Canadian Oil Field Services

[johnlw]

Gemini earns $412,000 in Q2 2006

2006-08-21 17:02 ET - News Release

Mr. Robert Brookwell reports

GEMINI CORPORATION REPORTS 2006 SECOND QUARTER RESULTS

Gemini Corp. has provided its second quarter financial results for the period ended June 30, 2006.

Revenue in the second quarter totalled $22.03-million, a 22-per-cent increase over the $18,059,000 generated in the second quarter of 2005. This brings Gemini's six-month revenues for 2006 to $46,337,000, compared with $30,193,000 for the same period last year. A significant portion of the revenue growth in both the second quarter and for the year to date relates to the previously announced pipeline module fabrication project announced early in the year. Additional work in relation to this project has been secured and is expected to extend its production horizon into the fourth quarter.

Gross profits to June 30, 2006, totalled $8,254,000, compared with $7,996,000 for the first half of 2005. Second quarter gross profits declined this year compared with the same period last year as a result of reduced billable hours within the engineering operations. These billing reductions were a function of temporary project delays related principally to the natural gas price uncertainties experienced in the quarter. At the start of the third quarter, client activity has regained strength and delayed projects are beginning to be released. Management expects that the shortfall in second quarter gross profits should be made up over the remainder of the year based upon current client feedback regarding planned activity levels.

Net earnings for the second quarter were reduced to $412,000 (1.1 cents per share), compared with the $960,000 (2.9 cents per share) achieved last year. Year-to-date net earnings now total $1,144,000 (3.3 cents per share), compared with $1.49-million (4.6 cents per share) for the same period in 2005. Earnings for the remainder of 2006 are expected to strengthen as engineering usage rates recover to more normal levels and further process improvements continue to enhance the profitability of the fabrication, construction and maintenance operations.

"The first half of 2006 has been somewhat unpredictable as certain clients chose to more closely examine their plans and delay some projects in light of market uncertainties," said Carl Johnson, Gemini's president and chief executive officer. "These delays lowered our staff utilization rates and reduced our engineering profitability as staff were retained in anticipation of third and fourth quarter demands. Fortunately, profitability improvements within our field service segments helped to offset some of this impact. We remain confident, based upon client feedback, that the last half of 2006 will be stronger and our net earnings should approach plan by the end of the year."

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