Cabo Announces Record 3rd Quarter Results

Marketwired

NORTH VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 31, 2012) - Cabo Drilling Corp. ("Cabo" or the "Company") (CBE.V - News) reports its fiscal year 2012 third quarter results for the quarter ended March 31.





3rd QUARTER HIGHLIGHTS                                                      

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                                  3 months   3 months   9 months   9 months 

(CDN $000s, except earnings per     ending     ending     ending     ending 

 share)                          Mar 31/12  Mar 31/11  Mar 31/12  Mar 31/11 

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Revenue                             14,046      9,540     45,339     30,395 

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Earnings (Loss) Before Interest,                                            

 Taxes, Amortization, Stock                                                 

 Based Compensation and Other                                               

 Items (EBITDA)                      1,551        (30)     6,075      2,243 

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Net Earnings (Loss) Before Taxes       230       (801)     3,130         (7)

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Net Earnings (Loss) After Taxes        430       (624)     2,389        (34)

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Earnings (Loss) per Share ($)                                               

 (Basic and Diluted) Before                                                 

 Interest, Taxes, Amortization,                                             

 Stock-based Compensation and                                               

 Other Items (EBITDA)                 0.02       0.00       0.08       0.04 

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Earnings (Loss) per Share ($)                                               

 (Basic and Diluted)                  0.01      (0.01)      0.03       0.00 

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Cash from Operations(i)              1,012        248      3,968      1,608 

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Gross Margin %                        23.2%      18.8%      24.0%      23.1%

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Working Capital                      9,639      8,040      9,639      8,040 

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(i) before changes in non-cash working capital items                        

                                                                            

The Company reports:                                                        



--  Record quarterly revenue for the 3rd quarter fiscal 2012 of $14.05

    million, a 47% improvement compared to $9.54 million in the 3rd quarter

    fiscal 2011. 

--  3rd quarter fiscal 2012 earnings before interest, taxes, amortization,

    stock-based compensation and other items (EBITDA) of $1.55 million

    compared to 3rd quarter fiscal 2011 earnings before interest, tax,

    amortization, stock based compensation and other items (EBITDA) of

    $(30,039), resulting in 3rd quarter fiscal 2012 earnings before

    interest, taxes, amortization, stock-based compensation and other items

    of $0.02 per share and $0.00 per share in the 3rd quarter of fiscal

    2011. 

--  Net before tax income for the 3rd quarter of fiscal 2012 of $230,300

    compared to a 3rd quarter fiscal 2011 before tax loss of $800,862. 

--  Net after tax earnings for the 3rd quarter of fiscal 2012 of $429,692

    compared to a net after tax loss for the 3rd quarter of fiscal 2011 of

    $624,422, resulting in 3rd quarter fiscal 2012 net after tax earnings of

    $0.01 per share compared to a net after tax loss for 3rd quarter fiscal

    2011 of $0.01 per share. 

--  Gross margin percentage for the 3rdquarter fiscal 2012 was 23.2%

    compared with a gross margin of 18.8% in 3rd quarter fiscal 2011 and

    24.0% in the 2nd quarter of fiscal 2012. 

--  Cash from operations, before changes in non-cash working capital items,

    was $3.97 million for the 3rd quarter fiscal 2012 compared to 3rd

    quarter fiscal 2011 cash from operations of $1.61 million. 

--  A current asset balance of $26.02 million and working capital of $9,639

    million. 

--  Total assets of $41.84 million and total liabilities of $17.86 million.



"Cabo Drilling generated record revenues for the first nine months of fiscal 2012 of $45.34 million. This represents a 49% increase over the $30.40 million recorded in the comparable period in fiscal 2011. The Company has exceeded the $43.22 million reported for all of fiscal 2011, by the end of the third quarter of fiscal 2012." stated Mr. Versfelt, Cabo's President & CEO. "The Company's quarterly gross revenue for the three months ending March 31, 2012 also increased by 47% to $14.05 million, compared to $9.54 million in the comparable three month period in fiscal 2011."

"Revenues from our international divisions continue to represent a significant part of Cabo Drilling's operations with 30% or $13.39 million, as compared to $6.78 million during the nine month period ending March 31, 2011. This represents a 102% increase in international revenues in fiscal 2012 as compared to fiscal 2011," commented Mr. Versfelt. "The Company experienced a 35% increase in revenues from the Canadian divisions to $31.95 million in fiscal 2012, as compared to $23.60 million in the same period in fiscal 2011."

"Gross margin remained healthy at 23.2% or $3.25 million during the third quarter, fiscal 2012," said Mr. Versfelt. "Our gross margin for this quarter is down slightly compared to 24.1% in the second quarter of fiscal 2012 but higher than the 18.8% in the third quarter of fiscal 2011."

"EBITDA improved to $1.55 million or $0.02 per share for the quarter ending March 31, 2012 from $(30,039) in the comparable period of fiscal 2011," stated Mr. Versfelt. "For the nine months ending March 31, 2012, EBITDA improved to $6.08 million or $0.08 per share, compared to $2.24 million or $0.04 per share for the same period in 2011."

"Cabo was once again profitable in the quarter with net income after taxes for the third quarter, fiscal 2012, increasing to $429,692," commended Mr. Versfelt. "This is a significant improvement compared to a net loss of $624,422 for the same period in 2011."

"Additionally, Cabo has generated $3.97 million in cash flow from operating activities in the first nine months of fiscal 2012, a147% increase from the $1.61 million generated in the comparable period in 2011," commented Mr. Versfelt. "Of this amount in 2012, $2.11 million has gone to reducing the Company's total debt outstanding, while $1.92 million has been reinvested in the business in the form of capital expenditures.

Third quarter ended March 31, 2012

Cabo's gross revenues for the three months ending March 31, 2012 increased by 47% to $14.05 million, compared to $9.54 million in the comparable three month period in fiscal 2011. The Canadian divisions represented 67% of total revenues for the third quarter of fiscal 2012, as compared to 70% during the second quarter of fiscal 2012. International revenues increased to $4.87 million, slightly higher than the previous quarter of $4.30 million and $2.07 million higher (135%) than the comparable quarter in fiscal 2011. All the Company's divisions reported improved revenues compared to the same period last year.

Direct costs for the three month period ended March 31, 2012 were $10.79 million compared to $7.75 million in the comparable three month period ended March 31, 2012. Gross margins for the three month period ended March 31, 2012 were 23.2%, compared to 18.8% during the quarter ended March 31, 2011 and 24% in the second quarter of fiscal 2012. The decreased margin during the third quarter of fiscal 2012 is a direct result of the increased wage and material costs.

General and administration costs increased to $1.90 million in the quarter ended March 31, 2012 compared to $1.71 million incurred in third quarter of fiscal 2011 and the $1.89 million in the second quarter of fiscal 2012. This increase is attributable to increased administration costs in the international locations, increased travel costs, increased professional fees (legal and accounting) and one time charges incurred in investigating new debt facilities.

General and administration includes stock based compensation expense in the amount of $146,060 in the quarter ended March 31, 2012 compared to $nil in the third quarter of 2011.

General and administration costs as a percentage of revenue have decreased to 14% in the third quarter of fiscal 2012 as compared to 18% in the third quarter of fiscal 2011.

Depreciation of property, plant and equipment for the three months ending March 31, 2012 increased to $664,994 from $662,254 in the third quarter of fiscal 2011 and $664,324 incurred during the quarter ended December 31, 2011.

Net income for the third quarter of fiscal 2012 was $429,692 compared to net loss of $624,422 in the third quarter of fiscal 2011 and a net income of $439,638 in the second quarter of fiscal 2012.

Accounts receivable increased by $483,369 or 5% to $11.05 million at March 31, 2012 from $10.59 million at June 30, 2011. The increase is primarily due to increased activity during the third quarter of fiscal 2012.

Property, plant & equipment increased by $87,776 at March 31, 2012 to $13.08 million from $12.99 million at June 30, 2011. The Company increased capital equipment by $1.95 million during the first nine months of fiscal 2012. Included in this amount is over $500,000 in new trucks. Other significant equipment capital expenditures included reverse circulation and helicopter support drills. During the first nine months of fiscal 2012, the Company acquired one new drill, financed by an equipment manufacturer, and completed major overhauls of four other drills that were mobilized to new projects. These acquisitions and capital expenditures generally occur in three year cycles. Consequently, Cabo does not expect significant acquisitions for trucks and major drill overhauls through the end of fiscal 2012 and fiscal 2013.

Consolidated Financial Results for nine months ending March 31, 2012

Revenue for the nine months ending March 31, 2012 increased approximately 49% to a record $45.34 million, compared to $30.40 million in the comparable period in fiscal 2011. Revenues from our international divisions continue to represent a significant part of Cabo Drilling's operations with 30% or $13.39 million, as compared to $6.78 million during the nine month period ending March 31, 2011. This represents a 102% increase in international revenues in fiscal 2012 as compared to fiscal 2011. The Company experienced a 35% increase in revenues from the Canadian divisions to $31.95 million in fiscal 2012, as compared to $23.60 million in the same period in fiscal 2011.

Surface drilling increased by 48% during the nine month period ending March 31, 2012 to $36.45 million, on the strength of increased reverse circulation drilling carried out by the Ontario division and the increased core drilling revenues in the Colombia and Pacific divisions. Underground drilling increased by 79% during the nine month period ending March 31, 2012 to $8.03 million as compared to $4.48 million during the comparable period in fiscal 2011. The increase came primarily from underground drilling operations in Ontario, Atlantic and Albania divisions.

Direct costs for the nine months ended March 31, 2012 were $34.47 million compared to $23.38 million in the comparable period in fiscal 2011. Gross margins for the nine months ended March 31, 2012 were 24% compared to 23% during the nine months ended March 31, 2011. The increased margins are attributed to higher margins earned on international projects.

General and administrative expenses increased by approximately 17% or $835,957 from $4.71 million in the first nine months of fiscal 2011 to $5.54 million in the first nine months of fiscal 2012. The increase is consistent with a generally higher level of overall business activity and a direct result of increased travel costs, increased professional fees, higher administration costs in the international divisions and increased costs incurred in securing new credit facilities, as well as $146,000 attributed to stock based compensation. As a percentage of revenues general and administration decreased to represent 12% of revenues during the nine months ending March 31, 2011 as compared to 15% in the comparable period in fiscal 2011.

The stock based compensation expense in the amount of $146,060 in the first nine months of 2012 compares to $23,033 in the first nine months of 2011.

Net income for the first nine months of fiscal 2012 was $2.39 million compared to net loss of $33,746 in the comparable period of fiscal 2011.

Cash flow from operations (before changes in non-cash operating working capital items) was $3.97 million during the first nine months of fiscal 2012, compared to $1.61 during the first nine months of fiscal 2011.

The mineral drilling industry is dependent on demand for and supply of precious, base and strategic metals as well as precious stones. Demand and supply factors for these commodities can change dramatically up and down, as we have witnessed in the past, causing dynamic shifts in the supply of drills and drilling personnel from under supply to over supply. The financial stress in European financial credit markets, readjustments in China and Brazil, as well as significant global currency and economic shifts, have caused substantial uncertainty in the global financial markets. While this uncertainty has not caused major changes in the non-ferrous metal markets to date, the Company remains very vigilante to any substantial market moves that can impact the demand for its services. Management has initiated comprehensive cost and spending controls, as well as risk management procedures throughout the Company. Senior management is focused on careful cash management, realignment of debt, high customer relations and high employee relations.

About Cabo Drilling Corp. (CBE.V - News)

Cabo Drilling Corp. is a drilling services company headquartered in North Vancouver, British Columbia, Canada. The Company provides mining specialty drilling services through its Canadian divisions in Surrey, British Columbia; Montreal, Quebec; Kirkland Lake, Ontario; and Springdale, Newfoundland; as well as Cabo Drilling (Nevada) Inc. of the United States; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Panama-Pacifico Corp. of Panama, Republic of Panama doing business as Cabo Drilling Colombia Corp.; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

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 Sheri Barton or Mr. John A. Versfelt.

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.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact:
Sheri Barton
Cabo Drilling Corp.
Corporate Communications
403-217-5830
(604) 983-8056 (FAX)

Mr. John A. Versfelt
Cabo Drilling Corp.
Chairman, President & CEO
604-984-8894
ir@cabo.ca
www.cabo.ca

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