Macro Enterprises Inc.
TSX VENTURE : MCR

Macro Enterprises Inc.

May 28, 2009 15:28 ET

Macro Enterprises Inc. Announces 2009 First Quarter Results

FORT ST. JOHN, BRITISH COLUMBIA--(Marketwire - May 28, 2009) - Macro Enterprises Inc. (TSX VENTURE:MCR) -



Summary of financial
results
(thousands of dollars
except per
share amounts)
---------------------
Three months ended
March 31
---------------------
2009 2008
---------------------
(unaudited) (unaudited)

Revenues $27,451 $28,289

EBITDA(1) 4,444 (369)

Net earnings (loss) from continuing operations 2,180 (1,242)

Net earnings (loss) from discontinued operations (118) (161)

Net earnings (loss) per share from continuing
operations $0.09 ($0.06)

Net earnings (loss) per share from discontinued
operations ($0.00) ($0.01)

Weighted average common shares outstanding
(thousands) - basic 22,117 22,117
---------------------

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.


Highlights

- Results improved markedly from the first quarter last year due to improved project execution, an increased proportion of cost reimbursable work and a longer season due to colder weather

- The Company negotiated a new one-year credit agreement with its principal lender

- Despite the uncertain economic conditions, the Company continues to pursue opportunities in executing its business plan

First quarter results

Consolidated revenue was $27.4 million compared to $28.3 million in the first quarter last year. Volumes were only slightly lower this year but the customer mix was different. In the first quarter last year, the Company performed a significant contract in the Fort McMurray, Alberta region. This year, most of the work was for customers in NE B.C.

Direct costs were 78.9% of revenue in the quarter compared to 96.1% in the same quarter last year. The improvement from last year is due to several factors, including improved project execution, an increased proportion of cost reimbursable work and a longer season due to colder weather. In addition, last year the Company had poorer than expected performance on two jobs.

General and administrative expenses were $1.3 million, down from $1.5 million last year. Savings were realized principally through lower compensation costs.

Total amortization expense was $0.9 million compared to $1.0 million in the first quarter last year. Amortization expense was slightly lower due to reduced levels of fixed asset additions in the prior year and the goodwill and intangible asset impairment charge taken in the fourth quarter of last year.

Interest expense of $0.3 million was the same as last year as overall levels of debt were similar.

Income tax expense in the quarter of $1.1 million was at an effective tax rate of 33.3%. This is higher than statutory rates due in part to the effect of permanent differences between accounting and taxable income.

Net income from continuing operations was $2.2 million (earnings of $0.09 per share) compared to a loss from continuing operations last year of $1.2 million (a loss of $0.06 per share).

Discontinued operations

In the fourth quarter of 2008, the Company concluded that it no longer had the resources to continue to operate Access Manufacturing ("Access"). Access manufactures oilfield equipment including dehydrators, tanks, flare stacks etc. The Company adopted a formal plan of discontinuance in the fourth quarter and planned to 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 net loss from discontinued operations was $118,000 this quarter compared to a loss of $161,000 in the first quarter last year. Effective May 15, 2009 the Company sold most of the inventory and fixed assets of Access for gross proceeds of $750,000.

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