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CE Franklin Ltd. (CFK) Message Board

  • monty_a100 monty_a100 Apr 24, 2008 9:20 PM Flag

    Results

    Quite a good result: Down 1c on last year. But in an environment where comparable well completions were down 26% it is testimony to be benefit of acquiring Full Tilt and Jen Supply. These acquisition contributed to the increased sales of MRO [Maintenance, repair and operating Supplies] products which have a higher margin than capital project sales.

    <<< Sales declined by 9% due to an overall reduction in industry capital expenditure activity in the first quarter of 2008 as well completions declined by 26% compared to the prior year period. This was partially offset by increased sales from JEN Supply Inc. and Full Tilt Field Services Limited acquired in the last half of 2007. Gross profit increased by $0.8 million over the prior year period as the impact of lower sales was more than offset by the increase in gross profit margins. Gross profit margins reached 19.2% up from 17.1% in the prior year period due mainly to increased high margin MRO sales and a large, low margin oilsands order in the first quarter of 2007.>>>

    There was also a useful comment in relation to the outlook:

    <<<< Well completions for the remainder of 2008 should benefit from the increase in average rig counts experienced during the first quarter of 2008 compared to the prior year period, which should translate into stronger demand for the Company's products.>>>

    So overall the acquisitions have been accretive and the outlook is quite positive for the remainder of the year. The company continues to make money and improve its balance sheet. As the capital projects sales pick up that will tend to lower margin compared to the MRO sales so it will be a function of sales mix as to how the margin looks in the future. But headline sales increases are always welcome.

    Lets see what the market thinks about this.

    Monty

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    • One thing of concern that nobody mentioned is sharp increase in receivables. That makes one wonder if there will be problems with collecting those. I wonder if they addressed that on cc.
      Otherwise, cfk definitely exceeded my expectations.

    • Nice breakdown monty!

      I love the whole m&a actions where management says it should be accretive in such and such quarter! When they should just say, "oops we paid to much for this s#$%&! Anyway Mr. West has got his ducks in a row so I am not worried on that end. All the built inventory probably turned out to be a blessing in disguise. I can say from working in the field that lead times and costs for fittings and what not are insane! Now BC is exploding with action for Nat Gas, Bakken shale is just getting going and SK is going to get some serious action. Alberta and the oil sands will only compound. Looks like Alberta has adjusted some of the tax structures too! It's never fun when your neighbor's flourish and your left trying to catch up. Now what was the bottom line coming out of LIBYA! Full Tilt and Jen Supply look to well diversify their offering. CFK has proven multiple times that they will be profitable in slower times! Now it's time for the respect.........I think going into the fall we will get that as long as nat gas stays strong. Small caps are hated so that is where MOOK gets all hot and heavy................

    • Thanks for sharing your thoughts on the earnings announcement. I appreciate that you put your comments out there.

 

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