Horizon North Logistics Inc. Announces Results for the Quarter Ended March 31, 2015

CALGARY, April 29, 2015 /CNW/ - TSX Symbol: HNL

Horizon North Logistics Inc. ("Horizon North" or the "Corporation") reported its financial and operating results for the three months ended March 31, 2015 and 2014.

First Quarter Highlights

  • Consolidated revenues and EBITDAS grew by 10% and 25% respectively, compared to the same period of 2014;
  • Total profit and earnings per share increased by 37% and 43% respectively, compared to the same period of 2014 as a result of improved revenues and EBITDAS;
  • Cash from operations increased significantly, compared to Q1 2014, as a result of decreased working capital and stronger operational results;
  • Net capital spending was $12.2 million during the quarter on a revised capital budget of $30.0 million for 2015;
  • Loans and borrowings decreased by $11.0 million compared to the year ended December 31, 2014;
  • Credit facilities updated including expansion of borrowing capacity from $175 million to $200 million and relaxation of debt to trailing EBITDAS covenants to provide increased financial flexibility.

First Quarter Financial Summary

Three months ended March 31

(000's except per share amounts)



% change











EBITDAS as a % of revenue



Operating earnings




Operating earnings as a % of revenue



Total profit 




Total comprehensive income 




Earnings per share

 – basic






 – diluted




Total assets






Long-term loans and borrowings




Cash from operations




Capital spending

Purchase of property, plant & equipment




Proceeds from disposals of property, plant & equipment




Net capital spending




Senior debt to EBITDAS

Total debt to EBITDAS





Debt to total capitalization ratio



Dividends declared






Dividends declared per share





See Non-GAAP and additional GAAP measures definitions within the press release for details.

First Quarter Overview

Horizon North's stronger first quarter performance was mainly a result of higher activity levels and improved utilization in the camps and catering segment, resulting in higher consolidated revenues, EBITDAS, total profit and earnings per share for the three months ended March 31, 2015 ("Q1 2015" or "the first quarter of 2015") compared to the three months ended March 31, 2014 ("Q1 2014" or "the first quarter of 2014"). Stronger seasonal camp activity, the addition of several large camp contracts which became operational in the second half of 2014 and higher activity in the Relocateable Structures business drove increased volumes and utilization. The matting segment results in Q1 2015 decreased compared to Q1 2014, reflective of customers reduced capital programs and a competitive environment exerting downward pressure on pricing.

Consolidated revenues for Q1 2015 increased by $11.8 million or 10% compared to Q1 2014. The main contributors to the revenue growth were the camps and catering operations (11% increase) and the manufacturing operations (24% increase). The camps and catering revenue growth was driven by large camp utilization of 79% on an average fleet of 8,665 rentable beds compared to 63% on an average fleet of 7,094 rentable beds in Q1 2014. Both revenue per manday and RevPAAB (revenue per average available bed) remained relatively consistent in the comparative periods at $156 and $97, respectively.

The strength in manufacturing revenue was related to the timing of external projects in the comparative quarters. Activity for Q1 2015 was focused on executing a large camp project in the Alberta oil sands for a third party customer compared to Q1 2014 which was mainly focused fleet production to fulfill contract commitments. Total direct hours in Q1 2015 were 242,138, a decrease of 20,069 hours or 8% from Q1 2014 with 75% of total direct hours in Q1 2015 allocated to external sales compared to 48% in the same period of 2014.

In contrast, matting revenues for Q1 2015 decreased by 28% compared to Q1 2014 mainly due to a 74% decrease in access mat sales, a result of customers reducing their capital programs. With the reduction in capital, customers chose to rent mats increasing access mat rental volumes by 86% for Q1 2015 compared to Q1 2014. Owned fleet utilization for Q1 2015 was 50% compared to 41% in Q1 2014 with average access mat fleet growth of 8,500 mats to 25,160 mats in Q1 2015. Although access mat rental volumes were up significantly, a more competitive environment exerted downward pressure on pricing resulting in revenue per mat rental day decreasing by 23%.

EBITDAS for Q1 2015 was $29.4 million, an increase of $5.9 million or 25% compared to Q1 2014 and as a percentage of revenue EBITDAS was 22%, up from 19% in Q1 2014. The strength in EBITDAS was driven by the higher activity levels discussed above. As a percentage of revenue, the increase in EBITDAS was driven by the Corporation's focus on cost reduction initiatives across all the operations and efficiencies realized with higher utilization in the camp and catering operations.

Total profit and earnings per share increased by 37% and 43% respectively compared to Q1 2014 as a result of the stronger operational results as well as similar depreciation and amortization expense quarter over quarter.

Horizon North's balance sheet improved as a result of decreased working capital, significantly higher cash from operations and reduced capital spending compared to March 31, 2014. Loans and borrowings decreased by $11.0 million during the quarter resulting in a total debt to trailing EBITDAS ratio of 1.42:1.00 as at March 31, 2015 compared to 1.66:1.00 as at December 31, 2014.

Capital Spending

For the three months ended March 31, 2015, capital spending was $15.2 million, a decrease of $12.7 million or 46% compared to the same period of 2014. The 2015 capital was focused on refreshing the camp rental fleet, expansion of the relocatable structures fleet and expansion of the access mat rental fleet.

Management evaluates and manages its capital spending plans taking into account proceeds from the sale of property, plant and equipment resulting in net capital spending for the three months ended March 31, 2015 of $12.2 million compared to $22.4 million for the same period of 2014.

Dividend payment

Horizon North announced today that its Board of Directors has declared a dividend for the second quarter of 2015 at $0.08 per share. The dividend is payable to shareholders of record at the close of business on June 30, 2015 to be paid on July 15, 2015. The dividends are eligible dividends for Canadian tax purposes.


The strong results in the first quarter of 2015 do not significantly change the outlook for Horizon North. Continuing pressure on commodity prices, with oil pricing currently in the $40-$55 per barrel range, has resulted in a number of our larger customers delaying or deferring their 2015 capital spending plans. In addition, as Horizon North continues to work closely with our customers in an effort to help them through these challenging times, accommodations made to existing contracts will have implications on our revenue and profitability. While we have seen these swings in the past, there is no clear consensus on how long this trough will last. 

With this challenging macro environment, Horizon North is undertaking structural changes in its business that will realign the development and direction of the corporation, stabilize our base, and prepare us for the next up-cycle. These changes included taking steps in Q1 2015 to reduce our manufacturing headcount to match our current order book, outlining a reduced maintenance capital spending program of $30 million for 2015, moving towards a more integrated business model to reduce costs and improve efficiencies and changing our business development strategy to facilitate additional cross selling capabilities for all of our products and services.

We will be expanding our product and service offerings to balance our exposure between operating expenditure (OPEX) and capital expenditure (CAPEX) budgets of our major customers. Although many of Horizon North's customers have reduced their capital plans, several major customers are taking a longer term view and continue to spend through the down cycle. CAPEX is typically cyclical as compared to OPEX spending which tends to be smoother and more consistent over time. We are working to broaden our products and service offerings to a variety of end-markets to lessen our exposure to energy market fluctuations. We are continuing to develop new end-markets for our manufacturing platform, for example moving into the construction of permanent modular buildings in commercial and institutional markets. Finally, we are preparing our west coast British Columbia land infrastructure for potential significant LNG projects.

Our new mission statement at Horizon North is "To provide superior, safe, fully integrated turn-key accommodations and related ancillary infrastructure in Canada and Alaska" this will be our focus in 2015.

Additional Information

A copy of the Corporation's Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2015 and 2014 and related Management's Discussion and Analysis have been filed with the Canadian securities regulatory authorities and is available on SEDAR at www.sedar.com and www.horizonnorth.ca.  Unless otherwise indicated, the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and the reporting currency is in Canadian dollars

Conference call

Horizon North will host a conference call and webcast to begin promptly at 9:00 a.m. MT (11:00 a.m. ET) on – April 30, 2015 to discuss Horizon North's first quarter results.

To access the conference call by telephone the conference call dial in number is 1-888-231-8191

A live webcast of the conference call will be accessible on Horizon North's website at www.horizonnorth.ca by selecting the webcast link on the home page.

An archived recording of the conference call will be available approximately two hours after completion of the call until May 14, 2015 by dialing 1-403-451-9481 or 1-855-859-2056 - Passcode: 30359953.

Caution Regarding Forward-Looking Information and Statements

Certain statements contained in the Management Discussion and Analysis constitute forward-looking statements or information.  These statements relate to future events or future performance of Horizon North.  All statements other than statements of historical fact are forward-looking statements.  The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "should", "believe" and similar expressions are intended to identify forward-looking statements.

In particular, such forward-looking information and statements include, but are not limited to, the following:

  • the expansion of Horizon North's product and service offerings to balance exposure to customers' OPEX and CAPEX budgets to lessen exposure to energy market fluctuations;
  • the development of new end-markets for Horizon North's manufacturing platform;
  • the preparation of our west coast British Columbia land infrastructure;
  • our focus on in 2015 on Horizon North's new mission statement;
  • the payment of our declared quarterly dividend;
  • our business strategy;
  • our capital expenditure program for 2015;
  • the movement towards a more integrated business model to reduce costs and improve efficiencies;
  • changing our business development strategy to facilitate additional cross selling capabilities for all of our products and services; and
  • the forward-looking statements and information under the heading "Critical accounting Estimates and Judgments".

The forward-looking statements and information are based on certain assumptions made by Horizon North which include, but are not limited to, assumptions relating to:

  • industry activity for oil, natural gas and mineral exploration and development in the western Canadian provinces and northern territories;
  • commodity prices;
  • anticipated activity levels for 2015;
  • future operating costs and Corporation's access to capital;
  • the effects of regulation by governmental agencies;
  • the competitive environment in the which the Corporation operates;
  • the ability of the Corporation to attract and retain personnel;
  • the development of LNG and commodity transportation infrastructure; and
  • the relationships between the Corporation and its customers; and
  • general economic and financial conditions.

Although Horizon North believes that the expectations and assumptions on which the forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Horizon North cannot give any assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties.  Actual results could differ materially from those currently anticipated due to a number of known and unknown risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

  • volatility in the price and demand for oil, natural gas and minerals;
  • fluctuations in the demand for the Corporation's services;
  • availability of qualified personnel;
  • changes in regulation by governmental agencies, including environmental regulation; and
  • other factors listed under "Risks and Uncertainties" in this MD&A and other risk factors identified in the Corporation's annual information form.

Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive. Additional information on these and other risk factors that could affect Horizon North's operations and financial results are included in Horizon North's annual information form which may be accessed through the SEDAR website at www.sedar.com. In addition, the reader is cautioned that historical results are not indicative of future performance. The forward-looking statements and information contained in this MD&A are made as of the date hereof and Horizon North does not undertake any obligation to update publicly or revise any forward-looking statements and information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Horizon North's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

Non-GAAP and additional GAAP measures

Certain measures in this MD&A do not have any standardized meaning as prescribed by generally accepted accounting principles ("GAAP") and, therefore, are considered non-GAAP measures. These measures are regularly reviewed by the Chief Operating Decision Maker and provide investors with an alternative method for assessing the Corporation's operating results in a manner that is focused on the performance of the Corporation's ongoing operations and to provide a more consistent basis for comparison between periods. These measures should not be construed as alternatives to total profit and total comprehensive income determined in accordance with GAAP as an indicator of the Corporation's performance. The method of calculating these measures may differ from other entities and accordingly, may not be comparable to measures used by other entities. The following non-GAAP and additional GAAP measures are used to monitor the Corporation's performance:

EBITDAS: Earnings before finance costs, taxes, depreciation, amortization, gain/loss on disposal of property, plant and equipment and share based compensation ("EBITDAS"). Management believes that in addition to total profit and total comprehensive income, EBITDAS is a useful supplemental measure as it provides an indication of the Corporation's ability to generate cash flow in order to fund working capital, service debt, pay current income taxes and fund capital programs, and it is regularly provided to and reviewed by the Chief Operating Decision Maker.

Debt to total capitalization: Calculated as the ratio of debt to total capitalization. Debt is defined as the sum of current and long-term portions of loans and borrowings. Total capitalization is calculated as the sum of debt and shareholders' equity.

About Horizon North

Horizon North is a remote resource development service company that provides workforce accommodation solutions, camp management and catering services, and road and access matting solutions. Horizon North provides these services in support of oil sands development, oil and gas exploration, mining and infrastructure projects throughout Canada's western provinces and northern territories where local infrastructure does not meet project requirements.

SOURCE Horizon North Logistics Inc.

For further information: For further information, please contact Rod Graham, President and Chief Executive Officer or Scott Matson, Vice President Finance and Chief Financial Officer, 1600, 505 - 3rd Street S.W., Calgary, Alberta T2P 3E6; Telephone (403) 517 - 4654, Fax (403) 517 - 4678; website: www.horizonnorth.ca


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