Canadian Equipment Rental Fund Limited Partnership Announces September 30, 2011 Results
TSX Venture Symbol: CFL
CALGARY, Nov. 28, 2011 /CNW/ - Mr. Wayne Wadley, President of CERF GP Corp., the general partner (the "General Partner") of Canadian Equipment Rental Fund Limited Partnership ("CERF LP" or the "Partnership"), is pleased to announce the results for the three and nine months ended September 30, 2011.
Full details of the Partnership's results, in the form of the unaudited condensed interim consolidated financial statements and notes thereto for the three and nine months ended September 30, 2011 and Management's Discussion and Analysis of the results dated November 23, 2011 are available on SEDAR at www.sedar.com and on the Partnership's website at www.cerfcorp.com.
Highlights of the three and nine months ended September 30, 2011 were:
Revenues increased 77% to $17,688,218 for the nine months ended
September 30, 2011 from $10,013,343 for the nine months ended September
Net income increased to $1,157,866 for the nine months ended September
30, 2011 compared to a loss of $(292,609) for the same period in 2010.
Net income in 2011 was reduced by a onetime charge of $193,838 related
to the cost of converting to a public corporation on October 1, 2011.
EBITDA increased 63% to $5,128,492 for the nine months ended September
30, 2011 compared to $3,139,869 for the same period in 2010.
Acquisition of Maplethorpe Contractors Ltd. ("MCL"), a private
integrated waste management company, was completed on April 29, 2011.
The acquisition of MCL is considered to be immediately accretive to the
Partnership's operations and significant synergies are expected to be
realized in the future. Since the acquisition on April 29, 2011 MCL has
contributed sales revenues of $4,772,539 and net income of $787,438 to
the consolidated results.
Revenues, excluding revenues contributed by MCL, for the quarter ended
September 30, 2011 increased 20% when compared to revenue for the same
quarter of 2010.
Net income per limited partnership unit was $0.04 for the quarter, in
comparison to the 2010 third quarter net loss per unit of $(0.03).
- The Partnership distributed $0.06 per unit for the quarter to unit holders of record as at September 30, 2011. Total distributions for the nine months amount to $0.18 per unit.
On September 29, 2011, the Limited Partnership Unitholders approved a plan of arrangement agreement, (the "Arrangement") among CERF LP, the General Partner, and CERF Incorporated ("CERF Inc."), a wholly owned subsidiary of CERF LP, under Section 193 of the Business Corporations Act (Alberta). The Arrangement resulted in the conversion of CERF LP from a limited partnership to a taxable Canadian corporation, namely CERF Inc. The Arrangement became effective on October 1, 2011.
The Arrangement resulted in CERF Inc. carrying on the businesses presently carried on by CERF LP. The Board of Directors of CERF Inc. is comprised of the previous members of the Board of Directors of the General Partner and the management of CERF Inc. is comprised of the management of the General Partner and the subsidiaries of CERF LP.
The Board of Directors anticipates that there will be no change in distribution policy as a result of completion of the Arrangement and that CERF Inc. will declare cash dividends on a quarterly basis substantially in the same manner as distributions have previously been made by CERF LP prior to the completion of the Arrangement. CERF Inc. expects to designate any dividends paid as "eligible dividends" for Canadian federal income tax purposes, which are anticipated to qualify for the enhanced federal dividend tax credit in Canada.
Unitholders received one common share of CERF Inc. in exchange for each unit held as of October 1, 2011. The Arrangement did not result in any benefits for, or change of control, termination or other payments being made to, any officers, directors or employees of CERF LP or any of its subsidiaries or of the General Partner.
The exchange of units for common shares is expected to have occurred on a tax deferred rollover basis for Unitholders. This information is not intended to be, and should not be construed as, tax advice and Unitholders should consult with financial advisors, legal counsel or accountants regarding the tax consequences of the exchange.
The Board of Directors believes that the Arrangement enabled CERF Inc. to pursue its current strategic plan for the benefit of shareholders. Given the federal government changes to tax legislation regarding SIFTs which, for CERF LP, have been effective since January 1, 2011, resulting in the diminished value of the publicly traded limited partnership structure since that time, the Board of Directors believes that the best opportunity for creating value was to move to a corporate structure effective on October 1, 2011, allowing CERF LP, to thereafter continue as a dividend paying public corporation.
In addition, the Board of Directors believes that the Arrangement provides a number of compelling and strategic benefits including, among other things, the expectation that a conversion to a public corporation would:
remove CERF LP from any uncertainty that exists today in the publicly
traded partnership marketplace;
remove the restrictions on non-resident ownership applicable to
"Canadian partnerships" (as defined in the Income Tax Act (Canada)),
which may provide CERF Inc. greater access to capital and improved
permit CERF Inc.'s financial and operational performance to be more
easily valued relative to its corporate peers;
position CERF Inc. to invest in and structure attractive opportunities
for growth and expansion;
provide for the payment of dividends to shareholders of CERF Inc. with a
view to sustainability while at the same time delivering strong returns
through capital appreciation; and
- be accomplished, from a Canadian federal income tax perspective, on a tax deferred rollover basis for Unitholders.
Mr. Wadley makes the following statements:
"The quarter ended September 30, 2011 resulted in record breaking revenues exceeding $7,000,000. This represents an increase of 114% from the same period last year and an increase of 77% over the corresponding nine month period in prior year. The increase in revenue was due in part to the fact that it was the first full quarter that Maplethorpe Contractors Ltd.'s ("MCL") results were reported in the consolidated results of the Partnership.
Rental operations revenue from 4-Way saw an increase of 20% for Q3 year over year and a 26% increase for the nine months compared to last year. The increased activity that started in late 2010 in the construction, housing and infrastructure sectors continued throughout 2011. We see that trend continuing for the foreseeable future.
The wet weather conditions in May and June gave way to more seasonably drier conditions throughout the quarter which led to a very busy period for MCL as contractors and remediation companies trying to catch up on the backlog of Q2 projects brought increased volumes of waste material to the MCL operated facilities. The MCL acquisition is performing well and is doing what we expected of them. MCL management has identified many strategic opportunities. We are looking forward to growing that segment of our business.
Smart-Way continues to grow both in the Edmonton and Calgary markets as demand for their innovative products and services are being embraced by more and more contractors. For the nine months ended September 30, 2011, revenue from Smart-Way was $1,082,000, an increase of 78% over the same period in 2010.
We continue to work on the integration strategies of our three operating companies as each organization becomes more familiar with the strengths and expertise of their respective sister companies and how they can use those strengths to better service and supply our customers."
CERF LP is an Alberta limited partnership engaged in the rental, sale and service of industrial and construction equipment and provides waste management and environmental services. CERF LP converted to a public corporation on October 1, 2011 which trades on the TSX Venture Exchange under the symbol "CFL" and currently has 9,530,906 shares issued and outstanding.
Certain information contained herein relating to, but not limited to, CERF LP and its businesses, the anticipated completion of the Arrangement and the statements of Mr. Wadley, constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that CERF LP expects or anticipates may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", 'plan", "intend", "target", "project", 'forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Arrangement including, but not limited to, the timing and completion of the Arrangement, the anticipated benefits of the Arrangement, the receipt of the necessary consents and approvals for the Arrangement to proceed, and the anticipated Canadian federal tax treatment of dividends declared and paid on the Common Shares. The risks and uncertainties that may affect the forward-looking statements in this news release include, but are not limited to, the following factors: CERF LP's ability to successfully obtain the regulatory, stock exchange, court and any other third party approvals necessary to complete the Arrangement; the failure to complete the Arrangement and the resulting continued application of the SIFT legislation to CERF LP; the failure to realize the anticipated benefits of the Arrangement; and changes in Canadian federal tax laws. Additional information on risks, uncertainties and factors that could affect CERF LP's operations or financial results is included in its filings with the securities commissions or similar authorities in the provinces of British Columbia, Alberta and Ontario, as may be updated from time to time. Many of the risks described in such filings will also be applicable to CERF Inc. following completion of the Arrangement. Readers are also cautioned that such additional information is not exhaustive. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time.
Although CERF LP believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the information contained herein, as actual results achieved will vary from the information provided herein and the variations may be material. CERF LP makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof and CERF LP does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.
Summarized financial results for the three and nine months ended September 30, 2011 follow:
|CANADIAN EQUIPMENT RENTAL FUND LIMITED PARTNERSHIP|
|Condensed Interim Consolidated Statements of Financial Position|
|Unaudited, in Canadian dollars|
|September 30, 2011||December 31, 2010|
|Cash||$ 1,349,559||$ 5,011,552|
|Prepaid expenses and deposits||231,938||224,351|
|Property and equipment||21,729,322||15,802,840|
|Deferred income taxes||—||155,394|
|Total assets||$ 34,035,929||$ 26,083,459|
|Liabilities and Partners' Equity|
|Bank indebtedness||$ 1,372,016||$ —|
|Accounts payable and accrued liabilities||2,760,767||2,297,724|
|Income taxes payable||582,137||—|
|Current portion of long-term debt||3,355,254||1,714,645|
|Current portion of finance leases||368,556||106,685|
|Obligation under finance leases||4,595,202||4,324,074|
|Deferred income taxes||604,693||—|
|Limited partnership units||17,201,490||14,765,518|
|Unit purchase loans receivable||(309,532)||(374,535)|
CANADIAN EQUIPMENT RENTAL FUND LIMITED PARTNERSHIP
|Statements of Condensed Interim Consolidated Comprehensive Income|
|Unaudited, in Canadian dollars|
Three months ended
Nine months ended
|Equipment rental||$ 2,509,475||$ 2,157,700||$ 8,005,509||$ 6,681,293|
|Sales of equipment, fuel and parts||865,355||632,987||2,978,294||1,989,330|
|Service and other||285,962||253,022||849,714||734,689|
|Direct operating costs||3,589,688||1,468,697||8,464,746||4,393,198|
|Depreciation of operating and rental|
|Cost of sales of equipment, fuel and parts||666,652||465,368||2,342,068||1,454,356|
|General and administrative||792,831||372,598||1,584,931||1,036,478|
|Depreciation of general property and|
|Amortization of intangible assets||103,683||-||172,016||-|
|Income (loss) before income taxes||365,078||(156,934)||1,381,059||(291,395)|
|Income taxes (recovery)||(22,510)||1,264||223,193||1,214|
|Net income and comprehensive income (loss) for the period||$ 387,588||$ (158,198)||$ 1,157,866||$ (292,609)|
|Net income (loss) per unit|
|Basic||$ 0.04||$ (0.03)||$ 0.13||$ (0.05)|
|Diluted||$ 0.04||$ (0.03)||$ 0.13||$ (0.05)|
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