ENTREC Corporation
TSX : ENT

ENTREC Corporation

January 28, 2015 07:00 ET

ENTREC Corporation Provides Operational Update

ACHESON, ALBERTA--(Marketwired - Jan. 28, 2015) - ENTREC Corporation (TSX:ENT) ("ENTREC" or the "Company"), an employee-owned integrated crane solutions provider, today provided an operational update to its 2015 business plan first announced on January 16, 2015.

As was previously announced, ENTREC is focused on aggressively managing its expenditures and capital allocation in 2015 due to the recent plunge in crude oil prices. These measures include minimizing discretionary expenditures, controlling all operating and capital costs, and rationalizing operations where practical. As part of this initiative, ENTREC today announced that it is consolidating its Calgary operations branch location into its Acheson branch location. The Calgary branch only offered transportation services (no crane services) and serviced the same customer base as the Acheson branch. The majority of the customers currently being served from the Calgary branch will now be served from the Acheson branch. In conjunction with the Calgary branch closure ENTREC also announces it is reducing its salaried (non-billable) workforce by about 15%, effective immediately. The 15% reduction includes the salaried employees affected by the Calgary branch closure. These measures will allow the Company to significantly reduce its overhead costs, while also improving operating efficiency.

"In the current industry downturn, we are focused on controlling our costs and maintaining maximum efficiency," commented John M. Stevens, ENTREC's President and Chief Executive Officer. "Among other things, this means right-sizing our company for the current business environment. Given the negative outlook in the short-term, we will remain as lean as possible. By consolidating our Calgary and Acheson operations into one location, we believe that we will maintain utilization of our equipment fleet, while also reducing operating costs and continuing to maintain a high level of service to our customers."

Once fully implemented, ENTREC estimates these cost reduction initiatives to reduce on-going indirect and general and administrative expenditures by approximately $4.0 to $5.0 million on an annual basis.

ENTREC's Balance Sheet Remains Well-Positioned

ENTREC remains well-capitalized and well-positioned to weather the downturn. Specific current highlights of ENTREC's financial position include a very strong working capital position, which was about $40 million as at December 31, 2014 and a very flexible $240 million asset-based debt facility ("ABL Facility"). At December 31, 2014, based on ENTREC's fleet and accounts receivable as at that date, ENTREC's borrowing base under the ABL Facility was $207 million. ENTREC was borrowing about $148 million of this availability giving it excess borrowing capacity of about $59 million.

The ABL Facility matures in March 2019, has no principal repayments required, and has no leverage covenant as at December 31, 2014. The facility is supported by a very modern crane and transportation fleet that has a current value of approximately $250 million. In addition, the facility is supported by over $50 million in accounts receivable as at December 31, 2014. History has shown that modern crane fleets hold their value throughout market cycles. There will be no leverage covenant in place if ENTREC maintains an excess borrowing capacity higher than 12.5% of the borrowing base.

"Our covenant-light debt structure gives us tremendous flexibility in managing through the current economic uncertainty," commented Jason Vandenberg, ENTREC's Chief Financial Officer. "With this debt structure in place together with the cost reduction initiatives announced today, we are very well positioned to emerge from this challenging environment as a stronger and more profitable company."

About ENTREC

ENTREC is an employee-owned integrated crane solutions provider to the oil and natural gas, construction, petrochemical, mining and power generation industries. ENTREC is listed on the Toronto Stock Exchange under the symbol ENT.

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: our belief that, by consolidating our Calgary and Acheson operations into one location, we will maintain utilization of our equipment fleet while also reducing operating costs; our estimate that the current cost reduction initiatives will reduce ENTREC's on-going indirect and general and administrative expenditures by approximately $4.0 to $5.0 million on an annual basis; our belief that ENTREC remains well-capitalized and well-positioned to weather the downturn; our belief that, with our flexible debt structure together with these cost reductions, we are positioned to emerge from this challenging environment as a stronger and more profitable company; and our estimate of ENTREC's working capital and borrowing base under the ABL Facility at December 31, 2014.

ENTREC's forward-looking statements involve a number of significant assumptions Maintaining equipment fleet utilization is dependent on the needs of our customers for our services and ENTREC remaining the supplier of choice for our customers. Achieving ENTREC's cost reduction goals is dependent on ENTREC being able to efficiently execute its cost reduction initiatives and also being able to sustain its current level of operations once the cost reductions are realized. ENTREC's ability to remain well-capitalized and well-positioned to weather the downturn and emerge from this challenging environment as a stronger and more profitable company assumes that the downturn will not have more negative results to the Company's financial position than is currently contemplated. ENTREC's 2014 working capital and ABL Facility borrowing base positions remain subject to final year-end accounting adjustments, and as a result, may be different from current expectations. The forward-looking statements are subject to the risk that these assumptions do not prove to be accurate.

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.

Contact Information

  • ENTREC Corporation
    John M. Stevens
    President & Chief Executive Officer
    (780) 960-5625

    ENTREC Corporation
    Jason Vandenberg
    Chief Financial Officer
    (780) 960-5630
    www.entrec.com