NAPEC Inc.
TSX : NPC

NAPEC Inc.

March 26, 2015 07:00 ET

NAPEC Inc. Reports Results for the 2014 Fourth Quarter and Fiscal Year-End

DRUMMONDVILLE, QUEBEC--(Marketwired - March 26, 2015) - NAPEC Inc. ("NAPEC" or "the Corporation") (TSX:NPC) today reported results for the fourth quarter and fiscal year ended December 31, 2014. All amounts are in Canadian dollars unless otherwise indicated.

Financial highlights Three months ended Dec. 31 Fiscal year ended Dec. 31
(in thousands of dollars, except per-share data) 2014 2013 2014 2013
Revenues 73,607 70,832 292,673 239,829
EBITDA 3,562 3,364 11,120 7,110
Net earnings (88 ) 528 (2,327 ) (1,754 )
Per share - basic and diluted ($) 0.00 0.01 (0.03 ) (0.02 )
Weighted average number of shares outstanding (basic, in thousands) 71,533 71,579 71,533 71,902

"2014 laid the foundation to an exciting future for NAPEC. We implemented our new business model in the United States and we are gradually realizing anticipated cost savings and synergy gains. Revenues reached a record level driven by a solid contribution from our U.S. and Ontario operations, while operating profitability improved. At the end of the year, NAPEC's order backlog stood at $278.0 million, the highest level in three years, and this value further increased in the first few weeks of 2015 following the award of new contracts amounting to nearly $97.0 million", said Pierre L. Gauthier, President and Chief Executive Officer of NAPEC.

FOURTH-QUARTER RESULTS

Revenues reached $73.6 million, up 3.9% from the fourth quarter of 2013. The increase was mainly attributable to higher revenues derived from contracts related to the construction, maintenance and repair of electricity transmission lines and of underground lines. In addition, the conversion effect resulting from fluctuations in the value of the Canadian dollar increased the value of U.S.-dollar-denominated revenues for the quarter ended December 31, 2014 by approximately $4.3 million relative to the same period in 2013. However, revenues from contracts related to the construction, maintenance and repair of electricity distribution lines were lower.

The higher business volume contributed to a rise in earnings before interest, taxes, depreciation and amortization ("EBITDA"), which amounted to $3.6 million, or 4.8% of revenues, compared to $3.4 million, or 4.7% of revenues, in the fourth quarter of 2013. The Corporation concluded the fourth quarter of 2014 with a net loss of $88,000, or $0.00 per basic and diluted share, compared to net earnings of $528,000, or $0.01 per basic and diluted share, in the fourth quarter of 2013.

As at December 31, 2014, the value of the Corporation's order backlog was approximately $278.0 million, compared to $228.0 million at the end of the previous quarter. This variation reflects the award of new contracts for a total value of close to $100.0 million announced on December 17, 2014, but excludes contracts with an aggregate value of nearly $97.0 million obtained in the first few weeks of 2015.

FISCAL 2014 RESULTS

Revenues for fiscal year ended December 31, 2014 were $292.7 million, up 22.0% from $239.8 million for fiscal 2013. The currency-conversion effect increased the value of U.S.-dollar-denominated revenues for fiscal 2014 by approximately $13.6 million relative to the previous year. Revenues from work carried out in the U.S. were up 24.5% to $201.6 million, while revenues from contracts performed in Canada were up 16.8% to $91.1 million. Of this amount, Ontario operations accounted for revenue of $41.1 million, up significantly from $11.7 million in 2013.

EBITDA amounted to $11.1 million, or 3.8% of revenues, up from $7.1 million, or 3.0% of revenues, a year earlier. Given a charge for the impairment of property, plant and equipment of $1.3 million, net of related taxes, recognized in the third quarter of 2014, the Corporation recorded a net loss of $2.3 million, or $0.03 per basic and diluted share, compared to a net loss of $1.8 million, or $0.02 per basic and diluted share, a year earlier.

FINANCIAL POSITION

As a reminder, in June 2014, the Corporation closed a new agreement with a banking syndicate for a total of $65.0 million in bank financing. The financing consists of a renewable credit facility of an authorized amount of $40.0 million in Canadian dollars, on which funds may also be drawn in US dollars, and a long-term loan of an authorized amount of $25.0 million. As at December 31, 2014, an amount of $22.8 million has been used under the renewable credit facility.

As at December 31, 2014, the long-term debt, including the current portion, was $34.8 million, versus $31.7 million three months earlier, while the ratio of long-term debt to equity was 0.41, versus 0.38 three months earlier. In addition, the Corporation's cash balance rose by $9.6 million during the fourth quarter to reach $11.3 million at the end of the 2014 fiscal year.

OUTLOOK

"We recently unveiled our 2015-2017 strategic plan and strong industry fundamentals combined with favourable trends should lead to increased demand for our services. This plan calls for substantial revenue growth by the end of 2017. We also expect the EBITDA margin to gradually return to NAPEC's historical level, as we increase the share of revenues derived from higher margin sectors and realize further synergies from the organizational transformation. In the United States, our priorities are to expand our geographical footprint and to grow mechanical and gas-related activities to capture business opportunities offered by the evolution of electricity generation sources. Finally, in Canada, our priority is to proceed with the organizational transformation by regrouping our activities under the Thirau brand name", concluded Mr. Gauthier.

NON-IFRS MEASURE

EBITDA is a measure that has no standardized meaning prescribed by IFRS and is thus considered to be a non-IFRS measure. Therefore, this measure may not be comparable to similar measures presented by other issuers. This measure is presented and described in this release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that reflect management's current expectations regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management assumes no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.

OVERVIEW OF THE CORPORATION

NAPEC is a company operating in the energy sector. The Corporation is a leading provider of construction and maintenance services to the public utility and heavy industrial markets mainly in Quebec, Ontario, and the eastern United States. Through its subsidiaries, the Corporation provides maintenance and construction services for electricity transmission and distribution networks, substations and electrical power houses, as well as the control of vegetation on rights-of-way for electrical lines.

Further information regarding NAPEC is available in the SEDAR database (www.sedar.com) and on the Corporation's website at www.napec.ca.

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