Macro Enterprises Inc.
TSX VENTURE : MCR

Macro Enterprises Inc.

March 08, 2011 19:19 ET

Macro Enterprises Inc. Announces 2010 Fourth Quarter and Year End Results

FORT ST. JOHN, BRITISH COLUMBIA--(Marketwire - March 8, 2011) - Macro Enterprises Inc. (TSX VENTURE:MCR) -

  Summary of financial results
  (thousands of dollars except per share amounts)
  Three months ended
December 31
Year ended
December 31
  2010 2009 2010 2009
  (unaudited)    
         
Revenues $12,660 $6,266 $58,206 $48,464
         
EBITDA1 2,024 (708) 4,975 3,435
         
Net earnings (loss) from continuing operations 513 (1,662)2 224 (1,315)2
         
Net earnings (loss) from discontinued operations - 55 - (307)
         
Net earnings (loss)
 per share from continuing operations
$0.01 ($0.08)2 $0.00 ($0.08)2
         
Net earnings (loss) per share from discontinued operations $0.00 $0.01 - ($0.01)
         
Weighted average common shares outstanding (thousands)    
23,666

22,456
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 2009 include an impairment charge of $0.5 million (a loss of $0.02 per share). 

Highlights

  • Revenue more than doubled in the fourth quarter compared to the same period last year as the Company obtained pipeline and facility construction work from several customers.
  • EBITDA in the quarter was $2.0 million and the for the year EBITDA was $5.0 million compared to $3.4 million in the prior year. 
  • The Company's financial position remains strong, with $6.9 million of cash and no operating loan at year end. Working capital was $5.7 million at year end, compared to $3.4 million at the end of last year. The Company has increased the availability under its operating line of credit and arranged temporary financing in order to finance the high level of work in the first quarter of 2011.

Fourth quarter results

Consolidated revenue was $12.7 million compared to $6.3 million in the fourth quarter last year. The Company was able to secure work with three significant customers and also performed a number of smaller jobs in 2010. Last year's results were affected by the overall slowdown in oil and gas activity and increased competition. 

Direct costs were 77.4% of revenue in the quarter compared to 94.1% in the same quarter last year. 

The direct cost percentage was lower this year, mainly due to improved bid margins, a greater proportion of hourly work and the ability to spread some of these direct costs over a larger revenue base this year. 

General and administrative expenses were $0.9 million, down $0.2 million from the same quarter last year. The Company has maintained a lower level of staffing despite the increase in revenue. 

Total amortization expense was $0.9 million compared to $1.0 million in the fourth quarter last year. Amortization expense was lower as the Company has not replaced its fixed assets at the same level as amortization expense. 

In 2009, the Company determined that the intangible assets had no remaining value and recorded a charge of $90,000 to reduce the carrying value to zero. In addition, in 2009 the Company assessed the carrying value of fixed assets and determined that the carrying value exceeded the fair value and recorded an impairment charge of $390,000. 

Interest expense of $0.2 million was the same as last year.

Net earnings from continuing operations was $698,000 ($0.01 per share, after providing for preference dividends in arrears) compared to a loss from continuing operations last year of $1.6 million (a loss of $0.08 per share). Last year's results included an impairment charge of $0.5 million.

New credit agreement

Effective March 2, 2011, the Company's revolving, operating demand loan facility was amended as follows:

  1. For the period March 2, 2011 to May 31, 2011, the maximum borrowings available under this facility were increased from $5.0 million to $10.0 million, subject to the maximum borrowings being limited to 75% of eligible accounts receivable less priority claims. This increase in availability was also subject to the completion of the interim credit facility described under "Related party transactions" below.
  2. Effective June 1, 2011, the maximum borrowings available under this facility will revert to $5.0 million, subject to the maximum borrowings being limited to 75% of eligible accounts receivable less priority claims.

Related party transaction

Effective March 7, 2011, Frank Miles and Ron Baker, both directors of the Company, have agreed to provide Macro Industries Inc., the Company's principal operating unit, an unsecured interim credit facility of $3.0 million and $1.0 million, respectively. The funds will be used to assist the Company in meeting its working capital requirements during its busy season and will supplement the operating line now provided by the Company's bankers.

Under the terms of each facility, principal bears interest at 1.5% per month calculated on the outstanding daily balance and paid monthly in arrears. The principal is due and payable on May 31, 2011 but can be prepaid without penalty. Loan commitment fees of $100,000 to Mr. Miles and $33,500 to Mr. Baker will be paid by the Company on the maturity date. Macro Industries Inc. will pay all reasonable fees and legal expenses incurred in respect of establishing the facilities.

Frank Miles is a senior officer and director of the Company and Macro Industries Inc. and holds 28.8% of the Company's outstanding common shares. Ron Baker is a director of the Company and holds 50,000 common shares.

Outlook

The Company has obtained three significant pipeline and facility construction contracts and is expecting revenues in the first quarter of 2011 to surpass revenues recorded in the first quarter of 2010. In the longer term, the continued low price of natural gas may reduce the overall level of oilfield activity in areas where the Company operates.

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. 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. 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