CALGARY, Nov. 28, 2017 /CNW/ - Gemini Corporation
(GKX-TSXV) ("Gemini" or the "Company") today reported its financial
results for the three and nine months ended September 30, 2017. All financial figures are
expressed in Canadian dollars.
"The business environment in Western
Canada remains challenged which is having an ongoing impact
on gross profit margin", said Chris
Podolsky, Gemini's CFO.
"In order to return the Company to profitability in 2018, the
decision has been made to immediately enter into a corporate
restructuring process. This restructuring will include changes to
the executive leadership team and significant reductions in
personnel resulting in a $6.0 million
annual reduction in overhead costs. The restructuring is driven by
a change in strategic direction in Alberta to enhance our focus on our field
operations business, comprised of fabrication, construction and
maintenance. Our Fort St John, BC
environmental office will continue to operate as a profitable
stand-alone location. On November 28,
2017, our Lender amended the financial covenants until
March 31, 2018 to reflect the new
plan put forth by Gemini, and has committed to working with
management to implement a new covenant package after that date that
will reflect the new state of the Company."
For more information about these developments, please see
today's press release entitled "Gemini Restructures Leadership and
Operations".
FINANCIAL HIGHLIGHTS
$'000's
|
Three months
ended
September
30
|
Nine months
ended
September
30
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
$14,559
|
$22,129
|
$34,859
|
$82,192
|
Gross
profit
|
(156)
|
6,258
|
(125)
|
11,478
|
Net loss
|
(3,248)
|
(1,227)
|
(8,358)
|
(5,653)
|
Net loss per share -
basic and diluted
|
(0.04)
|
(0.02)
|
(0.11)
|
(0.07)
|
Adjusted
EBITDA(1)
|
(2,397)
|
2,466
|
(6,497)
|
846
|
|
|
|
|
|
$'000's
|
|
|
September 30,
2017
|
December 31,
2016
|
Working
capital(1)
|
|
|
$(372)
|
$8,334
|
Working capital
ratio(1)
|
|
|
1:1
|
1.8:1
|
Total
assets
|
|
|
27,506
|
23,089
|
Tangible net
worth(1)
|
|
|
(1,843)
|
6,565
|
Total liabilities to
equity ratio
|
|
|
(52):1
|
2.0:1
|
(1)
|
Non-IFRS financial
measure
|
THIRD QUARTER 2017 HIGHLIGHTS
- $12 million in additional work
was awarded to Gemini in the third quarter from new and existing
clients;
- $26.4 million revenue backlog as
at September 30, 2017. The majority
of this backlog will be converted into revenue in the fourth
quarter of 2017 and the first quarter of 2018;
- Revenue for the quarter declined 34% or $7.5 million to $14.6
million compared with the same period in 2016 due to the
continued challenging market conditions;
- Administrative expenses for the quarter decreased 26% or
$0.9 million to $2.6 million compared with the same period in
2016 due to savings realized through ongoing cost containment
efforts begun in 2016;
- Adjusted EBITDA for the quarter was a loss of $2.4 million due to a decrease in revenue that
outpaced our cost containment efforts;
- Net Loss for the quarter was $3.2
million compared with a net loss of $1.2 million for the same period in 2016;
- Cash used in operations was $6.2
million for the quarter. By comparison, Gemini's operations
provided $4.7 million of cash during
the same period in 2016; and
- Gemini ended the quarter with $11.7
million drawn against the revolving line of credit, compared
with nil drawn as at September 30,
2016.
OUTLOOK
Economic recovery in the sectors we serve
continues to be slower than anticipated due to low energy prices
and a lack of new 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. Despite aggressive cost containment efforts
introduced in 2016, the lower revenue levels in 2017 require the
Company to further reduce overhead costs throughout the business in
order to achieve profitability.
While the economic environment for Gemini remains highly
competitive, the Company continues to have confidence and success
in the team's ability to secure new work. Gemini is fortunate to
have solid, trusted relationships with a group of active, growth
oriented clients.
The Company continues to maintain project quality while
competing for new business in a competitive marketplace. The
restructuring of Alberta
operations in the fourth quarter of 2017 will allow the Company to
bid competitively and profitably on new projects in line with
current market expectations.
Requests for proposals and bidding activity remain high and the
Company enjoyed success in the third quarter securing new business
with new and existing clients. Revenue backlog as at September 30, 2017 was $26.4 million.
The excess fabrication capacity in the Alberta market continues to put downward
pressure on gross profit margins and we do not see this changing in
the foreseeable future. Higher revenue volumes combined with the
planned reduction in G&A costs will help Gemini counter the
pressure on gross profit margin thereby restoring profitability.
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.
MD&A AND FINANCIAL STATEMENTS
The 2017 Q3
Management's Discussion and Analysis, and the Consolidated
Financial Statements provide a detailed explanation of Gemini's
operating results for the three and nine months ended September 30, 2017. Gemini's 2017 third quarter
will be filed on SEDAR at http://www.sedar.com by November 28, 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 September 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 in Western Canada and is headquartered in
Calgary with offices in
Ponoka, Fort Saskatchewan and Fort St. John. The Company is celebrating its
35th anniversary in 2017.
The Company provides fabrication, construction, maintenance,
environmental and regulatory support to customers involved in oil
and gas, heavy oil, oil sands, midstream and pipeline facilities,
hydrocarbon processing, power and other industrials.
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