EDMONTON, March 5, 2015 /CNW/ - ZCL Composites Inc. (TSX:
ZCL) today announced financial results for the fourth quarter and
year ended December 31, 2014.
Year 2014 compared with 2013
- Record revenue of $170.8 million,
up $9.1 million or 6% from
$161.7 million;
- Record net income of $16.3
million or $0.54 per share
(basic and fully diluted), up $1.9
million or $0.05 per share
from $14.4 million or $0.49 per share (basic and fully diluted);
- Record adjusted EBITDA of $27.1
million, up $1.5 million or 6%
from $25.6 million;
- Backlog of $31.0 million, down
$7.9 million or 20% from $38.9 million; and
- Quarterly dividend of $0.045 per
share, up 13% from $0.04 per share in
the third quarter of 2014.
Q4 2014 compared with Q4 2013
- Revenue of $48.2 million, up
$10.5 million or 28% from
$37.7 million;
- Net income of $4.9 million or
$0.16 per share (basic and fully
diluted), up $3.1 million or
$0.10 per share from $1.8 million or $0.06 per share (basic and fully diluted);
and
- Adjusted EBITDA of $7.7 million,
up $3.7 million or 94% from
$4.0 million.
"I view 2014 as a year of achievement for ZCL," said
Ron Bachmeier, President and Chief
Executive Officer. "We set annual records for several financial
performance metrics and delivered a return on capital employed of
29%. Our balance sheet continues to be strong with working
capital of $62.6 million and a net
cash position of $25.8 million.
As there is uncertainty in certain markets that we serve due to the
decline in oil and gas prices, we will continue exercising prudence
on our capital allocation decisions, leaving us with flexibility to
take advantage of any growth opportunities that may arise."
"Looking ahead, we remain encouraged about our prospects.
As we enter 2015, we expect that we may initially see lower
levels of activity at ZCL due to the uncertainty in the energy
markets. However, we feel that the diversity of our product
offerings in the retail petroleum, water, and industrial corrosion
markets, which should benefit from lower commodity energy prices,
will allow us to grow our business in 2015 and capitalize on the
opportunities that will present themselves in the current
environment."
Financial Results
Revenue for the year ended December 31,
2014 was a record $170.8
million, up $9.1 million or 6%
from $161.7 million for the year
ended December 31, 2013. The
Underground operating segment grew 14% and both Petroleum Products
and Water Products achieved record annual revenues. The
Aboveground operating segment revenue was down 21% from 2013.
Gross profit for the year ended December
31, 2014 was $34.5 million, up
$1.0 million or 3% from $33.5 million a year earlier. Gross margin
was 20% of revenue for 2014, down slightly from 21% a year earlier,
with the decrease attributable to the Aboveground operating
segment.
Net income for the year ended December
31, 2014 was $16.3 million, up
$1.9 million or 13% from $14.4 million a year earlier. Net income
per diluted share for 2014 was $0.54,
up $0.05 or 10% from $0.49 per diluted share a year earlier. Net
income included a foreign exchange gain of $1.0 million that arose on the translation of US
dollar assets and liabilities held in the Canadian legal
entities.
Backlog
As of December 31, 2014, backlog
was $31.0 million, down $7.9 million or 20% from $38.9 million a year earlier. The overall
decrease primarily resulted from a reduction in the Underground
backlog of $8.0 million, which was
partially offset by a small increase in Aboveground backlog.
The Underground backlog decline reflects the significant amount of
pre-orders that the Canadian sales group received at the end of
2013 relative to 2014, an acceleration of product sales to certain
customers in the fourth quarter of 2014 that otherwise would have
been recorded as backlog at year end, and temporary customer
indecision due to the oil price drop. Our Canadian sales team
is currently focused on obtaining pre-orders for the first quarter
of 2015.
Financial Position
At December 31, 2014, ZCL's
balance sheet had working capital (current assets less current
liabilities) of $62.6 million, up
$14.7 million or 31% from
$47.8 million at December 31, 2013. Net cash increased
$10.6 million throughout the 2014
fiscal year to $25.8 million,
primarily due to increases in cash flows from operations throughout
the year of $20.8 million.
Return on capital employed remains strong at 29% for the year ended
December 31, 2014.
Dividends
Given our financial strength and ability to generate cash from
operations, the Board declared a 13% increase in our quarterly
dividend to $0.045 per share for the
fourth quarter of 2014, up from $0.04
per share previously. The dividend will be paid on
April 15, 2015, to the shareholders
of record as of March 31, 2015.
2015 Outlook
In 2015, our operations group plans to incur capital investment
at a level similar to 2014, in order to further progress lean
initiatives within our facilities. ZCL's maintenance capital
requirements are historically between $3
million to $5 million annually. For 2015, similar to
2014, ZCL's capital budget is planned to be at the upper end of
that range in order to continue to upgrade certain of our existing
facilities and equipment with the intent to further improve lead
times and process flow.
Summary Financial Results
For the three
months ended
|
|
2014
|
|
2013
|
(in thousands of
dollars,
|
|
Dec
31
|
|
Sep
30
|
|
Jun
30
|
|
Mar
31
|
|
Dec
31
|
|
Sep
30
|
|
Jun
30
|
|
Mar
31
|
except per share
amounts)
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue
|
|
48,195
|
|
49,361
|
|
41,687
|
|
31,592
|
|
37,715
|
|
43,931
|
|
47,250
|
|
32,809
|
Net income
|
|
4,895
|
|
5,557
|
|
4,492
|
|
1,372
|
|
1,769
|
|
4,993
|
|
5,087
|
|
2,536
|
Adjusted
EBITDA
|
|
7,702
|
|
8,834
|
|
7,382
|
|
3,159
|
|
3,975
|
|
8,512
|
|
8,316
|
|
4,797
|
Basic earnings per
share
|
|
0.16
|
|
0.19
|
|
0.15
|
|
0.05
|
|
0.06
|
|
0.17
|
|
0.17
|
|
0.09
|
Diluted earnings per
share
|
|
0.16
|
|
0.18
|
|
0.15
|
|
0.05
|
|
0.06
|
|
0.17
|
|
0.17
|
|
0.09
|
Adjusted EBITDA per
diluted share
|
|
0.25
|
|
0.29
|
|
0.24
|
|
0.10
|
|
0.13
|
|
0.28
|
|
0.28
|
|
0.16
|
Dividends declared
per share
|
|
0.04
|
|
0.04
|
|
0.035
|
|
0.035
|
|
0.03
|
|
0.03
|
|
0.025
|
|
0.025
|
MD&A and Financial Statements
The Company's management's discussion and analysis ("MD&A")
and consolidated financial statements for the years ended
December 31, 2014 and 2013, are
available on SEDAR at www.sedar.com and the ZCL website at
this link:
http://www.zcl.com/investor-relations/financials.html.
Conference Call
ZCL Composites Inc. has scheduled an investor conference call
for 9:00 a.m. Mountain Time
(11:00 a.m. Eastern Time) on
Friday, March 6, 2015, to discuss its
financial and operating results for the year and fourth quarter
ended December 31, 2014.
To access the conference call by telephone, please call (647)
427-7450 from the greater Toronto
area, or dial toll free 888-231-8191 from elsewhere in North
America. An audio webcast may be accessed through the
Investor Events tab on the ZCL website at
http://www.zcl.com/investor-relations/investor-events.html. Audio
replays will be available on the ZCL website shortly after the
conclusion of the conference call.
The conference call will include prepared remarks by ZCL's
President and Chief Executive Officer, Ron
Bachmeier and by ZCL's Chief Financial Officer, Kathy Demuth. After the prepared remarks,
ZCL will accept questions from analysts and institutional
investors. The public is invited to listen to the conference call
in real time or by replay.
Note on Non-IFRS Measures:
ZCL uses both IFRS and non-IFRS measures to make strategic
decisions and to set targets. Backlog, adjusted EBITDA,
return on capital employed, and net cash are non-IFRS measures that
are used by ZCL and may not be comparable to similar measures used
by other companies.
Backlog
Backlog is defined as the total value of orders that management
has assessed as having a high certainty of being performed because
of the existence of a contract or purchase order specifying the
scope, value and timing of an order.
Adjusted EBITDA
Adjusted EBITDA is defined as income from operations before
finance expense, income taxes, share-based compensation,
depreciation of property, plant and equipment, amortization of
deferred development costs and intangible assets, gains or losses
on sale of assets, and impairment of assets.
Return on Capital Employed
Return on capital employed is defined as adjusted EBITDA divided
by average capital employed, being average shareholders' equity,
plus average long term debt, including current portion, less
average cash and cash equivalents.
Net cash
Net cash is defined as cash and cash equivalents less long term
debt, current portion of long term debt and bank indebtedness.
Advisory Regarding Forward-Looking Statements
This document contains forward-looking statements under the
heading "Outlook" and elsewhere concerning future events or the
Company's future performance, including the Company's objectives or
expectations for revenue and earnings growth, income taxes as a
percentage of pre-tax income, business opportunities in the
Petroleum Products, Water Products, Corrosion Products markets,
efforts to reduce administrative and production costs, manage
production levels, anticipated capital expenditure trends, activity
in the petroleum and other industries and markets served by the
Company and the sufficiency of cash flows and credit facilities
available to cover normal operating and capital expenditures.
Forward-looking statements are often, but not always, identified by
the use of words such as "seek," "anticipate," "plan," "continue,"
"estimate," "expect," "may," "will," "project," "predict,"
"potential," "targeting," "intend," "could," "might," "should,"
"believe" and similar expressions. Actual events or results may
differ materially from those reflected in the Company's
forward-looking statements due to a number of known and unknown
risks, uncertainties and other factors affecting the Company's
business and the industries the Company serves generally.
These factors include, but are not limited to, fluctuations in
the level of capital expenditures in the Petroleum Products, Water
Products, and Corrosion Products markets, drilling activity and oil
and natural gas prices, and other factors that affect demand for
the Company's products and services, industry competition, the need
to effectively integrate acquired businesses, uncertainties as to
the Company's ability to implement its business strategy
effectively, political and economic conditions, the Company's
ability to attract and retain key personnel, raw material and
labour costs, fluctuations in the US dollar, euro and Canadian
dollar exchange rates, and other risks and uncertainties described
under the heading "Risk Factors" in the Company's most recent
Annual Information Form, and elsewhere in this document and other
documents filed with Canadian provincial securities authorities.
These documents are available to the public at www.sedar.com.
Unless otherwise indicated, the consolidated financial statements
have been prepared in accordance with International Financial
Reporting Standards and the reporting currency is in Canadian
dollars.
In addition to the factors noted above, management cautions
readers that the current economic environment could have a negative
impact on the markets in which the Company operates and on the
Company's ability to achieve its financial targets. Factors such as
continuing global economic uncertainty, tighter lending standards,
volatile capital markets, fluctuating commodity prices, and other
factors could negatively impact the demand for the Company's
products and the Company's ability to grow or sustain revenues and
earnings. Fluctuations in conversion rates of the US dollar to
Canadian dollar and euro to Canadian dollar also have the potential
to impact the Company's revenues and earnings.
The Company believes that the expectations reflected in the
forward-looking statements are reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this report should not be
unduly relied upon.
The forward-looking statements in this report speak only as of
the date of this report. The Company does not undertake to update
any forward-looking statement, whether written or oral, that may be
made from time to time by the Company or on the Company's behalf,
whether as a result of new information, future events, or
otherwise, except as may be required under applicable securities
laws. The forward-looking statements contained in this document are
expressly qualified by this cautionary statement. For further
information, please contact:
SOURCE ZCL Composites Inc.