Entrec Announces Strong Financial Results for the Quarter Ended June 30, 2012
14 August 2012 - 10:00PM
Marketwired Canada
-- Revenue up 90% over same period in prior year from legacy companies
-- Adjusted EBITDA $7.7 million and net income $0.04 per share
-- Capital expenditure program increased
ENTREC Corporation (TSX VENTURE:ENT) ("ENTREC" or the "Company") is pleased to
announce another strong quarter of financial results. Revenue was $28.7 million
in the second quarter, representing a $13.6 million or 90% increase from the
combined pro forma revenue of $15.1 million generated from each of the Company's
business acquisitions and predecessor companies, on a combined basis, in the
three months ended June 30, 2011 (the pro forma comparative revenue reflecting
revenue generated from each of ENTREC's business acquisitions commencing one
year prior to their respective date of acquisition). Higher rates of equipment
utilization, cross-utilization of ENTREC's people and equipment resources among
its geographic areas and expansion of the Company's equipment fleet through its
capital expenditure program contributed to this significant rate of organic
growth.
Strong revenue in the quarter resulted in Adjusted EBITDA of $7.7 million and
net income of $3.0 million or $0.04 per share. During the six months ended June
30, 2012 ENTREC generated Adjusted EBITDA of $13.4 million and net income of
$5.5 million or $0.10 per share.
The Company also closed two very strategic business acquisitions during the
quarter. The acquisition of Singer, based in Calgary, Alberta, allowed ENTREC to
consolidate a significant peer and competitor in the Calgary region, consolidate
its facilities in Calgary, and increase the scope of services it is able to
provide its customers. The acquisition of the Mains Group in June 2012 expanded
the Company's business into the crane services market and represented a
significant step forward for ENTREC in becoming a leading provider of integrated
crane and heavy haul solutions to its customers throughout North America.
Strong Outlook for Remainder of 2012 and 2013
"Our outlook for the remainder of 2012 and 2013 remains very positive," comments
Rod Marlin, ENTREC's Chairman and CEO. "Utilization rates for our fleet continue
to be very brisk moving into the third quarter of 2012 and we continue to field
a tremendous volume of quoting activity for future work. Capital spending levels
on projects within the Alberta oil sands region and across western Canada also
continue to be strong resulting in high demand for both crane and heavy haul
transportation services. Complimenting this increase is also higher demand for
on-site crane and transportation services to support new and existing facilities
in the Alberta oil sands region."
The Company also believes its acquisition of Rain Coast Cranes & Equipment Inc.
("Rain Coast"), currently planned for the fourth quarter of 2012, will
compliment its current crane operations and position ENTREC to benefit from the
burgeoning development of LNG facilities planned for the Kitimat region over the
coming years as well as ongoing mining, hydro-electric, pipelines, and other
major projects throughout northern BC.
Revenue Guidance Reiterated
The Company reiterates its previously announced revenue guidance for fiscal
2012. Based on current expectations for future business activity and assuming no
further business acquisitions are completed, the Company estimates revenue for
the year ending December 31, 2012 will exceed $115 million, Future business
acquisitions completed in fiscal 2012, including the acquisition of Rain Coast,
currently anticipated to close on October 1, 2012, may further increase this
revenue estimate.
Capital Expenditure Program Increased
The Company also announces it has increased its 2012 capital expenditure program
to $39 million from a previous program of $22.3 million. This program consists
of $5 million in maintenance capital expenditures and $34 million in growth
capital expenditures to significantly expand ENTREC's crane and transportation
fleets. The increase in the capital expenditure program for 2012 was primarily
driven by the need for additions to the Company's crane fleet to meet the
expected demand for crane services over the coming year.
"We believe our growth capital expenditures will allow us to continue to achieve
strong year-over-year organic revenue growth in our business as we move into the
latter half of 2012 and 2013," added Mr. Marlin.
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".
Consolidated Statements of
Financial Position June December
As at 30 31
2012 2011
(thousands of Canadian dollars) $ $
ASSETS
Current assets
Cash 2,991 115
Trade and other receivables 34,814 13,679
Inventory 1,415 576
Prepaid expenses and deposits 1,021 406
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40,241 14,776
Non-current assets
Long-term deposits 400 400
Property, plant and equipment 94,225 45,680
Intangible assets 18,635 6,440
Goodwill 41,211 10,356
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Total assets 194,712 77,652
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Bank indebtedness - 267
Trade and other payables 11,444 5,949
Income taxes payable 2,164 -
Acquisition consideration payable 5,316 4,125
Current portion of credit
facilities - 5,251
Current portion of long-term debt 9,692 -
Current portion of obligations
under finance lease 723 313
Credit facilities - 22,238
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29,339 38,143
Non-current liabilities
Long-term debt 54,198 -
Obligations under capital lease 2,697 1,141
Deferred income taxes 13,115 1,877
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Total liabilities 99,349 41,161
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Shareholders' equity
Share capital 82,041 34,759
Contributed surplus 7,182 1,125
Retained earnings 6,148 607
Accumulated other comprehensive
income (8) -
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Total shareholders' equity 95,363 36,491
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Total liabilities and shareholders'
equity 194,712 77,652
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Consolidated Statements
of Income Three Months Ended Six Months Ended
(thousands of Canadian June 30 July 31 June 30 July 31
dollars, except per 2012 2011 2012 2011
share amounts) $ $ $ $
Revenue 28,730 4,650 52,167 4,650
Direct costs 18,121 3,838 33,453 3,838
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Gross profit 10,609 812 18,714 812
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Operating expenses
General and
administrative expense 2,917 826 5,448 1,016
Depreciation of
property, plant and
equipment 1,865 532 3,133 532
Amortization of
intangible assets 338 26 544 26
Share-based compensation 447 93 618 93
Loss on disposal of
property, plant and
equipment 119 - 128 -
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5,686 1,477 9,871 1,667
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Income (loss) before
finance items and
income taxes 4,923 (665) 8,843 (855)
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Finance items
Finance costs 655 171 1,129 171
Finance income (7) (28) (17) (32)
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648 143 1,112 139
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Income (loss) before
income taxes 4,275 (808) 7,731 (994)
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Income taxes
Current 441 - 441 -
Deferred 823 (270) 1,749 (270)
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1,264 (270) 2,190 (270)
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Net income (loss) 3,011 (538) 5,541 (724)
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Earnings (loss) per
share - basic and
diluted 0.04 (0.02) 0.10 (0.05)
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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
June 30, 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 exceed $115 million before considering the impact of
future business acquisitions; expectation the acquisition of Rain Coast will
compliment the Company's current crane operations and position ENTREC to benefit
from the burgeoning development of LNG facilities planned for the Kitimat region
over the coming years as well as ongoing mining, hydro-electric, pipelines, and
other major projects throughout northern BC; and expectation the Company will
execute its 2012 capital expenditure program of $39 million.
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 June 30, 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 Rain Coast 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; and (v) Rain Coast
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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