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Cabo Announces Record 1st Quarter Results

North Vancouver, BC - November 29, 2007 - Cabo Drilling Corp. (“Cabo” or the “Company”) (TSX-V:CBE) today reported results for its fiscal year 2008 first quarter ended September 30, 2007.

1st QUARTER HIGHLIGHTS

(CDN $000s, except earnings per share)
 
Q1- 08
Sept. 30
Q1- 07
Sept. 30
FY 2007
June 30
 Revenue  14,339    10,498       38,445  

 Net Earnings (Loss) Before Interest, Tax, Amortization, Stock-based Compensation and Other Items (EBITDA)

 2,349 1,194 4,012 
 Net Earnings (Loss) Before Taxes  1,759 703 1,680 
 Net Earnings (Loss) After Taxes  1,084 423  1,1019 

 Earnings (Loss) per Share ($) Basic Before Interest, Tax, Amortization, Stock-based Compensation and Other Items (EBITDA)

 0.05 0.01 0.03
 Earnings (Loss) per Share ($) Basic and Diluted  0.03 0.01  0.03 
 Cash from operations*  1,573 863  2,758 
 Gross Margin %  26.1% 23.6%  24.6% 
 Working Capital  6,225 3,503  3,272 

 *before changes in non-cash working capital items

The Company reports:

Its highest ever quarterly revenue of $14.34 million in the 1ST quarter of FY2008, a 36% increase from the 1st quarter of 2007 and a 22% increase from the previous recorded high in the 4th quarter of fiscal 2007.
Record net 1st quarter FY2008 earnings before interest, taxes, amortization, stock based compensation and other items of $2.35 million compared to 1st quarter FY2007 earnings before interest, tax, amortization, stock based compensation and other items of $1.19 million.
Record net earnings before taxes for the 1st quarter of FY2008 of $1.76 million compared to 1st quarter FY2007 net earnings before taxes of $1.19 million.
Record net earnings after taxes for the 1st quarter of FY2008 of $1.08 million compared to 1st quarter FY2007 net earnings after taxes of $422,553, resulting in 1st quarter FY2008 net earnings after taxes of $0.03 per share compared to FY2007 1st quarter earnings of $0.01 per share.
Gross margin percentage for the 1st quarter FY2008 was 26.1% compared with a gross margin of 23.6% in the FY2007 1st quarter.
Cash from operations, before changes in non-cash working capital items, was $1.57 million for the 1st quarter FY2008 compared to 1st quarter FY2007 cash from operations of $862,786.
A current asset balance of $19.53 million and working capital of $6.23 million.
Total assets of $31.49 million and total liabilities of $14.82 million.

“Cabo showed strong progress in its 1st quarter of 2008 by delivering record quarterly revenue and earnings per share,” said John A. Versfelt, President and CEO of Cabo Drilling Corp. “The Company’s revenue for the 1st quarter of $14.34 million is an increase of 36% from the revenue of $10.50 million in the 1st quarter of 2007. The Company also reports record quarterly net income of $1.08 million compared to $422,553 in the 1st quarter of fiscal 2007. This represents a 156% increase from the first quarter in fiscal 2007 and the highest quarterly earnings after taxes in the Company’s history which results in $0.03 per share earnings.”
“Gross margins showed improvement with an increase to 26.1% compared to 23.6% in the 1st quarter of fiscal 2007 and a slight decrease from the 26.5% recorded in the 4th quarter of fiscal 2007,” stated John A. Versfelt. “We will continue to work towards improving our gross margin through improved efficiencies. Labour and supply costs are increasing; however, this is a factor affecting all drilling and mining services companies and these costs are factored into the contract rates.”

“Cash flow from operations strengthened in the 1st quarter of fiscal 2008,” said Mr. Versfelt. “The Company recorded cash flow from operations (before changes in non-cash operating working capital items) of $1.57 million in the 1st quarter of fiscal 2008 compared to $862,786 in the same period during the prior year, an improvement of 82%. Cabo invested its cash in both equipment and people, spending approximately $1.10 million, during the quarter to ensure the continued success and growth of the Company.”

“The Company recorded a net income of $1.08 million during the 1st quarter of fiscal 2008 or $0.03 earnings per share compared $422,553 or $0.01 earnings per share in the 1st quarter of fiscal 2007,” noted John A. Versfelt. “EBITDA increased 97% to $2.35 million during the first quarter of fiscal 2008, our highest quarter EBITDA recorded by the Company, compared to $1.19 million in the previous corresponding period. These positive results are reflective of improved contract rates, operating efficiencies and increased market share within our current markets.”

“As the demand for drilling services remains strong, Cabo is identifying growth opportunities in its current markets, as well as identifying new market opportunities,” stated John A. Versfelt. “It is imperative that we invest our capital in equipment and people now, as they are vital to our ongoing and future success.”

First quarter ended September 30, 2008

Revenue for the quarter ending September 30, 2007 was $14.34 million compared to $10.50 million in the first quarter of fiscal 2007, a 36% increase. Revenues also increased 22% compared to those of the fourth quarter, fiscal 2007 of $11.68 million. This increase can be attributed primarily to significant growth in our Ontario operations, plus revenues earned internationally have added $1.12 million during the first quarter of fiscal 2008. International revenues represented 7.8% of revenues for the quarter as compared to 4.5% for fiscal 2007. Management expects the international operations to provide a growing percentage of the Company’s total revenue stream.

In the first quarter of fiscal 2008, surface drilling increased $3.28 million or 41% to $11.25 million from $7.96 million in the first quarter of fiscal 2007, while underground drilling increased 21% to $2.76 million. Geotechnical drilling revenues increased 28% from quarter to quarter.

The overall gross margin for the first quarter of fiscal 2008 was 26.1% compared to 23.6% during the first quarter of fiscal 2007. The improved gross margin is primarily the result of increased contract rates and continued improved efficiencies. Gross margin decreased marginally from the 26.5% recorded in the fourth quarter of fiscal 2007 to 26.1% in the first quarter of fiscal 2008 because of somewhat higher than normal servicing costs at several projects in Canada.

The Company reported EBITDA (earnings before interest, tax, amortization, stock-based compensation and other items) of $2.35 million for the quarter ending September 30, 2007 as compared to $1.19 million in the same period last year. This is the highest quarterly EBITDA recorded by the Company.

While general and administrative expenses increased to $1.36 million for the quarter compared to $1.27 million for the same period last year, these expenses decreased by approximately $292,000 compared to the fourth quarter of fiscal 2007. The increase compared to the first quarter fiscal 2007 is a result of hiring additional administration personnel during fiscal 2008 due to increased drilling services business. However, when calculating general costs as a percentage of revenue in the first quarter of fiscal 2008, the result is 9.5%. This compares to12% recorded in the previous fourth quarter of fiscal 2007. While the Company has maintained salaries at the cost of living index for the past couple of years, it is expected that during this next fiscal year the salaries will increase around 8%.

The Company recorded lower general and administrative expenses during the quarter of $1.36 million when compared to $1.66 million in the fourth quarter of fiscal 2007. As a percentage of revenue this is a decrease to 9.5% compared to 14% recorded in the fourth quarter of fiscal 2007. This decrease is attributed to lower allowances for bad debts during the period and decreased professional fees.

Amortization of property, plant and equipment for the quarter ending September 30, 2007 increased to $516,089 compared to $295,484 in the first quarter of fiscal 2007. The increase is due to an increased property, plant and equipment base acquired over the past twelve months. However, amortization expense decreased during the quarter when comparing the first quarter expense of $516,089 to the expense of $650,000 in the fourth quarter of fiscal 2007. The fourth quarter fiscal 2007 amortization expense included one time adjustments for prior quarters.

Net income after taxes, increased to $1.08 million for the quarter ending September 30, 2007 as compared to $422,553 recorded in the first quarter of fiscal 2007, an increase of 156%. The increase is directly related to the increased revenues and the improved gross margin.

The Company’s current cash (cash and cash equivalents) position at September 30, 2007 is $307,371 compared to $422,337 at June 30, 2007. Short-term investments and marketable securities decreased $50,818 from $204,460 at June 30, 2007, to $153,642 at September 30, 2007. There were no dispositions during the quarter, but the decrease is attributed to the adjustment to market VALUES (at September 30, 2007. The adjustment of $50,818 is recorded on the Statement of Comprehensive Income.

Cash flow from operations (before changes in non-cash operating working capital items) was $1.57 million during the quarter ending September 30, 2007, as compared $862,786 earned in the same period in the prior year.

Working capital increased by $2.75 million from $3.48 million at June 30, 2007 to $6.23 million at September 30, 2007, as a result of the exercise of Cabo warrants and the improved financial results during the quarter.

Cabo has positioned itself to capture an increase in revenues and improve its gross margin as the demand for mineral exploration and mining drilling services increases. The Company’s strategy is to focus on growth by expanding its existing long-term customer base revenues, attracting new customers and by identifying favourable geographical locations in which to expand its drilling services business.

Cabo Drilling Corp. is a drilling services company headquartered in North Vancouver, British Columbia, Canada. The Company provides mining related and specialty drilling services through its Canadian divisions in Surrey, British Columbia; Montréal, Quebec; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as, Cabo Drilling de Mexico S.A. de C.V. of Hermosillo, Sonora, Mexico; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; and Cabo Drilling Spain S.L. of Sevilla, Spain. The Company’s common shares trade on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

(signed “John A. Versfelt”)

John A. Versfelt
Chairman, President and CEO

Further information about the Company can be found on the Cabo website (http://www.cabo.ca) and SEDAR (www.sedar.com) or by contacting Investor Relations Ms. Sheri Barton at 403-217-5830 or Mr. John A. Versfelt, Chairman, President & CEO of the Company at 604-984-8894.
* * * *
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes and other business transactions timing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.


Last Updated: 11/29/2007