NAPEC Inc. Reports Results for the Second Quarter of 2017

DRUMMONDVILLE, QUEBEC--(Marketwired - Aug. 10, 2017) - NAPEC Inc. ("NAPEC" or "the Corporation") (TSX:NPC) reported its results today for the second quarter ended June 30, 2017. All amounts are in Canadian dollars unless otherwise indicated.

Financial highlights		Three months ended June 30			Six months ended June 30
(in thousands of dollars, except the number of shares and per-share data)		2017	2016		2017	2016
Revenues		112,159	77,779		221,509	170,412
EBITDA1		9,078	4,835		17,901	11,400
Net earnings (loss)		534	(897	)	1,128	(1,273	)
	Per share - basic and diluted ($)	0.01	(0.01	)	0.01	(0.02	)
Weighted average number of outstanding shares (basic, in thousands)		103,923	79,866		103,923	79,866
1 Earnings before interest, taxes, depreciation and amortization. Not an IFRS measure. See "Non-IFRS Measure" below for a reconciliation.

"NAPEC posted another solid performance in the second quarter. Our broader reach in the United States translated into strong revenue growth, especially in services related to natural gas networks, following the acquisition of PCT Contracting LLC ("PCT") last November. In Canada, some delays in the execution of an important contract affected our activities, but this work will continue until the beginning of 2018. Also, the increase in high value-added services and disciplined cost management gave rise to a significant increase in operating profitability," said Pierre L. Gauthier, President and Chief Executive Officer of NAPEC.

SECOND QUARTER RESULTS

Revenues for the second quarter of 2017 were $112.2 million, up 44.2% from $77.8 million a year earlier. The increase reflects the addition of PCT's operations related to the construction, maintenance and repair of natural gas networks, which represented revenues of $16.4 million in the second quarter of 2017. Furthermore, the currency conversion effect resulting from fluctuations in the value of the Canadian dollar increased the value of U.S.-dollar-denominated revenues by approximately $4.2 million in the second quarter of 2017, compared to the same period in 2016.

Excluding these items, NAPEC recorded organic revenue growth of $13.8 million or 17.7%. This growth mainly reflects an increase in revenues from contracts related to electricity projects for industrial, commercial and institutional customers, contracts related to the construction, maintenance and repair of electrical substations and contracts related to renewable energy sources.

EBITDA for the second quarter of 2017 amounted to $9.1 million or 8.1% of revenues, compared to $4.8 million or 6.2% of revenues in the second quarter of 2016. The increase in monetary terms was mainly due to higher business activity, while the increase as a percentage of revenues reflects a better revenue mix, with a larger proportion coming from high value-added services, and lower selling, general and administrative expenses as a percentage of revenues.

NAPEC concluded the second quarter of 2017 with net earnings of $534,000 or $0.01 per share, basic and diluted, compared to a net loss of $897,000 or $0.01 per share, basic and diluted, a year earlier.

As at June 30, 2017, NAPEC had a backlog of $471 million, up from $417 million as at June 30, 2016.

SIX-MONTH RESULTS

Revenues for the six-month period ended June 30, 2017 were $221.5 million, up from $170.4 million for the six-month period ended June 30, 2016. The addition of PCT's activities represented revenues of $28.4 million, while the currency conversion effect increased the value of U.S.-dollar-denominated revenues for the six-month period ended June 30, 2017 by approximately $600,000 compared to the same period in 2016. Excluding these items, revenues increased by $22.1 million or 13.0%.

EBITDA amounted to $17.9 million or 8.1% of revenues, compared to $11.4 million or 6.7% of revenues a year earlier. Net earnings for the first six months of 2017 were $1.1 million or $0.01 per share, basic and diluted, compared to a net loss of $1.3 million or $0.02 per share, basic and diluted, for the first six months of 2016.

FINANCIAL POSITION

As at June 30, 2017, long-term debt, including the current portion, was $88.3 million, compared to $94.1 million three months earlier. The decrease mainly reflects the repayment of $5.6 million in long-term debt in the second quarter of 2017. As a result, the long-term debt to equity ratio was 0.74 as at June 30, 2017, down from 0.77 three months earlier. As at June 30, 2017, the Corporation had a cash balance of $5.0 million and an amount of $20.5 million was used from its $50.0 million authorized renewable credit facility.

OUTLOOK

"We are satisfied with the progress shown over the first half of the year, and we are confident to post organic revenue growth in 2017. The demand for our services remains strong in the majority of our market niches, especially in the United States. In this context, we are aiming to capture cross-selling opportunities across our network and further increase the scope of our high value-added services," concluded Mr. Gauthier.

CONFERENCE CALL

NAPEC will hold a conference call to discuss its results on Thursday, August 10, 2017 beginning at 10:00 a.m. Eastern Time. Interested parties can join the call by dialling 647-788-4922 (from Toronto and overseas) or 1-877-223-4471 (from elsewhere in North America). If you are unable to participate, you can listen to a recording by dialling 1-800-585-8367 and entering the code 48705744 on your telephone keypad. The recording will be available from 1:00 p.m. on Thursday, August 10, 2017 until 11:59 p.m. on Thursday, August 17, 2017.

Those wishing to join the webcast and presentation can do so by clicking on the following link: http://www.napec.ca/en-CA/investor-relations/calendar-financial-activities/upcoming-activities

NON-IFRS MEASURE

EBITDA is a measure that has no standardized meaning under IFRS and is therefore considered a non-IFRS measure. As a result, this measure may not be comparable to similar measures presented by other companies. This measure is presented and described in this press release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.

The following table is a reconciliation of EBITDA as used by the Corporation to reported net earnings (loss).

Reconciliation of EBITDA to net earnings (loss)	Three months ended June 30			Six months ended June 30
(in thousands of dollars)	2017	2016		2017	2016
Net earnings (loss) for the period	534	(897	)	1,128	(1,273	)
Plus:
Finance charges	1,790	1,085		3,393	2,460
Income tax expense (recovery)	314	(1,196	)	879	(1,423	)
Depreciation and amortization	6,440	5,843		12,501	11,636
EBITDA	9,078	4,835		17,901	11,400

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that reflect management's current expectations regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management assumes no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.

OVERVIEW OF THE CORPORATION

NAPEC is a company operating in the energy sector. The Corporation is a leading provider of construction and maintenance services to the public utility and heavy industrial markets, mainly in Quebec, Ontario and the eastern United States. NAPEC and its subsidiaries build and maintain electrical transmission and distribution systems, solar panel farms and natural gas networks. The Corporation also installs gas-powered and electric-powered heavy equipment for utilities, gas-fired industrial power plants and petrochemical facilities in North America. The Corporation also offers environmental construction and road matting services.

Additional information on NAPEC can be found in the SEDAR database (www.sedar.com) and on the Corporation's website, at www.napec.ca.