NAPEC Inc. Reports Results for the First Quarter of 2015

DRUMMONDVILLE, QUEBEC--(Marketwired - May 14, 2015) - NAPEC Inc. ("NAPEC" or "the Corporation") (TSX:NPC) today reported results for its first quarter ended March 31, 2015. All amounts are in Canadian dollars unless otherwise indicated.

"First-quarter results were affected by severe winter weather in the northeastern portion of the continent. These conditions delayed the deployment of our teams in carrying out certain projects and reduced the efficiency of their execution. The work subject to delays will be carried out in subsequent periods. On the other hand, we have been active in bidding for and winning new contracts, as attested by the increase of our order backlog to a value of $393.0 million at the end of the quarter", said Pierre L. Gauthier, President and Chief Executive Officer of NAPEC.

FIRST-QUARTER RESULTS

Revenues for the quarter were $58.8 million, compared to $71.2 million in the first quarter of 2014. The change was due mainly to lower revenues from contracts for the construction, maintenance and repair of transmission and distribution lines and from underground, planting and mechanical operations.

On the other hand, revenues from electrical projects for industrial, commercial and institutional customers and from the construction, maintenance and repair of electrical substations were higher. In addition, fluctuations in the exchange value of the Canadian dollar increased the value of U.S.-dollar-denominated revenues during the first quarter of 2015 by approximately $5.4 million relative to the first quarter of 2014.

The lower business activity resulted in a decrease in earnings before interest, income taxes, depreciation and amortization ("EBITDA"), which were $1.7 million, or 2.9% of revenues, compared to $4.6 million, or 6.4% of revenues, in the first quarter of 2014. The Corporation recorded a net loss for the quarter of $1.1 million, or $0.02 per basic and diluted share, compared to net earnings of $1.4 million, or $0.02 per basic and diluted share, in the same quarter of 2014.

As at March 31, 2015, the value of the Corporation's order backlog was approximately $393.0 million, compared to $278.0 million as at December 31, 2014, representing an increase of 41.4%. This value includes an amount of $83.2 million related to some of the contracts announced on April 21, 2015.

FINANCIAL POSITION

As at March 31, 2015, the long-term debt, including the current portion, was $34.0 million, versus $34.8 million three months earlier, while the ratio of long-term debt to equity was 0.38, versus 0.41 three months earlier. At the same date, the cash balance was $4.6 million and an amount of $15.9 million had been drawn on the authorized renewable credit facility of $40.0 million.

EVENT AFTER THE REPORTING PERIOD

On May 5, 2015, the Corporation announced that it has entered into a bought deal agreement with Laurentian Bank Securities Inc. (the "Underwriter"), pursuant to which the Underwriter has agreed to purchase 8,333,334 units of the Corporation at a price of $0.90 per Unit for gross proceeds of $7.5 million (the "Offering"). The Underwriter will have an option to purchase up to an additional 2,777,778 Units at the issue price. If this option is exercised in full, the total gross proceeds will be $10.0 million.

The Offering is expected to close on or about May 26, 2015 and is subject to customary conditions and regulatory approvals, including approval of the TSX. The net proceeds of the Offering will be used for working capital and general corporate purposes to support NAPEC's organic growth as part of executing its strategic plan.

OUTLOOK

"The large volume of contracts signed since the beginning of the year validates our strategic orientations, and the demand for NAPEC's services is likely to be buoyed by solid fundamentals and favourable industry trends. Internally, we remain proactive in taking advantage of opportunities providing greater added value, while realizing as quickly as possible the synergies resulting from our organizational transformation", 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 corporation operating in the energy sector. The Corporation is a leading service provider to the public utility and heavy industrial markets mainly in Quebec, Ontario and the eastern United States. NAPEC and its subsidiaries build and maintain electrical transmission and distribution grids, as well as networks for gas utilities. In addition, the Corporation installs gas-powered and electric-powered heavy equipment for utilities, industrial gas power plants, and petrochemical facilities in North America.

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