WesternOne Inc. Reports 2015 Q4 and Full Year Results

VANCOUVER, March 9, 2016 /CNW/ - WesternOne Inc. ("WesternOne") (Toronto Stock Exchange: WEQ, WEQ.DB, and WEQ.DB.C) today announced the release of its financial results for the year ended December 31, 2015.

The results, consisting of WesternOne's audited financial statements for the year ended December 31, 2015 and Management's Discussion and Analysis ("MD&A") dated March 9, 2016, are available on SEDAR (www.sedar.com).

2015 Q4 and annual financial summary:

  • Q4 consolidated revenue of $35.9 million, gross profit of $13.1 million and adjusted EBITDA(1) of $6.3 million, compared to the respective amounts of $88.2 million, $18.5 million and $8.1 million in Q4 of 2014. Included in the Q4 2014 gross profit and adjusted EBITDA was a $7.1 million adjustment in relation to phase 1 of the Manitoba Hydro Keeyask workforce accommodations project (the "Adjustment"). Excluding the Adjustment, Q4 2014 gross profit and adjusted EBITDA would have been $25.6 million and $15.2 million, respectively. The year-over-year decline reflected continued challenges in WesternOne's macro business environment and the related impact on business activity.

  • Continued to execute on cash preservation initiative as WesternOne recorded $69.8 million of net cash from operating activities of continuing operations for the year ended December 31, 2015. Operating cash flow generation primarily related to earnings from continuing operations, receipt of cash from large workforce accommodations projects and improved working capital efficiency.

  • Strengthened balance sheet through reducing bank indebtedness from $92.4 million to $46.4 million during the year.

  • Continued company-wide cost rationalization measures resulted in total cost reductions of $7.1 million in Q4 and $20.7 million for the year when compared to the respective periods in the prior year, resulting in an estimated "run-rate" annualized reduction of $25.6 million. Q4 general and administration expenses were $12.3 million, down 23% from $15.9 million in Q4 of 2014.

  • Company-wide headcount reduced by 67 or 9% in Q4, for a total reduction of 675 or 50% in 2015. Headcount further reduced by 93 or 14% since the beginning of 2016.

  • Net loss from continuing operations attributable to shareholders was $10.6 million ($0.27 per share), compared with net income of $12.5 million ($0.33 per share) in Q4 of 2014. Included in the net loss were non-cash pre-tax impairment charges on goodwill, intangible assets and fixed assets of $50.6 million in Q4, in light of reduced demand for temporary modular buildings and consolidation of rental operations. The Q4 financial results also included non-cash pre-tax finance income of $42.6 million, relating to changes in the fair value of convertible debentures at year-end. Excluding these non-cash items on an after-tax basis, net loss for Q4 of 2015 would have been $1.5 million ($0.04 per share), compared to net loss of $2.0 million ($0.05 per share) in the prior year after adjusting for like items.

WIS, WesternOne's infrastructure services division, recorded Q4 revenue of $20.4 million and adjusted EBITDA of $5.5 million, compared to the respective amounts of $28.0 million and $9.0 million in the prior year. The decline was primarily due to increased supply of rental equipment from competitors, primarily in the Alberta markets, and mild winter weather which adversely impacted heater rentals and fuel sales.

Britco, WesternOne's modular construction and modular space rental division, recorded Q4 revenue of $15.5 million and adjusted EBITDA of $1.9 million, compared to the respective amounts of $60.2 million and $0.3 million in the prior year. Excluding the Adjustment, adjusted EBITDA for Q4 of 2014 would have been $7.4 million. The year-over-year decline in the operating results reflected Britco's reduced manufacturing output and on-site work in light of the continued low demand for temporary modular buildings from the industrial sector in Canada and the United States. Britco has also focused on pursuing permanent modular opportunities to diversify its revenue base, such as Britco's recent announcement to build a permanent modular hotel and lodge property for the Burns Lake Band in northern BC.

Corporate overhead before amortization and share-based compensation for Q4 was $1.1 million, down from $1.2 million in the prior year.

Summary Financial Overview

($ millions except per share amounts)

Three months ended

 December 31,

Year ended

December 31,

2015

2014

2015

2014

Revenue

$     35.9

$    88.2

$    233.0

$   373.9

Gross Profit

13.1

18.5

57.6

81.6






Adjusted EBITDA (1) (2)

6.3

8.1

26.6

42.3






Net Income (Loss) from Continuing Operations (2)

(10.6)

12.5

(19.8)

18.2

Net Gain (Loss) from Discontinued Operations (2)

0.4

0.9

0.3

(29.1)

Net Income (Loss) (2)

(10.2)

13.4

(19.5)

(10.9)






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

(0.27)

0.33

(0.50)

0.55

Earnings (Loss) per Share (2)

(0.26)

0.35

(0.49)

(0.33)

__________________

(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 March 9, 2016. Comparative figures for 2014 have been adjusted to exclude severance costs to be consistent with the current definition of adjusted EBITDA.

(2)

Represents amount attributable to shareholders.

"Despite the challenging market conditions throughout 2015, WesternOne maintained its disciplined capital management strategy through preserving cash generated from operating activities and substantially paying down bank indebtedness, thereby advancing a key initiative for 2015 - strengthening our balance sheet" said Peter Blake, CEO of WesternOne.

"In 2016, as we continue to experience the macroeconomic headwinds that strongly weigh on our businesses, we plan to maintain our focus on prudent capital management and cost containment. Additionally, within Britco, we will seek to generate earnings by continued diversification of our revenue base from further penetration of the permanent modular construction markets. We also intend to pursue relevant opportunities connected to resource development in our markets, specifically prospects related to BC LNG projects. Within WIS, we will continue to execute on prudent capital management through fleet rationalization and redeployment. Driven by refined sales management, we will aim to generate earnings in both our existing and potentially new branch locations," said Mr. Blake.

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, March 10, 2016, to review the financial results and corporate developments for the year ended December 31, 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 March 10, 2016, 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 March 17, 2016. Please enter the Replay ID number 740751 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 "run-rate" annualized reduction of WesternOne's operating costs as a result of the company-wide cost rationalization measures; management's continuing focus on prudent capital management and cost containment; Britco's revenue diversification strategy through penetration of the permanent modular construction markets; Britco's intention to pursue relevant opportunities connected to resource development in its markets; WIS's plan to execute on prudent capital management through fleet rationalization and deployment; and WIS's plan to grow earnings in both existing and potentially new branch locations with refined sales 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 March 9, 2016, 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: For more information about this press release, please contact: 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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