TerraVest announces fourth quarter and year end results for fiscal 2016

VEGREVILLE, AB, Dec. 7, 2016 /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 the three months and fiscal year ended September 30, 2016.

The fourth quarter is generally a strong quarter for TerraVest on a seasonal basis, however the dramatic reduction in oil and gas activity continues to impact the Western Canadian business segments. TerraVest's non‐oil and gas exposed business segment, the Fuel Containment division, continues to perform well and the Company maintains a well‐capitalized balance sheet. In addition, TerraVest continues to evaluate opportunities that arise as a result of the oil and gas downturn as well as other opportunities to augment its existing portfolio of businesses. 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. The Dividend Payout ratio of the Company for the year end was 63%.

Highlights for the year end include:

"It is no surprise that this fiscal year has been one of the most challenging for companies exposed to the oil & gas industry. What TerraVest has demonstrated is its ability to withstand the most serious of downturns while still delivering strong cash flow results.  On a positive note, we are seeing the benefits of our diversification strategy." said Charles Pellerin, Executive Chairman of TerraVest.

• Revenues of $178,513 for the year, down 8% from 2015;
• Adjusted EBITDA for the year of $24,802, which represents a decrease of 30% over fiscal 2015;
• Free cash flow for the year of $27,601, which represents an increase of 40% over fiscal 2015;
• Successfully acquired and integrated EnviroVault and Segretech during the year; and
• Earnings per share and diluted earnings per share of $0.41 and $0.41, respectively for the year September 30, 2016 compared to earnings per share and diluted earnings per share of $0.83 and $0.80, respectively in fiscal 2015.

		Three months ended September 30		Year ended September 30
		2016	2015	2016	2015
		$	$	$	$
Revenue		43,320	54,288	178,513	195,038
Net income		1,530	5,558	7,692	15,580
Add (subtract):
Income taxes		665	2,358	3,001	5,956
Financing costs		905	975	3,488	3,161
Amortization and depreciation		2,606	1,918	9,951	9,941
EBITDA		5,706	10,809	24,132	34,638
Impairment of property, plant and equipment		2,473	214	2,473	1,096
Loss (gain) on disposal of property, plant and equipment		94	141	(1,803)	(372)
Adjusted EBITDA		8,273	11,164	24,802	35,362
Maintenance Capital Expenditures		(1,353)	(1,614)	(3,969)	(4,448)
Cash income taxes paid		(1,275)	(372)	(5,483)	(2,491)
Financing costs paid		(277)	(390)	(3,044)	(2,498)
Distribution to non-controlling interest		-	(2)	(625)	(831)
Cash Available for Distribution		5,368	8,786	11,681	25,094
Dividends Paid in the Period		1,832	1,808	7,313	7,238
Dividend Payout Ratio		34%	21%	63%	29%
Free Cash Flow
Cash flow from operations before changes in non-cash Working Capital		8,464	10,408	18,040	30,684
Changes in non-cash Working Capital		(7,477)	(5,692)	10,850	(5,596)
Cash flow from operations		987	4,716	28,890	25,088
Add (subtract):
	Purchase of property, plant and equipment	(960)	(1,560)	(4,978)	(6,442)
	Proceeds on disposal of property, plant and equipment	129	129	3,689	1,015
Free Cash Flow		156	3,285	27,601	19,661

 

TerraVest's fourth quarter ended September 30, 2016 saw decreases in revenue and Adjusted EBITDA of approximately 20% and 26%, respectively, versus the comparable period ended September 30, 2015. For the fiscal year ended TerraVest saw decreases in revenue and Adjusted EBITDA of 8% and 30% respectively, versus the comparable fiscal year end in 2015. These decreases were primarily the result of declines in the Fabrication and Service segments.

Outlook

TerraVest's Fuel Containment segment had a strong 2016 despite an unseasonably warm winter that weighed on demand for its propane products. Management continues to see strong demand for this segment's residential steel and fiberglass tank products and more recently has seen a rebound in demand for its propane products. Fiscal 2016 saw the completion of several plant expansions and modifications, of which management expects to see the benefits moving forward. The segment is currently pursuing several organic growth initiatives, including expanded product offerings, and remains on the lookout for strategic acquisition opportunities.

Fiscal 2016 was a difficult year for TerraVest's Fabrication segment as it saw major declines in activity due to persistently weak commodity pricing. With that in mind, the segment was successful in streamlining its operations to remain profitable throughout the year and took advantage of the downturn by adding to its product portfolio with the acquisitions of EnivroVault and Segretech. Management is currently pursuing several initiatives to make its operations more cost competitive and it believes this will have a lasting effect on the businesses as many of its competitors do not have the resources to do the same. Recently this division has seen an uptick in demand for its products, which correlates with increased optimism and increased capital budgets from the well-capitalized oil and gas producers.  Management remains cautiously optimistic that the upcoming year will bring a modest recovery in business activity.

For the Service segment fiscal 2016 was a very challenging year. This was a result of the weak commodity pricing, as well as a major asset sale by one of this segment's major customers. Management has done an excellent job managing costs throughout the downturn and we expect this to continue. Management is expecting a modest improvement for the upcoming year as it navigates the major customer transition mentioned above and sees the benefits of Saskatchewan's drilling friendly policies.

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, 2017 to shareholders of record as at the close of business on December 30, 2016. The ex-dividend date is December 28, 2016. The dividend is designated an "eligible dividend" for Canadian income tax purposes.

Additional information can be found in TerraVest's audited 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 7, 2015 and under "Risk Factors" in the MD&A of TerraVest for the year ended September 30, 2016, 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 7, 2016.

SOURCE TerraVest Capital Inc.

Mitchell Gilbert, TerraVest Capital Inc., Chief Investment Officer, [phone], [email protected]