The Corporation Closes the Year With a Higher Adjusted EBITDA Margin and a Solid $600 Million Backlog
DRUMMONDVILLE, QUEBEC--(Marketwired - Mar 29, 2017) - NAPEC Inc. ("NAPEC" or "the Corporation") (TSX:NPC) reported its results today for the fourth quarter and fiscal year ended December 31, 2016. All amounts are in Canadian dollars unless otherwise indicated.
| Financial highlights | | Three months ended Dec. 31, | | Years ended Dec. 31, |
| (in thousands of dollars, except the number of shares and per-share data) | | 2016 | | | 2015 | | 2016 | | | 2015 |
| Revenues | | 97,367 | | | 115,890 | | 353,262 | | | 343,982 |
| Adjusted EBITDA 1 | | 7,174 | | | 7,164 | | 24,907 | | | 20,836 |
| EBITDA 1 | | 4,067 | | | 7,067 | | 21,715 | | | 20,345 |
| Net earnings (loss) | | (2,424) | | | 1,322 | | (3,706) | | | 2,360 |
| | Per share - basic and diluted ($) | | (0.03) | | | 0.02 | | (0.04) | | | 0.03 |
| Weighted average number of outstanding shares (basic, in thousands) 2 | | 89,803 | | | 79,866 | | 82,364 | | | 76,394 |
| | |
| 1 | Not an IFRS measure. See "Non-IFRS Measures" below for a reconciliation. |
| 2 | 103,923,176 shares were outstanding as at December 31, 2016. |
"In fiscal 2016, disciplined execution of NAPEC's strategic plan enabled us to expand our geographic reach and service offering in the United States through a major acquisition, PCT Contracting LLC ("PCT"). This expansion in services related to natural gas networks provides NAPEC with access to new sources of growth in a promising sector. A strong new contract intake and a solid order backlog of $600 million are testaments of our growing presence in our main markets, which advantageously positions us as a one-stop shop for high value-added services," said Pierre L. Gauthier, President and Chief Executive Officer of NAPEC.
FOURTH-QUARTER RESULTS
Revenues were $97.4 million in the fourth quarter of 2016 compared to $115.9 million a year earlier. This variation mainly reflects lower revenues from contracts for the construction, maintenance and repair of electricity transmission lines and contracts for renewable energy projects. Conversely, revenues from contracts for the construction, maintenance and repair of electricity distribution lines and substations increased. As of November 30, 2016, NAPEC also benefited from the addition of PCT's business related to the construction, maintenance and repair of natural gas networks.
In March 2017, the Corporation settled litigation concerning contract amendments related to the execution of a contract in Canada. A loss in an amount of $2.6 million was recognized in the fourth quarter of fiscal 2016, with respect to this settlement and was applied as a reduction in revenues.
Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") for the fourth quarter of 2016 totalled $7.2 million or 7.4% of revenues, compared to $7.2 million or 6.2% of revenues in the fourth quarter of 2015. The increase in adjusted EBITDA as a percentage of revenues is mainly attributable to a more favourable mix of revenues and lower selling, general and administrative expenses.
The net loss for the fourth quarter of 2016 was $2.4 million or $0.03 per share, basic and diluted, compared to net earnings of $1.3 million or $0.02 per share, basic and diluted, a year earlier. The variation reflects an increase in depreciation and amortization arising from large investments in equipment to support growth, and from intangible assets related to the acquisitions of the last two years, as well as the aforementioned loss on the settlement of litigation.
As at December 31, 2016, NAPEC's order backlog was $600 million, up from $470 million as at December 31, 2015. The figure for December 31, 2016, includes PCT's backlog of approximately $109 million.
FISCAL 2016 RESULTS
Revenues for the fiscal year ended December 31, 2016, totalled $353.3 million, up 2.7% from $344.0 million in fiscal 2015. Adjusted EBITDA was $24.9 million or 7.1% of revenues, compared to $20.8 million or 6.1% of revenues a year earlier. NAPEC once again improved its adjusted EBITDA margin, which now falls within its historical range of 7% to 8%.
The Corporation posted a net loss of $3.7 million or $0.04 per share, basic and diluted, for fiscal 2016, compared to net earnings of $2.4 million or $0.03 per share, basic and diluted, the previous year.
FINANCIAL POSITION
As at December 31, 2016, long-term debt including the current portion was $98.0 million, versus $62.5 million three months earlier, with the increase mainly reflecting the use of long-term debt to finance a portion of the PCT acquisition. At the same date, the Corporation had a cash balance of $14.0 million, as well as access to $38.2 million available on its $50.0 million authorized renewable credit facility.
OUTLOOK
"NAPEC is confident as it enters 2017. We believe that the broad trends in our industry will persist and will continue to drive a substantial increase in demand for our services. Given these factors and our growing presence in the U.S. market, we foresee revenue growth in 2017, mainly in the gas sector. In addition, we have obtained an important qualification from Hydro One that allows us to bid on more projects in Ontario. More importantly, we are aiming for steady improvement in our operating profitability through higher value-added services and tight cost controls," concluded Mr. Gauthier.
CONFERENCE CALL
NAPEC will hold a conference call to discuss its results and provide an update on its operations on Wednesday, March 29, 2017 beginning at 10:00 a.m. Eastern Time. Interested parties can join the call by dialling 647-788-4922 (from Toronto and overseas) or 1-877-223-4471 (from elsewhere in North America). Those unable to participate can listen to a recording by dialling 1-800-585-8367 and entering the code 81870086 on the telephone keypad. The recording will be available from 1:00 p.m. on Wednesday, March 29, 2017 until 11:59 p.m. on Wednesday, April 5, 2017.
Those interested in participating in the webcast with presentation should click on this link:
https://www.napec.ca/en-CA/investor-relations/calendar-financial-activities/upcoming-activities
NON-IFRS MEASURE
EBITDA and adjusted EBITDA are measures that have no standardized meaning under IFRS and are therefore considered non-IFRS measures. As a result, such measures may not be comparable to similar measures presented by other companies. These measures are presented and described in this press release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.
The following table is a reconciliation of the EBITDA and adjusted EBITDA used by the Corporation to the reported net earnings (loss).
Reconciliation of EBITDA to net earnings (loss)
(in thousands of dollars) | | Three months ended (unaudited) | | | Twelve months ended (audited) | |
| | Dec. 31, 2016 | | | Dec. 31, 2015 | | | Dec. 31, 2016 | | | Dec. 31, 2015 | |
| Net earnings (loss) for the period | | (2,424) | | | 1,322 | | | (3,706) | | | 2,360 | |
| Plus: | | | | | | | | | | | | |
| | Finance charges | | 1,437 | | | 1,341 | | | 5,153 | | | 4,270 | |
| | Income tax recovery | | (637) | | | (120) | | | (2,464) | | | (233) | |
| | Depreciation and amortization | | 5,691 | | | 4,524 | | | 22,732 | | | 13,948 | |
| EBITDA | | 4,067 | | | 7,067 | | | 21,715 | | | 20,345 | |
| Settlement of litigation | | 2,626 | | | - | | | 2,626 | | | - | |
| Business acquisition costs | | 481 | | | 97 | | | 566 | | | 491 | |
| Adjusted EBITDA | | 7,174 | | | 7,164 | | | 24,907 | | | 20,836 |