TerraVest announces fiscal year end results for 2014 with strong EBITDA

VEGREVILLE, AB, Dec. 9, 2014 /CNW/ - TerraVest Capital Inc. (TSX: TVK) ("TerraVest" or the "Company") a manufacturer of fuel containment and pressure vessels as well as an oil field service provider is pleased to announce strong revenue and EBITDA for both the three months ended September 30^th and fiscal year end 2014.

The fiscal year end was a milestone year for TerraVest which included strong EBITDA, substantial growth in the business, two acquisitions and strong return to shareholders. Highlights included, but were not limited to:

• EBITDA in the fourth quarter and fiscal year end in excess of $8.7 million and $23.0 million respectively;
  • Had the Company owned its two acquisitions for the entire year, management believes TerraVest would have generated approximately $32.5 million in EBITDA on a pro-forma basis for the fiscal year;
• The acquisition of Gestion Jerico Inc. ("Gestion Jerico") for approximately $54.0 million (including Gestion Jerico's debt) or 4.7x EBITDA, with EBITDA now tracking above acquisition levels;
• The acquisition of NWP Industries Inc. ("NWP") for approximately $12.8 million (including working capital adjustments) or 4.3x EBITDA, with EBITDA now tracking above acquisition levels; and
• Increased liquidity by way of a $20.0 million bought deal offering of equity securities through a syndicate of underwriters.

The integration of both businesses continues to move forward as planned with operating results exceeding the expectations set out at the time of the acquisitions.

"We continue to move forward with our plans to enhance shareholder value both through organic growth and through our continued search for acquisitions where we can leverage our existing competencies.  We are pleased with the results-to-date" said Charles Pellerin, Executive Chairman of TerraVest.

FINANCIAL INFORMATION
				Three months ended Sept. 30					Year ended Sept. 30	Nine months ended Sept. 30	Twelve months ended Sept. 30 ^2
				2014		2013			2014	2013	2013
				$		$			$	$	$
Revenue				51,007		16,180			131,635	46,857	64,154
Net income				2,765		991			8,915	3,945	656
Add (subtract):
Income tax expense				1,102		313			3,043	1,416	6,475
Financing costs				704		133			2,093	501	692
Impairment of property, plant and equipment				2,057		359			2,519	359	658
Loss on disposal of property, plant and equipment				63		-			87	(2)	-
Depreciation and amortization				2,104		859			6,394	2,304	3,227
EBITDA ^1				8,795		2,655			23,051	8,524	11,708
Maintenance capital expenditures ^1				(2,128)		(846)			(5,083)	(2,344)	(3,423)
Cash income taxes				(198)		(15)			(538)	(30)	(84)
Financing costs				(704)		(133)			(2,093)	(501)	(692)
Distribution to non-controlling interest				-		-			(238)	(140)	(403)
Cash Available for Distribution ^1				5,765		1,,661			15,099	5,509	7,106
Dividends Paid in the Period				1,770		997			6,888	1,997	1,997
Dividend Payout Ratio ^1				31%		58%			46%	36%	28%
Free Cash Flow  ^1
Cash flow from operations before change in Working Capital				8,128		2,225			21,032	7,993	10,560
Change in Working Capital				(4,696)		1,037			(11,998)	3,665	3,135
Cash flow from operations				3,432		3,262			9,034	11,658	13,695
Add (subtract):
Net purchase of PP&E				(2,518)		(846)			(5,681)	(2,344)	(3,423)
Free Cash Flow				914		2,416			3,353	9,314	10,272

1.	Non-GAAP measure, refer to definitions of non-GAAP measure in this MD&A
2.	Twelve months ended September 30, 2013 are unaudited pro-forma comparatives representing the trailing twelve months ended September 30, 2014.

TerraVest's fiscal year end 2014 saw increases in revenue and EBITDA both exceeding 100% and 95%, respectively, versus the comparable 12 month period ended September 2013. These increases were primarily the result of the acquisitions of Gestion Jerico and NWP which are not included in the comparable period ended September 30^th, 2013. However, both Gestion Jerico and NWP, on a stand-alone basis have achieved results exceeding the previous fiscal year. Excluding the acquisition of Jerico and NWP, EBITDA for RJV increased by approximately 30% for the fiscal year ended 2014 versus the comparable 12 month period ended September 2013, while Diamond's EBITDA was approximately 10% higher than the comparative twelve month period, despite a major customer cutting its capital budget during the fourth quarter of 2014. TerraVest balance sheet remains strong, with net debt/EBITDA in the range of 1.6x assuming the Company had owned its two acquisitions for the entire year.

Outlook

We continue to see good opportunities to expand the Company's portfolio of businesses consistent with our stated strategy and we will continue to evaluate good opportunities to further grow the strategic position of the Company as well as optimize the existing businesses. With the recent acquisitions of Jerico and NWP we are actively pursuing further integration opportunities between the portfolio companies and are optimistic that these will contribute to the Company's profitability.

We expect that continued soft oil price could affect RJV sometime in fiscal 2015. RJV's backlog is approximately $9 million, which is not as strong as the comparable period last year, but the business is still operating at full capacity and we expect this to continue into fiscal 2015. We do however; expect RJV to generate additional cash flow for the upcoming year as the company benefits from new inventory reduction initiatives, which is aimed at freeing up cash tied up in working capital.

NWP manufactures a similar product line to RJV, but despite the weak oil price NWP's backlog has remained strong at $14.3 million, which is in line with the previous year. Management expects NWP to have a strong fiscal 2015 based on backlog and synergies that can be achieved with RJV.  

Both NWP and RJV service many of the largest oil and gas producers in Canada whose capital spending programs tend to be more robust and less subject to short term fluctuations in commodity prices. Canadian oil producers have also remained somewhat sheltered from the falling oil price due to the declining Canadian dollar. In addition, natural gas prices have remained relatively flat and this further mitigates RJV and NWP from the effects of the declining oil price, and results in a more favourable product mix as producers target liquids‐rich natural gas wells.

Jerico had a strong fiscal year in 2014 due to strong demand for its propane distribution related products, as well as better than expected volumes in its residential oil tank business. Management expects this performance to continue into fiscal 2015. The current backlog in Jerico's propane tank business stretches well into the spring of 2015, which is stronger than usual and Jerico's total backlog is approximately $15.5 million. Jerico's residential tank business is positioned for a strong year with the development of a new fiberglass tank and increased demand in the US. Jerico sold its first fiberglass tank in October of 2014 and expects to ramp this business up considerably over the coming year. Management also expects to see opportunities to cross‐sell in the oil and gas industry through NWP and RJV.

Diamond had a very strong year and continues to be a stable source of cash flow for TerraVest. A continuation of weak oil prices could have some effect on Diamond in fiscal 2015. In fiscal 2014 Diamond was able to mitigate a major customer's announcement for a reduction in its capital spending program by relocating equipment with new and existing customers and this announcement should have limited impact on the results for the upcoming fiscal year. Diamond's coil tubing division recently expanded its customer base and we expect this to have a positive impact on Diamond's 2015 results. All things considered, we expect Diamond's results for fiscal 2015 to be in line with or slightly below fiscal 2014 results.

Opportunistic acquisitions meeting the Company's criteria continue to be sought out.

Conference Call

TerraVest will hold a conference call on Wednesday December 10^th at 8:00 am Eastern Standard Time to discuss its financial results for the fiscal year ended September 30^th, 2014.

To participate in the call, please dial: 416-340-2217 or 877-405-9213 using Participant code: 5731445

For those unable to attend the call, an instant replay of the call will be available until the 24^th of December, 2014 at 905-694-9451 using passcode 9202421.

Dividend

TerraVest is also pleased to announce that The Board of Directors has declared its quarterly dividend of 10 cents per share upon the outstanding Common Shares in the capital stock of the Company being payable on January 9, 2015 to shareholders of record as at the close of business on December 31, 2014. The ex-dividend date is December 29, 2014. The dividend is designated an "eligible dividend" for Canadian income tax purposes.

Additional information can be found in TerraVest's unaudited interim condensed consolidated financial statements and MD&A which are available on SEDAR at www.sedar.com.

Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements.  All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding our strategic direction and evaluation of the business segments and TerraVest as a whole, and other plans and objectives of or involving TerraVest. Readers can identify many of these statements by looking for words such as "expects" and "will" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements require us to make assumptions and, accordingly, forward looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements. 

Assumptions and analysis about the performance of TerraVest as a whole and its business segments, the markets in which the business segments compete and the prospects and values of the business segments are considered in setting the business plan for TerraVest, plans and/or ability to pay dividends, outlook for operations, financial position, results and cash flow, other plans and objectives and in making related forward-looking statements. Such assumptions include, without limitation, demand for products and services of the business segments in respect of the Canadian and other markets in which the businesses are active will be stable, and that input costs to business segments do not vary significantly from levels experienced historically. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements.

The information set forth under "Risk Factors" in the annual information form of TerraVest dated December 9, 2014 and under "Risk Factors" in the MD&A of TerraVest for the year ended September 30, 2014, identifies risk factors that could affect the operating results and performance of TerraVest and its business segments and the values of the business segments and TerraVest as a whole. We caution that the lists of factors discussed in such information is not exhaustive and that, when relying on forward-looking statements to make decisions with respect to TerraVest, investors and others should carefully consider the factors discussed, as well as other uncertainties and potential events, and the inherent risks and uncertainties of forward-looking statements.  The forward-looking statements herein are made based on the assumption that TerraVest will not be affected by such risks, but that, if TerraVest is affected by such risks, the forward-looking statements may become inaccurate.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.  The forward-looking statements included in this news release are made as of the date of this news release.  Except as required by applicable securities laws, TerraVest does not undertake to update such forward-looking statements.

Non-GAAP Financial Measures

For Non-GAAP financial measures please refer to the definitions outlined the TerraVest Management's Discussion and Analysis dated December 9, 2014.

SOURCE: TerraVest Capital Inc.

Mitchell Gilbert, TerraVest Capital Inc., Chief Investment Officer, (416) 364 -0064, [email protected]; OR Paul A. Casey, CA, TerraVest Capital Inc., Chief Financial Officer, [phone], [email protected]

Related Links

www.terravestindustries.com