Enterprise Group, Inc.

TSX : E


Enterprise Group, Inc.

March 31, 2014 17:46 ET

Enterprise Group, Inc. Announces 2013 Year End Financial Results

ST. ALBERT, ALBERTA--(Marketwired - March 31, 2014) - Enterprise Group, Inc. ("Enterprise," or "the Company") (TSX:E) is pleased to announce its financial results for the year ended December 31, 2013.

2013 HIGHLIGHTS

  • Revenue of $34.8 million, an increase of $16.3 million when compared to prior year, primarily due to strong contributions from the Company's Utilities/Infrastructure Division.

  • EBITDAS of $10.0 million, an increase of $5.6 million when compared to prior year.

  • Earnings per share of $0.08, an increase of $0.04 when compared to prior year.

  • Subsequent to the conclusion of the year end, on January 3, 2014, the Company completed its acquisition of Hart Oilfield Rentals ("Hart") for a purchase price of approximately $22.6 million.

  • Also subsequent to the conclusion of the year end, on March 25, 2014, the Company completed a bought deal equity financing of 27,600,000 of its Common Shares at a price of $1.00 per Common Share for aggregate gross proceeds of $27,600,000.

SUMMARY FINANCIAL OVERVIEW
In millions except for EPS For the year ended
December 31
2013 2012 % chg % of Revenue
Revenue $ 34.8 $ 18.5 88%
EBITDAS(1) 10.0 4.3 130% 29%
Net Income 5.8 2.5 132% 17%
EPS 0.08 0.04 -
% change are representative of whole un-rounded numbers
(1) EBITDAS = Earnings Before Interest, Tax, Depreciation, Amortization, and Stock Based Compensation

Enterprise's year end results are highlighted by a material increase in revenue when compared to the prior year. This improvement was primarily due to the strong performance of the Company's Utilities/Infrastructure Division, which generated year end revenues of $26.6 million, an increase of $11.4 million when compared to the prior year. This increase can be attributed to the acquisition Calgary Tunnelling & Horizontal Augering Ltd. ("CTHA") in June 2013, as well as expansion of Enterprise's service equipment fleet, which has allowed the Company to both increase its capacity and attract projects from major customers.

Over the year ahead, Enterprise expects that the performance of its Utilities/Infrastructure Division will continue to improve. During 2013, this Division renewed a three year, multi-million dollar service contract with one of Canada's premier power suppliers and, due to the high level of service and quality of work, was also awarded a second contract from the same customer that is similar in size and scope. Enterprise also expects significant growth from T.C. Backhoe and Directional Drilling ("TC"). In January 2014, TC entered into a Master Service Agreement to provide hydro-vac services for a joint venture project between a major oil company and one of North America's largest energy companies. TC also increased the scope of its Master Service Agreement with one of North America's largest pipeline and natural gas companies, which was previously announced on October 25, 2013. In total, these agreements are expected to generate $5.5 million in revenue over the next 24 months. In order to service these agreements, the Company has deployed new personnel and equipment, in addition to ordering a further three hydro-vacs. Management's capital plan allocates the funds necessary to double the hydro-vac fleet during 2014 to 20 units from ten units at the end of 2013.

These contracts are evidence of the growing demand for quality work within Enterprise's markets, and the backlog of projects that has developed as a result. In order to satisfy this demand, Enterprise intends to significantly expand its service and rental fleet over the course of 2014. The Company's capital budget for the year is approximately $20.0 million, and includes:

  1. approximately $3.0 million towards the expansion of underground utility and tunnelling equipment;
  2. approximately $2.0 million towards the expansion of the utility hydro-vac fleet; and
  3. approximately $15.0 million towards acquiring additional oilfield service rental equipment and flameless heaters.

"Enterprise's impressive year end results clearly illustrate the benefit of our selective acquisition strategy," stated Leonard Jaroszuk, the Company's Chief Executive Officer. "CTHA continued to play a major role in improving our revenues, and its contributions are testament to both the quality of its service offerings and the effective manner in which it has been integrated into our overall business. Integration has emerged as a core competency for Enterprise, and we have already begun to apply ourselves to the inclusion of Hart Oilfield Services. We expect that this acquisition will be immediately accretive, expose Enterprise to new strategic markets, and create the opportunity for efficiencies within our existing businesses."

"We fully expect that Enterprise will continue its trend of improvement during 2014," concluded Mr. Jaroszuk. "Our markets continue to display economic growth, and we are eager to increase our capacity in order to satisfy the growing demand for our high-quality services. In particular, we intend to devote the majority of our capital towards the acquisition of additional oilfield service rental equipment and flameless heaters, an area that we believe presents outsized potential. We believe the expansion of our service and rental fleets will allow Enterprise to not only continue its revenue momentum over the course of the year ahead, but also allow a greater portion of this revenue to translate into EBITDAS. I look forward to communicating our progress throughout the year."

SUBSEQUENT EVENTS

On January 3, 2014, Enterprise completed its acquisition of Hart, a private oilfield equipment service provider, for a purchase price of $22.6 million, subject to closing adjustments. Hart is a full service oilfield site infrastructure company that provides both site services and equipment rentals to its oil and gas customers within the Western Canadian Sedimentary Basin. Hart's equipment fleet consists of approximately 1,500 owned pieces and an additional 500 pieces that have been rented in order to fulfill demand. During December 2013, in order to fund this acquisition, the Company completed an overnight market public offering of subscription receipts at a price of $0.72 per subscription receipt for gross proceeds of approximately $15.0 million. The purchase price for the acquisition was satisfied through a combination of the net proceeds from this public offering, the issuance of 1,388,890 common shares of the Company at a price of $0.72 per share, and funds available from the Company's credit facility.

Also on January 3, 2014, in conjunction with the close of the Hart acquisition, the Company accepted a term sheet presented by the Canadian branch of PNC Bank. This term sheet allowed the Company to increase its current senior secured finance facility from $20.0 million to a maximum of $35.0 million, subject to certain borrowing base restrictions, at the existing interest rate of prime plus 2%.

On March 25, 2014, the Company completed a bought deal equity financing of 27,600,000 common shares of the Company, which included 3,600,000 Common Shares issued pursuant to the exercise in full of the financing's over-allotment option, at a price of $1.00 per common share for aggregate gross proceeds of $27.6 million. The Company has issued 1,380,000 broker warrants to the Underwriters. Each broker warrant will entitle the holder to acquire one common share at an exercise price of $1.00 per share for a period of 24 months from the date of closing. The net proceeds will be used to accelerate the Company's capital expenditure program, as articulated above, as well as for general working capital purposes.

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 of Artic Therm International Ltd. in September 2012, Calgary Tunnelling & Horizontal Augering Ltd. in June 2013, and Hart Oilfield Rentals 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
    Candace Williams or Christy Strashek
    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