CALGARY, Feb. 2 /PRNewswire-FirstCall/ - CE FRANKLIN LTD.
(TSX.CFT, NASDAQ.CFK) reported net income of $1.6 million or
$0.09 per share (basic) for the fourth quarter ended December 31,
2010, compared to a net loss of $0.5 million or $0.03 per share
(basic) for the fourth quarter ended December 31, 2009. For
2010, net income was $5.9 million or $0.34 per share (basic), a
decrease of 6% from the $6.3 million or $0.36 per share earned in
2009.
Financial Highlights
(millions of Cdn.$ except per
share data) |
|
Three
months ended
December 31 |
|
Year
ended
December 31 |
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Sales |
|
$ 135.6 |
|
$
93.0 |
|
$ 489.6 |
|
$ 437.0 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
20.5 |
|
15.3 |
|
75.0 |
|
76.6 |
Gross profit - % of sales |
|
15.1% |
|
16.5% |
|
15.3% |
|
17.5% |
|
|
|
|
|
|
|
|
|
EBITDA(1) |
|
3.8 |
|
0.6 |
|
12.5 |
|
12.4 |
EBITDA(1) % of sales |
|
2.8% |
|
0.6% |
|
2.5% |
|
2.8% |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$
1.6 |
|
$
(0.5) |
|
$
5.9 |
|
$
6.3 |
|
|
|
|
|
|
|
|
|
Per share - basic |
|
$
0.09 |
|
$ (0.03) |
|
$
0.34 |
|
$
0.36 |
- diluted |
|
$
0.09 |
|
$ (0.03) |
|
$
0.33 |
|
$
0.35 |
|
|
|
|
|
|
|
|
|
Net working capital
(2) |
|
$ 125.7 |
|
$ 136.6 |
|
|
|
|
Long Term Debt / Bank operating
loan (2) |
|
$
6.4 |
|
$ 26.8 |
|
|
|
|
(1) |
|
EBITDA represents net income before interest, taxes,
depreciation and amortization. EBITDA is supplemental non-GAAP
financial measure used by management, as well as industry analysts,
to evaluate operations. Management believes that EBITDA, as
presented, represents a useful means of assessing the performance
of the Company's ongoing operating activities, as it reflects the
Company's earnings trends without showing the impact of certain
charges. The Company is also presenting EBITDA and EBITDA as a
percentage of sales because it is used by management as
supplemental measures of profitability. The use of EBITDA by the
Company has certain material limitations because it excludes the
recurring expenditures of interest, income tax, and amortization
expenses. Interest expense is a necessary component of the
Company's expenses because the Company borrows money to finance its
working capital and capital expenditures. Income tax expense is a
necessary component of the Company's expenses because the Company
is required to pay cash income taxes. Amortization expense is a
necessary component of the Company's expenses because the Company
uses property and equipment to generate sales. Management
compensates for these limitations to the use of EBITDA by using
EBITDA as only a supplementary measure of profitability. EBITDA is
not used by management as an alternative to net income, as an
indicator of the Company's operating performance, as an alternative
to any other measure of performance in conformity with generally
accepted accounting principles or as an alternative to cash flow
from operating activities as a measure of liquidity. A
reconciliation of EBITDA to Net income is provided within the
Company's Management Discussion and Analysis. Not all companies
calculate EBITDA in the same manner and EBITDA does not have a
standardized meaning prescribed by GAAP. Accordingly, EBITDA, as
the term is used herein, is unlikely to be comparable to EBITDA as
reported by other entities. |
|
|
|
(2) |
|
Net working capital is defined as current assets excluding
cash, less accounts payable and accrued liabilities, income taxes
payable and other current liabilities, excluding the bank operating
loan. Net working capital, bank operating loan and long term debt
are as at quarter end. |
|
|
|
"Fourth quarter results reflect continuing year
over year improvement in oil and gas industry well completions and
rig counts which contributed to a 46% increase in sales over the
prior year period. This momentum is anticipated to continue in
2011," said Michael West, President and CEO.
Net income for the fourth quarter of 2010 was
$1.6 million, and included a $0.7 million after tax charge
associated with the elimination of the cash settlement mechanic
from the Company's stock option plan in response to income tax
provisions introduced in the 2010 Canadian federal budget.
Excluding the stock option charge, net income was $2.3 million, an
increase of $2.8 million over the net loss of $0.5 million in the
fourth quarter of 2009. Sales were $135.6 million, an increase of
$42.6 million (46%) over the fourth quarter of 2009, principally
due to increased oilfield sales, driven by a 200% increase in well
completions over the prior year period. Gross profit reached
$20.5 million, an increase of $5.2 million (34%) over the prior
year period, due to increased sales partially offset by a reduction
of 1.4% in average sales margins. Compared to the annual year
over year decrease in sales margins of 2.2%, fourth quarter 2010
margins began to recover as tubular and other steel product margins
improved as higher cost inventory was sold during 2010 and replaced
with more competitively priced product. Selling, general and
administrative ("SG&A") costs increased by $2.1 million (15%)
over the prior year period as people and selling costs were higher
in the fourth quarter to support the increase in sales compared to
the prior year period. Income tax expense increased by $1.3
million over the prior year period due to increased earnings and
the stock option charge. Net income per share (basic) was $0.09 in
the fourth quarter of 2010, an increase of $0.12 from the net loss
of $0.03 in the fourth quarter of 2009.
Net income for the year ended December 31, 2010
was $5.9 million, down $0.4 million (6%) from the year ended
December 31, 2009. After adjusting for the $0.7 million after
tax stock option charge recorded in the fourth quarter, net income
increased by $0.3 million (5%) over 2009 as earnings momentum
increased in the second half of 2010 compared to the prior year
period. Sales reached $489.6 million in 2010, an increase of
$52.6 million (12%) over 2009. Approximately one-half of the
increase reflected the full year contribution of sales in 2010 from
the acquisition of a western Canadian oil field supply competitor
on June 1, 2009 (the "Acquired Business"). The remaining
increase was attributable to the 50% year over year increase in
industry well completions, which tend to drive demand for oilfield
products used in capital projects, partially offset by the rollover
of tubular and other steel product prices experienced in 2009 that
contributed to lower sales and margin performance for these
products in 2010. Gross profit decreased by $1.7 million in
2010 (2%) as the impact of the increase in sales was more than
offset by a reduction of 2.2% in average sales margins. Lower
sales margins in 2010 reflected increased customer bid activity
combined with aggressive oilfield supply industry
competition. SG&A costs decreased by $1.7 million in 2010
compared to 2009, offsetting the reduction in gross profit.
SG&A costs were reduced in 2010 due to the absence of costs
incurred in 2009 to integrate the Acquired Business. Income
tax expenses in 2010 increased by $0.8 million as a result of the
fourth quarter stock option charge. Net income per share
(basic) was $0.34 in 2010, down 6% from 2009, consistent with the
decrease in net income.
Business Outlook
Oil and gas industry activity in 2011 is
expected to increase modestly from 2010 levels. Natural gas
prices remain depressed as North American production capacity and
inventory levels currently dominate demand. Natural gas
capital expenditure activity is focused on the emerging shale gas
plays in north eastern British Columbia and liquids rich gas plays
in north-western Alberta where the Company has strong market
positions. Conventional and heavy oil economics are
reasonable at current price levels leading to moderate capital
expenditure activity in eastern Alberta and south east
Saskatchewan. Oil sands project announcements continue to
gain momentum at current oil price levels. Approximately 50%
to 60% of the Company's total sales are driven by our customer's
capital expenditure requirements. CE Franklin's revenues are
expected to increase modestly in 2011 due to increased oil and gas
industry activity and the expansion of the Company's product
lines.
Sales margins are expected to remain under
pressure as customers that produce natural gas, focus on reducing
their costs to maintain acceptable project economics and due to
continued aggressive oilfield supply industry competition.
The Company will continue to manage its cost structure to protect
profitability while maintaining service capacity and advancing
strategic initiatives.
Over the medium to longer term, the Company's
strong financial and competitive positions will enable profitable
growth of its distribution network through the expansion of its
product lines, supplier relationships and capability to service
additional oil and gas and other industrial end use markets.
Fourth Quarter Operating Results
The following table summarizes CE Franklin's
results of operations:
(in millions of Cdn. dollars except
per share data) |
|
|
|
|
|
|
Three months
ended December 31 |
|
|
Year ended
December 31 |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
135.6 |
|
100.0% |
|
$ |
93.0 |
|
100.0% |
|
$ |
489.6 |
|
100.0% |
|
$ |
437.0 |
|
100.0% |
|
Cost of sales |
|
|
(115.1) |
|
(84.8)% |
|
|
(77.7) |
|
(83.5)% |
|
|
(414.6) |
|
(84.7)% |
|
|
(360.4) |
|
(82.5)% |
|
Gross profit |
|
|
20.5 |
|
15.1% |
|
|
15.3 |
|
16.5% |
|
|
75.0 |
|
15.3% |
|
|
76.6 |
|
17.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
(16.7) |
|
(12.3)% |
|
|
(14.6) |
|
(15.7)% |
|
|
(62.6) |
|
(12.8)% |
|
|
(64.2) |
|
(14.7)% |
Foreign exchange loss |
|
|
- |
|
- |
|
|
(0.1) |
|
- |
|
|
0.1 |
|
- |
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
3.8 |
|
2.8% |
|
|
0.6 |
|
0.8% |
|
|
12.5 |
|
2.5% |
|
|
12.4 |
|
2.8% |
Amortization |
|
|
(0.6) |
|
(0.4)% |
|
|
(0.8) |
|
(0.9)% |
|
|
(2.5) |
|
(0.5)% |
|
|
(2.5) |
|
(0.6)% |
Interest |
|
|
(0.2) |
|
(0.1)% |
|
|
(0.2) |
|
(0.2)% |
|
|
(0.7) |
|
(0.1)% |
|
|
(0.9) |
|
(0.2)% |
Income
(loss) before taxes |
|
|
3.0 |
|
2.2% |
|
|
(0.4) |
|
(0.3)% |
|
|
9.3 |
|
1.9% |
|
|
8.9 |
|
2.0% |
Income tax expense |
|
|
(1.4) |
|
(1.0)% |
|
|
(0.1) |
|
(0.1)% |
|
|
(3.4) |
|
(0.7)% |
|
|
(2.6) |
|
(0.6)% |
Net income (loss) |
|
|
1.6 |
|
1.2% |
|
|
(0.5) |
|
(0.4)% |
|
|
5.9 |
|
1.2% |
|
|
6.3 |
|
1.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.09 |
|
|
|
$ |
(0.03) |
|
|
|
$ |
0.34 |
|
|
|
$ |
0.36 |
|
|
|
Diluted |
|
$ |
0.09 |
|
|
|
$ |
(0.03) |
|
|
|
$ |
0.33 |
|
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(000's) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
17,452 |
|
|
|
|
17,630 |
|
|
|
|
17,499 |
|
|
|
|
17,750 |
|
|
|
Diluted |
|
|
17,968 |
|
|
|
|
17,884 |
|
|
|
|
18,000 |
|
|
|
|
17,953 |
Sales
Sales for the quarter ended December 31, 2010
were $135.6 million, an increase of 46% from the quarter ended
December 31, 2009, as detailed above in the "Financial Highlights"
discussion.
The relative level of oil and gas commodity
prices are a key driver of industry capital project activity as
product prices directly impact the economic returns realized by oil
and gas companies. The Company uses oil and gas well completions
and average rig counts as industry activity measures to assess
demand for oilfield equipment used in capital projects. Oil
and gas well completions require the products sold by the Company
to complete a well and bring production on stream and are a general
indicator of energy industry activity levels. Average
drilling rig counts are also used by management to assess industry
activity levels as the number of rigs in use ultimately drives well
completion requirements. Well completion, rig count and
commodity price information for the fourth quarter and years 2010
and 2009 are provided in the table below:
|
|
|
Q4
average |
% |
|
Year
average |
% |
|
|
|
2010 |
|
2009 |
|
change |
|
2010 |
|
2009 |
|
change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas - Cdn. $/gj (AECO spot) |
|
|
$3.64 |
|
$4.54 |
|
(20%) |
|
$4.00 |
|
$3.97 |
|
1% |
Oil - Cdn. $/bbl (Synthetic Crude) |
|
|
$84.35 |
|
$78.82 |
|
7% |
|
$80.57 |
|
$69.09 |
|
17% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average rig count |
|
|
398 |
|
273 |
|
46% |
|
332 |
|
215 |
|
54% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Well completions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil |
|
|
2,625 |
|
999 |
|
163% |
|
6,541 |
|
3,197 |
|
105% |
|
Gas |
|
|
2,135 |
|
577 |
|
270% |
|
5,873 |
|
5,068 |
|
16% |
Total well completions |
|
|
4,760 |
|
1,576 |
|
202% |
|
12,414 |
|
8,265 |
|
50% |
Average statistics are shown except for well
completions. |
|
|
|
|
|
|
Sources: Oil and Gas prices -
First Energy Capital Corp.; Rig count data - CAODC; Well completion
data - Daily Oil Bulletin
Gas prices have been depressed in 2009 and 2010,
down significantly from average prices realized in 2008 while oil
prices have recovered from lows experienced during the first half
of 2009. Oil and gas producers have responded to the relative
change in oil and gas prices during this period by shifting their
focus from gas to oil projects. Gas well completions comprised 47%
of total Canadian industry well completions in 2010, down from 70%
in 2008. Customers have also increased the amount of
competitive bid activity used to procure the products they require
in an effort to reduce their costs. The Company is addressing
these industry changes by pursuing initiatives focused on improving
sales quotation processes and increasing the operating flexibility
and efficiency of its branch network.
The following table summarizes end use sales
demand:
(in millions of Cdn. $) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
Dec 31 |
|
Year ended Dec
31 |
|
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
End use sales demand |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
Capital projects |
|
73.5 |
|
54 |
|
46.5 |
|
50 |
|
255.3 |
|
52 |
|
246.0 |
|
56 |
|
Maintenance, repair and operating supplies
(MRO) |
|
62.1 |
|
46 |
|
46.5 |
|
50 |
|
234.3 |
|
48 |
|
191.0 |
|
44 |
|
Total sales |
|
135.6 |
|
100 |
|
93.0 |
|
100 |
|
489.6 |
|
100 |
|
437.0 |
|
100 |
|
Note: Capital project end use
sales are defined by the Company as consisting of tubulars and 80%
of pipe, flanges and fittings; and valves and accessories product
sales respectively. MRO Sales are defined by the Company as
consisting of pumps and production equipment, production services;
general product and 20% of pipes, flanges and fittings; and valves
and accessory product sales respectively.
Sales of capital project related products were
$73.5 million in the fourth quarter of 2010, an increase of 58%
($27.0 million) from the fourth quarter of 2009. Increased sales
reflect an increase in total well completions by 202% to 4,760 in
the fourth quarter of 2010 and an increase in the average working
rig count by 46% compared to the prior year period to 398 rigs. Gas
wells comprised 45% of the total wells completed in western Canada
in the fourth quarter of 2010 compared to 37% in the fourth quarter
of 2009. Spot gas and oil prices ended the fourth quarter at $3.94
per GJ (AECO) and $84.78 per bbl (Synthetic Crude), an increase of
8% and 2%, respectively, from fourth quarter average prices.
Depressed gas prices are expected to continue to negatively impact
gas drilling activity into 2011, which in turn is expected to
constrain demand for the Company's products.
MRO product sales are related to overall oil and
gas industry production levels and tend to be more stable than
capital project sales. MRO product sales for the quarter
ended December 31, 2010 increased by 15.6 million (34%) to $62.1
million compared to the quarter ended December 31, 2009 and
comprised 46% of the Company's total sales (2009 - 50%).
The Company's strategy is to grow profitability
by focusing on its core western Canadian oilfield product supply
business, complemented by an increase in product life cycle
services provided to its customers and the focus on the emerging
oil sands capital project and MRO sales opportunities. Sales
results of these initiatives to date are provided below:
|
|
|
|
|
|
Q4 2010 |
|
Q4 2009 |
|
YTD
2010 |
|
YTD 2009 |
Sales ($millions) |
|
|
|
|
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
Oilfield |
|
|
|
|
|
118.1 |
|
88 |
|
79.8 |
|
85 |
|
410.7 |
|
83 |
|
362.0 |
|
83 |
Oil sands |
|
|
|
|
|
11.5 |
|
8 |
|
10.1 |
|
11 |
|
61.3 |
|
13 |
|
64.5 |
|
15 |
Production services |
|
|
|
|
|
6.0 |
|
4 |
|
3.1 |
|
4 |
|
17.6 |
|
4 |
|
10.5 |
|
2 |
Total sales |
|
|
|
|
|
135.6 |
|
100 |
|
93.0 |
|
100 |
|
489.6 |
|
100 |
|
437.0 |
|
100 |
Sales of oilfield products to conventional
western Canada oil and gas end use applications were $118.1 million
for the fourth quarter of 2010, up 48% from the fourth quarter of
2009. This increase was driven by the 202% increase in well
completions compared to the prior year period.
Sales to oil sands end use applications were
$11.5 million in the fourth quarter an increase of $1.4 million
(14%) compared to $10.1 million in the fourth quarter of 2009 as
the Company continues to have strong sales to oil sands
construction projects. The Company continues to position its major
project execution capability and Fort McMurray branch to penetrate
this growing market for capital project and MRO products.
Production service sales were $6.0 million in
the fourth quarter of 2010 compared to $3.1 million in the fourth
quarter of 2009 reflecting improved oil production economics
resulting in increased customer maintenance activities that were
deferred in 2009.
Gross Profit
|
|
Q4 2010 |
|
Q4
2009 |
|
YTD
2010 |
|
YTD
2009 |
|
|
|
|
|
|
|
|
|
Gross profit (millions) |
|
$20.5 |
|
$15.3 |
|
$75.0 |
|
$76.7 |
Gross profit margin as a % of
sales |
|
15.1% |
|
16.5% |
|
15.3% |
|
17.5% |
|
|
|
|
|
|
|
|
|
Gross profit composition by product
sales category: |
|
|
|
|
|
|
Tubulars |
|
5% |
|
3% |
|
3% |
|
5% |
Pipe, flanges and fittings |
|
24% |
|
22% |
|
28% |
|
31% |
Valves and accessories |
|
21% |
|
22% |
|
20% |
|
19% |
Pumps, production
equipment and services |
|
15% |
|
15% |
|
14% |
|
12% |
General |
|
35% |
|
38% |
|
35% |
|
33% |
Total |
|
100% |
|
100% |
|
100% |
|
100% |
Gross profit was $20.5 million in the fourth
quarter of 2010, up $5.2 million (34%) from the fourth quarter of
2009 due to the 46% increase in sales being partially offset by
lower gross profit margins. Gross profit margins declined from
16.5% in the fourth quarter of 2009 to 15.1% in the fourth quarter
of 2010. Lower sales margins reflect increased customer bid
activity combined with aggressive oilfield supply industry
competition. The decrease in tubular gross profit composition in
2010 compared to 2009 reflected the rollover of tubular prices and
margins that commenced in the second quarter of 2009 and began to
recover in the fourth quarter of 2010.
Selling, General and Administrative
("SG&A") Costs
|
|
|
|
|
Q4
2010 |
|
Q4
2009 |
|
YTD
2010 |
|
YTD
2009 |
($millions) |
|
|
|
|
$ |
% |
|
$ |
|
% |
|
$ |
% |
|
$ |
|
% |
People costs |
|
|
|
|
9.8 |
59% |
|
8.2 |
|
56% |
|
36.3 |
58% |
|
36.2 |
|
56% |
Selling costs |
|
|
|
|
2.0 |
12% |
|
1.5 |
|
10% |
|
6.6 |
11% |
|
7.5 |
|
12% |
Facility and office costs |
|
|
|
|
3.3 |
20% |
|
3.2 |
|
22% |
|
13.4 |
21% |
|
13.3 |
|
21% |
Other |
|
|
|
|
1.6 |
9% |
|
1.7 |
|
12% |
|
6.3 |
10% |
|
7.2 |
|
11% |
SG&A costs |
|
|
|
|
16.7 |
100% |
|
14.6 |
|
100% |
|
62.6 |
100% |
|
64.2 |
|
100% |
SG&A costs as % of sales |
|
|
|
|
12% |
|
|
16% |
|
|
|
13% |
|
|
15% |
|
SG&A costs increased $2.1 million (14%) in
the fourth quarter of 2010 from the prior year period,
representing 12% of sales compared to 16% in the prior year period.
The improvement in SG&A costs as a percentage of sales compared
to the prior year period, reflects the impact of the 46% increase
in sales on a relatively high fixed cost nature of the Company's
branch network and supporting supply chain infrastructure. The
increase in people costs of $1.6 million reflects an increase in
variable compensation due to the increase in earnings, a 5%
increase in the number of employees, and a one-time stock based
compensation cost associated with the removal of the cash
settlement mechanic in the Company's stock option plan.
Selling costs increased by $0.5 million compared to the prior year
period due to an increase in bad debt expenses versus a reduction
in the bad debt expense in the prior year period. On a year to date
basis, selling costs are lower than the prior year due to lower
agent commissions. Facility and office costs are consistent with
the fourth quarter of 2009. Other expenses for the quarter
are consistent with the prior year period, but below the prior year
annual amount due to onetime costs incurred to integrate the
Acquired Business in 2009.
Amortization Expense
Amortization expense of $0.6 million in the
fourth quarter of 2010 was comparable to the fourth quarter of
2009.
Interest Expense
Interest expense was $0.2 million in the fourth
quarter of 2010, consistent with the fourth quarter of
2009.
Foreign Exchange Loss
Foreign exchange gains on United States dollar
denominated product purchases and net working capital liabilities
were nominal in the fourth quarter compared to a loss of $0.1
million in the prior year quarter.
Income Tax Expense
The Company's effective tax rate for the fourth
quarter of 2010 was 46.6% compared to a 46.4% rate in the fourth
quarter of 2009. The increase in the 2010 fourth quarter effective
rate reflects the write off of $0.5 million of future tax assets
related to the removal of the cash settlement mechanism from the
Company's stock option plan in the fourth quarter as a result of
provisions contained in the federal government's 2010 budget which
effectively eliminated the ability to deduct for tax purposes, cash
payments made to settle stock option obligations.
Substantially all of the Company's tax provision is currently
payable. The effective tax rate in 2009 was also high due to the
impact of comparable non-deductible expenses on lower net income
(loss) in 2009.
Summary of Quarterly Financial Data
The selected quarterly financial data presented
below is presented in Canadian dollars and in accordance with
Canadian GAAP. This information is derived from the Company's
unaudited quarterly financial statements.
(in millions of Cdn. dollars
except per share data) |
Unaudited |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
|
2009 |
|
2009 |
|
2009 |
|
2009 |
|
2010 |
|
2010 |
|
2010 |
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ 140.7 |
|
$
109.1 |
|
$ 94.1 |
|
$ 93.0 |
|
$
121.9 |
|
$ 99.9 |
|
$
132.2 |
|
$
135.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
26.4 |
|
17.5 |
|
17.4 |
|
15.3 |
|
19.7 |
|
15.6 |
|
19.2 |
|
20.5 |
Gross profit % |
|
18.8% |
|
16.0% |
|
18.5% |
|
16.5% |
|
16.1% |
|
15.6% |
|
14.5% |
|
15.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
9.5 |
|
1.7 |
|
0.5 |
|
0.6 |
|
4.1 |
|
0.7 |
|
3.8 |
|
3.8 |
EBITDA as a % of sales |
|
6.8% |
|
1.6% |
|
0.5% |
|
0.6% |
|
3.4% |
|
0.7% |
|
2.9% |
|
2.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
6.0 |
|
0.6 |
|
0.2 |
|
(0.5) |
|
2.2 |
|
(0.1) |
|
2.2 |
|
1.6 |
Net income (loss) as a % of sales |
|
4.3% |
|
0.5% |
|
0.2% |
|
(0.5%) |
|
1.8% |
|
(0.1%) |
|
1.7% |
|
1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ 0.33 |
|
$ 0.04 |
|
$ 0.01 |
|
($0.03) |
|
$ 0.13 |
|
($0.01) |
|
$ 0.12 |
|
$ 0.09 |
|
Diluted |
|
$ 0.33 |
|
$ 0.03 |
|
$ 0.01 |
|
($0.03) |
|
$ 0.12 |
|
($0.01) |
|
$ 0.12 |
|
$ 0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net working
capital(1) |
|
153.2 |
|
137.0 |
|
131.1 |
|
136.6 |
|
113.9 |
|
111.8 |
|
129.0 |
|
125.7 |
Long term debt/Bank operating
loan(1) |
|
40.7 |
|
25.8 |
|
21.6 |
|
26.8 |
|
1.4 |
|
0.0 |
|
14.7 |
|
6.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total well completions |
|
3,947 |
|
1,274 |
|
1,468 |
|
1,576 |
|
2,846 |
|
2,197 |
|
2,611 |
|
4,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Net working
capital, bank operating loan amounts and long term debt
are as at quarter end. |
The Company's sales levels are affected by
weather conditions. As warm weather returns in the spring
each year, the winter's frost comes out of the ground rendering
many secondary roads incapable of supporting the weight of heavy
equipment until they have dried out. In addition, many
exploration and production areas in northern Canada are accessible
only in the winter months when the ground is frozen. As a
result, the first and fourth quarters typically represent the
busiest time for oil and gas industry activity and the highest
sales activity for the Company. Sales levels drop
dramatically during the second quarter until such time as roads
have dried and road bans have been lifted. This typically results
in a significant reduction in earnings during the second quarter,
as the decline in sales typically out paces the decline in SG&A
costs as the majority of the Company's SG&A costs are fixed in
nature. Net working capital (defined as current assets less
accounts payable and accrued liabilities, income taxes payable and
other current liabilities, excluding the bank operating loan) and
borrowing levels follow similar seasonal patterns as sales.
Liquidity and Capital Resources
The Company's primary internal source of
liquidity is cash flow from operating activities before changes in
non-cash net working capital balances. Cash flow from
operating activities and the Company's $60.0 million revolving term
credit facility are used to finance the Company's net working
capital, capital expenditures and acquisitions.
As at December 31, 2010, long term debt was $6.4
million and was comprised principally of borrowings under the
Company's revolving term credit facility. Borrowings
decreased by $20.4 million from December 31, 2009 due to the
Company generating $10.7 million in cash flow from operating
activities, before net changes in non-cash working capital balances
and a $12.8 million reduction in net working capital. This was
offset by $1.3 million in capital expenditures and $1.9 million for
the purchase of shares to resource stock compensation obligations
and the repurchase of shares under the Company's Normal Course
Issuer Bid ("NCIB").
As at December 31, 2009, borrowings under the
Company's bank operating loan were $26.5 million, a decrease of
$8.4 million from December 31, 2008. Borrowing levels
decreased due to the Company generating $10.9 million in cash flow
from operating activities, before net changes in non-cash working
capital balances and a $14.8 million reduction in net working
capital. This was offset by $2.6 million in capital and other
expenditures, $11.3 million related to the acquisition of the
Acquired Business and $3.4 million for the purchase of shares to
resource stock compensation obligations and the repurchase of
shares under the Company's NCIB.
Net working capital was $125.7 million at
December 31, 2010, a decrease of $10.9 million from December 31,
2009. Accounts receivable at December 31, 2010 was $93.0
million an increase of $25.5 million (38%) from December 31, 2009,
due to the 46% increase in fourth quarter sales compared to the
prior year period, partially offset by a 7% improvement in days
sales outstanding in accounts receivable ("DSO") in the fourth
quarter of 2010 to 56 days from 60 days in the fourth quarter of
2009. DSO is calculated using average sales per day for the quarter
compared to the period end customer accounts receivable
balance. Inventory at December 31, 2010 was $94.8 million,
down $7.8 million (8%) at December 31, 2009. Inventory turns
for the fourth quarter of 2010 improved by 63% to 4.9 turns from
3.0 turns in the fourth quarter of 2009 as sales increased while
inventory decreased. Inventory turns are calculated using
cost of goods sold for the quarter on an annualized basis, compared
to the period end inventory balance. Accounts payable and
accrued liabilities at December 31, 2010 were $63.7 million, an
increase of $26.7 million (70%) due to increased purchasing
activity in the fourth quarter of 2010 to resource the increase in
sales compared to the prior year period.
Capital expenditures in 2010 were $1.3 million,
a decrease of $1.3 million (50%) and $4.3 million (77%) from 2009
and 2008 expenditures, respectively. Expenditures in
2010 were directed towards branch facility and business system
expansion and maintenance. The majority of the expenditures
in 2009 and 2008 were directed towards branch and Distribution
Centre facility expansions. Capital expenditures in 2011 are
anticipated to be in the $3.5 million to $4.5 million range and
will be directed towards business system, branch facility, vehicle
and operating equipment upgrades and replacements.
In July of 2010, the Company entered into a
$60.0 million revolving term credit facility that matures in July
2013 (the "Credit Facility"). The Credit Facility provides
lower borrowing costs, improved covenant flexibility and extended
repayment terms compared to the previous $60.0 million, 364 day
operating credit facility. Borrowings under the Credit
Facility bear interest based on floating interest rates and are
secured by a general security agreement covering all assets of the
Company. The maximum amount available under the Credit
Facility is subject to a borrowing base formula applied to accounts
receivable and inventories. The Credit Facility requires the
Company to maintain the ratio of its debt to debt plus equity, at
less than 40%. As at December 31, 2010, this ratio was
4%. The Company must also maintain coverage of its net
operating cash flow as defined in the Credit Facility agreement,
over interest expense for the trailing twelve month period, greater
than 1.25 times. As at December 31, 2010, this ratio was 14.1
times. The Credit Facility contains certain other covenants,
which the Company is in compliance with. As at December 31,
2010, the Company had borrowed $6.1 million and had available
undrawn borrowing capacity of $53.9 million under the Credit
Facility.
Contractual Obligations
There have been no material changes in
off-balance sheet contractual commitments since December 31,
2009.
Capital Stock
As at December 31, 2010 and 2009, the following
shares and securities convertible into shares were outstanding:
(millions) |
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Shares |
Shares outstanding |
|
|
|
|
|
|
|
|
|
|
17.5 |
|
|
17.6 |
Stock options |
|
|
|
|
|
|
|
|
|
|
1.1 |
|
|
1.2 |
Restricted share units |
|
|
|
|
|
|
|
|
|
|
0.5 |
|
|
0.4 |
Shares outstanding and issuable |
|
|
|
|
|
|
|
|
|
|
19.1 |
|
|
19.2 |
The basic weighted average number of shares
outstanding in 2010 was 17.5 million, a decrease of 0.3 million
shares from the prior year due principally to the purchases of
shares under its NCIB and to resource share unit incentive plan
obligations. The diluted weighted average number of shares
outstanding in 2010 was 18.0 million and was comparable to 2009, as
the decrease in the basic number of common shares outstanding was
offset by the dilutive effect of removing the cash settlement
mechanic from the stock option program in the fourth quarter of
2010. Going forward, stock option obligations will be settled
with shares issued from treasury.
The Company has established an independent trust
to purchase shares of the Company on the open market to resource
share unit plan obligations. For the year ended December 31,
2010 there were 204,300 shares acquired by the trust at an average
cost per share of $6.91. (2009 - 120,700 at an average cost per
share of $5.60). As at December 31, 2010, the trust held 450,732
shares representing approximately 100% of share unit plan
obligations outstanding (December 31, 2009 - 360,576 shares)
representing approximately 96% of share unit plan obligations
outstanding).
During the fourth quarter of 2010, the Company
discontinued the settlement of stock option obligations with cash
payments in favor of issuing shares from treasury. The cash
settlement mechanism was discontinued as a result of provisions
contained in the federal government's 2010 budget which effectively
eliminated the ability to deduct for tax purposes, cash payments
made to settle stock option obligations. An after tax charge
of $0.7 million was recorded in the fourth quarter comprised of a
$0.2 million stock based compensation charge and the write off of
$0.5 million of future income tax asset related to stock option
obligations. The mark to market current obligation of $2.1
million was transferred to contributed surplus on the balance sheet
as a result of this change in settlement of stock option
obligations. The cash settlement mechanism had been implemented
during the third quarter of 2009 to enable the Company to manage
its share dilution while resourcing its stock option plan on a tax
efficient basis.
On December 23, 2009, the Company announced the
renewal of its NCIB to purchase for cancellation through the
facilities of NASDAQ, up to 880,000 common shares representing
approximately 5% of its outstanding common shares. The Company
purchased in 2010, 61,769 shares at a cost of $0.4 million ($6.62
per share). During 2009, the Company purchased 553,710 shares at a
cost of $2.9 million ($5.17 per share) under its NCIB. On
December 21, 2010, the Company announced the renewal of the NCIB,
effective January 3, 2011, to purchase up to 850,000 common shares
representing approximately 5% of its outstanding common shares.
Shares may be purchased up to December 31, 2011.
Critical Accounting Estimates
There have been no material changes to critical
accounting estimates since December 31, 2009. The Company is not
aware of any environmental or asset retirement obligations that
could have a material impact on its operations.
Change in Accounting Policies
There have been no changes to accounting
policies since December 31, 2009.
Transition to International Financial Reporting Standards
("IFRS")
In February 2008, the Canadian Accounting
Standards Board confirmed that the basis for financial reporting by
Canadian publicly accountable enterprises will change from Canadian
GAAP to IFRS effective for January 1, 2011, including the
preparation and reporting of one year of comparative figures. This
change is part of a global shift to provide consistency in
financial reporting in the global marketplace.
Project Structure and Governance
A Steering Committee has been established to
provide leadership and guidance to the project team, assist in
developing accounting policy recommendations and ensure there is
adequate resources and training available. Management provides
status updates to the Audit Committee on a quarterly basis.
Resources and Training
CE Franklin's project team has been assembled
and has developed a detailed workplan that includes training,
detailed Canadian GAAP to IFRS analysis, technical research, policy
recommendations and implementation. The project team completed
initial training and ongoing training will continue through the
project as required. The Company's Leadership Team and the Audit
Committee have also participated in IFRS awareness sessions.
IFRS Progress
The project team is advanced in its assessment
of the differences between Canadian GAAP and IFRS. A risk based
approach was used to identify significant differences based on
possible financial impact and complexity. No accounting policy
differences have been identified to date that would give rise to
significant differences between Canadian GAAP and IFRS. Similarly,
there have been no significant information system change
requirements identified in order to adopt IFRS. The project team
has substantially completed its assessment of changes to financial
statement presentation, disclosure and again no significant
differences have been identified to this point. There are some
additional disclosures required under IFRS that the company will be
presenting in its first IFRS financial statements. Work is ongoing
on internal controls over financial reporting that will be required
to adopt IFRS. There are a number of IFRS standards in the process
of being amended by the International Accounting Standards Board
and are expected to continue until the transition date of January
1, 2011. The Company is actively monitoring proposed changes.
At this stage in the project, CE Franklin has
determined that the impact of adopting IFRS will be minimal to its
financial position and future results.
Controls and Procedures
Internal control over financial reporting
("ICFR") is designed to provide reasonable assurance regarding the
reliability of the Company's financial reporting and its compliance
with Canadian GAAP in its financial statements. The President
and Chief Executive Officer and the Vice President and Chief
Financial Officer of the Company have evaluated whether there were
changes to its ICFR during the twelve months ended December 31,
2010 that have materially affected or are reasonably likely to
materially affect the ICFR. No such changes were identified
through their evaluation.
Risk Factors
The Company is exposed to certain business and
market risks including risks arising from transactions that are
entered into the normal course of business, which are primarily
related to interest rate changes and fluctuations in foreign
exchange rates. During the reporting period, no events or
transactions have occurred that would materially change the
information disclosed in the Company Form 20F.
Forward Looking Statements
The information in this press release may
contain "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements
of historical facts, that address activities, events, outcomes and
other matters that CE Franklin plans, expects, intends, assumes,
believes, budgets, predicts, forecasts, projects, estimates or
anticipates (and other similar expressions) will, should or may
occur in the future are forward-looking statements. These
forward-looking statements are based on management's current
belief, based on currently available information, as to the outcome
and timing of future events. When considering forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements in this press release, including those in
under the caption "Risk factors".
Forward-looking statements appear in a number of
places and include statements with respect to, among other
things:
- forecasted oil and gas industry activity levels in 2011 and
beyond;
- planned capital expenditures and working capital and
availability of capital resources to fund capital expenditures and
working capital;
- the Company's future financial condition or results of
operations and future revenues and expenses;
- the Company's business strategy and other plans and objectives
for future operations;
- fluctuations in worldwide prices and demand for oil and
gas;
- fluctuations in the demand for the Company's products and
services.
Should one or more of the risks or uncertainties
described above or elsewhere in this press release occur, or should
underlying assumptions prove incorrect, the Company's actual
results and plans could differ materially from those expressed in
any forward-looking statements.
All forward-looking statements expressed or
implied, included in this press release and attributable to CE
Franklin are qualified in their entirety by this cautionary
statement. This cautionary statement should also be
considered in connection with any subsequent written or oral
forward-looking statements that CE Franklin or persons acting on
its behalf might issue. CE Franklin does not undertake any
obligation to update any forward-looking statements to reflect
events or circumstances after the date of filing this press
release, except as required by law.
CE Franklin Ltd. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Consolidated
Balance Sheets - Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
December 31 |
(in thousands of Canadian
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
2009 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable (note
8(b)) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,950 |
|
67,443 |
|
Inventories (note
3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,838 |
|
102,669 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,625 |
|
4,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,413 |
|
175,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,431 |
|
10,517 |
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,570 |
|
20,570 |
Future income
taxes (note 7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,116 |
|
1,457 |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
147 |
|
339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,677 |
|
207,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank operating loan (note 5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
26,549 |
|
Accounts payable and
accrued liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,363 |
|
38,489 |
|
Income taxes payable (note 7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,711 |
|
65,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term debt (note
5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,430 |
|
290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,141 |
|
65,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock (note 6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,078 |
|
23,284 |
|
Contributed surplus |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,716 |
|
17,184 |
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,742 |
|
102,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,536 |
|
142,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,677 |
|
207,955 |
See accompanying notes to these interim consolidated
financial statements.
|
CE Franklin Ltd. |
Interim Consolidated Statements of
Operations and Comprehensive Income - Unaudited |
|
|
|
Three months
ended |
|
Twelve months
ended |
|
|
December 31 |
December 31 |
|
December 31 |
December 31 |
(in
thousands of Canadian dollars except shares
and per share amounts) |
|
2010 |
2009 |
|
2010 |
2009 |
|
|
|
|
|
|
|
Sales |
|
135,641 |
93,013 |
|
489,585 |
437,027 |
Cost of sales |
|
115,095 |
77,666 |
|
414,579 |
360,370 |
Gross profit |
|
20,546 |
15,347 |
|
75,006 |
76,657 |
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
|
|
Selling, general and administrative
expenses |
|
16,738 |
14,568 |
|
62,554 |
64,226 |
|
Amortization |
|
610 |
759 |
|
2,465 |
2,535 |
|
Interest expense |
|
158 |
245 |
|
698 |
915 |
|
Foreign exchange (gain) / loss |
|
(20) |
137 |
|
(65) |
37 |
|
|
17,486 |
15,709 |
|
65,652 |
67,713 |
|
|
|
|
|
|
|
Income/(loss) before income taxes |
|
3,060 |
(362) |
|
9,354 |
8,944 |
|
|
|
|
|
|
|
Income tax expense (recovery) (note
7) |
|
|
|
|
|
|
|
Current |
|
979 |
44 |
|
3,102 |
2,894 |
|
Future |
|
449 |
124 |
|
341 |
(258) |
|
|
1,427 |
168 |
|
3,443 |
2,636 |
|
|
|
|
|
|
|
Net income/(loss) and comprehensive
income/(loss) |
1,633 |
(530) |
|
5,911 |
6,308 |
|
|
|
|
|
|
|
Net income/(loss) per share (note
6) |
|
|
|
|
|
|
|
Basic |
|
0.09 |
(0.03) |
|
0.34 |
0.36 |
|
Diluted |
|
0.09 |
(0.03) |
|
0.33 |
0.35 |
|
|
|
|
|
|
|
Weighted average number of shares
outstanding (000's) |
|
|
|
|
|
Basic |
|
17,452 |
17,630 |
|
17,499 |
17,750 |
|
Diluted (note 6(e)) |
|
17,966 |
17,884 |
|
18,000 |
17,953 |
See accompanying notes to these interim consolidated
financial statements.
|
|
|
|
|
CE Franklin Ltd. |
Interim Consolidated Statements of Cash
Flow - Unaudited |
|
|
|
|
|
|
|
Three months ended |
|
Twelve months ended |
|
|
December 31 |
|
December 31 |
(in thousands of Canadian dollars) |
|
2010 |
2009 |
|
2010 |
2009 |
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
Net income/(loss) for the period |
|
1,633 |
(530) |
|
5,911 |
6,308 |
Items not affecting cash
- |
|
|
|
|
|
|
Amortization |
|
610 |
759 |
|
2,465 |
2,535 |
Future income tax
expense/(recovery) |
|
449 |
124 |
|
341 |
(258) |
Stock based compensation expense |
|
471 |
224 |
|
1,991 |
2,306 |
Other |
|
78 |
45 |
|
27 |
- |
|
|
3,241 |
622 |
|
10,735 |
10,891 |
Net change in non-cash working capital
balances |
|
|
|
|
|
|
related to operations - |
|
|
|
|
|
|
Accounts receivable |
|
(1,216) |
(3,000) |
|
(25,479) |
33,070 |
Inventories |
|
1,270 |
1,762 |
|
7,831 |
27,042 |
Other current assets |
|
3,810 |
(477) |
|
2,358 |
5,800 |
Accounts payable and accrued liabilities |
|
977 |
(3,379) |
|
26,691 |
(46,702) |
Income taxes payable |
|
222 |
61 |
|
1,378 |
(4,434) |
|
|
8,304 |
(4,411) |
|
23,514 |
25,667 |
|
|
|
|
|
|
|
Cash flows (used in)/ from financing activities |
|
|
|
|
|
|
Decrease in bank operating
loan |
|
|
5,222 |
|
(26,549) |
(8,399) |
Increase in long term debt |
|
(7,970) |
|
|
6,126 |
|
Issuance of capital stock- Stock
options exercises |
|
58 |
(99) |
|
169 |
149 |
Purchase of
capital stock through normal course issuer bid |
|
(35) |
(136) |
|
(409) |
(2,863) |
Purchase of capital stock in
trust for Share Unit Plans |
|
(181) |
(282) |
|
(1,588) |
(676) |
|
|
(8,128) |
4,705 |
|
(22,251) |
(11,789) |
|
|
|
|
|
|
|
Cash flows (used in)/from investing activities |
|
|
|
|
|
|
Purchase of property and
equipment |
|
(176) |
(294) |
|
(1,263) |
(2,592) |
Business combinations (note
2) |
|
- |
- |
|
- |
(11,286) |
|
|
(176) |
(294) |
|
(1,263) |
(13,878) |
|
|
|
|
|
|
|
Change in cash and cash equivalents during the
period |
|
- |
- |
|
- |
- |
|
|
|
|
|
|
|
Cash and cash equivalents - Beginning and end of
period |
|
- |
- |
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
Interest |
|
158 |
245 |
|
698 |
915 |
Income taxes |
|
768 |
- |
|
1,725 |
7,230 |
See accompanying notes to these interim consolidated
financial statements.
|
|
|
|
|
|
|
|
|
CE Franklin Ltd. |
Interim Consolidated Statements of
Changes in Shareholders' Equity - Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock |
|
|
|
|
|
|
(in thousands of Canadian
dollars and number of shares) |
Number of
Shares |
|
|
|
$ |
|
Contributed
Surplus |
|
Retained
Earnings |
|
Shareholders'
Equity |
December 31,
2007 |
18,370 |
|
|
|
24,306 |
|
17,671 |
|
76,243 |
|
118,220 |
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation expense
(note 6 (b) and (c)) |
- |
|
|
|
- |
|
1,365 |
|
- |
|
1,365 |
Stock options excercised (note 6 (b)) |
13 |
|
|
|
69 |
|
(20) |
|
- |
|
49 |
Purchase of shares in trust for
Share Unit Plans (note 6 (c)) |
(300) |
|
|
|
(2,058) |
|
- |
|
- |
|
(2,058) |
Shares issued from Share Unit Plan
Trust (note 6 (c)) |
11 |
|
|
|
181 |
|
(181) |
|
- |
|
- |
Net income |
- |
|
|
|
- |
|
- |
|
21,747 |
|
21,747 |
December 31,
2008 |
18,094 |
|
|
|
22,498 |
|
18,835 |
|
97,990 |
|
139,323 |
|
|
|
|
|
|
|
|
|
|
|
|
Normal course issuer bid (note 6
(d)) |
(554) |
|
|
|
(724) |
|
- |
|
(2,139) |
|
(2,863) |
Stock based compensation expense
(note 6 (b) and (c)) |
- |
|
|
|
- |
|
1,662 |
|
- |
|
1,662 |
Modification of Stock option plan
(note 6 (b)) |
- |
|
|
|
- |
|
(1,276) |
|
- |
|
(1,276) |
Stock options excercised
(note 6 (b)) |
57 |
|
|
|
235 |
|
(86) |
|
- |
|
149 |
Purchase of shares in trust for
Share Unit Plans (note 6 (c)) |
(121) |
|
|
|
(676) |
|
- |
|
- |
|
(676) |
Shares issued from Share Unit Plan
Trust (note 6 (c)) |
105 |
|
|
|
1,951 |
|
(1,951) |
|
- |
|
- |
Net income |
- |
|
|
|
- |
|
- |
|
6,308 |
|
6,308 |
December 31,
2009 |
17,581 |
|
|
|
23,284 |
|
17,184 |
|
102,159 |
|
142,627 |
Normal course issuer bid (note 6 (d)) |
(62) |
|
|
|
(81) |
|
- |
|
(328) |
|
(409) |
Stock based compensation expense (note 6 (b)
and (c)) |
- |
|
|
|
- |
|
1,751 |
|
- |
|
1,751 |
Modification of Stock option plan (note 6
(b)) |
- |
|
|
|
- |
|
2,075 |
|
- |
|
2,075 |
Stock options excercised (note 6 (b)) |
46 |
|
|
|
290 |
|
(121) |
|
- |
|
169 |
Purchase of shares in trust for
Share Unit Plans and settlement of Deferred Share Unit Exercise
(note 6 (c)) |
(204) |
|
|
|
(1,410) |
|
(178) |
|
- |
|
(1,588) |
Shares issued from Share Unit Plan
Trust (note 6 (c)) |
113 |
|
|
|
995 |
|
(995) |
|
- |
|
- |
Net income |
- |
|
|
|
- |
|
- |
|
5,911 |
|
5,911 |
December 31, 2010 |
17,474 |
|
|
|
23,078 |
|
19,716 |
|
107,742 |
|
150,536 |
See accompanying notes to these interim consolidated
financial statements.
|
|
|
|
|
|
CE Franklin Ltd. |
|
|
|
|
|
Notes to Interim Consolidated Financial Statements -
Unaudited |
|
|
|
|
|
(tabular amounts in thousands of Canadian dollars, except
share and per share
amounts) |
|
|
|
|
Note 1 - Accounting Policies
These interim consolidated financial statements
have been prepared in accordance with accounting principles
generally accepted in Canada applied on a consistent basis with CE
Franklin Ltd.'s (the "Company") annual consolidated financial
statements for the year ended December 31, 2009. These
interim consolidated financial statements should be read in
conjunction with the annual consolidated financial statements and
the notes thereto for the year ended December 31, 2009, but do not
include all disclosures required by Generally Accepted Accounting
Principles (GAAP) for annual financial statements.
Recent Canadian GAAP pronouncements include CICA
section 1582 - Business Combinations, CICA section 1601 -
Consolidated Financial Statements and CICA section 1602 - Non -
Controlling interests. The overall objective of the standards
issued is to update the standards pertaining to business
combinations and allow convergence with International Financial
Reporting Standards by January 1, 2011. The adoption of these
standards is expected to have no impact on the Company.
These unaudited interim consolidated financial
statements reflect all adjustments which are, in the opinion of
management, necessary for a fair presentation of the results for
the interim periods presented. All such adjustments are of a normal
recurring nature.
The Company's sales typically peak in the first
quarter when oil and gas drilling activity is at its highest
levels. Sales then seasonally decline through the second and third
quarters, rising again in the fourth quarter when preparation for
the next drilling season commences. Similarly, net working capital
levels are typically at seasonally high levels at the end of the
first quarter, declining in the second and third quarters, and then
rising again in the fourth quarter.
Note 2- Business Combinations
On June 1, 2009, the Company acquired the net
assets of a western Canadian oilfield equipment distributor, for
total consideration of $11.3 million, after $0.7 million of post
closing adjustments, related principally to inventory
reductions.
Using the purchase method of accounting for
acquisitions, the Company consolidated the assets from the
acquisition date and allocated the consideration paid as
follows:
Cash consideration paid: |
|
|
|
|
|
11,286 |
|
|
|
|
|
|
|
Net assets acquired: |
|
|
|
|
|
|
Inventory |
|
|
|
|
|
10,462 |
Property, equipment and other |
|
|
|
|
|
824 |
|
|
|
|
|
|
11,286 |
Note 3 - Inventory
Inventories consisting primarily of goods
purchased for resale, are valued at the lower of average cost or
net realizable value. Inventory net realizable value expense was
recognized in the three and twelve months period ending December
31, 2010 of $0.3 million and $0.9 million respectively (2009 - $0.1
million and $1.2 million). As at December 31, 2010 and December 31,
2009 the Company had recorded inventory valuation reserves of $5.0
million and $6.3 million respectively.
During the three and twelve months period ended
December 31, 2010, inventory valuation reserves of $0.5 million and
$2.2 million respectively were utilized (2009 - $0.3 million and
$0.6 million respectively). No reversals of previously
written down inventory were recorded in either period.
Note 4 - Capital Management
The Company's primary source of capital is its
shareholders equity and cash flow from operating activities before
net changes in non-cash working capital balances. The Company
augments these capital sources with a $60.0 million revolving term
bank credit facility (the "Credit Facility") that is used to
finance its net working capital and general corporate requirements.
The Credit Facility was entered into July 8, 2010 and matures in
July, 2013. Previously the Company had a $60.0 million, 364 day
bank operating loan facility.
Note 5 - Long term debt and bank operating
loan
|
|
|
|
|
|
|
|
|
|
|
As at December
31 |
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
Bank operating loan |
|
|
|
|
|
|
|
|
|
|
- |
|
|
26,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JEN Supply debt |
|
|
|
|
|
|
|
|
|
|
290 |
|
|
290 |
Revolving term credit facility |
|
|
|
|
|
|
|
|
|
|
6,140 |
|
|
- |
Long term debt |
|
|
|
|
|
|
|
|
|
|
6,430 |
|
|
290 |
In July of 2010, the Company entered into a $60.0 million revolving
term Credit Facility which replaced its $60.0 million, 364 day bank
operating loan. Borrowings under the Credit Facility bear interest
based on floating interest rates and are secured by a general
security agreement covering all assets of the Company. The maximum
amount available under the Credit Facility is subject to a
borrowing base formula applied to accounts receivable and
inventories. The Credit Facility requires that the Company
maintains the ratio of its debt to debt plus equity at less than
40%. As at December 31, 2010, this ratio was 4% The Company must
also maintain coverage of its net operating cash flow as defined in
the Credit Facility agreement, over interest expense for the
trailing twelve month period, at greater than 1.25 times. As at
December 31, 2010, this ratio was 14.1 times. The Credit
Facility contains certain other covenants, which the Company is in
compliance with. As at December 31, 2010, the Company had borrowed
$6.1 million and had available undrawn borrowing capacity of $53.9
million under the Credit Facility. In management's opinion, the
Company's available borrowing capacity under its Credit Facility
and ongoing cash flow from operations, are sufficient to resource
its anticipated contractual commitments.
The JEN Supply debt is unsecured and bears interest at the
floating Canadian bank prime rate and is repayable in 2012.
Note 6 - Capital Stock
The Company has authorized an unlimited number
of common shares with no par value.
a) Stock options
Option activity for the years ended December 31
was as follows:
000's |
|
|
|
|
|
|
|
|
2010 |
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1 |
|
|
|
|
|
|
|
|
1,195 |
|
|
|
1,294 |
Granted |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
Exercised |
|
|
|
|
|
|
|
|
(86) |
|
|
|
(59) |
Forfeited |
|
|
|
|
|
|
|
|
(36) |
|
|
|
(40) |
Outstanding at December 31 |
|
|
|
|
|
|
|
|
1,073 |
|
|
|
1,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31 |
|
|
|
|
|
|
|
|
897 |
|
|
|
842 |
There were no options granted during the three
and twelve month periods ended December 31, 2010 and December 31,
2009.
During the year ended December 31, 2009, the
Company modified its stock option plan to include a cash settlement
mechanism. As a result, the Company's stock option obligations were
classified as current obligations (subject to vesting) based on the
positive difference between the Company's closing stock price at
period end and the underlying option exercise price. As at December
31, 2009, the Company's accrued stock option liability was
$1,918,000 representing a $642,000 increase in compensation
expense, since implementation of the cash settlement mechanism,
over the equity obligation of $1,276,000 previously recorded to
shareholders' equity (contributed surplus) using the Black Scholes
valuation model. As stock option obligations were recorded as
a liability on the Company's balance sheet, stock options were not
included in the calculation of the diluted number of shares
outstanding (see note 6(e)).
During the fourth quarter of 2010, the Company
discontinued the settlement of stock option obligations with cash
payments in favour of issuing shares from treasury. At the time of
this plan modification the current obligation of $2,075,000 was
transferred to Contributed Surplus.
Stock option compensation expense recorded in
the three and twelve month periods ended December 31, 2010
was $350,000 (2009 - $7,000) and $723,000 (2009 - $1,358,000),
respectively and is included in selling, general and administrative
expenses on the Consolidated Statement of Operations and
Comprehensive Income.
b) Share Unit Plans
The Company has Restricted Share Unit ("RSU"),
Performance Share Unit ("PSU") and Deferred Share Unit ("DSU")
plans (collectively the "Share Unit Plans"), whereby RSUs, PSUs and
DSUs are granted entitling the participant, at the Company's
option, to receive either a common share or cash equivalent in
exchange for a vested unit. RSUs and PSUs are granted to the
Company's officers and employees and vest one third per year over
the three year period from the date of grant. DSUs are
granted to the independent members of the Company's Board of
Directors ("Board"), vest on the date of grant, and can only be
redeemed when the Director resigns from the Board. For the PSU
plan, which was introduced in 2009, the number of units granted is
dependent on the Company meeting certain return on net asset
("RONA") performance thresholds during the year of grant. The
multiplier within the plan ranges from 0% - 200% dependent on
performance. For 2010, the PSU performance adjustment was a
negative reduction of 58% from target, resulting in a 77,000 unit
adjustment ($284,000) (2009 - negative reduction of 66% from target
resulting in a 103,000 unit adjustment). Compensation expense
related to the units granted is recognized over the vesting period
based on the fair value of the units at the date of the grant and
is recorded to compensation expense and contributed surplus.
The contributed surplus balance is reduced as the vested units are
settled. Share Unit Plan activity for the years ended December 31
was as follows:
|
|
|
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
Number of Units |
|
Number of Units |
|
|
|
|
|
|
RSU |
PSU |
DSU |
Total |
|
RSU |
PSU |
DSU |
Total |
Outstanding at January 1 |
|
|
|
|
|
223 |
53 |
98 |
374 |
|
165 |
- |
67 |
232 |
Granted |
|
|
|
|
|
145 |
132 |
31 |
308 |
|
172 |
161 |
31 |
364 |
Performance adjustment |
|
|
|
|
|
- |
(77) |
- |
(77) |
|
- |
(103) |
- |
(103) |
Excercised |
|
|
|
|
|
(82) |
(7) |
(49) |
(138) |
|
(105) |
- |
- |
(105) |
Forfeited |
|
|
|
|
|
(13) |
(4) |
- |
(17) |
|
(9) |
(5) |
- |
(14) |
Outstanding at December 31 |
|
|
|
|
|
273 |
97 |
80 |
450 |
|
223 |
53 |
98 |
374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31 |
|
|
|
|
|
30 |
10 |
80 |
120 |
|
33 |
- |
98 |
131 |
Share Unit Plan compensation expense recorded in
the three and twelve month periods ended December 31, 2010, net of
the PSU adjustment was $306,000 (2009 - $215,000 recovery) and
$1,268,000 (2009 - $948,000) respectively.
c) The Company's intention is to settle Share
Unit Plan obligations from an independent trust established by the
Company to purchase common shares of the Company on the open
market. The trust is considered to be a variable interest
entity and is consolidated in the Company's financial statements
with the cost of the shares held in trust reported as a reduction
to capital stock. During 2010, 204,300 common shares were
purchased by the trust (2009 - 120,700 common shares; 2008 -
300,095) at an average cost of $6.91 per share (2009 - $5.60 per
share; 2008 - $6.86 per share). As at December 31, 2010, the
trust held 450,732 shares (2009 - 360,576 shares).
d) Normal Course Issuer Bid ("NCIB")
On January 6, 2010, the Company announced the
renewal of its NCIB to purchase for cancellation, up to 880,000
common shares through the facilities of NASDAQ, representing
approximately 5% of its outstanding common shares. During the year
ended December 31, 2010, the Company purchased 61,769 shares at an
average cost of $6.62 per share for an aggregate cost of $409,000
(2009 - 553,710 shares purchased at an average cost of $5.17 per
share for an aggregate cost of $2,863,000).
On December 21, 2010, the Company announced the
renewal of the NCIB effective January 3, 2011, to purchase up to
850,000 common shares through the facilities of NASDAQ,
representing approximately 5% of its outstanding common shares.
Shares may be purchased up to December 31, 2011.
e) Reconciliation of weighted average number of
diluted common shares outstanding (in 000's)
The following table summarizes the common shares
in calculating net earnings per share.
|
|
|
|
Three months
ended |
|
Twelve months
ended |
|
|
|
|
December 31 |
|
December 31 |
|
|
|
|
2010 |
2009 |
|
2010 |
2009 |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding -
basic |
|
|
|
17,452 |
17,630 |
|
17,499 |
17,750 |
Effect of Stock options |
|
|
|
211 |
- |
|
194 |
- |
Effect of Share Unit Plans |
|
|
|
305 |
254 |
|
307 |
203 |
Weighted average common shares outstanding -
diluted |
|
|
|
17,968 |
17,884 |
|
18,000 |
17,953 |
Note 7 - Income taxes
a) |
|
The difference between the income tax provision recorded and
the provision obtained by applying the combined federal and
provincial statutory rates is as follows: |
|
|
|
|
Three months
ended |
|
|
Twelve months
ended |
|
|
|
|
December
31 |
|
|
December
31 |
|
|
|
|
2010 |
|
|
% |
|
|
2009 |
|
|
% |
|
|
2010 |
|
|
% |
|
|
2009 |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
|
3,060 |
|
|
|
|
|
(362) |
|
|
|
|
|
9,354 |
|
|
|
|
|
8,944 |
|
|
|
Income taxes calculated at expected rates |
|
|
|
860 |
|
|
28.1 |
|
|
(107) |
|
|
29.6 |
|
|
2,647 |
|
|
28.3 |
|
|
2,628 |
|
|
29.4 |
Non-deductible items |
|
|
|
25 |
|
|
0.8 |
|
|
28 |
|
|
(7.7) |
|
|
104 |
|
|
1.1 |
|
|
119 |
|
|
1.3 |
Capital taxes |
|
|
|
- |
|
|
- |
|
|
(26) |
|
|
7.2 |
|
|
11 |
|
|
0.1 |
|
|
19 |
|
|
0.2 |
Share based compensation |
|
|
|
554 |
|
|
18.1 |
|
|
254 |
|
|
(70.2) |
|
|
712 |
|
|
7.6 |
|
|
(70) |
|
|
(0.8) |
Adjustments on filing returns & other |
|
|
|
(12) |
|
|
(0.4) |
|
|
19 |
|
|
(5.2) |
|
|
(31) |
|
|
(0.3) |
|
|
(60) |
|
|
(0.7) |
Income tax expense |
|
|
|
1,427 |
|
|
46.6 |
|
|
168 |
|
|
(46.4) |
|
|
3,443 |
|
|
36.8 |
|
|
2,636 |
|
|
29.5 |
As at December 31, 2010 included in current
liabilities are taxes payable of $348,000. As at December 31,
2009, income taxes receivable of $1,029,000 were included in other
current assets.
b) |
|
Future income taxes reflect the net effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Significant components of future income tax
assets and liabilities are as follows: |
As at December
31 |
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
|
2009 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment |
|
|
|
|
|
|
|
|
|
|
870 |
|
|
|
852 |
|
Share based compensation |
|
|
|
|
|
|
|
|
|
|
487 |
|
|
|
856 |
|
Other |
|
|
|
|
|
|
|
|
|
|
157 |
|
|
|
127 |
|
|
|
|
|
|
|
|
|
|
|
1,513 |
|
|
|
1,835 |
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other |
|
|
|
|
|
|
|
|
|
|
397 |
|
|
|
378 |
Net future income tax
asset |
|
|
|
|
|
|
|
|
|
|
1,116 |
|
|
|
1,457 |
The Company believes it is more likely than not
that all future income tax assets will be realized.
Note 8 - Financial Instruments and Risk
Management
a) Fair
Values
The Company's financial instruments recognized
on the consolidated balance sheet consist of accounts receivable,
accounts payable and accrued liabilities, bank operating loan and
long term debt. The fair values of these financial instruments,
excluding the long term debt, approximate their carrying amounts
due to their short-term maturity. At December 31, 2010, the fair
value of the long term debt approximated its carrying value due to
its floating interest rate nature and short term maturity. There is
no active market for these financial instruments.
b) Credit
Risk
A substantial portion of the Company's accounts
receivable balance is with customers in the oil and gas industry
and is subject to normal industry credit risks. The Company
follows a program of credit evaluations of customers and limits the
amount of credit extended when deemed necessary.
The Company maintains provisions for possible
credit losses that are charged to selling, general and
administrative expenses by performing an analysis of specific
accounts. Movement of the allowance for credit losses for the
twelve month periods ended December 31 and the allowance for credit
losses deducted from accounts receivables as at December 31 was as
follows:
As at December 31 |
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
|
2009 |
Opening balance |
|
|
|
|
|
|
|
|
|
|
2,335 |
|
|
|
2,776 |
Write-offs |
|
|
|
|
|
|
|
|
|
|
(1,385) |
|
|
|
(1,026) |
Recoveries |
|
|
|
|
|
|
|
|
|
|
952 |
|
|
|
440 |
Change in provision for credit
losses |
|
|
|
|
|
|
|
|
|
|
(15) |
|
|
|
145 |
Closing balance |
|
|
|
|
|
|
|
|
|
|
1,887 |
|
|
|
2,335 |
Trade receivables outstanding greater than 60
days overdue were 6% of total trade receivables as at December 31,
2010 (2009 - 10%).
c) Market
Risk
The Company's long term debt bears interest
based on floating interest rates. As a result the Company is
exposed to market risk from changes in the Canadian prime interest
rate which can impact its borrowing costs. The Company purchases
certain products in US dollars and sells such products to its
customers typically priced in Canadian dollars, thus leading to
accounts receivable and accounts payable balances that are subject
to foreign exchange gains and losses upon translation. As a result,
fluctuations in the value of the Canadian dollar relative to the US
dollar can result in foreign exchange gains and losses.
d) Risk
Management
From time to time, the Company enters into
foreign exchange forward contracts to manage its foreign exchange
market risk by fixing the value of its liabilities and future
purchase commitments. The Company's foreign exchange risk arises
principally from the settlement of United States dollar denominated
net working capital balances as a result of product purchases
denominated in United States dollars. As at December 31,
2010, the Company had contracted to purchase US$6,515,000 (2009 -
$930,000) of these level two financial instruments at a fixed
exchange rate with terms not exceeding eight months. The fair
market value of the contract were nominal at December 31, 2010.
Note 9 - Related Party Transactions
Schlumberger Limited ("Schlumberger") owns
approximately 56% of the Company's outstanding shares. The
Company is the exclusive distributor in Canada of down hole pump
production equipment manufactured by Wilson Supply, a division of
Schlumberger. Purchases of such equipment conducted in the normal
course on commercial terms were as follows:
|
|
|
|
|
|
December 31
2010 |
|
|
December 31
2009 |
Cost of sales for the three months
ended |
|
|
|
|
|
2,280 |
|
|
1,932 |
|
|
|
|
|
|
|
|
|
|
Cost of sales for the twelve
months ended |
|
|
|
|
|
8,212 |
|
|
6,703 |
|
|
|
|
|
|
|
|
|
|
Inventory |
|
|
|
|
|
3,544 |
|
|
4,154 |
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
|
|
|
|
1,457 |
|
|
991 |
The Company pays facility rental expense to an
operations manager in the capacity of landlord, reflecting market
based rates. For the three and twelve month periods ended December
31, 2010, these costs totaled $185,000 and $798,000 respectively
(2009: $245,000 and $765,000).
Note 10 - Segmented reporting
The Company distributes oilfield products
principally through its network of 45 branches located in western
Canada to oil and gas industry customers. Accordingly, the
Company has determined that it operated through a single operating
segment and geographic jurisdiction.
Additional Information
Additional information relating to CE Franklin,
including its third quarter 2010 Management Discussion and Analysis
and interim consolidated financial statements and its Form 20-F /
Annual Information Form, is available under the Company's profile
on the SEDAR website at www.sedar.com and at
www.cefranklin.com.
Conference Call and Webcast
Information
A conference call to review the 2010 fourth
quarter results, which is open to the public, will be held on
Thursday, February 3rd, 2011 at 11:00 a.m. Eastern Time
(9:00 a.m. Mountain Time).
Participants may join the call by dialing
1-647-427-7450 in Toronto or dialing 1-888-231-8191 at the
scheduled time of 11:00 a.m. Eastern Time. For those
unable to listen to the live conference call, a replay will be
available at approximately 2:00 p.m. Eastern Time on the same day
by calling 1-416-849-0833 in Toronto or dialing
1-800-642-1687 and entering the Passcode of 38225963
and may be accessed until midnight Friday, February 17, 2011.
The call will also be webcast live at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3375020 and
will be available on the Company's website at
http://www.cefranklin.com.
Michael West, President and Chief Executive
Officer will lead the discussion and will be accompanied by Mark
Schweitzer, Vice President and Chief Financial Officer. The
discussion will be followed by a question and answer period.
About CE Franklin
For more than half a century, CE Franklin has
been a leading supplier of products and services to the energy
industry. CE Franklin distributes pipe, valves, flanges, fittings,
production equipment, tubular products and other general oilfield
supplies to oil and gas producers in Canada as well as to the oil
sands, refining, heavy oil, petrochemical, forestry and mining
industries. These products are distributed through its 45
branches, which are situated in towns and cities serving particular
oil and gas fields of the western Canadian sedimentary basin.
Forward-looking Statements: The
information in this news release may contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934 and
other applicable securities legislation. All statements,
other than statements of historical facts, that address activities,
events, outcomes and other matters that CE Franklin plans, expects,
intends, assumes, believes, budgets, predicts, forecasts, projects,
estimates or anticipates (and other similar expressions) will,
should or may occur in the future are forward-looking
statements. These forward-looking statements are based on
management's current belief, based on currently available
information, as to the outcome and timing of future events.
When considering forward-looking statements, you should keep in
mind the risk factors and other cautionary statements and refer to
the Form 20-F or our annual information form for further
detail.
SOURCE CE Franklin Ltd.
Copyright b. 2 PR Newswire