Entrec Corporation
TSX VENTURE : ENT

Entrec Corporation

August 14, 2012 08:00 ET

Entrec Announces Strong Financial Results for the Quarter Ended June 30, 2012

SPRUCE GROVE, ALBERTA--(Marketwire - Aug. 14, 2012) -

  • Revenue up 90% over same period in prior year from legacy companies
  • Adjusted EBITDA $7.7 million and net income $0.04 per share
  • Capital expenditure program increased

ENTREC Corporation (TSX VENTURE:ENT) ("ENTREC" or the "Company") is pleased to announce another strong quarter of financial results. Revenue was $28.7 million in the second quarter, representing a $13.6 million or 90% increase from the combined pro forma revenue of $15.1 million generated from each of the Company's business acquisitions and predecessor companies, on a combined basis, in the three months ended June 30, 2011 (the pro forma comparative revenue reflecting revenue generated from each of ENTREC's business acquisitions commencing one year prior to their respective date of acquisition). Higher rates of equipment utilization, cross-utilization of ENTREC's people and equipment resources among its geographic areas and expansion of the Company's equipment fleet through its capital expenditure program contributed to this significant rate of organic growth.

Strong revenue in the quarter resulted in Adjusted EBITDA of $7.7 million and net income of $3.0 million or $0.04 per share. During the six months ended June 30, 2012 ENTREC generated Adjusted EBITDA of $13.4 million and net income of $5.5 million or $0.10 per share.

The Company also closed two very strategic business acquisitions during the quarter. The acquisition of Singer, based in Calgary, Alberta, allowed ENTREC to consolidate a significant peer and competitor in the Calgary region, consolidate its facilities in Calgary, and increase the scope of services it is able to provide its customers. The acquisition of the Mains Group in June 2012 expanded the Company's business into the crane services market and represented a significant step forward for ENTREC in becoming a leading provider of integrated crane and heavy haul solutions to its customers throughout North America.

Strong Outlook for Remainder of 2012 and 2013

"Our outlook for the remainder of 2012 and 2013 remains very positive," comments Rod Marlin, ENTREC's Chairman and CEO. "Utilization rates for our fleet continue to be very brisk moving into the third quarter of 2012 and we continue to field a tremendous volume of quoting activity for future work. Capital spending levels on projects within the Alberta oil sands region and across western Canada also continue to be strong resulting in high demand for both crane and heavy haul transportation services. Complimenting this increase is also higher demand for on-site crane and transportation services to support new and existing facilities in the Alberta oil sands region."

The Company also believes its acquisition of Rain Coast Cranes & Equipment Inc. ("Rain Coast"), currently planned for the fourth quarter of 2012, will compliment its current crane operations and position ENTREC to benefit from the burgeoning development of LNG facilities planned for the Kitimat region over the coming years as well as ongoing mining, hydro-electric, pipelines, and other major projects throughout northern BC.

Revenue Guidance Reiterated

The Company reiterates its previously announced revenue guidance for fiscal 2012. Based on current expectations for future business activity and assuming no further business acquisitions are completed, the Company estimates revenue for the year ending December 31, 2012 will exceed $115 million, Future business acquisitions completed in fiscal 2012, including the acquisition of Rain Coast, currently anticipated to close on October 1, 2012, may further increase this revenue estimate.

Capital Expenditure Program Increased

The Company also announces it has increased its 2012 capital expenditure program to $39 million from a previous program of $22.3 million. This program consists of $5 million in maintenance capital expenditures and $34 million in growth capital expenditures to significantly expand ENTREC's crane and transportation fleets. The increase in the capital expenditure program for 2012 was primarily driven by the need for additions to the Company's crane fleet to meet the expected demand for crane services over the coming year.

"We believe our growth capital expenditures will allow us to continue to achieve strong year-over-year organic revenue growth in our business as we move into the latter half of 2012 and 2013," added Mr. Marlin.

A complete set of ENTREC's most recent financial statements and Management's Discussion and Analysis will be filed on SEDAR (www.sedar.com) and posted on the Company's website (www.entrec.com).

About ENTREC

ENTREC specializes in the lifting, transportation (over the road and on-site), loading, off-loading and setting of overweight and oversized cargo for the oil and gas, construction, petrochemical, mining and power generation industries. The common shares of ENTREC trade on the TSX Venture Exchange under the trading symbol "ENT".

Consolidated Statements of Financial Position June December
As at 30 31
2012 2011
(thousands of Canadian dollars) $ $
ASSETS
Current assets
Cash 2,991 115
Trade and other receivables 34,814 13,679
Inventory 1,415 576
Prepaid expenses and deposits 1,021 406
40,241 14,776
Non-current assets
Long-term deposits 400 400
Property, plant and equipment 94,225 45,680
Intangible assets 18,635 6,440
Goodwill 41,211 10,356
Total assets 194,712 77,652
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness - 267
Trade and other payables 11,444 5,949
Income taxes payable 2,164 -
Acquisition consideration payable 5,316 4,125
Current portion of credit facilities - 5,251
Current portion of long-term debt 9,692 -
Current portion of obligations under finance lease 723 313
Credit facilities - 22,238
29,339 38,143
Non-current liabilities
Long-term debt 54,198 -
Obligations under capital lease 2,697 1,141
Deferred income taxes 13,115 1,877
Total liabilities 99,349 41,161
Shareholders' equity
Share capital 82,041 34,759
Contributed surplus 7,182 1,125
Retained earnings 6,148 607
Accumulated other comprehensive income (8 ) -
Total shareholders' equity 95,363 36,491
Total liabilities and shareholders' equity 194,712 77,652
Consolidated Statements of Income Three Months Ended Six Months Ended
(thousands of Canadian dollars, except per share amounts) June 30
2012
$


July 31
2011
$


June 30
2012
$


July 31
2011
$


Revenue 28,730 4,650 52,167 4,650
Direct costs 18,121 3,838 33,453 3,838
Gross profit 10,609 812 18,714 812
Operating expenses
General and administrative expense 2,917 826 5,448 1,016
Depreciation of property, plant and equipment 1,865 532 3,133 532
Amortization of intangible assets 338 26 544 26
Share-based compensation 447 93 618 93
Loss on disposal of property, plant and equipment 119 - 128 -
5,686 1,477 9,871 1,667
Income (loss) before finance items and income taxes
4,923

(665

)

8,843

(855

)
Finance items
Finance costs 655 171 1,129 171
Finance income (7 ) (28 ) (17 ) (32 )
648 143 1,112 139
Income (loss) before income taxes 4,275 (808 ) 7,731 (994 )
Income taxes
Current 441 - 441 -
Deferred 823 (270 ) 1,749 (270 )
1,264 (270 ) 2,190 (270 )
Net income (loss) 3,011 (538 ) 5,541 (724 )
Earnings (loss) per share - basic and diluted 0.04 (0.02 ) 0.10 (0.05 )

Non-IFRS Financial Measures

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, loss (gain) on disposal of property, plant and equipment, and share-based compensation. In addition to net income, Adjusted EBITDA is a useful measure as it provides an indication of the financial results generated by ENTREC's principal business activities prior to consideration of how these activities are financed or how the results are taxed in various jurisdictions and before certain non-cash expenses.

Please see ENTREC's Management Discussion & Analysis for the three months ended June 30, 2012 for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with IFRS.

Forward-looking Statements

This press release contains forward-looking statements which reflect ENTREC's current beliefs and are based on information currently available to ENTREC. These statements require ENTREC to make assumptions it believes are reasonable and are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward- looking statements as certain of these risks and uncertainties are beyond ENTREC's control.

Examples of such forward-looking statements in this press release relate to, but are not limited to: ENTREC's projection that revenue for the year ending December 31, 2012 will exceed $115 million before considering the impact of future business acquisitions; expectation the acquisition of Rain Coast will compliment the Company's current crane operations and position ENTREC to benefit from the burgeoning development of LNG facilities planned for the Kitimat region over the coming years as well as ongoing mining, hydro-electric, pipelines, and other major projects throughout northern BC; and expectation the Company will execute its 2012 capital expenditure program of $39 million.

These forward-looking statements involve a number of significant assumptions. Key assumptions utilized in developing forward-looking statements related to ENTREC's future growth expectations include achieving its internal revenue, net income and cash flow forecasts for 2012 and 2013. Achieving these forecasts is largely dependent on a number of factors beyond ENTREC's control including all of the risks discussed further under the "Business Risks" section in ENTREC's Management Discussion and Analysis for the three months ended June 30, 2012. These risk factors are interdependent and the impact of any one risk or uncertainty on a particular forward-looking statement is not determinable.

ENTREC's ability to finance its capital expenditure program through credit facilities and finance leases is dependent on its ability to achieve debt financing terms acceptable to the lenders and ENTREC as well as meeting ENTREC's internal cash flow forecasts. Forward-looking statements associated with ENTREC's potential acquisition of Rain Coast rely on certain expectations and assumptions, including, among others, (i) the results of ENTREC's due diligence review of the businesses proposed to be acquired being satisfactory, (ii) the ability of the parties to agree to the terms of definitive agreements, (iii) ENTREC's ability to receive the various approvals required; and (v) Rain Coast meeting or exceeding ENTREC's internal revenue, net income, and cash flow forecasts for that business in the future.

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, ENTREC. These forward-looking statements are made as of the date of this press release. Except as required by applicable securities legislation, ENTREC assumes no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.

Neither the 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

  • ENTREC Corporation
    Rod Marlin
    Chairman & CEO
    (780) 960-5647

    ENTREC Corporation
    John M. Stevens
    President & COO
    (780) 960-5625

    ENTREC Corporation
    Jason Vandenberg
    CFO
    (780) 960-5630
    www.entrec.com