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 ($0.51 per share) in the prior year period.
Summary Financial
Overview
|
Three months
ended
September
30,
|
Nine months
ended
September 30,
|
($ millions except per share
amounts)
|
|
2017
|
2016
|
2017
|
2016
|
Revenue from
Continuing Operations
|
$
12.8
|
$
13.2
|
$
52.9
|
$
48.2
|
Gross Profit from
Continuing Operations
|
1.7
|
2.2
|
14.5
|
15.7
|
|
|
|
|
|
Adjusted
EBITDA (1) (2)
|
(1.7)
|
(1.2)
|
2.6
|
4.9
|
|
|
|
|
|
Net Loss from
Continuing Operations (2)
|
(6.7)
|
(12.5)
|
(21.3)
|
(30.8)
|
Net Income (Loss)
from Discontinued Operations (2)
|
1.2
|
(1.3)
|
(1.6)
|
(9.5)
|
Net Loss
(2)
|
(5.5)
|
(13.8)
|
(22.9)
|
(40.3)
|
|
|
|
|
|
Loss per share from
Continuing Operations (2) (3)
|
(0.39)
|
(1.14)
|
(1.25)
|
(6.93)
|
Loss per share
(2) (3)
|
(0.32)
|
(1.26)
|
(1.35)
|
(9.08)
|
______________________________
|
(1)
|
"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.
|
(2)
|
Represents amount
attributable to shareholders.
|
(3)
|
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.
|
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.
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 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.
Replay
Dial-In:
|
Toll
Free..........................................................
1-888-390-0541
|
|
International or
Local Toronto........................ 1-416-764-8677
|
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.