Enterprise Group, Inc. ("Enterprise," or "the Company") (TSX:E) is pleased to
announce its financial results for the three month period ended March 31, 2014
("the first quarter"). Enterprise's strong first quarter results reflect both
the successful execution of the Company's acquisition strategy and growing
demand for the Company's services.
FIRST QUARTER HIGHLIGHTS
-- Record quarterly revenue of $21.1 million, an increase of $12.2 million
when compared to the prior year, due to both the impact of Enterprise's
acquisitions and strong demand for the Company's services.
-- Record quarterly EBITDAS of $7.0 million, an increase of $3.1 million
when compared to the prior year.
-- On January 3, 2014, the Company completed its acquisition of Hart
Oilfield Rentals ("Hart") for a purchase price of approximately $22.6
million.
-- On March 25, 2014, the Company completed a bought deal equity financing
of 27,600,000 of its Common Shares at a price of $1.00 per Common Share
for aggregate gross proceeds of $27.6 million.
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Consolidated: Q1/2014 Q1/2013 Change
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Revenue $21,107,305 $8,904,380 $12,202,925
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Gross margin $10,529,435 $5,201,966 $5,327,469
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Gross margin % 50% 58% -8%
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EBITDAS $7,046,966 $3,901,300 $3,145,666
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Net Income $4,326,813 $3,166,882 $1,159,931
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EPS $0.04 $0.05 -$0.01
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Total Assets $131,378,174 $31,185,747 $100,192,427
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Enterprise's first quarter results are highlighted by a significant increase in
revenue, reflecting both a strong demand for the Company's services and the
positive impact of acquisitions within both of the Company operating divisions.
While the Company's EBITDAS also witnessed a significant improvement, EBITDAS
margin decreased as a result of the change in revenue mix created by the
acquisitions. The Company's earnings per share decrease slightly, partially as a
result of $550,000 in one-time costs related to the acquisition and integration
of new subsidiaries and adjustments to operational infrastructure.
Enterprise remains on track to deploy $20 million of capital expenditures over
the course of 2014. These capital expenditures are intended to create
improvements in both the Company's revenue and operating margins. Management
believes these improvements will be reflected in the Company's operating results
during the second half of 2014.
"Enterprise's results for the first quarter represent a strong start to what we
believe will be a very exciting year for our business," stated Leonard Jaroszuk,
the Company's Chief Executive Officer. "These results demonstrate both the
benefit of our selective acquisition strategy and the healthy economic
environment, which continues to increase demand for our services."
"The capital raised during the first quarter will allow us to execute upon
investments that will significantly increase Enterprise's operating capacity,"
concluded Mr. Jaroszuk. "As our equipment fleet grows, we expect to improve not
only our revenue, but also our profitability. As a result, I have great
confidence in our ability to continue Enterprise's pattern of growth both
through 2014 and beyond. I look forward to communicating our progress."
Utilities/Infrastructure Division
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Q1/2014 Q1/2013
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Revenue $8,477,405 $3,849,208
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Increase $4,628,196
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EBITDAS $2,367,758 $1,091,287
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Increase (decrease) $1,276,471
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Enterprise's Utilities/Infrastructure Division generated first quarter revenue
of $8.5 million, an increase of $4.6 million when compared to the prior year.
This improvement can be attributed to the acquisition Calgary Tunnelling &
Horizontal Augering Ltd. ("CTHA") in June of 2013, an increase in activity, and
the expansion of Enterprise's service equipment fleet, which has allowed the
Company to both increase its capacity and attract projects from major customers.
This division's EBITDAS margin of 28% reflects both a change in revenue mix due
to the acquisition of CTHA and an increased use of third-party equipment
necessitated by strong demand at T.C. Backhoe. This metric is expected to
improve is expected to improve as new capital assets are purchased and
subcontracted equipment is replaced. Enterprise's capital plan allocates the
funds necessary to increase its hydrovac fleet to 20 units by the conclusion of
2014.
Equipment Rental Division
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Q1/2014 Q1/2013
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Revenue $12,629,900 $5,055,171
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Increase $7,574,729
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EBITDAS $5,875,401 $3,524,497
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Increase (decrease) $2,350,904
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Enterprise's Equipment Rental Division generated first quarter revenue of $12.6
million, an increase of $7.6 million when compared to the prior year. This
improvement was primarily due to the acquisition of Hart at the beginning of the
first quarter. This division's EBITDAS margin of 47% reflects a change in
revenue mix due to the acquisition of Hart, and is expected to improve as new
capital assets are purchased and subcontracted equipment is replaced. Revenue
from the Company's flameless heater fleet continued to be impacted by delays to
certain projects that should recommence during the latter half of 2014.
Major Developments
On January 3, 2014, Enterprise completed its acquisition of Hart, a private
oilfield equipment service provider, for a purchase price of $22.6 million,
subject to closing adjustments. Hart is a full service oilfield site
infrastructure company that provides both site services and equipment rentals to
its oil and gas customers within the Western Canadian Sedimentary Basin. Hart's
equipment fleet consists of approximately 1,500 owned pieces and an additional
500 pieces that have been rented in order to fulfill demand. During December of
2013, in order to fund this acquisition, the Company completed an overnight
market public offering of subscription receipts at a price of $0.72 per
subscription receipt for gross proceeds of approximately $15.0 million. The
purchase price for the acquisition was satisfied through a combination of the
net proceeds from this public offering, the issuance of 1,388,890 common shares
of the Company at a price of $0.72 per share, and funds available from the
Company's credit facility.
Also on January 3, 2014, in conjunction with the close of the Hart acquisition,
Enterprise accepted a term sheet presented by the Canadian branch of PNC Bank.
This term sheet allowed the Company to increase its current senior secured
finance facility from $20.0 million to a maximum of $35.0 million, subject to
certain borrowing base restrictions, at the existing interest rate of prime plus
2%.
On March 25, 2014, Enterprise completed a bought deal equity financing of
27,600,000 common shares of the Company, which included 3,600,000 Common Shares
issued pursuant to the exercise in full of the financing's over-allotment
option, at a price of $1.00 per common share for aggregate gross proceeds of
$27.6 million. The Company has issued 1,380,000 broker warrants to the
Underwriters. Each broker warrant will entitle the holder to acquire one common
share at an exercise price of $1.00 per share for a period of 24 months from the
date of closing. The net proceeds will be used to accelerate the Company's
capital expenditure program, as articulated above, as well as for general
working capital purposes.
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,
and Hart Oilfield Rentals in January 2014.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Assembly Stakeholder Relations
Candace Williams or Nathan Sellyn
780-328-3863
Enterprise Group, Inc.
Leonard D. Jaroszuk
President & CEO
780-418-4400
Enterprise Group, Inc.
Desmond O'Kell
Senior Vice President
780-418-4400
contact@EnterpriseGRP.ca
www.EnterpriseGRP.ca
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