CALGARY, Aug. 18, 2017 /CNW/ - Gemini Corporation
(GKX-TSXV) ("Gemini" or the "Company"), an integrated project
solutions company focused on energy and industrial facilities,
today reported its financial results for the three and six months
ended June 30, 2017. All financial
figures are expressed in Canadian dollars.
"After a challenging start to the year, in the second quarter we
won $15 million in new business and
increased our revenue backlog to $33
million. That said, the business environment in Western Canada continues to be fiercely
competitive which is having an ongoing impact on gross profit
margin", said Pete Sametz, Gemini's
President and CEO.
"In response to market conditions, our team embarked on a
disciplined cost containment program in 2016 that allowed us to
decrease general and administrative expenses by 61% or $3.3 million year-over-year. This will help us
compete on new projects and also allowed us to contain and decrease
our losses on a year-over-year basis in the face of lower revenue
and gross profit. We have also bolstered our financial capacity
with a two-year committed senior secured revolving credit facility
of up to $14 million with an
additional $4 million accordion."
FINANCIAL HIGHLIGHTS
$'000's
|
Three months
ended
June
30
|
Six months
ended
June
30
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
13,582
|
29,242
|
20,300
|
60,063
|
Gross
profit
|
297
|
2,942
|
31
|
5,220
|
Net loss
|
(2,212)
|
(2,972)
|
(5,110)
|
(4,426)
|
Net loss per share -
basic and diluted
|
(0.03)
|
(0.04)
|
(0.07)
|
(0.06)
|
Adjusted
EBITDA(1)
|
(1,505)
|
(779)
|
(4,100)
|
(1,620)
|
$'000's
|
June 30,
2017
|
December 31,
2016
|
Working
capital(1)
|
$7,927
|
$8,334
|
Working capital
ratio(1)
|
1.7:1
|
1.8:1
|
Total
assets
|
22,964
|
23,089
|
Tangible net
worth(1)
|
1,404
|
6,565
|
Total liabilities to
equity ratio
|
7.5:1
|
2.0:1
|
|
(1)
Non-IFRS financial measure
|
Second Quarter 2017 Highlights
- The Company announced $15 million
in new business in the second quarter from four major clients;
- The Company had a revenue backlog of $33
million as at June 30, 2017.
The Company has visibility into additional projects and will be
aggressively pursuing these opportunities;
- Revenue was $13.6 million for the
three months ended June 30, 2017, an
increase over the past two quarters but still down significantly
from historical revenue volumes. Revenue volume has shown steady
increases during each month this quarter and this trend is expected
to continue throughout the third quarter;
- Administrative expenses for the quarter declined 61% or
$3.3 million to $2.1 million compared with the same period in
2016 due to the disciplined cost cutting measures and restructuring
efforts that commenced in 2016 and continued into 2017;
- During the quarter, the Company bolstered its financial
capacity by signing 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; and
- The Company completed a corporate amalgamation effective
April 1, 2017, simplifying back
office processes and allowing for further cost savings and
operating efficiencies.
Outlook
As we mentioned last quarter, 2017 is recovering slower than
anticipated due to low energy prices and a lack of major
infrastructure projects in western Canada. As a result, the competitive
environment is one where lowest cost is the primary consideration
when awarding new work. The Company expects revenue for 2017 to be
substantially less than 2016, notwithstanding an increase in
activity in the second half of 2017.
While the economic environment for Gemini remains highly
competitive, the Company continues to have confidence in the team's
ability to secure new work and maintain 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.
The Company and industry adjusted to the reduced activity levels
in 2016 and now Gemini is working to grow cash flow, add qualified
tradespeople, maintain project quality and expand capability, while
competing for new business in a competitive marketplace. The cost
cutting and restructuring efforts that commenced in 2016 have
resulted in significant administrative cost savings which have not
only allowed Gemini to mitigate its losses, but will also allow the
Company to bid aggressively on new projects.
Requests for proposals and bidding activity remains high and the
Company enjoyed good success in the second quarter in securing a
reasonable level of new business. During the second quarter, the
Company secured new projects from four major clients resulting in
backlog as at June 30, 2017 of
$33 million.
The excess fabrication capacity in the Alberta market is still resulting in
unacceptably low gross profit margins and we do not see this
changing in the foreseeable future. Higher revenue volumes will be
needed to offset the reduction in gross profit margin. 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.
Gemini's fabrication shop in Ponoka has shown a steady increase in volume
month over month and we expect this to continue into the third
quarter based on our secured backlog. The Fort St John office is seeing seasonal
increases in work volumes and is expected to remain steady into the
fourth quarter. Construction and maintenance activity levels in the
Fort Saskatchewan, AB region
remain challenging. This will be a priority for the Company in the
third quarter as we concentrate business development and
recruitment efforts in this key market.
The Company has been successful in upgrading capabilities by
recruiting senior level professionals as needed to join our team of
dedicated Gemini personnel. As we have been experiencing over the
past several months, our accessibility to the local workforce has
allowed us to bring on new personnel on a steady and consistent
basis as new project awards are secured.
We are committed to investing in innovative and sustainable
construction practices to deliver value and efficiency to our
clients and drive greater profitability for Gemini.
MD&A AND FINANCIAL STATEMENTS
The 2017 Q2 Management's Discussion and Analysis, and the
Consolidated Financial Statements provide a detailed explanation of
Gemini's operating results for the three and six months ended
June 30, 2017. Gemini's 2017 second
quarter will be filed on SEDAR at http://www.sedar.com by
August 18, 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 June 30, 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 is 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