Canlan Reports Strong Q2 EBITDA and Continues Dividend
12 August 2016 - 9:54AM
Canlan Ice Sports Corp. (the “Corporation”) (TSX:ICE) today
reported its financial results for the second quarter ended June
30, 2016.
Highlights of Q2 2016:
- Q2 revenue of $18.2 million increased by $0.7 million or 4.0
% compared to 2015;
- Q2 EBITDA was $0.5 million compared to a break-even level in
2015;
- The Company refinanced all of its Canadian long–term debt at
favourable terms to reduce borrowing cost and increase cash flow.
HSBC Bank Canada provided Canlan with a $48.5 million refinancing
loan to consolidate its Canadian loan facilities;
- The Company entered into a long-term agreement to operate a new
state-of-the-art ice rink facility in Calgary, Alberta; and
- Major projects related to energy management and renewal of
refrigeration equipment are in progress as planned.
Three Months and Six Months Ended June 30, 2016
Results
|
For the 3 months ended June
30 |
For the 6 months ended June
30 |
(in thousands) |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Revenue |
$ |
18,182 |
|
$ |
17,476 |
|
$ |
42,413 |
|
$ |
40,051 |
|
Operating expense |
|
16,233 |
|
|
16,351 |
|
|
32,564 |
|
|
32,252 |
|
|
|
1,949 |
|
|
1,125 |
|
|
9,849 |
|
|
7,799 |
|
G&A expense |
|
1,493 |
|
|
1,113 |
|
|
2,749 |
|
|
2,368 |
|
EBITDA1 |
$ |
456 |
|
$ |
12 |
|
$ |
7,100 |
|
$ |
5,431 |
|
EBITDA per share |
$ |
0.03 |
|
$ |
- |
|
$ |
0.53 |
|
$ |
0.41 |
|
Depreciation |
|
1,729 |
|
|
1,733 |
|
|
3,465 |
|
|
3,412 |
|
Finance
costs |
|
3,093 |
|
|
709 |
|
|
3,823 |
|
|
1,438 |
|
Loss on held for
trading financial liabilities |
|
863 |
|
|
- |
|
|
863 |
|
|
- |
|
Loss (gain) on
foreign exchange |
|
(5 |
) |
|
(111 |
) |
|
(463 |
) |
|
539 |
|
Income tax
expense (recovery) |
|
(1,427 |
) |
|
(400 |
) |
|
(760 |
) |
|
246 |
|
Net earnings (loss) |
($ |
3,797 |
) |
($ |
1,919 |
) |
$ |
172 |
|
($ |
204 |
) |
Net
earnings (loss) per share |
($ |
0.28 |
) |
($ |
0.14 |
) |
$ |
0.01 |
|
($ |
0.02 |
) |
1 Earnings before interest, taxes, depreciation and
amortization (EBITDA) is often used as a measure of financial
performance. However, EBITDA is not a term that has specific
meaning in accordance with IFRS, and may be calculated differently
by other companies. Canlan reconciles EBITDA to its net
earnings.
Key Balance Sheet Figures (in
thousands): |
|
|
|
June 30, 2016 |
December 31, 2015 |
Assets |
|
|
Cash and
cash equivalents |
$ |
9,485 |
|
$ |
10,065 |
|
Property
plant and equipment |
|
100,963 |
|
|
103,631 |
|
Investment
properties |
|
557 |
|
|
574 |
|
Other assets |
|
7,246 |
|
|
6,334 |
|
Total assets |
$ |
118,251 |
|
$ |
120,604 |
|
Liabilities and Equity |
|
|
Interest
bearing debt |
$ |
58,618 |
|
$ |
55,762 |
|
Accounts
payable and accrued liabilities |
|
8,385 |
|
|
7,938 |
|
Deferred
revenue |
|
7,125 |
|
|
12,519 |
|
Financial
liability held for trading |
|
863 |
|
|
- |
|
Other liabilities |
|
756 |
|
|
657 |
|
Total liabilities |
|
75,747 |
|
|
76,876 |
|
Share
capital and contributed surplus |
|
63,652 |
|
|
63,652 |
|
Foreign
currency translation reserve |
|
2,750 |
|
|
3,612 |
|
Deficit |
|
(23,898 |
) |
|
(23,536 |
) |
Total shareholders’ equity |
|
42,504 |
|
|
43,728 |
|
Total liabilities and equity |
$ |
118,251 |
|
$ |
120,604 |
|
Second Quarter Results (three
months ended June 30, 2016 compared with three months ended June
30, 2015)
- Total revenue of $18.2 million increased by $0.7 million or
4.0% compared to the prior year;
- Growth in sales from adult and youth hockey leagues, and
contract ice rentals were the primary sources of the year-over-year
revenue increase;
- Quarterly EBITDA reached $0.5 million compared to break even in
2015;
- After recording depreciation, finance costs, an unrealized
valuation expense on an interest rate swap contract, and income tax
recovery, net loss for the period was $3.8 million compared to $1.9
million a year ago;
- Included in finance cost was a $2.3 million early debt
repayment fee;
- Minimal foreign exchange gain/loss was recognized during the
period compared to a foreign exchange gain of $0.1 million in 2015
related to period end translation of U.S. dollar denominated loans
and monetary items; and
- On July 7, 2016, Canlan entered into a lease and operating
agreement with a municipality to operate a two-pad ice rink
facility in Calgary, Alberta for a term of 25 years and a nominal
lease payment. Ownership of the facility will not
transfer to Canlan; however, an income sharing arrangement with the
municipality forms part of the agreement.
Six Months Ended June 30, 2016
Results (six months ended June 30, 2016 compared with six
months ended June 30, 2015)
- Total revenue of $42.4 million increased by $2.4 million or
5.9% compared to the prior year;
- Growth in sales from adult, youth hockey and soccer leagues,
contract ice rentals, and instructional programs were the primary
sources of the year-over-year revenue increase;
- Quarterly EBITDA of $7.1 million increased by $1.7 million or
30.7% from 2015;
- After recording depreciation, finance costs, an unrealized
valuation expense on an interest rate swap contract, income tax
recovery and a foreign exchange gain, net earnings for the period
was $0.2 million compared to a net loss of $0.2 million a year ago;
and
- A foreign exchange gain of $0.5 million was recognized during
the period compared to a foreign exchange loss of $0.5 million in
2015 related to period end translation of U.S. dollar denominated
loans and monetary items.
“Overall, Q2 operations were on target and
positive results in our two sportsplex facilities, U.S. ice rinks,
and our tournament division resulted in strong year-over-year
earnings growth,” said Canlan’s CEO, Joey St-Aubin. “In
addition, I am very pleased that we concluded our operating
agreement with the City of Calgary enabling us to serve the Calgary
community and once again establish a presence in the province of
Alberta. We’d like to thank the City of Calgary for providing
this opportunity to Canlan Ice Sports.”
“In addition to the solid revenue growth
achieved, we were also able to complete a refinancing transaction
during the quarter with HSBC,” added Canlan’s CFO, Mike
Gellard. “The transaction will reduce borrowing cost and
increase cash flow through reduced debt service requirements and in
turn, provide the company with added working capital for operating
and capital expenditures.”
Dividend Policy
Canlan’s Board of Directors has approved the
continuation of the Corporation’s quarterly dividend policy and
declared eligible dividends totaling $0.02 per common share that
will next be paid on October 14, 2016 to shareholders of record at
the close of business September 30, 2016. Canlan's Board of
Directors reviews the Corporation’s dividend policy on a quarterly
basis. Canlan's dividend is designated as an “eligible”
dividend under the Income Tax Act (Canada) and any corresponding
provincial legislation. Under this legislation, individuals
resident in Canada may be entitled to enhanced dividend tax
credits, which reduce income tax otherwise payable.
“Currently, youth summer camps and tournaments
are in full swing, which is always an exciting time for all our
facilities,” said Mr. St-Aubin. “At the same time, we will focus on
the start-up of the new ice rink facility in Calgary that we have
been engaged to operate, and maximize registrations in all our
sports leagues for the upcoming fall/winter season.”
Canlan’s financial statements and Management
Discussion & Analysis for the period ended June 30, 2016 will
be available via SEDAR on or before August 12, 2016 and through the
Company’s website, www.icesports.com.
About Canlan
Canlan Ice Sports Corp. is the North American
leader in the development, operations and ownership of
multi-purpose recreation and entertainment facilities. We are the
largest private sector owner and operator of recreation facilities
in North America and currently own, lease and/or manage 22
facilities in Canada and the United States with 59 ice surfaces, as
well as five indoor soccer fields, and 21 sport, volleyball, and
basketball courts. To learn more about Canlan please visit
www.icesports.com.
Canlan Ice Sports Corp. is listed on the Toronto
Stock Exchange under the symbol “ICE.”
Caution concerning forward-looking
statements
Certain statements in this MD&A may
constitute ''forward looking'' statements which involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Corporation to
be materially different from any future results, performance or
achievements expressed or implied by such forward looking
statements. When used in this MD&A, such statements may use
such words as ''may'', ''will'', ''expect'', ''believe'', ''plan''
and other similar terminology. These statements reflect
management's current expectations regarding future events and
operating performance and speak only as of the date of this
MD&A. These forward looking statements involve a number of
risks and uncertainties. Some of the factors that could cause
actual results to differ materially from those expressed in or
underlying such forward looking statements are the effects of, as
well as changes in: international, national and local business and
economic conditions; political or economic instability in the
Corporation’s markets; competition; legislation and governmental
regulation; and accounting policies and practices. The foregoing
list of factors is not exhaustive.
For more information:Canlan Ice Sports
Corp.
Michael F.
Gellard
Senior Vice President &
CFO
604 736 9152
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