Acasta Reports First Quarter 2017 Results

TORONTO, May 15, 2017 /CNW/ - Acasta Enterprises Inc. (TSX: AEF.B and AEF.WT) ("Acasta" or the "Company") today released its first quarter 2017 results and announced a number of key strategic initiatives, including its seeding of Stellwagen's Senior Loan Fund ("Stelloan") with a US$100 million investment.

First Quarter of 2017 Financial Highlights

  • Net income was $4.2 million, or $0.05 per share
  • Adjusted net income* was $9.3 million, or $0.11 per share
  • EBITDA* was $31.9 million
  • Adjusted EBITDA* was $37.0 million
  • EBITDA Margin* was 34.3%
  • Cash and cash equivalents on hand at March 31, 2017 was $34.1 million

*The calculation of these non-IFRS financial performance measures as well as their reconciliation to data prepared in accordance with IFRS is outlined under "Non-IFRS Financial Performance Measures" below.

Strategic Initiatives
Acasta has secured financing to fund its US$100 million seed investment in Stelloan. Stelloan will provide senior loan financing for Stellwagen's increasing pipeline of commercial aircraft financing opportunities. The Stellwagen Group is a fully-integrated provider of asset management, technical management, and fleet and capital financing solutions to the global aviation industry as well as aviation investors. This investment will allow Stellwagen to make some early investments and enhance its overall investment management platform. It is also expected to also support Stelloan's further fundraising efforts.

Financing for Acasta's seed investment is provided for under a credit facility of up to US$150 million that Acasta has obtained from a group of lenders, including up to US $25 million in aggregate from affiliates of Douglas Brennan and Richard and Charles Wachsberg.

Last week, Acasta announced that Stellwagen has agreed to acquire ECN Capital's commercial aviation finance business ("ECN Aviation"). ECN Aviation is a vertically integrated provider of aviation services. Its experienced US-based team manages a $1.7 billion portfolio of commercial aviation assets on behalf of institutional investors. Its portfolio extends across 30 global airlines and comprises 45 commercial passenger aircraft.  ECN Aviation's complementary expertise and increased distribution capabilities will be synergistically additive to Stellwagen's own capabilities. The acquisition further supports a recurring revenue operating side to Stellwagen. 

A senior and experienced private equity professional will be joining Anthony Melman and Michael Liebrock as founding partners of Acasta's private equity fund, and support corporate development in other parts of Acasta's business.  The Company expects to disclose the name of this professional shortly, when arrangements are finalized.  In addition, in our consumer products business, we are exploring a number of attractive transactions and acquisition opportunities.

"These strategic initiatives represent important advances by Acasta and keep us on track to achieving the vision we presented to our shareholders," said Anthony Melman, Chairman and CEO. "We started in early January by successfully closing our qualifying acquisition of three businesses and are pleased to mark our continued progress in each area of our operations. We see much more on the horizon and look forward to continued progress." 

"This was a good quarter for Acasta, our first quarter reporting financial results as an operating entity," said Ian Kidson, CFO and COO. "While we do not give quarterly guidance, we have provided annual performance targets for the three companies in our current portfolio and at this time, we have no reason to change those previously disclosed estimates. The JemPak and Apollo businesses are reasonably predictable, while the transactional nature of the Stellwagen business means a non-linear revenue and earnings pattern. Management of each business continue to be confident its target will be reached."

First Quarter Results
Acasta's operating companies have been grouped into three segments for reporting purposes, including Consumer Products, Aviation and Other. The results do not include meaningful comparatives from the previous year. This will continue to be an issue for each quarter of fiscal 2017.

The quarter's results reflect the establishment of opening balance sheet accounts. The Company recognizes that it is possible that there may be some adjustments to some balances throughout the year, though does not expect these to be material.

The Consumer Products segment achieved an Adjusted EBITDA of $13.7 million for the first quarter of 2017, while Net Income and Adjusted Net Income were $1.9 million and $4.4 million, respectively. 

For the Aviation segment, Adjusted Net Income of $6.2 million was based on Revenue of $29.2 million for the quarter, while Adjusted EBITDA of $24.5 million was achieved.

On a consolidated basis, Acasta's Net Income was $4.2 million, or 5 cents per share. Adjusted Net Income was $9.3 million, or 11 cents per share for the first quarter of 2017, while the Company achieved Adjusted EBITDA of $37.0 million.   

Our MD&A will provide additional details and breaks down the results from each of the reportable segments in our portfolio.

Acasta's first quarter fiscal 2017 financial statements and MD&A will be available on the company website at www.acastaenterprises.com/investors or on the SEDAR website at www.sedar.com effective May 15, 2017.

First Quarter 2017 Results Conference Call
Acasta's senior management will host a conference call on Monday, May 15, 2017 at 8:30 AM (E.D.T.) to discuss the Company's financial and operating results. Please dial 416-340-2217 or toll-free (Canada/US) 800-806-5484 with passcode 6102819. To ensure your participation, please join approximately five minutes prior to the scheduled start of the conference call.

Replay archive:
The conference call will be archived on the Company's website at www.acastaenterprises.com and will be available for replay at 905-694-9451 or toll-free 800-408-3053 with passcode 6422928, expiring on November 15, 2017.

About Acasta Enterprises Inc.
Acasta Enterprises Inc. is a leading Canadian public company that acquires businesses with exceptional potential for value creation through strategic and transformational initiatives. As a proactive private equity manager, Acasta partners with the senior management teams of its acquired businesses, empowering them to pursue value creating trajectories.

Non-IFRS Financial Performance Measures
Adjusted net income, EBITDA, Adjusted EBITDA and EBITDA Margin are not recognized measures under IFRS and this data may not be comparable to data presented by other companies.

Adjusted net income is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted net income is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.

EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for finance costs, current and deferred income tax, depreciation and amortization expenses. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. EBITDA is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.

Adjusted EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS (the calculation for adjusted net income) and then further adjusting for interest, current and deferred income tax, depreciation and amortization expenses. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted EBITDA is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.

EBITDA Margin is calculated by dividing EBITDA (see calculation outlined above) by total revenue as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss).



 

 

Three Months Ended March 31, 2017


Three Months
Ended
March 31,
2016



Reportable Segments







NON‑IFRS FINANCIAL PERFORMANCE MEASURES
(in thousands of Canadian dollars, except share and
per share amounts)


Consumer
Products


Aviation


Other


Acasta
Consolidated


Acasta
Consolidated

Net income (loss)


$1,869


$4,471


$(2,142)


$4,198


$(8,071)

Gain on redemption of Class A Restricted Voting Shares




(3,699)


(3,699)


Loss on disposal of property, plant and equipment



1,083



1,083


Qualifying Acquisition transaction costs




4,627


4,627


Costs to prepare aircraft for sale



706



706


Net loss (gain) on foreign exchange transactions


244


(25)


(95)


124


Cost of sales increment related to acquisitions


1,946




1,946


Other non‑recurring costs


359




359


Adjusted net income (loss)


$4,418


$6,235


$(1,309)


$9,344


$(8,071)

Net income (loss) per share — basic and diluted








0.05


(0.86)

Adjusted net income (loss) per share — basic and diluted








0.11


(0.86)

Weighted average number of Class B Shares outstanding








85,642,902


9,349,648












Finance costs


$1,046


$5,414


$192


$6,652


$—

Current income tax expense


3,016


1,018



4,034


Deferred income tax recovery


(2,353)


(737)



(3,090)


Depreciation of property, plant and equipment and
amortization of intangible assets


7,555


12,536



20,091


EBITDA


$11,133


$22,702


$(1,950)


$31,885


$(8,071)

Adjusted EBITDA


$13,682


$24,466


$(1,117)


$37,031


$(8,071)

 

ACASTA ENTERPRISES INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(In thousands of Canadian dollars)


As at
March 31,
2017


As at
December 31,
2016

Current assets





Cash and cash equivalents

$34,138


$187


Trade and other receivables

47,077


597


Inventories

30,828



Prepaid expenses and deposits

9,990


25


Restricted cash


405,002


Assets held for sale

26,511



Other current assets

154



$148,698


$405,811

Non‑current assets





Property, plant and equipment

662,654



Intangible assets

332,952



Goodwill

608,590



Other non‑current assets

10,520


710


$1,614,716


$710

Total assets

$1,763,414


$406,521

Liabilities




Current liabilities





Accounts payable and accrued liabilities

$36,879


$8,779


Current portion of long‑term debt

57,770



Class A Restricted Voting Shares subject to redemption


409,342


Income taxes payable

4,170



Liabilities related to assets held for sale

21,672



Other current liabilities

30,515


13,504


$151,006


$431,625

Non‑current liabilities





Long‑term debt

717,691



Deferred tax liabilities

44,252



Other non‑current liabilities

65,029



$826,972


$—

Total liabilities

$977,978


$431,625

Shareholders' equity





Share capital

$822,866


$14,995


Warrants

3,939


3,939


Deficit

(39,840)


(44,038)


Accumulated other comprehensive loss

(1,529)


Total shareholders' equity

$785,436


$(25,104)

Total liabilities and shareholders' equity

$1,763,414


$406,521


 

ACASTA ENTERPRISES INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS
OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands of Canadian dollars, except share and per share amounts)


Three months
ended
March 31,
2017


Three months
ended
March 31,
2016

Revenue

$92,971


$457

Cost of sales, expenses, and other items




Cost of sales

44,714


Selling, general and administrative expense

38,932


478

Finance costs

6,652


Net unrealized (gain) loss on change in fair value of financial liabilities

(236)


8,050

Net loss on foreign exchange transactions

124


Other income, net

(2,357)


Income (loss) before income tax

$5,142


$(8,071)

Current income tax expense

4,034


Deferred income tax recovery

(3,090)


Net income (loss)

$4,198


$(8,071)

Comprehensive income (loss)




Items that may be subsequently reclassified to net income (loss)





Foreign currency translation

$(2,559)


$—


Net movement in cash flow hedges, net of tax

1,030


Other comprehensive loss

$(1,529)


$—

Total comprehensive income (loss)

$2,669


$(8,071)

Net income (loss) per share





Basic

$0.05


$(0.86)


Diluted

$0.05


$(0.86)

Other comprehensive loss per share





Basic

$(0.02)


$—


Diluted

$(0.02)


$—

Weighted average number of Class B Shares outstanding





Basic

85,642,902


9,349,648


Diluted

85,642,902


9,349,648


 

ACASTA ENTERPRISES INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)


Three months
ended
March 31,
2017


Three months
ended
March 31,
2016

Operating activities




Net income (loss)

$4,198


$(8,071)

Adjustments for non‑cash items and other adjustments:





Depreciation of property, plant and equipment

5,822



Amortization of intangible assets

14,269



Gain on redemption of Class A Restricted Voting Shares

(3,699)



Loss on disposal of property, plant and equipment

1,083



Net unrealized (gain) loss on change in fair value of financial liabilities

(236)


8,050


Finance costs (income)

6,652


(457)


Current income tax expense

4,034



Deferred income tax recovery

(3,090)



Net loss on foreign exchange transactions

124



Cost of sales increment related to acquisitions

3,355


Amortization of inventory fair value increment

(13,227)


252

Net cash flows provided by (used in) operating activities

19,285


(226)

Income taxes paid

(3,448)


Cash provided by (used in) operating activities

$15,837


$(226)

Investing activities




Additions to property, plant and equipment

$(299,442)


$—

Additions to intangible assets

(67,881)


Proceeds on disposal of property, plant and equipment

24,989


Interest received on restricted cash held in escrow


462

Proceeds on maturity of restricted cash held in escrow


403,152

Investment in restricted cash and cash equivalents held in escrow


(403,614)

Proceeds from restricted cash to finance acquisitions

106,240


Acquisition of Apollo

(161,545)


Acquisition of JemPak

(55,448)


Acquisition of Stellwagen

(90,772)


Cash used in investing activities

$(543,859)


$—

Financing activities




Proceeds from long‑term debt and credit facilities

$441,182


$—

Repayment of long‑term debt

(26,605)


Payment of debt issuance costs

(5,112)


Proceeds from restricted cash to fund redemption of Class A Restricted Voting
Shares and deferred underwriters' commission

298,761


Redemption of Class A Restricted Voting Shares

(285,680)


Proceeds from private placement of Class B Shares

159,551


Payment of deferred underwriters' commission

(13,081)


Payment of costs related to private placement

(1,075)


Interest paid

(5,968)


Cash provided by financing activities

$561,973


$—

Net increase (decrease) in cash during the period

$33,951


$(226)

Cash and cash equivalents, beginning of period

187


3,096

Cash and cash equivalents, end of period

$34,138


$2,870

 

Cautionary Note Regarding Forward-Looking Statements

This news release may contain forwardlooking statements (within the meaning of applicable securities laws) which reflect Acasta's current expectations regarding future events. Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. These statements are based on Acasta's expectations, estimates, forecasts and projections and include, without limitation, statements regarding the acquisition of ECN Aviation and the benefits expected to be realized therefrom, launch of Acasta's first private equity fund, the expansion of Acasta's private equity team, the expectation that Acasta's private equity team will execute on further acquisitions and investment opportunities in its deal pipeline, and that Acasta's private equity team will generate significant value for Acasta and its private equity fund investors.

The forward-looking statements in this news release are based on certain assumptions, including without limitation, that Acasta's future objectives and strategies to achieve those objectives will not change, including, without limitation, the expected operations, financial results and condition of Acasta following the acquisition of ECN Aviation and the launch of its initial private equity fund, Acasta's plans to pursue additional acquisition opportunities, as well as other statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Acasta has made certain assumptions with respect to, among other things, currency exchange and interest rates and global economic and financial conditions. The forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading "Risk Factors" in Acasta's annual information form for the fiscal year ended December 31, 2016, a copy of which is available on the SEDAR website at www.sedar.com under Acasta's profile. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, Acasta assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SOURCE Acasta Enterprises Inc.

For further information: Acasta Enterprises Inc., Ian Kidson, 647-725-6707, Chief Financial Officer and Chief Operating Officer

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