Entrec Announces Strong Financial Results for the Quarter Ended March 31, 2012
15 May 2012 - 10:00PM
Marketwired Canada
-- Revenue up 59% over same period in prior year from legacy companies
-- Adjusted EBITDA $5.6 million and net income of $0.06 per share
-- Revenue outlook increased for fiscal 2012
Entrec Transportation Services Ltd. ("ENTREC" or the "Company") (TSX
VENTURE:ENT) is pleased to announce its financial results for the quarter ended
March 31, 2012. Revenue was $23.4 million, representing a 59% increase from the
combined pro forma revenue of $14.7 million generated from each of ENTREC's
business acquisitions, on a combined basis, in the three month period ended
March 31, 2011.
"Not only are we obtaining growth from business acquisitions, we are also
achieving substantial organic revenue growth from integrating these
acquisitions, achieving higher rates of equipment utilization, growing our fleet
of equipment, and benefiting from the cross-utilization of our people and
equipment resources among our geographic areas," comments Rod Marlin, ENTREC's
chairman and CEO.
The Company's strong revenue resulted in Adjusted EBITDA of $5.6 million and net
income of $2.5 million or $0.06 per share during the three months ended March
31, 2012.
Increased Revenue Guidance for Fiscal 2012
"Our outlook for the remainder of 2012 and 2013 is very positive," added Mr.
Marlin. "Capital spending on projects within the Alberta oil sands region and
across western Canada has grown significantly commencing in the second half of
2011 resulting in increased demand for heavy haul transportation services.
Complimenting this increase is also higher demand for on-site services to
support existing facilities in the Alberta oil sands region."
Based on ENTREC's current expectations for future business activity and assuming
no further business acquisitions are completed, the Company currently estimates
revenue for the year ending December 31, 2012 could be between $85 million and
$95 million. This represents an increase from its previous revenue guidance of
between $70 million and $75 million and results from adding the revenue
contribution related to the acquisition of the Singer Specialized Group of
Companies ("Singer") in April 2012 and from further increases in ENTREC's
business outlook for the remainder the year. We believe further increases in our
revenue guidance for 2012 may be possible should fundamentals within the heavy
haul transportation industry continue to improve and we realize synergies
associated with our acquisition of Singer.
ENTREC will also continue to aggressively pursue its growth strategies in 2012.
Future business acquisitions completed in fiscal 2012 may further increase its
revenue estimates. The Company estimates its acquisition of the Mains Group, if
completed, could initially contribute an additional $30 million to $35 million
of revenue to operations on an annual basis.
"Since completing our Qualifying Transaction in May 2011, we have been impressed
with our progress in executing our growth strategies," said Mr. Marlin. "This
execution, combined with the improvement of overall fundamentals within our
industry, are placing us into what we believe is an enviable position as the
right company at the right place at the right time."
Executing ENTREC's Growth Strategies
During the first quarter of 2012, ENTREC continued to execute on its growth
strategies. The Company commenced its $22.3 million 2012 capital expenditure
program, adding $7.2 million in property, plant and equipment in the quarter,
consisting of $0.7 million in maintenance capital expenditures and $6.5 million
in growth capital expenditures to expand its truck and heavy haul trailer fleet.
In April 2012, ENTREC completed the acquisition of Singer for aggregate
consideration of $10.0 million in cash and the issuance of 3,900,000 common
shares. The acquisition of Singer allowed ENTREC to consolidate a significant
competitor in the Calgary market and represented an important milestone in the
Company's strategy of becoming the premier provider of heavy haul transportation
services in its markets.
In March 2012, ENTREC into a letter of intent, subject to certain conditions, to
acquire the Mains Group of Companies ("Mains Group") for an aggregate purchase
price of $56.3 million, subject to certain adjustments. Based in Nisku, Alberta,
the Mains Group has been providing crane and heavy haul transportation services
to all major industry sectors throughout western Canada for 18 years.
"Crane services are very complimentary to heavy haul transportation and allow
our customers to obtain both their heavy haul and lifting needs from one
vendor," comments Mr. Marlin. "This acquisition, if completed, will represent a
significant step forward for us in becoming a leading provider of integrated
crane and heavy haul solutions to our customers throughout North America."
A complete set of ENTREC's most recent financial statements and Management's
Discussion and Analysis will be filed on SEDAR (www.sedar.com) and posted on the
Company's website (www.entrec.com).
About ENTREC
ENTREC specializes in the lifting, transportation (over the road and on-site),
loading, off-loading and setting of overweight and oversized cargo for the oil
and gas, construction, petrochemical, mining and power generation industries.
The common shares of ENTREC trade on the TSX Venture Exchange under the trading
symbol "ENT".
Non-IFRS Financial Measures
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation,
amortization, loss (gain) on disposal of property, plant and equipment, and
share-based compensation. In addition to net income, Adjusted EBITDA is a useful
measure as it provides an indication of the financial results generated by
ENTREC's principal business activities prior to consideration of how these
activities are financed or how the results are taxed in various jurisdictions
and before certain non-cash expenses.
Please see ENTREC's Management Discussion & Analysis for the three months ended
March 31, 2012 for a reconciliation of Adjusted EBITDA to net income, the most
directly comparable financial measure calculated and presented in accordance
with IFRS.
Forward-looking Statements
This press release contains forward-looking statements which reflect ENTREC's
current beliefs and are based on information currently available to ENTREC.
These statements require ENTREC to make assumptions it believes are reasonable
and are subject to inherent risks and uncertainties. Actual results and
developments may differ materially from the results and developments discussed
in the forward-looking statements as certain of these risks and uncertainties
are beyond ENTREC's control.
Examples of such forward-looking statements in this press release relate to, but
are not limited to: ENTREC's projection that revenue for the year ending
December 31, 2012 will be between $85 million and $95 million before considering
the impact of future business acquisitions; that further increases in our
revenue guidance for 2012 may be possible should fundamentals within the heavy
haul transportation industry continue to improve and we realize synergies
associated with our acquisition of Singer; that the acquisition of the Mains
Group could contribute initially an additional $30 million to $35 million of
revenue to operations on an annual basis; expectation the Company will execute
its 2012 capital expenditure program of $22.3 million; and belief that the
acquisitions of Singer and the Mains Group, if completed, will contribute to the
achievement of ENTREC's overall growth strategies.
These forward-looking statements involve a number of significant assumptions.
Key assumptions utilized in developing forward-looking statements related to
ENTREC's future growth expectations include achieving its internal revenue, net
income and cash flow forecasts for 2012 and 2013. Achieving these forecasts is
largely dependent on a number of factors beyond ENTREC's control including all
of the risks discussed further under the "Business Risks" section in ENTREC's
Management Discussion and Analysis for the three months ended March 31, 2012.
These risk factors are interdependent and the impact of any one risk or
uncertainty on a particular forward-looking statement is not determinable.
ENTREC's ability to finance its capital expenditure program through credit
facilities and finance leases is dependent on its ability to achieve debt
financing terms acceptable to the lenders and ENTREC as well as meeting ENTREC's
internal cash flow forecasts. Forward-looking statements associated with
ENTREC's potential acquisition of the Mains Group rely on certain expectations
and assumptions, including, among others, (i) the results of ENTREC's due
diligence review of the businesses proposed to be acquired being satisfactory,
(ii) the ability of the parties to agree to the terms of definitive agreements,
(iii) ENTREC's ability to receive the various approvals required, (iv) ENTREC's
ability to obtain sufficient financing to complete the transactions; and (v) the
Mains Group meeting or exceeding ENTREC's internal revenue, net income, and cash
flow forecasts for that business in the future.
Consequently, all of the forward-looking statements made in this press release
are qualified by these cautionary statements and other cautionary statements or
factors contained herein, and there can be no assurance that the actual results
or developments will be realized or, even if substantially realized, that they
will have the expected consequences to, or effects on, ENTREC. These
forward-looking statements are made as of the date of this press release. Except
as required by applicable securities legislation, ENTREC assumes no obligation
to update publicly or revise any forward-looking statements to reflect
subsequent information, events, or circumstances.
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Entrec Transportation Services Ltd.
Interim Statements of Financial
Position
Unaudited
As at March 31 December 31 November 1
2012 2011 2010
(thousands of Canadian dollars) $ $ $
ASSETS
Current assets
Cash 17,203 115 1,876
Trade and other receivables 21,207 13,679 1
Inventory 770 576 -
Prepaid expenses and deposits 356 406 -
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39,536 14,776 1,877
Non-current assets
Long-term deposits 400 400 -
Property, plant and equipment 51,570 45,680 -
Intangible assets 6,281 6,440 -
Goodwill 10,356 10,356 -
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Total assets 108,143 77,652 1,877
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness - 267 -
Trade and other payables 7,572 5,949 9
Acquisition consideration payable 4,000 4,125 -
Current portion of credit
facilities 5,267 5,251 -
Current portion of obligations
under finance lease 618 313 -
Credit facilities 20,938 22,238 -
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38,395 38,143 9
Non-current liabilities
Obligations under finance lease 2,519 1,141 -
Deferred income taxes 2,321 1,877 -
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Total liabilities 43,235 41,161 9
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Shareholders' equity
Share capital 60,475 34,759 1,833
Contributed surplus 1,296 1,125 189
Retained earnings (deficit) 3,137 607 (154)
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Total shareholders' equity 64,908 36,491 1,868
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Total liabilities and shareholders'
equity 108,143 77,652 1,877
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Entrec Transportation Services Ltd.
Interim Statements of Income (Loss) and
Comprehensive Income (Loss)
Unaudited
For the three months ended
March 31 April 30
(thousands of Canadian dollars, except per 2012 2011
share amounts) $ $
Revenue 23,437 -
Direct costs 15,332 -
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Gross profit 8,105 -
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Operating expenses
General and administrative expenses 2,531 190
Depreciation of property, plant and
equipment 1,268 -
Amortization of intangible assets 206 -
Share-based compensation 171 -
Loss on disposal of property, plant and
equipment 9 -
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4,185 190
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Income (loss) before finance items and
income taxes 3,920 (190)
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Finance items
Finance costs 474 -
Finance income (10) (4)
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464 (4)
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Income (loss) before income taxes 3,456 (186)
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Income taxes
Current - -
Deferred 926 -
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926 -
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Net income (loss) and comprehensive income
(loss) 2,530 (186)
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Earnings (loss) per share - basic and
diluted 0.06 (0.07)
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