WesternOne Inc. Reports 2015 Q3 Results

VANCOUVER, Nov. 11, 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 nine months ended September 30, 2015.

2015 Q3 Financial Results

The results, consisting of WesternOne's interim financial statements for the three and nine months ended September 30, 2015 and Management's Discussion and Analysis ("MD&A") dated November 11, 2015, are available on SEDAR (www.sedar.com).

2015 Q3 financial summary:

  • Consolidated revenue of $46.8 million, gross profit of $7.2 million and adjusted EBITDA(1) of $1.0 million, compared to the respective amounts of $88.0 million, $15.8 million and $7.4 million in Q3 of 2014. The decreases were mainly due to lower manufacturing output and on-site work volume from the Britco operations and higher operating costs from WesternOne Infrastructure Services' ("WIS") expanded heat operations, compared to the same period last year.
  • Strong cash flow generation from operating activities of $22.5 million. The operating cash flow generation primarily related to earnings from the continuing operations, receipt of cash from the large workforce accommodations projects and improved working capital efficiency. Cash generated year to date from operating activities of the continuing operations was $71.0 million, up from $38.7 million in the same period last year.
  • Continued strengthening of the balance sheet by reducing bank indebtedness. During Q3, WesternOne reduced its senior bank indebtedness by $21.7 million from $69.0 million down to $47.3 million as at September 30, 2015. The Company has reduced bank indebtedness since January 1, 2015 by a total of $45.1 million.
  • Solid performance from the WIS aerial division. Due to firm demand from the general construction sectors in major markets in Alberta and the film and TV production segment in BC, revenues from aerial rentals and related services were $10.6 million in Q3, up 10.5% from $9.6 million in the same period last year.
  • Good growth in Britco's modular space rental division. Revenues grew to $3.4 million, a 13.2% increase over the previous year's $3.0 million, in part due to increased installation and transportation services to the general construction sector in BC.
  • Net loss from continuing operations attributable to shareholders was $7.1 million ($0.18 per share), compared with net loss of $1.0 million ($0.03 per share) in Q3 of 2014.
  • Continued company-wide cost rationalization measures resulted in total cost reductions of $7.1 million in Q3 compared to the same period last year, or an estimated annualized reduction of $25.5 million.
  • On August 5, 2015, WesternOne entered into an amended and restated facility letter (the "Amended Facility Letter") with its senior lender (the "Bank") to refinance WesternOne's senior credit facility, pursuant to 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 Term Credit Facility will mature on October 1, 2017. Pursuant to the Amended Facility Letter, the Bank also extended a demand bank guarantee facility with an authorized limit of $15.0 million for advance payment, performance and warranty guarantees as required.

WIS, WesternOne's infrastructure services division, recorded Q3 revenue of $15.2 million and adjusted EBITDA of $2.4 million, compared to the respective amounts of $15.8 million and $3.8 million in the prior year. In spite of the solid performance of the aerial division mentioned in the financial summary above, the revenue decrease was mainly due to lower sales of fuel, parts and merchandise. The decline in the adjusted EBITDA was primarily due to incremental overhead pursuant to WesternOne's strategy to expand the temporary heat operations (most notably the business and assets of Enerbuilt Technologies Inc. which were acquired on September 30, 2014), which generated low revenues in Q3, seasonally a slow quarter for the heat operations.

Britco, WesternOne's modular construction and modular space rental division, recorded Q3 revenue of $31.6 million and adjusted EBITDA of $0.1 million, compared to the respective amounts of $72.1 million and $4.5 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, as mentioned in the financial summary above.

Britco expects the on-site work relating to the installation of work camp units for the Manitoba Hydro Keeyask project to be substantially completed by the end of 2015.

Corporate overhead before amortization and share-based compensation for Q3 was $1.4 million, consistent with Q2 and compared to $1.0 million in the prior year.

Pursuant to the cost rationalization measures implemented earlier in 2015 to better align operating expenses with revenue levels, Britco reduced its workforce from 694 at the beginning of Q2 to 434 at the end of Q3. Together with other general and administrative expense reductions at WIS and Britco, total cost reductions for the third quarter were $7.1 million and $13.7 million year to date, resulting in an annual estimated cost reduction of $25.5 million.

Summary Financial Overview

Three months ended

Nine months ended

($ millions except per share amounts)

 September 30,

September 30,


2015

2014

2015

2014

Revenue

$

46.8

$

88.0

$

197.1

$

285.7

Gross Profit


7.2


15.8


44.5


63.1










Adjusted EBITDA(1) (2)


1.0


7.4


20.3


34.2










Net Income (Loss) from Continuing Operations (2)


(7.1)


(1.0)


(9.3)


5.8

Net Loss from Discontinued Operations (2)


-


(16.6)


(0.1)


(30.0)

Net Loss (2)


(7.1)


(17.6)


(9.4)


(24.2)










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


(0.18)


(0.03)


(0.24)


0.18

Loss per Share (2)


(0.18)


(0.55)


(0.25)


(0.77)

___________________

(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 fleet assets, intangible assets and goodwill. For a full description of adjusted EBITDA, refer to "Non-IFRS Measures" in the MD&A dated November 11, 2015.

(2)

Represents amount attributable to shareholders.

"The ongoing macroeconomic headwinds continue to impact our ability to grow our businesses. Our management team remains focused on executing our business plans and strengthening the balance sheet through operating cash flow generation and debt reduction," said Peter Blake, CEO of WesternOne. "Our business plans include pursuing emerging opportunities in the BC LNG and other commercial and industrial sectors, including permanent modular construction, through executing on project design and estimation and sales capabilities for Britco, and managing our rental fleet to maximize earnings and optimize return on investment for WIS."

Capital Structure Initiative

WesternOne has engaged Canaccord Genuity Corp. to advise it with respect to the design and execution of potential transactions to improve WesternOne's current capital structure, including assessing alternatives for the outstanding convertible debentures.

There can be no assurance that this engagement will lead to any transaction taking place or as to the timing of any such transaction if it does.

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 Thursday, November 12, 2015, to review the financial results and corporate developments for the three and nine months ended September 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 November 12, 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 November 19, 2015. Please enter the Replay ID number 498375 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 containing costs and strengthening the balance sheet through operating cash flow generation and debt reduction;  the completion date of the on-site work relating to the installation of work camp units for the Manitoba Hydro Keeyask project; WesternOne's focus on pursuing opportunities in the BC LNG and other commercial and industrial sectors through executing on project design and estimation and sales capabilities for Britco, and managing our rental fleet to maximize earnings and optimize return on investment for WIS; and potential transactions to improve WesternOne's current capital structure. 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 November 11, 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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