EDMONTON, ALBERTA — (Marketwire) — 12/17/12 —
Financial highlights from fiscal 2012 are as follows:
For the twelve-month period ended September 30, 2012, Commercial reported revenue of $115.7 million compared to revenue of $107.7 million for the same period last year, representing a year-over-year increase of 7.4 percent, as previously announced. EBITDA decreased by $0.4 million and net earnings improved by $0.04 million from the prior year.
For the three-month period ended September 30, 2012, Commercial reported revenue of $28.0 million compared to revenue of $29.2 million for the same period last year, representing a decrease of 4.0 percent. EBITDA for the quarter was $0.1 million in comparison to $1.5 million in the same period last year. The Company reported net loss of $0.3 million for the quarter compared to net earnings of $0.6 million during the fourth quarter of fiscal 2011.
The Company’s increase in revenues primarily relates to growth in the first two quarters of the fiscal year. During these periods, capital expenditures for rig building and rig utilization rates were higher. During the third quarter, although rig utilization rates were lower due to the wetter than normal weather conditions in Western Canada, the Company benefited from its strategic efforts in expanding its service to customers who provide well completion and production maintenance activities. These companies are less impacted by weather and therefore less seasonal. As well, oil and gas exploration activity in Saskatchewan strengthened which directly enhanced revenues generated by the Company’s service centers in this region. The growth in Saskatchewan also includes increases in revenues generated from the agriculture, construction, mining and manufacturing sectors. For the last quarter of the fiscal year, the Company experienced a decrease in revenues as rig utilization rates continued to be low due to continued wet weather over the summer. As well, exploration and production companies were dealing with numerous uncertainties including pipeline limitations, volatile crude oil prices and unpredictable capital markets. These factors contributed to curtailed or delayed capital spending which directly affected the Company’s revenues.
The Company experienced significant EBITDA improvement in the first two quarters of the year when revenue levels were high; however, the improvement in EBITDA was fully offset by the EBITDA decrease experienced during the last quarter. Fiscal 2012’s fourth quarter EBITDA was at the lowest quarter in the current year compared to 2011 fourth quarter EBITDA which was the highest for the 2011 year. The current year’s last quarter EBITDA decrease was due to a decrease in revenues coupled to an increase in operating expenses. The increase in operating expenses was primarily a result of increased personnel costs as Commercial adjusted staffing and wages levels to meet increased demand during the first half of the fiscal year. These levels were maintained to ensure that a quality workforce was retained for expected activity post spring break-up. Net earnings improved from the prior year despite lower EBITDA. This was primarily due to interest costs savings as the Company paid down the mezzanine debt as well as having lower tax expenses in the current year.
The Company is approaching fiscal 2013 purposefully and cautiously. A significant portion of the Company’s revenue is derived from the Western Canadian energy sector which is impacted by drilling activity in Western Canada. The current global economic activity is resulting in subdued expectations in Western Canada and this is anticipated to be sustained throughout fiscal 2013.
Commercial has organized its business to serve different sectors. In addition to the energy sector, the Company’s other primary markets include construction, mining, agriculture and forestry. Very strong agricultural commodity prices are expected to drive an increase in overall planting acreage in Alberta and Saskatchewan in the next fiscal year, subject to weather conditions. The forestry sector in British Columbia is also showing growth as recovery in the United States is experiencing accelerating housing starts. Growth in these other sectors and new growth in the United States energy sector will benefit the company as it continues developing its operations in Texas. These factors are important in mitigating the seasonal impact of lower revenues from oil drilling in Western Canada.
Jim Barker, President and CEO of Commercial noted, “This has been a unique year where we started out with high activity in the energy sector providing us opportunity to grow at double-digit rates. With the exception of the last quarter, we have delivered nine consecutive quarters of revenue increases. While the market continues to be uncertain, I am encouraged by the potential growth in some of the diverse sectors we serve. We are also increasing our market share in the energy sector through strong relationships with regional customers. With the recent announcement of a pending consolidation with a larger company, we believe it further enhances our capability to be successful in the competitive markets we serve.”