TerraVest Announces Third Quarter Results for Fiscal 2017

VEGREVILLE, AB, Aug. 8, 2017 /CNW/ -TerraVest Capital Inc. (TSX: TVK) ("TerraVest" or the "Company") is pleased to announce its results for the three and nine months ended June 30, 2017.

TerraVest's Fuel Containment segment experienced improved operating results related to strong demand for its residential oil tank and related product lines, as well as its Canadian propane storage products, which was partially offset by continued weak demand for propane trucks in the segment's US markets. The Fabrication segment has experienced a gradual improvement in operating results as activity has picked up in Western Canada. Pricing pressure continues to affect profitability, but this has only partially offset the benefits of increased activity and improved cost control. TerraVest's Service segment had a weaker quarter primarily related to the timing and severity of the spring break up in the areas in which it operates.

Highlights for the quarter include:

• Revenues of $44,993 for the quarter, which represents an increase of 25% from the comparable period in fiscal 2016;
• Third quarter Adjusted EBITDA of $5,329, which is an increase of 266% over the comparable period in fiscal 2016;
• Free cash flow for the quarter of $(5,207), which represents a decrease of $12,145 over the third quarter of fiscal 2016, and;
• Earnings per share and diluted earnings per share of $0.07 and $0.07 respectively for the three months ended June 30, 2017 compared to earnings per share and diluted earnings per share of $0.31 and $0.31, respectively in the third quarter of fiscal 2016.

"Our results this quarter were encouraging. Our Fabrication segment is performing better, which is the result of an improved operating environment in Western Canada, but also a vigilant effort to reduce costs by the segment's management team. Our Fuel Containment segment had a decent quarter despite persistently weak demand for propane trucks in our US markets and costs related to the integration of our most recent acquisition – Vilco group." said Dustin Haw, Chief Executive Officer of TerraVest.

	Three months ended June 30		Nine months ended June 30
	2017	2016	2017	2016
	$	$	$	$
Revenue	44,993	36,016	139,836	135,193
Net income	1,154	(10)	5,550	6,162
Add (subtract):
Income taxes	746	(4)	2,781	2,336
Financing costs	1,025	833	2,874	2,583
Amortization and depreciation	2,430	2,469	7,608	7,345
EBITDA	5,355	3,288	18,813	18,426
Gain on disposal of property, plant and equipment	(26)	(1,832)	(125)	(1,897)
Adjusted EBITDA	5,329	1,456	18,688	16,529
Maintenance Capital Expenditures	(523)	(709)	(3,695)	(2,615)
Cash income taxes paid	(867)	(35)	(3,067)	(4,209)
Financing costs paid	(1,029)	(1,039)	(2,933)	(2,767)
Distribution to non-controlling interest	-	(359)	-	(625)
Cash Available for Distribution	2,910	(686)	8,993	6,313
Dividends Paid in the Period	1,835	1,824	5,499	5,481
Dividend Payout Ratio	63%	NM	61%	87%
	Three months ended June 30		Nine months ended June 30
	2017	2016	2017	2016
	$	$	$	$
Free Cash Flow
Cash flow from operations before changes in non‐cash Working Capital	4,229	468	14,025	8,826
Changes in non‐cash Working Capital	(7,815)	4,761	(11,197)	19,077
Cash flow from operations	(3,586)	5,229	2,828	27,903
Add (subtract):
Purchase of property, plant and equipment	(1,700)	(1,465)	(7,796)	(4,018)
Proceeds on disposal of property, plant and equipment	79	3,174	379	3,560
Free Cash Flow	(5,207)	6,938	(4,589)	27,445

TerraVest generated Adjusted EBITDA of $5,329 and $18,688, respectively, in the three and nine months ended June 30, 2017 compared to $1,456 and $16,529 in the same periods of fiscal 2016. The 13% increase year-to-date is largely a result of increased activity in the Fabrication segment and stronger demand for residential oil tanks in the Fuel Containment segment.

Outlook

TerraVest's Fuel Containment segment has experienced strong demand for its oil tanks and related furnace product lines and management expects this to continue in light of the persistently weak oil price. The integration of the Vilco acquisition that occurred during the second quarter is largely complete. Fuel Containment's propane businesses continue to experience polarized results as demand for bulk storage and other propane storage products have been strong in the Canadian market, while demand for propane trucks in the US markets continues to be weak and delayed chassis deliveries have further compounded the impact on the third quarter results. The cause of the persistently weak demand for propane trucks is directly related to the unseasonably warm winters that have occurred over the past two years. Demand for these products will continue to be correlated with heating requirements in the Northeastern and Midwestern USA.

TerraVest is seeing activity continue to rise in Western Canada at a gradual pace. Management expected recent declines in commodity pricing to have a negative impact on their customers capital spending programs, although this has not been the case and backlogs remain strong. Pricing pressure is still widely prevalent in all of TerraVest's oil and gas related markets; however, management's focus on cost control and recent capital investments targeted at improving efficiency are paying off as the Fabrication segment has been able to improve its margins while remaining competitive. Management expects to continue focusing the bulk of its efforts on efficiency as current commodity pricing could be here for the long term.

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 October 9, 2017 to shareholders of record as at the close of business on September 29, 2017. The ex-dividend date is September 27, 2017. 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, objectives and expectations of or involving TerraVest. Readers can identify many of these statements by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" and similar words or the negative thereof. Although management of the Company ("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. Forward-looking statements are used to describe Management expectations and plans and to assist shareholders in understanding the financial position of the Company, as a whole, and its business segments. Readers are cautioned that this information may not be appropriate for other purposes.

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. TerraVest cautions 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, in evaluating and forecasting availability of credit, outlook for operations, financial position, results and cash flow, ability to pay dividends, other plans and objectives and in making related forward-looking statements. In respect of the business segments, key assumptions are that, other than as specifically identified herein, 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 the input costs to the business segments do not vary significantly from the 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, 2016 and under "Financial instruments" in the MD&A of TerraVest for the three and nine months ended June 30, 2017, 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 under "Risk Factors" in the annual information form of of TerraVest dated December 7, 2016 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 August 4, 2017.

SOURCE TerraVest Capital Inc.

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

Related Links

https://www.terravestcapital.com/