Trading Symbol: "EGD: TSX.V"
VANCOUVER, April 26, 2019 /CNW/ - Energold Drilling
Corp. (EGD: TSX.V) ("Energold" or "The Company" or "Energold
Group") is pleased to announce its annual results for the year
ended December 31, 2018 with a
four-year high revenue of $84.1
million across all business divisions, representing an
increase of 12% on a year over year basis compared to 2017's
$75.0 million revenue. This continued
revenue rebound can be attributed to a successful
diversification and turnaround strategy the group has put in place
since 2012 to mitigate the effects of a prolonged downturn in the
mineral sector. In 2018, over 50% of revenues for Energold came
from non-mining activities.
Positive EBITDA (earnings before interest, tax, depreciation
& amortization) was achieved for the first three quarters of
2018, the first positive earnings since 2012. Q4 2018 was a
challenging quarter due to lack of junior mining capital, seasonal
delays, combined with work start costs in the oil sands which
culminated in a yearly EBITDA loss of $2.9
million. This is a significant improvement from EBITDA loss
of $5.6 million in 2017 and a
testament to improving commodities outlook, better margins, and the
growing diversified segments of renewables and geothermal.
Despite a lukewarm recovery in mineral exploration, Energold's
diversified sectors are growing.
In 2018, gross margin for the group was 17% compared to 14% in
2017 demonstrating a continued push for operational efficiency and
resulting in better margins. Net loss for 2018 totaled $14.6 million compared to a loss of $17.6 million in 2017 and operation losses
narrowed by 51% to $6.9 million in
2018 from $14.1 million in 2017.
Looking forward, Energold believes 2019 will be conducive for
higher EBITDA and earnings.
At the end of December 31, 2018,
the Company had cash of $5.0 million,
trade and receivables of $13.5
million, and net working capital of $32.4 million. The working capital decrease was
affected by the reclassification of $10.8
million in inventory from current assets to long term assets
and bank indebtedness of $2.5 million
becoming current in 2018.
Fred Davidson, CEO and President
of Energold, commented as follows: "2018 signified a continual
turnaround in the Energold story with the group achieving the first
positive EBITDA in over six years and narrowing losses
significantly for the full year. This strategically positions the
group to continue to work towards achieving breakeven and net
income in 2019 as our diversified business segments continue to
demonstrate growth against a backdrop of tepid mineral exploration
markets."
Quarter-to-date and year-to-date results comparison
|
For three months
ended Dec 31
|
For the year ended
Dec 31
|
CAD$
(000s)
|
2018
|
2017
|
2018
|
2017
|
Revenue
|
|
|
|
|
Mineral
|
6,512
|
10,948
|
39,275
|
45,294
|
Energy and
infrastructure
|
7,164
|
5,056
|
35,034
|
22,681
|
Manufacturing
|
844
|
2,279
|
9,770
|
7,004
|
Total
Revenue
|
$14,520
|
$18,283
|
$84,079
|
$74,979
|
|
|
|
|
|
Gross
profit
|
897
|
1,709
|
14,074
|
10,800
|
Gross Margin
%
|
6%
|
9%
|
17%
|
14%
|
Operating
loss
|
(3,337)
|
(5,383)
|
(6,888)
|
(14,073)
|
Net loss
|
(7,370)
|
(5,918)
|
(14,602)
|
(17,598)
|
|
|
|
|
|
Amortization
|
633
|
2,125
|
6,013
|
8,384
|
Finance
Cost
|
1,049
|
922
|
4,265
|
3,330
|
Current and deferred
income tax expense (recovery)
|
456
|
(29)
|
1,453
|
266
|
EBITDA
|
$(5,232)
|
$(2,900)
|
$(2,871)
|
$(5,618)
|
MINERAL DRILLING DIVISION
In 2018, mineral revenues decreased to $39.3 million in 2018 from $45.3 million in 2017. Not surprisingly, S&P
Global Intelligence quoted grassroots explorations budget at record
decade lows at below 30% of global expenditures of $9 billion which is barely above 2009
budgets.
This decrease in revenue for mineral drilling is impacted by the
downturn of previous years and inability for most juniors and
developers to access new capital. While there are positive signs in
the industry and an improvement in exploration spending worldwide
primarily in the development phase of mining, most of the early
stage exploration juniors market remains relatively challenged.
The Company believes with the start of the mergers and
acquisitions in the sector now underway, more efforts will be
placed to upgrade reserves, replace reserves, or discover new
projects in coming years which should benefit the mining
division.
At December 31, 2018 the Company
had 139 rigs in its mineral drilling fleet, many of which the
Company has developed conversion kits to address evolving client
needs beyond portable frontier drilling to reverse circulation,
underground drilling, and even open-hole drilling.
Meters Drilled During the Quarter
|
Q4-2018
|
Q3-2018
|
Q2-2018
|
Q1-2018
|
Q4-2017
|
Meters
Drilled
|
42,400
|
56,400
|
83,100
|
72,400
|
66,300
|
OIL AND GAS, SUSTAINABLE DRILLING & INFRASTRUCTURE
DIVISION
Diversified energy and infrastructure work this year brought in
over $35.0 million compared to
$22.7 million in 2017 which is a 54%
increase. Continued strength, improving prices and the supply
situation is buoyant for oil prices, resulting in strong oil sands
and seismic activity of $11.0 million
in 2018 compared to $9.6 million in
2017.
Energold's horizontal directional drilling ("HDD") division
generated $6.9 million in revenue in
2018, nearly doubling year over year compared to $3.6 million in 2017. The HDD division captured
the growing demand for technology, infrastructure connectedness,
and telecommunication retrofit work around cities in North America, and there are additional
markets in developing nations as well.
Meters drilled:
|
For the three
months ended Dec 31
|
For the year ended
Dec 31
|
|
2018
|
2017
|
2018
|
2017
|
Infrastructure
|
15,100
|
11,500
|
58,700
|
43,700
|
Oil sands
|
6,700
|
7,000
|
29,200
|
19,900
|
Sustainable
drilling
|
23,200
|
23,600
|
240,900
|
118,300
|
|
45,000
|
42,100
|
328,800
|
181,900
|
MANUFACTURING
Dando, Energold's manufacturing division's core business,
remains challenging given the global slowdown in mining activities
and thus mining related equipment. To combat operation losses,
corporate restructuring for potential divestiture commenced in 2017
aiming at reducing fixed costs and streamlining production and
product portfolio.
The manufacturing division demonstrated strong turnaround with
new management, generating $9.8
million in revenue, a 40% increase from 2017's $7.0 million.
The turnaround process has seen early success with Dando
achieving profitability for the first time in years early in
2018. In March 2019, Energold
entered into a binding heads of agreement ("HoA)" with a private UK
company to acquire Dando. The new owners will fund Dando for up to
an additional GBP 1,000,000 and own
51%, purchasing the remaining 49% for GBP
3.1 million (approximately $5.35
million CAD) over a ten-year period. Additional information
is available on the news release dated March
7, 2019.
INDUSTRY OUTLOOK
The mining industry has seen several years of under expenditures
resulting in a hollowing out of the mid-tier development projects
feeding the need of grade and ore replacement trend for majors. As
evident through recent mergers and acquisitions on the largest
scale, the rush to explore and generate greenfield projects could
soon increase which should benefit service companies such as
Energold.
In the Canadian oil and gas sector, we have also seen a dramatic
reversal of the collapse of the WCS price resulting from
Alberta mandating production cuts
which coupled with the resurgence of world oil prices is strongly
positive for the sector. The Canadian oil sands is the third
largest source of world oil reserves and account for more than
two-thirds of Canadian exports with increases forecasted out to
2035 according to CAPP. This entails considerable future drilling
and well service programs.
The green and infrastructure drilling space continues to grow
with significant data network upgrades throughout developed cities,
energy efficiency upgrades, and public capital allocated to larger
projects such as fiber optics network and high-speed network
upgrades for $4.7 billion in BC
through to 2020.
A conference call to review financials is planned for
Monday, April 29, 2019 at
4:00 p.m. Eastern Time. Dial-in
numbers are 647-689-4231 or 1-833-297-9922. All our earnings
calls are also archived online at www.energold.com under the
Investors tab and Earnings Calls Archive page.
ABOUT ENERGOLD DRILLING
Energold Drilling Corp. is a leading global specialty drilling
company that services the mining, energy, infrastructure,
geothermal, water and manufacturing sectors in 24 countries.
Specializing in a socially and environmentally sensitive approach
to drilling, Energold provides a comprehensive range of drilling
services from early stage exploration to onsite operations as well
as manufacturing.
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.
Cautionary Note Regarding 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