Tuckamore Announces Second Quarter 2014 Financial Results

Date : 08/05/2014 @ 1:19PM
Source : Marketwired Canada

Tuckamore Announces Second Quarter 2014 Financial Results

NOT FOR DISTRIBUTION TO THE U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES


Tuckamore Capital (TSX:TX)(TSX:TX.DB.B) today announced its results for the
three and six months ended June 30, 2014. 


Second Quarter Results



----------------------------------------------------------------------------
($ millions, except per                                6 months    6 months 
 share amounts)                 Q2 2014     Q2 2013        2014        2013 
----------------------------------------------------------------------------
Revenue                           172.5       177.3       345.1       320.2 
----------------------------------------------------------------------------
Gross profit                       40.6        36.2        77.3        63.8 
----------------------------------------------------------------------------
Selling, general &                                                          
 administrative expenses          (25.8)      (23.9)      (51.3)      (47.2)
----------------------------------------------------------------------------
Net income (loss)                   0.7        (2.1)        2.8        (8.0)
----------------------------------------------------------------------------
EBITDA                             12.9        13.3        25.4        19.4 
----------------------------------------------------------------------------
Adjusted EBITDA                    15.8        13.5        28.5        19.8 
----------------------------------------------------------------------------
Income (loss) per share,                                                    
 basic                             0.01       (0.03)       0.04       (0.11)
----------------------------------------------------------------------------



Revenue for the three and six month period ended June 30, 2014 was $172.5
million and $345.1 million, compared to $177.3 million and $320.2 million
produced during the same periods in 2013. Gross profit for three and six months
ended June 30, 2014 was $40.6 million and $77.3 million representing a gross
profit margin of 23.5% and 22.4%. For the same periods in the prior year, the
Company reported gross profit of $36.2 million and $63.8 million representing a
gross profit margin of 20.4% and 19.9% percent. Adjusted EBITDA was $15.8
million and $28.5 million for the three and six months ended June 30, 2014,
compared to $13.5 million and $19.8 million for the corresponding periods in
2013.


The net income (loss) for the three and six months ended June 30, 2014 was $0.7
million and $2.8 million compared to $(2.1) million and $(8.0) for the same
periods in the prior year.


Adjusted EBITDA increased to $15.8 million and $28.5 million compared to $13.5
million and $19.8 million for the same periods in the prior year.


PORTFOLIO REVIEW

INDUSTRIAL SERVICES

ClearStream experienced lower revenues in the current quarter compared to the
prior year but realized gains and improvements in gross margin. The Wear,
Fabrication and Conventional oil and gas maintenance divisions performed better
in the current quarter compared to the same period in the prior year, while
business volumes in the Oilsands division were lower than the same quarter in
the prior year. 


Quantum Murray's results have improved over the same quarter in the prior year.
Better results stem from increased business volumes as a result of an improved
backlog and the containment of costs on legacy projects.


MARKETING 

Gemma had a challenging quarter with lower revenues compared to the same quarter
in the prior year. The decrease in revenues was primarily a result of a
reduction in business volumes and program delays with certain clients.


IC Group results were lower in the current quarter when compared to the same
period in the prior year. Clients continue to postpone projects and internalize
some of their marketing functions.


OTHER

Gusgo's results in the second quarter of 2014 were slightly higher than the same
period a year ago. Improved results are primarily due to an increase in drop
shipments compared to the same period in the prior year. 


Titan's results in the second quarter of 2014 were lower than the same quarter
in the prior year. This is due to increased competition in the market place as
well as costs associated with improving the organizational infrastructure. Lower
drilling activity also affected the results for the quarter. 


SUBSEQUENT EVENTS

On July 25, 2014, Tuckamore announced that it had entered into a subscription
agreement with Orange Capital Master I Ltd. ("Orange Capital") to sell $12.5
million of common shares of the Company to Orange Capital for a price not lower
than $0.75 per share, resulting in the issuance of no more than 16,666,667
shares (the "Private Placement").


On August 1, 2014, following repeated submissions by Access Holdings Management
Company LLC ("Access"), the Toronto Stock Exchange ("TSX") confirmed its
conditional approval of the Private Placement. Access has indicated its
intention to appeal the decision of the TSX, and on August 1, 2014 commenced an
application before the Ontario Securities Commission (the "OSC") to consider a
temporary cease trade order in respect of the Private Placement. The OSC
dismissed this application on the basis that Tuckamore's counsel undertake that
the company will effect an unwind of the Private Placement in circumstance where
Access actually appeals the TSX decision and is successful on such appeal.


On August 1, 2014, and in accordance with the decision of the OSC, Tuckamore
completed the Private Placement at a price of $0.80 per share for total gross
proceeds of $13.3 million. As previously disclosed, Tuckamore has obtained
approval from the lenders under its senior secured credit facilities to extend
the maturity date thereunder from March 9, 2015 to December 31, 2015, which
extension will become effective upon the prepayment of outstanding indebtedness
thereunder using the net proceeds of the Private Placement


THIRD QUARTER 2014 OUTLOOK

At ClearStream, despite revenue softness in lower margin areas, higher margin
divisions are performing well and we expect to maintain our EBITDA forecasts in
the coming quarter. ClearStream remains committed to its business development
strategy and has recently added to its business development team. Business
volumes remain high in both the Fabrication and Wear divisions. Growth will be
carefully planned and monitored, and Tuckamore and ClearStream management will
work closely to address the working capital needs of the business.  


At Quantum Murray the third quarter outlook calls for continued improvement with
the expectation that the organization will continue to grow its backlog and
improve its success rate in bidding on medium and large projects. Management is
also focused on fine tuning changes to its organizational infrastructure to
improve margins and ensure that the business has the tools required for its
longer-term growth and operational efficiency.


In the Marketing segment, the outlook calls for mixed results. At Gemma, the new
management team has been very active in bidding on new business and aims to grow
the sales pipeline throughout the third quarter. At IC Group, the core client
base has reduced its project spending. Management is continuing its efforts to
stabilize business volumes from its core client base while placing an increased
focus on identifying and securing new clients.


In the Other segment, Titan expects a challenging third quarter as a result of
increased competition. Titan will continue to manage its overhead and inventory
costs through the third quarter. Titan recently rebranded in an effort to
improve the company's market recognition. Management is also continuing to
strengthen Titan's business development and sales team for better market
penetration. Gusgo is continuing to expect stable business volumes from its
existing customer base and will continue to identify and target new customers
that can be serviced at positive margins.


Management continues to look to create value through the improvement of the
operations of Tuckamore's assets and, in some cases, may look to realize value
through the sale of certain of its assets.


About Tuckamore Capital Management Inc. 

Tuckamore has investments in 7 businesses representing a diverse cross-section
of the Canadian economy. 


Forward-looking information 

This press release contains certain forward-looking information. Certain
information included in this press release may constitute forward-looking
information within the meaning of securities laws. In some cases,
forward-looking information can be identified by terminology such as "may",
"will", "should", "expect", "plan", "anticipate", "believe", "estimate",
"predict", "potential", "continue" or the negative of these terms or other
similar expressions concerning matters that are not historical facts.
Forward-looking information may relate to management's future outlook and
anticipated events or results and may include statements or information
regarding the future plans or prospects of Tuckamore or the Operating
Partnerships and reflects management's expectations and assumptions regarding
the growth, results of operations, performance and business prospects and
opportunities of Tuckamore and the Operating Partnerships. Without limitation,
information regarding the future operating results and economic performance of
Tuckamore and the Operating Partnerships constitute forward-looking information.
Such forward-looking information reflects management's current beliefs and is
based on information currently available to management of Tuckamore and the
Operating Partnerships. Forward-looking information involves significant risks
and uncertainties. A number of factors could cause actual events or results to
differ materially from the events and results discussed in the forward-looking
information including risks related to investments, conditions of capital
markets, economic conditions, dependence on key personnel, limited customer
bases, interest rates, regulatory change, ability to meet working capital
requirements and capital expenditures needs of the Operating Partners, factors
relating to the weather and availability of labour.

These factors should not be considered exhaustive. In addition, in evaluating
this information, investors should specifically consider various factors,
including the risks outlined under "Risk Factors," which may cause actual events
or results to differ materially from any forward-looking statement. In
formulating forward-looking information herein, management has assumed that
business and economic conditions affecting Tuckamore and the Operating
Partnerships will continue substantially in the ordinary course, including
without limitation with respect to general levels of economic activity,
regulations, taxes and interest rates. Although the forward-looking information
is based on what management of Tuckamore and the Operating Partnerships consider
to be reasonable assumptions based on information currently available to it,
there can be no assurance that actual events or results will be consistent with
this forward-looking information, and management's assumptions may prove to be
incorrect. This forward-looking information is made as of the date of this press
release, and Tuckamore does not assume any obligation to update or revise it to
reflect new events or circumstances except as required by law. Undue reliance
should not be placed on forward-looking information. Tuckamore is providing the
forward-looking financial information set out in this press release for the
purpose of providing investors with some context for the "Third Quarter Outlook"
presented. Readers are cautioned that this information may not be appropriate
for any other purpose.


Non-standard measures 

The terms "EBITDA" and "adjusted EBITDA" (collectively the "Non-GAAP measures")
are financial measures used in this press release that are not standard measures
under International Financial Reporting Standards ("IFRS"). Tuckamore's method
of calculating Non-GAAP measures may differ from the methods used by other
issuers. Therefore, Tuckamore's Non-GAAP measures, as presented may not be
comparable to similar measures presented by other issuers.


EBITDA refers to net earnings determined in accordance with IFRS, before
depreciation and amortization, interest expense and income tax expense
(recovery). EBITDA is used by management and the directors of Tuckamore (the
"Directors") as well as many investors to determine the ability of an issuer to
generate cash from operations. Management also uses EBITDA to monitor the
performance of Tuckamore's reportable segments and believes that in addition to
net income or loss and cash provided by operating activities, EBITDA is a useful
supplemental measure from which to determine Tuckamore's ability to generate
cash available for debt service, working capital, capital expenditures, income
taxes and distributions. Tuckamore has provided a reconciliation of income to
EBITDA in its Management's Discussion and Analysis. 


Adjusted EBITDA refers to EBITDA excluding the interest, taxes, depreciation and
amortization of long-term investments and transaction costs. Tuckamore has used
Adjusted EBITDA as the basis for the analysis of its past operating financial
performance. Adjusted EBITDA is used by Tuckamore and management believes it is
a useful supplemental measure from which to determine Tuckamore's ability to
generate cash available for debt service, working capital, capital expenditures,
and income taxes. Adjusted EBITDA is a measure that management believes
facilitates the comparability of the results of historical periods and the
analysis of its operating financial performance which may be useful to
investors.


Investors are cautioned that the Non-GAAP Measures are not alternatives to
measures under IFRS and should not, on their own, be construed as an indicator
of performance or cash flows, a measure of liquidity or as a measure of actual
return on the shares. These Non-GAAP Measures should only be used in conjunction
with the financial statements included in the press release and Tuckamore's
annual audited financial statements available on SEDAR at www.sedar.com or
www.tuckamore.ca




TUCKAMORE CAPITAL MANAGEMENT INC.                                           
Consolidated Interim Balance Sheets                                         
(In thousands of Canadian dollars)                                          
(unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                   June 30,     December 31,
                                                       2014             2013
                                                                            
----------------------------------------------------------------------------
Assets                                                                      
Current Assets:                                                             
  Cash                                        $      12,963    $      28,883
  Cash and short-term investments held in                                   
   trust                                              2,950            2,950
  Accounts receivable                               161,389          145,858
  Inventories                                        16,918           12,721
  Prepaid expenses                                    3,391            6,753
  Other current assets                                2,921            2,733
----------------------------------------------------------------------------
Total current assets                          $     200,532    $     199,898
Property, plant and equipment                        60,606           62,688
Long-term investments                                28,348           28,281
Goodwill                                             61,128           61,128
Intangible assets                                    46,699           49,896
Other assets                                            633              633
----------------------------------------------------------------------------
Total assets                                  $     397,946    $     402,524
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities and Shareholders' Equity                                        
Current liabilities:                                                        
  Accounts payable and accrued liabilities           63,818           65,807
  Deferred revenue                                    1,388            3,048
  Current portion of obligations under                                      
   finance leases                                     5,886            6,041
  Senior credit facility                             84,681            5,481
  Unsecured debentures                                    -           24,819
----------------------------------------------------------------------------
Total current liabilities                     $     155,773    $     105,196
Obligations under finance leases                     10,221           11,584
Senior credit facility                                    -           84,354
Secured debentures                                  163,233          159,700
Deferred tax liability                                6,274            5,650
Shareholders' equity                                 62,445           36,040
----------------------------------------------------------------------------
Total liabilities & shareholders' equity      $     397,946    $     402,524
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            
TUCKAMORE CAPITAL MANAGEMENT INC.                                           
Consolidated Interim Statements of Income (Loss) and Comprehensive Income   
(Loss)                                                                      
(In thousands of Canadian dollars, except per share amounts)                
(unaudited)                                                                 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            Three months ended             Six months ended 
                                      June 30,                     June 30, 
                           2014           2013          2014           2013 
                                   Restated(1)                  Restated(1) 
----------------------------------------------------------------------------
                                                                            
Revenues            $   172,517   $    177,337   $   345,055   $    320,193 
Cost of revenues       (131,913)      (141,137)     (267,739)      (256,344)
----------------------------------------------------------------------------
Gross profit             40,604         36,200        77,316         63,849 
Selling, general                                                            
 and                                                                        
 administrative                                                             
 expenses               (25,828)       (23,888)      (51,346)       (47,241)
Amortization of                                                             
 intangible assets       (1,712)        (2,697)       (3,431)        (5,404)
Depreciation             (3,367)        (3,883)       (6,690)        (7,760)
Income from long-                                                           
 term investments           804            989         2,146          2,770 
Interest expense,                                                           
 net                     (6,497)        (8,442)      (14,862)       (16,598)
Transaction costs        (2,706)             -        (2,706)             - 
----------------------------------------------------------------------------
Income (loss)                                                               
 before income                                                              
 taxes              $     1,298   $     (1,721)  $       427   $    (10,384)
Income tax                                                                  
 recovery                                                                   
 (expense) -                                                                
 current                      -             50             -           (109)
Income tax                                                                  
 (expense)                                                                  
 recovery -                                                                 
 deferred                  (643)          (379)        2,372          2,540 
----------------------------------------------------------------------------
Net income (loss)   $       655   $     (2,050)  $     2,799   $     (7,953)
----------------------------------------------------------------------------
Net income (loss)                                                           
 and comprehensive                                                          
 income (loss)      $       655   $     (2,050)  $     2,799   $     (7,953)
----------------------------------------------------------------------------
                                                                            
                           Three months ended             Six months ended  
                                      June 30,                     June 30, 
                                                                            
Income (loss) per                                                           
 share                     2014           2013          2014           2013 
----------------------------------------------------------------------------
Basic:                                                                      
  Net income                                                                
   (loss)           $      0.01   $      (0.03)  $      0.04   $      (0.11)
Diluted:                                                                    
  Net income(2)                                                             
   (loss)           $      0.01   $      (0.03)  $      0.04   $      (0.11)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Please refer to Note 9 - "Comparative Figures" in Tuckamore's June 30, 
     2014 consolidated financial statements for more information.           
(2)  The effect of stock options for the three and six months period ended  
     June 30, 2013 was anti-dilutive.                                       
                                                                            
                                                                            
                                                                            
TUCKAMORE CAPITAL MANAGEMENT INC.                                           
Consolidated Interim Statements of Cash Flows                               
(In thousands of Canadian dollars)                                          
(unaudited)                                                                 





----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                           Six months ended 
                                     Six months ended         June 30, 2013 
                                        June 30, 2014           Restated(1) 
----------------------------------------------------------------------------
Cash provided by (used in):                                                 
Operating activities:                                                       
  Net income (loss) for the                                                 
   period                           $           2,799     $          (7,953)
  Items not affecting cash:                                                 
    Amortization of intangible                                              
     assets                                     3,431                 5,404 
    Depreciation                                6,690                 7,760 
    Deferred income tax recovery               (2,372)               (2,540)
    Income from equity                                                      
     investments, net of cash                                               
     received                                     (67)                 (220)
    Non-cash interest expense                   5,267                 6,191 
    Amortization of deferred                                                
     financing costs                              327                   326 
    Stock based compensation                                                
     expense                                        -                   170 
    Changes in non-cash working                                             
     capital                                  (20,270)                4,951 
----------------------------------------------------------------------------
Total cash (used in) provided by                                            
 operating activities               $          (4,195)    $          14,089 
----------------------------------------------------------------------------
Investing activities:                                                       
  Purchase of property, plant                                               
   and equipment                               (3,426)               (2,082)
  Net proceeds on disposal of                                               
   property, plant and equipment                  448                   497 
  Purchase of software                           (234)                 (240)
  Decrease in other assets                          -                    10 
----------------------------------------------------------------------------
Total cash used in investing                                                
 activities                         $          (3,212)    $          (1,815)
----------------------------------------------------------------------------
Financing activities:                                                       
  Repayment of long-term debt                  (5,481)                 (118)
  Increase in cash held in trust                    -                   (20)
  Repayment of finance lease                                                
   obligations                                 (3,032)               (3,076)
----------------------------------------------------------------------------
Total cash used in financing                                                
 activities                         $          (8,513)    $          (3,214)
----------------------------------------------------------------------------
(Decrease) increase in cash                   (15,920)                9,060 
  Cash, beginning of period                    28,883                10,549 
----------------------------------------------------------------------------
Cash, end of period                 $          12,963     $          19,609 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Supplemental cash flow                                                      
 information:                                                               
  Interest paid                                 8,066                 2,673 
Supplemental disclosure of non-                                             
 cash financing and investing                                               
 activities:                                                                
  Acquisition of property, plant                                            
   and equipment through finance                                            
   leases                                       1,680                 4,928 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Please refer to Note 9 - "Comparative Figures" in Tuckamore's June 30, 
     2014 consolidated financial statements for more information.           



FOR FURTHER INFORMATION PLEASE CONTACT: 
Tuckamore Capital Management Inc.
Keith Halbert
Chief Financial Officer
416-775-3796
keith@tuckamore.ca

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