CERF Incorporated
TSX VENTURE : CFL

CERF Incorporated

March 30, 2015 16:33 ET

CERF Incorporated Announces 2014 Year End and Fourth Quarter Results and First Quarter Dividend

CALGARY, ALBERTA--(Marketwired - March 30, 2015) - CERF Incorporated (the "Company" or "CERF") (TSX VENTURE:CFL) today declared its 2015 first quarter dividend of $0.06 per share ($0.24 annually) and announced its financial and operating results for the year ended December 31, 2014 ("year-end") and the three months ended December 31, 2014 ("Q4"). Payment will be made on or about April 15, 2015, to shareholders of record as of the close of business on April 8, 2015. The ex-dividend date is April 6, 2015.

"We are pleased to announce that 2014 was a record financial year for CERF," said Wayne Wadley, President and CEO of CERF. "We made large strides during the year, effectively acquiring and integrating two significant entities and expanding our footprint in Western Canada's energy services industry. Both have added to our earnings and provide a great platform for future growth. With these acquisitions, CERF now has a balanced weighting of revenue between its industrials and energy services divisions.

In context of current oil and gas market conditions, CERF has been proactive to reduce capital expenditures, staffing and operating costs for both divisions. These aggressive steps in combination with a strong balance sheet and industry diversification are the reasons why CERF is able to maintain its dividend. We will continue to be vigilant in monitoring the performance of each division."

FULL YEAR 2014 & FOURTH QUARTER HIGHLIGHTS

Amounts in the following tables are presented in thousands of dollars, except for per share amounts and percentages.

Twelve months ended
December 31
Three months ended
December 31
2014 2013 2014 2013
Revenue 57,967 46,757 20,522 12,522
Gross margin 17,395 12,070 6,360 3,262
EBIT1 10,505 6,963 4,138 1,952
Net income (loss) 5,073 3,129 2,036 1,005
Net income (loss) per share
Basic $0.22 $0.23 $0.06 $0.06
Diluted $0.22 $0.23 $0.06 $0.06
Adjusted EBITDA2 18,527 13,027 6,861 3,629
Dividends paid per share $0.24 $0.24 $0.06 $0.06

1,2 See Financial Measures Reconciliations on page 7 of CERF's Fourth Quarter 2014 MD&A and see accompanying notes to the Condensed Consolidated Interim Financial Statements.

FINANCIAL HIGHLIGHTS

  • Revenue increased by 24% to $58.0 million, for the year-ended December 31, 2014, compared to the prior year. Fourth quarter revenue also saw a 64% increase to $20.5 million compared to the same quarter in 2013. Both increases were largely driven by the contributions of the assets acquired from Empire Tool Inc. ("Empire") and the acquisition of Winalta Inc. ("Winalta") on May 28, 2014 and August 27, 2014, respectively. Revenue gains in the fourth quarter were partially offset by lower revenue from CERF's Waste Management segment.
  • Year-end net income increased 62% to $5.1 million ($0.22 per share - diluted) compared to $3.1 million ($0.23 per share -diluted) generated in the twelve months ended December 31, 2013. Fourth quarter 2014 net income increased 103% to $2.0 million ($0.06 per share - diluted) versus a net income of $1.0 million ($0.06 per share -diluted) in Q4 2013.
  • Adjusted EBITDA increased 42% to $18.5 million ($0.80 per share - diluted), when compared to $13.0 million generated in 2013. The increase was largely the result of the strong performance in the Energy Services Division throughout 2014. Adjusted EBITDA for the fourth quarter 2014 increased 89% to $6.9 million compared to $3.6 million in Q4 2013.

OPERATING HIGHLIGHTS

Energy Services Division

  • For the year ended December 31, 2014, TRAC Energy Services ("TRAC") recorded record revenues of $21.5 million a 165% increase from the previous year.
  • For the quarter ended December 31, 2014, TRAC recorded record revenues of $11.8 million up $9.9 million over the comparable quarter in 2013. This growth was driven primarily by the acquisition of Winalta and Empire, contributing $8.6 million and $0.9 million respectively to revenue for the quarter with the additional $0.4 revenue growth generated organically from TRAC's existing business.
  • Margins for the quarter ended December 31, 2014 also increased by $3.6 million, again resulting from the addition of the Empire assets and Winalta operations combined with strong operating performance of the underlying TRAC operations.
  • Gross margin decreased 6% to 36% for the quarter as a direct result of a larger percent of total revenue being generated through lower margin third party revenue. For the quarter ended December 31, 2014, $2.9 million or 25% of TRAC's total revenue was generated from third party revenue, up from $0.1 million or 4% of TRAC's total revenue for the comparable quarter in 2013.

Industrials Division - Equipment Rentals & Waste Management Segments

Equipment Rentals Segment

  • Equipment Rentals revenue for the full year 2014 increased 5% to $22.3 million compared to the $21.3 million generated in 2014. Fourth quarter 2014 revenue declined by $1.5 million or 22%, compared to the same quarter in 2013. The quarterly decrease largely resulted from lower rental revenues on both owned and re-rented equipment due to warmer average temperatures which reduced the demand for the company large fleet of heaters.
  • Margins for the quarter ended December 31, 2014 decreased by $0.7 million or 30% as the 18% decreases in direct costs were not significant enough to offset decreased revenue.

Waste Management Segment

  • Revenue for the year declined $3.2 million or 19% which resulted from $3.6 million revenue generated in 2013 from a one-time special project not repeated in 2014. Increased revenues derived from growth in the municipal solid waste volumes only partially offset the decrease. This special project was also the primary driver of the $0.4 million or 11% decrease in Q4 revenues.
  • Margin for the quarter and the year ended December 31, 2014 increased 149% and 172% respectively as a result of focusing on higher margin customers and insourcing its repairs and maintenance of its equipment.

Conference Call

CERF will host a conference call on March 30, 2015 at 3:30 p.m. MST (5:30 p.m. EST). To access the conference call by telephone dial toll-free 1-866-223-7781. Callers from the Toronto area should use (416) 340-2216. Please connect approximately 10 minutes prior to the beginning of the call.

The conference call will be available for replay two hours after the call ends at toll-free 1-800-408-3053. Callers from the Toronto area should use (905) 694-9451. It will remain available at the link above until April 14, 2015.

Full details of the Company's financial results, in the form of the audited, condensed, consolidated interim financial statements and notes for the three months ended December 31, 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: industrials and energy services. The industrials division is engaged in the rental of industrial and construction equipment and waste management. The energy services division is engaged in the rental of surface rentals, downhole equipment and accommodations to the Western Canadian Oil and Gas Industry. CERF has paid consecutive quarterly dividends since 2005 and trades on the TSX Venture Exchange under the symbol "CFL". CERF currently has 36,213,947 common shares issued and outstanding.

FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this press release constitute forward-looking statements or forward-looking information, including management's assessment of expected activity levels continuing through 2015, and expected decrease in demand for rental equipment over the next year as well as forecasted economic measures for the Province of Alberta and oil and natural gas prices and the effect on drilling programs as a result of the decline in oil prices. Forward-looking statements or information may contain statements with the words "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "budget", "should", "project", "would have realized', "may have been" or similar words suggesting future outcomes or expectations. Although the Company believes that the expectations implied in such forward-looking statements or information are reasonable, undue reliance should not be placed on these forward-looking statements because the Company can give no assurance that such statements will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of assumptions about the future and uncertainties. These assumptions include that demand for industrial rental equipment, will remain relatively constant or grow marginally through 2015, that the economic downturn caused by the low oil price environment will not affect the performance of the waste management segment, that the Company's proactive cost cutting measures currently being implemented will protect future margins and that the Company's diverse operations will protect against profound down swings in the economic environment. Although management believes these assumptions are reasonable, there can be no assurance that they will be proved to be correct, and actual results will differ materially from those anticipated. For this purpose, any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. The forward-looking statements or information contained in this press release are made as of the date hereof and the Company assumes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new contrary information, future events or any other reason, unless it is required by any applicable securities laws. The forward-looking statements or information contained in this press release are expressly qualified by this cautionary statement.

This press release also makes reference to certain non-IFRS measures, which management believes assists in assessing the Company's financial performance. Readers are directed to the section below entitled "Financial Measures Reconciliations" for an explanation of the non-IFRS measures used.

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.

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