Macro Enterprises Inc.
TSX VENTURE : MCR

Macro Enterprises Inc.

August 14, 2008 09:00 ET

Macro Enterprises Inc. Announces 2008 Second Quarter Results

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



Summary of financial results
(thousands of dollars except per share amounts)
(unaudited)

Three months ended Six months ended
June 30 June 30
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2008 2007 2008 2007
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Revenues $ 8,703 $ 12,672 $ 37,652 $ 54,184
Net earnings (loss) (1,451) (564) (2,855) 4,463
Net earnings (loss) per share -
basic ($0.07) ($0.03) ($0.14) $ 0.20
Net earnings (loss) per share -
diluted ($0.07) ($0.03) ($0.14) $ 0.17
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Weighted average common shares
outstanding (thousands) 22,117 21,574
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Highlights

- Revenues were down compared to the second quarter last year due to reduced levels of oil and gas activity in the company's market region.

- Gross margin percentage was down from the second quarter last year due to increased competition resulting in lower bid margins.

- Capital expenditures and general and administrative expenses have been reduced to reflect the lower activity levels in 2008.

- Several leading industry economic indicators forecast improved market conditions for late 2008 and into 2009.

SECOND QUARTER RESULTS

Consolidated revenue was $8.7 million compared to $12.7 million in the second quarter last year. Similar to the first quarter, volumes were lower this year due to reduced oil & gas activity in the company's market region and increased competition for the work that was available.

Direct costs were 88.7% of revenue in the quarter compared to 84.0% in the same quarter last year. This variance was mainly due to lower bid margins this year compared to last year, reflecting increased competition in the region. Performance improved from the first quarter of this year (when direct costs were 95.7% of revenue) due to improved project execution and additional cost reimbursable work in the second quarter.

General and administrative expenses were $1.5 million, down from $1.6 million in the same quarter last year. Savings were realized principally through lower compensation costs.

Total amortization expense increased to $1.1 million compared to $1.0 million in the second quarter last year due to higher levels of fixed assets and amortization of intangible assets related to the acquisitions of Tracer and Omineca in 2007.

Interest expense of $0.3 million was marginally higher than last year as last year as overall levels of debt were similar.

Income taxes recovered in the quarter were $0.6 million representing an effective tax rate of 27.7%. 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 for the quarter was $1.5 million (a loss of $0.07 per share) compared to a net loss of $0.6 million (a loss of $0.03 per share) in the same quarter last year.

Outlook

Drilling activity in the Western Canadian Sedimentary Basin, a leading indicator of demand for oilfield construction services, remained at a low level through the Company's second fiscal quarter. This was due in part to the normal spring break-up period, coupled with the continued general industry trend toward less demand for construction services carried over from 2007. The Company continues to experience increased competitive conditions in its market due to excess capacity in the construction industry relative to demand for these services.

Industry sources forecast that drilling activity in the second half of the year is expected to improve considerably relative to the first half of 2008. This forecast, coupled with several other recent developments, indicates that improved market conditions later in 2008 and 2009 are likely. First, the 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 local market conditions as takeaway capacity and processing facilities are expanded to handle the increased future gas production. Second, natural gas prices are forecast to improve. Finally, the B.C. government natural gas royalty structure has been revised to further improve returns to exploration and production companies.

The Company will need to control costs in the next fiscal quarter to ensure it remains cost competitive. 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, 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