VEGREVILLE, AB, Feb. 11, 2015 /CNW/ - TerraVest Capital Inc. (TSX: TVK) ("TerraVest" or the "Company") a manufacturer of fuel containment and pressure vessels as well as an oil field service provider is pleased to announce its results for three months ended December 31st 2014.
The first quarter was another milestone period for TerraVest which included record EBITDA and the first full quarter which included both of TerraVest's acquisitions from fiscal 2014. Furthermore, each segment had growth in EBITDA vs. the comparable period last year. Highlights included, but are not limited to:
- Record EBITDA for the first quarter in excess of $10.8 million;
- EBITDA growth in all segments vs. their comparable period last year;
- Both of TerraVest's recent acquisitions continue to exceed the expectations set out at the time of acquisition;
- Record quarter for the Fuel Containment segment which generated approximately 45% of TerraVest's total EBITDA;
- Revenues and EBITDA from this segment are primarily insulated from the decline in world oil prices;
- Successful cooperation across business segments. The Fabrication segment successfully secured a large oil & gas equipment order with the assistance of the Fuel Containment Segment's vessel fabrication capabilities; enabling shorter lead times for the customer;
- Debt repayments of $10,518;
"TerraVest continues to perform well and maintains a strong balance sheet. We continue to make progress with integration efforts among our recently acquired businesses and we are moving forward with a number of organic growth strategies. TerraVest's timely diversification into the Fuel Containment Segment has also positioned the Company to pursue opportunistic acquisitions during the downturn in oil prices." said Charles Pellerin, Executive Chairman of TerraVest.
| FINANCIAL INFORMATION |
|||
| Three months ended December 31 |
|||
| 2014 |
2013 |
||
| $ |
$ |
||
| Revenue |
53,004 |
20,668 |
|
| Net income |
5,334 |
2,583 |
|
| Add (subtract): |
|||
| Income tax expense |
2,470 |
788 |
|
| Financing costs |
658 |
135 |
|
| Gain on disposal of property, plant and equipment |
(216) |
(58) |
|
| Amortization and depreciation |
2,648 |
890 |
|
| EBITDA |
10,894 |
4,338 |
|
| Maintenance Capital Expenditures |
(1,092) |
(1,162) |
|
| Cash income taxes paid (recovered) |
(283) |
73 |
|
| Financing costs paid |
(944) |
(135) |
|
| Distribution to non-controlling interest |
(376) |
(50) |
|
| Cash Available for Distribution |
8,199 |
3,064 |
|
| Dividends Paid in the Period |
1,810 |
996 |
|
| Dividend Payout Ratio |
22% |
33% |
|
| Free Cash Flow |
|||
| Cash flow from operations before changes in non-cash Working Capital |
9,691 |
4,294 |
|
| Changes in non-cash Working Capital |
3,623 |
(6,647) |
|
| Cash flow from operations |
13,314 |
(2,353) |
|
| Add (subtract): |
|||
| Purchase of property, plant and equipment |
(1,092) |
(2,161) |
|
| Proceeds on disposal of property, plant and equipment |
376 |
402 |
|
| Free Cash Flow |
12,598 |
(4,112) |
|
TerraVest's first quarter ended December 31, 2015 saw increases in revenue and EBITDA of approximately 156% and 151%, respectively, versus the comparable period ended December 31 2014. The increases were primarily the result of the acquisitions of Gestion Jerico and NWP which are not included in the comparable period. However, all segments achieved growth in EBITDA vs. the comparable quarter last year. Furthermore, TerraVest's acquisitions have achieved results exceeding expectations set out at the time of acquisition. TerraVest's balance sheet remains strong, with net debt/EBITDA at approximately 1.3x assuming the Company had owned its two acquisitions for a full 12 month period.
Outlook
We continue to see opportunities to expand the Company's portfolio of businesses consistent with our stated strategy and we will continue evaluating opportunities to further grow the strategic position of the Company as well as optimize the existing businesses. We continue to actively pursue integration opportunities between the existing portfolio companies and are optimistic that these will contribute to the Company's profitability.
The Fabrication Segment services many of the largest oil and gas producers in Canada, many of whose capital spending programs have been significantly reduced in response to the rapid decline in oil prices. As a result, the Fabrication Segment is experiencing pricing pressures and some project deferrals from certain customers. However, we believe that our Fabrication segment is well positioned, to withstand the current market trends for some time in light of our best in class offering, material backlog and the basins in which we primarily ship (being the Montney and Duvernay formations).
The Fabrication Segment's backlog is approximately $29,000, which is not as strong as the comparable period last year, but the segment is currently operating at full capacity. We expect a decline in activity levels after spring breakup that could last well into the second half of fiscal 2015 if oil prices remain at current levels. Despite the low oil price environment, the addition of NWP to the Fabrication segment in August 2014, should allow this segment to deliver operating results that are at least on par with those obtained in fiscal 2014 as we continue to pursue integration synergies. In addition, Management of the Fabrication segment continues to work on its inventory reduction initiatives in an effort to free up cash tied up in working capital.
The Fuel Containment Segment had a strong quarter due to increased demand for its propane distribution related products, as well as better than expected volumes in its residential oil tank business. Management expects this performance to continue into fiscal 2015, as declining oil prices tend to increase demand for this segment's fuel containment products. We expect the strong performance to be bolstered further by the weakening Canadian dollar. The Fuel Containment Segment accounts for approximately 40% of TerraVest's total EBITDA and is not exposed to the downward pressure in world oil prices. The current backlog in the Fuel Containment's propane tank business stretches well into the spring of 2015, which is stronger than usual and the Fuel Containment Segment's total backlog is approximately $9,100. The Fuel Containment Segment's residential tank business is positioned for a strong year with the development of a new fiberglass tank and increased demand in the US. The Fuel Containment Segment sold its first fiberglass tank in October of 2014 and expects to ramp this business up considerably over the coming year. Management also expects to see opportunities to cross-sell in the oil and gas industry through the Fabrication Segment.
The Service Segment had a very strong quarter as it realized higher operating hours and utilization rates. However, as a result of the rapid decline in oil prices in the first quarter, the Service Segment began to experience some pricing pressures from its major customers. We expect a continued weak oil price will impact the Service Segment after spring break up and into the second half of fiscal 2015. As a result we expect this segment to deliver operating results below fiscal 2014 results. Ultimately, the Service Segment's business is not tied to the drill bit and as oil companies cut their capital budgets an emphasis is placed on well optimization which helps mitigate the cyclicality for this Segment.
Opportunistic acquisitions meeting the Company's criteria continue to be sought out and we fully expect the financial distress facing many companies in the oil and gas industry will present opportunities for TerraVest.
Conference Call
TerraVest will hold a conference call on Thursday February 12th at 10:00 am Eastern Standard Time to discuss its financial results for the quarter ended December 31st, 2014.
To participate in the call, please dial: 416.340.2217 or 1.866.696.5910 using Participant code: 4869759
For those unable to attend the call, an instant replay of the call will be available until the 26th of February, 2015 at 905.694.9451 using Participant code: 7555478
Dividend
TerraVest is also pleased to announce that The Board of Directors has declared its quarterly dividend of 10 cents per share upon the outstanding Common Shares in the capital stock of the Company being payable on April 10th, 2015 to shareholders of record as at the close of business on March 31, 2015. The ex-dividend date is March 27th, 2015. The dividend is designated an "eligible dividend" for Canadian income tax purposes.
Additional information can be found in TerraVest's unaudited interim condensed consolidated financial statements and MD&A which are available on SEDAR at www.sedar.com.
Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements. All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding our strategic direction and evaluation of the business segments and TerraVest as a whole, and other plans and objectives of or involving TerraVest. Readers can identify many of these statements by looking for words such as "expects" and "will" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.
By their nature, forward-looking statements require us to make assumptions and, accordingly, forward looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements.
Assumptions and analysis about the performance of TerraVest as a whole and its business segments, the markets in which the business segments compete and the prospects and values of the business segments are considered in setting the business plan for TerraVest, plans and/or ability to pay dividends, outlook for operations, financial position, results and cash flow, other plans and objectives and in making related forward-looking statements. Such assumptions include, without limitation, demand for products and services of the business segments in respect of the Canadian and other markets in which the businesses are active will be stable, and that input costs to business segments do not vary significantly from levels experienced historically. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements.
The information set forth under "Risk Factors" in the annual information form of TerraVest dated December 9, 2014 and under "Risk Factors" in the MD&A of TerraVest for the year ended September 30, 2014, identifies risk factors that could affect the operating results and performance of TerraVest and its business segments and the values of the business segments and TerraVest as a whole. We caution that the lists of factors discussed in such information is not exhaustive and that, when relying on forward-looking statements to make decisions with respect to TerraVest, investors and others should carefully consider the factors discussed, as well as other uncertainties and potential events, and the inherent risks and uncertainties of forward-looking statements. The forward-looking statements herein are made based on the assumption that TerraVest will not be affected by such risks, but that, if TerraVest is affected by such risks, the forward-looking statements may become inaccurate.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, TerraVest does not undertake to update such forward-looking statements.
Non-GAAP Financial Measures
For Non-GAAP financial measures please refer to the definitions outlined the TerraVest Management's Discussion and Analysis dated December 9, 2014.
SOURCE TerraVest Capital Inc.
Mitchell Gilbert, TerraVest Capital Inc., Chief Investment Officer, (416) 364 -0064, [email protected] OR Paul A. Casey, CA, TerraVest Capital Inc., Chief Financial Officer, (780) 632-2040, [email protected]
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