Commercial Solutions Inc.

TSX : CSA


Commercial Solutions Inc.

December 17, 2013 16:57 ET

Commercial Reports Improved Q4 Along With Revenues of $112.6 Million and EBITDA of $2.5 Million for Fiscal 2013

EDMONTON, ALBERTA--(Marketwired - Dec. 17, 2013) - COMMERCIAL SOLUTIONS INC. (TSX:CSA) -

All figures in CAD For the three months
ended September 30
For the twelve months
ended September 30
2013 2012 2013 2012
Revenue $ 30,347,549 $ 28,017,866 $ 112,604,567 $ 115,701,729
* EBITDA $ 978,587 $ 133,690 $ 2,577,678 $ 3,900,126
Net earnings (loss) $ 217,162 $ (272,582 ) $ 44,146 $ 944,495
** Basic EPS $ 0.01 $ (0.01 ) $ 0.00 $ 0.05
** Diluted EPS $ 0.01 $ (0.02 ) $ 0.00 $ 0.04
* EBITDA is defined as Earnings Before Interest, Taxes, Depreciation & Amortization
** EPS is defined as Earnings (Loss) Per Share

COMMERCIAL SOLUTIONS INC. ("Commercial" or "Company"), a leading Canadian distributor of bearings, power transmission equipment, oilfield, industrial, and safety products, today announced its financial results for the three-month and twelve-month periods ended September 30, 2013. A complete copy of the Company's report will be available on the Internet at www.sedar.com.

Financial highlights from fiscal 2013 are as follows:

For the three-month period ended September 30, 2013, Commercial reported revenue of $30.3 million compared to revenue of $28.0 million for the same period last year, representing an increase of 8.3 percent. EBITDA for the quarter was $0.9 Million; however, the Company incurred non-recurring expenses of $0.3 Million related to consulting and legal expenses as well as severance during the fourth quarter of fiscal 2013. Normalized for these expenses, EBITDA for the three months ended September 30, 2013 was $1.3 Million, a significant improvement from the $0.1 Million reported in the same period in the prior year.

For the twelve-month period ended September 30, 2013, Commercial reported revenue of $112.6 Million compared to revenue of $115.7 million for the same period last year, representing a year-over-year decrease of 2.7 percent. EBITDA for the twelve months ended September 30, 2013 included $0.6 Million of non-recurring expenses. Normalized for this, EBITDA for fiscal 2013 was $3.2 Million compared to $3.9 Million in fiscal 2012.

The Company experienced a reduction in revenues by 6.2 percent during the first nine months of fiscal 2013 in comparison to the same periods in the prior year and experienced growth in the last quarter by 8.3 percent in comparison to the last quarter of the prior year. Throughout fiscal 2013, the Company's USA entity experienced significant growth; however, the reduction in drilling activity and capital spending in the first three quarters in Western Canada overshadowed the increase in revenue at the Company's USA entity. However, the Company is encouraged to see the capital spending by its Western Canadian customers increase in the last quarter of fiscal 2013 as it represents general optimism for 2014. Drilling activity also improved slightly in the last quarter but on a year-to-date basis, compared significantly lower to fiscal 2012.

The Company continues to maintain a strong balance sheet and a cost structure that helps withstand the ongoing volatility in the market. Operating expenses for fiscal 2013 year, excluding non-recurring expenses, decreased by $1.7 Million which represents 6.0% reduction from prior year. The decrease is primarily the result of lower salaries and wages coupled with a smaller workforce as the Company is actively managing all variable expenses. Commercial's interest bearing debt as at September 30, 2013 was also reduced significantly by 16.5% from September 30, 2012 which resulted in 9.8% savings on interest expense in comparison to fiscal 2012. The reduction was primarily a result of improved inventory turns and days sales in receivables.

The Company incurred non-recurring consulting, legal and severance expense of $0.6 Million related to the review of various strategic alternatives for the Company. The review of strategic alternatives was ongoing all year and resulted in a signed arrangement agreement, subject to certain conditions, with a strategic purchaser as announced on December 2, 2013.

Outlook

Jim Barker, President and CEO of Commercial noted, "We experienced a softer year in the energy sector in Western Canada in fiscal 2013. Until the infrastructure issues associated with moving Alberta oil and gas to USA and international markets are resolved, we will continue experiencing uncertainty and lower drilling and capital expenditures in this sector. The last quarter of fiscal 2013 was encouraging, with an increased level of sales coupled with positive developments in discussions between the British Columbia and Alberta governments on the proposed pipeline. This is expected to very positively affect both investments in capital expenditures by our customers and drilling activity should these pipeline issues get resolved. In the meantime, we are focusing on revenue growth in our other key regions and markets. We experienced significant growth in our USA entity in fiscal 2013 and will continue capturing opportunities in this region. We also experienced growth in the forestry sector, particularly in British Columbia as the housing market in the USA has shown significant improvement."

Commercial has organized its business to serve different sectors. In addition to the energy and forestry sectors, the Company's other primary markets include construction, mining, and agriculture. Strong agricultural commodity prices will continue to drive an increase in overall planting acreage in Alberta and Saskatchewan subject to weather conditions.

About Commercial

Headquartered in Edmonton, Alberta, Commercial is one of Canada's leading independent industrial distributors with 23 Services Centres and approximately 275 employees located primarily in Western Canada. Commercial offers more than 160,000 items critical to maintenance repair and operations (MRO) and original equipment manufacturer (OEM) customers. The Company represents 450 leading manufacturers and serves over 11,000 customer accounts within a broad cross-section of industries, including oil and gas, forestry, agriculture, firefighting, food processing, chemical processing, mining, utilities, manufacturing, and construction. Commercial trades under the symbol "CSA" on the Toronto Stock Exchange. For further information on the Company, please visit www.commercialsolutions.ca and for detailed financial information visit www.sedar.com.

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