ST. ALBERT, ALBERTA--(Marketwired - March 30, 2015) - Enterprise Group, Inc. ("Enterprise," or "the Company") (TSX:E) is pleased to announce its financial results for the three and twelve month periods ended December 31, 2014 (the "fourth quarter" and "full year 2014," respectively).
HIGHLIGHTS AND SIGNIFICANT EVENTS
- Full year 2014 revenue of $79.6 million, an increase of $44.8 million when compared to the prior year.
- Full year 2014 EBITDA of $20.2 million, an increase of $11.8 million when compared to the prior year.
- Fourth quarter revenue of $25.7 million, an increase of $14.6 million when compared to the prior year.
- Fourth quarter EBITDA of $6.3 million, an increase of $4.0 million when compared to the prior year.
- On October 15, 2014, the Company completed its acquisition of Westar Oilfield Rentals Inc. ("Westar"), a privately held oilfield site service company, for a purchase price of approximately $13.5 million plus closing adjustments.
| |
Three months
December 31,
2014 |
|
Three months
December 31,
2013 |
Year ended
December 31,
2014 |
Year ended
December 31,
2013 |
| Revenue |
$ |
25,667,320 |
|
$ |
11,111,993 |
$ |
79,629,450 |
$ |
34,849,266 |
| EBITDA |
$ |
6,339,693 |
|
$ |
2,298,270 |
$ |
20,245,679 |
$ |
8,484,903 |
| Income before income tax |
$ |
2,475,747 |
|
$ |
515,002 |
$ |
9,064,446 |
$ |
5,020,985 |
| Net (loss) income |
$ |
(463,462 |
) |
$ |
210,330 |
$ |
5,731,399 |
$ |
5,782,426 |
| Basic and diluted earnings per share |
$ |
0.00 |
|
$ |
0.00 |
$ |
0.04 |
$ |
0.08 |
| Total assets |
$ |
165,101,322 |
|
$ |
66,877,308 |
$ |
165,101,322 |
$ |
66,877,308 |
Enterprise's recorded revenue of $79.6 million and EBITDA of $20.2 million during the full year 2014, representing increases of 128% and 139%, respectively, when compared to the prior year. These improvements can be attributed primarily to the Company's acquisitions, which accounted for 72% of the revenue increase, as well as organic growth supported by the Company's capital expenditures, which accounted for 28% of the revenue increase.
For the fourth quarter, Enterprise generated record revenue of $25.7 million and EBITDA of $6.3 million, representing increases of 131% and 176%, respectively, when compared to the fourth quarter of 2013. These improvements can be attributed primarily to the Company's acquisitions, as well as organic growth supported by the Company's capital expenditures.
Overall EBITDA margins for the full year 2014 were 25%, a one percentage point decrease when compared to the prior year. This was driven in part by a decrease in margins within the Utilities/Infrastructure Services division that related to costs associated with higher repairs and maintenance, fleet expansions, and the use of third party rentals. Additionally, while acquisitions made during 2014 in the Equipment Rental division did create profitable growth, the acquired businesses operated at a lower margin than that historically generated by Artic Therm.
Enterprise had $55.1 million in total debt as at the conclusion of the fourth quarter, inclusive of $33.7 million drawn on the Company's senior secured credit facility.
"We are pleased by Enterprise's record results for both the fourth quarter and full year 2014," stated Leonard Jaroszuk, the Company's Chief Executive Officer. "These results are evidence of not only the contributions of the acquisitions made throughout the year, but also the resilience of our business that results from the diversification of our revenue stream.
"Our operating margins within the Equipment Rental division began to reflect the benefit of the $20 million capital program we completed during 2014. The equipment purchased through this program served to considerably expand our operating capacity, facilitating organic growth at both divisions of our business and reducing our need to rely upon third-party equipment in order to properly fulfill demand.
"While we are satisfied with the benefits our new equipment has brought to our business, we do not believe it would be prudent to embark upon a similar capital program during 2015. The oil and gas industry has encountered significant headwinds over the past eight months, and this has created a commensurate level of economic uncertainty within Western Canada. In light of this uncertainty, we have elected to adopt a conservative approach towards capital spending during the year ahead. At most, we expect to spend a total of $4.0 million on maintenance capital expenditures and the probable purchase of the Direct Pipe system during the second half of the year.
"At the beginning of 2015, we implemented pricing adjustments for our oil and gas clients that aligned with those of our industry peers. To date, there has been minimal cancelation of contracts or work orders, and overall we expect workflow to remain relatively stable in the first half of 2015. However, our visibility into how demand from our clients will develop in the second half of the year is limited. We will devote 2015 to focusing upon our core strengths - providing great service to our customers and successfully integrating our newest acquisition."
Utilities/Infrastructure Division
| |
Three months December 31, 2014 |
|
Three months December 31, 2013 |
Year ended December 31, 2014 |
|
Year ended December 31, 2013 |
| Revenue |
$ |
11,025,991 |
|
$ |
8,824,391 |
$ |
39,854,678 |
|
$ |
26,622,211 |
| |
Increase |
$ |
2,201,600 |
|
|
|
$ |
13,232,467 |
|
|
|
| EBITDA |
$ |
1,700,434 |
|
$ |
2,548,182 |
$ |
10,021,555 |
|
$ |
10,373,477 |
| |
Increase (decrease) |
$ |
(847,748 |
) |
|
|
$ |
(351,922 |
) |
|
|
| Total Assets |
|
|
|
|
|
$ |
55,624,058 |
|
$ |
36,718,521 |
| |
Increase |
|
|
|
|
|
$ |
18,905,537 |
|
|
|
Enterprise's Utilities/Infrastructure Division generated fourth quarter revenue of $11.0 million, an increase of $2.2 million when compared to the prior year. This organic growth can be primarily attributed to new equipment purchased under the Company's 2014 capital program.
The Utilities/Infrastructure Division recorded an EBITDA margin of 15% during the fourth quarter, a decrease of 14 percentage points when compared to the prior year. This decline can be attributed to higher repairs and maintenance costs, expenses associated with the expansion of the fleet and associated support personnel, and - to a lesser extent - the use of third party rentals to meet customer demands while additional equipment could be acquired. The majority of these costs were incurred by T.C. Backhoe. This company was acquired in 2007, and a significant upgrade to its fleet was required to meet the growing demand for its services. Management feels that this division now has sufficient equipment to eliminate the need for significant third party rentals and prevent the need for significant repairs and maintenance costs.
The Utilities/Infrastructure Division generated revenue of $39.9 million for the full year 2014, a 50% increase when compared to the prior year. This increase reflects both a full year of operations of CTHA and organic growth supported by capital expenditures. Organic growth for the year contributed $7.7 million, or 58%, to revenue growth. The full year 2014 EBITDA margin of 25% was below management's expectations due to the same factors that created pressure on margins during the fourth quarter.
Equipment Rental Division
| |
Three months December 31, 2014 |
Three months December 31, 2013 |
Year ended December 31, 2014 |
Year ended December 31, 2013 |
| Revenue |
$ |
14,641,329 |
$ |
2,287,602 |
$ |
39,774,772 |
$ |
8,227,055 |
| |
Increase |
$ |
12,353,727 |
|
|
$ |
31,547,717 |
|
|
| EBITDA |
$ |
5,894,147 |
$ |
915,670 |
$ |
15,054,413 |
$ |
3,780,998 |
| |
Increase (decrease) |
$ |
4,978,477 |
|
|
$ |
11,273,415 |
|
|
| Total Assets |
|
|
|
|
$ |
93,053,266 |
$ |
21,490,556 |
| |
Increase |
|
|
|
|
$ |
71,562,710 |
|
|
Enterprise's Equipment Rental Division generated fourth quarter revenue of $14.6 million, an increase of $12.4 million when compared to the prior year. This improvement was primarily due to the Company's acquisitions of Hart Oilfield Rentals Ltd during the first quarter of 2014 and Westar Oilfield Rentals Ltd during the fourth quarter of 2014. Westar contributed approximately $2.5 million, or 20%, of the division's revenue growth. Nearly all of the remaining 80% of increased revenues can be attributed to Hart, which had a strong 2014 and grew its fourth revenues by nearly 30% relative to the prior year (prior to its acquisition).
The Equipment Rental Division recorded an EBITDA margin of 40% during the fourth quarter. This metric is consistent with management's expectations.
The Equipment Rental Division generated full year 2014 revenue of $39.8 million, an increase of $31.5 million when compared to 2013. This improvement was largely driven by acquisition activity, which accounted for $25.2 million, or 80%, of the revenue increase. The division's full year 2014 EBITDA margin of 38% for was consistent with management's expectations and is reflective of the addition of Hart, which has higher operating costs as a result of its size of operation and number of locations.
Significant Events
Westar Acquisition
On October 15, 2014, Enterprise announced the completion of the acquisition of Westar Oilfield Rentals Inc., a privately held oilfield site service company, for an aggregate purchase price of $13.5 million plus working capital and capital expenditure adjustments. Westar's equipment fleet currently consists of nearly 400 owned pieces. The purchase price was satisfied through a combination of $10.0 million in cash, $2.0 million in Enterprise shares (2.5 million shares at a price of $.80 per share), and $1.5 million in vendor take-back financing, which will be paid over the next two years.
Increased Credit Facility
On October 15, 2014, in conjunction with the acquisition of Westar, Enterprise announced that it had accepted a term sheet presented by PNC Bank Canada Branch to increase the Company's senior secured finance facility to $45.0 million. This facility, which carries an interest rate of prime plus 1.5%, was previously increased from $20.0 million to $35.0 million in November of 2013.
Conference Call Information
Enterprise will host a conference call for investors and analysts tomorrow, March 31, 2015, at 11:00 AM Eastern, in order to review the financial results for the fourth quarter and full year ended December 31, 2014. To participate in the conference call, please dial 416-340-8527 or toll free at 866-223-7781.
Enterprise COO, Doug Bachman to Retire
Doug Bachman has provided notice of his retirement which is effective at the end of this month. Enterprise would like to take this opportunity to thank Doug Bachman for his efforts over last two years and wish him a successful retirement.
About Enterprise Group, Inc.
Enterprise Group, Inc. is a consolidator of construction services companies operating in the energy, utility and transportation infrastructure industries. The Company's focus is primarily construction services and specialized equipment rental. The Company's strategy is to acquire complementary service companies in Western Canada, consolidating capital, management, and human resources to support continued growth. Enterprise acquired of Artic Therm International Ltd. in September 2012, Calgary Tunnelling & Horizontal Augering Ltd. in June 2013, Hart Oilfield Rentals in January 2014, and Westar Oilfield Rentals Inc. in October 2014. More information is available at the Company's website, www.enterprisegrp.ca - also, today's filings can be found on www.sedar.com
Forward Looking Information
Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Company's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
Non-IFRS Measures
The Company uses International Financial Reporting Standards ("IFRS"). EBITDAS is not a measure that has any standardized meaning prescribed by IFRS and is therefore referred to as a non-IFRS measure. This news release contains references to EBITDAS. This non-IFRS measure used by the Company may not be comparable to a similar measure used by other companies. Management believes that in addition to net income, EBITDAS is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed or how the results are taxed. EBITDAS is calculated as net income excluding depreciation, amortization, interest, taxes and stock based compensation.