Petrowest Corporation announces third quarter 2015 financial results

CALGARY, Nov. 12, 2015 /CNW/ - Petrowest Corporation ("Petrowest") (TSX:PRW) announced today its consolidated financial results for the three and nine month periods ended September 30, 2015.

Rick Quigley, Chief Executive Officer, stated that "Petrowest is entering an exciting time period with the development of BC Hydro's Site C facility, including submitting our main civil works bid with our partners Acciona Infrastructure Canada Inc. and Samsung C&T Corporation as at October 9. Our strategy of operating a diversified business model has also strongly positioned the Company to benefit from the expected increased infrastructure developments in both Alberta and British Columbia. During the quarter, Petrowest benefited from site preparation work for the Site C hydro-electric project, strong revenue contribution from our Civil division and cost saving initiatives implemented by the Company. These initiatives have helped the Company minimize the impact of the slowdown in our energy related operations and resulted in Adjusted EBITDA of $9.6MM (14.7% Adjusted EBITDA margin) which compares to the same quarter in 2014 of 15.0% Adjusted EBITDA margin." Approximately 40% of Petrowest's total revenue from operations is directly related to Western Canadian oil and gas activity, with 100% of this exposure relating to liquids rich natural gas drilling activity. Of note, both the Civil division and certain parts of the Transportation division are not as sensitive to commodity prices.

KEY QUARTERLY HIGHLIGHTS

During the third quarter, Petrowest benefited from increased infrastructure projects in British Columbia and Alberta, including site preparation work for the Site C hydro-electric project in British Columbia.  Petrowest previously announced that it had been awarded a sub-contract on the workforce housing facility for the Site C hydro-electric project in northeastern British Columbia. The project commenced during the first week of August and is now nearing completion. In addition, Petrowest, along with Acciona Infrastructure Canada Inc. and Samsung C&T Corporation, have now submitted the main civil works technical and financial bids as at October 9, 2015, as per www.sitecproject.com. In 2014 the Company, along with Acciona Infrastructure Canada Inc. and Samsung C&T Corporation, were selected as one of four consortia qualified to bid to provide the main civil work.

The Construction division benefited from the increased infrastructure activity alongside active liquids rich natural gas drilling activity in northwestern Alberta and northeastern British Columbia over the quarter. In addition, the decrease in sub-contractor expenses helped contribute to a strong Gross Margin Percentage for the third quarter.

Activity levels in the Civil division remained strong during the third quarter. The mobile aggregate rock crushing services operated at, or near, full capacity for the majority of the third quarter, and are expected to remain operating at, or near, capacity for the remainder of the crushing season.

Finally, as a continuation of the Company's cost cutting initiatives, the Grande Prairie office building was sold, and additional G&A cut backs were implemented, including office employee reductions, salary freezes and price negotiations with various vendors.

FINANCIAL HIGHLIGHTS

In the three months ended September 30, 2015 compared to the same quarter in 2014, the Company:

  • Reported revenue of $65.3 million, a decrease of $24.4 million compared to the same quarter in 2014,
  • Reported Adjusted EBITDA of $9.6 million compared to an Adjusted EBITDA of $13.5 million for the same quarter in 2014,
  • Reported Adjusted EBITDA margin percentage of 14.7% compared to 15.0% for the same quarter in 2014,

In the nine months ended September 30, 2015 compared to the same quarter in 2014, the Company:

  • Reported revenue of $146.0 million, a decrease of $60.2 million compared to the same period in 2014,
  • Reported Adjusted EBITDA of $10.6 million compared to an Adjusted EBITDA of $27.6 million for the same period in 2014,
  • Reported Adjusted EBITDA margin percentage of 7.3% compared to 13.4% for the same period in 2014.

FINANCIAL RESULTS


Three months ended
September 30,

Nine months ended
September 30,

($000's)

2015

2014

2015

2014

Revenue

65,295

89,711

146,012

206,210

Operating expense

54,214

73,959

130,684

172,622

Gross margin

11,081

15,752

15,328

33,588

General and administrative

1,487

2,281

4,711

6,028

Adjusted EBITDA

9,594

13,471

10,617

27,560

Amortization of property and equipment

7,990

5,400

23,118

15,234

Amortization of intangible assets

150

148

434

436

Share based compensation

437

333

1,395

978

(Gain) loss on disposal of property and equipment

(246)

184

(349)

40

Foreign exchange gain

(5)

(80)

Operating profit (loss)

1,268

7,406

(13,901)

10,872

Net finance expense

1,063

1,306

3,608

3,444

Net income (loss) and comprehensive income (loss)

before income tax

205

6,100

(17,509)

7,428

Current income tax (recovery) expense

317

317

Deferred income tax (recovery) expense

(1,095)

1,495

(4,538)

1,534

Net income (loss) and comprehensive income (loss)

983

4,605

(13,288)

5,894






Total assets

182,052

176,753

182,052

176,753

Total long term liabilities

73,553

42,009

73,553

42,009

Funds from Operations

8,427

12,309

7,186

24,540

OPERATIONAL OUTLOOK

Looking forward, Petrowest is approaching an exciting period with major industry transformational events approaching which include:

  • the impact of the proposed "Site C hydro-electric project", where in addition to the potential additional work associated with Site C due to Petrowest's local presence, Petrowest is also short-listed as part of one of four consortia qualified to bid on the main civil works;
  • continued activity in northeastern British Columbia, the area with the largest growth potential, where the impact of the proposed future liquefied natural gas ("LNG") facilities are already being realized by the Company in regards to increased drilling activity and basic infrastructure construction;
  • expected increased infrastructure activity, including both roadbuilding and civil construction, following the completion of both provincial and federal elections; and
  • stronger demand in the forestry industry driven component of the business partly due to a weakened Canadian dollar.

With regards to LNG, Petrowest continues to see encouraging signs for both current and future opportunities. With an increasing global demand for LNG and more favorable global pricing, the industry continues to work towards becoming a global supplier. Currently there are several projects proposed to provide liquefaction and export of natural gas.  In addition, there are several gas pipelines proposed to be built from northeastern British Columbia to the coast as noted at https://engage.gov.bc.ca/lnginbc/lng-projects/. As a local contractor, Petrowest is strongly positioned to benefit from the increased development projects within British Columbia, in addition to our long-standing customer relationships with most of the significant natural gas producers.

In addition, Petrowest has updated its corporate presentation which can be found at www.petrowestcorp.com.

SELECTED FINANCIAL INFORMATION AND NON-IFRS MEASURES

Selected financial information for the three and nine month periods ended September 30, 2015 and 2014 is set out above and includes the following non-IFRS financial measures: Gross margin, Gross margin percentage, Adjusted EBITDA, Adjusted EBITDA margin percentage and Funds from (used in) Operations. This information should be read in conjunction with the consolidated financial statements for the three and nine months ended September 30, 2015 and the Company's Management, Discussion and Analysis ("MD&A"), available under the Company's profile on the SEDAR website at www.sedar.com. Further information respecting the non-IFRS financial measures is contained in the Company's MD&A.

FORWARD LOOKING INFORMATION

This news release contains forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are identified by their use of terms and  phrases such as "anticipate",  "achievable",  "believe", "expect",  "estimate",  "plan",  "intend",  "project",  "may",  "should",  "could",  "predict",  "will",  or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements and information are based on Petrowest's current beliefs as well as assumptions made by and information currently available to Petrowest concerning anticipated business performance. Although management of Petrowest considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking statements are subject to many external variables that are beyond Petrowest's control, such as fluctuating prices for crude oil and natural gas, changes in drilling activity, and general local and global economic, political, business and weather conditions. If any of these or other uncertainties materialize, the actual results of Petrowest may vary materially from those expected.

ABOUT PETROWEST

Petrowest is an Alberta corporation involved in both industrial and civil infrastructure projects, as well as pre-drilling and post-completion energy services, gravel crushing and hauling for non-energy sector customers. Petrowest's primary operations are based in northwestern Alberta and northeastern British Columbia.

SOURCE Petrowest Corporation

For further information: please contact Nikolaus Kiefer, Vice President of Investor Relations & Corporate Development at (403) 384-0405 or info@petrowest.com.

RELATED LINKS
www.petro-west.com

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