TORONTO, ONTARIO--(Marketwire - Nov. 9, 2011) -
NOT FOR DISTRIBUTION TO THE U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Tuckamore Capital (TSX:TX)(TSX:TX.DB.B)(TSX:TX.DB.C) today announced its results for the three and nine months ended September 30, 2011.
Third Quarter Results
| 9 months | 9 months | |||||||
| ($ millions, except per share amounts) | Q3 2011 | Q3 2010 | 2011 | 2010 | ||||
| Revenue | 162.4 | 118.5 | 453.7 | 339.3 | ||||
| Gross profit | 37.7 | 23.9 | 100.1 | 71.8 | ||||
| Selling, general & administrative expenses | (22.2 | ) | (18.6 | ) | (70.3 | ) | (56.9 | ) |
| Net income (loss) from continuing operations | 6.5 | (9.4 | ) | 22.3 | (19.2 | ) | ||
| Adjusted EBITDA from continuing operations | 14.6 | 5.7 | 27.9 | 15.6 | ||||
| Income (loss) per share from continuing operations – basic | 0.09 | (0.13 | ) | 0.31 | (0.27 | ) | ||
| Income (loss) per share from continuing operations – diluted | 0.08 | (0.13 | ) | 0.27 | (0.27 | ) |
The results from continuing operations exclude those of assets sold during the quarter and which were classified in discontinued operations during the period.
Revenue for the three and nine months period ended September 30, 2011 was $162.4 and $453.7 million, versus $118.5 and $339.3 million reported in 2010. Gross profit was $37.7 million for the quarter representing a gross profit margin of 23% percent. For the same period last year, the Company reported gross profit of $23.9 representing a gross profit margin of 20% percent. Adjusted EBITDA was $14.6 and $27.9 million for the three and nine months ended September 30, 2011, compared to $5.7 and $15.6 million for the corresponding periods in 2010.
INDUSTRIAL SERVICES
The Industrial services segment had a strong quarter with both investments significantly exceeding the prior year results.
At NPC the improved results reflect the increase in ownership of both NPC and Golosky to 100%, as well as increased maintenance services activity and higher volumes in the fabrications divisions.
Quantum Murray had its most profitable quarter to date. The environmental division benefitted from several large hazmat and remediation projects, as well as seasonal Arctic work. The demolition division also had a solid quarter due to increased levels of industrial decommissioning activity. The metals division results were improved due to higher scrap prices and trading margins.
MARKETING
The Marketing segment had overall improved results compared to the prior year quarter. Gemma had its strongest quarter in over two years. Increased revenue and gross margin over the prior year were largely a result of key clients increasing inbound telesales volumes. Armstrong had a solid EBITDA contribution despite lower revenues reflecting a shift in mix of revenue to higher margin services. IC Group had improved results primarily due to improved margins.
OTHER
Results in the Other division were mixed in the quarter. Titan continued to have increased volumes for ground engaging tools and rigging products reflecting increased activity in the conventional oil and gas industry. Gusgo had slightly lower results compared to prior year period which reflected higher storage revenue.
FOURTH QUARTER OUTLOOK
Within the marketing segments, Gemma's outlook for Q4 is positive. Significant new business volumes from Gemma's larger clients will benefit the balance of 2011. Both IC Group and Armstrong continue to have a more cautious outlook as they continue to focus on business development activities.
The fourth quarter will see turnaround plant and maintenance assignments, and increased workload in NPC's fabrication and transportation divisions, but will also be affected by the December holiday season. Quantum Murray has a healthy work backlog and this quarter will see the completion of some larger projects in both the demolition and remediation divisions.
Titan and Gusgo's fourth quarter business levels are expected to be similar to this third quarter.
NEW BOARD MEMBER
Douglas Brown, Chairman of the Board of Directors of Tuckamore Capital, is pleased to announce the appointment of The Right Honourable Brian Mulroney to the Board of Directors, effective November 8, 2011. Mr. Mulroney was the Prime Minister of Canada from 1984 to 1993 and brings considerable business and international experience to the Board, and will provide valuable insight into ongoing corporate strategy.
About Tuckamore Capital
Tuckamore is a publicly traded company, which invests in successful Canadian private businesses. Tuckamore, has $352 million invested in 8 businesses representing a diverse cross-section of the Canadian economy.
Forward-looking information
This press release contains certain forward-looking information. Certain information included in this press release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results and may include statements or information regarding the future plans or prospects of Tuckamore or the Operating Partnerships and reflects management's expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of Tuckamore and the Operating Partnerships. Without limitation, information regarding the future operating results and economic performance of Tuckamore and the Operating Partnerships constitute forward-looking information. Such forward-looking information reflects management's current beliefs and is based on information currently available to management of Tuckamore and the Operating Partnerships. Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking information including risks related to investments, conditions of capital markets, economic conditions, dependence on key personnel, limited customer bases, interest rates, regulatory change, ability to meet working capital requirements and capital expenditures needs of the Operating Partners, factors relating to the weather and availability of labour.
These factors should not be considered exhaustive. In addition, in evaluating this information, investors should specifically consider various factors, including the risks outlined under "Risk Factors," which may cause actual events or results to differ materially from any forward-looking statement. In formulating forward-looking information herein, management has assumed that business and economic conditions affecting Tuckamore and the Operating Partnerships will continue substantially in the ordinary course, including without limitation with respect to general levels of economic activity, regulations, taxes and interest rates. Although the forward-looking information is based on what management of Tuckamore and the Operating Partnerships consider to be reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with this forward-looking information, and management's assumptions may prove to be incorrect. This forward-looking information is made as of the date of this press release, and Tuckamore does not assume any obligation to update or revise it to reflect new events or circumstances except as required by law. Undue reliance should not be placed on forward-looking information. Tuckamore is providing the forward-looking financial information set out in this PRESS RELEASE for the purpose of providing investors with some context for the "Fourth Quarter Outlook" presented. Readers are cautioned that this information may not be appropriate for any other purpose.
Non-standard measures
The terms "EBITDA", "adjusted EBITDA", "invested capital", (collectively the "Non-IFRS measures") are financial measures used in this press release that are not standard measures under International Financial Reporting Standards ("IFRS"). Tuckamore's method of calculating Non-IFRS measures may differ from the methods used by other issuers. Therefore, Tuckamore's Non-IFRS measures, as presented may not be comparable to similar measures presented by other issuers.
EBITDA refers to net earnings determined in accordance with IFRS, before depreciation and amortization, interest expense and income tax expense. EBITDA is used by management and the Directors as well as many investors to determine the ability of an issuer to generate cash from operations. Management also uses EBITDA to monitor the performance of Tuckamore's reportable segments and believes that in addition to net income or loss and cash provided by operating activities, EBITDA is a useful supplemental measure from which to determine Tuckamore's ability to generate cash available for debt service, working capital, capital expenditures, income taxes and distributions. Tuckamore has provided a reconciliation of income to EBITDA in its press release.
Adjusted EBITDA refers to EBITDA excluding the gain or loss on reduction or sale of ownership interest (dilution gains or losses), the write-down of goodwill and intangible assets, restructuring costs, gain on re-measurement of investments, gain on debt extinguishment, fair value adjustments on stock based compensation expense and the impairment of long-term investments. Tuckamore has used Adjusted EBITDA as the basis for the analysis of its past operating financial performance. Adjusted EBITDA is used by Tuckamore and management believes it is a useful supplemental measure from which to determine Tuckamore's ability to generate cash available for debt service, working capital, capital expenditures, and income taxes. Adjusted EBITDA is a measure that management believes facilitates the comparability of the results of historical periods and the analysis of its operating financial performance which may be useful to investors.
Investors are cautioned that the Non-standard Measures are not alternatives to measures under IFRS and should not, on their own, be construed as an indicator of performance or cash flows, a measure of liquidity or as a measure of actual return on the shares. These Non-standard Measures should only be used in conjunction with the financial statements included in the press release and Tuckamore's (formally Newport Partners Income Fund) annual audited financial statements available on SEDAR at www.sedar.com or www.tuckamore.ca.
| TUCKAMORE CAPITAL MANAGEMENT INC. (formerly "Newport Partners Income Fund") | |||||
| Consolidated Balance Sheets | |||||
| (In thousands of Canadian dollars) | |||||
| (unaudited) | |||||
| September 30, 2011 | December 31, 2010 | ||||
| Assets | |||||
| Current Assets: | |||||
| Cash and cash equivalents | $ | 12,864 | $ | 27,230 | |
| Cash and short-term investments held in trust | 9,372 | 5,000 | |||
| Accounts receivable | 158,144 | 90,184 | |||
| Inventories | 43,559 | 28,202 | |||
| Prepaid expenses | 3,580 | 3,354 | |||
| Other current assets | 2,953 | 8,513 | |||
| Assets of discontinued operations | - | 45,233 | |||
| $ | 230,472 | $ | 207,716 | ||
| Property, plant and equipment | 55,329 | 53,390 | |||
| Long-term investments | 7,594 | 7,594 | |||
| Goodwill | 70,758 | 75,587 | |||
| Intangible assets | 98,101 | 80,890 | |||
| Other assets | 1,717 | 1,492 | |||
| $ | 463,971 | $ | 426,669 | ||
| Liabilities and Shareholders' Equity | |||||
| Current liabilities: | |||||
| Accounts payable and accrued liabilities | 101,094 | 58,232 | |||
| Provisions | 487 | 5,401 | |||
| Deferred revenue | 7,307 | 6,757 | |||
| Current portion of obligations under capital leases | 5,170 | 4,534 | |||
| Accrued interest on convertible debentures | - | 23,870 | |||
| Revolving credit facilities | - | 10,089 | |||
| Accrued interest on revolving credit facilities | - | 1,449 | |||
| Current portion of long-term debt | 10,000 | 86,939 | |||
| Convertible debentures | - | 159,829 | |||
| Liabilities of discontinued operations | - | 22,221 | |||
| $ | 124,058 | $ | 379,321 | ||
| Obligations under capital leases | 3,471 | 4,306 | |||
| Long-term debt | 86,549 | - | |||
| Secured debentures | 144,721 | - | |||
| Unsecured debentures | 13,259 | - | |||
| Stock based payment liability | - | 1,165 | |||
| Deferred tax liability | 14,025 | 7,332 | |||
| Unitholders' equity | - | 34,545 | |||
| Shareholders' equity | 77,888 | ||||
| $ | 463,971 | $ | 426,669 | ||
| TUCKAMORE CAPITAL MANAGEMENT INC. (formerly "Newport Partners Income Fund") | |||||||||||||
| Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) | |||||||||||||
| (In thousands of Canadian dollars, except per unit amounts) | |||||||||||||
| (unaudited) | |||||||||||||
| Three months ended | Nine months ended | ||||||||||||
| September 30 | September 30 | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Revenue | $ | 162,447 | $ | 118,471 | $ | 453,739 | $ | 339,281 | |||||
| Cost of revenue | (124,725 | ) | (94,515 | ) | (353,657 | ) | (267,511 | ) | |||||
| Gross profit | 37,722 | 23,956 | 100,082 | 71,770 | |||||||||
| Expenses | |||||||||||||
| Selling, general and administrative | (22,198 | ) | (18,567 | ) | (70,301 | ) | (56,943 | ) | |||||
| Amortization of intangible assets | (3,813 | ) | (3,191 | ) | (13,370 | ) | (9,354 | ) | |||||
| Depreciation | (5,297 | ) | (2,730 | ) | (12,670 | ) | (8,028 | ) | |||||
| $ | (31,308 | ) | $ | (24,488 | ) | $ | (96,341 | ) | $ | (74,325 | ) | ||
| Income (loss) before the undernoted | 6,414 | (532 | ) | 3,741 | (2,555 | ) | |||||||
| Income from equity investments | - | 280 | 372 | 765 | |||||||||
| Interest expense, net | (9,212 | ) | (9,327 | ) | (23,841 | ) | (25,707 | ) | |||||
| Gain on re-measurement of investment and gain on bargain purchase | 10,871 | - | 10,871 | 9,051 | |||||||||
| Loss on sale of investment | - | (442 | ) | - | (442 | ) | |||||||
| Gain on debt extinguishment | - | - | 37,451 | - | |||||||||
| Fair value adjustment to stock based compensation expense | - | 482 | (883 | ) | 833 | ||||||||
| Transaction costs | (910 | ) | - | (2,297 | ) | (40 | ) | ||||||
| Write-down of goodwill and intangible assets | - | - | (321 | ) | (1,779 | ) | |||||||
| Income (loss) before income taxes | $ | 7,163 | $ | (9,539 | ) | $ | 25,093 | $ | (19,874 | ) | |||
| Income tax expense - current | (6 | ) | (161 | ) | (14 | ) | (205 | ) | |||||
| Income tax (expense) recovery - deferred | (646 | ) | 331 | (2,759 | ) | 906 | |||||||
| Net income (loss) from continuing operations | $ | 6,511 | $ | (9,369 | ) | $ | 22,320 | $ | (19,173 | ) | |||
| Income (loss) from discontinued operations (net of income tax) | 13,311 | (3,642 | ) | 17,065 | 2,080 | ||||||||
| Net income (loss) and comprehensive income (loss) | $ | 19,822 | $ | (13,011 | ) | $ | 39,385 | $ | (17,093 | ) | |||
| Income (loss) per share | |||||||||||||
| Basic: | |||||||||||||
| Continuing operations | $ | 0.09 | $ | (0.13 | ) | $ | 0.31 | $ | (0.27 | ) | |||
| Net income (loss) | $ | 0.28 | $ | (0.18 | ) | $ | 0.55 | $ | (0.23 | ) | |||
| Diluted: | |||||||||||||
| Continuing operations | $ | 0.08 | $ | (0.13 | ) | $ | 0.27 | $ | (0.27 | ) | |||
| Net income (loss) | $ | 0.23 | $ | (0.18 | ) | $ | 0.47 | $ | (0.23 | ) | |||
| TUCKAMORE CAPITAL MANAGEMENT INC. (formerly "Newport Partners Income Fund") | |||||||
| Consolidated Statements of Cash Flows | |||||||
| (In thousands of Canadian dollars, except per unit amounts) | |||||||
| (unaudited) | |||||||
| Nine months ended September 30 | |||||||
| 2011 | 2010 | ||||||
| Cash provided by (used in): | |||||||
| Operating activities: | |||||||
| Net income (loss) for the period | $ | 39,385 | $ | (17,093 | ) | ||
| Items not affecting cash: | |||||||
| Income from discontinued operations | (17,065 | ) | (2,080 | ) | |||
| Amortization of intangible assets | 13,370 | 9,354 | |||||
| Depreciation | 12,710 | 8,068 | |||||
| Deferred income tax expense (recovery) | 2,759 | (906 | ) | ||||
| Income from equity investments, net of cash received | 132 | (428 | ) | ||||
| Loss on sale of investment | - | 442 | |||||
| Non-cash interest expense | 5,728 | 2,803 | |||||
| Gain on re-measurement of investment/ gain on bargain purchase | (10,871 | ) | (9,051 | ) | |||
| Gain on extinguishment of debt | (37,451 | ) | - | ||||
| Stock based compensation expense | 2,793 | 400 | |||||
| Write-down of goodwill and intangible assets | 321 | 1,779 | |||||
| Changes in non-cash working capital | (34,200 | ) | (8,635 | ) | |||
| Distributions from discontinued operations | 1,634 | 13,992 | |||||
| Cash provided by (used in) discontinued operations | 829 | 13,364 | |||||
| $ | (19,926 | ) | $ | 12,009 | |||
| Investing activities: | |||||||
| Acquisition of businesses, net cash acquired | (31,344 | ) | (4,321 | ) | |||
| Purchase of property, plant and equipment | (1,633 | ) | (2,068 | ) | |||
| Proceeds on disposition of property, plant and equipment | 733 | - | |||||
| Proceeds on disposition of businesses | 38,730 | 23,581 | |||||
| Purchase of software | (763 | ) | (329 | ) | |||
| Purchase of other intangible assets | (2,000 | ) | - | ||||
| Increase in other assets | - | (19 | ) | ||||
| Cash provided by (used in) discontinued operations | (69 | ) | (1,094 | ) | |||
| $ | 3,654 | $ | 15,750 | ||||
| Financing activities: | |||||||
| Increase in long-term debt | 11,016 | - | |||||
| Repayment of long term debt | - | (38,505 | ) | ||||
| Increase (decrease) in cash held in trust | (4,372 | ) | 35 | ||||
| Repayment of capital lease obligations | (3,978 | ) | (3,603 | ) | |||
| Cash used in discontinued operations | (1,269 | ) | (12,033 | ) | |||
| $ | 1,397 | $ | (54,106 | ) | |||
| Decrease in cash and cash equivalents | (14,875 | ) | (26,347 | ) | |||
| Cash and cash equivalents, beginning of period - continuing operations | 27,230 | 40,595 | |||||
| Cash and cash equivalents, beginning of period - discontinued operations | 509 | 3,287 | |||||
| Cash and cash equivalents, end of period | $ | 12,864 | $ | 17,535 | |||
| Cash and cash equivalents, end of period - continuing operations | $ | 12,864 | $ | 14,011 | |||
| Cash and cash equivalents, end of period - discontinued operations | - | 3,524 | |||||
| Supplemental cash flow information: | |||||||
| Interest paid | $ | 9,350 | $ | 22,904 | |||
| Cash acquired upon acquisition | $ | (1,054 | ) | 4 | |||
| Supplemental disclosure of non-cash financing and investing activities: | $ | - | $ | - | |||
| Acquisition of property, plant and equipment through capital leases | $ | 2,287 | $ | 1,632 | |||
| Debt and accrued interest repaid through issuance of debentures | $ | 152,951 | - | ||||
Contact Information:
Keith Halbert
Chief Financial Officer
416-775-3796
keith@tuckamore.ca