TerraVest announces fourth quarter and year end results for fiscal 2015

VEGREVILLE, AB, Dec. 10, 2015 /CNW/ - TerraVest Capital Inc. (TSX: TVK) ("TerraVest" or the "Company") a manufacturer of fuel containment vessels and oil & gas equipment as well as an oil field service provider is pleased to announce its results for three months and fiscal year ended September 30^th 2015.

The fourth quarter is generally a strong quarter for TerraVest on a seasonal basis, which was further enhanced by the performance of recent acquisitions. Despite the macro conditions in Western Canada, Management is pleased with the overall performance and remains positive of the long-term outlook for the Company. This was the first full quarter incorporating the Signature acquisition, which further diversified the Company's cash flows away from the oil & gas segment and contributed to the overall growth in revenue, EBITDA and cash flow of the Company versus the comparable period ended September 30^th, 2014.  The Dividend Payout ratio of the Company for the year end was 29%.

Highlights for the year end include:

• Revenues of $195,038 which represents an increase of 48% from fiscal 2014;
• Adjusted EBITDA of $35,362 which represents an increase of 53% from fiscal 2014;
• Free cash flow of $19,661 which represents an increase of 486% from fiscal 2014;
• Successfully acquired and integrated Signature Truck Systems during the year;
• Strong growth in earnings per share despite difficult economic conditions in the oil and gas industry. Earnings per share and diluted earnings per share of $0.83 and $0.80, respectively for the year ended September 30^th, 2015 compared to earnings per share and diluted earnings per share of $0.57 in fiscal 2014.

"Although our oil & gas segments face the challenges of today's macroeconomic trends, TerraVest continues to perform well as a result of our diversified cash flows and quality management teams. With the majority of our EBITDA generated from non-oil and gas related businesses, we continue to benefit from strong demand in the fuel containment segment. Furthermore, we see exciting growth opportunities in our existing businesses through continued integration and organic growth opportunities. We are in a strong position to take advantage of any recovery in the oil and gas market." said Charles Pellerin, Executive Chairman of TerraVest.

		Three months ended September 30		Year  ended September 30
		2015	2014		2015	2014
		$	$		$	$
Revenue		54,288	51,007		195,038	131,635
Net income		5,558	2,765		15,580	8,915
Add (subtract):
Income taxes		2,358	1,102		5,956	3,043
Financing costs		975	704		3,161	2,093
Amortization and depreciation		1,918	2,104		9,941	6,394
EBITDA		10,809	6,675		34,638	20,445
Impairment of property, plant and equipment		214	2,057		1,096	2,519
Loss (gain) on disposal of property, plant and equipment		141	63		(372)	87
Adjusted EBITDA		11,164	8,795		35,362	23,051
Maintenance Capital Expenditures		(1,614)	(2,128)		(4,448)	(5,083)
Cash income taxes paid		(372)	(198)		(2,491)	(538)
Financing costs paid		(390)	(704)		(2,498)	(1,534)
Distribution to non-controlling interest		(2)	-		(831)	(238)
Cash Available for Distribution		8,786	5,765		25,094	15,658
Dividends Paid in the Period		1,808	1,770		7,238	6,888
Dividend Payout Ratio		21%	31%		29%	44%
Free Cash Flow
Cash flow from operations before changes in non-cash Working Capital		10,408	8,128		30,509	21,032
Changes in non-cash Working Capital		(5,692)	(4,696)	(5,421)		(11,998)
Cash flow from operations		4,716	3,432		25,088	9,034
Add (subtract):
	Purchase of property, plant and equipment	(1,560)	(2,522)		(6,442)	(6,477)
	Proceeds on disposal of property, plant and equipment	129	4		1,015	796
Free Cash Flow		3,285	914		19,661	3,353

TerraVest's fourth quarter ended September 30^th, 2015 saw increases in revenue and adjusted EBITDA of approximately 6% and 27%, respectively, versus the comparable period ended September 30^th, 2014. For the fiscal year ended TerraVest saw increases in revenue and adjusted EBITDA of 48% and 53% respectively, versus the comparable fiscal year end in 2014. These increases were the result of both organic and acquisition growth over the year.

Outlook

TerraVest continues to focus on pursuing opportunities to expand the Company's existing portfolio of businesses and add new businesses where current operational and management expertise can be leveraged. 

The Fuel Containment segment is experiencing strong demand for its entire suite of propane products both in the U.S. and Canada.  Management expects this demand will continue well into the winter months.  With the acquisition of Signature, this segment is working diligently to sell more propane tanks and trailers into the U.S. and expects that this will increase revenues in the coming quarters in conjunction with the expansion of the propane manufacturing facilities.  The current backlog in the Fuel Containment segment's propane tank business is approximately $18,406 and stretches into 2016. Separate from propane, with the strong US dollar and low oil price environment, management expects equally strong performance from the residential oil tank business which is expected to generate higher EBITDA relative to the prior year.

The Fabrication Segment continues to experience pricing pressures and reduced demand from certain of its customers paralleling the state of the oil & gas market. In an effort to mitigate the impacts of a negative outlook for the Western Canadian economy, management took steps in 2015 to reduce staffing levels by approximately 35% in the Fabrication Segment and continues to evaluate all cost saving opportunities. Additionally, the Fabrication segment continues to take advantage of this economic slowdown to improve manufacturing processes through investment in equipment and changes to our plant layouts and work flow. These changes should result in cost rationalization, shorter lead times and increased capacity that will persist beyond an eventual recovery in oil prices. The Fabrication Segment's backlog is approximately $20,872 up from the previous quarter, but not as strong as last year as the continuation of the low oil prices impacts the industry in its entirety. Management expects the continued low oil price environment will be challenging for this segment.

The Service segment's results in the fourth quarter of fiscal 2015 were weaker than the prior year's quarter as a result pricing pressures and reduced activity due to the continued depressed oil and gas prices. Although this segment continues to face pricing pressure from its major customers, management is working diligently to maintain rig utilization levels and reduce costs of operating. The Service segment is a resilient business and as oil companies cut their capital budgets an emphasis is placed on well optimization which helps mitigate the cyclicality for this segment. We expect the low oil price environment will continue to put pressure on field rates and utilization levels for the foreseeable future. We remain confident in the long-term outlook for this business and its ability to withstand the current downturn.

Conference Call

TerraVest will hold a conference call on Wednesday December 16^th at 11:00 am Eastern Standard Time to discuss its financial results for the quarter ended September 30^th, 2015.

To participate in the call, please dial: 416.695.7806 or 866.696.5910 using Participant code: 2962928.

For those unable to attend the call, an instant replay of the call will be available until the 30^th of December, 2015 at 905.694.9451 using Participant code: 1328084.

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 January 11^th, 2016 to shareholders of record as at the close of business on December 31^st, 2015. The ex-dividend date is December 29^th, 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, 2015, 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, [phone], [email protected]