Macro Enterprises Inc.
TSX VENTURE : MCR

Macro Enterprises Inc.

March 14, 2008 15:54 ET

Macro Enterprises Inc. Announces 2007 Fourth Quarter and Year End Results

CALGARY, ALBERTA--(Marketwire - March 14, 2008) - Macro Enterprises Inc. (TSX VENTURE:MCR) -



Summary of financial results
(thousands of dollars except per share amounts)
--------------------------------------------------------
Nine months
ended
Three months ended Twelve months ended December 31
December 31 December 31 (note)
--------------------------------------------------------
2007 2006 2007 2006 2006
(note)
--------------------------------------------------------
(unaudited) (unaudited) (unaudited)

Revenues $8,602 $13,723 $78,703 $90,360 $39,004

Net earnings
(loss) (2,148) (673) 2,177 7,705 220

Net earnings
(loss) per
share - basic ($0.11) ($0.03) $ 0.08 $ 0.39 $ 0.01

Net earnings
(loss) per
share - diluted ($0.11) ($0.03) $ 0.08 $ 0.38 $ 0.01
---------------------

Weighted average
common shares
outstanding
(thousands) - basic 21,579 20,760 21,053
--------------------------------


Note: The Company changed its year end from March 31 to December 31 effective in 2006. The information for the twelve months ended December 31, 2007 and for the nine months ended December 31, 2006 is audited. The information for the three months ended December 31, 2007 and December 31, 2006 and for the year ended December 31, 2006 is unaudited. The information for the twelve months ended December 31, 2006 was compiled from quarterly results for the four quarters ending December 31, 2006.

Highlights

- Revenues were lower in the fourth quarter and year-to-date due to reduced levels of oil and gas activity

- Gross margins were lower in fourth quarter due to continued competitive marketplace conditions and lower than expected performance on some projects underway in the quarter

- Recently announced discoveries of significant gas deposits in the Horn River Basin and the Montney formation in northeast B.C., the Company's market region, coupled with increased interest in B.C. land sales, may lead to strengthened market conditions later in 2008.

Fourth quarter results

Consolidated revenue was $8.6 million compared to $13.7 million in the fourth quarter last year. Results in the fourth quarter last year included the completion of one large facility turnaround project whereas this year the quarter was comprised mainly of smaller projects.

Direct costs were 94.7% of revenue in the quarter compared to 85.6% last year. Costs were higher this quarter due to lower bid margins, reflecting the competitive marketplace, and lower than expected performance on projects underway in the quarter.

General and administrative expenses were $2.0 million, up from $1.6 million last year. Some of this increase is attributable to a reclassification of some expenses from direct costs to general and administrative expenses. Also, the Company accrued some year end expenses in the fourth quarter this year which had been accrued throughout the balance of the prior year.

Amortization expense increased to $1.3 million compared to $1.0 million in the fourth quarter last year due to higher levels of fixed assets. In addition, $0.1 million of amortization of intangible assets was recorded in the fourth quarter related to the acquisitions of Tracer and Omineca.

Interest expense was $0.3 million compared to $0.2 million last year, as a result of higher levels of debt this year.

Income taxes recovered in the quarter were $1.0 million representing an effective tax rate of 30.7%. This compares to an income tax recovery last year of $0.2 million which represented an effective tax rate of 25.5%. The implied rate at which income taxes were recovered last year was lower due in part to the effect of permanent differences between accounting and taxable income.

Net loss for the quarter was $2.1 million (a loss of $0.11 per share) compared to a net loss of $0.7 million ($0.03 per share) in the same quarter last year.

Outlook

Current drilling activity for oil and gas wells in the Western Canadian Sedimentary Basin, a leading indicator of demand for oilfield construction services, continues at the low levels of 2007. Industry sources predict that bearish demand for services will continue through the first half of 2008. The Company is also experiencing increased competitive conditions in its market. Recently announced discoveries of significant gas deposits in the Horn River Basin and the Montney formation in northeast B.C., the Company's market region, coupled with increased interest in B.C. land sales, may lead to strengthened market conditions later in 2008.

The Company will need to control costs in the next two fiscal quarters. Spring break up, typically the Company's slowest period, will require management to defer all but critical capital expenditures and implement additional cash management procedures.

The Company will seek organic growth later this year, and will pursue strategic acquisitions to expand its client base and to provide new service offerings. The Company will continue to focus on its core business, and will maintain and build on relationships with its key customers active in northeast B.C. and northwest Alberta.

Macro's core business is providing pipeline and facilities construction and maintenance services to major companies in the oil and gas industry in northeastern B.C. and northwestern Alberta. The Company's corporate office is in Calgary, Alberta. Its shares are listed on the TSX Venture Exchange under the symbol MCR. Information on the Company's principal operating unit, Macro Industries Inc., can be found at www.macroindustries.ca.

Forward Looking Statements

Certain statements in this news release may include forward-looking information that involves various risks and uncertainties. These may include, without limitation, statements regarding expected revenues, expenses and industry trends and the pursuit of strategic acquisitions. These risks and uncertainties include, but are not restricted to, government regulation of energy and resource companies including the recently legislated changes to the taxation of income trusts, seasonal weather patterns, maintaining and increasing market share, terrorist activity, the price and availability of alternative fuels, the availability of pipeline capacity, potential instability or armed conflict in oil producing regions and the overall economic environment. For a more detailed description of these risks and uncertainties, please see the section "Risk Factors" in the Company's Annual Information Form for the year ended December 31, 2007 available on SEDAR at www.sedar.com. These risks and uncertainties may cause actual results to differ from information contained herein. There can be no assurance that such forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These statements are based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

Contact Information

  • Macro Enterprises Inc.
    J. Norman Rokosh
    President and C.E.O.
    (403) 705-7303
    (403) 705-7310 (FAX)
    Website: www.macroindustries.ca