CERF Incorporated
TSX VENTURE : CFL

CERF Incorporated

November 17, 2014 06:00 ET

CERF Incorporated Announces 2014 Third Quarter Results

CERF Reports Revenue of $15.0 million, Net Income of $1.3 million and Adjusted EBITDA(1) of $5.0 million for Q3 2014

CALGARY, ALBERTA--(Marketwired - Nov. 17, 2014) - CERF Incorporated (the "Company" or "CERF") (TSX VENTURE:CFL) today announced its financial and operating results for the three and nine months ended September 30, 2014.

Selected Q3 2014 Financial Highlights for the Three and Nine Months Ended September 30, 2014 are as follows:

FINANCIAL HIGHLIGHTS

Revenue

  • Revenue for the three months ended September 30, 2014 increased by 18% to $15.0 million, which included revenues of $2.8 million and $1 million resulting from the acquisitions of Winalta Inc. ("Winalta") and the assets acquired from Empire Tool ("Empire") on August 27, 2014 and May 28, 2014 respectively, compared to the same quarter in 2013.

  • For the nine-month period ended September 30, 2014 ("year-to-date" or "YTD"), revenue increased by 9% to $37.4 million compared to the nine-month period ended September 30, 2013. The increase was largely due to increases in CERF's Oilfield Rentals segment, inclusive of acquisitions, but was partially offset by lower revenue from CERF's Waste Management segment.

Net Income

  • Net income increased 12% to $1.3 million ($0.05 per share - basic), inclusive of the $0.5 million from Winalta and the income generated Empire during the quarter, versus a net income of $1.2 million ($0.08 per share -basic) in Q3 2013.

  • Year-to-date, net income increased 43% to $3.0 million ($0.16 per share - basic) compared to the $2.1 million ($0.17 per share -basic) generated in the first nine months of 2013.

Adjusted EBITDA1

  • Adjusted EBITDA increased 39% to $5.0 million, inclusive of $1.2 million Adjusted EBITDA generated by Winalta and Empire since their acquisitions, for the third quarter compared to $3.6 million in Q3 2013.

  • The Company generated $11.7 million in Adjusted EBITDA year-to-date, a 24% increase over the $9.4 million from the same nine-month period in 2013.

  • Adjusted EBITDA per basic share, decreased to $0.20 in the third quarter versus $0.24 in 2013, largely as a result of new shares issued for the acquisition of Winalta, which only contributed revenue for the 34 days in the quarter.

1 See Financial Measures Reconciliations on page 5 of CERF's Third Quarter 2014 MD&A and see accompanying notes to the Condensed Consolidated Interim Financial Statements.

Dividends

  • The Company paid dividends of $0.06 per share to shareholders in Q3 2014, representing an annualized payout ratio of 76%. The increase over the preceding quarter was largely the result of the factors stated above.

Corporate

  • On August 21, 2014, the Company exercised its right to accelerate the expiry date of the warrants to September 30, 2014. As a result 4,023,267 warrants were exercised in the quarter resulting in proceeds of $12,673,000.

  • On August 27, 2014, pursuant to a plan of arrangement ("the Arrangement"), CERF acquired all of the issued and outstanding common shares of Winalta Inc. ("Winalta"). The former holders of Winalta Shares received 0.3352 of a CERF common share ("CERF Share") for each Winalta common share held. Under the Arrangement, CERF issued approximately 14,456,717 CERF Shares and assumed $19.3 million of Winalta net debt, inclusive of transaction costs.
  • Concurrent with the Winalta acquisition, CERF entered into new syndicated credit facilities in the amount of $65 million.

OPERATING HIGHLIGHTS

Energy Services - Oilfield Rentals Segment

  • The addition of the Winalta for 34 days of the third quarter of 2014 added $2.8 million to revenue and $0.9 million to the gross margin of CERF's Oilfield Rentals segment. The addition of the Empire contributed revenues of $1.0 million to the quarterly revenue.

  • Third quarter revenue including the foregoing amounts from Winalta's operations and the Empire revenues, increased 186% to $6.0 million compared with $2.1 million during the same period in the prior year.

  • Revenue from the Oilfield Rentals segment, excluding acquisitions was $2.2 million in the third quarter compared to $2.1 million Q3 2013, the increase represents a 4% organic growth in the base business.

Industrials - Equipment Rental & Waste Management Segments

  • Industrial rentals showed slight revenue increases of 1% and 5% for the three and nine-month periods ended September 30, 2014 respectively, but a 6% decrease in margin during the third quarter of 2014 compared to the third quarter of 2013. The decrease was largely due to construction project delays and increased competitive pressures in certain rental categories.

  • Margins for the waste management segment increased to 22% from 10% and to 17% from 5% for the three and nine-month periods ended September 30, 2014 respectively, compared to the three and nine-month periods ended September 30, 2013. The increase was generated from larger non-hazardous impacted soil volumes and landfill operations. However, gains were offset by the absence of non-recurring special project revenues which generated $3.9 million in Q3 2013.

Summary of Third Quarter Consolidated Financial Results

Three months ended
September 30
Nine months ended
September 30
(in $,000s except % and per share data) 2014 2013 % change 2014 2013 % change
Revenue 15,006 12,697 18% 37,446 34,235 9%
Gross margin 4,584 3,365 36% 11,035 8,808 25%
Net income 1,293 1,150 12% 3,038 2,125 43%
Net income per share- basic 0.05 0.08 -38% 0.16 0.17 -6%
Adjusted EBITDA1 5,039 3,614 39% 11,667 9,398 24%
Adjusted Free Cash Flow 3,385 2,726 24% 4,787 4,516 6%
Dividends per share 0.06 0.06 - 0.18 0.18 -
1 See Financial Measures Reconciliations on page 5 of CERF's Third Quarter 2014 MD&A and see accompanying notes to the Condensed Consolidated Interim Financial Statements.

Full details of the Company's financial results, in the form of the unaudited, condensed, consolidated interim financial statements and notes for the three months ended September 30, 2014 and Management's Discussion and Analysis of the results are available on SEDAR at www.sedar.com and on the Company's website at www.cerfcorp.com.

About CERF Incorporated

CERF is a Canadian public corporation with two primary divisions: energy services and industrials. The energy services division is engaged in the rental of surface rentals, down-hole equipment and accommodations to the Western Canadian Oil and Gas Industry. The industrials division is engaged in the rental of industrial and construction equipment and waste management. CERF has paid consecutive quarterly dividends since 2006 and trades on the TSX Venture Exchange under the symbol "CFL". CERF currently has 36,213,947 common shares issued and outstanding.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information