FORT ST. JOHN, British Columbia, Nov. 23, 2017 (GLOBE NEWSWIRE) -- Macro Enterprises Inc. (TSX VENTURE:MCR) -
| Summary of financial results | |||||||||||
| (thousands of dollars except per share amounts) | |||||||||||
| Three months ended September 30 | Nine months ended September 30 | ||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||
| (unaudited) | |||||||||||
| Revenue | $ | 39,098 | $ | 19,817 | $ | 77,083 | $ | 33,028 | |||
| EBITDA1 | $ | 2,338 | $ | 509 | $ | 2,456 | $ | (4,404 | ) | ||
| Net earnings | $ | 919 | $ | (1,024 | ) | $ | (1,396 | ) | $ | (7,588 | ) |
| Net earnings (loss) per share | $ | 0.03 | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.25 | ) |
| Weighted average common shares outstanding (thousands) | 30,278 | 30,120 | |||||||||
Note 1 - References to EBITDA are to net income from continuing operations before interest, taxes, amortization and impairment charge. EBITDA is not an earnings measure recognized by International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning prescribed by IFRS. Management believes that EBITDA is an appropriate measure in evaluating the Company’s performance. Readers are cautioned that EBITDA should not be construed as an alternative to net income (as determined under IFRS) as an indicator of financial performance or to cash flow from operating activities (as determined under IFRS) as a measure of liquidity and cash flow. The Company’s method of calculating EBITDA may differ from the methods used by other issuers and, accordingly, the Company’s EBITDA may not be comparable to similar measures used by other issuers.
Highlights
- The Company continues to materially exceed industry standard safety averages. As at September 30, 2017 Macro Enterprises has now exceeded 17 quarters and 3.4 million man hours worked without a single lost time injury.
- The Company announced that the joint venture in which it has a 50% interest signed a $375 million phased reimbursable type contract for construction work on the Trans Mountain Expansion Project.
- Revenues for the quarter exceeded total revenues recognized during the first 6 months with $3.2 million in positive cash flows from operations being generated.
- Total working capital as at September 30, 2017 was $45.5 million of which $19.2 million was held in cash. The Company continues to remain unleveraged and undrawn on its credit facilities.
- The Company has acquired 120,900 common shares under its NCIB.
- The Company is reporting shareholders’ equity of $80.6 million or $2.65 per share based on weighted average common shares outstanding as at September 30, 2017.
- Subsequent to period end, the Company made a $1.5 million investment for a 10% interest in a private Canadian company with expertise in tunnel boring.
Third Quarter Results
Consolidated revenue was $39.1 million and significantly greater than the $19.8 million reported in the third quarter last year. Total revenues recognized during the third quarter were greater than total revenues booked during the first six months of the current year and were greater than the total revenue recognized during the first nine months of fiscal 2016. The significant increase in revenues during the quarter was anticipated as a result of higher activity in the oil & gas industry generally. However, market conditions, commodity uncertainty and permitting issues will continue to impact overall activity levels in the foreseeable future. The majority of revenue recognized during the quarter related to a number of pipeline construction jobs and completing work on 3 larger facility jobs started in previous quarters. The remaining revenues related to maintenance and integrity work performed under existing master service agreements. In the third quarter last year, revenue primarily related to non-discretionary maintenance and integrity work performed under master service agreements.
Operating expenses were $34.3 million or 88% of revenue compared to $16.8 million or 85% of revenue in the third quarter last year. The Company’s operating margins remained higher than historical averages due to continuing competitive pricing pressure together with rising variable and fixed costs. In addition, the Company incurred pre-job spending and business development costs on project work anticipated to commence in the fourth quarter and go well into the new fiscal year. All aspects of the Company’s operations are being monitored and streamlined in order to realize efficiencies and costs savings while ensuring the highest degree of health, safety and environmental standards are maintained.
General and administrative expenses were $1.5 million, up $215,000 and representing a 16% increase from the $1.3 million incurred prior year. The increase is a result of increased operations and the Company actively scaling its business to accommodate prospective growth. However, as a result of uncertain market conditions, the Company will continue its efforts to contain its overhead costs while maintaining its business development plans.
Depreciation of property, plant and equipment was $1.4 million and down slightly from prior year’s third quarter. The decrease was a result of reduced capital expenditures being made and the aging of the Company’s existing fleet of equipment. Depreciation is calculated at various declining balance methods across the Company’s multiple categories of property, plant and equipment and is used in guiding the annual capital expenditure estimates. Residual values, methods of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.
During the third quarter the Company recognized a non-cash loss of $1.3 million on the mark-to-market re-measurement of its preferred shares at period end. This loss resulted from a 43% appreciation in the weighted average share price of its common shares between the second and third quarter of fiscal 2017.
During the third quarter the Company recognized non-cash stock-based compensation charges of $12,000 relating to options granted in prior years.
Finance costs of $215,000 were higher than prior year but remained in-line with its prior quarters’ fees. The increase over third quarter 2016 was due to the premium fees and expenses paid to its banking syndicate for two waivers and amendments made under its senior secured credit facility. However, also included in the finance costs were $72,000 of amortized deferred transaction costs relating to the establishment of the credit facility and $42,000 of effective interest rate payments made on its preferred shares. The Company anticipates its future finance fees will decrease as a result of its improved operations.
Income tax recovery in the quarter of $0.2 million was in line with current enacted tax rates of approximately 26%.
Net income was $0.9 million ($0.03 per share) compared to a net loss of ($1.0) million (($0.03) per share) recognized during the three months ended September 30, 2016. The increase to a net income position was a result of increased industry activity with new larger projects for the Company commencing during the quarter. Off-setting net income was a $1.3 million non-cash charge recorded for the mark-to-market adjustment to its preferred shares.
Outlook
With a solid balance sheet, enhanced liquidity and its industry leading health, safety and environmental practices, the Company is in excellent financial shape to address the continued market and commodity price volatility.
The Company will maintain its focus on working with blue chip pipeline owners and operators to carry out their construction and maintenance programs across Canada.
The Company’s fourth quarter revenues are estimated to be lower than in the third quarter but higher than the first two quarters of the year with margins expected to continue to improve. Recurring revenues from its existing master service agreements and the continuation of the pipeline work commenced during the third quarter will represent the bulk of activity for the balance of the calendar year.
During the third quarter the Company announced that its 50/50 joint venture with Spiecapag Canada Corp. successfully negotiated and executed a construction contract with Trans Mountain Pipeline L.P. for pipeline construction work on the Trans Mountain Expansion Project.
The contract is for the construction of approximately 85 kilometers of 36 inch pipeline along the Coquihalla-Hope corridor in British Columbia referred to as pipeline “Spread 5B”. Construction is expected to last two years, with field construction to commence once the regulatory requirements for construction of the project have been satisfied. The reimbursable type contract will be phased and has an initial estimated contract value of approximately $375 million.
The joint venture has begun its planning for the construction work. The planning now being performed is included as part of the work under the contract.
Forward Looking Statements
Certain statements in this news release may include forward-looking information that involves various risks and uncertainties. These may include, without limitation, statements regarding expected revenues, expenses and industry trends and the pursuit of strategic acquisitions. These risks and uncertainties include, but are not restricted to, global economic conditions, government regulation of energy and resource companies, seasonal weather patterns, maintaining and increasing market share, terrorist activity, the price and availability of alternative fuels, the availability of pipeline capacity, and potential instability or armed conflict in oil producing regions. These risks and uncertainties may cause actual results to differ from information contained herein. There can be no assurance that such forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These statements are based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.
| For further information please contact: | ||
| Frank Miles President and C.E.O. Phone: (250) 785-0033 | Jeff Redmond C.F.O. (250) 785-0033 | |
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