Mosaic Capital Corporation Reports Q3 2016 Financial Results

CALGARY, Nov. 22, 2016 /CNW/ - Mosaic Capital Corporation ("Mosaic" or the "Company") (TSX–V Symbols: M, M.PR.A and M.DB) has released its unaudited consolidated financial statements for the three months and nine months ended September 30, 2016.

Selected Highlights

NOTE: During 2015, Mosaic divested two portfolio companies, Streamline Mechanical and Polar Geomatic.  Pursuant to IFRS, the results of these discontinued operations and gains (losses) on divestiture are reported separately in the Consolidated Statement of Income and Comprehensive Income as "(loss) income from discontinued operations".


3 Months Ended September 30

9 Months Ended September 30

All amounts are in thousands except %

2016

2015

% Change

2016

2015

% Change

Revenue(2)

$57,811

$51,743

+12%

$146,325

$133,897

+9%

Income from operations (2)

$6,696

$5,613

+19%

$16,787

$15,574

+8%

Adjusted EBITDA (1)(2)

$7,051

$5,613

+26%

$17,178

$15,634

+10%

Cash Flow Prior to Changes In Non-Cash Working Capital (3)

$5,482

$5,304

+3%

$15,263

$14,331

+7%

Free Cash Flow (1)(2)

$4,353

$3,637

+20%

$10,907

$10,468

+4%

Increase (Decrease) In Free Cash Flow Per Common Share (Fully Diluted) (2)

+23%



+7%



Net Income and Comprehensive Income Attributable to Shareholders (3)

$1,782

$1,353

+32%

$5,987

$2,031

+195%

Adjusted Return on Common Equity (rolling 12 months) (1)(2)




4%

32%


Preferred Distribution Payout Ratio (1)(2)

75%

90%


90%

90%


Combined Payout Ratio (1)(2)

95%

113%


114%

114%


Notes:

1.

These non-IFRS financial measures do not have any standardized meaning under IFRS, may not be comparable to similar measures presented by other issuers and are defined and reconciled to their most directly comparable IFRS measure within our Management's Discussion and Analysis for the three months and nine months ended September 30, 2016 under the sections "Non-IFRS Financial Measures" and "Reconciliation of Non-IFRS Financial Measures", which document is available electronically at www.sedar.com under Mosaic's profile.

2.

Excludes results from discontinued operations for Q3 2015.

3.

Includes results from discontinued operations for Q3 2015.  

Q3 2016 Financial and Operational Highlights

  • Mosaic welcomed Mark Gardhouse as its new CEO effective July 11, 2016. Mark brings significant private equity investment experience to Mosaic and will lead Mosaic's portfolio growth initiatives.

  • Mosaic completed the acquisition of an 80% interest in Mackow Industries on August 1, 2016.  Mackow is a manufacturer of precision fabricated metal components. Mackow's primary market is North American manufacturers of transit buses and highway motor coaches.

      
  • Mackow Industries' two months of operating results contributed materially to Mosaic's Q3 consolidated financial results.  The balance of the portfolio companies combined operating results were generally consistent with the prior quarter.

  • The Preferred and Combined Payout Ratios improved over the comparable quarter and were below 100%.

  • Continued strong financial position including $25.5 million cash, $57.3 million working capital and $29.3 million long-term debt as at September 30, 2016.

  • Mosaic continues to see strong acquisition deal flow across a wide range of industries and geographies.

Financial Performance By Segment*
For the Nine Months Ended September 30, 2016

All amounts are in thousands
except %

CONSOLIDATED

Infrastructure

Diversified

Energy

 

Revenue

% of Total

 

% increase (decrease) year

over year

$146,325

100%

 

9%

 

$104,056

72%

 

7%

 

$36,708

25%

 

36%

 

$4,746

3%

 

(43%)

 

Income From Operations

 

% increase (decrease) year
over year

$16,787

 

8%

$12,046

 

1%

$7,438

 

90%

$868

 

(68%)

*Revenue and income from operations attributable to the Real Estate segment are immaterial.

Outlook

During Q3 Mosaic completed the acquisition of Mackow Industries.  This acquisition is the largest in Mosaic's history.  The majority of Mackow's revenues are from fabrication of metal components designed for installation in transit buses and motor coaches.  The majority of these buses and motor coaches are sold into the U.S. market.  We view the North American public and private mass transportation market as having solid long-term fundamentals.  We believe this acquisition is an important addition to Mosaic's portfolio and we anticipate that it will increase Mosaic's future consolidated operating results and geographic and industry diversity.  

In 2016 we expanded our acquisition team, broadened our geographic focus and geared our efforts toward somewhat larger, non-cyclical enterprises.  These realignments are resulting in elevated deal flow activity and quality from across Canada spanning a wide range of industrial sectors.  Mosaic's diverse deal-flow provides the Company an exceptional vantage point to assess which sectors it views as most attractive for investment. 

ABOUT MOSAIC CAPITAL CORPORATION

Mosaic is a Canadian investment company that owns a portfolio of established businesses which span a diverse range of industries and geographies.  Mosaic's strategy is to create long-term value for its shareholders through accretive acquisitions, long-term portfolio ownership, sustained cash flows and organic portfolio growth.  Mosaic achieves its objectives by maintaining financial discipline, acquiring businesses at attractive valuations, performing extensive acquisition due diligence, utilizing creative transaction structuring and working closely with subsidiary businesses after acquisition.

Forward-Looking Information

This news release contains forward-looking information and statements within the meaning of applicable Canadian securities laws (herein referred to as "forward-looking statements") that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  All information and statements in this press release which are not statements of historical fact may be forward-looking statements. The words "believe", "expect", "intend", "estimate", "anticipate", "project", "scheduled", and similar expressions, as well as future or conditional verbs such as "will", "should", "would", and "could" often identify forward-looking statements. In particular this news release may contain forward-looking statements regarding: the anticipated financial and operating performance for Mosaic including the anticipated positive impact of the acquisition of Mackow Industries on consolidated operating results and geographic and industry diversification; and the business strategy and objectives of Mosaic. Such statements or information, if any, are only predictions and reflect the current beliefs of management with respect to future events and are based on information currently available to management.  Actual results and events may differ materially from those contemplated by these forward-looking statements due to these statements being subject to a number of risks and uncertainties. Undue reliance should not be placed on these forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature forward-looking statements involve assumptions and known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other things contemplated by the forward-looking statements will not occur. Some of the assumptions made by Mosaic upon which forward-looking statements are typically based include:  the anticipated number of business owners to exit their businesses over the next ten years; the ability of Mosaic and its subsidiaries to access financing from time to time on favorable terms; current credit facilities will be adequate for managing the current operating needs of Mosaic's subsidiaries; management's belief that all receivables, net of allowances made for doubtful accounts, will be collected; the business operations of the operating businesses of Mosaic continuing on a basis consistent with prior years; the ability of Mosaic to continue to make acquisitions satisfying its criteria and to realize anticipated benefits of acquisitions; the continuation of executive and operating management or the non-disruptive replacement of them on competitive terms; the ability of Mosaic to maintain reasonably stable operating, maintenance and general administrative expenses; the current economic environment in western Canada (including commodity prices, such as oil prices) stabilizing and showing signs of strengthening over the coming year; the economic condition in Canada not deteriorating due to the influence of international economic developments in the United States, Europe, Asia and elsewhere; and continuing solid long-term growth fundamentals in the North American mass transportation market.

A number of factors could cause actual results to differ materially from the results stated in the forward-looking statements, including, but not limited to, risks related to: general economic and business conditions; the failure of Mosaic to identify acquisition targets or complete announced acquisitions; third parties honouring their contractual obligations with Mosaic and its subsidiaries; results of management's ongoing efforts to sell, re-lease, lease, develop and improve real estate owned and being acquired indirectly by Mosaic through its subsidiaries; the failure to realize the anticipated benefits of Mosaic's recent and future acquisitions; adverse fluctuations in commodity prices; competition for, among other things, capital, equipment and skilled personnel; the inability to generate sufficient cash flow from operations to meet current and future obligations; the inability to obtain required debt and/or equity capital on suitable terms; competition for acquisition targets; supply disruptions; adverse weather conditions; seasonality and fluctuations in results; and limited diversification of Mosaic's subsidiaries. Should any of the risks or uncertainties facing Mosaic and its subsidiaries materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, activities or achievements could vary materially from those expressed or implied by any forward-looking statements contained in this news release.

Readers are cautioned that the foregoing list of risks is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Mosaic and its subsidiaries are included in Mosaic's annual information form for the year ended December 31, 2015 which has been filed under Mosaic's profile on SEDAR (www.sedar.com).

Although Mosaic believes that the expectations represented by any forward-looking-statements contained herein are reasonable based on the information available to them on the date of this news release, management cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. Any forward-looking statements herein contained are made as of the date of this press release and Mosaic does not assume any obligation to update or revise them to reflect new information, events or circumstances, except as required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE MOSAIC CAPITAL CORPORATION

For further information: Allan Fowler, Chief Financial Officer, Mosaic Capital Corporation, 400, 2424 - 4th Street SW, Calgary, AB T2S 2T4, Tel: (403) 270-4663


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