VEGREVILLE, AB, Aug. 14, 2018 /CNW/ - TerraVest
Industries Inc., formerly TerraVest Capital Inc., (TSX: TVK)
("TerraVest" or the "Company") announces its results for the third
quarter ended June 30, 2018. The
Company's financial results for the third quarter of fiscal 2018
represent an improvement over the third quarter of fiscal 2017.
THIRD QUARTER AND NINE MONTHS 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 third quarter and the nine months ended
June 30, 2018 and the comparative periods in fiscal
2017.
|
Third quarters
ended
|
|
Nine months
ended
|
|
June 30,
2018
|
June 30,
2017
|
|
June 30
2018
|
June 30,
2017
|
|
$
|
$
|
|
$
|
$
|
|
|
|
|
|
|
Sales
|
65,459
|
44,993
|
|
190,630
|
139,836
|
|
|
|
|
|
|
Net income
|
1,867
|
1,154
|
|
8,886
|
5,550
|
Add
(subtract):
|
|
|
|
|
|
|
Income tax
expenses
|
990
|
746
|
|
3,790
|
2,781
|
|
Financing
costs
|
1,440
|
1,025
|
|
3,930
|
2,874
|
|
Depreciation and
amortization
|
2,703
|
2,430
|
|
7,856
|
7,608
|
EBITDA
|
7,000
|
5,355
|
|
24,462
|
18,813
|
Other (gains)
losses
|
285
|
(26)
|
|
436
|
(125)
|
Acquisition-related
costs
|
426
|
-
|
|
618
|
-
|
Change in fair value
of derivatives instruments
|
588
|
-
|
|
1,384
|
-
|
Adjusted
EBITDA
|
8,299
|
5,329
|
|
26,900
|
18,688
|
Maintenance Capital
Expenditures
|
(762)
|
(523)
|
|
(2,457)
|
(3,695)
|
Income taxes
paid
|
(442)
|
(867)
|
|
(5,433)
|
(3,067)
|
Interest
paid
|
(1,193)
|
(1,029)
|
|
(3,161)
|
(2,933)
|
Cash Available for
Distribution
|
5,902
|
2,910
|
|
15,849
|
8,993
|
Dividends Paid in
the Period
|
1,847
|
1,835
|
|
5,521
|
5,499
|
Dividend Payout
Ratio
|
31%
|
63%
|
|
35%
|
61%
|
Sales for the quarter were $65,459
compared to $44,993 for the prior
comparable period representing an increase of 45%. 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.
Adjusted EBITDA for the quarter was $8,299, which represents an increase of 56%
versus the prior comparable quarter. This increase is a result of
positive contributions from MaXfield and Fischer Tanks, and
increased volume across many of Fuel Containment's product lines,
partially offset by customer delays affecting profitability in the
Processing Equipment segment. In reconciling EBITDA to Adjusted
EBITDA, one-time restructuring costs of $426 associated with the acquisition of MaXfield
have been added back.
Maintenance Capital Expenditures were $762 for the quarter versus $523 for the prior comparable period. This
increase is largely due to timing of required capital projects,
which can vary from quarter to quarter. During the period, the
Company's total purchase of property, plant and equipment were
$4,043 of which $3,281 is considered growth capital. This growth
capital includes additions to the Company's rental equipment fleet,
as well as manufacturing equipment to support capacity expansions
and process improvements in several of its businesses.
Cash Available for Distribution increased 103% over the prior
comparable period. This increase is due to the additions of
MaXfield and Fischer Tanks, as well as better operating results in
the Fuel Containment segment.
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 logistical issues, but this impact is
only temporary as backlogs remain strong.
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. There continues to be a divergence between
oil and natural gas pricing which is having a varying effect on
this segment's customer base.
The outlook for the Service segment is not materially different
than the prior year. Pricing pressure has been a 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.
Global steel prices and supply constraints continue to be a
challenge for the Company as a whole. More recently, the import
tariffs imposed by the Canadian government and deteriorating trade
relations have added an additional level of uncertainty around
access to raw materials. Management is expecting this to have a
negative impact on the Company moving forward.
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
October 8, 2018 to shareholders of record as at the close
of business on September 28, 2018. The ex-dividend date
is September 26, 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.