Macro Enterprises Inc.
TSX VENTURE : MCR

Macro Enterprises Inc.

April 01, 2015 16:57 ET

Macro Enterprises Inc. Announces 2014 Fourth Quarter and Year End Results

FORT ST. JOHN, BRITISH COLUMBIA--(Marketwired - April 1, 2015) - 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
2014 2013 2014 2013
(unaudited)
Revenues $41,467 $54,386 $200,076 $211,846
EBITDA1 7,720 8,625 19,748 47,743
Net income 3,703 6,670 7,736 31,285
Net income per share $0.12 $0.22 $0.25 $1.13
Weighted average common shares outstanding (thousands)
30,109

27,464
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 International Financial Reporting Standards ("IFRS") and does not have a standardized meaning prescribed by IFRS. 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 IFRS) as an indicator of financial performance or to cash flow from operating activities (as determined under IFRS) 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

  • The Company continues to materially exceed industry standard safety averages. In the year ended December 31, 2014 Macro Enterprises exceeded 1.2 million man hours worked without a single lost time injury.
  • The Company is reporting its fourteenth consecutive profitable quarter with net income of $3.7 million in what is a cyclical industry.
  • The Company is reporting shareholders' equity of $85.7 million or $2.84 per share based on common shares issued and outstanding as at December 31, 2014.
  • The Company continues to build on and maintains a strong working capital position of $47.2 million as at December 31, 2014.
  • The Company's fourth quarter operating margins were consistent with the improved results achieved in the third quarter and are now well within the expected historical averages.

Fourth quarter results

Three months ended December 31, 2014 vs. three months ended December 31, 2013

Consolidated revenue was $41.5 million compared to $54.4 million in the fourth quarter last year. During the fourth quarter this year, close to half the Company's revenues were derived from integrity work being performed for one of its main clients in Alberta and Manitoba. Other large jobs included pipeline maintenance and repair work in Northeast B.C. and facilities construction in the Fort McMurray area. Lastly, the Company also performed several small maintenance jobs during the quarter for its various clients under current Master Service Agreements. The reduction in revenue being recognized compared to prior year is due to overall reduced work levels experienced and the size and scope of jobs being performed during the quarter. Last year, the Company was active in two pipeline construction projects in the Fort McMurray area as well pipeline integrity and facility work with clients being serviced under existing agreements.

Operating expenses were 77.1% of revenue in the quarter compared to 80.2% in the same quarter last year. Operating expenses were comparable to prior quarter and in-line with historical averages. The Company was successful in maintaining its improved operating margins in the second half of fiscal 2014 when compared to the first half. Operating expenses in the prior year fourth quarter were relatively higher as a result of lower bid margins being realized.

General and administrative expenses were $1.5 million, down $659,000 from the $2.2 million recorded prior year. The Company's general and administrative expenditures reflects costs incurred in connection with the bid processes, professional fees, corporate wages, burdens and various other overheads, including rents, insurance, travel and administrative supplies that are not charged directly to projects. In the fourth quarter 2014, the Company's general and administrative expenditures were reduced due to the reduction in professional fees and other service estimates. On a go forward basis, the Company anticipates its general and administrative costs to returning to what it averaged in prior quarters and what was incurred during the fourth quarter of 2013.

Depreciation of property, plant and equipment was $2.2 million and comparable to prior year fourth quarter depreciation. Depreciation recorded during the year reflected the acquisition of pipeline construction equipment and related assets from North American Energy partners completed in the fourth quarter of 2012.

During the fourth quarter the Company recognized a non-cash stock-based compensation charge of $315,000 relating to options granted during the year.

Finance costs of $0.2 million were approximately the same as last year.

Income tax expense in the quarter of $1.6 million was at an effective rate of 30.1% which is higher than the enacted tax rates of 26% after appropriate deductions. The increase over the enacted tax rates related to timing differences being realized during the quarter as a result of the yearend accounting for the Company's deferred income tax liability.

Net income in the quarter was $3.7 million ($0.12 per share) compared to $6.7 million ($0.22 per share). The decrease in net income was a result of reduced levels of work activity during the quarter compared to prior year further impacted by a non-cash stock-based compensation charge and an increase to the Company's yearend tax provisions. Offsetting the loss was a reduction to the Company's general and administrative costs for the quarter.

Outlook

As a result of the significant decline with commodity prices as experienced during the second half of fiscal 2014 and through the start of 2015, activity levels in the oil and gas industry have been materially impacted across Western Canada. Although the pricing uncertainty is affecting activity and many projects have been delayed, large oil and gas companies are continuing to request bids on significant projects, both LNG-related and not. With a solid balance sheet, strong liquidity and its industry leading health, safety and environmental practices, the Company is in excellent financial shape to address these uncertain times.

Macro is strategically pursuing multiple large scale potential projects that combine commercial, logistic, and time scheduled criteria that are conducive to minimizing risk and maximizing the synergies of pipeline and facility construction. Macro is seeing benefits from numerous pipeline integrity and facility maintenance projects derived from its multiple major clients. However, primarily as a result of commodity pricing uncertainty and client project scheduling delays, the Company is anticipating revenues in the first half of fiscal 2015 to be significantly less than those recorded in the first half of fiscal 2014 and more closely aligned with what was recognized in the second half of prior year. The Company is targeting margins more in line with historical averages and as such expects to see financial improvements to its operations throughout the upcoming year.

As part of its strategy, the Company is seeking out pipeline and facilities construction contracts In connection with the Liquefied Natural Gas (LNG) projects being planned on the west coast of British Columbia, an industry that is anticipated to bring substantial economic activity to British Columbia over the next 30 years. Macro has completed bid processes and has entered into discussions with the LNG project owners regarding future pipeline and facilities construction.

Macro has been approached by multiple major clients to assist with budget and constructability estimates for major pipeline and facility projects that are not LNG related. These projects are scheduled for approvals by mid to late 2015.

Conference call

The Company will host a conference call at 8 am PDT on Thursday, April 2, 2015 to discuss the 2014 fourth quarter and year end results. The conference call can be accessed by dialing 1-888-390-0546 and referencing conference ID 11716655.

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 Fort St. John, British Columbia. Its shares are listed on the TSX Venture Exchange under the symbol MCR. Information on the Company's principal operations 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Macro Enterprises Inc.
    Frank Miles
    President and C.E.O.
    (250) 785-0033

    Macro Enterprises Inc.
    Jeff Redmond
    C.F.O.
    (250) 785-0033
    www.macroindustries.ca