SPRUCE GROVE, ALBERTA?(Marketwire ? Aug. 14, 2012) -
- Revenue up 90% over same period in prior year from legacy companies
- Adjusted EBITDA $7.7 million and net income $0.04 per share
- Capital expenditure program increased
ENTREC Corporation (TSX VENTURE:ENT) (ENTREC or the Company) is pleased to announce another strong quarter of financial results. Revenue was $28.7 million in the second quarter, representing a $13.6 million or 90% increase from the combined pro forma revenue of $15.1 million generated from each of the Companys business acquisitions and predecessor companies, on a combined basis, in the three months ended June 30, 2011 (the pro forma comparative revenue reflecting revenue generated from each of ENTRECs business acquisitions commencing one year prior to their respective date of acquisition). Higher rates of equipment utilization, cross-utilization of ENTRECs people and equipment resources among its geographic areas and expansion of the Companys equipment fleet through its capital expenditure program contributed to this significant rate of organic growth.
Strong revenue in the quarter resulted in Adjusted EBITDA of $7.7 million and net income of $3.0 million or $0.04 per share. During the six months ended June 30, 2012 ENTREC generated Adjusted EBITDA of $13.4 million and net income of $5.5 million or $0.10 per share.
The Company also closed two very strategic business acquisitions during the quarter. The acquisition of Singer, based in Calgary, Alberta, allowed ENTREC to consolidate a significant peer and competitor in the Calgary region, consolidate its facilities in Calgary, and increase the scope of services it is able to provide its customers. The acquisition of the Mains Group in June 2012 expanded the Companys business into the crane services market and represented a significant step forward for ENTREC in becoming a leading provider of integrated crane and heavy haul solutions to its customers throughout North America.
Strong Outlook for Remainder of 2012 and 2013
Our outlook for the remainder of 2012 and 2013 remains very positive, comments Rod Marlin, ENTRECs Chairman and CEO. Utilization rates for our fleet continue to be very brisk moving into the third quarter of 2012 and we continue to field a tremendous volume of quoting activity for future work. Capital spending levels on projects within the Alberta oil sands region and across western Canada also continue to be strong resulting in high demand for both crane and heavy haul transportation services. Complimenting this increase is also higher demand for on-site crane and transportation services to support new and existing facilities in the Alberta oil sands region.
The Company also believes its acquisition of Rain Coast Cranes & Equipment Inc. (Rain Coast), currently planned for the fourth quarter of 2012, will compliment its current crane operations and position ENTREC to benefit from the burgeoning development of LNG facilities planned for the Kitimat region over the coming years as well as ongoing mining, hydro-electric, pipelines, and other major projects throughout northern BC.
Revenue Guidance Reiterated
The Company reiterates its previously announced revenue guidance for fiscal 2012. Based on current expectations for future business activity and assuming no further business acquisitions are completed, the Company estimates revenue for the year ending December 31, 2012 will exceed $115 million, Future business acquisitions completed in fiscal 2012, including the acquisition of Rain Coast, currently anticipated to close on October 1, 2012, may further increase this revenue estimate.
Capital Expenditure Program Increased
The Company also announces it has increased its 2012 capital expenditure program to $39 million from a previous program of $22.3 million. This program consists of $5 million in maintenance capital expenditures and $34 million in growth capital expenditures to significantly expand ENTRECs crane and transportation fleets. The increase in the capital expenditure program for 2012 was primarily driven by the need for additions to the Companys crane fleet to meet the expected demand for crane services over the coming year.
We believe our growth capital expenditures will allow us to continue to achieve strong year-over-year organic revenue growth in our business as we move into the latter half of 2012 and 2013, added Mr. Marlin.
A complete set of ENTRECs most recent financial statements and Managements Discussion and Analysis will be filed on SEDAR (www.sedar.com) and posted on the Companys website (www.entrec.com).
About ENTREC
ENTREC specializes in the lifting, transportation (over the road and on-site), loading, off-loading and setting of overweight and oversized cargo for the oil and gas, construction, petrochemical, mining and power generation industries. The common shares of ENTREC trade on the TSX Venture Exchange under the trading symbol ENT.
| Consolidated Statements of Financial Position | June | December | ||
| As at | 30 | 31 | ||
| 2012 | 2011 | |||
| (thousands of Canadian dollars) | $ | $ | ||
| ASSETS | ||||
| Current assets | ||||
| Cash | 2,991 | 115 | ||
| Trade and other receivables | 34,814 | 13,679 | ||
| Inventory | 1,415 | 576 | ||
| Prepaid expenses and deposits | 1,021 | 406 | ||
| 40,241 | 14,776 | |||
| Non-current assets | ||||
| Long-term deposits | 400 | 400 | ||
| Property, plant and equipment | 94,225 | 45,680 | ||
| Intangible assets | 18,635 | 6,440 | ||
| Goodwill | 41,211 | 10,356 | ||
| Total assets | 194,712 | 77,652 | ||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||
| Current liabilities | ||||
| Bank indebtedness | - | 267 | ||
| Trade and other payables | 11,444 | 5,949 | ||
| Income taxes payable | 2,164 | - | ||
| Acquisition consideration payable | 5,316 | 4,125 | ||
| Current portion of credit facilities | - | 5,251 | ||
| Current portion of long-term debt | 9,692 | - | ||
| Current portion of obligations under finance lease | 723 | 313 | ||
| Credit facilities | - | 22,238 | ||
| 29,339 | 38,143 | |||
| Non-current liabilities | ||||
| Long-term debt | 54,198 | - | ||
| Obligations under capital lease | 2,697 | 1,141 | ||
| Deferred income taxes | 13,115 | 1,877 | ||
| Total liabilities | 99,349 | 41,161 | ||
| Shareholders equity | ||||
| Share capital | 82,041 | 34,759 | ||
| Contributed surplus | 7,182 | 1,125 | ||
| Retained earnings | 6,148 | 607 | ||
| Accumulated other comprehensive income | (8 | ) | - | |
| Total shareholders equity | 95,363 | 36,491 | ||
| Total liabilities and shareholders equity | 194,712 | 77,652 | ||
| Consolidated Statements of Income | Three Months Ended | Six Months Ended | |||||||
| (thousands of Canadian dollars, except per share amounts) | June 30 2012 $ | July 31 2011 $ | June 30 2012 $ | July 31 2011 $ | |||||
| Revenue | 28,730 | 4,650 | 52,167 | 4,650 | |||||
| Direct costs | 18,121 | 3,838 | 33,453 | 3,838 | |||||
| Gross profit | 10,609 | 812 | 18,714 | 812 | |||||
| Operating expenses | |||||||||
| General and administrative expense | 2,917 | 826 | 5,448 | 1,016 | |||||
| Depreciation of property, plant and equipment | 1,865 | 532 | 3,133 | 532 | |||||
| Amortization of intangible assets | 338 | 26 | 544 | 26 | |||||
| Share-based compensation | 447 | 93 | 618 | 93 | |||||
| Loss on disposal of property, plant and equipment | 119 | - | 128 | - | |||||
| 5,686 | 1,477 | 9,871 | 1,667 | ||||||
| Income (loss) before finance items and income taxes | 4,923 | (665 | ) | 8,843 | (855 | ) | |||
| Finance items | |||||||||
| Finance costs | 655 | 171 | 1,129 | 171 | |||||
| Finance income | (7 | ) | (28 | ) | (17 | ) | (32 | ) | |
| 648 | 143 | 1,112 | 139 | ||||||
| Income (loss) before income taxes | 4,275 | (808 | ) | 7,731 | (994 | ) | |||
| Income taxes | |||||||||
| Current | 441 | - | 441 | - | |||||
| Deferred | 823 | (270 | ) | 1,749 | (270 | ) | |||
| 1,264 | (270 | ) | 2,190 | (270 | ) | ||||
| Net income (loss) | 3,011 | (538 | ) | 5,541 | (724 | ) | |||
| Earnings (loss) per share ? basic and diluted | 0.04 | (0.02 | ) | 0.10 | (0.05 | ) | |||
Non-IFRS Financial Measures
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, loss (gain) on disposal of property, plant and equipment, and share-based compensation. In addition to net income, Adjusted EBITDA is a useful measure as it provides an indication of the financial results generated by ENTRECs principal business activities prior to consideration of how these activities are financed or how the results are taxed in various jurisdictions and before certain non-cash expenses.
Please see ENTRECs Management Discussion & Analysis for the three months ended June 30, 2012 for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with IFRS.
Forward-looking Statements
This press release contains forward-looking statements which reflect ENTRECs current beliefs and are based on information currently available to ENTREC. These statements require ENTREC to make assumptions it believes are reasonable and are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward- looking statements as certain of these risks and uncertainties are beyond ENTRECs control.
Examples of such forward-looking statements in this press release relate to, but are not limited to: ENTRECs projection that revenue for the year ending December 31, 2012 will exceed $115 million before considering the impact of future business acquisitions; expectation the acquisition of Rain Coast will compliment the Companys current crane operations and position ENTREC to benefit from the burgeoning development of LNG facilities planned for the Kitimat region over the coming years as well as ongoing mining, hydro-electric, pipelines, and other major projects throughout northern BC; and expectation the Company will execute its 2012 capital expenditure program of $39 million.
These forward-looking statements involve a number of significant assumptions. Key assumptions utilized in developing forward-looking statements related to ENTRECs future growth expectations include achieving its internal revenue, net income and cash flow forecasts for 2012 and 2013. Achieving these forecasts is largely dependent on a number of factors beyond ENTRECs control including all of the risks discussed further under the Business Risks section in ENTRECs Management Discussion and Analysis for the three months ended June 30, 2012. These risk factors are interdependent and the impact of any one risk or uncertainty on a particular forward-looking statement is not determinable.
ENTRECs ability to finance its capital expenditure program through credit facilities and finance leases is dependent on its ability to achieve debt financing terms acceptable to the lenders and ENTREC as well as meeting ENTRECs internal cash flow forecasts. Forward-looking statements associated with ENTRECs potential acquisition of Rain Coast rely on certain expectations and assumptions, including, among others, (i) the results of ENTRECs due diligence review of the businesses proposed to be acquired being satisfactory, (ii) the ability of the parties to agree to the terms of definitive agreements, (iii) ENTRECs ability to receive the various approvals required; and (v) Rain Coast meeting or exceeding ENTRECs internal revenue, net income, and cash flow forecasts for that business in the future.
Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, ENTREC. These forward-looking statements are made as of the date of this press release. Except as required by applicable securities legislation, ENTREC assumes no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.
Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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