TerraVest Announces Fourth Quarter and Year End Results for Fiscal 2017

VEGREVILLE, AB, Dec. 22, 2017 /CNW/ - TerraVest Capital Inc. (TSX: TVK) ("TerraVest" or the "Company") announces its results for the three and twelve month periods ended September 30, 2017. As a whole the Company's fiscal 2017 results were below management expectation but slightly improved over the prior year.

The Company's Fabrication segment experienced improved results compared to the prior year, which resulted from increased sales, and reduced expenses partially offset by weak pricing. The oil and gas industry in Western Canada has been persistently weak since 2015 and competition for work has remained high. The Fabrication segment has made significant progress on cost reduction efforts, which has allowed it to gain market share despite the aggressive bidding practices in the industry at present.

The Fuel Containment segment did not meet management's expectations for fiscal 2017. This was primarily a result of weak demand in the segment's US propane business and weaker than expected results at the time of acquisition and higher than anticipated integration costs from the recently acquired Vilco Group. Fuel Containment's home heating oil tank businesses and Canadian propane businesses were relatively in line with expectations.

The Service segment's performance was in line with management's expectations for fiscal 2017. However, results for this segment continue to be well below historical trends as the persistently weak oil and gas market in Western Canada continues to affect pricing for this segments services.

HIGHLIGHTS – Q4 and fiscal year ended September 30, 2017

• Revenues of $52,699 and $192,535 for the quarter and fiscal year ended September 30, 2017, which represents increases of 22% and 8% respectively versus prior comparable periods;
• Adjusted EBITDA of $6,548 and $25,236 for the quarter and fiscal year ended September 30, 2017, which represents decrease of 21% and increase of 2% respectively versus prior comparable periods;
• Free cash flow of $8,832 and $4,243 for the quarter and fiscal year ended September 30, 2017, which compares to $156 and $27,601 for the comparable periods in fiscal 2016;
• Earnings per share and diluted earnings per share of $0.50 and $0.49, for the fiscal year ended September 30, 2017 compared to earnings per share and diluted earnings per share of $0.41 and $0.41, for fiscal 2016.

"Fiscal 2017 showed continued financial improvements year over year, but was not without challenges. We experienced increased levels of activity in our Western Canadian businesses, but the benefits were muted as a result of persistent pricing pressure, while our Fuel Containment segment did not meet expectations." – said Dustin Haw, Chief Executive Officer of TerraVest. 

		Three months ended September 30		Year ended September 30
		2017	2016	2017	2016
		$	$	$	$
Revenue		52,699	43,320	192,535	178,513
Net income		3,478	1,530	9,028	7,692
Add (subtract):
	Income taxes	(104)	665	2,677	3,001
	Financing costs	992	905	3,866	3,488
	Amortization and depreciation	2,120	2,606	9,728	9,951
EBITDA		6,486	5,706	25,299	24,132
Impairment of goodwill		-	2,473	-	2,473
Loss (gain) on disposal of property, plant and equipment		62	94	(63)	(1,803)
Adjusted EBITDA		6,548	8,273	25,236	24,802
Maintenance Capital Expenditures		(1,707)	(1,353)	(5,402)	(3,969)
Cash income taxes paid		(744)	(1,275)	(3,811)	(5,483)
Financing costs paid		(933)	(277)	(3,866)	(3,044)
Distribution to non‐controlling interest		-	-	-	(625)
Cash Available for Distribution		3,164	5,368	12,157	11,681
Dividends Paid in the Period		1,838	1,832	7,337	7,313
Dividend Payout Ratio		58%	34%	60%	63%

OUTLOOK

Management's outlook for the upcoming fiscal year is positive. For the Fabrication segment management is anticipating an improvement for fiscal 2018 driven by higher than usual backlogs and further incremental cost reductions. The Company is also expecting a positive contribution from the desanding business, which was acquired in 2016.

TerraVest is expecting improved results from the Fuel Containment segment in fiscal 2018. Demand for propane storage and distribution equipment in the US has picked up in recent months as delayed capital investments seem to have caught up to many propane retailers. This segment should also see a positive contribution from the recently acquired Fischer Tanks, as well as a new domestic propane tank manufacturing line that was installed during fiscal 2017. Additionally, managements expects that many of the integration challenges associated with the Vilco acquisition are behind them and will no longer be drag on this segments profitability.

The outlook for the Service segment is not materially different from the previous year. While this segment did experience increased utilization during fiscal 2017, pricing continues to be a major challenge and barring any improvement in commodity pricing management does not expect an immediate improvement in profitability.

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 9, 2018 to shareholders of record as at the close of business on December 29 2017. The ex-dividend date is December 28, 2017. 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.

SOURCE TerraVest Capital Inc.

Dustin Haw, TerraVest Capital Inc., Chief Executive Officer, [phone], [email protected]

Related Links

https://www.terravestcapital.com/