2021 Second Quarter Results Highlights
- Total working capital as at June 30, 2021 was $55.4 million of which the Company's cash position was $42.5 million
- The Company is reporting shareholders' equity of $113.9 million or $3.61 per share based on weighted average common shares outstanding as at June 30, 2021
- As a result of the execution of the NGTL construction contract announced during the second quarter of fiscal 2021, the extension and increase of scope on the Interim TMEP construction contract announced during the first quarter of fiscal 2021 until August 31st, and along with the continued work on core maintenance and integrity programs with existing clients, the Company is anticipating revenue to approach $300 million for the year
- The Company continues to materially exceed industry standard safety averages. As at June 30, 2021 Macro Enterprises has now exceeded 34 quarters without a single lost time injury
Second Quarter Results
Three months ended June 30, 2021 vs. three months ended June 30, 2020
Macro Enterprises Inc. posted consolidated revenue of $88.9 million compared to $45.7 million reported second quarter last year. The increase in revenues during the quarter was materially due to the continuation of the interim construction work on a major pipeline project along with the pre-construction reimbursable work in connection with another major pipeline project secured and announced during the second quarter. Approximately 96% or $85.1 million of the revenue earned related to pipeline and facilities construction with the balance ($3.7 million) relating to maintenance and integrity work being performed under existing master service agreements. Prior year revenue relating to pipeline and facilities construction was approximately 94% or $41.1 million while the balance related to maintenance and integrity work.
Operating expenses were $72.2 million or 81% of revenue compared to $38.9 million or 85% of revenue in the second quarter last year. Margins were generally better than recent historical averages as a result of resource continuity and proximity of work to the major projects currently under way. As well, during the quarter the Company was eligible for the Canadian Emergency Wage Subsidy ('CEWS') and claimed $2.2 million in government assistance which was applied as a reduction in salaries and wage expenses recorded in its operating expenses. The Company continues to actively monitor and streamline its overheads and processes to the maximum extent possible to ensure savings are realized while maintaining the highest degree of health, safety and environmental standards possible.
General and administrative expenses were $1.4 million, down $0.3 million from the $1.7 million recorded prior year. The decrease was expected as the Company has now reduced expenditures relating to joint operations. As well, during the quarter the Company was eligible for the CEWS in connection with administrative salaries and was able to claim $0.2 million in government assistance which was applied as a reduction in salaries expense recorded in its general and administrative expenses. Included in the Company's general and administrative expenditures are professional fees, corporate wages, burdens and other overheads, including rents, insurance, travel and administrative supplies that are not charged directly to projects.
Depreciation of property, plant and equipment was $4.4 million compared to $5.3 million reported in the previous year. The decrease in depreciation reflects a temporary reduction in capital spending during the first half of the fiscal year. Depreciation is calculated at various declining balance methods across the Company's multiple categories of property, plant and equipment and is used in guiding the annual capital expenditure estimates. Residual values, methods of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.
During the second quarter the Company recognized a non-cash gain of $156,000 on the mark-to-market re-measurement of its preferred shares at period end. The loss adjustment is indicative of a 3.3% decrease to the Company's share value over the prior reported period.
Finance costs of $0.6 million were comparable to prior year due to the adjustments the Company recognized under IFRS 16 right of use asset lease obligations and the associated implicit interest charges, the amortization of deferred finance costs recorded on its credit facilities and the issuance of its letters of credit relating to contract financial assurances. In addition to the non-cash deferred transaction costs, interest charges, standby and admin fees associated with the Company's credit facility, other finance costs included $41,000 of effective interest rate payments made on its preferred shares.
Income tax expense in the quarter of $3.0 million was at an effective rate of 29% which approaches the enacted tax rates of 27% after reversing non-cash charges and timing differences, namely the collections of prior year holdbacks.
Net income was $7.3 million ($0.23 per share) compared to net loss of $1.6 million (($0.05) per share) recognized during the three months ended June 30, 2020. EBITDA was $15.5 million compared to $4.0 million recognized during the three months ended June 30, 2020. As a result of increased activity and improved margins, non-cash adjustments including mark-to-market gains and depreciation, the Company's net income and EBITDA were comparably better than to prior years.
OUTLOOK
As the effects of the COVID-19 pandemic begin to subside, we believe Macro is well positioned to chart new independent growth for years to come. In this regard, we note the Company's strong balance sheet, access to liquidity, exceptional health and safety records, and meaningful client relations. With a newly added $20 million in borrowing capacity to the existing $80 million senior secured Letter of Credit facility, supported by Export Development Canada, Macro will continue to pursue large scale economically strategic opportunities while executing and servicing safely its secured backlog of business and long standing Master Service Agreements with its clients.
As to fiscal 2021, Macro has recently announced its second largest pipeline construction contract in its history on the NGTL Expansion Project, and with added extensions in schedule and scope of its Interim Contract on the Trans Mountain Expansion Project, Macro expects to deliver meaningful results for fiscal 2021 with revenues forecast to approach $300 million.
https://www.newsfilecorp.com/release/93790/Macro-Enterprises-Inc.-Announces-2021-Second-Quarter-Results