WesternOne Inc. Reports 2014 Q3 Results

VANCOUVER, Nov. 13, 2014 /CNW/ - WesternOne Inc. ("WesternOne") (Toronto Stock Exchange: WEQ, WEQ.DB and WEQ.DB.C) today announced the release of its financial results for the three and nine months ended September 30, 2014.

The results, consisting of WesternOne's interim financial statements for the three and nine months ended September 30, 2014 and Management's Discussion and Analysis ("MD&A") dated November 13, 2014, are available on SEDAR (www.sedar.com).

2014 Q3 financial highlights and recent events are as follows:

• WesternOne recorded consolidated revenue of $88.0 million, gross profit of $15.8 million and adjusted EBITDA⁽¹⁾ of $7.4 million. These figures represent WesternOne's continuing operations in North America and have excluded the operating results from the Australian operations as a result of WesternOne's adoption of IFRS 5 - Discontinued Operations pursuant to its announcement on July 29, 2014 to wind down the Australian operations and place it into voluntary administration.
• Britco, WesternOne's modular construction and rental division, recorded revenue of $72.2 million and adjusted EBITDA of $4.5 million. Year-over-year revenue grew by 20.0% and adjusted EBITDA declined by 39.8%.
• The revenue growth was due to (i) increased manufacturing output at Britco's four facilities in Western Canada and the United States relating to large runs of work camp units; and (ii) a higher volume of on-site construction work relating to the Manitoba Hydro and Devon work force accommodations projects. The decline in the adjusted EBITDA was due to (i) increased labour and sub-contractor costs arising from delays in completing on-site civil and pre-engineered structure works for phase one of the Manitoba Hydro project (currently scheduled to complete by early 2015); (ii) reduced profitability from manufacturing due to a sales product mix that comprised higher material costs and overhead in Canada; and (iii) increased operating expenses relating to the shared services and project management functions to support the execution of current and future projects.
• The decline in Britco's adjusted EBITDA was partially offset by continued growth from the Britco USA operations, which reported $3.4 million of EBITDA at the entity level, compared with $1.3 million for the same period last year. Britco's ownership of the US operations was 44.55% as at September 30, 2014 so its share of the adjusted EBITDA was $1.5 million in Q3, compared with $0.6 million in 2013.
• WIS, WesternOne's infrastructure services division, recorded revenue of $15.8 million and adjusted EBITDA of $3.8 million. Year-over year revenue grew by 0.6% and adjusted EBITDA declined by 20.8%.
• WIS recorded additional revenue of $0.7 million from new branches in Fort McMurray, Alberta and Terrace and Campbell River, BC and general growth in rental rates in certain of its markets. The increase was partially offset by a drop in rental and related services and product sales revenue, as a result of lower rental fleet utilization due to delayed construction project starts as a result of a prolonged winter/spring season which led to a temporary decline in demand for aerial equipment over the summer. During the quarter WIS also incurred higher operating costs primarily relating to branch salaries and wages, property rent and fleet maintenance to support platform growth. The low revenue growth, coupled with increased operating costs, led to a decline in the adjusted EBITDA.
• The delays in the construction project starts have caused construction work to be pushed into early fall, and management has seen the rental volume and related rental fleet utilization back to the normalized levels in October and early November 2014.
•  Corporate overhead for adjusted EBITDA purposes was $0.9 million, compared with $1.3 million in Q3 of 2013.
• Net loss from continuing operations attributable to shareholders was $1.0 million ($0.03 per share), compared with net income of $1.6 million ($0.07 per share) last year.
• Operating cash flow from continuing operations was $21.7 million, up 17.5% from $18.5 million last year primarily due to more efficient working capital management.
• Q3 consolidated payout percentage⁽²⁾ was 150.4% or 68.7% year-to-date.
• On July 29, 2014, WesternOne announced that it is winding-down its operations in Australia and appointed voluntary administrators under the Corporation Act in Australia. Pursuant to the appointment, the voluntary administrators assume control of the business, property and affairs of APB Britco Pty Limited ("APB Britco"), with the powers of its directors and shareholders suspended. Upon completion of the voluntary administration process (currently scheduled to end by December 31, 2014), WesternOne anticipates that the voluntary administrators will become liquidators of APB Britco and will proceed with the liquidation of the remaining assets of APB Britco as a process of winding down its affairs.
• Under IFRS requirement, WesternOne recorded net loss from discontinued operations of $17.1 million pursuant to the winding-down of the Australian operations. Included in this amount was $15.3 million of non-cash charges, and $1.8 million of cash costs relating to operating losses for the month of July and residual obligations to be discharged, net of  estimated cash recovery from the voluntary administration and the subsequent liquidation process.
• On August 6, 2014, WesternOne announced that it has adopted a Premium Dividend^TM[1] and Dividend Reinvestment Plan (the "Plan"). The Plan provides eligible shareholders of WesternOne with an opportunity to receive, by reinvesting the monthly cash dividends declared payable on their Shares, either:

(i) new Shares at a subscription price equal to a 3% discount to the Average Market Price (as defined in the Plan); or

(ii) a premium cash payment equal to 102% of the amount of the reinvested cash dividends.

• On September 25, 2014, WesternOne announced the closing of a public offering of 4,825,000 common shares, on a bought deal basis, at a price of $8.00 per common share, for total gross proceeds of $38.6 million. WesternOne used the net proceeds from the offering to:

(i) partially fund the acquisition of the business and assets of Enerbuilt Technologies Inc., a Western Canadian based business that supplies heating equipment and services to the oil & gas industry and other markets in Western Canada;

(ii) increase WesternOne's indirect ownership of Britco Structures USA LLC, a Texas-based company that conducts the design and manufacturing of office complexes and workforce accommodations to support the energy, shale oil and gas, and construction and infrastructure sectors in the Mid-West and Southern United States, from 44.55% to 64.55%;  

(iii) deploy additional capital towards WesternOne's capital expenditure program; and

(iv) as to any balance, fund debt reduction and working capital.

• On September 30, 2014, WesternOne completed the acquisition of Enerbuilt Technologies Inc. and completed the transaction to increase ownership of its Britco USA operations.

"The main markets where WesternOne operates in are among the most solid construction and infrastructure markets in North America. Although our aerial equipment business temporarily slowed down in summer due primarily to weather-related factors, rental volume and fleet utilizations have since recovered and are back to the normalized levels. We are pleased to see this happen in conjunction with the start of the construction heat season as winter is around the corner," said Mr. Peter Blake, Chief Executive Officer.

"Despite cost-related challenges with the completion of the on-site construction work for phase one of the Manitoba Hydro project, the construction of the 1,500-room work camp under phase two of the project is expected to yield a better margin for Britco in 2015. We have good visibility as we execute our 2015 business plan with plant manufacturing work currently scheduled out to mid-2015 and a robust bid pipeline that is actively pursued by our sales team," said Mr. Blake. " We continue to pursue our growth strategies with an acute focus on doing what we do best, namely construction heating and aerial services for WIS and modular work camp manufacturing and space rentals for Britco, and in the process deliver exceptional value for our customers in the construction and infrastructure and energy markets in Western Canada and Texas." 

Conference Call Information

Peter Blake, CEO and the management team will host its Q3 2014 Financial Results Conference Call today at 4:30pm (Eastern time) or 1:30pm (Pacific time), to review the financial results and corporate developments for the period ended September 30, 2014.

To participate in this conference call, please dial one of the following numbers approximately 10  minutes prior to the commencement of the call, and ask to join the WesternOne conference call.

Conference Call Replay

If you cannot participate on November 13, 2014, a replay of the conference call will be available by dialing one of the following replay numbers. You will be able to dial in and listen to the conference two hours after the meeting end time, and the replay will be available until November 20, 2014. Please enter the Replay ID number 096972 followed by the # key.

Forward-looking Information

Certain statements in this press release may constitute "forward-looking" information that involves known and unknown risks, uncertainties and other factors, and it may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such information includes, without limitation, statements with respect to: the anticipated timing and process relating to the winding-down of WesternOne's Australia operations, anticipated completion of phase one of the Manitoba Hydro workforce accommodations project, profitability of future projects, visibility of manufacturing work schedule and bid pipeline, and the long-term strategic plan that WesternOne will implement. Actual events or results may differ materially.

Forward-looking information contained in this press release is based on certain key expectations and assumptions made by WesternOne, including, without limitation: the outlook of WesternOne's business and the economy in Western Canada and the US, the supply and demand for WesternOne's products and services and management's assessment of future plans and operations. Although the forward-looking information contained in this press release is based upon what the WesternOne's management believes to be reasonable assumptions, WesternOne cannot assure investors that actual results will be consistent with such information. Forward-looking information reflects current expectations of management regarding future events and operating performance as of the date of this press release. Such information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, and a description of these factors can be found under "Risk Factors" in WesternOne's Annual Information Form dated March 28, 2014 and Management's Discussion and Analysis dated November 13, 2014, which are available on SEDAR (www.sedar.com).

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management's current beliefs and is based on information currently available to WesternOne. The forward-looking information is made as of the date of this press release and WesternOne assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

About WesternOne

WesternOne seeks to acquire and grow businesses in the construction and infrastructure services sectors in order to generate stable dividends to its shareholders and to achieve capital appreciation.

Additional Information

Additional information relating to WesternOne and other public filings, is available on SEDAR at www.sedar.com or on WesternOne's website at www.weq.ca.

Trading Symbols

Toronto Stock Exchange: WEQ, WEQ.DB and WEQ.DB.C

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.

SOURCE WesternOne Inc.