Tornado Global Hydrovacs Reports Record Second Quarter 2023 Results
August 17 2023 - 7:30AM
Tornado Global Hydrovacs Ltd. (“Tornado” or the “Company”) (TSX-V:
TGH; OTCQX: TGHLF) today reported its unaudited financial and
operating results for the three months period ended June 30, 2023,
with comparisons to the same period last year. The unaudited
condensed consolidated financial statements and related management
discussion and analysis are available on the Company’s issuer
profile in Canada on SEDAR at www.sedar.com, the United States at
www.otcmarkets.com and on the Company’s web site
www.tornadotrucks.com. All amounts reported in this news release
are in thousands ($000’s CAD) except per share amounts.
Second Quarter 2023 Overview and Recent
Developments
- The Company
achieved record quarterly Sales, Gross Profit, EBITDAS and Net
Income.
- The economic
environment continued to improve during Q2/2023 resulting in the
improvement of all key operating financial metrics compared to the
same period in 2022.
- In July 2022 the
Company entered into a Product Supply and Development Agreement for
the co-development and supply of customized hydrovac trucks (the
“Supply Contract”) with Ditch Witch, a division of The Toro Company
(“Ditch Witch”). The Supply Contract contains a commitment for the
delivery of a number of innovative, proprietary hydrovac trucks to
Ditch Witch that are estimated to generate minimum gross revenue
for the Company in the amount of $44 million USD during the four
year term. In addition the agreement provides for the transfer and
sale of certain intellectual property rights (“IP”) relating to the
proprietary hydrovac trucks developed for Ditch Witch.
- Revenue of
$23,516 increased 76.0% in Q2/2023 compared to $13,362 in Q2/2022
as a result of: (i) the positive impact of the Supply Contract with
Ditch Witch; (ii) the increase in sales pricing to customers; and
(iii) the increase in demand for hydrovac trucks in North America.
The quarter was another record quarterly revenue for the
Company.
- Gross Profit of
$3,962 increased by $1,129 in Q2/2023 compared to $2,833 in Q2/2022
principally due to increased revenue. Gross Profit was also
positively impacted by the benefits from cost savings on parts
sourced globally during Q2/2023. Gross Profit was negatively
impacted by increased material, labour and freight costs in
Q2/2023.
- The Company
earned net income of $1,054 in Q2/2023, which represents an
increase of $484 compared to net income of $570 in Q2/2022.
- EBITDAS of $2,011 increased 64.8%
in Q2/2023 compared to $1,220 in Q2/2022. This increase was due to
increased revenue and Gross Profit.
Gross Profit and EBITDAS are a non-IFRS
financial measures and readers are cautioned that Gross profit and
EBITDAS should not be considered to be more meaningful than Net
Income determined in accordance with IFRS.
OutlookManagement believes the
Company’s business will continue to strengthen and expects the
Company’s production and sales of hydrovac trucks in North America
in 2023 to continue to grow and capitalize on the significantly
increased production capacity at its Red Deer facility over the
long term for the following reasons:
- The positive impact of the Supply
Contract with Ditch Witch including an anticipated total of $3
million USD cash proceeds in 2023 upon meeting certain milestones
related to the transfer of IP.
- The anticipated increasing revenues
and benefits from the exclusive sales agreement with its US
strategic partner, Custom Truck One Source (“Custom Truck”), a
single-source provider of specialized truck and heavy equipment
solutions including sales, rentals, and financing and has an
integrated network of 35 locations across North America that the
Company entered into in 2019.
- Expected increased spending on
infrastructure in North America, particularly in the USA as a
result of the US Infrastructure Bill passed in late 2021.
- The anticipated addition of new and
innovative products to its product lines that will support the
infrastructure, telecommunications and oil and gas industries.
- The Company’s commitment to
continuous improvement of its hydrovac truck design which in the
Company’s view will result in compelling advantages over other
hydrovac trucks currently offered in the market.
- The Company continues to secure key
manufacturing components, including chassis for customers, into
future years through strategic relationships.
- The Company has strengthened its
dealer relationships in both Canada and US to meet the expected
demand increase.
- Expanded North American coverage for maintenance warranty and
repair to better serve customers.
- Increased sales pricing to
customers to reflect changes in material and labour costs.
Limiting factors on the Company’s ability to
meet increased demand include: (i) the possibility of chassis
supply chain interruption due to chip shortages at the chassis
manufacturer level and other supply chain issues related to other
key hydrovac components caused by the COVID pandemic, the Russian
invasion of Ukraine and USA China tensions, Canada China relations,
and China Taiwan tensions; and (ii) general inflationary increases
in components and labour. However, management believes that it will
be able to manage these supply chain issues as a result of
strategic decisions made by the Company.
Financial and Operating
Highlights (in CAD $000’s except per share
data)
|
Three months ended June 30 |
|
Six Months ended June 30 |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
Revenue |
$ |
23,516 |
|
$ |
13,362 |
|
|
$ |
44,547 |
|
$ |
23,301 |
|
Cost of sales |
|
19,554 |
|
|
10,529 |
|
|
|
37,137 |
|
|
18,124 |
|
Gross Profit (1) |
|
3,962 |
|
|
2,833 |
|
|
|
7,410 |
|
|
5,177 |
|
|
|
|
|
|
|
Selling and general administrative expenses |
|
1,951 |
|
|
1,613 |
|
|
|
3,740 |
|
|
3,011 |
|
Depreciation and amortization |
|
358 |
|
|
306 |
|
|
|
690 |
|
|
613 |
|
Finance expense |
|
164 |
|
|
38 |
|
|
|
325 |
|
|
83 |
|
Stock-based compensation |
|
98 |
|
|
39 |
|
|
|
227 |
|
|
92 |
|
(Gain) on disposal of fixed assets |
|
- |
|
|
- |
|
|
|
- |
|
|
(136 |
) |
|
|
|
|
|
|
Income before tax |
|
1,391 |
|
|
837 |
|
|
|
2,428 |
|
|
1,514 |
|
Income tax expense |
|
(337 |
) |
|
(267 |
) |
|
|
(589 |
) |
|
(470 |
) |
|
|
|
|
|
|
Net income |
$ |
1,054 |
|
$ |
570 |
|
|
$ |
1,839 |
|
$ |
1,044 |
|
|
|
|
|
|
|
Net income per share - basic |
$ |
0.008 |
|
$ |
0.004 |
|
|
$ |
0.014 |
|
$ |
0.008 |
|
Net income per share - diluted |
$ |
0.008 |
|
$ |
0.004 |
|
|
$ |
0.013 |
|
$ |
0.008 |
|
|
|
|
|
|
|
EBITDAS (1) |
$ |
2,011 |
|
$ |
1,220 |
|
|
$ |
3,670 |
|
$ |
2,166 |
|
EBIT (1) |
$ |
1,555 |
|
$ |
875 |
|
|
$ |
2,753 |
|
$ |
1,597 |
|
|
|
|
|
|
|
Total assets |
$ |
45,766 |
|
$ |
29,866 |
|
|
$ |
45,766 |
|
$ |
29,866 |
|
Shareholders Equity |
$ |
18,035 |
|
$ |
13,368 |
|
|
$ |
18,035 |
|
$ |
13,368 |
|
1 Gross Profit, EBITDAS and EBIT are a non-IFRS financial
measures and readers are cautioned that none of Gross Profit,
EBITDAS or EBIT should be considered to be more meaningful than Net
Income determined in accordance with IFRS.
About Tornado Global Hydrovacs
Ltd.Tornado is a pioneer and leader in the vacuum truck
industry and has been a choice of utility and oilfield
professionals with over 1,200 hydrovacs sold since 2005. The
Company designs and manufactures hydrovac trucks as well as
provides heavy duty truck maintenance operations in central
Alberta. It sells hydrovac trucks to excavation service providers
in the infrastructure and industrial construction and oil and gas
markets. Hydrovac trucks use high pressure water and vacuum to
safely penetrate and cut soil to expose critical infrastructure for
repair and installation without damage. Hydrovac excavation methods
are quickly becoming a standard in the North America to safely
excavate in urban areas and around critical infrastructure greatly
reducing infrastructure damage and related fatalities. In China,
the Company’s subsidiary is used principally to source certain
parts to the Company’s North America operations.
For more information about Tornado Global
Hydrovacs Ltd., visit www.tornadotrucks.com or contact:
Brett NewtonPresident and Chief
Executive OfficerPhone: (587) 802-5070Email: bnewton@tghl.ca |
|
|
|
AdvisoryCertain statements
contained in this news release constitute forward-looking
statements and future oriented financial information. These
statements relate to future events. All statements other than
statements of historical fact are forward-looking statements or
future oriented financial information. The use of the words
“anticipates”, “should”, ‘‘may”, “expected”, “expects”, “believes”
and other words of a similar nature are intended to identify
forward-looking statements or future oriented financial
information. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements or, as applicable, future oriented
financial information. Although Tornado believes these statements
to be reasonable, no assurance can be given that these expectations
will prove to be correct and such forward-looking statements and
future oriented financial information included in this news release
should not be unduly relied upon. Such statements include those
with respect to:
- the expectation that the Company’s
production and sales of hydrovac trucks in North America in 2023
will continue to grow;
- the expectation of a positive
impact from the Supply Contract with Ditch Witch and receipt of an
anticipated total $3 Million USD cash proceeds in 2023 upon meeting
certain milestones related to the transfer of IP;
- management’s belief in the
increasing revenues and benefits from the exclusive sales agreement
with its US strategic partner;
- the Company’s estimate of aggregate
gross revenue in the amount of $44 million USD from the Supply
Contract;
- the anticipated development and
supply of the customized hydrovac trucks to be delivered by the
Company over a four-year period commencing in fiscal year 2022 and
ending in fiscal year 2025;
- the expectation that the US
Infrastructure Bill will lead to an increase in infrastructure
spending;
- the Company’s outlook for the 2023
fiscal year generally;
- the expectation that the improving
economic environment is expected to continue through 2023;
- the expectation of adding new and
innovative products to its product lines that will support the
infrastructure, telecommunications and oil and gas industries;
- management’s belief that the
Company’s commitment to continuous improvement of its hydrovac
truck design will continue to provide compelling advantages over
other hydrovac trucks currently offered in the market;
- management’s belief of its
continuing ability of securing key manufacturing components,
including chassis, for customers into future years through
strategic relationships;
- management’s belief in the positive
impact of strengthened dealer relationships in both Canada and
US;
- management’s belief in the positive impact of expanded North
American coverage for maintenance warranty and repair;
- management’s belief in the positive
impact of increased sales pricing to customers to reflect changes
in material and labour costs; and
- the Company’s ability to meet
increased demand may be limited by factors including (i) the
possibility of chassis supply chain interruption due to chip
shortages at the chassis manufacturer level and other supply chain
issues related to other key components caused by the COVID
pandemic, the Russian invasion of Ukraine and USA China tensions,
Canada China relations, and China Taiwan tensions; and (ii) general
inflationary increases in components and labour. Management’s
belief that it will be able to manage these supply chain issues as
a result of strategic decisions made by the Company.
These statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking statements. Actual results could differ
materially from those anticipated in these forward-looking
statements as a result of prevailing economic conditions, and other
factors, many of which are beyond the control of Tornado. Although
Tornado believes these statements to be reasonable, no assurance
can be given that these expectations will prove to be correct and
such forward-looking statements included in this news release
should not be unduly relied upon. The forward-looking statements
contained in this news release represent Tornado’s expectations as
of the date hereof and are subject to change after such date.
Tornado disclaims any intention or obligation to update or revise
any forward-looking statements whether as a result of new
information, future events or otherwise, except as may be required
by applicable securities regulations.
The future oriented financial information
regarding the Company’s estimate of aggregate gross revenue in the
amount of USD$44 million from the Supply Contract contained in this
news release was approved by management as of the date hereof and
is based on certain assumptions that management believes are
reasonable in the circumstances including (i) the demand for
hydrovac trucks, (ii) the ability of the Company to fulfil its
obligations under Supply Contract; and (iii) the anticipated
purchase price to be paid for hydrovac trucks. The purpose of the
future oriented financial information contained herein is to
disclose the anticipated economic value of the Supply Contract and
readers are cautioned that such information may not be appropriate
for other purposes.
Neither the Exchange nor its Regulation
Service Provider (as that term is defined in policies of the
Exchange) accepts responsibility for the adequacy or accuracy of
this news release.
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