CALGARY, June 16, 2016 /CNW/ - Stuart Olson Inc. (TSX: SOX, SOX.DB.A) ("Stuart Olson" or the "Company") today released preliminary revenue and adjusted EBITDA estimates for its Industrial Group for the second quarter of 2016. While Stuart Olson does not ordinarily provide quarterly financial guidance, we are providing preliminary estimates today given that second quarter results from the Industrial Group are expected to be materially impacted by production shutdowns and slowdowns amongst its oil sands customers affected by the recent wildfires in Northern Alberta. Stuart Olson's Industrial Group does significant maintenance, repair and operations ("MRO") work with several of the largest oil sands operators in the affected region. The fire-related financial impacts to the Industrial Group include lost maintenance revenue, scope decreases on active projects, and revenue impacts from projects that have been deferred until later in 2016. Second quarter results are also expected to reflect significant productivity challenges and additional costs associated with demobilizing and remobilizing on three oil sands sites as a result of the wildfire crisis.
For the three months ended June 30, 2016, Stuart Olson estimates that Industrial Group revenue will be between $70.0 and $80.0 million, as compared to revenue of $106.8 million in the same period last year. Adjusted EBITDA from the Industrial Group is estimated to be between $2.0 million and $3.0 million, down from $8.5 million in the second quarter of 2015.
Full-year 2016 results from the Industrial Group are also expected to be significantly below 2015 levels, reflecting not only the weaker second quarter results anticipated, but also the deferral of oil sands project opportunities that we expected would benefit the Industrial Group's financial results in the second half of 2016.
Stuart Olson's Buildings Group and Commercial Systems Group were not affected by the wildfires and the outlook for these groups remains consistent with that provided with the release of the Company's first quarter 2016 financial results.
Said David LeMay, President and CEO of Stuart Olson, "I am very proud of our team's disciplined response in safely demobilizing hundreds of employees from the region during the crisis. "Approximately sixty percent of that team is now back onsite and we are working closely with our customers to resume normal operations as quickly and efficiently as possible."
About Stuart Olson Inc.
Stuart Olson Inc. provides general contracting and electrical building systems contracting in the public and private construction markets as well as electrical, mechanical and specialty trades, such as insulation, cladding and asbestos abatement, in the industrial construction and services market. The Company operates office locations throughout British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stuart Olson's common shares and convertible debentures are listed on the Toronto Stock Exchange under the symbols "SOX" and "SOX.DB.A", respectively. www.stuartolson.com
Forward Looking Information
This press release contains certain statements that may constitute forward-looking information within the meaning of applicable securities laws. This forward-looking information includes, without limitation, statements relating to the expected operational and financial impact of the recent Northern Alberta wildfires on our Industrial Group's results and statements related to Stuart Olson's expectations regarding its other groups. Often, but not always, forward-looking information can be identified by the use of such words as "may", "will", "expect", "believe", "plan", "intend", "estimate", "outlook", "forecast", "should", "anticipate" and other similar terminology, including statements concerning possible or assumed future results. Forward-looking information is based on management's reasonable assumptions, analysis and estimates in respect of its experience and perception of trends, current economic conditions, government policies and expected developments, as well as other material factors that it considers to be relevant at the time of making such statements.
The forward-looking information in this press release is included solely for the purpose of assisting investors in understanding Stuart Olson's expectations regarding its financial position and the results of its operations as at the date hereof. By its nature, forward-looking information involves known and unknown risks and uncertainties, which give rise to the possibility that management's assumptions, analysis and estimates will be incorrect and that Stuart Olson's anticipated results will not be achieved. Although Stuart Olson believes that the statements with respect to forward-looking information are reasonable and current, such statements should not be interpreted as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. Forward-looking information is necessarily subject to a number of factors that may cause actual results to differ materially from those results implied by the expectations suggested by such information. Those factors include, without limitation, the risks and uncertainties described in Stuart Olson's Annual Information Form filed with the securities regulatory authorities in Canada under Stuart Olson's profile at www.sedar.com. Readers are encouraged to consider the foregoing risks and other factors carefully when evaluating the forward-looking information and are cautioned not to place undue reliance upon such information when making investment decisions.
The forward-looking information in this press release is current to the date hereof, and is subject to change following such date. While Stuart Olson may elect to do so, unless required by applicable law, it undertakes no obligation to update this information to reflect new information or circumstances at any particular time.
This press release references adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA). This measure, while common in the construction industry, is not a recognized measure under International Financial Reporting Standards ("IFRS"). We initiated the use of adjusted EBITDA in conjunction with the release of our first quarter 2016 Management's Discussion and Analysis ("MD&A") to better reflect operating performance, as a valuation metric for investors and as a measure of Stuart Olson's ability to incur and service debt. Our calculation of adjusted EBITDA excludes unusual items, including restructuring charges and charges related to investing decisions that do not reflect our ongoing operations and, we believe, should not be reflected in a metric used for valuation and debt servicing purposes. Please see the "Non-IFRS Measures" section in our first quarter 2016 MD&A for a full definition of adjusted EBITDA.
SOURCE Stuart Olson Inc.
For further information: Daryl Sands, Executive Vice President and Chief Financial Officer, Stuart Olson Inc., (403) 685-7777, Email: [email protected]