TORONTO, ONTARIO--(Marketwired - Nov. 13, 2014) -
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) today announced its results for the three and nine months ended September 30, 2014.
| ($ millions, except per share amounts) | Q3 2014 |
Q3 2013 |
9 months 2014 |
9 months 2013 |
||||
| Revenue | 195.9 | 185.9 | 541.0 | 506.1 | ||||
| Gross profit | 38.4 | 42.1 | 113.8 | 106.0 | ||||
| Selling, general & administrative expenses | (24.9 | ) | (26.0 | ) | (74.3 | ) | (73.3 | ) |
| Net loss | (3.0 | ) | (2.6 | ) | (0.2 | ) | (10.5 | ) |
| EBITDA | 7.8 | 11.8 | 33.2 | 31.1 | ||||
| Adjusted EBITDA | 14.3 | 17.6 | 42.8 | 37.4 | ||||
| Loss per share, basic | (0.03 | ) | (0.04 | ) | 0.00 | (0.15 | ) |
Revenue for the three and nine month period ended September 30, 2014 was $195.9 million and $541.0 million, compared to $185.9 million and $506.1 million produced during the same periods in 2013. Gross profit for three and nine months ended September 30, 2014 was $38.4 million and $113.8 million representing a gross profit margin of 19.6% and 21.0%. For the same periods in the prior year, the Company reported gross profit of $42.1 million and $106.0 million representing a gross profit margin of 22.6% and 20.9% percent.
The net loss for the three and nine months ended September 30, 2014 was $3.0 million and $0.2 million compared to $2.6 million and $10.5 for the same periods in the prior year.
Adjusted EBITDA was $14.3 million and $42.8 million for the three and nine months ended September 30, 2014, compared to $17.6 million and $37.4 million for the corresponding periods in 2013.
PORTFOLIO REVIEW
INDUSTRIAL SERVICES
ClearStream's results reflect revenues up from a year ago with increases in the Wear technology, Fabrication and Conventional and Oilsands maintenance divisions. ClearStream continues to see demand for its pipe-coating wear product, and is operating at close to capacity in its Fabrication division. Oilsands maintenance revenues were back to seasonal levels following lower revenues in the previous quarter due to certain clients' temporarily reduced production capacity.
Quantum Murray's results in the third quarter reflect similar revenue levels to a year ago, but lower gross margins. The project backlog is improved, but the activity from the newer projects was less than expected in the third quarter due to delayed starts. Projects that did commence in the quarter were lower margin Remediation projects. The Demolition division continues to win and execute well on smaller projects, but lower scrap metal volumes continue to negatively impact the Metals division.
MARKETING
Gemma had a challenging quarter with reductions in call centre revenues from several clients continuing to impact the business. This quarter was also impacted by organizational changes costs. Gemma has enjoyed some recent successes from its business development efforts which will benefit future quarters. IC Group continues to see client revenue reduction as clients' marketing programs are delayed or internalized.
OTHER
Gusgo's results are improved from a year ago due to increased client activity and better contract pricing. Titan is continuing its transition, and is re-aligning its sales force to better address customer needs.
FOURTH QUARTER 2014 OUTLOOK
At ClearStream there continues to be revenue softness particularly in its conventional oil and gas maintenance services division. ClearStream is closely monitoring its costs to limit the impact of lower revenues. ClearStream remains committed to its business development strategy and has recently added to its business development team. Business volumes remain high in both the Fabrication and Wear divisions. Growth will be carefully planned and monitored, and Tuckamore and ClearStream management will work closely to address the working capital needs of the business.
At Quantum Murray the fourth quarter outlook will see further work on larger lower margin remediation projects, weather permitting and completion of more small and medium sized demolition projects. There is a healthy bid pipeline and Quantum Murray should be able to grow its backlog. Management continues to fine tune its organizational infrastructure to improve margins.
In the Marketing segment, the fourth quarter outlook calls for mixed results. At Gemma, the new management team has been successful in some recent bids and remains active in bidding on new business. At IC Group, the core client base has reduced its project spending. Management is continuing its efforts to stabilize business volumes from its core client base while placing an increased focus on identifying and securing new clients.
In the Other segment, Titan expects an improved fourth quarter as it enters its busier season when typically winter ground engaging equipment sales are strong. Titan recently rebranded in an effort to improve the company's market recognition. Management has strengthened Titan's business development and sales team which should benefit future quarters. Gusgo is continuing to expect stable business volumes from its existing customer base and will continue to operate efficiently in order to maximize margins.
Management continues to look to create value through the improvement of the operations of Tuckamore's assets and, in some cases, may look to realize value through the sale of certain of its assets.
About Tuckamore Capital Management Inc.
Tuckamore has investments in 7 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" and "adjusted EBITDA" (collectively the "Non-GAAP 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-GAAP measures may differ from the methods used by other issuers. Therefore, Tuckamore's Non-GAAP 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 (recovery). EBITDA is used by management and the directors of Tuckamore (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 Management's Discussion and Analysis.
Adjusted EBITDA refers to EBITDA excluding the interest, taxes, depreciation and amortization of long-term investments, write-down of goodwill and intangibles and transaction costs. 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-GAAP 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-GAAP Measures should only be used in conjunction with the financial statements included in the press release and Tuckamore's annual audited financial statements available on SEDAR at www.sedar.com or www.tuckamore.ca
| TUCKAMORE CAPITAL MANAGEMENT INC. |
| Consolidated Interim Balance Sheets |
| (In thousands of Canadian dollars) |
| (unaudited) |
| September 30, 2014 |
December 31, 2013 |
||||
| Assets | |||||
| Current Assets: | |||||
| Cash | $ | 6,486 | $ | 28,883 | |
| Cash and short-term investments held in trust | 2,950 | 2,950 | |||
| Accounts receivable | 191,322 | 145,858 | |||
| Inventories | 18,872 | 12,721 | |||
| Prepaid expenses | 4,998 | 6,753 | |||
| Other current assets | 2,958 | 2,733 | |||
| Total current assets | $ | 227,586 | $ | 199,898 | |
| Property, plant and equipment | 63,239 | 62,688 | |||
| Long-term investments | 28,499 | 28,281 | |||
| Goodwill | 61,128 | 61,128 | |||
| Intangible assets | 45,069 | 49,896 | |||
| Other assets | 633 | 633 | |||
| Total assets | $ | 426,154 | $ | 402,524 | |
| Liabilities and Shareholders' Equity | |||||
| Current liabilities: | |||||
| Accounts payable and accrued liabilities | 90,906 | 65,807 | |||
| Deferred revenue | 1,926 | 3,048 | |||
| Current portion of obligations under finance leases | 6,630 | 6,041 | |||
| Senior credit facility | - | 5,481 | |||
| Unsecured debentures | - | 24,819 | |||
| Total current liabilities | $ | 99,462 | $ | 105,196 | |
| Obligations under finance leases | 12,268 | 11,584 | |||
| Senior credit facility | 67,234 | 84,354 | |||
| Secured debentures | 165,030 | 159,700 | |||
| Deferred tax liability | 5,260 | 5,650 | |||
| Shareholders' equity | 76,900 | 36,040 | |||
| Total liabilities & shareholders' equity | $ | 426,154 | $ | 402,524 | |
| TUCKAMORE CAPITAL MANAGEMENT INC. |
| Consolidated Interim Statements of Loss and Comprehensive Loss |
| (In thousands of Canadian dollars, except per share amounts) |
| (unaudited) |
| Three months ended September 30, |
Nine months ended September 30, |
||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Restated(1) | Restated(1) | ||||||||||||
| Revenues | $ | 195,921 | $ | 185,893 | $ | 540,976 | $ | 506,086 | |||||
| Cost of revenues | (157,474 | ) | (143,756 | ) | (427,186 | ) | (400,099 | ) | |||||
| Gross profit | 38,447 | 42,137 | 113,790 | 105,987 | |||||||||
| Selling, general and administrative expenses | (24,924 | ) | (26,010 | ) | (74,297 | ) | (73,250 | ) | |||||
| Amortization of intangible assets | (1,769 | ) | (1,646 | ) | (5,208 | ) | (7,050 | ) | |||||
| Depreciation | (3,517 | ) | (4,126 | ) | (10,199 | ) | (11,887 | ) | |||||
| Income from long-term investments | 586 | 1,338 | 2,732 | 4,066 | |||||||||
| Interest expense, net | (6,501 | ) | (8,693 | ) | (21,363 | ) | (25,292 | ) | |||||
| Write-down of goodwill and intangibles | - | (5,713 | ) | - | (5,713 | ) | |||||||
| Transaction costs | (6,351 | ) | - | (9,057 | ) | - | |||||||
| Loss before income taxes | $ | (4,029 | ) | $ | (2,713 | ) | $ | (3,602 | ) | $ | (13,139 | ) | |
| Income tax recovery (expense) - current | 65 | 7 | 63 | (101 | ) | ||||||||
| Income tax recovery - deferred | 989 | 134 | 3,361 | 2,716 | |||||||||
| Net loss | $ | (2,975 | ) | $ | (2,572 | ) | $ | (178 | ) | $ | (10,524 | ) | |
| Net loss and comprehensive loss | $ | (2,975 | ) | $ | (2,572 | ) | $ | (178 | ) | $ | (10,524 | ) | |
| Basic and Diluted(2): | |||||||||||||
| Net loss, per share | $ | (0.03 | ) | $ | (0.04 | ) | $ | 0.00 | $ | (0.15 | ) | ||
| (1) | Please refer to Note 11 - "Comparative Figures" in Tuckamore's September 30, 2014 consolidated financial statements for more information. |
| (2) | The effect of stock options for three and nine months period ended September 30, 2014 and September 30, 2013 are anti-dilutive. |
| TUCKAMORE CAPITAL MANAGEMENT INC. |
| Consolidated Interim Statements of Cash Flows |
| (In thousands of Canadian dollars) |
| (unaudited) |
| Nine months ended September 30, 2014 |
Nine months ended September 30, 2013 Restated(1) |
|||||||
| Cash provided by (used in): | ||||||||
| Operating activities: | ||||||||
| Net loss for the period | $ | (178 | ) | $ | (10,524 | ) | ||
| Items not affecting cash: | ||||||||
| Amortization of intangible assets | 5,208 | 7,050 | ||||||
| Depreciation | 10,199 | 11,887 | ||||||
| Deferred income tax recovery | (3,361 | ) | (2,716 | ) | ||||
| Income from equity investments, net of cash received | (239 | ) | (751 | ) | ||||
| Non-cash interest expense | 7,063 | 9,469 | ||||||
| Amortization of deferred financing costs | 516 | 489 | ||||||
| Stock based compensation expense | - | 170 | ||||||
| Write-down of goodwill and intangible assets | - | 5,713 | ||||||
| Changes in non-cash working capital | (26,185 | ) | (11,230 | ) | ||||
| Total cash (used in) provided by operating activities | $ | (6,977 | ) | $ | 9,557 | |||
| Investing activities: | ||||||||
| Purchase of property, plant and equipment | (5,040 | ) | (3,613 | ) | ||||
| Net proceeds on disposal of property, plant and equipment | 447 | 729 | ||||||
| Purchase of software | (381 | ) | (283 | ) | ||||
| Decrease in long term assets | - | (55 | ) | |||||
| Total cash used in investing activities | $ | (4,974 | ) | $ | (3,222 | ) | ||
| Financing activities: | ||||||||
| Repayment of senior credit facility | (22,968 | ) | (118 | ) | ||||
| Proceeds from issuance of common shares, net | 12,500 | - | ||||||
| Proceeds from the exercise of options for common shares | 4,986 | - | ||||||
| Increase in cash held in trust | - | (25 | ) | |||||
| Repayment of finance lease obligations | (4,964 | ) | (4,748 | ) | ||||
| Total cash used in financing activities | $ | (10,446 | ) | $ | (4,891 | ) | ||
| (Decrease) increase in cash | (22,397 | ) | 1,444 | |||||
| Cash, beginning of period | 28,883 | 10,549 | ||||||
| Cash, end of period | $ | 6,486 | $ | 11,993 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | 13,305 | 10,924 | ||||||
| Supplemental disclosure of non-cash financing and investing activities: | ||||||||
| Acquisition of property, plant and equipment through finance leases | 6,237 | 6,420 | ||||||
| (1) | Please refer to Note 11 - "Comparative Figures" in Tuckamore's September 30, 2014 consolidated financial statements for more information. |
Contact Information:
Adrian Montgomery
Chief Investment Officer
416-775-3790
adrian@tuckamore.ca