CALGARY, May 26, 2017 /CNW/ - Gemini Corporation
(GKX-TSXV) ("Gemini" or the "Company") today announced first
quarter 2017 results.
"The business environment in Western
Canada continues to be fiercely competitive and although
requests for proposals and bidding activity has been steady,
Gemini's win rate has not been as good as we had hoped. Our first
quarter was slower than expected", said Pete Sametz, Gemini's President and CEO.
"As we actively seek out new business opportunities and refine
our estimating process, our key challenge for the remainder of the
year continues to be securing new work with reasonable margins
while maintaining the excellent execution and client satisfaction
levels that were achieved in 2016. We have excellent employees who
are working very closely with key clients to support them in this
tough environment. We continue to manage our balance sheet
carefully and we are very pleased to announce the closing of a
$14 million credit facility for
working capital needs with our new financial partner, ATB
Financial."
FINANCIAL HIGHLIGHTS
|
Three months
ended
March 31,
|
($'000's)
|
2017
|
2016
|
Revenue
|
$6,718
|
$30,821
|
Gross profit
(loss)
|
(266)
|
2,278
|
Net loss
|
(2,898)
|
(1,454)
|
Net loss per share -
basic and diluted
|
(0.04)
|
(0.02)
|
Adjusted
EBITDA(1)
|
(2,595)
|
(841)
|
|
|
|
($'000's)
|
March
31,
2017
|
December
31,
2016
|
Working
capital(1)
|
$4,414
|
$8,334
|
Working capital
ratio(1)
|
1.6:1
|
1.8:1
|
Total
assets
|
16,932
|
23,089
|
Total
equity
|
4,860
|
7,741
|
Total liabilities to
equity ratio(1)
|
2.5:1
|
2.0:1
|
|
|
|
(1)
|
Non-IFRS financial
measure
|
|
FIRST QUARTER 2017 OVERVIEW
- For the three months ended March 31,
2017, Gemini recorded revenue of $6.7
million, a decline of 78% or $30.8
million from the same period in 2016. The Ponoka fabrication facility was inactive
during the first quarter due to lack of significant projects,
compared to the same period last year where modules were being
constructed related to the Alberta Northwest Upgrader and Fort
Hills projects.
- Adjusted EBITDA for the three months ended March 31, 2017 was a loss of $2.6 million, compared to a loss of $0.8 million in the first quarter of 2016.
- Administrative expenses for the quarter decreased by
$0.9 million, a reduction of 27%
compared to the same period in 2016. This reduction is a result of
significant cost cutting measures and restructuring undertaken in
2016, the impact of which are now being realized.
- Cash flow from operations was $0.5
million for the quarter. By comparison, Gemini's operations
used $3.0 million of cash during the
same period in 2016.
- Gemini ended the quarter with $1.8
million cash, up slightly from the year end cash balance of
$1.6 million.
- On March 30, 2017, the Company
signed a term sheet for a two year committed senior secured
revolving credit facility of up to $14
million plus an accordion feature for an additional
$4 million as needed. The new credit
facility was finalized and put in place effective May 25, 2017.
- The Company completed a corporate amalgamation effective
April 1, 2017. The amalgamation
allows for the simplification of back office processes and
realization of future cost savings and operating efficiencies.
OUTLOOK
The Company and industry adjusted to the reduced activity levels
in 2016 and now Gemini is working to grow cash flow, personnel,
project quality and capability, while competing fiercely for new
business. The industry optimism that existed at the beginning of
the year, based on improved economic activity, an increase in
capital budgets and improved energy prices, has now given way to
the sober realization that 2017 is recovering slower than
anticipated.
Today the Company finds itself dealing with an environment where
the lowest cost is the primary consideration when awarding new
work. Requests for proposals and bidding activity remains high,
however, the Company found it challenging to secure new work at
profitable levels in the first quarter of the year despite positive
feedback on our technical submissions and execution strategies.
Having strengthened the balance sheet and secured a new credit
facility, the Company will continue to balance the desire for work
volume with a cautious risk management approach that seeks to avoid
exposing the Company to financial loss by bidding unprofitable or
excessively risky projects.
Gemini continues to focus on business development, rigorous
estimating and controls, operational excellence and execution
processes to find innovative ways to bring value to clients and
secure new backlog. Interestingly, many of the proposals and
requests for pricing are also associated with work not expected to
commence until 2018 as clients attempt to lock in today's low
prices for next year's work.
The Company is now expecting revenue for 2017 to be less than
2016 but expects activity to pick up in the second half of 2017
into 2018. Gemini's fabrication shop in Ponoka has recently started to ramp up
activity with key long-term clients. Environmental and maintenance
services are also seeing increased activity, while construction
activity levels in the Fort
Saskatchewan region remain challenging.
The Company experienced a higher than normal level of attrition
in the first five months of 2017 and has decided to defer the
replacement of all non-essential positions until backlog levels
improve. On an annualized basis, approximately $2.1 million of salary costs have been eliminated
through attrition and we expect to realize further savings in the
second quarter. Processes have also been established to ramp back
up quickly as necessary. The Company is confident that the quality
and dedication of Gemini's personnel are best of class and our
accessibility to the local workforce will allow us to bring on new
personnel as required.
While the economic environment for Gemini remains highly
competitive, the Company continues to have confidence in the teams'
ability to secure new work with reasonable margins while
maintaining the excellent execution standards and client
satisfaction that was achieved in 2016. Gemini is fortunate to have
solid, trusted relationships with a group of active, growth
oriented clients that we value highly.
MD&A AND FINANCIAL STATEMENTS
The 2017 Q1
Management's Discussion and Analysis, and the Consolidated
Financial Statements provide a detailed explanation of Gemini's
operating results for the three months ended March 31, 2017. Gemini's 2017 first quarter will
be filed on SEDAR at http://www.sedar.com by May 26, 2017.
FORWARD-LOOKING STATEMENTS AND NON-IFRS FINANCIAL
MEASURES
This news release may contain forward looking
information that represents Gemini's expectations, estimates or
beliefs concerning, among other things, the timing of any recovery
in oil and gas prices, the recovery of the markets for the
Company's products and services, future operating results and
various components thereof, or Gemini's future economic
performance. All statements other than the statements of historical
fact may be forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
"may", "will", "should", "expects" and similar expressions. The
estimates and beliefs contained in such forward-looking statements
are based on management's assumptions relating to Gemini's
performance and competition within the sectors in which it
competes, the continuation of the current regulatory and tax
regimes in the jurisdictions in which Gemini operates, and
necessarily involve known and unknown risks and uncertainties,
including risks and assumptions relating to client service demand,
field service costs, labour rates and other factors that may cause
actual performance and financial results in future periods to
differ materially from any projections of future performance or
results expressed or implied by such forward-looking statements.
Accordingly, readers are cautioned that events or circumstances
could cause results to differ materially from those predicted or
suggested. Gemini does not undertake to update any forward-looking
information in this document whether as to new information, future
events or otherwise.
This news release refers to certain Non-IFRS financial measures
that are not determined in accordance with International Financial
Reporting Standards ("IFRS"). The measures used are "backlog",
"working capital", "working capital ratio" and "adjusted EBITDA".
These measures are used by our management to assist in making
operating decisions and assessing performance. While we calculate
these measures consistently from period to period, they likely will
not be directly comparable to similar measures used by other
companies because they do not have standardized meanings prescribed
by IFRS. See the "Non-IFRS Measures" section of the March 31, 2017 MD&A. Investors are encouraged
to evaluate each adjustment and the reasons Gemini considers it
appropriate for supplemental analysis. Investors are cautioned,
however, that these measures should not be construed as an
alternative to net earnings determined in accordance with IFRS as
an indication of Gemini's performance. The forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement.
ABOUT GEMINI
Gemini operates as an integrated project
solutions company focused on energy and industrial facilities.
Gemini offers services on either a stand-alone basis or in a
combination, integrated to provide our clients with a single point
of accountability. The Company will be celebrating its 35th
anniversary in 2017.
Through an all-in commitment from every individual in the
Company, Gemini is determined to change the client perspective of
how project services should be delivered. The Company is uniquely
qualified to provide a full spectrum of modular and integrated
project solutions, leveraging a philosophy and approach that
directly aligns with its clients' business objectives.
The Company is capable of servicing its clients through the full
life cycle of their assets; from asset acquisition, environmental
and regulatory support, engineering, fabrication, construction,
maintenance, turnarounds, de-commissioning, reclamation and
remediation. Gemini provides full project management to integrate
any or all of these services. The Company's principal target
markets are oil and gas, heavy oil, oil sands, midstream and
pipeline facilities, hydrocarbon processing, power and other
industrials.
The Company operates in western Canada and is headquartered in Calgary with offices in Ponoka, Fort
Saskatchewan and Fort St.
John.
Shares of Gemini trade on the TSX Venture Exchange under the
symbol "GKX". For more information about the Company and its
services, go to www.geminicorp.ca.
The TSX Venture Exchange does not accept responsibility for
the adequacy or accuracy of this release.
SOURCE Gemini Corporation