Enterprise Group, Inc.

TSX : E


Enterprise Group, Inc.

August 13, 2014 18:00 ET

Enterprise Group Announces Results for the Second Quarter of 2014

ST. ALBERT, ALBERTA--(Marketwired - Aug. 13, 2014) - Enterprise Group, Inc. ("Enterprise," or "the Company") (TSX:E) is pleased to announce its financial results for the three month period ended June 30, 2014 ("the second quarter"). Enterprise's second quarter results reflect considerable contributions from acquisitions made during 2013, as well as steady demand for the Company's services.

SECOND QUARTER HIGHLIGHTS

  • Quarterly revenue of $14.1 million, an increase of $9.3 million, or 194%, when compared to the prior year, due primarily to the impact of acquisitions.
  • Quarterly EBITDAS of $2.6, compared to approximately break-even in the prior year.
  • Enterprise in on track to deploy the $20.0 million in capital expenditures the Company planned for 2014. As a result, the substantial majority of the equipment purchased as a result of these expenditures will be active by the fourth quarter of 2014.
  • On July 31, 2014, the Company announced that it had signed a letter of intent to acquire a privately-owned oilfield site services rental company (the "Acquisition Target") based in Fort St. John, British Columbia. The Company expects to complete this acquisition by October 2014.

Consolidated:
Three months
June 30, 2014
Three months
June 30, 2013
Six months
June 30, 2014
Six months
June 30, 2013
Revenue $14,069,617 $4,831,035 $35,176,922 $13,735,415
Gross margin $5,526,067 $1,671,955 $16,055,502 $6,873,922
Gross margin % 39 % 35 % 46 % 50 %
EBITDAS $2,656,735 $4,862 $9,703,707 $3,906,165
Net Income $329,959 $(1,542,924 ) $4,656,775 $1,623,959
EPS $0.00 $(0.02 ) $0.04 $0.03
Total Assets $130,047,730 $48,955,461 $130,047,730 $48,955,461

Enterprise's second quarter results reflect both the continued positive impact of the acquisitions completed during the prior 12 months and steady demand for the Company's services. While the Company's EBITDAS and EBITDAS margin increased significantly when compared to the second quarter of 2013, both of these metrics declined when compared to the Company's results for the first quarter of 2014. These declines reflect the need for the Company to maintain commitments during a period of seasonal downturn in order to prepare for the higher demand for services during the second half of 2014, as well as an increased use of third-party equipment. Commitments during the second quarter included Enterprise maintaining a full complement of operational employees in order to prepare for a more robust business cycle during the latter half of the year. Both EBITDAS and EBITDAS margin are expected to improve meaningfully during the third and fourth quarters of 2014, due to both seasonal increases in demand and the replacement of subcontracted equipment by the capital assets the Company has purchased over the course of 2014. The Company's earnings per share increased slightly during the second quarter, primarily due to the improvements in both revenue and EBITDAS when compared to the second quarter of 2013.

Enterprise remains on track to deploy $20.0 million of capital expenditures over the course of 2014. These capital expenditures are intended to create improvements in both the Company's revenue and operating margins. Management believes these improvements will be reflected in the Company's operating results during the second half of 2014. The Company anticipates that it will have completed the substantial majority of its planned capital expenditures for 2014 by the conclusion of the third quarter.

"We are satisfied by Enterprise's results for the second quarter, which once again demonstrate the benefits of our selective acquisition strategy," stated Leonard Jaroszuk, the Company's Chief Executive Officer. "While this quarter's results are reflective of a seasonal slowdown, we were pleased by the consistent demand for our services, and by our ability to maintain our commitments to our workforce as we prepare for the second half of 2014."

"Seasonal demand is historically much higher during the latter half of the year, and Enterprise is ideally positioned to service this demand. Our capital spending over the course of 2014 has significantly increased our operating capacity. That capacity will grow further upon completion of our recently announced acquisition. The Fort St. John region is a critical area in the development of Western Canada's LNG industry. I am confident this acquisition will be immediately accretive to our business, and will establish Enterprise within Fort St. John and will better position us to meet the demands of the LNG industry."

"Over the past year, Enterprise has developed a track record of rapid and successful integration," concluded Mr. Jaroszuk. "We have already begun planning for the integration of this new addition. As a result, we anticipate that the fourth quarter of 2014 will not only reflect a full three months of this acquisition's contributions, but also benefit from its synergies with our existing operations. All of these factors - seasonal improvement, our expanded capacity, and our upcoming acquisition - give us great optimism for Enterprise's future, both in the months ahead and over the long-term."

Utilities/Infrastructure Division

Utilities/Infrastructure Construction: Three months
June 30, 2014
Three months
June 30, 2013
Six months
June 30, 2014
Six months
June 30, 2013
Revenue $8,311,555 $4,308,597 $16,788,960 $8,157,806
Increase $4,002,958 $8,631,154
EBITDAS $2,403,741 $1,335,550 $4,771,499 $2,426,841
Increase $1,068,191 $2,344,658
Total Assets $46,624,155 $27,626,731 $46,624,155 $27,626,731
Increase $18,997,424 $18,997,424

Enterprise's Utilities/Infrastructure Division generated second quarter revenue of $8.3 million, an increase of $4.0 million when compared to the prior year. This improvement can be attributed to the acquisition of Calgary Tunnelling & Horizontal Augering Ltd. ("CTHA") in June of 2013, an increase in activity, and the expansion of Enterprise's service equipment fleet, which has allowed the Company to both increase its capacity and attract projects from major customers. This division's EBITDAS margin of 29% reflects both a change in revenue mix due to the acquisition of CTHA and an increased use of third-party equipment necessitated by strong demand at T.C. Backhoe. This metric is expected to improve as recently purchased capital assets replace subcontracted equipment currently in use. Enterprise's capital plan allocates the funds necessary to increase its hydrovac fleet to 20 units. The Company currently has 16 units in operation.

Equipment Rental Division


Equipment Rental:
Three months
June 30, 2014
Three months
June 30, 2013
Six months
June 30, 2014
Six months
June 30, 2013
Revenue $5,758,062 $522,438 $18,387,962 $5,577,609
Increase $5,235,624 $12,810,353
EBITDAS $1,349,265 $(203,833 ) $7,224,667 $3,320,662
Increase $1,553,098 $3,904,005
Total Assets $56,540,496 $15,832,136 $56,540,496 $15,832,136
Increase $40,708,360 $40,708,360

Enterprise's Equipment Rental Division generated second quarter revenue of $5.8 million, an increase of $5.2 million when compared to the prior year. This improvement was primarily due to the acquisition of Hart at the beginning of the first quarter. This division's EBITDAS margin of 22% reflects a change in revenue mix due to the acquisition of Hart, and is expected to improve as recently purchased capital assets replace subcontracted equipment currently in use.

Major Developments

On July 31, 2014, Enterprise announced that it had signed a letter of intent to acquire a privately-owned oilfield site services rental company. The purchase price for this acquisition will be based upon the Acquisition Target's most recent financial statements, which are currently being audited, as well as the conclusion of a complete appraisal of the Acquisition Target's assets. The acquisition will be funded by a combination of Enterprise shares, cash, and vendor take-back financing.

Over the past ten years, the Acquisition Target has developed a highly-regarded full-service oilfield site infrastructure company that fulfills multiple equipment rental needs for a variety of oil and gas customers. The Acquisition Target's equipment fleet currently consists of approximately 350 owned pieces. This acquisition expedites Enterprise's plans to be operating three of its subsidiaries in Fort St. John by the fourth quarter of 2014. The owner of the Acquisition Target has agreed to sign a five-year management agreement with the Company.

Enterprise anticipates completing this acquisition by October of 2014. This completion will be subject to negotiation of a definitive share purchase agreement, the Company's finalization of satisfactory due diligence, and customary closing conditions.

About Enterprise Group, Inc.

Enterprise Group, Inc. is a consolidator of construction services companies operating in the energy, utility and transportation infrastructure industries. The Company's focus is primarily construction services and specialized equipment rental. The Company's strategy is to acquire complementary service companies in Western Canada, consolidating capital, management, and human resources to support continued growth. Enterprise acquired Artic Therm International Ltd. in September 2012, Calgary Tunnelling & Horizontal Augering Ltd. in June 2013, and Hart Oilfield Rentals Ltd. in January 2014.

Forward-Looking Information

Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Company's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Non-IFRS Measures

The Company uses International Financial Reporting Standards ("IFRS"). EBITDAS is not a measure that has any standardized meaning prescribed by IFRS and is therefore referred to as a non-IFRS measure. This news release contains references to EBITDAS. This non-IFRS measure used by the Company may not be comparable to a similar measure used by other companies. Management believes that in addition to net income, EBITDAS is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed or how the results are taxed. EBITDAS is calculated as net income excluding depreciation, amortization, interest, taxes and stock based compensation.

Contact Information

  • Assembly Stakeholder Relations
    780-328-3863

    Enterprise Group, Inc.
    Leonard D. Jaroszuk
    President & CEO
    780-418-4400

    Enterprise Group, Inc.
    Desmond O'Kell
    Senior Vice President
    780-418-4400
    contact@EnterpriseGRP.ca
    www.EnterpriseGRP.ca