Aveda Transportation and Energy Services Announces Record Results
for Fiscal Year 2013
CALGARY, ALBERTA--(Marketwired - Apr 30, 2014) -
Aveda Transportation and Energy Services Inc. ("Aveda" or the
"Company") (TSX-VENTURE:AVE), a leading provider of oilfield
hauling services and equipment rentals to the energy industry,
today announced record results for the three and twelve months
ended December 31, 2013.
2013 BUSINESS
HIGHLIGHTS
- Revenue for the twelve months ended December 31, 2013 grew by
approximately $5.4 million to $88.7 million compared with revenue
of $83.3 million for the same period in 2012, US revenue increased
by 29.8% which offset a 24.3% decline in Canadian revenue resulted
in overall revenue increase of 6.4%;
- Generated net income for the twelve months ended December 31,
2013 of $5.3 million, as compared to net loss of $1.3 million for
the same period in 2012;
- Generated Adjusted EBITDA1 for the twelve months ended December
31, 2013 of $15.0 million after incurring $0.7 in acquisition
expenses, an increase of $5.2 million compared with Adjusted
EBITDA1 of $9.8 million for the same period in 2012. Excluding
acquisition expenses, Adjusted EBITDA1 would have been $15.7
million;
- Expanded equipment base by acquiring $6.3 million ($4.6 million
net of disposals) of additional equipment and leaseholds in the
year 2013, including the addition of two cranes and invested $0.5
million in the Company's new ERP system;
- Generated net cash provided by operating activities for the
year ended December 31, 2013 of $12.5 million, an increase of $4.2
million compared to $8.3 million for the same period in 2012;
- Repaid loans and borrowings of $2.3 million in the year ended
December 31, 2013 from internally generated cash flow;
- Relocated the Company's Pennsylvania branch from New Columbia
to Williamsport, Pennsylvania;
- Commenced operation of a new satellite branch in Buckhannon,
West Virginia;
- Converted $4.7 million of convertible debenture into 1,850,980
common shares of the Company at a price of $2.55 per share;
- Acquired all outstanding shares of Lon Dan Enterprises Ltd.,
which carries on business as Belair Rentals for an initial purchase
price of $4.0 million and contingent consideration currently
estimated $1.5 million if the acquired business achieves certain
financial targets. As a result of the acquisition the Company
established operations in Edson, AB, thus enabling the Company to
better serve our clients in the Edson region and improve the
utilization of the Company's existing rental equipment;
- Relocated the Company's US head office from Mineral Wells, TX
to Houston, TX to be closer and better serve the Company's US
clients;
- Signed an asset purchase agreement to acquire the operating
assets of Williston, North Dakota based M&K Hotshot &
Trucking, Inc. and M&K Rig Service, Inc. (collectively
"M&K"). The M&K acquisition was completed on January 31,
2014;
Note:
1 See page 3 of this
news release for definition of Adjusted EBITDA and Debt to
EBITDA.
- In connection with the M&K acquisition, the Company closed
a $23.0 million bought deal private placement offering of 6.4
million Subscription Receipts of the Company (the "Subscription
Receipts") at a price of $3.60 per Subscription Receipt. Subsequent
to the year end, concurrent with the closing of the M&K
acquisition, all Subscription Receipts automatically converted into
6.4 million common shares of the Company; and
- In connection with the M&K acquisition, the Company entered
into an agreement with its senior credit facility holder which the
availability under its current operating facility (i) be increased
to $75.0 million effective December 31, 2013; (ii) be extended to
January 1, 2018; (iii) have the interest rate decreased by 50 basis
points as long as Undrawn Availability (as defined in the Facility
agreement) is greater than $10.0 million; and (iv) the removal of
all financial covenants as long as the Undrawn Availability is
greater than $15.0 million.
"The Aveda team
continues to execute on our growth strategy, and at the same time
consistently improve our operations to better serve our customers,"
said Kevin Roycraft, President and Chief Executive Officer of
Aveda. "I thank our team for all their efforts and look forward to
many more successes."
The Company is
pleased to announce that, subject to the receipt of TSX Venture
Exchange approval, it has engaged Transcend Resource Group.
("Transcend"), a Vancouver, British Columbia based investor
relations firm, to conduct certain investor relations activities on
behalf of the Company, including the publication and dissemination
of articles regarding the Company. Pursuant to a service agreement
entered into between the Company and Transcend, Transcend will
provide investor relations activities on behalf of the Company for
a three month-term. Pursuant to the agreement, Transcend will
receive a monthly fee of $2,500. Prior to the entering into of the
agreement outlined above, Transcend had no direct or indirect
interest in the Company or its securities.
The Company also
announces that Kris Miks has resigned as the Company's Corporate
Secretary. The Company thanks Mr. Miks for his contributions to our
successes over the years.
The Company will
host its fourth quarter fiscal 2013 results conference call on
Thursday, May 1st, 2014 at 9:00 a.m. Eastern Time (ET). Executive
Chairman David Werklund, 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
1-888-231-8191. A live audio webcast of the conference call will be
available at
http://www.newswire.ca/en/webcast/detail/1337339/1478257.
The conference call
webcast will be archived and available at
http://www.avedaenergy.com/investors/Conference-Calls/default.aspx
until June 30, 2014.
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) |
|
|
|
|
|
|
Twelve |
|
Twelve |
|
|
|
Three |
|
Three |
|
|
|
|
Months |
|
Months |
|
|
|
Months |
|
Months |
|
|
|
|
Ended |
|
Ended |
|
%
Change |
|
Ended |
|
Ended |
|
%
Change |
|
|
December |
|
December |
|
2012 - |
|
December |
|
December |
|
2012 - |
|
|
31, 2013 |
|
31, 2012 |
|
2013 |
|
31, 2013 |
|
31, 2012 |
|
2013 |
|
Revenue |
88,664 |
|
83,331 |
|
6.4 |
% |
21,793 |
|
23,015 |
|
-5.3 |
% |
Gross
profit5 |
18,597 |
|
13,745 |
|
35.3 |
% |
4,595 |
|
3,149 |
|
45.9 |
% |
Gross
margin |
21.0 |
% |
16.5 |
% |
N/A |
|
21.1 |
% |
13.7 |
% |
N/A |
|
Gross profit5 excluding depreciation and amortization |
26,472 |
|
20,397 |
|
29.8 |
% |
6,596 |
|
5,194 |
|
27.0 |
% |
Gross margin excluding depreciation and amortization |
29.9 |
% |
24.5 |
% |
N/A |
|
30.3 |
% |
22.6 |
% |
N/A |
|
Adjusted EBITDA1 |
15,039 |
|
9,761 |
|
54.1 |
% |
3,052 |
|
2,553 |
|
19.5 |
% |
Adjusted EBITDA1 as a percentage of revenue |
17.0 |
% |
11.7 |
% |
N/A |
|
14.0 |
% |
11.1 |
% |
N/A |
|
Net
income (loss) |
5,299 |
|
(1,278 |
) |
514.6 |
% |
487 |
|
(517 |
) |
194.2 |
% |
Net income (loss) as a percentage of revenue |
6.0 |
% |
-1.5 |
% |
N/A |
|
2.2 |
% |
-2.2 |
% |
N/A |
|
Adjusted EBITDA1 per share |
1.51 |
|
1.11 |
|
36.0 |
% |
0.30 |
|
0.26 |
|
15.4 |
% |
Earnings per share - basic |
0.53 |
|
(0.15 |
) |
453.3 |
% |
0.05 |
|
(0.05 |
) |
200.0 |
% |
Earnings per share - diluted |
0.51 |
|
(0.15 |
) |
440.0 |
% |
0.05 |
|
(0.05 |
) |
200.0 |
% |
Current ratio2 |
2.17 |
|
2.10 |
|
3.6 |
% |
2.17 |
|
2.10 |
|
3.6 |
% |
Debt
to equity ratio3 |
0.70 |
|
1.36 |
|
-48.5 |
% |
0.70 |
|
1.36 |
|
-48.5 |
% |
Debt
to EBITDA ratio3, 4 |
1.67 |
|
3.38 |
|
-50.6 |
% |
1.67 |
|
3.38 |
|
-50.6 |
% |
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) Current ratio calculated as current assets divided by
current liabilities.
(3) Debt includes loans and borrowings as per their carrying
amounts on the balance sheet.
(4) EBITDA used is Adjusted EBITDA for the trailing twelve
months.
(5) Gross profit calculated as revenue less direct operating
expense.
Outlook
Aveda earns revenue
primarily by providing specialized transportation services to
companies engaged in the exploration, development and production of
petroleum resources. As a result, demand for Aveda's transportation
services are generally 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 United States.
In recent history,
total drilling activity in the WCSB and US has been negatively
impacted due to, in part, lower natural gas prices. This has
largely been the result of increased supply driven by the fast
development of shale gas resources in the US. Countering the
decline in natural gas drilling has been a relatively strong price
for oil. The average West Texas Intermediate ("WTI") spot price
during April 2014 was approximately $100, just below the average
monthly high of $104 during 20131. This consistently strong WTI
price has resulted in oil-focused regions to experience robust rig
counts, such as those surrounding Aveda's Pleasanton and Midland.
During April 2014 the average number of rigs within approximately a
100 mile radius of Pleasanton and Midland were 209 and 360. Of that
rig count, nearly all were drilling for oil (89% in Pleasanton and
99% in Midland)2.
In the WCSB, at the
end December 2013, rig counts were approximately 10% higher than
the count at the same time last year3. Despite this increase,
overall counts remain well below 2011 levels due to, in part,
on-going export capacity bottlenecks and limited capital
expenditures, particularly in natural gas plays. Although future
natural gas activity remains uncertain in Canada, TD Canada Trust4
("TD") recently identified that based on forward-looking shipping
commitments, the demand for Canadian natural gas in 2014 may be the
strongest in 5 years. TD also expects, over the shorter term,
prices and demand will remain relatively strong due to the colder
than expected winter (inventories in the U.S. are more than 30%
below the five year average). TD's relatively positive outlook may
be further reinforced by Pembina Pipeline Corp.'s ("Pembina")
announcement that they are proceeding with their phase III
expansion, which will result in a new 270 km pipeline from Fox
Creek, Alberta to Edmonton, Alberta. This expansion is the largest
in Pembina's history and will have an ultimate capacity of 500,000
barrels per day. This expansion is under-pinned by long-term
contracts with 30 customers and is expected to be in service in
late 2016 and mid-20175. In addition, many industry analysts are
citing Canadian Natural Resources Ltd.'s $3.13 Billion dollar
acquisition of Devon Energy Corp.'s Canadian conventional business,
which was the largest acquisition by a Canadian energy company
since Suncor Energy Inc. acquired Petro Canada in 2009, may be the
start of an active merger and acquisition year in Western Canada.
Adam Waterous, Vice Chairman at Scotia Waterous, stated that
recently there has been "ferocious demand on the part of buyers"
(both foreign and Canadian)6.
Due to the more
optimistic outlook in the Canadian oil and gas market, Aveda
anticipates Canadian revenue in 2014 to exceed 2013.
1 U.S. Energy
Information Administration, accessed on March 4, 2012 at
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rwtc&f=d
2 Baker Hughes North
American Rig Count, accessed on March 4, 2014 at
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother
3 Canadian
Association of Oilwell Drilling Contractors, accessed on March 4,
2014 at http://www.caodc.ca/dr-month
4 TD Economics,
"Finally Some Good News for Canadian Natural Gas Producers",
http://www.td.com/document/PDF/economics/special/Canadian_Natural_Gas_Producers.pdf
5 News Wire,
"Pembina Pipeline Corporation to Proceed with $2 Billion Phase III
Expansion of its Pipeline System",
http://www.newswire.ca/en/story/1280621/pembina-pipeline-corporation-to-proceed-with-2-billion-phase-iii-expansion-of-its-pipeline-system
6 Financial Post,
"Canadian Natural's $3.13B Deal for Devon Energy Marks Comeback for
Canadian Energy Sector",
http://business.financialpost.com/2014/02/19/canadian-naturals-3-13b-deal-for-devon-energy-marks-comeback-for-canadian-energy-sector/?__lsa=a438-bae8
Although there is no
shortage of future opportunities in Canada, it appears that at this
time, opportunities for expansion and growth are strongest in the
US. According to Baker Hughes, key regions where Aveda has
terminals, including the Eagle Ford, Permian and Bakken, have rig
counts that remain close to all-time highs7. The high rig count is
despite drillers having shifted away from using multiple, smaller
rigs with fewer, larger rigs which are more efficient. Recent
analysis by the U.S. Energy Information Administration ("EIA")
found that 67% of all oil production growth from the six largest US
plays were coming from the Eagle Ford and Bakken8. In contrast,
other regions in which Aveda competes, such as the Barnett and
Marcellus, have relatively limited, or declining activity levels.
The limited market size has been a challenge; however, to date,
Aveda has remained competitive in these regions due to, in part,
strong client relationships. Aveda continues to actively explore
new opportunities/strategies to help improve margins and increase
revenue in these regions. Aveda's newest satellite branch in
Buckhannon, WV, which services clients in the Utica region,
continues to gain traction; however, is experiencing growth at a
rate slower than initially anticipated. As such, the Company will
continue to monitor this branch's performance and evaluate several
alternatives before determining whether or not to continue
operations from this location.
Overall, Aveda
expects the US market to remain strong in 2014. As described above,
activity in the Midland and Pleasanton areas especially have the
potential to experience significant growth. Both terminals, which
were opened in 2012, started to realize full potential in mid to
late 2013 which Aveda expects to continue through 2014.
Currently, the
Company expects to spend $12 - $15 million on capital expenditures
during 2014. Approximately $3 - $5 million is expected to be
maintenance related and the balance for growth. Aveda may also
expand its geographic footprint in 2014. This however is dependent
on market conditions. If conditions change, the expected capital
expenditure will be adjusted accordingly.
About Aveda
Transportation and Energy Services
Aveda provides
specialized transportation services 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, Pennsylvania
and North Dakota. 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 well-sites, 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, Edson, AB, Mineral Wells, TX,
Pleasanton, TX, Midland, TX, Williamsport, PA, Buckhannon, WV and
Williston, ND. Aveda is publicly traded on the TSX Venture Exchange
under the symbol AVE. For more information on Aveda please visit
www.avedaenergy.com.
7 Baker Hughes North
American Rig Count, accessed on March 4, 2014 at
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother
8 U.S. Energy
Information Administration, "Outlook for U.S. Shale Oil and Gas",
http://www.eia.gov/pressroom/presentations/sieminski_01042014.pdf
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, 2013 (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.
Neither 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.
Aveda Transportation and Energy Services Inc.Bharat Mahajan,
CAVice President, Finance and Chief Financial(403)
264-5769bharat.mahajan@avedaenergy.comwww.avedaenergy.com
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