TerraVest Announces Second Quarter Results for Fiscal 2018

VEGREVILLE, AB, May 9, 2018 /CNW/ - TerraVest Industries Inc., formerly TerraVest Capital Inc, (TSX: TVK) ("TerraVest" or the "Company") announces its results for the second quarter ended March 31, 2018. The Company's financial results for the second quarter of fiscal 2018 represent an improvement over the second quarter of fiscal 2017.

SECOND QUARTER REVIEW AND OUTLOOK

Business Performance

Management believes that there are certain non‐IFRS financial measures that can be used to assist shareholders in determining the performance of the Company. The table below highlights certain financial results and reconciles net income to EBITDA, EBITDA to Adjusted EBITDA and Adjusted EBITDA to Cash Available for Distribution for the second quarter and the first six months ended March 31, 2018 and the comparative periods in fiscal 2017.

		Second quarters ended		Six months ended
		March 31, 2018	March 31, 2017	March 31 2018	March 31, 2017
		$	$	$	$
Sales		62,568	46,565	125,171	94,843
Net income		1,872	655	7,019	4,396
Add (subtract):
	Income tax expenses	859	658	2,800	2,035
	Financing costs	1,413	962	2,490	1,849
	Amortization and depreciation	2,686	2,659	5,153	5,178
EBITDA		6,830	4,934	17,462	13,458
Other (gains) losses		106	(23)	151	(99)
Acquisition-related costs		192	-	192	-
Loss on foreign exchange contracts		619	-	796	-
Adjusted EBITDA		7,747	4,911	18,601	13,359
Maintenance Capital Expenditures		(882)	(1,669)	(1,695)	(3,172)
Income taxes paid		(3,567)	(716)	(4,991)	(2,200)
Financing costs paid		(543)	(1,194)	(1,968)	(1,904)
Cash Available for Distribution		2,755	1,332	9,947	6,083
Dividends Paid in the Period		1,832	1,832	3,674	3,664
Dividend Payout Ratio		66%	137%	37%	60%

Sales for the quarter was $62,568 compared to $46,565 for the prior comparable period representing an increase of 34%. This increase primarily results from the additions of MaXfield Group Inc. ("MaXfield") and Fischer Tanks LLC ("Fischer Tanks"), which did not contribute in the prior comparable period, as well as increased demand for most of Fuel Containment's product lines. This was partially offset by reduced output in one of Processing Equipment's subsidiaries as a result of moving into a new manufacturing facility during the period.

Adjusted EBITDA for the quarter was $7,747, which represents an increase of 58% versus the prior comparable quarter. This increase is a result of the reasons highlighted above, including positive contributions from MaXfield and Fischer Tanks, partially offset by the impact of moving into the new facility in Processing Equipment.

Maintenance Capital Expenditures were $882 for the quarter versus $1,669 for the prior comparable period. This reduction is largely due to timing of required capital projects, which can vary significantly from quarter to quarter. During the period, the Company's total purchases of property, plant and equipment were $3,768 of which $2,886 is considered growth capital. This growth capital includes additions to the Company's desanding equipment rental fleet, equipment for a new domestic propane tank manufacturing line, as well as equipment to support a new manufacturing facility in the Processing Equipment's segment.

Cash Available for Distribution increased 107% over the prior comparable period. This increase is due to better operating results (explained above) and reduced Maintenance Capital Expenditures, which were partially offset by increased Financing costs, as debt levels increased to support the acquisitions of Fischer Tanks LLC and MaXfield Group Inc. 

Outlook

The Fuel Containment segment continues to experience increased levels of demand this year for its products and management continues to expect fiscal 2018 to be a stronger year than prior. Output during the quarter for certain propane storage products was negatively impacted due to weather in Northeastern United States and Canada, but this impact is only temporary as backlogs remain strong. Global steel prices continue to be a challenge as a result of dramatic price increases and supply shortages for certain products.

Management continues to expect that fiscal 2018 will also be a stronger year than fiscal 2017 for the Processing Equipment segment. Backlogs remain higher than the previous year and management is expecting positive contributions from the recent acquisition of MaXfield Group Inc. There continues to be a divergence between oil and natural gas pricing which is having a varying effect on this segment's customer base. Pricing pressure continues to be an issue for this segment, in particular for its oil and gas processing equipment product lines, and is expected to continue as long as there remains excess manufacturing capacity in Western Canada.

The outlook for the Service segment is not materially different than the prior year. Pricing pressure has been major challenge for this segment. Management is optimistic that the increase in oil prices will bring higher rates for its service rigs, as many of this segment's customers are oil producers. However, increasing operating expenses and labour challenges could mitigate the benefits.

DIVIDEND

TerraVest is also pleased to announce that The Board of Directors has declared its quarterly dividend of 10 cents per Common share payable on July 10, 2018 to shareholders of record as at the close of business on June 29, 2018. The ex-dividend date is June 27, 2018. The dividend is designated an "eligible dividend" for Canadian income tax purposes.

Additional information can be found in TerraVest's 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.

SOURCE TerraVest Industries Inc.

Dustin Haw, TerraVest Industries Inc., Chief Executive Officer, [phone], [email protected]

Related Links

https://www.terravestcapital.com/