Trading Symbol: "EGD: TSX.V"
VANCOUVER, Nov. 21, 2016 /CNW/ - Energold Drilling Corp.
("Energold" or "the Company") announces third quarter revenue in
2016 of $18.9 million compared to
$15.6 million in the second quarter
of 2016 and $22.8 million in the
third quarter of 2015. While the mineral segment continues to
improve amidst a global recovery, the decrease in revenue
year-over-year is due to softer conditions during the period in the
energy and manufacturing segments.
The Company's gross margin in the third quarter of 2016 was
16.5% compared to 16.8% in the third quarter of 2015. EBITDA* in
the third quarter improved to $0.3
million, representing the first EBITDA positive quarter this
year and while modest, it further underscores management's belief
that the recovery in the mineral segment has firmly taken hold.
Management's focus on cost control has also played a role in the
return to EBITDA profitability and continued improvements are
expected going forward. The net loss per share for the period was
$0.06 compared to a net loss per
share of $0.08 in the same period in
2015.
Energold continues to maintain a strong and healthy balance
sheet with $12.3 million in cash and
$53.1 million in working capital,
which includes the effect of reclassifying the Company's
convertible debenture as a short-term liability. Management is
currently considering several options to replace the convertible
debenture which may include paying down a significant portion of
the debt or refinancing the debenture in its entirety.
Quarter-to-date
and year-to-date results comparison
|
|
|
|
|
For three months
ended September 30
|
For the year ended
September 30
|
CAD$ (000) except per
share amounts
|
2016
|
2015
|
2016
|
2015
|
Revenue
|
$
|
$
|
$
|
$
|
|
Mineral
|
10,729
|
10,371
|
28,218
|
22,562
|
|
Energy
|
4,353
|
6,562
|
14,195
|
23,951
|
|
Manufacturing
|
3,806
|
5,881
|
8,648
|
16,163
|
Total
Revenue
|
18,888
|
22,814
|
51,061
|
62,676
|
Net Loss
|
|
|
|
|
|
Mineral
|
(740)
|
(885)
|
(3,316)
|
(5,082)
|
|
Energy
|
(1,998)
|
(2,450)
|
(6,592)
|
(4,276)
|
|
Manufacturing
|
(451)
|
(368)
|
(3,368)
|
(1,346)
|
|
Corporate
|
(147)
|
(174)
|
(1,374)
|
(1,338)
|
Total Net
Loss
|
(3,336)
|
(3,877)
|
(14,650)
|
(12,042)
|
Loss Per
Share
|
Basic and
diluted
|
(0.06)
|
(0.08)
|
(0.29)
|
(0.25)
|
EBITDA*
|
278
|
182
|
(4,463)
|
(1,581)
|
|
|
|
|
As of September
30, 2016
|
As of December 31,
2015
|
Cash
|
12,303
|
13,561
|
Working
Capital
|
53,077
|
72,568
|
|
* EBITDA - Earnings
before interest, taxes, depreciation and amortization (see non-IFRS
(international financial reporting standards) financial measures in
Energold's MD&A).
|
MINERAL DRILLING DIVISION
Revenues increased to $10.7
million in the third quarter of 2016 compared to
$10.4 million in the comparable
period of 2015. Average revenue per meter in the period was
$162 compared to $160 in the same period of 2015. On a
year-to-date basis, revenues increased to $28.2 million in the first nine months of 2016
from $22.6 million in the comparable
period of 2015 as a result of a 19% increase in meters
drilled. Average revenue per meter for the first nine months
of 2016 was $163 compared to
$155 in the comparable period.
Management sees a considerable improvement for mineral drilling
services especially in Central
America. As capacity utilization rises, pricing will
continue to strengthen and margins will expand as the mineral
division strives to maintain low operating costs and improve
productivity. The gross margin for the third quarter of 2016 was
$1.8 million or 16.9% compared to
$1.2 million or 11.4% in the
comparable period in 2015. The margin for the nine months
ended September 30, 2016 was 12.8%,
an improvement over the comparable period of 5.3%. Drilling
programs have started to grow in size as the recovery continues and
margin expansion is expected to continue as costs remain low and
pricing becomes more firm in several key markets.
Meters
Drilled
|
|
|
|
|
|
|
Q3
2016
|
Q3 2015
|
2016
Annual
|
2015
Annual
|
Meters
Drilled
|
66,300
|
65,000
|
173,200
|
145,400
|
Drill Rigs
|
N/A
|
N/A
|
139
|
138
|
ENERGY DRILLING AND INFRASTRUCTURE DIVISION
Revenue for the third quarter of 2016 was $4.4 million compared to $6.6 million in the same period for 2015.
The majority of the decrease is due to major operators delaying
projects due to the continued low price of oil. Gross margin was
$0.7 million or 15.0% in 2016
compared to a $1.6 million or 24.9%
in the comparable period of 2015. The decrease in revenue
from the oil sands resulted in a lower gross margin as the division
still has certain fixed costs in its operations, although
significant efforts have been made to reduce costs over the last
six months.
Meters
Drilled
|
|
|
|
|
|
|
Q3
2016
|
Q3 2015
|
2016
Annual
|
2015
Annual
|
Infrastructure
|
11,100
|
-
|
18,800
|
-
|
Oil sands
coring
|
300
|
1,800
|
4,900
|
17,900
|
Seismic (Track and
Heli portable)
|
-
|
-
|
-
|
66,300
|
Water
wells
|
200
|
400
|
1,000
|
400
|
Geothermal &
geotechnical
|
29,800
|
64,000
|
102,300
|
238,00
|
TOTAL
|
41,400
|
66,200
|
127,000
|
322,600
|
On a year-to-date basis, Bertram drilled 9,300 meters in
Canada and approximately 98,900 in
the U.S. compared to 88,800 meters in Canada and approximately 233,800 in the U.S.
in 2015. Since its acquisition on March 4,
2016, Cros-man drilled 18,800 meters and 11,100 meters in
Q3-2016 in the infrastructure in Central
Canada.
Larger oil sands customers have started to refocus budgets on
resource delineation as they seek to expand their resources and
meet certain obligations made to continue development of the oil
sands region. The majority of this budget expansion is ideal for
the energy fleet core drilling fleet. Pricing however remains
depressed and recovery remains uncertain.
MANUFACTURING & WATER DRILLING – DANDO
Revenues for Dando in the third quarter of 2016 were
$3.8 million with a margin of 17.1 %
compared to revenues of $5.9 million
with a gross margin of 17.2% in the same period of 2015. Revenue is
typically weak in the first half of the year with deliveries
occurring towards the end of the year. Notwithstanding, several
orders that management had expected did not materialize; therefore
performance in this division has not met expectations.
Dando continues to receive growing interest for its products,
however revenue growth has been affected by a number of factors
including geopolitical uncertainty in many of the target markets,
difficulties experienced by the customers in raising funds and the
continuing downturn in the minerals market. As part of its
plans to service future growth, Dando continues to maintain an
inventory of additional small rigs for its stock. While this
strategy tends to increase costs in the short run, revenue
generally follows in later periods.
INDUSTRY OUTLOOK
The Company's mineral drilling division, which represents the
largest component of aggregate sales, continues to recover with
varying degrees of strength depending on the market. In certain
countries in Latin America, the
Company's man-portable, frontier style rigs are nearly fully
utilized for a seasonally strong mid-2017 period. Equipment is
being transferred from other parts of the world to the region to
meet demand in various markets. Pricing and volume of meters
drilled continue to recover as excess capacity associated with
strong safety records are seeing the strongest signs of the ongoing
recovery.
The energy market continues to face challenges although several
larger customers have indicated their plans to increase spending in
the oil patch in 2017 compared to 2016. The Company enjoys several
long-term contracts and agreements with major oil companies which
have led to ongoing work for the Company's fleet. Notwithstanding,
excess capacity still exists and certain rigs are being moved to
other markets for the time being. Meanwhile, efforts to reduce
costs are ongoing as pricing and profitability remains below
historical levels.
The infrastructure division continues to improve and despite its
exposure to energy, it has picked up several contracts for national
railway and telecom companies. The division offers a higher margin
revenue profile for the Company with some of the strongest areas of
growth over the next two years.
A conference call is planned for today, November 21, 2016 at 4:30
pm Eastern time. Dial-in numbers for the call are
416-640-5946 or 866-233-4585.
Energold Drilling Corp. is a leading global specialty drilling
company that services the mining, energy, water, infrastructure and
manufacturing sectors in approximately 25 countries. Specializing
in a socially and environmentally sensitive approach to drilling,
Energold provides a comprehensive range of drilling services from
early stage exploration to mine site operations for all commodity
sectors and has an established drill rig manufacturer, Dando
Drilling International, based in the United Kingdom.
On behalf of the Directors of Energold Drilling Corp.,
"Frederick W. Davidson"
President, CEO
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward-Looking Statements: Some statements in this news
release contain forward-looking information. These statements
include, but are not limited to, statements with respect to
proposed activities, work programs and future expenditures. These
statements address future events and conditions and, as such,
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the statements. Such factors
include, among others, the effects of general economic conditions,
a reduction in the demand for the Company's drilling services, the
price of commodities, changing foreign exchange rates, actions by
government authorities, the failure to find economically viable
acquisition targets, title matters, environmental matters, reliance
on key personnel, the ability for operational and other reasons to
complete proposed activities and work programs, the need for
additional financing and the timing and amount of expenditures.
Energold Drilling Corp. does not assume the obligation to update
any forward-looking statement.
SOURCE Energold Drilling Group