VANCOUVER, Nov. 13, 2017 /CNW/ - WesternOne Inc.
("WesternOne") (Toronto Stock Exchange: WEQ and WEQ.DB) today announced the release of its financial results for the three
and nine months ended September 30, 2017.
The results, consisting of WesternOne's unaudited interim financial statements for the three and nine months ended
September 30, 2017 and Management's Discussion and Analysis ("MD&A") dated November 13, 2017, are available on SEDAR (www.sedar.com).
2017 Q3 financial summary:
- Consolidated revenue from continuing operations was $12.8 million which decreased 3.0%
compared to $13.2 million in the prior year period. During the quarter, both heat and aerial
rental activity levels increased from the prior year period as a result of continued strength in the construction sector in BC
and a gradual economic recovery in Alberta primarily driven by increased residential and
industrial construction activity. The year-over-year increase of 5.2% in rental volumes, however, was negatively impacted by
rate compression due to continued competition in primary markets resulting in a net decline of 7.1% or $0.8 million in rentals and related service revenues. Partially offsetting the decline was an increase in
product sales, which grew 17.2% or $0.4 million mainly due to higher fuel sales and related
services driven by the rental volume growth.
- Gross profit and adjusted EBITDA (as defined below) were $1.7 million and negative
$1.7 million respectively, compared to the respective amounts of $2.2
million and negative $1.2 million in the prior year period. The decline was mainly due to
the net impact from rental rate compression, increased operating costs from elevated levels of fleet on rent, and lower profit
contribution from reduced level of fleet disposals to preserve fleet available on hand.
- Net cash from operating activities of continuing operations was negative $1.2 million,
compared to negative $0.2 million in the prior year period. The decline was mainly due to reduced
earnings and working capital changes. Net change in cash position from continuing operations was negative $7.0 million, compared to positive $1.6 million in the prior year period. Other
major factors leading to the net change in cash position in Q3 included ordinary fleet capital expenditures and debt principal
repayments and related interest.
- Net loss from continuing operations attributable to shareholders was $6.7 million
($0.39 per share), compared to $12.5 million ($1.14 per share) in prior year period. Included in net loss were non-cash finance expenses relating to
changes in the fair value of convertible debentures at quarter-end. Excluding the related non-cash effects on an after-tax
basis, net loss would have been $6.8 million ($0.40 per share),
compared to net loss of $5.6 million ($0.51 per share) in the prior
year period.
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Summary Financial Overview
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Three months ended
September 30,
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Nine months ended
September 30,
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($ millions except per share amounts)
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2017
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2016
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2017
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2016
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Revenue from Continuing Operations
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$ 12.8
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$ 13.2
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$ 52.9
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$ 48.2
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Gross Profit from Continuing Operations
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1.7
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2.2
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14.5
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15.7
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Adjusted EBITDA (1) (2)
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(1.7)
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(1.2)
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2.6
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4.9
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Net Loss from Continuing Operations (2)
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(6.7)
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(12.5)
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(21.3)
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(30.8)
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Net Income (Loss) from Discontinued Operations (2)
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1.2
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(1.3)
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(1.6)
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(9.5)
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Net Loss (2)
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(5.5)
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(13.8)
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(22.9)
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(40.3)
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Loss per share from Continuing Operations (2) (3)
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(0.39)
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(1.14)
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(1.25)
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(6.93)
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Loss per share (2) (3)
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(0.32)
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(1.26)
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(1.35)
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(9.08)
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______________________________
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(1)
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"Adjusted EBITDA" is not a recognized measure under IFRS and does not
have a standardized meaning prescribed by IFRS. "Adjusted EBITDA" refers to net income or loss from continuing operations
before interest, taxes, depreciation and amortization, and other specified items that would impact comparability
including, where applicable, non-operational income and expenses, securities-based compensation and other gains or
losses. The use of the term "non-operational income and expenses" is defined by WesternOne as those that do not impact
operating decisions taken by WesternOne's management as well as items of an unusual nature that do not reflect
WesternOne's ongoing operations. For a full description of adjusted EBITDA, refer to "Non-IFRS Measures" in the MD&A
dated November 13, 2017.
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(2)
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Represents amount attributable to shareholders.
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(3)
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Loss per share for prior periods have been adjusted on a retroactive basis
to reflect the consolidation of WesternOne's issued and outstanding common shares on the basis of one post-consolidation
common share for every 35 pre-consolidation common shares (the "Consolidation"). The Consolidation was completed
on October 31, 2016.
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Conference Call
Peter Blake, CEO, and the management team will host a conference call at 11:00am (Eastern time) or 8:00am (Pacific time), on Tuesday, November 14, 2017 to review the financial results and corporate developments for the three and nine
months ended September 30, 2017.
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.
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Dial in numbers:
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Toll Free..........................................................
1-888-390-0546
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International or Local Toronto........................
1-416-764-8688
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Conference Call Replay
If you cannot participate on November 14, 2017, 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 21, 2017. Please enter
the Replay ID number 233358 followed by the # key.
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Replay Dial-In:
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Toll Free..........................................................
1-888-390-0541
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International or Local Toronto........................
1-416-764-8677
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New Credit Facility
On November 13, 2017, WesternOne entered into an asset-based credit agreement (the "ABL
Agreement") with Canadian Imperial Bank of Commerce (the "Bank") under which a three-year $35.0
million secured revolving credit facility (the "ABL Facility") is to be offered upon satisfaction of certain
conditions precedent by WesternOne, at which time WesternOne expects to draw funds under the ABL Facility to fully repay the
outstanding balance of its currently existing $20.0 million demand facility.
Under the ABL Agreement, drawn amounts under the ABL Facility will be limited by a borrowing base, the calculation of which
will include certain eligible assets of WesternOne. The ABL Facility will be supported by security in favour of the Bank over all
of the assets of WesternOne and its material subsidiaries. Interest rates on borrowings will be, at WesternOne's option, based on
banker's acceptances, London Interbank Offered Rate, or the Bank's Canadian prime rate or US base rate, plus in each case an
applicable margin.
The ABL Agreement contains restrictive covenants, including restrictions on the incurrence of indebtedness, financial
maintenance covenants and restrictions on payments to affiliates, debenture holders and shareholders, as well as events of
default and representations and warranties.
As part of the process, WesternOne engaged an external appraisal company to perform an equipment inspection and appraisal of
its rental fleet and vehicles in July 2017. The appraised fair market value of the related assets
was $87.0 million, based on a net book value for accounting purposes of $62.1 million as at May 31, 2017.
"In Q3 our business was supported by favourable year-over-year variances in rental activity levels, a consistent trend that we
have observed since the latter part of 2016. While the operating results were weighed down by impact from lingering rental rate
compression, we are encouraged that the continued strengthening of rental volumes stemmed from gradual economic recoveries in our
primary markets, in particular Alberta's residential and industrial construction sectors. This
is an important factor as we enter into the 2017/18 construction heat season," said Mr. Peter
Blake, CEO of WesternOne.
"We are also very pleased with the execution of the ABL Agreement, which is expected to enhance our financial flexibility at a
relatively conservative asset leverage ratio. We would also expect the ABL Facility to provide us with additional liquidity
to manage working capital and execute on growth mandates including rental fleet expenditures and acquisitions as opportunities
arise," continued Mr. Blake.
Appointment of New Director
WesternOne is also pleased to announce that Jason Gray has been appointed to WesternOne's Board
of Directors.
Mr. Gray is a co-founder and general partner of the Alumni Fund, a venture capital firm made up of alumni from the world's top
tech incubators. Prior to founding Alumni Fund, Mr. Gray was a Senior Advisor with MaRS Cleantech Ventures Services where
he advised companies on fundraising, growth, and operations. He was also co-founder and CFO of SunFarmer, an energy finance
enterprise focused on developing markets, where he presently serves on the board. Mr. Gray holds an MBA from the University of Calgary.
Forward-looking Information
Certain statements in this news 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:
WesternOne satisfying certain conditions precedent to be offered the ABL Facility; WesternOne's expectation to draw funds under
the ABL Facility to repay the outstanding balance of its currently existing $20.0 million demand
facility; the limitation of amounts drawn under the ABL Facility by a borrowing base and the inclusion of certain eligible assets
of WesternOne in respect of the borrowing base; the security granted by WesternOne for the ABL Facility; the interest rates on
borrowing in respect of the ABL Facility; management's expectation that the ABL Facility will enhance WesternOne's financial
flexibility at a relatively conservative asset leverage ratio; and management's expectation that the ABL Facility will provide
WesternOne with additional liquidity to manage working capital and execute on growth mandates including rental fleet expenditures
and acquisitions as opportunities arise. Actual events or results may differ materially.
Forward-looking information contained in this news release is based on certain key expectations and assumptions made by
WesternOne, including, without limitation: net receivables are collectible, payments to suppliers will continue under current
terms, the stability of the economy in Western Canada; the impact of the current economic
climate in Western Canada on WesternOne's operations will remain consistent with WesternOne's
current expectations; the increased competitive environment in which WesternOne and its business units operate; a protracted
period of lower crude oil prices; rental rates will be subject to supply-related and competitive pressure in 2017 and 2018; the
supply and demand for WesternOne's products and services and the related impact on the pricing on such products and services will
remain consistent with WesternOne's current expectations; management's assessment of future plans and operations; WesternOne will
be able to grow through acquisitions and organic expansion; WesternOne will be able to: (i) fund debt maturities and to meet
current and future obligations; (ii) collect net receivables; (iii) integrate newly acquired businesses; (iv) maintain payments
to suppliers under current terms; and (v) expand its product offering and customer base; critical accounting estimates;
WesternOne will be able to discharge its liabilities; the impact from the wind-down of WesternOne's Australian operations will
remain consistent with WesternOne's current expectations; the impact on rental rates from supply-related and competitive pressure
will remain consistent with the WesternOne's current expectations; rental activity levels are expected to continue its moderate
growth trend; and the contractual requirements of WesternOne under the bank credit facilities are met. Although the
forward-looking information contained in this news release is based upon what 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
news 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 30, 2017 and MD&A dated November 13, 2017, which are both 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 news 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 Inc. seeks to acquire and grow businesses in the construction and infrastructure services sectors in Western Canada. Its primary business platform, WesternOne Infrastructure Services, is a leading provider of
construction heat services and aerial equipment rentals to businesses in the construction, infrastructure, film and television
industries in Western Canada.
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 and WEQ.DB
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT
ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.
SOURCE WesternOne Inc.
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