CERF INCORPORATED Announces Record Results for the First Quarter of 2013

TSX Venture Symbol: CFL

CALGARY, May 28, 2013 /CNW/ - Mr. Wayne Wadley, President of CERF Incorporated (the "Company" or "CERF"), is pleased to announce the results for the first quarter of 2013.

Full details of the Company's results, in the form of the unaudited condensed consolidated financial statements and notes thereto for the three months ended March 31, 2013 and Management's Discussion and Analysis of the results dated May 27, 2013 are available on SEDAR at www.sedar.com and on the Company's website at www.cerfcorp.com.

Summary of fourth Quarter and Year to Date Consolidated Financial Results:

In C$,000's except percentages and per shares data	Q1 2013	Q1 2012	$ change	%
Revenue	11,444	7,210	4,234	59%
Direct Expenses	7,763	5,739	2,024	35%
Gross Margin %	32%	20%	12%
Net Income	1,110	155	955	616%
Adjusted EBITDA	4,003	1,624	2,379	146%
Dividend per share	$0.06	$0.06

Selected Highlights of the quarter:

• Revenue increased 59% to $11,444,000 for Q1 2013 versus the corresponding period in 2012;
  

• Equipment Rental Segment revenue increased 83% in Q1 2013, to $8,595,000, versus $4,698,000 in Q1 2012 being 75% of revenue for the first quarter of 2013 versus 65% in the first quarter of 2012. This was due in part to the acquisition of Trac Energy Services Ltd. ("TRAC") in October of 2012. TRAC provides rental equipment to the drilling and service sectors of the oil and natural gas industry and added $2,925,000 of revenue and $1,877,000 of EBITDA in the quarter;
  

• Construction Equipment Rental revenue increased organically 38% by $1,215,000 to $4,392,000 in the first quarter of 2013 versus Q1 2012;
  

• Waste Management Segment revenue increased 13% (by $337,000) for Q1 2013 to $2,849,000, versus the corresponding period in 2012;
  

• Adjusted EBITDA increased 146% to $4,003,000 for the first quarter of 2013 versus $1,624,000 for the same period in 2012 reflecting the strong EBITDA impact of the TRAC acquisition had on the quarter as well as the strong organic growth in construction rentals.  Further, EBITDA per share in Q1 2013 was $0.34 versus $0.17 in Q1 2012, despite the fact that the Company issued an additional 2,027,729 common shares to acquire TRAC, being a 21% increase in shares outstanding;
  

• Net income increased 616% to $1,110,000 for the three months ended March 31, 2013 or an earnings per share of $0.095 versus $155,000 for the same period in 2012 or an earnings per share of $0.01; and
  

• The Company paid dividends of $0.06 per share to shareholders in the first quarter of 2012 for a total of $0.24 for the trailing twelve months.

Mr. Wadley, President  & CEO makes the following comments:

First Quarter Results

"Increased general economic activity in Alberta combined with strong demand for rental equipment drove all-time record quarterly revenue and EBITDA.  As we mentioned at the time of our 2012 Year End and Q4 results, the drivers that drove our business in Q4 2012 continued into Q1 and have continued into Q2 of 2013."

"In our rental segment, cold weather in the Edmonton operating area that drove the demand for our expanded rental heater fleet in Q4 continued throughout the entire first quarter and continued into the second quarter.  The transition into the summer construction season is off to a robust start as equipment specifically suited for summer is already in high demand.   This activity level is expected to continue throughout the summer."

"Our oilfield rental business operated by TRAC continued its strong activity in the first quarter with a large percentage of its rental fleet out in the field.  TRAC has been able to rent a good portion of its fleet throughout spring breakup which is a bonus to the overall results and we expect the increased demand to continue over the next several months.  When road bans are lifted after spring breakup and drilling rigs begin to move and go back to work TRAC equipment, which has been stored with the rigs, is expected to go back to work as well.  TRAC continues to be asked by key customers to supply more equipment in broader geographic regions, validating TRAC's commitment to high levels of service and the supply of quality rental equipment."

"While the waste management segment of our business is typically slower during the first quarter, we are gearing up for what appears to be a very busy summer.    In addition to the regular increase in summer waste material volumes moving through our six managed facilities, which drives incremental revenue, we have been contracted to complete several internally managed construction projects which are incremental to our management fee.  Our employees and equipment will complete a majority of that work in-house.  The waste removal business is running at its equipment capacity as spring cleaning projects and new jobsites are underway.  They expect to remain very busy until colder weather hits next winter."

About CERF Incorporated

CERF is engaged in the equipment rental business (the "Equipment Rental Segment") and the waste management business (the "Waste Management Segment") in Alberta.  The Equipment Rental Segment includes the rental of residential, commercial and industrial construction related equipment including sales and service of equipment.  It also includes the rental and sale of equipment to the drilling and service sectors of the oil and natural gas industry.  The Waste Management Segment consists of complete waste facility management (currently we manage 6 landfill sites in central Alberta) with all that entails including waste facility design and construction services, recycling management, and collection services, and consulting services.  The Waste Management Segment also consists of waste removal and disposal from commercial, industrial and residential customers.

CERF Incorporated trades on the TSX Venture Exchange under the symbol "CFL" and currently has 11,671,096 shares issued and outstanding.

Forward-Looking Statements

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Certain statements included or incorporated by reference in this press release constitute forward-looking statements or forward-looking information, including management's assessment of expected activity levels throughout the summer of 2013, expected increase in demand for TRAC rental equipment over the next several months, expected demand for TRAC rental equipment after spring breakup, and expected activity levels until next winter in the waste management segment. Forward-looking statements or information may contain statements with the words "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "budget", "project", "would have realized', "may have been" or similar words suggesting future outcomes or expectations. Although the Company believes that the expectations implied in such forward-looking statements or information are reasonable, undue reliance should not be placed on these forward-looking statements because the Company can give no assurance that such statements will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of assumptions about the future and uncertainties. Although management believes these assumptions are reasonable, there can be no assurance that they will be proved to be correct, and actual results could differ materially from those anticipated.  For this purpose, any statements herein that are not statements of historical fact may be deemed to be forward-looking statements.  Such risks and uncertainties include, but are not limited to:  general economic conditions, industry conditions, weather conditions, commodity prices, currency fluctuations and competition from other equipment rental companies. The forward-looking statements or information contained in this press release are made as of date hereof and the Company assumes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new contrary information, future events or any other reason, unless it is required by any applicable securities laws. The forward-looking statements or information contained in this press release are expressly qualified by this cautionary statement.

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Summarized financial results for the three months ended March 31, 2013 follow:

CERF INCORPORATED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited) IN THOUSANDS OF CANADIAN DOLLARS
			March 31, 2013	December 31, 2012
Assets
Current assets
		Accounts receivable	9,717	7,765
		Inventory	1,307	1,369
		Income taxes recoverable	—	590
		Prepaid expenses and deposits	280	297
			11,304	10,021
Non-current assets
		Loan receivable	402	456
		Property and equipment	35,566	35,041
		Intangibles and goodwill	11,468	11,719
			47,436	47,216
Total assets			58,740	57,237
Liabilities and Shareholders' Equity
Current liabilities:
		Bank indebtedness	4,565	1,569
		Accounts payable and accrued liabilities	4,010	5,771
		Dividends payable	700	700
		Income taxes payable	2	—
		Current portion of long-term debt	4,372	4,430
		Current portion of finance leases	386	451
			14,035	12,921
Non-current liabilities:
		Long-term debt	19,537	19,662
		Obligation under finance leases	4,331	4,420
		Deferred income taxes	2,097	2,190
			25,965	26,272
Total liabilities			40,000	39,193
Shareholders' equity
		Share capital	22,897	22,897
		Share purchase loans receivable	(203)	(203)
		Contributed surplus	673	387
		Deficit	(4,627)	(5,037)
			18,740	18,044
Total liabilities and shareholders' equity			58,740	57,237

CERF INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) IN THOUSANDS OF CANADIAN DOLLARS
		Three months ended March 31
		2013	2012
Revenues		11,444	7,210
Direct expenses
	Direct operating costs	5,491	3,883
	Cost of sales of equipment, fuel and parts	862	925
	Depreciation of equipment	1,410	931
		7,763	5,739
	Gross margin	3,681	1,471
Operating expenses
	General and administrative	1,374	779
	Depreciation of other property and  equipment	28	91
	Amortization of intangible assets	251	111
	Business acquisition expenses	10	7
		1,663	988
Other expenses
	Finance costs	424	251
Income before income taxes		1,594	232
Income taxes		484	77
Net income and comprehensive income for the period		1,110	155
Net income per share
	Basic	$ 0.095	$ 0.01
	Diluted	$ 0.095	$ 0.01

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 

 

 

SOURCE: CERF Inc.

Wayne Wadley, President and CEO at [phone] or by email at [email protected] or Ken Stephens CFO at [phone], by fax at [phone] or by email at [email protected].