Aveda Transportation and Energy Services Announces Solid Results
for the First Quarter of 2014
CALGARY, ALBERTA--(Marketwired - May 28, 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 revenue and Adjusted EBITDA1 for the three months ended
March 31, 2014.
2014 BUSINESS HIGHLIGHTS
- Revenue for the quarter ended March 31, 2014 grew by $12.0
million to $35.5 million, compared with revenue of $23.5 million
for the same period in 2013. US revenue increased by 82.5% and
Canadian revenue increased by 6.9% which resulted in overall
revenue increase of 51.1%;
- Generated net income for the quarter ended March 31, 2014 of
$2.5 million, an increase of approximately $0.8 million compared to
$1.7 million for the same period in 2013. Net income per share for
2014 was $0.15 compared to net income per share of $0.17 in the
comparative period;
- Generated Adjusted EBITDA1 for the quarter ended March 31, 2014
of $6.6 million, an increase of $2.3 million compared with Adjusted
EBITDA1 of $4.3 million for the same period in 2013;
- Expanded equipment base by acquiring $2.4 million of additional
equipment and leaseholds in the quarter ended March 31, 2014,
including the addition of two cranes;
- On January 31, 2014, completed the acquisition of the operating
assets of Williston, North Dakota based M&K Hotshot Trucking,
Inc. and M&K Rig Service, Inc. (collectively "M&K");
and
- In connection with the completion of M&K acquisition, in
December 2013 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. Concurrent with the closing of the M&K
acquisition, all Subscription Receipts automatically converted into
6.4 million common shares of the Company.
"We are extremely pleased to have delivered another solid
quarter of results," said Kevin Roycraft, President and Chief
Executive Officer of Aveda "We have delivered these results despite
having to overcome the tough industry and weather conditions some
of our competitors have talked about. These results are true
testament to all the hard work and efforts of our dedicated
employees."
The Company announces that Jason McCormick has been appointed as
Corporate Secretary of the Company.
The Company will host its first quarter fiscal 2014 results
conference call on Thursday, May 29th, 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/1358301/1503345.
The conference call webcast will be archived and available at
http://www.avedaenergy.com/investors/Conference-Calls/default.aspx
until July 31, 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) |
|
|
|
|
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2013 |
% Change 2013 - 2014 |
Revenue |
35,455 |
23,471 |
51.1% |
Gross profit5 |
7,541 |
4,859 |
55.2% |
Gross margin |
21.3% |
20.7% |
N/A |
Gross profit5 excluding depreciation and amortization |
10,289 |
6,841 |
50.4% |
Gross margin excluding depreciation and amortization |
29.0% |
29.1% |
N/A |
Adjusted EBITDA1 |
6,572 |
4,306 |
52.6% |
Adjusted EBITDA1 as a percentage of revenue |
18.5% |
18.3% |
N/A |
Net income |
2,544 |
1,723 |
47.6% |
Net income as a percentage of revenue |
7.2% |
7.3% |
N/A |
Adjusted EBITDA1 per share |
0.38 |
0.43 |
-11.6% |
Earnings per share - basic |
0.15 |
0.17 |
-11.8% |
Earnings per share - diluted |
0.15 |
0.16 |
-6.3% |
Current ratio2 |
1.77 |
2.06 |
-14.1% |
Debt to equity ratio3 |
0.56 |
1.14 |
-50.9% |
Debt to EBITDA ratio3, 4 |
2.20 |
2.67 |
-17.5% |
|
|
|
|
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 is 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 level of
drilling activity in the WCSB and US.
In recent history, total drilling activity in the WCSB and US
has been negatively impacted due to, in part, lower average 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 which has resulted in oil-focused
regions, such as those surrounding Aveda's Williston, Pleasanton
and Midland branches, to experience robust rig counts. In the first
quarter of 2014, the average West Texas Intermediate ("WTI") spot
price was approximately $99 per barrel, compared to $94 per barrel
during the first quarter of 20136.
6 U.S. Energy Information Administration, accessed on May 8,
2014, at
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rwtc&f=d
In Alberta's portion of the WCSB, first quarter rig counts
increased by approximately 3% relative to the same period in 20137.
Despite this increase, overall counts remain below 2012 levels due
to, in part, on-going export capacity bottlenecks and limited
capital expenditures, particularly in natural gas plays.
7 Rig Locator, accessed on May 8, 2014
Although future activity remains uncertain in Canada, many
industry analysts are forecasting a positive 2014. Patrick Meneley,
Vice Chair of Investment Banking with TD Securities, stated that
"the painfully cold winter dramatically increased the drawdown of
gas in storage, which will drive a continued demand for gas as the
system re-establishes a supply". Dan Tsubouchi, head of research
for Haywood Securities in Calgary, stated that "we're seeing a
turning point for the Canadian oil and gas sector"8. Increasing
confidence in Canada's oil and gas market can be further
illustrated through the 11.2% increase in the S&P TSX E&P
Index (peer group of large independent producers) in the first
quarter of 2014, compared to the S&P TSX Composite which only
increased 5.2% during the same period9. As well, during the first
four months of 2014, there has been $3.3 billion worth of equity
issuances by oil and gas companies, compared to only $500.0 million
during the same period a year before signaling increased confidence
in the market8.
8
http://business.financialpost.com/2014/04/30/investment-for-oil-and-gas-on-the-upswing/?__lsa=2314-bee8
9
http://arcfinancial.com/research/energy-charts/capital-markets-thaw
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 the Baker Hughes Rig
Count10, drilling activity in the Bakken, Eagleford and Permian
basins remain close to the highest levels experienced in the last
ten years. The consistently high activity levels have allowed Aveda
to grow significantly in these areas. Both the Midland, TX and
Pleasanton, TX branches continue to experience increases in
activity as they become established providers in their respective
basins. Aveda's newly acquired terminal in Williston, ND, located
in the center of the highly active Bakken region, continues to show
significant potential as the experienced M&K team is integrated
into the Company. In contrast, the Barnett basin, which is
primarily serviced by the Mineral Wells, TX branch, continues to
face significant declines in rig counts. As a result, the branch is
focusing on maximizing revenue and EBITDA by re-directing efforts
on acquiring new customers in higher activity, liquids-rich areas
to the north. As with the Barnett basin, the Marcellus, which is
serviced by Aveda's Williamsport, PA branch, is experiencing
decrease in activity.
10 Baker Hughes Rig Count, accessed on May 8, 2014, at
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview
Overall, 2014 is expected to be a strong year for Aveda as oil
prices are expected to remain strong and natural gas prices start
to recover. First quarter results were positively impacted due to
the Canadian dollar depreciating against the US dollar. As Aveda's
business grows in the US, this should continue to positively impact
results.
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.
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 Officer(403)
264-5769bharat.mahajan@avedaenergy.comwww.avedaenergy.com
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