Did a bit of homework (previous post) before chatting with the co. The most striking feature is the increase in sales, which is what you'd expect to be seeing at this stage in the drilling cycle. First six months sales were $13.5 mil. this year, vs. $7.4 mil. last year -- i.e., almost double. Note, however, that the profit margin has not yet recovered -- it was 6.2% in Q2 FY '01, vs. 11.3% in FY 1998 (their best year).
The company responds that, during the downturn in '98 and '99, they had to bid on anything that resembled business, so they had a large backlog of stuff that was low margin. They have worked through that now, so that e.g. Q3 '01 will show a significant increase in profitability. The balance of this FY should look a lot like 1998.
They are very keen about the future, particularly if the kind of numbers bandied about by CAODC end up resembling reality at all (20,000 wells drilled in '01 -- personally I'll believe it when I see it). They have identified some strategic acquisitions, but will not issue new equity until the market gives them a more reasonable valuation.
Someone asked how the revenue/profit breaks down by division. That's all shown at SEDAR in their quarterlies. I didn't download all the statements, so I don't have a time series, but for the period ended Oct. 31 '00 it was:
MCO: revenue $2 mil., profit $122k
Reliable Airflow: revenue $1.3 mil, profit $146 k
BW Rig: revenue $8 mil., profit $46 k
Canwest Crane: revenue $2.3 mil; profit $41k.
Clearly BW Rig has to start pulling its weight; sounds like that's coming. |
