Petrowest Corporation announces year end 2014 financial results

CALGARY, March 17, 2015 /CNW/ - Petrowest Corporation ("Petrowest") (TSX:PRW) announced today its consolidated financial results for the three months and year ended December 31, 2014.

Rick Quigley, Chief Executive Officer, stated that "Our financial results for 2014 reflect the strong start to the year in all divisions, the record revenue and Adjusted EBITDA in the Civil division and the effect, in the fourth quarter, on certain of our operations, of the significant reduction in the price of crude oil and the natural gas environment. We continued to strengthen our balance sheet during 2014, completing an equity financing and further improving the size and flexibility of our credit facilities.  Our working capital balance was $30.0 million at December 31, 2014.  We also significantly grew our assets, completing multiple acquisitions in 2014, in anticipation of continued strong activity in the areas in which we operate.  The execution of the 2014 acquisitions resulted in $0.8 million in one time non-recurring business development costs, which means there's room for improvement on our margins.  However, with reduced activity levels in the oil and gas industry thus far in 2015, we expect some margin compression in certain segments of our operations in the near term, particularly in the Construction division and in the newly-acquired businesses. In order to mitigate the effect on margins, we have focused on controlling operating and discretionary capital costs. Initiatives taken by Petrowest include a reduction in headcount, primarily through the contract workforce, salary rollbacks at certain operating divisions, hiring and salary freezes, deferral of bonus payments, deferral of non-essential capital spending and minimizing discretionary expenditures." Mr. Quigley further stated that, "With our diversified customer base within the energy, forestry, industrial and government sectors, our fleet size and the quality of personnel, we believe we are well positioned in the current market environment.  We will continue to work to maximize the synergies expected to be achieved as a result of the acquisitions. On the Civil side of our operations, the backlog remains strong and activity is expected to ramp up in the second quarter of the year. In addition, the log haul part of our Transportation division should also remain strong.  Further, we are well positioned for work related to both the Site C hydro-electric project and future LNG related activities."

FINANCIAL HIGHLIGHTS

In the year ended December 31, 2014 the Company:

  • Reported revenue of $269.3 million, an increase of $37.5 million over 2013
  • Reported Adjusted EBITDA of $34.9 million compared to $32.6 million in 2013
  • Reported Adjusted EBITDA margin of 13.0% compared to 14.1% in 2013
  • Completed the sale, on a "bought-deal" basis, of 18,400,000 class A common shares at a price of $1.25 per share, for aggregate gross proceeds of $23.0 million
  • Completed an amendment on the revolving operating credit facility to increase the maximum facility amount to $40.0 million and to extend the maturity date to August 20, 2017, followed by the refinancing of all the credit facilities on January 23, 2015 with a three-year syndicated credit agreement which includes a $50.0 million revolving reducing term loan and a $40.0 million revolving credit facility, plus an accordion feature which may increase availability under either the term loan or the revolving credit facility by a maximum of $30.0 million, subject to borrowing base availability
  • Completed the acquisition of Enviro-Mulch Land Clearing Solutions Ltd. in May 2014
  • Completed the acquisitions of CJM Trucking Ltd., Trans Carrier Ltd. and Trans Carrier Rentals Ltd. in October 2014
  • Completed construction of the $78.0 million Highway 43 twinning project
  • Recognized an impairment charge on goodwill and intangible assets of $8.5 million due to the decline in commodity pricing and the reduced outlook in customer activity
  • Reported record revenue and Adjusted EBITDA in the Civil division

FINANCIAL RESULTS


Three months ended
December 31

Year ended
December 31,

($000's)

2014

2013

2014

2013

Revenue

63,124

63,200

269,334

231,873

Operating expense

54,707

53,471

227,329

193,007

Gross margin

8,417

9,729

42,005

38,866

General and administrative

1,071

1,997

7,099

6,217

Adjusted EBITDA

7,346

7,732

34,906

32,649

Amortization of property and equipment

7,682

5,278

22,916

20,433

Amortization of intangible assets

175

100

611

457

Impairment

8,471

8,471

Share-based compensation

453

447

1,431

1,112

Gain on disposal of property and equipment

(196)

(103)

(156)

(432)

Foreign exchange loss

642

Operating profit

(9,239)

2,010

1,633

10,437

Net finance expense

1,718

1,198

5,162

11,157

Loss on fair value of financial instruments

6

Net income (loss) and comprehensive income (loss) before income tax

(10,957)

812

(3,529)

(726)

Deferred income tax expense (recovery)

85

215

1,619

(142)

Net and comprehensive income (loss)

(11,042)

597

(5,148)

(584)






Total assets

192,291

140,295



Total long-term liabilities

68,012

54,181



Funds from Operations

7,988

6,034

30,908

24,686

SELECTED FINANCIAL INFORMATION AND NON-IFRS MEASURES

Selected financial information for the three and twelve month periods ended December 31, 2014 and 2013 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 Operations. This information should be read in conjunction with the consolidated financial statements for the year ended December 31, 2014 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

Certain of the statements made in this news release constitute forward-looking information, including statements respecting expected future operating results, expected future activity levels in Petrowest's divisions, expected benefits from the acquisitions completed in 2014, expectations respecting the future competitive position of such business divisions, and statements as to future economic and operating conditions. Readers should review the cautionary statement respecting forward-looking information that appears below. Any forward-looking statements are made as of the date hereof and Petrowest does not undertake to publicly update and revise such statements to reflect new events, subsequent events or otherwise, except as required by applicable securities legislation.

Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by oil and gas producers and explorers), fluctuations in prevailing commodity prices or currency and interest rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of Petrowest's various business divisions to attract and maintain key personnel and other qualified employees, inherent risks associated with the conduct of the businesses in which Petrowest's business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities. Forward-looking information concerning future operating results, future activity levels in Petrowest's divisions and exepected benefits from the 2014 acquisitions is based on the current budget of Petrowest (which is subject to change), factors that affected the historical growth of such business divisions, sources of historic growth opportunities and expectations relating to future economic and operating conditions. Forward-looking information concerning the future competitive position of Petrowest's business divisions is based upon the current competitive environment in which those business divisions operate, expectations relating to future economic and operating conditions and current and announced build programs and other expansion plans of other organizations that operate in the energy service business. Forward-looking information concerning future economic and operating conditions is based upon historical economic and operating conditions and opinions of third-party analysts respecting anticipated economic and operating conditions.

Although management of Petrowest believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this news release. All of the forward-looking statements of the Corporation contained in this news release are expressly qualified, in their entirety, by this cautionary statement.

ABOUT PETROWEST

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

SOURCE Petrowest Corporation

For further information: Richard Quigley, President and Chief Executive Officer, at (780) 830-0881, or; Lloyd Wiggins, Chief Financial Officer, at (403) 384-0402, or info@petro-west.com.

RELATED LINKS
www.petro-west.com

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