CALGARY, ALBERTA -- (Marketwire) -- 03/01/13 -- Gemini Corporation (TSX VENTURE: GKX) today announced its financial results for the fiscal year ended December 31, 2012.
The trend of increased revenue in 2012 over 2011 continued through the fourth quarter with an increase of 6.5% to $19,896,000 compared to $18,673,000 for the same period last year. This brings total 2012 revenue to $87,187,000, which is a 36% increase over the $64,102,000 achieved in 2011. The growth in revenue slowed in the fourth quarter as clients chose to delay or defer project decisions due to the uncertainties related to western Canadian oil and natural gas commodity price constraints. This development dampened activity and profitability for the fourth quarter and is expected to result in lingering effects through 2013 as surplus supply and market delivery challenges are addressed. Notwithstanding these conditions, the backlog of work in both the Field Solutions and Engineered Solutions segments remain solid and activity is expected to regain strength early in 2013.
Business development efforts directed toward key clients and potential new clients are continuing to reveal project opportunities that are expected to expand the Corporation's backlog of work. Notwithstanding the market uncertainties, clients are forecasting fairly consistent spending for 2013 compared to 2012 and Gemini is expecting to achieve revenue growth through increasing its share of the client spending programs.
Fourth quarter gross profit for 2012 was $2,958,000 compared to $2,904,000 for the same period in 2011. The slowdown in activity experienced in late November and through December resulted in a reduction in gross profit for the quarter as staff utilization levels declined. Gross profit for the year in absolute dollars increased as a result of the substantial revenue improvement, but declined as a percent of revenue to 16% from 18% in the prior year. This margin compression was a result of labour and material cost escalation, reduced utilization due to variable work flow, and the Corporation's focus on lower risk field service projects, which earn somewhat lower margins. Management is taking steps to return margins to more traditional levels through the implementation of a number of operational excellence initiatives centered on optimized utilization and efficiencies gained through technology, training and automation.
Net earnings for 2012 improved substantially to $785,000 (2.1 cents per share) compared to the net loss of $1,700,000 (4.9 cents per share) incurred in 2011. The positive profitability achieved in the first three quarters of the year was unfortunately reduced by a fourth quarter net loss of $224,000 (0.5 cents per share) due to the slowdown experienced near the end of the year.
"2012 has been a significant turning point for Gemini and the prospects for the future are bright even with some of the headwinds that are currently swirling", said Gemini's President and CEO, Doug Lautermilch. "We have regained profitability and the equity financing completed late in the year positions us well to invest in increased capability prior to what we expect to be a stronger market demand for our services in 2014 and beyond. Our operations have been successfully repositioned and our new business development team is making solid progress with both existing and new clients to secure an increasing backlog of work. We are expecting to generate increasing annual profitability as the future unfolds."
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