CE Franklin Second Quarter Sales Up 117% Gross Profit Up 133%.Business Editors CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--July 20, 2000 CE Franklin Franklin, cities, United States Franklin. 1 City (1990 pop. 12,907), seat of Johnson co., S central Ind., inc. 1823. It is a farm trade center. Manufactures include auto parts, aluminum doors and windows, and copper panels. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CFT CFT complement fixation test; see under fixation. CFT complement fixation test. .)(AMEX AMEX See: American Stock Exchange :CFK CFK Clausenengen Fotballklubb (Clausenengen Football Club; Norway) CFK Computer Forum KaHo (Computer Aiding Center) CFK Charles Foster Kane (movie, band, White Stripes lyric) ) Canada's Largest Energy Supply Company Announces Growth in Sales and Profitability. (Results are in Canadian Dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents ) CE FRANKLIN LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability . (TSE:CFT.)(AMEX:CFK) today reported an increase in gross profit from $4.6 million in the second quarter of 1999 to $10.7 million in the second quarter of 2000, a 133% increase. Sales grew to $78.7 million from $36.3 million, a 117% increase from the same period last year. A continuing recovery in activity in western Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. oil and gas drilling was the main driver of both sales and earnings. Gross profit as a percentage of sales increased to 13.6% in the second quarter of 2000 from 12.6% in the second quarter of 1999. This improvement reflected an ongoing recovery from the unusually low level of activity in the company's markets in the previous year and an increased procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. and process effort in the company. Selling, general and administrative expenses increased by 22% from the same period last year as a result of increased staffing requirements and increased commissions tied to higher sales levels. Net income was $0.1 million, an increase of $2.8 million compared to the second quarter of 1999. Earnings per share (fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) for the second quarter of 2000 were $0.01, an increased of $0.16 compared to the second quarter of 1999. Sales for the first six months of 2000 were $176.0 million, an increase of $83.0 million or 89% compared to the first six months of 1999. The increase is due mainly to a 70% increase in drilling activity in western Canada
Western Canada, commonly referred to as the West ; including a 254% increase in oil drilling and a 31% increase in gas drilling activity. Net income for the first six months of 2000 was $1.4 million, an increase of $6.8 million compared to the first six months of 1999. Earnings per share (fully diluted) for the first six months were $0.08, an increase of $0.39 from the first six months in 1999. "Our largest customers, the oil and gas producers, are now realizing the cash flow benefits of higher commodity prices and are gradually grad·u·al adj. Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope. n. Roman Catholic Church 1. ramping up their operating and capital expenditures," commented John Gilbank, Chairman and Chief Executive Officer. "Our sales momentum is building and that will enable us to continue to pursue improvement and growth initiatives. On the eCommerce See e-commerce. side for example, beta testing (programming) beta testing - Testing a pre-release (potentially unreliable) version of a piece of software by making it available to selected users. This term derives from early 1960s terminology for product cycle checkpoints, first used at IBM but later standard throughout the is underway and we will conduct our first transactions with our pilot customers at the end of July July: see month. ." CE FRANKLIN SECOND QUARTER 2000 RESULTS During the second quarter, CE Franklin went live with its new website. It offers all our stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. valuable information and is setup See BIOS setup and install program. to facilitate our eCommerce Marketplace. Check it out at www.cefranklin.com. ABOUT CE FRANKLIN CE Franklin is Canada's largest distributor of supplies for the drilling, production, processing and pipelining of hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. . In addition to its complete range of production equipment, including artificial lift technology, the company sells pipe, valves, fittings fit·ting adj. Being in keeping with a situation; appropriate. n. 1. The act of trying on clothes whose fit is being adjusted. 2. A small detachable part for a machine or apparatus. 3. and maintenance supplies and provides complete customer inventory procurement and management services through its 41 locations across Canada Across Canada was an afternoon program that formerly aired on The Weather Network. The segment ran from early 1999 until mid 2002. The show ran from 3:00PM ET until 7:00 PM ET. . The company also manufactures and packages specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. products for the energy industry and provides supply packages for projects in the hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen processing industry through its Piping Resources Division. CE Franklin's common stock trades on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol CFT and on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. under the symbol CFK. For additional information visit the new website at www.cefranklin.com. CONFERENCE CALL INFORMATION CE Franklin Ltd. has scheduled a conference call for Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , July 21, 2000, at 12:00, noon (Eastern Standard Time) during which the second quarter results will be discussed. Please phone the conference call operator at 1-877-323-2090. John Gilbank, Chairman and Chief Executive Officer will chair the conference call. A question and answer session will be included in the call. A taped version of the call will be available until midnight Wednesday Wednesday: see week. , July 26, 2000 by calling 1-888-509-0081. DETAILED FINANCIALS TO FOLLOW. This news release includes forward looking statements within the meaning of section 27A of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that expected results will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include economic conditions, seasonality of drilling activity, commodity prices for oil and gas, currency fluctuations and government regulations, and other risks and uncertainties as described in the Company's 1999 Annual Report on Form 20-F as filed with the United States Securities and Exchange Commission.
CE Franklin Ltd.
Consolidated Statements of
Operations (Unaudited)
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Three Months Ended June 30, June 30, June 30,
(in thousands of dollars) 2000 2000 1999
U.S. $ Cdn $ Cdn $
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Sales
General supplies 27,715 40,999 22,738
Tubulars 22,946 33,944 11,245
CEF Technologies 2,530 3,743 2,293
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53,191 78,686 36,276
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Gross profit
General supplies 4,921 7,279 3,424
% 17.8% 17.8% 15.1%
Tubulars 1,257 1,860 556
% 5.5% 5.5% 4.9%
CEF Technologies 1,030 1,524 594
% 40.7% 40.7% 25.9%
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Total gross profit $ 7,208 10,663 4,574
Total gross profit % 13.6% 13.6% 12.6%
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Selling, general and
administrative expenses 5,702 8,435 6,915
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Earnings before interest, tax,
depreciation, amortization and
other expenses (income) (EBITDA) 1,506 2,228 (2,341)
Other Expenses (Income)
Depreciation and amortization 724 1,071 929
Interest expense 577 854 792
Loss (gain) on disposal
of capital assets - - -
Other 93 137 80
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Income before income taxes 112 166 (4,142)
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Income tax expense (recovery) 30 44 (1,487)
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Net income (loss) for the period 82 122 (2,655)
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Net income (loss) per share
(note #1)
Basic 0.00 0.01 (0.16)
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Fully diluted 0.00 0.01 (0.15)
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Weighted average basic number
of shares outstanding 16,867,427 16,867,427 16,568,669
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CE Franklin Ltd.
Consolidated Statements of
Operations (Unaudited)
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Six Months Ended June 30, June 30, June 30,
(in thousands of dollars) 2000 2000 1999
U.S. $ Cdn $ Cdn $
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Sales
General supplies 61,897 91,564 57,392
Tubulars 51,231 75,786 30,722
CEF Technologies 5,874 8,690 4,936
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119,002 176,040 93,050
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Gross profit
General supplies 10,725 15,865 7,734
% 17.3% 17.3% 13.5%
Tubulars 2,874 4,252 1,556
% 5.6% 5.6% 5.1%
CEF Technologies 2,148 3,177 1,252
% 36.6% 36.6% 25.4%
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Total gross profit $ 15,747 23,294 10,542
Total gross profit % 13.2% 13.2% 11.3%
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Selling, general and
administrative expenses 11,467 16,963 16,067
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Earnings before interest, tax,
depreciation, amortization and
other expenses (income) (EBITDA) 4,280 6,331 (5,525)
Other Expenses (Income)
Depreciation and amortization 1,436 2,125 1,543
Interest expense 1,146 1,695 1,653
Loss (gain) on disposal of
capital assets 25 37 -
Other 16 24 (33)
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Income before income taxes 1,657 2,450 (8,688)
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Income tax expense (recovery) 699 1,034 (3,299)
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Net income (loss) for the period 958 1,416 (5,389)
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Net income (loss) per share
(note #1)
Basic 0.06 0.08 (0.33)
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Fully diluted 0.05 0.08 (0.31)
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Weighted average basic number
of shares outstanding 16,867,427 16,867,427 16,568,669
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CE Franklin Ltd.
Consolidated Balance Sheets
(Unaudited)
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(in thousands of dollars) June 30, June 30, June 30,
2000 2000 1999
U.S. $ Cdn $ Cdn $
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ASSETS
Current assets
Accounts receivable 34,003 50,301 35,091
Inventories 40,439 59,822 42,672
Income tax recoverable 2,770 4,097 3,794
Other 615 910 783
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Total current assets 77,827 115,130 82,340
Capital assets 13,239 19,584 20,903
Goodwill 7,587 11,223 11,537
Other assets 477 706 1,162
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Total Assets 99,130 146,643 115,942
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LIABILITIES
Current liabilities
Bank overdraft 639 945 -
Accounts payable and
accrued liabilities 33,977 50,262 27,737
Bank operating loan 30,014 44,400 -
Current portion of long-term debt 202 299 300
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Total current liabilities 64,832 95,906 28,037
Bank operating loan - - 40,600
Long-term debt 306 452 1,085
Deferred income taxes 1,064 1,574 170
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Total liabilities 66,202 97,932 69,892
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SHAREHOLDERS' EQUITY
Capital stock and
contributed surplus 21,773 32,209 30,915
Retained earnings 11,155 16,502 15,135
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Total Shareholders' Equity 32,928 48,711 46,050
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Total Liabilities and
Shareholders' Equity 99,130 146,643 115,942
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CE Franklin Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
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Three Months Ended June 30, June 30, June 30,
(in thousands of dollars) 2000 2000 1999
U.S. $ Cdn $ Cdn $
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Operating activities
Net income (loss) for the period 82 122 (2,655)
Items not affecting cash -
Depreciation and amortization 724 1,071 929
Loss (gain) on disposal
of capital assets - - -
Increase (decrease) of
inventory reserves 60 89 153
Net change in non-cash working
capital balances related to
operations 4,332 6,408 3,997
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5,198 7,690 2,424
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Financing activities
Issuance of shares 497 735 67
Increase (decrease) in bank
operating loan 2,569 3,800 (1,500)
Increase (decrease) in bank
overdraft (7,100) (10,503) -
Increase (decrease) in
obligations under capital lease (51) (75) 5
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(4,085) (6,043) (1,428)
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Investing activities
Decrease (increase) in
marketable securities - - -
Purchase of capital assets (1,113) (1,647) 133
Proceeds on disposal of
capital assets - - -
Reduction (increase)
of other assets - - (1,129)
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(1,113) (1,647) (996)
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Increase (decrease) in cash
during the period - - -
Cash and Cash equivalents
- beginning of period - - -
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Cash and Cash equivalents
- end of period - - -
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CE Franklin Ltd.
Consolidated Statements of Cash Flows
(Unaudited)
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Six Months Ended June 30, June 30, June 30,
(in thousands of dollars) 2000 2000 1999
U.S. $ Cdn $ Cdn $
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Operating activities
Net income (loss) for the period 957 1,416 (5,389)
Items not affecting cash -
Depreciation and amortization 1,436 2,125 1,543
Loss (gain) on disposal of
capital assets 25 37 -
Increase (decrease) of
inventory reserves 274 406 (535)
Net change in non-cash working
capital balances related to
operations (1,935) (2,862) 13,087
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760 1,122 8,706
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Financing activities
Issuance of shares 631 934 68
Increase (decrease) in bank
operating loan 5,340 7,900 (6,200)
Increase (decrease) in bank
overdraft (4,969) (7,350) (433)
Increase (decrease) in
obligations under capital lease (101) (150) 1,339
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901 1,334 (5,226)
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Investing activities
Decrease (increase) in
marketable securities - - 455
Purchase of capital assets (1,708) (2,526) (2,806)
Proceeds on disposal of
capital assets 47 70 -
Acquisitions consisting of:
Working capital, excluding cash - - -
Capital assets - - -
Goodwill - - -
Reduction (increase) of other
assets - - (1,129)
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(1,661) (2,456) (3,480)
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Increase (decrease) in cash
during the period - - -
Cash and Cash equivalents
- beginning of period - - -
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Cash and Cash equivalents
- end of period - - -
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Note #1 - U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income per share (Cdn. $) U.S. GAAP primary net income per share was $.08 and fully diluted $.08 for the six months ended June June: see month. 30, 2000 (1999 - ($0.31) per share). Note #2 - U.S. dollar amounts The financial statements presented herein are expressed in Canadian dollars, and, solely for the convienience of the reader, have been translated into United States dollars for the quarter ended June 30, 2000 at the rate of CDN $1.4793 = U.S. $1.00, the prevailing rate on June 30, 2000. This translation should not be construed as a representation that the Canadian dollar amounts shown could be so converted into U.S. dollars at CDN $1.4793 = U.S. $1.00 or at any other rate. Note #3 - Share data At June 30, 2000 the company had 17,058,754 common shares and 1,000,207 options to acquire common shares outstanding. 448,883 of those options were currently vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) and exercisable.
Supplemental Information - Quarterly Financial Data
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(IN MILLIONS OF CDN DOLLARS) Q1 Q2 6 Months 2000
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Sales
General Supplies 50.6 41.0 91.6
Tubulars 41.8 33.9 75.8
CEF Technologies 4.9 3.7 8.7
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Total Sales 97.4 78.7 176.0
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# of Oil Wells Drilled
(excluding dry/service) 1,264 1,209 2,473
# of Gas Wells Drilled
(excluding dry/service) 1,774 1,899 3,673
Gross Profit
General Supplies 8.6 7.3 15.9
% of Sales 17.0% 17.8% 17.3%
Tubulars 2.4 1.9 4.3
% of Sales 5.7% 5.5% 5.6%
CEF Technologies 1.7 1.5 3.2
% of Sales 33.4% 40.7% 36.6%
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Total Gross Profit 12.6 10.7 23.3
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% of Sales 13.0% 13.6% 13.2%
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Selling, General & Administrative 8.5 8.4 17.0
% of Gross Profit 67.5% 79.1% 72.8%
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Earnings before interest, tax,
depreciation, amortization and
other expenses (income) EBITDA 4.1 2.2 6.3
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Net Income 1.3 0.1 1.4
% of Sales 1.3% 0.2% 0.8%
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EPS
Basic 0.08 0.01 0.08
Fully Diluted 0.07 0.01 0.08
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Total Assets 150.7 146.6 146.6
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Total Financed Debt 41.4 45.2 45.2
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Total Capitalization (Average)
Average Financed Debt 43.7 46.1 44.9
% to Total Capitalization 48.1% 48.8% 48.5%
Average Equity 47.0 48.3 47.7
% to Total Capitalization 51.9% 51.2% 51.5%
Total Capitalization 90.7 94.4 92.6
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Current Assets % of Total
Assets (Average)
Average Current Assets 116.8 112.1 114.4
Average Total Assets 147.7 143.5 145.6
% 79.0% 78.1% 78.6%
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Days Sales Outstanding (DSO) (1)
Average Accounts Receivable
- Trade 53.0 46.2 49.6
Sales - annualized 389.4 314.7 352.1
DSO 49.6 53.5 51.4
(1) (Average A/R/Sales)*365 days
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Bad Debt % to Accounts Receivable
Bad Debt 0.1 0.3 0.4
Average Accounts Receivable
- Trade 53.0 46.2 49.6
% 0.3% 0.5% 0.8%
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Inventory Turns
Cost of Sales 84.7 68.0 152.7
Cost of Sales - annualized 338.9 272.1 305.5
Average Inventory 52.7 57.0 54.9
Inventory Turns 6.4 4.8 5.6
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Inventory Writeoff %
Inventory Writeoffs 0.1 0.1 0.3
Average Inventory 52.7 57.0 54.9
% 0.3% 0.2% 0.5%
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ROI (after tax)
= Return on Investment (2)
Interest after tax 0.5 0.6 1.1
Interest after tax - annualized 1.9 2.5 2.2
Net Income - annualized 5.2 0.5 2.8
ROI (after tax) 7.8% 3.2% 5.4%
(2) Net Income + Interest After Tax
-------------------------------
Average (Equity + Financed Debt)
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ROE (after tax)
= Return on Equity (3) 11.0% 1.0% 5.9%
(3) (Net Income/Average Equity)
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Economic Value Added (EVA) (4)
Weighted Average Cost of Capital 9.7% 9.9% 9.8%
EVA (1.9%) (6.8%) (4.4%)
(4) (ROI - Weighted Average Cost of Capital ((% financing from debt x
cost of debt) + (% financing from equity x cost of equity)))
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