Gemini Corporation (GKX-TSXV) ("Gemini" or the "Company") today announced first quarter 2017 results.
"The business environment in Western Canada continues to be fiercely competitive and although requests for proposals and bidding activity has been steady, Gemini's win rate has not been as good as we had hoped. Our first quarter was slower than expected", said Pete Sametz, Gemini's President and CEO.
"As we actively seek out new business opportunities and refine our estimating process, our key challenge for the remainder of the year continues to be securing new work with reasonable margins while maintaining the excellent execution and client satisfaction levels that were achieved in 2016. We have excellent employees who are working very closely with key clients to support them in this tough environment. We continue to manage our balance sheet carefully and we are very pleased to announce the closing of a $14 million credit facility for working capital needs with our new financial partner, ATB Financial."
FIRST QUARTER 2017 OVERVIEW
The Company and industry adjusted to the reduced activity levels in 2016 and now Gemini is working to grow cash flow, personnel, project quality and capability, while competing fiercely for new business. The industry optimism that existed at the beginning of the year, based on improved economic activity, an increase in capital budgets and improved energy prices, has now given way to the sober realization that 2017 is recovering slower than anticipated.
Today the Company finds itself dealing with an environment where the lowest cost is the primary consideration when awarding new work. Requests for proposals and bidding activity remains high, however, the Company found it challenging to secure new work at profitable levels in the first quarter of the year despite positive feedback on our technical submissions and execution strategies. Having strengthened the balance sheet and secured a new credit facility, the Company will continue to balance the desire for work volume with a cautious risk management approach that seeks to avoid exposing the Company to financial loss by bidding unprofitable or excessively risky projects.
Gemini continues to focus on business development, rigorous estimating and controls, operational excellence and execution processes to find innovative ways to bring value to clients and secure new backlog. Interestingly, many of the proposals and requests for pricing are also associated with work not expected to commence until 2018 as clients attempt to lock in today's low prices for next year's work.
The Company is now expecting revenue for 2017 to be less than 2016 but expects activity to pick up in the second half of 2017 into 2018. Gemini's fabrication shop in Ponoka has recently started to ramp up activity with key long-term clients. Environmental and maintenance services are also seeing increased activity, while construction activity levels in the Fort Saskatchewan region remain challenging.
The Company experienced a higher than normal level of attrition in the first five months of 2017 and has decided to defer the replacement of all non-essential positions until backlog levels improve. On an annualized basis, approximately $2.1 million of salary costs have been eliminated through attrition and we expect to realize further savings in the second quarter. Processes have also been established to ramp back up quickly as necessary. The Company is confident that the quality and dedication of Gemini's personnel are best of class and our accessibility to the local workforce will allow us to bring on new personnel as required.
While the economic environment for Gemini remains highly competitive, the Company continues to have confidence in the teams' ability to secure new work with reasonable margins while maintaining the excellent execution standards and client satisfaction that was achieved in 2016. Gemini is fortunate to have solid, trusted relationships with a group of active, growth oriented clients that we value highly.
MD&A AND FINANCIAL STATEMENTS
The 2017 Q1 Management's Discussion and Analysis, and the Consolidated Financial Statements provide a detailed explanation of Gemini's operating results for the three months ended March 31, 2017. Gemini's 2017 first quarter will be filed on SEDAR at http://www.sedar.com by May 26, 2017.
Gemini operates as an integrated project solutions company focused on energy and industrial facilities. Gemini offers services on either a stand-alone basis or in a combination, integrated to provide our clients with a single point of accountability. The Company will be celebrating its 35th anniversary in 2017.
Through an all-in commitment from every individual in the Company, Gemini is determined to change the client perspective of how project services should be delivered. The Company is uniquely qualified to provide a full spectrum of modular and integrated project solutions, leveraging a philosophy and approach that directly aligns with its clients' business objectives.
The Company is capable of servicing its clients through the full life cycle of their assets; from asset acquisition, environmental and regulatory support, engineering, fabrication, construction, maintenance, turnarounds, de-commissioning, reclamation and remediation. Gemini provides full project management to integrate any or all of these services. The Company's principal target markets are oil and gas, heavy oil, oil sands, midstream and pipeline facilities, hydrocarbon processing, power and other industrials.
The Company operates in western Canada and is headquartered in Calgary with offices in Ponoka, Fort Saskatchewan and Fort St. John.
Shares of Gemini trade on the TSX Venture Exchange under the symbol "GKX". For more information about the Company and its services, go to www.geminicorp.ca.
SOURCE: Gemini Corporation
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