Alberta, Canada - Commerical Solutions, a major Canadian distributor of bearings, power transmission equipment, oilfield, industrial, and safety products, today announced its financial results for the three-month and nine-month periods ended June 30, 2013. A complete copy of the company's report will be available on the Internet at www.sedar.com.
Commercial reported revenues of $27.1 million, a $0.6 million decline from the same period in the prior year. EBITDA for the quarter was $0.4 million in comparison to $1.0 million in the same period last year. The company reported net loss of $0.1 million for the quarter compared to earnings of $0.2 million during the same quarter of fiscal 2012.
For the nine months ended June 30, 2013, the company reported revenues of $82.3 million, a $5.4 million decline from the same period in the prior year. EBITDA for the nine months was $1.6 million in comparison to $3.8 million in the same period last year. The company reported net loss of $0.2 million for the nine months ended June 30, 2013 compared to $1.2 million net earnings during the same period in the prior fiscal year.
The decrease in earnings was primarily due to lower revenues and lower gross margin rates. These were partially offset by lower operating expenses. After normalizing for the one-time legal expenses directly related to the potential sale of the company and further consulting costs in reviewing strategic alternatives, operating expenses were $1.0 million lower for the nine months ended June 30, 2013 in comparison to the same period in the prior year. The decrease is primarily the result of lower salaries and wages coupled with a smaller workforce as the company is tightly managing all variable expenses. Gross margins rates were lower primarily due increase in revenues generated from the company's USA operation. This resulted in a change in sales mix as high dollar capital equipment with lower gross margin percentages constituted a higher portion of sales compared to the prior year.
The company's revenue generated from its USA entity more than doubled in comparison to the prior year; however, reduction in drilling activity and capital spending in the oil and gas industry in Western Canada overshadowed the increased activity in the company's USA entity. The largest challenge facing this sector is the pricing differential on its crude oil and the infrastructure issues in delivering its oil and gas products to the USA and international markets. This has resulted in a decline in both capital spending and oil production. In addition, unusually wet weather late in the quarter particularly in Southern Alberta further hampered drilling activity. The Canadian Association of Oilwell Drilling Contractors rig utilization data in the nine months ended June 30, 2013 was 40.9% compared to 49.7% in the same period of the prior year.
Jim Barker, President & CEO of Commercial stated, "There is prevailing improvement in US and Global economic markets that we believe will continue into the second half of 2013. These align with what have been traditionally stronger quarters for Commercial. While we expect commodity prices to be somewhat volatile with effects in Canada and Western Canada in particular, we will continue to actively manage infrastructure costs while continuing to seek growth opportunities."
