ENTREC Corporation ("ENTREC" or the "Company") (TSX VENTURE:ENT), a leading
provider of cranes and heavy haul transportation services, is pleased to
announce its 2012 third quarter financial results.
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$ thousands, except per share
amounts Three Months Ended Nine Months Ended
Sept 30 Oct 31 Sept 30 Oct 31
2012 2011 2012 2011
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Revenue 36,298 15,010 88,465 19,661
Gross profit 12,222 4,885 30,936 5,698
Gross margin 33.7% 32.5% 35.0% 29.0%
Adjusted EBITDA(1) 8,520 2,999 21,786 2,796
Adjusted EBITDA margin(1) 23.5% 20.0% 24.6% 14.2%
Per share(1) 0.11 0.09 0.34 0.14
Net income 3,143 916 8,684 192
Per share - basic 0.04 0.03 0.14 0.01
Per share - diluted 0.04 0.03 0.13 0.01
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Note: (1) See "Non-IFRS Financial Measures" section of the Company's
Management Discussion & Analysis for the three months ended
September 30, 2012.
"We achieved significant growth in revenue, EBITDA, and net income in the third
quarter of 2012 as we continued to execute our growth strategies and respond to
robust demand from Western Canada's resource industries," said John M. Stevens,
ENTREC's President and COO. "Since our founding acquisition in May 2011, we have
completed a total of nine acquisitions and undertaken a significant capital
expenditure program to expand our fleet and service offering, and increase our
geographic and customer diversification."
For the three months ended September 30, 2012, revenue more than doubled to
$36.3 million from $15.0 million during the comparative three months ended
October 31, 2011. The strong revenue performance reflects the positive impact of
the Company's business acquisitions, as well as significant organic growth. On a
pro forma combined basis, third quarter revenue was $11.4 million or 46% higher
than what ENTREC and each of the acquired businesses achieved independently
during the same period in 2011. The strong organic growth reflects a combination
of enhanced operational efficiency and equipment utilization, pricing
improvements and expansion of the Company's equipment fleet.
Adjusted EBITDA for the three months ended September 30, 2012 increased by 184%
to $8.5 million, reflecting the higher revenue and an improved gross margin
percentage of 33.7%, compared to 32.5% last year. Adjusted EBITDA margin climbed
to 23.5% of revenue from 20.0% during the comparable period ended October 31,
2011. Third quarter net income increased to $3.1 million or $0.04 per share from
$0.7 million or $0.03 per share during the comparable period last year.
For the nine months ended September 30, 2012, revenue increased to $88.5 million
from $19.7 million during the comparable period in 2011. Adjusted EBITDA
increased to $21.8 million from $2.8 million, while Adjusted EBITDA margin grew
to 24.6% from 14.2%. Net income for the first nine months of 2012 increased to
$8.7 million or $0.14 per share from $0.2 million or $0.01 per share during the
comparable period last year.
Strong Outlook for Remainder of 2012 and 2013
"Our outlook for the remainder of 2012 and 2013 continues to be positive," said
Mr. Stevens. "Capital spending levels on projects within the Alberta oil sands
region and across Western Canada remain robust, resulting in high demand for
both crane and heavy haul transportation services. Utilization rates for our
fleet are currently strong and we continue to field a large volume of requests
for additional equipment from our customers."
The recent acquisitions of Rain Coast Cranes & Equipment Inc. ("Rain Coast") and
Tiggo Transport Ltd. ("Tiggo"), position the Company to benefit from the
burgeoning industrial development occurring in Northern BC and North-west
Alberta. This includes the development of LNG facilities planned for the
Kitimat, BC region over the coming years as well as ongoing mining,
hydro-electric, pipelines, and oil and gas projects throughout these areas.
The Rain Coast acquisition also builds on ENTREC's crane service offering, which
was established with the June 2012 acquisition of the Mains Group. Crane
services are highly complementary to heavy haul transportation and allow
customers to obtain both their heavy haul and lifting needs from one vendor.
They also increase access to recurring onsite maintenance, operation and repair
("MRO") support work in the Alberta oil sands region, as cranes are key to
performing this work.
A large part of ENTREC's capital expenditure program in 2013 will be directed to
adding additional crane assets in order to grow the Company's capability and
market share in this important area.
Revenue Guidance Increased
Based on current expectations for future business activity, the Company
currently estimates revenue for the year ending December 31, 2012 could be
between $125 million and $130 million. This represents an increase from ENTREC's
previous revenue guidance of $115 million and primarily reflects the anticipated
incremental revenue from the Rain Coast and Tiggo acquisitions.
Looking Forward to 2013
"Moving into 2013, we expect our revenue and net earnings to continue to show
strong growth as we execute our capital expenditure programs," added Mr.
Stevens. "While we will not finalize our 2013 plan until early in the new year,
we currently anticipate that our 2013 capex program could increase to the $50
million range as we capitalize on growth opportunities. This would include
approximately $40 - $45 million of growth capital to significantly increase our
fleet of cranes and heavy haul transportation trucks and trailers."
Based on current expectations for future business activity, the Company
currently estimates revenue for the year ending December 31, 2013 could exceed
$200 million.
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
September 30, 2012 for a reconciliation of Adjusted EBITDA to net income, the
most directly comparable financial measure calculated and presented in
accordance with IFRS.
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Consolidated Statements of Financial Position
As at September 30 December 31
2012 2011
(thousands of Canadian dollars) $ $
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ASSETS
Current assets
Cash 5,779 115
Trade and other receivables 33,908 13,679
Inventory 1,597 576
Prepaid expenses and deposits 1,999 406
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43,283 14,776
Non-current assets
Long-term deposits 777 400
Property, plant and equipment 94,114 45,680
Intangible assets 18,152 6,440
Goodwill 41,222 10,356
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Total assets 197,548 77,652
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness - 267
Trade and other payables 13,876 5,949
Income taxes payable 2,790 -
Acquisition consideration payable 1,550 4,125
Current portion of credit facilities - 5,251
Current portion of long-term debt 12,907 -
Current portion of obligations under finance
lease 782 313
Credit facilities - 22,238
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31,905 38,143
Non-current liabilities
Long-term debt 50,771 -
Obligations under capital lease 2,673 1,141
Deferred income taxes 13,542 1,877
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Total liabilities 98,891 41,161
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Shareholders' equity
Share capital 82,041 34,759
Contributed surplus 7,375 1,125
Retained earnings 9,291 607
Accumulated other comprehensive income (50) -
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Total shareholders' equity 98,657 36,491
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Total liabilities and shareholders' equity 197,548 77,652
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Interim Consolidated Statements of Income
Three Months Ended Nine Months Ended
Sept 30 Oct 31 Sept 30 Oct 31
(thousands of Canadian dollars, 2012 2011 2012 2011
except per share amounts) $ $ $ $
Revenue 36,298 15,010 88,465 19,661
Direct costs 24,076 10,125 57,529 13,963
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Gross profit 12,222 4,885 30,936 5,698
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Operating expenses
General and administrative expense 3,702 1,886 9,150 2,902
Depreciation of property, plant and
equipment 2,504 1,014 5,637 1,546
Amortization of intangible assets 556 186 1,100 212
Share-based compensation 193 185 811 278
Loss (gain) on disposal of property,
plant and equipment 43 (21) 171 (21)
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6,998 3,250 16,869 4,917
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Income before finance items and
income taxes 5,224 1,635 14,067 781
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Finance items
Finance costs 880 328 2,009 499
Finance income (2) (1) (19) (33)
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878 327 1,990 466
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Income before income taxes 4,346 1,308 12,077 315
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Income taxes
Current 735 - 1,176 -
Deferred 468 392 2,217 123
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1,203 392 3,393 123
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Net income 3,143 916 8,684 192
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Earnings per share - basic 0.04 0.03 0.14 0.01
Earnings per share - diluted 0.04 0.03 0.13 0.01
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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 could be between $125 and $130 million; expectation the recent
acquisitions of Rain Coast and Tiggo will complement the Company's current crane
and heavy haul transportation operations and position ENTREC to benefit from the
burgeoning industrial development throughout Northern BC and North-west Alberta;
projection that revenue for the year ending December 31, 2013 could exceed $200
million; expectation the Company will execute its 2012 capital expenditure
program of $39 million; and projection that ENTREC's 2013 capital expenditure
program could be in the $50 million range.
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 September 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 programs 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.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
ENTREC Corporation
Rod Marlin
Chairman & CEO
(780) 960-5647
ENTREC Corporation
John M. Stevens
President & COO
(780) 960-5625
ENTREC Corporation
Jason Vandenberg
CFO
(780) 960-5630
www.entrec.com
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