Distinct Infrastructure Group Reports Third Quarter 2018 Results
TSXV: DUG │OTCQX: DSTFF
TORONTO, Nov. 29, 2018 /CNW/ - Distinct Infrastructure Group Inc. ("Distinct", "DIG" or the "Company") today released its financial results for the three-month and nine-month periods ended September 30, 2018.
Summary
- Third quarter Revenue of $21.4 million was a 1.9% increase over the $21 million reported in the third quarter of 2017. Revenue for the nine months ended September 30, 2018 was $61.5 million, an increase of 36.1% over the $45.2 million in revenue for the nine months ended September 30, 2017.
- EBITDA was $3.4 million in the quarter compared to $7.3 million in the third quarter of last year. For the nine months ended September 30, 2018, EBITDA was $6.8 million compared to $3.1 million in the previous year, an increase of 119.4%.
- Third quarter Net Loss of $0.57 million compared to Net Income of $5.4 million in the third quarter of 2017. The Net Loss for the nine months ended September 30, 2018 was $2.8 million compared to Net Loss of $5.2 million for the nine months ended September 30, 2017 which is an increase of 46.2% from the same period last year.
- On September 12, 2018, the Company completed an offering of $10 million of unsecured subordinated convertible debenture units. Each unit consisted of $1,000 principal amount of unsecured subordinated convertible debt and 225 common share purchase warrants (the "Warrants"). Each Warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.70 at any time up to September 12, 2020 (subject to adjustment in certain customary events).
- Strong results continued in Central Canada followed by the acquisition of Crown Utilities on November 2017.
Third Quarter 2018 Financial Highlights
Income Statement |
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All Figures in CAD |
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Three Months Ended |
Nine Months Ended |
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September 30, 2018 |
September 30, 2017 |
September 30, 2018 |
September 30, 2017 |
|
Revenue |
$21,447,225 |
$21,027,836 |
$61,464,917 |
$45,161,385 |
Expenses |
$19,314,699 |
$14,286,827 |
$58,166,513 |
$43,557,269 |
EBITDA |
$3,366,315 |
$7,253,690 |
$6,781,650 |
$3,093,195 |
Adjusted EBITDA |
$3,398,000 |
$7,267,000 |
$6,877,184 |
$3,149,668 |
Net Income (Loss) |
($566,525) |
$5,426,436 |
($2,776,305) |
($5,166,804) |
EPS (Basic) |
($0.01) |
$0.15 |
($0.06) |
($0.15) |
Overview
"The third quarter of 2018 represented a deviation from past trends due to the decrease in workload," said Joe Lanni, DIG's Co-CEO. "This never before seen decrease in workload, coupled with the Corporation's investment in increased personnel and equipment to meet the anticipated increase in workload, has put pressure on the Corporation's gross margins and profit. Discounting the expenses associated with the discontinued operations, the Corporation would have realized a profit for the third quarter."
Mr. Lanni went on to say, "Despite the challenges faced by the Company's operations in Ontario, Crown Utilities continues to grow as demand for its services increase. We anticipate that opportunities in Manitoba will continue to grow which should result in stronger results for its central operations."
"Given the decrease in workload, the Corporation will be undertaking a number of initiatives to reduce overall costs and realign its assets to maximize productivity, revenue and profitability," said Alex Agius, DIG's Co-CEO. "The implementation of the initiatives should result in a greater diversified customer mix as well as a more efficient workforce and fleet. Some of the initiatives include the reduction of field personnel, back office support and management as well as reducing the number of inefficient and/or high maintenance equipment and disposal of under-utilized assets. The Company anticipates annualized cost savings of approximately $5 million to $7 million which will result in a reduction in long term debt on assets and an increase in margins."
The construction industry in Canada is seasonal in nature for companies like Distinct that performs most of their work outdoors. As a result, less work is typically performed in the winter and early spring months than in the summer and fall months. Accordingly, Distinct has historically experienced a seasonal pattern in its operating results, with the first half of the year generating lower revenue and profitability than the second half of the year. The second half of 2018 has deviated from past trends due to the slowdown of workload from one of the Company's clients.
Q3 Operating Results
Revenue – Revenues for the quarter ending September 30, 2018 were $21,447,255, a slight increase over the revenues for the same quarter last year of $21,027,836. Despite the slowdown in the workload from one of the Company's significant client which started in mid-August and will continue through the remainder of fiscal 2018, the Company was able to increase its revenue year over year largely due to the performance of Crown Utilities and the strong demand for its services in Manitoba.
Gross Profit Margin – Gross profit (revenue less direct costs) reached $6,817,920 for the quarter ended September 30, 2018 compared to $9,711,898 from the third quarter of 2017. Gross profit margin for the third quarter was 31.8% compared to gross profit margin of 46.2% for the third quarter of last year. The decrease in gross profit was primarily due to the Company increasing its investments in personnel and equipment in anticipation of client programs that were subsequently scaled back by the client. This scale back is expected to continue through 2019. The Company has taken the initiative to re-organize and right size its business giving the company the ability to both grow a more diversified customer mix, as well as an even more efficient team and fleet. Once these initiatives are fully implemented, the Company anticipates that gross profit margins will return to historic levels.
Net Income / Loss – The Company reported a net loss of $566,525 for the third quarter of 2018 as compared to net income of $5,426,436 for the third quarter of 2017. Excluding the loss after income taxes from discontinued operations, the Corporation would have realized net income from continuing operations of $790,040. The decrease of net income year over year was largely due to the decrease in workload of one of the Corporation's significant clients.
About Distinct Infrastructure Group:
Distinct Infrastructure Group Inc. is a turnkey solutions firm providing design, engineering, construction and maintenance services to telecommunication firms, utilities and government bodies. Distinct's full service suite of offerings includes underground construction, aerial construction, inventory management, and technical services including fibre to the building and home. The Company's head offices are located in Toronto, Ontario, with additional offices in Winnipeg, Manitoba.
Non-IFRS / GAAP Measures
EBITDA, Adjusted EBITDA are non-GAAP/IFRS figures. "EBITDA" represents net income plus income tax, one-time finance expenses and depreciation. "Adjusted EBITDA" represents EBITDA plus share-based compensation and one-time costs.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward Looking Statements
This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "anticipated", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Distinct is subject to significant risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements contained in this release. Distinct cannot assure investors that actual results will be consistent with these forward looking statements and Distinct assumes no obligation to update or revise the forward looking statements contained in this release to reflect actual events or new circumstances.
SOURCE Distinct Infrastructure Group Inc.
William Nurnberger, Interim Chief Financial Officer, Distinct Infrastructure Group Inc., Email: [email protected]
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