23.2 million compared to revenue of $20.2 million for the same period last year, representing a quarter-over-quarter increase of 14.9 percent. The Company reported a positive EBITDA of
.8 million in the quarter compared to EBITDA loss of $1.0 million in the same period last year. Net loss for the quarter amounted to
.6 million compared to net loss of $1.6 million during the fourth quarter of fiscal 2009.
For the twelve-month period ended September 30, 2010, Commercial reported revenue of $89.5 million compared to revenue of $106.0 million for the same period last year, representing a year-over-year decrease of 15.6 percent. EBITDA improved from a loss of $2.4 million in fiscal 2009 to earnings of $1.3 million during fiscal 2010.
Despite the lower revenues in the current fiscal year in comparison to the prior fiscal year, the Company reported a significant improvement in EBITDA. This is primarily due to the significant decrease in operating costs through the aggressive cost cutting measures initiated by management over the last two of years. Lower revenues in the current fiscal year were primarily due to the lower activity in first and second quarters in comparison to same periods in the prior year. Activity levels in all of the Company's primary markets have since shown growth. Revenues from the energy sector have increased as drilling activity levels in Western Canada has improved. The increase in the revenues is also attributable to the focused effort by the Company in increasing its top-line results. Sales and marketing programs include increased communication with Commercial's customers, focusing on the Company's ability to provide a "one-stop-shop" benefit through its breadth of product offerings. The decrease of $20.8 million during the first two quarters was partially offset by $4.2 million increase in revenues in the third and fourth quarters in fiscal 2010 in comparison to the same periods in the prior year.
Outlook
The Company's primarily industry sector is the energy sector in Western Canada. Commercial has a total of 23 branches in Alberta, British Columbia and Saskatchewan. There is renewed activity in these provinces particularly in the oilsands, conventional oil and gas (mainly oil), and forestry sectors. With oil prices having improved and stabilized and with the Alberta royalty rate decrease, activity at the Alberta oilsands has recently been rekindled and is expected to grow in the years ahead. We anticipate growth in both British Columbia and Saskatchewan as well due to British Columbia's vast shale gas deposits and development of Saskatchewan's resources including oil and potash. Additionally, the new technologies in the conventional oil industry could be important in recovering reserves in mature fields throughout Western Canada. This has the potential to attract many oil companies to invest in these provinces due to the attractive economics in producing oil in these regions.
Although management believes that the worst of the crisis is over and economic conditions are improving, Commercial does not anticipate a significant improvement in market conditions until the prices of natural gas and crude oil are sustained at higher levels. At current prices, Commercial's customers continue to be focused on improving their returns on capital investment through reducing their costs. This impacts Commercial's gross margin due to increased price competition. Further, employment rates in these provinces confirm that most companies continue to be cautious in substantial increases in capital investment.
Jim Barker, President and CEO of Commercial noted, "As the crisis evolved, Commercial remained focused on the recovery. In fiscal 2010, we returned to positive EBITDA after EBITDA losses in fiscal 2009. We also generated positive free cash flow which further strengthened our healthy balance sheet. With these accomplishments, we secured a new and improved senior asset-based lending facility over a term of three years effective October 8, 2010. Although the tough economic conditions significantly impacted our financial performance over fiscal 2009 and 2010, we believe that it has and will continue to provide us with an opportunity to innovate, create, develop and excel. Over the next months, we will once again strive to achieve ambitious goals leading to business growth. We recognize that the general economic conditions continue to be unsettled but discipline in business operations and commitment to customer requirements will be critical aspects of how we go forward. Our committed people providing customers with needed products will be the focus of all we do to navigate the times ahead and differentiate us from our competitors".