CALGARY, April 28 /PRNewswire-FirstCall/ -- CE FRANKLIN LTD.
(TSX.CFT, NASDAQ.CFK) reported net income of $0.33 per share
(basic) for the first quarter ended March 31, 2009, a decrease of
3% from $0.34 per share earned in the first quarter ended March 31,
2008. Financial Highlights -------------------- Three Months Ended
(millions of Cdn.$ except per share data) March 31
----------------------- 2009 2008 ----------- -----------
(unaudited) Sales $ 140.7 $ 140.6 Gross profit 26.4 27.1 Gross
profit - % of sales 18.8% 19.2% EBITDA(1) 9.5 10.2 EBITDA(1) % of
sales 6.8% 7.2% Net income $ 6.0 $ 6.3 Per share - basic $ 0.33 $
0.34 - diluted $ 0.33 $ 0.34 Net working capital(2) $ 153.2 $ 117.4
Bank operating loan(2) $ 40.2 $ 21.8 "Our diversification
strategies continue to progress, offsetting the decline in activity
levels that has affected our core oilfield supply business," said
Michael West, President and CEO. Net income for the first quarter
of 2009 was $6.0 million, down $0.3 million from the first quarter
of 2008. Sales were $140.7 million, consistent with the first
quarter of 2008. Capital project business comprised 62% of total
sales (2008 - 55%), and increased $9.5 million (12%) over the prior
year period due to continued growth of oil sands revenues. Gross
profit was down $0.7 million with margins reducing by 0.4% from the
prior year period. Selling, general and administrative expenses
remained flat at $16.9 million for the quarter with increased
facility costs being offset by lower variable compensation costs
and reduced selling and marketing costs. Lower interest expense was
associated with lower floating interest rates in the first quarter
of 2009 compared to the same period in 2008. Income taxes decreased
by $0.2 million (3%) in the first quarter compared to the prior
year period due to lower pre-tax earnings. The weighted average
number of shares outstanding during the first quarter decreased by
0.3 million shares (2%) from the prior year period principally due
to shares purchased for cancellation pursuant to the Company's
Normal Course Issuer Bid. Net income per share (basic) was $0.33 in
the first quarter of 2009, down 3% from that earned in the first
quarter 2008. Business Outlook The recent upheaval in global credit
markets has contributed to significant capital market volatility,
resulting in deleveraging, repricing of risk and ultimately the
retrenchment of consumption. Oil and gas markets have experienced
similar upheaval. While crude oil prices have recently rebounded
from first quarter lows, natural gas prices are currently at the
lowest levels seen in a decade. Our customers continue to assess
the impact of these changes on their businesses and capital
expenditure plans in 2009. Oil and gas well completions and rig
counts have declined sharply at the end of the first quarter
compared to 2008 levels and we expect the decline will continue
through 2009 and into 2010. Approximately 60% of the Company's
sales are driven by our customers' capital project expenditures.
The Company expects these conditions will contribute to increased
consolidation of oil and gas customers, stable to deflationary
product costs and improved labour availability. For the balance of
2009, sales levels are expected to decline compared to 2008 as
expected lower oilfield sales are partially offset by expected
increased sales to oil sands, midstream and industrial product end
use markets. The Company has a strong balance sheet and is
positioned to pursue our strategies to increase market share in
both the conventional oilfield and oil sands markets. Over the
medium to longer term, the Company is confident that it can
continue to strengthen and improve the profitability of its
distribution network by expanding its product lines, supplier
relationships and capability to service additional oil and gas and
industrial end use markets. (1) EBITDA represents net income before
interest, taxes, depreciation and amortization. EBITDA is a
supplemental non-GAAP financial measure used by management, as well
as industry analysts, to evaluate operations. Management believes
that EBITDA, as presented, represents a useful means of assessing
the performance of the Company's ongoing operating activities, as
it reflects the Company's earnings trends without showing the
impact of certain charges. The Company is also presenting EBITDA
and EBITDA as a percentage of sales because it is used by
management as supplemental measures of profitability. The use of
EBITDA by the Company has certain material limitations because it
excludes the recurring expenditures of interest, income tax, and
amortization expenses. Interest expense is a necessary component of
the Company's expenses because the Company borrows money to finance
its working capital and capital expenditures. Income tax expense is
a necessary component of the Company's expenses because the Company
is required to pay cash income taxes. Amortization expense is a
necessary component of the Company's expenses because the Company
uses property and equipment to generate sales. Management
compensates for these limitations to the use of EBITDA by using
EBITDA as only a supplementary measure of profitability. EBITDA is
not used by management as an alternative to net income, as an
indicator of the Company's operating performance, as an alternative
to any other measure of performance in conformity with generally
accepted accounting principles or as an alternative to cash flow
from operating activities as a measure of liquidity. A
reconciliation of EBITDA to Net income is provided within the
Company's Management Discussion and Analysis. Not all companies
calculate EBITDA in the same manner and EBITDA does not have a
standardized meaning prescribed by GAAP. Accordingly, EBITDA, as
the term is used herein, is unlikely to be comparable to EBITDA as
reported by other entities. (2) Net working capital is defined as
current assets less accounts payable and accrued liabilities,
income taxes payable and other current liabilities, excluding the
bank operating loan. Net working capital and bank operating loan
are as at quarter end. Additional Information
---------------------- Additional information relating to CE
Franklin, including its first quarter 2009 Management Discussion
and Analysis and interim consolidated financial statements and its
Form 20-F/Annual Information Form, is available under the Company's
profile on the SEDAR website at http://www.sedar.com/ and at
http://www.cefranklin.com/ Conference Call and Webcast Information
--------------------------------------- A conference call to review
the 2009 first quarter results, which is open to the public, will
be held on Wednesday, April 29, 2009 at 11:00 a.m. Eastern Time
(9:00 a.m. Mountain Time). Participants may join the call by
dialing 1-416-644-3416 in Toronto or dialing 1-800-733-7571 at the
scheduled time of 11:00 a.m. Eastern Time. For those unable to
listen to the live conference call, a replay will be available at
approximately 1:00 p.m. Eastern Time on the same day by calling
1-416-640-1917 in Toronto or dialing 1-877-289-8525 and entering
the Passcode of 21302002 followed by the pound sign and may be
accessed until midnight Monday, May 11, 2009. The call will also be
webcast live at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2602160 and
will be available on the Company's website at
http://www.cefranklin.com/. Michael West, President and Chief
Executive Officer will lead the discussion and will be accompanied
by Mark Schweitzer, Vice President and Chief Financial Officer. The
discussion will be followed by a question and answer period. About
CE Franklin For more than half a century, CE Franklin has been a
leading supplier of products and services to the energy industry.
CE Franklin distributes pipe, valves, flanges, fittings, production
equipment, tubular products and other general oilfield supplies to
oil and gas producers in Canada as well as to the oilsands,
refining, heavy oil, petrochemical, forestry and mining industries.
These products are distributed through its 44 branches, which are
situated in towns and cities serving particular oil and gas fields
of the western Canadian sedimentary basin. Forward-looking
Statements: The information in this news release may contain
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and other applicable securities legislation.
All statements, other than statements of historical facts, that
address activities, events, outcomes and other matters that CE
Franklin plans, expects, intends, assumes, believes, budgets,
predicts, forecasts, projects, estimates or anticipates (and other
similar expressions) will, should or may occur in the future are
forward-looking statements. These forward-looking statements are
based on management's current belief, based on currently available
information, as to the outcome and timing of future events. When
considering forward-looking statements, you should keep in mind the
risk factors and other cautionary statements and refer to the Form
20-F or our annual information form for further detail.
Management's Discussion and Analysis as at April 28, 2009 The
following Management's Discussion and Analysis ("MD&A") is
provided to assist readers in understanding CE Franklin Ltd.'s ("CE
Franklin" or the "Company") financial performance and position
during the periods presented and significant trends that may impact
future performance of CE Franklin. This discussion should be read
in conjunction with the Company's interim consolidated financial
statements for the three month period ended March 31, 2009 and the
Management's Discussion and Analysis and the consolidated financial
statements for the year ended December 31, 2008. All amounts are
expressed in Canadian dollars and in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"), except
where otherwise noted. Overview CE Franklin is a leading
distributor of pipe, valves, flanges, fittings, production
equipment, tubular products and other general industrial supplies
primarily to the oil and gas industry in Canada through its 44
branches situated in towns and cities that serve oil and gas fields
of the western Canadian sedimentary basin. In addition, the Company
distributes similar products to the oil sands, midstream, refining,
and petrochemical industries and non-oilfield related industries
such as forestry and mining. The Company's branch operations
service over 3,000 customers by providing the right materials where
and when they are needed, and for the best value. Our branches,
supported by our centralized Distribution Centre in Edmonton,
Alberta, stock over 25,000 stock keeping units. This infrastructure
enables us to provide our customers with the products they need on
a same day or over night basis. Our centralized inventory and
procurement capabilities allow us to leverage our scale to enable
industry leading hub and spoke purchasing and logistics
capabilities. The branches are also supported by services provided
by the Company's corporate office in Calgary, Alberta including
sales, marketing, product expertise, logistics, invoicing, credit
and collection and other business services. The Company's shares
trade on the TSX ("CFT") and NASDAQ ("CFK") stock exchanges. Smith
International Inc., a major oilfield service company based in the
United States, owns 55% of the Company's shares. Business and
Operating Strategy The Company is pursuing the following strategies
to grow its business profitably: - Expand the reach and market
share serviced by our distribution network. We are focusing our
sales efforts and product offering on servicing complex, multi-site
needs of large and emerging customers in the energy sector. In
2008, we continued to invest in our distribution network by opening
a branch operation in Red Earth, Alberta and by expanding our
facilities at five existing branch operations. Last spring, we
successfully completed the move to our new 153,000 square foot
Distribution Centre and nine acre pipe yard located in Edmonton,
Alberta which positions us to service our growing distribution
network. Organic growth is expected to be complemented by selected
acquisitions such as the December 2007 acquisition of JEN Supply
which increased our market share in two existing markets and
expanded our presence in two additional markets. - Expand our
production equipment service capability to capture more of the
product life cycle requirements for the equipment we sell such as
down hole pump repair, oilfield engine maintenance, well
optimization and on site project management. This will
differentiate our service offering from our competitors and deepen
our relationship with customers. In the first quarter of 2009, we
have opened a valve actuation centre at our Distribution Centre, to
service our customers' valve automation requirements. The
acquisition of Full Tilt in July 2007 provided us with the
capability to service oilfield engines and parts that we were
previously selling, and, by doing so, position us to attract new
customers to our core oilfield equipment distribution business. -
Focus on the oil sands and industrial project and MRO business by
leveraging our existing supply chain infrastructure, product and
project expertise. The Company is expanding its product line and
supplier relationships and expertise to provide the automation,
instrumentation and other specialty products that these customers
require. Business Outlook The recent upheaval in global credit
markets has contributed to significant capital market volatility,
resulting in deleveraging, repricing of risk and ultimately the
retrenchment of consumption. Oil and gas markets have experienced
similar upheaval. While crude oil prices have recently rebounded
from first quarter lows, natural gas prices are currently at the
lowest levels seen in a decade. Our customers continue to assess
the impact of these changes on their businesses and capital
expenditure plans in 2009. Oil and gas well completions and rig
counts have declined sharply at the end of the first quarter
compared to 2008 levels and we expect the decline will continue
through 2009 and into 2010. Approximately 60% of the Company's
sales are driven by our customers' capital project expenditures.
The Company expects these conditions will contribute to increased
consolidation of oil and gas customers, stable to deflationary
product costs and improved labour availability. For the balance of
2009, sales levels are expected to decline compared to 2008 as
expected lower oilfield sales are partially offset by expected
increased sales to oil sands, midstream and industrial products.
The Company has a strong balance sheet and is positioned to pursue
our strategies to increase market share in both the conventional
oilfield and oil sands markets. Over the medium to longer term, the
Company is confident that it can continue to strengthen and improve
the profitability of its distribution network by expanding its
product lines, supplier relationships and capability to service
additional oil and gas and industrial end use markets. Operating
Results The following table summarizes CE Franklin's results of
operations: (in millions of Cdn. dollars except per share data)
Three Months Ended March 31
----------------------------------------------- 2009 2008
----------------------- ----------------------- Sales $ 140.7
100.0% $ 140.6 100.0% Cost of sales (114.3) (81.2)% (113.5) (80.8)%
----------- ----------- ----------- ----------- Gross profit 26.4
18.8% 27.1 19.2% Selling, general and administrative expenses
(16.9) (12.0)% (16.9) (12.0)% ----------- ----------- -----------
----------- EBITDA(1) 9.5 6.8% 10.2 7.2% Amortization (0.6) (0.4)%
(0.6) (0.4)% Interest (0.2) (0.1)% (0.4) (0.3)% -----------
----------- ----------- ----------- Income before taxes 8.7 6.2%
9.2 6.5% Income tax expense (2.7) (1.9)% (2.9) (2.0)% -----------
----------- ----------- ----------- Net income 6.0 4.3% 6.3 4.5%
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- Net income per share Basic $
0.33 $ 0.34 Diluted $ 0.33 $ 0.34 Weighted average number of shares
outstanding (000's) Basic 18,013 18,333 Diluted 18,189 18,523 (1)
EBITDA represents net income before interest, taxes, depreciation
and amortization. EBITDA is a supplemental non-GAAP financial
measure used by management, as well as industry analysts, to
evaluate operations. Management believes that EBITDA, as presented,
represents a useful means of assessing the performance of the
Company's ongoing operating activities, as it reflects the
Company's earnings trends without showing the impact of certain
charges. The Company is also presenting EBITDA and EBITDA as a
percentage of sales because it is used by management as
supplemental measures of profitability. The use of EBITDA by the
Company has certain material limitations because it excludes the
recurring expenditures of interest, income tax, and amortization
expenses. Interest expense is a necessary component of the
Company's expenses because the Company borrows money to finance its
working capital and capital expenditures. Income tax expense is a
necessary component of the Company's expenses because the Company
is required to pay cash income taxes. Amortization expense is a
necessary component of the Company's expenses because the Company
uses property and equipment to generate sales. Management
compensates for these limitations to the use of EBITDA by using
EBITDA as only a supplementary measure of profitability. EBITDA is
not used by management as an alternative to net income, as an
indicator of the Company's operating performance, as an alternative
to any other measure of performance in conformity with generally
accepted accounting principles or as an alternative to cash flow
from operating activities as a measure of liquidity. A
reconciliation of EBITDA to Net income is provided within the table
above. Not all companies calculate EBITDA in the same manner and
EBITDA does not have a standardized meaning prescribed by GAAP.
Accordingly, EBITDA, as the term is used herein, is unlikely to be
comparable to EBITDA as reported by other entities. First Quarter
Results Net income for the first quarter of 2009 was $6.0 million,
down $0.3 million from the first quarter of 2008. Sales were $140.7
million, consistent with the first quarter of 2008. Capital project
business comprised 62% of sales (2008 - 55%), and increased $9.5
million (12%) over the prior year period due to continued growth of
oil sands revenues. Gross profit was down $0.7 million with margins
reducing by 0.4% from the prior year period due to the increase in
lower margin oil sands and increased competitive pressure. Selling,
general and administrative expenses remained flat at $16.9 million
for the quarter with increased facility costs being offset by lower
variable compensation costs and reduced selling and marketing
costs. Lower interest expense was associated with lower floating
interest rates in the first quarter of 2009 as compared to the same
period in 2008. Income taxes decreased by $0.2 million (3%) in the
first quarter compared to the prior year period due to lower
pre-tax earnings. The weighted average number of shares outstanding
during the first quarter decreased by 0.3 million shares (2%) from
the prior year period, principally due to shares purchased for
cancellation pursuant to the Company's Normal Course Issuer Bid.
Net income per share (basic) was $0.33 in the first quarter of
2009, down 3% from that earned in the first quarter of 2008. Sales
Sales for the quarter ended March 31, 2009 were $140.7 million and
are consistent with sales for the quarter ended March 31, 2008, as
detailed above in the "First Quarter Results" discussion. (in
millions of Cdn. $) Three months ended March 31
----------------------------------- 2009 2008 -----------------
----------------- End use sales demand $ % $ % Capital projects
87.5 62 78.0 55 Maintenance, repair and operating supplies (MRO)
53.2 38 62.6 45 ----------------- ----------------- Total sales
140.7 100 140.6 100 Note: Capital project end use sales are defined
by the Company as consisting of tubulars and 80% of pipe, flanges
and fittings; and valves and accessories product sales
respectively; MRO Sales are defined by the Company as consisting of
pumps and production equipment, production services; general
product and 20% of pipes, flanges and fittings; and valves and
accessory product sales respectively. The Company uses oil and gas
well completions and average rig counts as industry activity
measures to assess demand for oilfield equipment used in capital
projects. Oil and gas well completions require the products sold by
the Company to complete a well and bring production on stream and
are a good general indicator of energy industry activity levels.
Average drilling rig counts are also used by management to assess
industry activity levels as the number of rigs in use ultimately
drives well completion requirements. The relative level of oil and
gas commodity prices are a key driver of industry capital project
activity as product prices directly impact the economic returns
realized by oil and gas companies. Well completion, rig count and
commodity price information for the first quarter 2009 and 2008 are
provided in the table below. Q1 Average ----------------------- %
2009 2008 change ----------- ----------- ----------- Gas - Cdn.
$/gj (AECO spot) $4.94 $7.92 (38%) Oil - Cdn. $/bbl (Synthetic
Crude) $56.23 $97.81 (24%) Average rig count 310 481 (36%) Well
completions: Oil 954 1,302 (27%) Gas 2,993 3,293 (9%) -----------
----------- ----------- Total well completions 3,947 4,595 (14%)
Average statistics are shown except for well completions. Sources:
Oil and Gas prices - First Energy Capital Corp.; Rig count data -
CAODC; Well completion data - Daily Oil Bulletin Sales of capital
project related products were $87.5 million in the first quarter of
2009, up 12% ($9.5 million) from the first quarter of 2008 due to
increased oil sands, midstream and industrial project sales. Total
well completions decreased by 14% in the first quarter of 2009 and
the average working rig count decreased by 36% compared to the
prior year period. Gas wells comprised 76% of the total wells
completed in western Canada in the first quarter of 2009 compared
to 72% in the first quarter of 2008. Spot gas and oil prices ended
the first quarter at $3.81 per GJ (AECO) and $62.27 per bbl
(Synthetic Crude), a decrease of 22% and an increase of 11%,
respectively, from first quarter average prices. Oil and gas
capital expenditure activity has been declining through the first
quarter as a result of continued depressed oil and gas prices and
reduced access to capital experienced by the oil and gas industry.
This is expected to result in reduced industry cash flow, access to
capital and capital expenditure economics, which in turn is
expected to decrease demand for the Company's products through the
remainder of 2009. MRO product sales are related to overall oil and
gas industry production levels and tend to be more stable than
capital project sales. MRO product sales for the quarter ended
March 31, 2009 decreased by $9.4 million (15%) to $53.2 million
compared to the quarter ended March 31, 2008 and comprised 38% of
the Company's total sales. The Company's strategy is to grow
profitability by focusing on its core western Canadian oilfield
equipment service business, complemented by an increase in the
product life cycle services provided to its customers, and the
focus on the emerging oil sands capital project and MRO sales
opportunities. Sales results of these initiatives to date are
provided below: Q1 2009 Q1 2008 ----------------- -----------------
Sales ($ millions) $ % $ % Oilfield 126.3 90 133.8 95 Oil sands
12.4 9 2.5 2 Production services 2.0 1 4.3 3 -----------------
----------------- Total sales 140.7 100 140.6 100 Sales of oilfield
products to conventional western Canada oil and gas end use
applications were $126.3 million for the first quarter of 2009,
down 6% from the first quarter of 2008. This decrease was driven by
the 14% decrease in well completions compared to the prior year
period, partially offset by increased midstream and industrial
project revenue. Sales to oil sands end use applications increased
to $12.4 million in the first quarter compared to $2.5 million in
the first quarter of 2008. The Company continues to position its
sales focus and Distribution Centre and Fort McMurray branch to
penetrate this emerging market for capital project and MRO
products. Production service sales were $2.0 million in the first
quarter of 2009 compared to $4.3 million in the first quarter of
2008 as customers deferred maintenance activities in the face of
challenging commodity prices. Gross Profit Q1 2009 Q1 2008
----------- ----------- Gross profit (millions) $26.4 $27.1 Gross
profit margin as a % of sales 18.8% 19.2% Gross profit composition
by product sales category: Tubulars 11% 8% Pipe, flanges and
fittings 41% 34% Valves and accessories 18% 20% Pumps, production
equipment and services 11% 15% General 19% 23% -----------
----------- Total gross profit 100% 100% Gross profit was $26.4
million in the first quarter of 2009, and gross profit margins were
18.8%, a decrease of $0.7 million and 0.4% from the prior year
first quarter. Gross profit composition in the first quarter of
2009 saw a shift from pumps, production equipment, services and
general categories into pipe, fitting and flange categories
reflecting the increase in capital projects sales and the reduction
in MRO sales. Selling, General and Administrative ("SG&A")
Costs Q1 2009 Q1 2008 ----------------- ----------------- ($
millions) $ % $ % People costs 10.1 60 10.3 61 Selling costs 1.7 10
2.1 12 Facility and office costs 3.4 20 2.7 16 Other 1.7 10 1.8 11
----------------- ----------------- SG&A costs 16.9 100 16.9
100 SG&A costs as % of sales 12% 12% SG&A costs for the
first quarter of 2009 were flat with the prior year period at 12%
of sales. The decrease in people costs of $0.2 million is mainly
due to decreased variable compensation based on a lower profit
outlook this year compared to 2008. Selling costs were down $0.4
million compared to the prior year period due mainly to reduced
advertising and promotion expense and accounts receivable bad debt
allowances. Facility and office costs have increased in the first
quarter of 2009 as the Company moved into a new, larger
Distribution Centre in Edmonton in the second quarter of 2008 and a
larger branch facility in Lloydminster during the first quarter of
2009, combined with continued occupancy cost pressure in western
Canada. The Company leases 34 of its 44 branch locations as well as
its corporate office in Calgary and Edmonton Distribution Centre.
Five branch locations are owned and five are operated by agents.
The Company is taking steps to reduce its variable and fixed costs
to adjust to expected lower industry activity levels. Amortization
Expense Amortization expense of $0.6 million in the first quarter
of 2009 was comparable to the first quarter of 2008. Interest
Expense Interest expense was $0.2 million in the first quarter of
2009, down $0.2 million (56%) from the first quarter of 2008 due to
a decline in average floating interest rates offset slightly by
higher average borrowing levels. Foreign Exchange (Gain) Loss
Foreign exchange (gains) and losses were nominal in both the first
quarter of 2009 and the first quarter of 2008, despite significant
exchange rate volatility. Income Tax Expense The Company's
effective tax rate for the first quarter of 2009 was 31.4%,
comparable to the first quarter of 2008. Summary of Quarterly
Financial Data The selected quarterly financial data presented
below is presented in Canadian dollars and in accordance with
Canadian GAAP. This information is derived from the Company's
unaudited quarterly financial statements. (in millions of Cdn.
dollars except per share data) Unaudited Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2007 2007 2007 2008 2008 2008 2008 2009 ------ ------ ------ ------
------ ------ ------ ------- Sales $ 82.9 $116.8 $112.3 $140.6 $
96.4 $149.3 $161.2 $140.7 Gross profit 16.8 21.0 20.4 27.1 19.0
27.8 33.9 26.4 Gross profit % 20.3% 18.0% 18.2% 19.2% 19.7% 18.6%
21.0% 18.8% EBITDA 2.2 7.4 5.1 10.2 2.3 9.1 14.3 9.5 EBITDA as a %
of sales 2.7% 6.4% 4.5% 7.2% 2.4% 6.1% 8.9% 6.8% Net income 0.6 4.1
2.4 6.3 1.0 5.7 8.8 6.0 Net income as a % of sales 0.7% 3.6% 2.1%
4.5% 1.0% 3.8% 5.5% 4.3% Net income per share Basic $ 0.03 $ 0.22 $
0.13 $ 0.34 $ 0.05 $ 0.31 $ 0.48 $ 0.33 Diluted $ 0.03 $ 0.22 $
0.13 $ 0.34 $ 0.05 $ 0.31 $ 0.47 $ 0.33 Net working capital(1)
127.0 128.7 134.7 117.4 114.9 123.1 142.8 153.2 Bank operating
loan(1) 36.0 35.4 44.3 21.8 18.4 20.9 34.9 40.2 Total well
completions 3,057 3,877 5,026 4,595 2,607 4,392 6,971 3,947 (1) Net
working capital and bank operating loan amounts are as at quarter
end. The Company's sales levels are affected by weather conditions.
As warm weather returns in the spring each year, the winter's frost
comes out of the ground rendering many secondary roads incapable of
supporting the weight of heavy equipment until they have dried out.
In addition, many exploration and production areas in northern
Canada are accessible only in the winter months when the ground is
frozen. As a result, the first and fourth quarters typically
represent the busiest time for oil and gas industry activity and
the highest sales activity for the Company. Sales levels drop
dramatically during the second quarter until such time as roads
have dried and road bans have been lifted. This typically results
in a significant reduction in earnings during the second quarter,
as the decline in sales typically out paces the decline in SG&A
costs as the majority of the Company's SG&A costs are fixed in
nature. Net working capital (defined as current assets less
accounts payable and accrued liabilities, income taxes payable and
other current liabilities, excluding the bank operating loan) and
bank operating loan borrowing levels follow similar seasonal
patterns as sales. Liquidity and Capital Resources The Company's
primary internal source of liquidity is cash flow from operating
activities before net changes in non-cash working capital balances.
Cash flow from operating activities and the Company's 364-day bank
operating facility are used to finance the Company's net working
capital, capital expenditures required to maintain its operations,
and growth capital expenditures. As at March 31, 2009, borrowings
under the Company's bank operating loan were $40.2 million, an
increase of $5.2 million from December 31, 2008. Borrowing levels
have increased due to a $10.3 million increase in net working
capital, $0.5 million in capital and other expenditures and $1.6
million for the purchase of shares to resource stock compensation
obligations and the repurchase of shares under the Company's Normal
Course Issuer Bid ("NCIB"). This was offset by $7.1 million in cash
flow from operating activities, before net changes in non-cash
working capital balances. Net working capital was $153.2 million at
March 31, 2009, an increase of $10.3 million from December 31,
2008. Accounts receivable decreased by $9.9 million (10%) to $90.6
million at March 31, 2009 from December 31, 2008 due to decreased
sales in the first quarter compared to the fourth quarter of 2008.
Days sales outstanding in accounts receivable ("DSO") in the first
quarter of 2009 was 52 days compared to 51 days in the fourth
quarter of 2008 and 67 days in the first quarter of 2008. The
improvement in DSO performance compared to the first quarter of
2008 was due to a more efficient invoicing process implemented in
the first quarter of 2008 and a general improvement in collections
performance. DSO is calculated using average sales per day for the
quarter compared to the period end accounts receivable balance.
Inventory decreased by $4.9 million (4%) at March 31, 2009 from
December 31, 2008. Inventory turns for the first quarter of 2009
decreased to 4.0 times compared to 4.2 times in the fourth quarter
of 2008 and 5.8 times in the first quarter of 2008. Inventory turns
are calculated using cost of goods sold for the quarter on an
annualized basis compared to the period end inventory balance. The
Company plans to adjust its investment in inventory to align with
anticipated lower industry activity levels and compressed supplier
lead times in order to improve inventory turnover efficiency.
Accounts payable and accrued liabilities decreased by $29.4 million
(35%) to $53.8 million at March 31, 2009 from December 31, 2008
responsive to the decreased activity levels. Capital expenditures
in the first quarter of 2009 were $0.5 million, comparable to $0.9
million in the prior year period. The Company has a 364 day bank
operating loan facility in the amount of $60.0 million arranged
with a syndicate of three banks that matures in July 2009. The loan
facility bears interest based on floating interest rates and is
secured by a general security agreement covering all assets of the
Company. The maximum amount available under the facility is subject
to a borrowing base formula applied to accounts receivable and
inventories, and a covenant restricting the Company's average debt
to 2.25 times trailing twelve month EBITDA. As at March 31, 2009,
the Company's average debt to EBITDA ratio was 0.8 times (March 31,
2008 - 1.3 times) which provides a maximum borrowing ability of $60
million under the facility. As at March 31, 2009, the ratio of the
Company's debt to total capitalization (debt plus equity) was 22%
(March 31, 2008 - 24%). Contractual Obligations There have been no
material changes in off-balance sheet contractual commitments since
December 31, 2008. Capital Stock As at March 31, 2009 and 2008, the
following shares and securities convertible into shares were
outstanding: (millions) March 31, 2009 March 31, 2008 Shares Shares
----------------- ----------------- Shares outstanding 17.8 18.3
Stock options 1.2 1.3 Share units 0.5 0.2 -----------------
----------------- Shares outstanding and issuable 19.5 19.8 The
weighted average number of shares outstanding during the first
quarter 2009 was 18.0 million, a decrease of 0.3 million shares
from the prior year's first quarter due principally to the
purchases of common shares under its NCIB and to resource
restricted share unit obligations. The diluted weighted average
number of shares outstanding was 18.2 million, a decrease of 0.3
million shares from the prior year's first quarter. The Company has
established an independent trust to purchase common shares of the
Company on the open market to resource restricted share unit
obligations. During the three month period ended March 31, 2009,
50,000 common shares were acquired by the trust at an average cost
per share of $5.00 (March 31, 2008 - 75,000 at an average cost per
share of $6.62). As at March 31, 2009, the trust held 363,258
shares (March 31, 2008 - 126,761 shares). On January 6, 2009, the
Company announced a NCIB to purchase for cancellation, up to
900,000 common shares representing approximately 5% of its
outstanding common shares. As at March 31, 2009 the Company had
purchased 302,800 shares at an average cost of $4.57 per share.
Critical Accounting Estimates There have been no material changes
to critical accounting estimates since December 31, 2008. The
Company is not aware of any environmental or asset retirement
obligations that could have a material impact on its operations.
Change in Accounting Policies Effective January 1, 2009 the Company
adopted section 3064 - Goodwill and Intangible Assets. The standard
addresses the accounting treatment of internally developed
intangibles and the recognition of such assets. The adoption of
this Standard has had no impact on the Company. The Company has
developed a high level IFRS project plan, a detailed project
charter including resources required and timelines, and has
commenced assessing the differences between IFRS and Canadian GAAP.
Controls and Procedures Internal control over financial reporting
("ICFR") is designed to provide reasonable assurance regarding the
reliability of the Company's financial reporting and its compliance
with Canadian GAAP in its financial statements. The President and
Chief Executive Officer and the Vice President and Chief Financial
Officer of the Company have evaluated whether there were changes to
its ICFR during the three months ended March 31, 2009 that have
materially affected or are reasonably likely to materially affect
the ICFR. No such changes were identified through their evaluation.
Risk Factors The Company is exposed to certain business and market
risks including risks arising from transactions that are entered
into the normal course of business, which are primarily related to
interest rate changes and fluctuations in foreign exchange rates.
During the reporting period, no events or transactions for year
ended December 31, 2008 have occurred that would materially change
the information disclosed in the Company's Form 20F. Forward
Looking Statements The information in this MD&A may contain
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of
historical facts, that address activities, events, outcomes and
other matters that CE Franklin plans, expects, intends, assumes,
believes, budgets, predicts, forecasts, projects, estimates or
anticipates (and other similar expressions) will, should or may
occur in the future are forward-looking statements. These
forward-looking statements are based on management's current
belief, based on currently available information, as to the outcome
and timing of future events. When considering forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements in this MD&A, including those in under
the caption "Risk factors". Forward-looking statements appear in a
number of places and include statements with respect to, among
other things: - forecasted oil and gas industry activity levels in
2009 and 2010; - planned capital expenditures and working capital
and availability of capital resources to fund capital expenditures
and working capital; - the Company's future financial condition or
results of operations and future revenues and expenses; - the
Company's business strategy and other plans and objectives for
future operations; - fluctuations in worldwide prices and demand
for oil and gas; - fluctuations in the demand for the Company's
products and services. Should one or more of the risks or
uncertainties described above or elsewhere in this MD&A occur,
or should underlying assumptions prove incorrect, the Company's
actual results and plans could differ materially from those
expressed in any forward-looking statements. All forward-looking
statements expressed or implied, included in this MD&A and
attributable to CE Franklin are qualified in their entirety by this
cautionary statement. This cautionary statement should also be
considered in connection with any subsequent written or oral
forward-looking statements that CE Franklin or persons acting on
its behalf might issue. CE Franklin does not undertake any
obligation to update any forward-looking statements to reflect
events or circumstances after the date of filing this MD&A,
except as required by law. Additional Information
---------------------- Additional information relating to CE
Franklin, including its first quarter 2009 Management Discussion
and Analysis and interim consolidated financial statements and its
Form 20-F/Annual Information Form, is available under the Company's
profile on the SEDAR website at http://www.sedar.com/ and at
http://www.cefranklin.com/ CE Franklin Ltd. Interim Consolidated
Balance Sheets - Unaudited
-------------------------------------------------------------------------
March 31 December 31 (in thousands of Canadian dollars) 2009 2008
-------------------------------------------------------------------------
Assets Current assets Accounts receivable 90,647 100,513
Inventories 114,569 119,459 Other 1,837 9,529
-------------------------------------------------------------------------
207,053 229,501 Property and equipment 9,522 9,528 Goodwill 20,570
20,570 Future income taxes (note 4) 964 1,186 Other 530 649
-------------------------------------------------------------------------
238,639 261,434
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities Current liabilities Bank operating loan 40,155 34,948
Accounts payable and accrued liabilities 53,834 83,258 Income taxes
payable (note 4) - 3,405
-------------------------------------------------------------------------
93,989 121,611 Long term debt 500 500
-------------------------------------------------------------------------
94,489 122,111
-------------------------------------------------------------------------
Shareholders' Equity Capital stock 22,275 22,498 Contributed
surplus 18,876 18,835 Retained earnings 102,999 97,990
-------------------------------------------------------------------------
144,150 139,323
-------------------------------------------------------------------------
238,639 261,434
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to these interim consolidated financial
statements. CE Franklin Ltd. Interim Consolidated Statements of
Operations and Comprehensive Income - Unaudited
-------------------------------------------------------------------------
Three months ended ------------------ (in thousands of Canadian
dollars March 31 except shares and per share amounts) 2009 2008
-------------------------------------------------------------------------
Sales 140,732 140,582 Cost of sales 114,367 113,521
-------------------------------------------------------------------------
Gross profit 26,365 27,061
-------------------------------------------------------------------------
Other expenses Selling, general and administrative expenses 16,857
16,873 Amortization 555 617 Interest expense 193 438 Foreign
exchange loss/(gain) 1 (2)
-------------------------------------------------------------------------
17,606 17,926
-------------------------------------------------------------------------
Income before income taxes 8,759 9,135 Income tax
expense/(recovery) (note 4) Current 2,535 2,931 Future 222 (78)
-------------------------------------------------------------------------
2,757 2,853
-------------------------------------------------------------------------
Net and comprehensive income for the period 6,002 6,282
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income per share (note 3e) Basic 0.33 0.34 Diluted 0.33 0.34
-------------------------------------------------------------------------
Weighted average number of shares outstanding (000's) Basic 18,013
18,333 Diluted (note 3e) 18,189 18,523
-------------------------------------------------------------------------
See accompanying notes to these interim consolidated financial
statements. CE Franklin Ltd. Interim Consolidated Statements of
Cash Flow - Unaudited
-------------------------------------------------------------------------
Three months ended ------------------ March 31 March 31 (in
thousands of Canadian dollars) 2009 2008
-------------------------------------------------------------------------
Cash flows from operating activities Net income for the period
6,002 6,282 Items not affecting cash - Amortization 555 617 Future
income tax expense/(recovery) 222 (79) Stock based compensation
expense 304 293
-------------------------------------------------------------------------
7,083 7,113 Net change in non-cash operating working capital
balances Accounts receivable 9,866 (23,039) Inventories 4,890 8,515
Other current assets 8,003 1,620 Accounts payable and accrued
liabilities (29,423) 27,767 Income taxes payable (3,625) 2,646
-------------------------------------------------------------------------
(3,206) 24,622
-------------------------------------------------------------------------
Cash flows from/(used in) financing activities Increase/(decrease)
in bank operating loan 5,207 (23,190) Issuance of capital stock 155
1 Purchase of capital stock through normal course issuer bid
(1,384) - Purchase of capital stock in trust for Share Unit Plans
(250) (496)
-------------------------------------------------------------------------
3,728 (23,685)
-------------------------------------------------------------------------
Cash flows used in investing activities Purchase of property and
equipment (522) (937)
-------------------------------------------------------------------------
(522) (937)
-------------------------------------------------------------------------
Change in cash and cash equivalents during the period - - Cash and
cash equivalents - Beginning and end of period - -
-------------------------------------------------------------------------
Cash paid during the period for: Interest on bank operating loan
193 438 Income taxes 6,160 163
-------------------------------------------------------------------------
See accompanying notes to these interim consolidated financial
statements. CE Franklin Ltd. Interim Consolidated Statements of
Changes in Shareholders' Equity - Unaudited
-------------------------------------------------------------------------
(in thousands of Canadian dollars and number of shares) Capital
Stock ---------------------- Share- Number of Contributed Retained
holders' Shares $ Surplus Earnings Equity
-------------------------------------------------------------------------
Balance - December 31, 2007 18,370 24,306 17,671 76,243 118,220
Stock based compensation expense - - 293 - 293 Stock options
exercised 2 6 (5) - 1 Share Units exercised 3 54 (54) - - Purchase
of shares in trust for Share Unit Plans (75) (496) - - (496) Net
income - - - 6,282 6,282
-------------------------------------------------------------------------
Balance - March 31, 2008 18,300 23,870 17,905 82,525 124,300
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance - December 31, 2008 18,094 22,498 18,835 97,990 139,323
Stock based compensation expense - - 304 - 304 Normal Course Issuer
Bid (303) (391) - (993) (1,384) Stock options exercised 52 372
(217) - 155 Share Units exercised 31 47 (47) - - Purchase of shares
in trust for Share Unit Plans (50) (250) - - (250) Net income - - -
6,002 6,002
-------------------------------------------------------------------------
Balance - March 31, 2009 17,824 22,275 18,876 102,999 144,150
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to these interim consolidated financial
statements. CE Franklin Ltd. Notes to Interim Consolidated
Financial Statements - Unaudited
-------------------------------------------------------------------------
(tabular amounts in thousands of Canadian dollars except share and
per share amounts) Note 1 - Accounting Policies These interim
consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in Canada applied on
a consistent basis with CE Franklin Ltd.'s (the "Company") annual
consolidated financial statements for the year ended December 31,
2008. These interim consolidated financial statements should be
read in conjunction with the annual consolidated financial
statements and the notes thereto for the year ended December 31,
2008. Effective January 1, 2009 the Company adopted section 3064 -
Goodwill and Intangible Assets. The standard addresses the
accounting treatment of internally developed intangibles and the
recognition of such assets. The adoption of this Standard has had
no impact on the Company. These unaudited interim consolidated
financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of the
results for the interim periods presented; all such adjustments are
of a normal recurring nature. Note 2 - Inventory Inventories
consisting primarily of goods purchased for resale are valued at
the lower of average cost or net realizable value. Inventory
obsolescence expense was recognized in the three month period
ending March 31, 2009 of $945,000 (2008 - $236,000). As at March
31, 2009 and December 31, 2008 the Company had recorded reserves
for inventory obsolescence of $3.7 million and $2.8 million
respectively. Note 3 - Share Data At March 31, 2009, the Company
had 17.8 million common shares and 1.2 million options outstanding
to acquire common shares at a weighted average exercise price of
$5.95 per common share, of which 751,055 options were vested and
exercisable at a weighted average exercise price of $4.97 per
common share. a) Stock options Option activity for each of the
three month periods ended March 31 was as follows: 000's 2009 2008
-------------------------------------------------------------------------
Outstanding at January 1 1,294 1,262 Granted - 75 Exercised (52)
(2) Forfeited (31) (1)
-------------------------------------------------------------------------
Outstanding at March 31 1,211 1,334
-------------------------------------------------------------------------
-------------------------------------------------------------------------
There were no options granted during the three month period ended
March 31, 2009. A total of 75,588 share options were granted at a
weighted average strike price of $6.26 in the three month period
ended March 31, 2008 for a fair value of $274,000. The fair value
of the options granted was estimated as at the grant date using the
Black- Scholes option pricing model, using the following
assumptions: 2008 ---- Dividend yield Nil Risk-free interest rate
3.88% Expected life 5 years Expected volatility 50% Stock Option
compensation expense recorded in the three month period ended March
31, 2009 was $178,000 (2008 - $170,000). b) Share Unit Plans The
Company has Restricted Share Unit ("RSU"), Performance Share Unit
("PSU") and Deferred Share Unit ("DSU") plans (collectively the
"Share Unit Plans"), where by RSU's, PSU's and DSU's are granted
entitling the participant, at the Company's option, to receive
either a common share or cash equivalent value in exchange for a
vested unit. For the PSU plan the number of units granted is
dependent on the Company meeting certain return on net asset
("RONA") performance thresholds during the year of grant. The
multiplier within the plan ranges from 0% - 200% dependant on
performance. The vesting period for RSU's and PSU's is three years
from the grant date. DSU's vest on the date of grant. Compensation
expense related to the units granted is recognized over the vesting
period based on the fair value of the units at the date of the
grant and is recorded to compensation expense and contributed
surplus. The contributed surplus balance is reduced as the vested
units are exchanged for either common shares or cash. Share Unit
Plan activity for the three month periods ended March 31 was as
follows: 000's 2009 Total 2008 Total
-------------------------------------------------------------------------
RSU PSU DSU RSU PSU DSU Outstanding at January 1 161 - 70 231 178 -
37 215 Granted 172 161 - 333 - - - - Exercised (30) - - (30) (3) -
- (3) Forfeited - - - - - - - -
-------------------------------------------------------------------------
Outstanding at March 31 303 161 70 534 175 - 37 212
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Share unit plan compensation expense recorded in the three month
period ended March 31, 2009 was $126,000 (2008 - $123,000). c) The
Company purchases its common shares on the open market to satisfy
Share Unit Plan obligations through an independent trust. The trust
is considered to be a variable interest entity and is consolidated
in the Company's financial statements with the number and cost of
shares held in trust, reported as a reduction of capital stock.
During the three month period ended March 31, 2009, 50,000 common
shares were acquired by the trust (2008 - 75,000) at a cost of
$250,000 (2008 - $496,000). d) Normal course issuer bid ("NCIB") On
January 6, 2009, the Company announced a NCIB to purchase for
cancellation, up to 900,000 common shares representing
approximately 5% of its outstanding common shares. As at March 31,
2009, the Company had purchased 302,800 shares at a cost of
$1,384,000. e) Reconciliation of weighted average number of diluted
common shares outstanding (in 000's) The following table summarizes
the common shares in calculating net earnings per share: Three
Months Ended ------------------ March 31 March 31 2009 2008
-------------------------------------------------------------------------
Weighted average common shares outstanding - basic 18,013 18,333
Effect of Stock options and Share Unit Plans 176 190
-------------------------------------------------------------------------
Weighted average common shares outstanding - diluted 18,189 18,523
Note 4 - Income taxes a) The difference between the income tax
provision recorded and the provision obtained by applying the
combined federal and provincial statutory rates is as follows:
Three Months Ended ---------------------------------- March 31 2009
% 2008 %
-------------------------------------------------------------------------
Income before income taxes 8,759 9,135 Income taxes calculated at
expected rates 2,565 29.3 2,736 30.0 Non-deductible items 166 1.9
83 0.9 Capital taxes 16 0.2 8 0.1 Adjustments on filing returns
& other 10 0.1 26 0.3
-------------------------------------------------------------------------
2,757 31.5 2,853 31.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As of March 31, 2009 included in other current assets are income
taxes receivable of $221,000 (December 31, 2008 - $3,405,000
payable). b) Future income taxes reflect the net effects of
temporary difference between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purpose. Significant components of future income tax
assets and liabilities are as follows: As at March 31 2009 2008
-------------------------------------------------------------------------
Assets Property and equipment 836 891 Share Unit Plan expense 208
674 Other 274 291
-------------------------------------------------------------------------
1,318 1,856 Liabilities Goodwill and other 354 375
-------------------------------------------------------------------------
Net future income tax asset 964 1,481
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The Company believes it is more likely than not that all future
income tax assets will be realized. Note 5 - Capital Management The
Company's primary source of capital is its shareholders equity and
cash flow from operating activities before net changes in non-cash
working capital balances. The Company augments these capital
sources with a $60 million, 364 day bank operating loan facility
which is used to finance its net working capital and general
corporate requirements. The bank operating facility is arranged
through a syndicate of three banks and matures in July 2009. The
Company anticipates that its bank operating facility will be
extended for an additional 364 day period in the normal course. The
maximum amount available to borrow under this facility is subject
to a borrowing base formula applied to accounts receivable and
inventories, and a covenant restricting the Company's average
guaranteed debt to 2.25 times trailing 12 month earnings before
interest, amortization and taxes. As at March 31, 2009, this ratio
was 0.8 times (December 31, 2008 - 0.7 times) and the maximum
amount available to be borrowed under the facility was $60 million.
In management's opinion, the Company's available borrowing capacity
under its bank operating facility and ongoing cash flow from
operations, are sufficient to resource its anticipated contractual
commitments. The facility contains certain other restrictive
covenants, which the Company was in compliance with as at March 31,
2009. Note 6 - Financial Instruments and Risk Management a) Fair
Values The Company's financial instruments recognized on the
consolidated balance sheet consist of accounts receivable, accounts
payable and accrued liabilities, bank operating loan, long term
debt and obligations under capital leases. The fair values of these
financial instruments, excluding the bank operating loan, long term
debt and obligations under capital leases, approximate their
carrying amounts due to their short- term maturity. At March 31,
2009, the fair value of the bank operating loan, long term debt and
obligations under capital leases approximated their carrying values
due to their floating interest rate nature and short term maturity.
b) Credit Risk A substantial portion of the Company's accounts
receivable balance is with customers in the oil and gas industry
and is subject to normal industry credit risks. The Company follows
a program of credit evaluations of customer's and limits the amount
of credit extended when deemed necessary. The Company maintains
provisions for possible credit losses that are charged to selling,
general and administrative expenses by performing and analysis of
specific accounts. Movement of the allowance for credit losses for
the three month periods ended March 31 was as follows: As at March
31 2009 2008
-------------------------------------------------------------------------
Opening balance 2,776 1,454 Increase during period 168 698
Write-offs (425) -
-------------------------------------------------------------------------
Closing balance 2,519 2,152
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Trade receivables over 90 days were 10% of total trade receivables
as at March 31, 2009 (2008 - 9%). c) Market Risk The Company is
exposed to market risk from changes in the Canadian prime interest
rate which can impact its borrowing costs. The Company purchases
certain products in US dollars and sells such products to its
customer typically priced in Canadian dollars. As a result,
fluctuations in the value of the Canadian dollar relative to the US
dollar can result in foreign exchange gains and losses. d) Risk
Management From time to time the Company enters into foreign
exchange forward contracts to manage its foreign exchange market
risk by fixing the value of its liabilities and future purchase
commitments. The Company's foreign exchange risk arises principally
from the settlement of the United States dollar denominated net
working capital balances as a result of product purchases
denominated in United States dollars. As at March 31, 2009, the
Company had contracted to purchase US$2.0 million at fixed exchange
rates with terms not exceeding six months. The fair market value of
the contract was nominal. Note 7 - Related Party Transactions Smith
International Inc. ("Smith") owns approximately 55% of the
Company's outstanding shares. The Company is the exclusive
distributor in Canada of down hole pump production equipment
manufactured by Wilson Supply, a division of Smith. Purchases of
such equipment conducted in the normal course on commercial terms
were as follows: March 31 March 31 2009 2008
-------------------------------------------------------------------------
Cost of sales for the Three months ended 1,674 3,056 Inventory
4,286 4,295 Accounts Payable and accrued liabilities 128 943 The
Company pays facility rental expense to an operations manager in
the capacity of landlord, reflecting market based rates. For the
three month period ended March 31, 2009, these costs totaled
$210,000 (2008 $24,000). Note 8 - Segmented reporting The Company
distributes oilfield products principally through its network of 44
branches located in western Canada to oil and gas industry
customers. Accordingly, the Company has determined that it operated
through a single operating segment and geographic jurisdiction.
DATASOURCE: CE Franklin Ltd. CONTACT: Investor Relations,
1-800-345-2858, (403) 531-5604,
Copyright