Acasta Reports First Quarter 2017 Results
TORONTO, May 15, 2017 /CNW/ - Acasta Enterprises Inc. (TSX: AEF.B and AEF.WT) ("Acasta" or the "Company") today released its first quarter 2017 results and announced a number of key strategic initiatives, including its seeding of Stellwagen's Senior Loan Fund ("Stelloan") with a US$100 million investment.
First Quarter of 2017 Financial Highlights
- Net income was $4.2 million, or $0.05 per share
- Adjusted net income* was $9.3 million, or $0.11 per share
- EBITDA* was $31.9 million
- Adjusted EBITDA* was $37.0 million
- EBITDA Margin* was 34.3%
- Cash and cash equivalents on hand at March 31, 2017 was $34.1 million
*The calculation of these non-IFRS financial performance measures as well as their reconciliation to data prepared in accordance with IFRS is outlined under "Non-IFRS Financial Performance Measures" below.
Strategic Initiatives
Acasta has secured financing to fund its US$100 million seed investment in Stelloan. Stelloan will provide senior loan financing for Stellwagen's increasing pipeline of commercial aircraft financing opportunities. The Stellwagen Group is a fully-integrated provider of asset management, technical management, and fleet and capital financing solutions to the global aviation industry as well as aviation investors. This investment will allow Stellwagen to make some early investments and enhance its overall investment management platform. It is also expected to also support Stelloan's further fundraising efforts.
Financing for Acasta's seed investment is provided for under a credit facility of up to US$150 million that Acasta has obtained from a group of lenders, including up to US $25 million in aggregate from affiliates of Douglas Brennan and Richard and Charles Wachsberg.
Last week, Acasta announced that Stellwagen has agreed to acquire ECN Capital's commercial aviation finance business ("ECN Aviation"). ECN Aviation is a vertically integrated provider of aviation services. Its experienced US-based team manages a $1.7 billion portfolio of commercial aviation assets on behalf of institutional investors. Its portfolio extends across 30 global airlines and comprises 45 commercial passenger aircraft. ECN Aviation's complementary expertise and increased distribution capabilities will be synergistically additive to Stellwagen's own capabilities. The acquisition further supports a recurring revenue operating side to Stellwagen.
A senior and experienced private equity professional will be joining Anthony Melman and Michael Liebrock as founding partners of Acasta's private equity fund, and support corporate development in other parts of Acasta's business. The Company expects to disclose the name of this professional shortly, when arrangements are finalized. In addition, in our consumer products business, we are exploring a number of attractive transactions and acquisition opportunities.
"These strategic initiatives represent important advances by Acasta and keep us on track to achieving the vision we presented to our shareholders," said Anthony Melman, Chairman and CEO. "We started in early January by successfully closing our qualifying acquisition of three businesses and are pleased to mark our continued progress in each area of our operations. We see much more on the horizon and look forward to continued progress."
"This was a good quarter for Acasta, our first quarter reporting financial results as an operating entity," said Ian Kidson, CFO and COO. "While we do not give quarterly guidance, we have provided annual performance targets for the three companies in our current portfolio and at this time, we have no reason to change those previously disclosed estimates. The JemPak and Apollo businesses are reasonably predictable, while the transactional nature of the Stellwagen business means a non-linear revenue and earnings pattern. Management of each business continue to be confident its target will be reached."
First Quarter Results
Acasta's operating companies have been grouped into three segments for reporting purposes, including Consumer Products, Aviation and Other. The results do not include meaningful comparatives from the previous year. This will continue to be an issue for each quarter of fiscal 2017.
The quarter's results reflect the establishment of opening balance sheet accounts. The Company recognizes that it is possible that there may be some adjustments to some balances throughout the year, though does not expect these to be material.
The Consumer Products segment achieved an Adjusted EBITDA of $13.7 million for the first quarter of 2017, while Net Income and Adjusted Net Income were $1.9 million and $4.4 million, respectively.
For the Aviation segment, Adjusted Net Income of $6.2 million was based on Revenue of $29.2 million for the quarter, while Adjusted EBITDA of $24.5 million was achieved.
On a consolidated basis, Acasta's Net Income was $4.2 million, or 5 cents per share. Adjusted Net Income was $9.3 million, or 11 cents per share for the first quarter of 2017, while the Company achieved Adjusted EBITDA of $37.0 million.
Our MD&A will provide additional details and breaks down the results from each of the reportable segments in our portfolio.
Acasta's first quarter fiscal 2017 financial statements and MD&A will be available on the company website at www.acastaenterprises.com/investors or on the SEDAR website at www.sedar.com effective May 15, 2017.
First Quarter 2017 Results Conference Call
Acasta's senior management will host a conference call on Monday, May 15, 2017 at 8:30 AM (E.D.T.) to discuss the Company's financial and operating results. Please dial 416-340-2217 or toll-free (Canada/US) 800-806-5484 with passcode 6102819. To ensure your participation, please join approximately five minutes prior to the scheduled start of the conference call.
Replay archive:
The conference call will be archived on the Company's website at www.acastaenterprises.com and will be available for replay at 905-694-9451 or toll-free 800-408-3053 with passcode 6422928, expiring on November 15, 2017.
About Acasta Enterprises Inc.
Acasta Enterprises Inc. is a leading Canadian public company that acquires businesses with exceptional potential for value creation through strategic and transformational initiatives. As a proactive private equity manager, Acasta partners with the senior management teams of its acquired businesses, empowering them to pursue value creating trajectories.
Non-IFRS Financial Performance Measures
Adjusted net income, EBITDA, Adjusted EBITDA and EBITDA Margin are not recognized measures under IFRS and this data may not be comparable to data presented by other companies.
Adjusted net income is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted net income is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.
EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for finance costs, current and deferred income tax, depreciation and amortization expenses. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. EBITDA is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.
Adjusted EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS (the calculation for adjusted net income) and then further adjusting for interest, current and deferred income tax, depreciation and amortization expenses. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted EBITDA is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.
EBITDA Margin is calculated by dividing EBITDA (see calculation outlined above) by total revenue as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss).
|
Three Months Ended March 31, 2017 |
Three Months |
|||||||||
| Reportable Segments |
||||||||||
| NON‑IFRS FINANCIAL PERFORMANCE MEASURES |
Consumer |
Aviation |
Other |
Acasta |
Acasta |
|||||
| Net income (loss) |
$1,869 |
$4,471 |
$(2,142) |
$4,198 |
$(8,071) |
|||||
| Gain on redemption of Class A Restricted Voting Shares |
— |
— |
(3,699) |
(3,699) |
— |
|||||
| Loss on disposal of property, plant and equipment |
— |
1,083 |
— |
1,083 |
— |
|||||
| Qualifying Acquisition transaction costs |
— |
— |
4,627 |
4,627 |
— |
|||||
| Costs to prepare aircraft for sale |
— |
706 |
— |
706 |
— |
|||||
| Net loss (gain) on foreign exchange transactions |
244 |
(25) |
(95) |
124 |
— |
|||||
| Cost of sales increment related to acquisitions |
1,946 |
— |
— |
1,946 |
— |
|||||
| Other non‑recurring costs |
359 |
— |
— |
359 |
— |
|||||
| Adjusted net income (loss) |
$4,418 |
$6,235 |
$(1,309) |
$9,344 |
$(8,071) |
|||||
| Net income (loss) per share — basic and diluted |
0.05 |
(0.86) |
||||||||
| Adjusted net income (loss) per share — basic and diluted |
0.11 |
(0.86) |
||||||||
| Weighted average number of Class B Shares outstanding |
85,642,902 |
9,349,648 |
||||||||
| Finance costs |
$1,046 |
$5,414 |
$192 |
$6,652 |
$— |
|||||
| Current income tax expense |
3,016 |
1,018 |
— |
4,034 |
— |
|||||
| Deferred income tax recovery |
(2,353) |
(737) |
— |
(3,090) |
— |
|||||
| Depreciation of property, plant and equipment and |
7,555 |
12,536 |
— |
20,091 |
— |
|||||
| EBITDA |
$11,133 |
$22,702 |
$(1,950) |
$31,885 |
$(8,071) |
|||||
| Adjusted EBITDA |
$13,682 |
$24,466 |
$(1,117) |
$37,031 |
$(8,071) |
|||||
ACASTA ENTERPRISES INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(In thousands of Canadian dollars)
| As at |
As at |
||||
| Current assets |
|||||
| Cash and cash equivalents |
$34,138 |
$187 |
|||
| Trade and other receivables |
47,077 |
597 |
|||
| Inventories |
30,828 |
— |
|||
| Prepaid expenses and deposits |
9,990 |
25 |
|||
| Restricted cash |
— |
405,002 |
|||
| Assets held for sale |
26,511 |
— |
|||
| Other current assets |
154 |
— |
|||
| $148,698 |
$405,811 |
||||
| Non‑current assets |
|||||
| Property, plant and equipment |
662,654 |
— |
|||
| Intangible assets |
332,952 |
— |
|||
| Goodwill |
608,590 |
— |
|||
| Other non‑current assets |
10,520 |
710 |
|||
| $1,614,716 |
$710 |
||||
| Total assets |
$1,763,414 |
$406,521 |
|||
| Liabilities |
|||||
| Current liabilities |
|||||
| Accounts payable and accrued liabilities |
$36,879 |
$8,779 |
|||
| Current portion of long‑term debt |
57,770 |
— |
|||
| Class A Restricted Voting Shares subject to redemption |
— |
409,342 |
|||
| Income taxes payable |
4,170 |
— |
|||
| Liabilities related to assets held for sale |
21,672 |
— |
|||
| Other current liabilities |
30,515 |
13,504 |
|||
| $151,006 |
$431,625 |
||||
| Non‑current liabilities |
|||||
| Long‑term debt |
717,691 |
— |
|||
| Deferred tax liabilities |
44,252 |
— |
|||
| Other non‑current liabilities |
65,029 |
— |
|||
| $826,972 |
$— |
||||
| Total liabilities |
$977,978 |
$431,625 |
|||
| Shareholders' equity |
|||||
| Share capital |
$822,866 |
$14,995 |
|||
| Warrants |
3,939 |
3,939 |
|||
| Deficit |
(39,840) |
(44,038) |
|||
| Accumulated other comprehensive loss |
(1,529) |
— |
|||
| Total shareholders' equity |
$785,436 |
$(25,104) |
|||
| Total liabilities and shareholders' equity |
$1,763,414 |
$406,521 |
|||
ACASTA ENTERPRISES INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS
OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands of Canadian dollars, except share and per share amounts)
| Three months |
Three months |
|||
| Revenue |
$92,971 |
$457 |
||
| Cost of sales, expenses, and other items |
||||
| Cost of sales |
44,714 |
— |
||
| Selling, general and administrative expense |
38,932 |
478 |
||
| Finance costs |
6,652 |
— |
||
| Net unrealized (gain) loss on change in fair value of financial liabilities |
(236) |
8,050 |
||
| Net loss on foreign exchange transactions |
124 |
— |
||
| Other income, net |
(2,357) |
— |
||
| Income (loss) before income tax |
$5,142 |
$(8,071) |
||
| Current income tax expense |
4,034 |
— |
||
| Deferred income tax recovery |
(3,090) |
— |
||
| Net income (loss) |
$4,198 |
$(8,071) |
||
| Comprehensive income (loss) |
||||
| Items that may be subsequently reclassified to net income (loss) |
||||
| Foreign currency translation |
$(2,559) |
$— |
||
| Net movement in cash flow hedges, net of tax |
1,030 |
— |
||
| Other comprehensive loss |
$(1,529) |
$— |
||
| Total comprehensive income (loss) |
$2,669 |
$(8,071) |
||
| Net income (loss) per share |
||||
| Basic |
$0.05 |
$(0.86) |
||
| Diluted |
$0.05 |
$(0.86) |
||
| Other comprehensive loss per share |
||||
| Basic |
$(0.02) |
$— |
||
| Diluted |
$(0.02) |
$— |
||
| Weighted average number of Class B Shares outstanding |
||||
| Basic |
85,642,902 |
9,349,648 |
||
| Diluted |
85,642,902 |
9,349,648 |
||
ACASTA ENTERPRISES INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
| Three months |
Three months |
|||
| Operating activities |
||||
| Net income (loss) |
$4,198 |
$(8,071) |
||
| Adjustments for non‑cash items and other adjustments: |
||||
| Depreciation of property, plant and equipment |
5,822 |
— |
||
| Amortization of intangible assets |
14,269 |
— |
||
| Gain on redemption of Class A Restricted Voting Shares |
(3,699) |
— |
||
| Loss on disposal of property, plant and equipment |
1,083 |
— |
||
| Net unrealized (gain) loss on change in fair value of financial liabilities |
(236) |
8,050 |
||
| Finance costs (income) |
6,652 |
(457) |
||
| Current income tax expense |
4,034 |
— |
||
| Deferred income tax recovery |
(3,090) |
— |
||
| Net loss on foreign exchange transactions |
124 |
— |
||
| Cost of sales increment related to acquisitions |
3,355 |
— |
||
| Amortization of inventory fair value increment |
(13,227) |
252 |
||
| Net cash flows provided by (used in) operating activities |
19,285 |
(226) |
||
| Income taxes paid |
(3,448) |
— |
||
| Cash provided by (used in) operating activities |
$15,837 |
$(226) |
||
| Investing activities |
||||
| Additions to property, plant and equipment |
$(299,442) |
$— |
||
| Additions to intangible assets |
(67,881) |
— |
||
| Proceeds on disposal of property, plant and equipment |
24,989 |
— |
||
| Interest received on restricted cash held in escrow |
— |
462 |
||
| Proceeds on maturity of restricted cash held in escrow |
— |
403,152 |
||
| Investment in restricted cash and cash equivalents held in escrow |
— |
(403,614) |
||
| Proceeds from restricted cash to finance acquisitions |
106,240 |
— |
||
| Acquisition of Apollo |
(161,545) |
— |
||
| Acquisition of JemPak |
(55,448) |
— |
||
| Acquisition of Stellwagen |
(90,772) |
— |
||
| Cash used in investing activities |
$(543,859) |
$— |
||
| Financing activities |
||||
| Proceeds from long‑term debt and credit facilities |
$441,182 |
$— |
||
| Repayment of long‑term debt |
(26,605) |
— |
||
| Payment of debt issuance costs |
(5,112) |
— |
||
| Proceeds from restricted cash to fund redemption of Class A Restricted Voting |
298,761 |
— |
||
| Redemption of Class A Restricted Voting Shares |
(285,680) |
— |
||
| Proceeds from private placement of Class B Shares |
159,551 |
— |
||
| Payment of deferred underwriters' commission |
(13,081) |
— |
||
| Payment of costs related to private placement |
(1,075) |
— |
||
| Interest paid |
(5,968) |
— |
||
| Cash provided by financing activities |
$561,973 |
$— |
||
| Net increase (decrease) in cash during the period |
$33,951 |
$(226) |
||
| Cash and cash equivalents, beginning of period |
187 |
3,096 |
||
| Cash and cash equivalents, end of period |
$34,138 |
$2,870 |
||
Cautionary Note Regarding Forward-Looking Statements
This news release may contain forward‐looking statements (within the meaning of applicable securities laws) which reflect Acasta's current expectations regarding future events. Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. These statements are based on Acasta's expectations, estimates, forecasts and projections and include, without limitation, statements regarding the acquisition of ECN Aviation and the benefits expected to be realized therefrom, launch of Acasta's first private equity fund, the expansion of Acasta's private equity team, the expectation that Acasta's private equity team will execute on further acquisitions and investment opportunities in its deal pipeline, and that Acasta's private equity team will generate significant value for Acasta and its private equity fund investors.
The forward-looking statements in this news release are based on certain assumptions, including without limitation, that Acasta's future objectives and strategies to achieve those objectives will not change, including, without limitation, the expected operations, financial results and condition of Acasta following the acquisition of ECN Aviation and the launch of its initial private equity fund, Acasta's plans to pursue additional acquisition opportunities, as well as other statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Acasta has made certain assumptions with respect to, among other things, currency exchange and interest rates and global economic and financial conditions. The forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading "Risk Factors" in Acasta's annual information form for the fiscal year ended December 31, 2016, a copy of which is available on the SEDAR website at www.sedar.com under Acasta's profile. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, Acasta assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
SOURCE Acasta Enterprises Inc.
Acasta Enterprises Inc., Ian Kidson, 647-725-6707, Chief Financial Officer and Chief Operating Officer
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