Aveda Transportation and Energy Services Inc. (TSX VENTURE:AVE) ("Aveda" or the
"Company"), a leading provider of oilfield hauling services and equipment
rentals to the energy industry, today announced record revenue and Adjusted
EBITDA(1) for the three months ended March 31, 2013.
2013 BUSINESS HIGHLIGHTS
-- Revenue for the quarter ended March 31, 2013 grew by $0.9 million to
$23.5 million, compared with revenue of $22.6 million for the same
period in 2012. Aveda achieved this revenue growth despite an average
year-over-year rig count decline of approximately 9% in the areas the
Company operates in;
-- Generated net income for the quarter ended March 31, 2013 of $1.7
million, an increase of $1.3 million compared to $0.4 million for the
same period in 2012. Net income per share for 2013 was $0.17 compared to
net income per share of $0.06 in the comparative period;
-- Generated Adjusted EBITDA(1) for the quarter ended March 31, 2013 of
$4.3 million, an increase of $1.4 million compared with Adjusted
EBITDA(1) of $2.9 million for the same period in 2012; and
-- Relocated the Company's Pennsylvania branch from New Columbia to
Williamsport, PA.
"Through the hard work of our team members, we were able to achieve profitable
results despite market weakness in certain locations," said Kevin Roycraft,
President and Chief Executive Officer of Aveda. "The Aveda team is off to a
strong start, we will continue to build upon the success we have achieved."
The Company will host its first quarter fiscal 2013 results conference call on
Wednesday, May 29th at 4:00 p.m. Eastern Time (ET). President and CEO Kevin
Roycraft and Vice-President, Finance and CFO Bharat Mahajan will discuss Aveda's
financial results for the quarter and then take questions from securities
analysts.
To access the conference call by telephone, dial (647) 427-7450 or (888)
231-8191. A live audio webcast of the conference call will be available at
http://www.newswire.ca/en/webcast/detail/1151875/1257551.
The conference call webcast will be archived and available at
http://www.avedaenergy.com/investors/Conference-Calls/default.aspx until June
30, 2013.
The Company's consolidated financial statements and Management's Discussion and
Analysis are available on the Company's website at www.avedaenergy.com or the
SEDAR website at www.sedar.com.
Financial Overview
(in thousands, except per share and ratio amounts)
Three Three
Months Months
Ended Ended %
March March Change
31, 31, 2012-
2013 2012 2013
--------------------
Revenue 23,471 22,600 3.9%
Gross profit(4) 4,859 4,286 13.4%
Gross margin 20.7% 19.0% N/A
Gross profit(4) excluding depreciation and amortization 6,841 5,551 23.2%
Gross margin excluding depreciation and amortization 29.1% 24.6% N/A
Adjusted EBITDA(1) 4,306 2,924 47.3%
Adjusted EBITDA(1) as a percentage of revenue 18.3% 12.9% N/A
Net income 1,723 440 291.6%
Net income as a percentage of revenue 7.3% 1.9% N/A
Adjusted EBITDA(1) per share 0.43 0.41 4.9%
Earnings per share - basic 0.17 0.06 183.3%
Earnings per share - diluted 0.16 0.06 166.7%
Current ratio 2.06 2.41 -14.4%
Debt to equity ratio(2) 1.14 1.50 -24.3%
Debt to EBITDA ratio(2)(3) 2.67 2.74 -2.6%
Net capital assets addition 299 4,532 -93.4%
Notes:
(1) This News Release contains the term Adjusted EBITDA. Adjusted EBITDA as
presented does not have any standardized meaning prescribed by international
financial reporting standards (IFRS) and therefore it may not be comparable
with the calculation of similar measures for other entities. Management uses
Adjusted EBITDA to analyze the operating performance of the business.
Adjusted EBITDA as presented is not intended to represent cash provided by
operating activities, net earnings or other measures of financial
performance calculated in accordance with IFRS. It is defined as earnings
before interest, taxes, depreciation and amortization excluding foreign
exchange gains or losses which are primarily related to the US dollar
activities of the Company and can vary significantly depending on exchange
rate fluctuations, which are beyond the control of the Company, and write
downs of intangible assets, goodwill impairment, financing costs, gains or
losses on disposal of assets, stock based compensation, fees and expenses on
settlement of debt and losses on extinguishment of debt.
(2) Debt includes, revolving credit facility, loans and borrowings,
obligations under finance lease and convertible debenture as per their
carrying amounts on the balance sheet.
(3) Three months ended March 31 debt to EBITDA ratio calculated using
Adjusted EBITDA for the trailing 12 months.
(4) Gross profit calculated as revenue less direct operating expense.
Outlook
The Company earns revenue primarily by providing specialized transportation
services to companies engaged in exploration, development and production of
petroleum resources. Demand for the Company's transportation services is
therefore linked to the economic conditions of the energy industry and the
general level of drilling activity in the exploration, development and
production of petroleum resources in Western Canada and in the United States.
Drilling activity in the WCSB and in the United States has in recent history
been affected by amongst other things, low natural gas prices and higher than
normal natural gas inventories in storage caused by many factors, including
reduced demand for commodities as a consequence of a global recession and the
temporary oversupply of natural gas due to the development of shale gas
resources in the United States.
Countering these factors is a strong price for oil, which has allowed
oil-focused regions to experience increasing rig counts. Although oil has had a
recent reduction in the first quarter of 2013 and is expected to remain closer
to $90/bbl(1) in the second quarter, the Pleasanton and Midland branches are
still benefitting from such prices, while other US branches are making efforts
to minimize the impact of declining revenue and margin reductions stemming from
continued low activity levels in natural gas focused regions.
The first quarter of 2013 showed average rig count in WCSB decline from the same
period in 2012. Spring break-up season has been slow; however a higher rig count
for 2013 is expected when break-up season is over(2), despite the unfavourable
conditions caused by export capacity bottlenecks. Large capital expenditure
projects continue to be challenged by said conditions, as exemplified by the
late 2012 announcement of delays in large projects such as the Fort Hill and
Joslyn oil sands mines(3). Within WCSB gas plays, various companies have reduced
capital expenditure investments due to the low returns experienced from the
exploration and production of low-priced natural gas. Instead, these companies
have shifted their focus towards cautious investments in liquids-rich plays,
divesting from dry gas assets and reducing overall capital expenditure in
expectation of market improvements(4).
In Canada, 2013 as whole remains highly uncertain due to the market conditions
described, including the risk of additional delays or cancellations in major
upstream projects in Canada and continually depressed natural gas prices.
However, a slightly more optimistic outlook has been expressed by the major
players represented by the PSAC, but it remains to be seen whether such
expectations will come to fruition.
Opportunities for expansion and growth continue to appear strongest in the US.
According to the Baker Hughes Rig Count(5), drilling activity in the Eagleford
and Permian basins remains close to the highest levels experienced in the last
10 years, although in both basins, rig counts in April 2013 have stabilized 8%
lower than the same period in 2012. Rig counts remain, however, at very high
levels compared to previous years, and the slight decline shown is not expected
to represent any significant reduction in Aveda's activity levels in these
regions. The high activity levels experienced have allowed Aveda to grow
significantly in these areas, with the opening of two new branches (Pleasanton
and Midland, TX) in 2012. In contrast, the Mineral Wells, TX branch has faced
significant decline in rig counts in the Dallas/Ft. Worth Basin (Barnett Shale
play), and the branch is working to maximize revenue and EBITDA by focusing
efforts at acquiring new customers in higher activity areas. The branch faces
significant decreases in revenue compared to 2012, and no major recovery is
expected in the short term due to the significant reductions in rig counts in
the region (40% to 50% decline in rig counts). Pennsylvania is also facing
significant declining rig counts in the surrounding area. The declining rig
counts have created significant downward price pressure stemming from a fierce
competitive environment and a shrinking market size. It is expected that rig
counts will continue a slow downward trend in Pennsylvania gas plays, which
management believes may be partially offset by the relocation of rigs to oil
plays further west in the state and into Ohio.
(1) Petroleum Services Association of Canada, Drilling Activity Forecast Update,
April 25 2013
(2) Petroleum Services Association of Canada, Drilling Activity Forecast Update,
April 25 2013
(3)
http://www.theglobeandmail.com/globe-investor/suncor-joins-spending-retreat/article4813907/
(4)
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/encana-puts-brakes-on-liquids-plays/article8656404/
(5) Baker Hughes Rig Count, accessed on March 7, 2013, at
http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm
The Midland terminal, the newest of Aveda's operations, continues to increase
its activities as it is established within the Permian Basin client base. The
terminal is expected to realize its full potential in mid-2013.
The North American economy faces several macro-economic uncertainties, such as
the anemic gross domestic product growth rate, and political uncertainties that
relates to the oil and gas industries. It is not clear at this time what impact,
if any, these uncertainties will have on the North American oil and gas industry
and conversely on the operations of the Company. The Company is monitoring these
macro-economic issues through feedback from its customers and will adjust its
operations as necessary.
About Aveda Transportation and Energy Services
Aveda provides specialized transportation of products, materials, supplies and
equipment required for the exploration, development and production of petroleum
resources in the Western Canadian Sedimentary Basin and in the United States of
America principally in and around the states of Texas and Pennsylvania.
Transportation services include both the equipment necessary to move the load as
well as a trained, professional driver capable of securing, moving and
manipulating the load at its origin and destination. Aveda's rental operations
include the rental of tanks, mats, pickers, light towers and other equipment
necessary for oilfield operations.
Aveda was incorporated in 1994 as a private company to serve the oil and gas
industry. In the spring of 2006 the Company went public on the TSX Venture
Exchange. Aveda has major operations in Calgary, AB, Slave Lake, AB, Leduc, AB,
Sylvan Lake, AB Mineral Wells, TX, Pleasanton, TX, Midland, TX and Williamsport,
PA. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE.
For more information on Aveda please visit www.avedaenergy.com.
This News Release contains certain forward-looking statements and
forward-looking information (collectively referred to herein as "forward-looking
statements") within the meaning of applicable Canadian securities laws. All
statements other than statements of present or historical fact are
forward-looking statements. Forward-looking statements are often, but not
always, identified by the use of words such as "anticipate", "achieve", "could",
"believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate",
"outlook", "expect", "may", "will", "project", "should" or similar words,
including negatives thereof, suggesting future outcomes. In particular, this
News Release contains forward-looking statements relating to: demand for the
Company's services and general industry activity level; the Company's growth
opportunities; and expectation to maintain revenue and equipment utilization.
Aveda believes the expectations reflected in such forward-looking statements are
reasonable as of the date hereof but no assurance can be given that these
expectations will prove to be correct and such forward-looking statements should
not be unduly relied upon.
Various material factors and assumptions are typically applied in drawing
conclusions or making the forecasts or projections set out in forward-looking
statements. Those material factors and assumptions are based on information
currently available to Aveda, including information obtained from third party
industry analysts and other third party sources. In some instances, material
assumptions and material factors are presented elsewhere in this News Release in
connection with the forward-looking statements. Readers are cautioned that the
following list of material factors and assumptions is not exhaustive. Specific
material factors and assumptions include, but are not limited to:
-- the performance of Aveda's businesses, including current business and
economic trends;
-- oil and natural gas commodity prices and production levels;
-- the effect of the rebranding on Aveda's businesses;
-- capital expenditure programs and other expenditures by Aveda and its
customers:
-- the ability of Aveda to retain and hire qualified personnel;
-- the ability of Aveda to obtain parts, consumables, equipment,
technology, and supplies in a timely manner to carry out its activities;
-- the ability of Aveda to maintain good working relationships with key
suppliers;
-- the ability of Aveda to market its services successfully to existing and
new customers;
-- the ability of Aveda to obtain timely financing on acceptable terms;
-- currency exchange and interest rates;
-- risks associated with foreign operations;
-- changes under governmental regulatory regimes and tax, environmental and
other laws in Canada and the United States; and
-- a stable competitive environment.
Forward-looking statements are not a guarantee of future performance and involve
a number of risks and uncertainties, some of which are described herein. Such
forward-looking statements necessarily involve known and unknown risks and
uncertainties, which may cause Aveda's actual performance and financial results
in future periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to, the risks
identified in Aveda's annual information form and management discussion and
analysis for the year ended December 31, 2012 (the "MD&A"). Any forward-looking
statements are made as of the date hereof and, except as required by law, Aveda
assumes no obligation to publicly update or revise such statements to reflect
new information, subsequent or otherwise.
This News Release contains the terms EBITDA and Adjusted EBITDA which are
defined in the MD&A. EBITDA and Adjusted EBITDA as presented do not have any
standardized meaning prescribed by international financial reporting standards
(IFRS) and therefore may not be comparable with the calculation of similar
measures for other entities. Management uses Adjusted EBITDA to analyze the
operating performance of the business. Adjusted EBITDA as presented is not
intended to represent cash provided by operating activities, net earnings or
other measures of financial performance calculated in accordance with IFRS.
FOR FURTHER INFORMATION PLEASE CONTACT:
Aveda Transportation and Energy Services Inc.
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer
(403) 264-5769
bharat.mahajan@avedaenergy.com
www.avedaenergy.com
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