ST. ALBERT, ALBERTA--(Marketwired - Aug. 13, 2015) - Enterprise Group, Inc. ("Enterprise," or "the Company") (TSX:E) is pleased to announce its financial results for the three month period ended June 30, 2015 (the "second quarter").
Consolidated: |
Three months June 30, 2015 |
|
Three months June 30, 2014 |
|
Six months June 30, 2015 |
|
Six months June 30, 2014 |
|
| Revenue |
$12,439,554 |
|
$14,069,617 |
|
$32,635,187 |
|
$35,176,922 |
|
| Gross margin |
$1,972,231 |
|
$3,622,980 |
|
$7,590,786 |
|
$12,170,147 |
|
| Gross margin % |
16 |
% |
26 |
% |
23 |
% |
35 |
% |
| EBITDA(1) |
$1,121,043 |
|
$2,684,590 |
|
$5,478,197 |
|
$9,759,411 |
|
| Net Income |
$(1,788,671 |
) |
$329,959 |
|
$(1,296,092 |
) |
$4,656,775 |
|
| EPS(2) |
$(0.04 |
) |
$0.01 |
|
$(0.03 |
) |
$0.11 |
|
| Total Assets |
$151,795,277 |
|
$130,047,730 |
|
$151,795,277 |
|
$130,047,730 |
|
| (1) |
Identified and defined under "Non-IFRS Measures" within the Company's Management and Analysis for the period ended June 30, 2015. |
| (2) |
Comparative numbers have been restated to reflect the share consolidation. |
Enterprise recorded revenue of $12.4 million and EBITDA of $1.1 million during the second quarter, decreases of $1.6 million and $1.5 million, respectively, when compared to the prior year. These decreases were primarily due to the impact of a weakened economy, and were mitigated by the Company's proactive client engagement efforts.
"Enterprise's results for the second quarter reflect what has so far proven to be a very challenging year for many resource-based businesses," stated Leonard Jaroszuk, Enterprise's Chief Executive Officer. "The decline in energy prices over the latter half of 2014 continues to result in changes to our operating environment. These changes are most pronounced in our Equipment Rental Services Division, which caters primarily to the resource sector. By contrast, Utilities/Infrastructure Division continues to experience relatively stable demand. Historically, the businesses within this division have displayed little sensitivity towards energy prices. However, the negative commodity environment has begun to impact the larger economic backdrop within Western Canada, and as a result we feel it is prudent to streamline the cost structure of all our operations."
"To that end, we have reduced headcount within our Rental division by 35%, implemented reduced work weeks, cut management salaries within that division, and introduced new management to our Utilities/Infrastructure division."
"Our efforts have not been limited to cost cutting. We have implemented considerable client outreach efforts, and are proactively working to ensure that our clients are receiving the level of service we are known for while protecting both parties' profitability. We believe that these efforts will help serve to mitigate a much larger potential impact."
"Given Enterprise's operating environment, management is committed to preserving the strength of the Company's balance sheet. As previously discussed, capital expenditures for 2015 are budgeted for $6 million, inclusive of the $1.5 million required to complete our purchase of the Direct Pipe System. We have also devoted nearly $10 million towards reducing our debt since the beginning of 2015, and recently renegotiated the covenants attached to that debt in order to further reinforce our financial security. These proactive measures will serve to not only protect Enterprise for however long this challenging environment persists, but also allow us to rebound rapidly once conditions improve."
Utilities/Infrastructure Division
The Utilities/Infrastructure Services division includes operations for T.C. Backhoe & Directional Drilling Ltd. ("TCB") and Calgary Tunnelling & Horizontal Augering Ltd. ("CTHA").
| Utilities/Infrastructure Construction: |
Three months
June 30, 2015 |
|
Three months
June 30, 2014 |
Six months
June 30, 2015 |
|
Six months
June 30, 2014 |
| Revenue |
$7,652,669 |
|
$8,311,555 |
$15,829,079 |
|
$16,788,960 |
| |
Decrease |
$(658,886 |
) |
|
$(959,881 |
) |
|
| EBITDA(1) |
$1,512,726 |
|
$2,403,741 |
$2,619,990 |
|
$4,771,499 |
| |
Decrease |
$(891,015 |
) |
|
$(2,151,509 |
) |
|
| Total Assets |
$54,303,028 |
|
$46,624,155 |
$54,303,028 |
|
$46,624,155 |
| |
Increase |
$7,678,873 |
|
|
$7,678,873 |
|
|
| (1) |
Identified and defined under "Non-IFRS Measures" within the Company's Management and Analysis for the period ended June 30, 2015. |
Enterprise's Utilities/Infrastructure division generated revenue of $7.7 million during the second quarter, a decrease of $0.7 million when compared to the prior year. This decline was primarily the result of delays at CTHA. During the quarter, the Company successfully completed a drilling and tunneling project under the Bow River in Calgary, its first project with the Direct Pipe System. This achievement is expected to create opportunities for more substantial projects across Western Canada.
The Utilities/Infrastructure division generated EBITDA of $1.5 million during the second quarter, a decrease of $0.9 million when compared to the prior year. This decline was primarily due to various project delays at CTHA, as well as previously identified cost issues at TCB that related to repairs and maintenance, fleet expansion, and third-party rentals. The impact of these issues was larger than anticipated during the second quarter. These issues have now been substantially resolved, and the Company anticipates that the Utilities/Infrastructure division's efficiency and EBITDA margins will improve moving forward.
Equipment Rental Division
The Equipment Rental Services division includes operations for Artic Therm International Ltd., Hart Oilfield Rentals Ltd. ("Hart"), and Westar Oilfield Rentals Ltd. ("Westar").
Equipment Rental: |
Three months June 30, 2015 |
|
Three months June 30, 2014 |
Six months
June 30, 2015 |
|
Six months
June 30, 2014 |
| Revenue |
$4,786,885 |
|
$5,758,062 |
$16,806,108 |
|
$ 18,387,962 |
| |
Increase |
$(971,177 |
) |
|
$(1,581,854 |
) |
|
| EBITDA(1) |
$527,921 |
|
$1,349,265 |
$5,054,549 |
|
$ 7,224,667 |
| |
Increase |
$(821,344 |
) |
|
$(2,170,118 |
) |
|
| Total Assets |
$82,804,531 |
|
$56,540,496 |
$82,804,531 |
|
$ 56,540,496 |
| |
Increase |
$26,264,035 |
|
|
$26,264,035 |
|
|
| (1) |
Identified and defined under "Non-IFRS Measures" within the Company's Management and Analysis for the period ended June 30, 2015. |
Enterprise's Equipment Rental division generated revenue of $4.8 million during the second quarter, a decrease of $1.0 million when compared to the prior year. This decline was primarily due to discounted rates for the Company's services, as well as by the warmer than average weather and the associated early arrival of spring break-up and road bans. These factors were only partially offset by the additional revenue provided by the acquisition of Westar.
The Equipment Rental division generated EBITDA of $0.5 million during the second quarter, a decrease of $0.8 million when compared to the prior year. This decline was primarily due to the same factors that impacted revenue. Discounted rates had a particularly pronounced impact on EBITDA due to a lack of an associated decrease in the Company's related expenses, while the warmer weather had a particularly pronounced impact on the demand for flameless heaters, which produce the greatest margins within this division.
In response to both the EBITDA decline and limited visibility regarding for this division's services over the second half of 2015, the Company has reduced divisional headcount by approximately 35% since the beginning of 2014. The Company has also implemented both salary reductions at the senior management level and a reduced work week.
Balance Sheet
Cash provided by operating activities in the second quarter was $6.3 million. This contributed to a quarter end balance of $7.1 million in cash and cash equivalents.
Total loans and borrowing at the end of the second quarter were $48.1 million, including finance lease liabilities, compared to $55.1 million at December 31, 2014. Of this $48.1 million of total loans and borrowing at the end of the second quarter, Enterprise's current portion of loans and borrowings is $7.0 million, including $5.3 million in finance lease liabilities.
The security of Enterprise's balance sheet has been bolstered by recent adjustments to its debt covenants for the balance of 2015. These adjustments lowered the fixed charge coverage ratio to 1.1:1.0 (from 1.25:1.0 previously) and increased the senior leverage ratio to 3.25:1.0 (from 2.5:1.0 previously). This additional security, as well as the diversified nature of the Company's revenues, is expected to allow for effective navigation of an uncertain commodity price environment.
Conference Call Information
Enterprise will host a conference call for investors and analysts today, August 13, 2015, at 5:00 PM Eastern, in order to review the financial results for the period ended June 30, 2015. To participate in the conference call, please dial 416-340-2218 or toll free at 866-225-0198.
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.
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.