Geodrill reports 74% increase in revenue for first quarter 2012
TORONTO, May 14, 2012 /CNW/ - Geodrill Limited ("Geodrill" or the
"Company") (TSX: GEO), a leading West African based drilling company,
reported its financial results for the three-month period ended March
31, 2012. All figures are reported in US dollars (US$), unless
otherwise indicated. Geodrill's financial statements are prepared in
accordance with IFRS.
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Financial Highlights
| US$ millions (except earnings per share) |
For the three months ended March 31, 2012 |
For the three months ended March 31, 2011 |
| Q1-12 | Q1-11 | |
| Revenue | $21.66 | $12.48 |
| Gross profit | $11.52 | $8.84 |
| As percentage of revenue | 53% | 71% |
| Net Earnings | $4.43 | $4.87 |
| Earnings per share - basic | $0.10 | $0.11 |
| EBITDA(1) | $7.94 | $5.93 |
| EBITDA margin (adjusted)(2) | 37% | 31% |
| Notes: | |
| (1) | Please see "Non-IFRS Measures" below for additional discussion. |
| (2) | EBITDA margin was 47% of revenue in Q1-2011. The margin reflects the reduction in cost of sales associated with the reversal of $2.05M of VAT and salary taxes no longer considered to be an obligation of the Company. Without this impact, the adjusted EBITDA margin would have been 31% for Q1-2011. |
First Quarter 2012 Operational Highlights:
- Revenue up 74% to $21.66M;
- Increased rig fleet and rigs deployed from 21 in Q1-2011 to 28 in Q1-2012;
- Secured new drilling contracts with Goldstone Resources, Cardero Resources Corp., Taruga Gold Ltd., Romex Mining Corp., and Gondwana Gold Inc.;
- Deployment of one drill rig into Niger during the second quarter of 2012 and plans to re-enter Cote d'Ivoire during the third quarter of 2012;
- Strengthened management team with addition of Stephan Rodrigue, Business Development Manager;
- Completed 317,741 meters of drilling a 69% increase from Q1-2011; and
- Subsequent to the quarter-end, renewed the pre-payment agreement with Azumah Resources (ASX: AZM) ("Azumah") for a $3.0M advance in drilling services.
"We continue to generate industry-leading revenue per rig and
profitability. Our first quarter of this year reflects the strength of
our business model and geographic concentration in West Africa. With
rig demand continuing to exceed supply in the region, we are focused on
fully utilizing our increased capacity to gain larger market share in
our primary markets, Ghana and Burkina Faso, as well as extending our
reach into equally prospective neighbouring regions," said David
Harper, President and CEO of Geodrill Limited.
Financial Review
Revenue
Q1-2012 revenue increased 74% to $21.66M compared to $12.48M in Q1-2011.
The increase in revenue is attributable to new drilling contracts and
the deployment of 7 new drill rigs resulting in a 69% increase in the
number of meters drilled from 188,421 in Q1-2011 to 317,741 in Q1-2012.
Gross Profit
Gross profit increased 30% to $11.52M for Q1-2012 or 53% of revenue
compared to $8.84M or 30% for Q1-2011. The gross profit percentage for
Q1- 2012 was 53% compared to 71% for Q1- 2011. The decrease in the
gross profit percentage reflects the dissolution of the Cote d'Ivoire
operation in 2011, which triggered the positive resolution of VAT and
salary tax obligations that positively impacted gross profit by 17%.
The net effect of this positive resolution was a decrease in the cost
of sales in the Q1-2011 of $2.05M.
Selling, General and Administrative ("SG&A") Expenses
SG&A expenses were $5.30M in Q1-2012 compared to $3.94M for Q1-2011.
Costs increased due to inflation and also reflects costs of hiring,
training, and mobilization of management and support staff necessary to
accommodate growth and geographical expansion.
Depreciation and Amortization
Depreciation and amortization of property, plant and equipment increased
slightly to $1.71M for Q1-2012 compared to $1.02M during for Q1-2011 as
a result of additional drill rigs and property, plant and equipment
purchases.
EBITDA
EBITDA was $7.94M or 37% of revenue in Q1-2012, compared to $5.93M or
47% of revenue in Q1-2011. The decrease reflects the reduction in cost
of sales associated with the reversal of $2.05M of VAT and salary taxes
no longer considered to be an obligation of the Company. Without this
impact, the adjusted EBITDA margin would have been 31% for Q1-2011.
Net Earnings
Net earnings were $4.43M or $0.10 per share in Q1-2012, compared to
$4.87M or $0.11 per share for Q1-2011. The decrease reflects the
reduction in cost of sales associated with the reversal of $2.05M of
VAT and salary taxes no longer considered to be an obligation of the
Company. Without these changes, the net earnings for the 1st quarter
of 2011 would have been US$2.82M, being 23% of revenue, or US$0.07 per
Ordinary Share (US$0.06 per Ordinary Share fully diluted).
Cash from Operations
During the Q1-2012, the Company generated a positive operating cash flow
of $6.9M, compared to a negative operating cash flow of $4.17M incurred
in Q1-2011. Cash inflow in Q1-2012 from operating activities was driven
mainly by the general increase in revenues. These funds were used to
finance the advance payments for drill rigs ordered, increases in
inventories and trade receivables less the increases in payables due to
the expansion of the drill rig fleet. It is anticipated that cash
flows from operating activities will continue to be fully utilized to
fund growth.
The Company currently has 42,476,000 ordinary shares issued and
outstanding.
Outlook
The Company's business strategy is focused on continued growth through
the development and optimization of its service offering across
geographical regions and industry segments, as well through the
expansion of its customer base. To support this growth Geodrill has
added significant capacity through the acquisition of additional drill
rigs. All of the Company's drill rigs as at March 31, 2012, are
currently committed to contracts. With 28 of the Company's drill rigs
commissioned and being utilized on client sites, 3 drill rigs in
workshop undergoing modifications, 5 drill rigs in transit and 4 drill
rigs on order and with the supplier under manufacturing, (3 drill rigs
are expected to arrive in Ghana, of which 2 of them will be operational
in Q3-2012 and 1 in Q4-2012), the Company will be able to leverage
increased capacity.
The number of drill rigs in operation has increased to 28 in Q1-2012 or
33% increase from 21 drill rigs in Q1-2011.
The Company's drill rig fleet and the drill rig deployed or planned to
be operational in the field is noted below:
|
|
As at Dec 31, 2011 |
As at Mar 31, 2012 |
Planned as at Jun 30, 2012 |
Planned as at Sep 30, 2012 |
Planned as at Dec 31, 2012 |
|||||
|
|
No. of Rigs |
Type |
No. of Rigs |
Type |
No. of Rigs |
Type |
No. of Rigs |
Type |
No. of Rigs |
Type |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational |
15 |
Multi- Purpose |
16 |
Multi- Purpose |
22 |
Multi- Purpose |
26 |
Multi- Purpose |
27 |
Multi- Purpose |
|
|
8 |
Core Only |
8 |
Core Only |
8 |
Core Only |
8 |
Core Only |
8 |
Core Only |
|
|
3 |
Air core |
4 |
Air core |
5 |
Air core |
5 |
Air core |
5 |
Air core |
|
TOTAL OPERATIONAL |
26 |
|
28 |
|
35 |
|
39 |
|
40 |
|
|
In transit |
1 |
Air core |
5 |
Multi- Purpose |
1 |
Multi- Purpose |
|
|
|
|
|
Total In Transit |
1 |
|
5 |
|
1 |
|
0 |
|
0 |
|
|
In W/Shop |
|
|
2 |
Multi- Purpose |
4 |
Multi- Purpose |
1 |
Multi- Purpose |
|
|
|
|
|
|
1 |
Air core |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total in W/shop |
|
|
3 |
|
4 |
|
1 |
|
0 |
|
|
Under Manufacturing |
10 |
Multi- Purpose |
3 |
Multi-purpose |
|
|
|
|
|
|
|
|
1 |
Aircore |
|
|
|
|
|
|
|
|
|
Total Under Manufacturing |
11 | 3 |
|
0 |
|
0 |
|
0 |
|
|
|
TOTAL DRILL RIGS |
38 |
|
39 |
|
40 |
|
40 |
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Split | ||||||||||
| Multi- Purpose | 25 | 26 | 27 | 27 | 27 | |||||
| Core Only | 8 | 8 | 8 | 8 | 8 | |||||
| Air Core | 5 | 5 | 5 | 5 | 5 | |||||
| TOTAL | 38 | 39 | 40 | 40 | 40 | |||||
Geodrill's interim financial statements and management's discussion &
analysis ("MD&A"), for the three-month period ended March 31, 2012, are
available via Geodrill's website at www.geodrill-gh.com and will be
available on SEDAR at www.sedar.com.
Following the release, the Company will host its Annual Meeting of
Shareholders at the TMX Broadcast Centre, the Exchange Tower, 130 King
St. West, Toronto at 10:00 am (EST) in which management will discuss
the quarterly financial results.
A live audio webcast will be available through:http://www.newswire.ca/en/webcast/detail/965423/1035663
An archived replay of the webcast will be available for 90 days. Operator Assisted Toll-Free Dial-In Number: (888) 231-8192.
Non-IFRS Measures
EBITDA is defined as Earnings before Interest, Taxes, Depreciation, and
Amortisation and is used as a measure of financial performance. The
Company believes EBITDA is useful to investors because it is frequently
used by securities analysts, investors and other interested parties to
evaluate companies in the Company's industry. However, EBITDA is not a
measure recognized by IFRS and does not have a standardized meaning
prescribed by IFRS. EBITDA should not be viewed in isolation and does
not purport to be an alternative to net income or gross profit as an
indicator of operating performance or cash flows from operating
activities as a measure of liquidity. EBITDA does not have a
standardized meaning prescribed by IFRS and therefore they may not be
comparable to similarly titled measures presented by other publicly
traded companies, and EBITDA should not be construed as an alternative
to other financial measures determined in accordance with IFRS.
Additionally, EBITDA is not intended to be a measure of free cash flow
for management's discretionary use, as it does not consider certain
cash requirements such as capital expenditures, contractual
commitments, interest payments, tax payments and debt service
requirements. Please see the Company's MD&A for the three-month period
ended March 31, 2012 for the EBITDA reconciliation.
