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 DividendTM[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.
_____________________________________ TM
Denotes trademark of Canaccord Genuity Corp.
|
"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."
Summary Financial
Overview
($ millions except per share
amounts)
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2014
|
2013
|
2014
|
2013
|
Revenue
(1)
|
$ 88.0
|
$ 75.9
|
$ 285.7
|
$ 208.8
|
Gross Profit
(1)
|
15.8
|
18.9
|
63.1
|
60.2
|
|
|
|
|
|
Adjusted
EBITDA (1) (2) (3)
|
7.4
|
11.1
|
34.2
|
39.6
|
|
|
|
|
|
Net Income (Loss)
from Continuing Operations (3)
|
(1.0)
|
1.6
|
5.8
|
10.1
|
Net Loss from
Discontinued Operations (3)
|
(16.6)
|
(1.6)
|
(30.0)
|
(5.6)
|
Net Income
(Loss) (3)
|
(17.6)
|
-
|
(24.2)
|
4.5
|
|
|
|
|
|
Earnings (Loss) per
Share from Continuing Operations (3)
|
|
|
|
|
|
- Basic
|
(0.03)
|
0.07
|
0.18
|
0.43
|
|
- Fully
Diluted
|
(0.03)
|
0.06
|
0.18
|
0.42
|
|
|
|
|
|
Distributable Cash
Generated (2)
|
1.8
|
6.5
|
17.7
|
25.2
|
Cash Dividends
Declared
|
2.7
|
3.6
|
12.2
|
10.7
|
Distributable Cash
per Share (5)
|
0.0566
|
0.2674
|
0.5606
|
1.0722
|
|
|
|
|
|
Payout
Percentage (4)
|
150.4%
|
56.3%
|
68.7%
|
42.4%
|
___________________
|
Notes:
|
(1)
|
Based on WesternOne's
continuing operations in North America.
|
(2)
|
"Adjusted EBITDA" and
"Distributable Cash" are not recognized measures under IFRS and do
not have a standardized meaning prescribed by IFRS. "Adjusted
EBITDA" refers to net income (loss) from continuing operations
before interest, taxes, depreciation, amortization, gain/loss on
financial derivatives relating to changes in the fair market value
of the fixed interest rate swap, business acquisition and trust
conversion costs, debenture issuance costs, gain/loss on debentures
relating to changes in their fair values, share based compensation,
foreign exchange gains/losses, and write-down of capital assets,
intangible assets and goodwill. "Distributable Cash" refers to cash
available for paying the cash portion of the dividend to the
shareholders by WesternOne. For a full description of Adjusted
EBITDA and Distributable Cash refer to "Non-IFRS Measures" in the
MD&A dated November 13, 2014.
|
(3)
|
Represents amount
attributable to shareholders.
|
(4)
|
Amounts calculated
using distributable cash and cash portion of dividends declared for
the related period, not on per share amounts. Calculated as cash
portion of dividend declared divided by distributable cash
generated.
|
(5)
|
Calculated based on
basic weighted average number of shares.
|
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.
Dial in
numbers:
|
Toll
Free...........................................................
1-888-390-0546
|
|
International or
Local Toronto.......................... 1-416-764-8688
|
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.
Replay
Dial-In:
|
Toll
Free...........................................................
1-888-390-0541
|
|
International or
Local Toronto.......................... 1-416-764-8677
|
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.