Macro Enterprises Inc.
TSX VENTURE : MCR

Macro Enterprises Inc.

April 30, 2009 19:29 ET

Macro Enterprises Inc. Announces 2008 Fourth Quarter and Year End Results

FORT ST JOHN, BRITISH COLUMBIA--(Marketwire - April 30, 2009) - Macro Enterprises Inc. (TSX VENTURE:MCR) -



Summary of financial results
(thousands of dollars except per share amounts)
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Three months ended Year ended
December 31 December 31
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2008 2007 2008 2007
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(unaudited)

Revenues $13,957 $7,543 $61,682 $76,593

EBITDA(1) 1,744 (1,344) 1,150 9,680

Net earnings (loss) from
continuing operations (1,378)(2) (1,926) (4,841)(2) 2,785

Net loss from discontinued
operations (2,096) (223) (2,521) (608)

Net earnings (loss) per
share from continuing
operations ($0.07)(2) ($0.09) ($0.24)(2) $0.11

Net loss per share from
discontinued operations ($0.09) ($0.01) ($0.11) ($0.03)
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Weighted average common
shares outstanding
(thousands) 22,117 21,579
-------------------

Note 1 - References to EBITDA are to net income from continuing operations
before interest, taxes, amortization and impairment charge. EBITDA is not
an earnings measure recognized by GAAP and does not have a standardized
meaning prescribed by GAAP. Management believes that EBITDA is an
appropriate measure in evaluating the Company's performance. Readers are
cautioned that EBITDA should not be construed as an alternative to net
income (as determined under GAAP) as an indicator of financial performance
or to cash flow from operating activities (as determined under GAAP) as a
measure of liquidity and cash flow. The Company's method of calculating
EBITDA may differ from the methods used by other issuers and, accordingly,
the Company's EBITDA may not be comparable to similar measures used by
other issuers.

Note 2 - Results in the fourth quarter of 2008 include an impairment charge
of $1.9 million (a loss of $0.09 per share)


Highlights

- Revenues were up from the fourth quarter last year due to additional contracts obtained, despite reduced levels of oil and gas activity in the company's market region.

- Direct costs as a percentage of revenue decreased from the third quarter due to improved project execution and proportionately more cost plus contracts. EBITDA increased over the prior year for similar reasons.

- The Company recorded a $1.9 million impairment charge in the fourth quarter, reflecting the current economic environment.

- The Company has adopted a formal plan of disposal with respect to Access Manufacturing. Results of operations of Access, including a $2.9 million write-down of assets in the fourth quarter of 2008, have been included in "discontinued operations". Prior year results have been restated to reflect this.

Fourth quarter results

Consolidated revenue was $14.0 million compared to $7.5 million in the fourth quarter last year. The Company was able to obtain additional work in both pipeline and facility construction despite the downturn in the markets.

Direct costs were 78.4% of revenue in the quarter compared to 95.6% in the same quarter last year. This positive variance was due to improved project execution, the lack of unfavourable weather and a greater proportion of cost plus contracts, which tend to have more stable costs.

General and administrative expenses were $1.3 million compared to $1.7 million in the same quarter last year. Most of the cost savings were personnel related.

Total amortization expense of $1.2 million was similar to the fourth quarter last year.

The Company completed its annual impairment test for goodwill and intangible assets effective December 31, 2008. Overall market conditions, including reductions in the Company's market capitalization and reductions in the prices of oil and natural gas which foretell decreases in customer demand, indicated that the carrying value of these assets exceeded their estimated fair value. Accordingly, the Company recorded a charge of $1.9 million ($1.0 million for intangible assets and $0.9 million for goodwill) to reduce the carrying value to fair value.

Interest expense of $0.4 million was above last year due to higher interest rates and a higher level of net debt.

Income taxes recovered in the quarter were $0.4 million representing an effective tax rate of 18.3%. The implied rate at which income taxes were recovered was lower than statutory rates due mainly to the effect of permanent differences between accounting and taxable income.

Net loss from continuing operations for the quarter was $1.4 million (a loss of $0.07 per share) compared to a net loss of $1.9 million (a loss of $0.09 per share) in the same quarter last year.

In the fourth quarter of 2008, the Company concluded that it no longer had the resources to continue to operate Access Manufacturing Ltd. ("Access"), a wholly-owned subsidiary of the Company. Access manufactures oilfield equipment including dehydrators, tanks, flare stacks etc. The Company adopted a formal plan of discontinuance in the fourth quarter and will either sell the assets as a going concern or on a piecemeal basis.

Accordingly, the Company has separately classified assets, liabilities, income or loss and cash flows from Access as discontinued operations. Prior year numbers have been restated to reflect this reclassification. The Company also recorded a pretax write-down of $2.6 million related to inventory and $0.3 million related to property and equipment in order to reduce the carrying value of these assets to estimated realizable value. The net loss from discontinued operations in the quarter was $2.1 million (a loss of $0.09 per share).

Outlook

The economic downturn, combined with much lower prices for oil and natural gas, will mean that our customers will be spending fewer dollars in oilfield construction activity, at least in the short term. In light of the reduced cash flows from our customers, the Company is seeking to increase its level of maintenance work from its customers, which is not as dependent on new construction activity.

The Company is expecting revenue in 2009 to be below 2008 levels. In light of this decreased level of activity, the Company is reducing capital expenditures and operating costs. The Company will not be investing in start-up ventures until such time as some level of stability is attained.

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, global economic conditions, government regulation of energy and resource companies, seasonal weather patterns, maintaining and increasing market share, terrorist activity, the price and availability of alternative fuels, the availability of pipeline capacity, and potential instability or armed conflict in oil producing regions. 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, 2008 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.
    Frank Miles
    President and C.E.O.
    (250) 785-0033
    or
    Macro Enterprises Inc.
    T. Jerrold Jackson
    C.F.O.
    (403) 705-7302
    www.macroindustries.ca