WesternOne Inc. Reports 2015 Q2 Results and Announces an Amended Term Credit Facility and Reduction of Bank Indebtedness

VANCOUVER, Aug. 6, 2015 /CNW/ - WesternOne Inc. ("WesternOne") (Toronto Stock Exchange: WEQ, WEQ.DB, and WEQ.DB.C) today announced the release of its financial results for the three and six months ended June 30, 2015, the entering into of an amended term credit facility and a significant reduction of bank indebtedness.

2015 Q2 Results

The results, consisting of WesternOne's interim financial statements for the three and six months ended June 30, 2015 and Management's Discussion and Analysis ("MD&A") dated August 6, 2015, are available on SEDAR (www.sedar.com).

2015 Q2 financial summary:

  • Consolidated revenue of $62.0 million, gross profit of $10.7 million and adjusted EBITDA(1) of $3.0 million, compared with the respective amounts of $98.7 million, $23.7 million and $12.6 million in Q2 of 2014.

  • Cash from operating activities of the continuing operations was $23.5 million, up from $8.3 million in Q2 of 2014. The operating cash flow reflects earnings from the continuing operations and working capital recovery from the large workforce accommodations projects and the 2014/15 construction heat season. Cash generated year to date from operating activities of the continuing operations was $48.5 million, up from $17.0 million in the prior year.
  • Net loss from continuing operations attributable to shareholders was $6.4 million ($0.16 per share), compared with net income of $3.0 million ($0.10 per share) in Q2 of 2014.

  • Implemented company-wide cost rationalization measures, resulting in total cost reductions of $4.8 million in Q2 compared to the prior year, or an estimated annualized reduction of $25.2 million.

WIS, WesternOne's infrastructure services division, recorded Q2 revenue of $17.1 million and adjusted EBITDA of $3.2 million, compared to the respective amounts of $18.9 million and $6.2 million in the prior year. The decline was primarily due to lower market demand for construction heat equipment rentals and fuels, caused by the unseasonably mild weather in Alberta. When combined with added expenses from the previous expansion of heat operations, the result was a further reduction in operating earnings. The decline was partially offset by improved aerial rental results in Alberta, driven by higher aerial fleet utilization as the mild weather gave rise to increased construction activities.

Britco, WesternOne's modular construction and modular space rental division, recorded Q2 revenue of $44.9 million and adjusted EBITDA of $1.4 million, compared to the respective amounts of $79.8 million and $8.0 million in the prior year. The decline reflected Britco's reduced manufacturing output and on-site work in light of the reduced demand from the industrial sector in Canada and the United States. The decline was partially offset by the growth from the modular space rental division, in which Q2 revenue and adjusted EBITDA were $3.0 million and $1.5 million, respectively, an increase of 6.2% and 39.9% from the prior year.

Corporate overhead before amortization and share-based compensation for Q2 was $1.6 million and was consistent with the prior year.

During the second quarter, management implemented cost rationalization measures to better align operating expenses with revenue levels. In light of the weakened demand from the industrial sector, Britco reduced its workforce from 694 at the beginning of Q2 to 500 at the end of Q2. Together with other general and administrative expense reductions at WIS and Britco, total cost reductions for the quarter were $4.8 million and $6.6 million year to date, resulting in annual estimated cost reduction of $25.2 million. WEQ also incurred $0.9 million of one-time severance costs which have been included in the general and administrative expenses for the quarter.

Summary Financial Overview
($ millions except per share amounts)

Three months ended
June 30,

Six months ended
June 30,


2015

2014

2015

2014

Revenue

$

62.0

$

98.7

$

150.3

$

197.7

Gross Profit

10.7

23.7

37.3

47.2






Adjusted EBITDA (1) (2)

3.0

12.6

19.3

26.8






Net Income (Loss) from Continuing Operations (2)

(6.4)

3.0

(2.2)

6.8

Net Loss from Discontinued Operations (2)

-

(12.1)

(0.1)

(13.4)

Net Loss (2)

(6.4)

(9.1)

(2.3)

(6.6)






Earnings (Loss) per Share from Continuing Operations (2)

(0.16)

0.10

(0.06)

0.22

Loss per Share (2)

(0.16)

(0.29)

(0.07)

(0.21)

_____________________

(1)

"Adjusted EBITDA" is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS. "Adjusted EBITDA" refers to net income (loss) from continuing operations before interest, income and commodity taxes, depreciation, amortization, non-controlling interest, gain/loss on financial derivatives relating to changes in the fair market value of the fixed interest rate swap, business acquisition costs, debenture issuance costs, gain/loss on debentures relating to changes in their fair market values, share based compensation, severance costs, foreign exchange gains/losses, and write-down of capital assets, intangible assets and goodwill. For a full description of adjusted EBITDA, refer to "Non-IFRS Measures" in the MD&A dated August 6, 2015.

(2)

 Represents amount attributable to shareholders.

 

"The Q2 financial results reflect ongoing persistent macroeconomic headwinds within our operating environment. In response, management will continue to focus on cost containment measures in creating sustainable improvements and better alignment with revenue levels," said Peter Blake, CEO of WesternOne. "We were pleased with the strong cash flow generation from operating activities year to date, which will be prudently deployed for working capital and debt servicing needs, along with other capital investment initiatives."

Amended Credit Facility and Reduction of Bank Indebtedness

WesternOne today also announced, effective August 5, 2015 (the "Effective Date"), that it entered into an amended and restated facility letter (the "Amended Facility Letter") with its senior lender (the "Bank"), under which the Bank provided a term credit facility with an aggregate value of $80.0 million (the "Term Credit Facility"). The Term Credit Facility comprises a $30.0 million revolving operating line and a $50.0 million revolving capital expenditure facility which was increased from $41.5 million under the previous "on-demand" credit facility (the "Demand Credit Facility"). The Term Credit Facility will mature on October 1, 2017 (the "Maturity Date"). A general security agreement providing a charge over all assets of the Company has been provided as collateral to the Bank.

Pursuant to the Amended Facility Letter, the Bank also extended a demand bank guarantee facility (the "Bank Guarantee Facility") with an authorized limit of $15.0 million for advance payment, performance and warranty guarantees as required.

On the Effective Date, the operating loans, capital loans and standby bank guarantee facility under the Demand Credit Facility were refinanced by the Term Credit Facility and the Bank Guarantee Facility. The Company also fully repaid the previous $25.0 million non-revolving acquisition facility using cash on hand.

The Term Credit Facility carries interest at either prime rate plus 2.25% or banker's acceptance rate plus 3.5% until October 31, 2016, after which the margin will be determined based on the ratio of Senior Debt to EBITDA (as defined in the Amended Facility Letter). The margins range from 0.75% to 2.25% for prime-based borrowing, and range from 2.0% to 3.5% for banker's acceptance-based borrowing. The Bank Guarantee Facility carries interest at 3.0%.

For further details of the Term Credit Facility, refer to WesternOne's Management's Discussion & Analysis dated August 6, 2015 which is available on SEDAR (www.sedar.com).

"With the execution of the new Term Credit Facility, we have now achieved one of our goals for 2015 and successfully recast our senior bank debt with committed debt financing," stated Mr. Blake. "Along with our other objectives for 2015, which include disciplined servicing and repayment of indebtedness and cost management, the Term Credit Facility is an important part of our overall financing strategy to strengthen our balance sheet and enhance financial flexibility for our business operations."

Conference Call

Peter Blake, CEO, and the management team will host a conference call at 9:00am (Eastern time) or 6:00am (Pacific time), on Friday, August 7, 2015, to review the financial results and corporate developments for the three and six months ended June 30, 2015.

To participate in this conference call, please dial one of the following numbers approximately 10 minutes prior to the commencement of the call, and ask to join the WesternOne conference call.

Dial in numbers:

Toll Free..................................................................................

1-888-390-0546


International or Local Toronto..............................................

1-416-764-8688

Conference Call Replay

If you cannot participate on August 7, 2015, a replay of the conference call will be available by dialing one of the following replay numbers. You will be able to dial in and listen to the conference two hours after the meeting end time, and the replay will be available until August 14, 2015. Please enter the Replay ID number 517944 followed by the # key.

Replay Dial-In:

Toll Free .................................................................................

1-888-390-0541


International or Local Toronto..............................................

1-416-764-8677

Forward-looking Information

Certain statements in this press release may constitute "forward-looking" information that involves known and unknown risks, uncertainties and other factors, and it may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such information includes, without limitation, statements with respect to: estimated annualized savings of WesternOne's general and administrative expenses as a result of the company-wide cost rationalization measures; management's continuing focus on cost containment measures in creating sustainable improvements and better alignment with revenue levels; deployment of cash generated from operating activities for working capital and debt servicing needs, along with other capital investment initiatives; the Maturity Date; interest rates under the Term Credit Facility and future adjustments thereto; and management's objectives for 2015 including disciplined servicing and repayment of indebtedness and cost management. Actual events or results may differ materially.

Forward-looking information contained in this press release is based on certain key expectations and assumptions made by WesternOne, including, without limitation: the outlook of WesternOne's business and the economy in Western Canada and the US, the supply and demand for WesternOne's products and services and management's assessment of future plans and operations. Although the forward-looking information contained in this press release is based upon what WesternOne's management believes to be reasonable assumptions, WesternOne cannot assure investors that actual results will be consistent with such information. Forward-looking information reflects current expectations of management regarding future events and operating performance as of the date of this press release. Such information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, and a description of these factors can be found under "Risk Factors" in WesternOne's Annual Information Form dated March 30, 2015 and Management's Discussion and Analysis dated August 6, 2015, which are both available on SEDAR (www.sedar.com).

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management's current beliefs and is based on information currently available to WesternOne. The forward-looking information is made as of the date of this press release and WesternOne assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

About WesternOne

WesternOne seeks to acquire and grow businesses in the construction and infrastructure services sectors in order to generate value for its shareholders.

Additional Information

Additional information relating to WesternOne and other public filings, is available on SEDAR at www.sedar.com or on WesternOne's website at www.weq.ca.

Trading Symbols
Toronto Stock Exchange: WEQ, WEQ.DB, and WEQ.DB.C

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.

SOURCE WesternOne Inc.

For further information: Carlos Yam, Chief Financial Officer, WesternOne Inc., Suite 910, 925 West Georgia Street, Vancouver, BC V6C 3L2, Phone: (604) 678-4042, E-mail: cyam@weq.ca; For investor relations information, please contact: Andrew Greig, Manager of Investor Relations, WesternOne Inc.. Suite 910, 925 West Georgia Street, Vancouver, BC V6C 3L2, Phone: (604) 678-4042, E-mail: agreig@weq.ca

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