FORT ST. JOHN, British Columbia, Aug. 16, 2017 (GLOBE NEWSWIRE) — Macro Enterprises Inc. (TSX-V:MCR)
|Summary of financial results|
|(thousands of dollars except per share amounts)|
| Three months ended
| Six months ended
|Net earnings (loss)||297||(3,634||)||(2,315||)||(6,564||)|
|Net earnings (loss) per share||$||0.01||($||0.12||)||($||0.08||)||($||0.22||)|
|Weighted average common shares outstanding (thousands)||30,299||30,120|
Note 1 – References to EBITDA are to net income from continuing operations before interest, taxes, amortization and impairment charge. EBITDA is not an earnings measure recognized by International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning prescribed by IFRS. Management believes that EBITDA is an appropriate measure in evaluating the Company’s performance. Readers are cautioned that EBITDA should not be construed as an alternative to net income (as determined under IFRS) as an indicator of financial performance or to cash flow from operating activities (as determined under IFRS) as a measure of liquidity and cash flow. The Company’s method of calculating EBITDA may differ from the methods used by other issuers and, accordingly, the Company’s EBITDA may not be comparable to similar measures used by other issuers.
- The Company continues to materially exceed industry standard safety averages. As at June 30, 2017 Macro Enterprises has now exceeded 16 quarters and 3.2 million man hours worked without a single lost time injury.
- Revenues for the quarter doubled over previous quarter with $1.2 million in positive cash flows from operations being generated.
- The Company incurred business development costs in excess of $0.8 million for the period ending June 30, 2017, in addition to $3.0 million incurred in 2016, as accounted for in its operating expenditures, relating to large scale projects management is confident will proceed and result in contracts.
- Total working capital as at June 30, 2017 was $42.6 million of which $27.6 million was held in cash. The Company continues to remain unleveraged and undrawn on its credit facilities.
- The Company has acquired 120,900 common shares under its NCIB as of today’s date.
- The Company is reporting shareholders’ equity of $79.6 million or $2.63 per share based on weighted average common shares outstanding as at June 30, 2017.
- The Company expects third quarter revenues to exceed total revenues recognized during the first six months of the year with margins continuing to improve.
Second Quarter Results
Three months ended June 30, 2017 vs. three months ended June 30, 2016
Consolidated revenue was $25.2 million and significantly greater than the $4.1 million reported in the second quarter last year. The material improvement in work performed during the quarter was expected due to a general pick up in industry activity though it still remains below historical averages. Market conditions, commodity uncertainty and permitting issues continue to impact overall activity levels. The majority of revenue recognized during the quarter related to 3 large facility jobs and one large pipeline project. The remaining revenues related to maintenance and integrity work performed under existing master service agreements. In the second quarter last year, revenues were entirely related to maintenance and integrity work being performed under master service agreements.
Operating expenses were $22.0 million or 87% of revenue compared to $5.7 million or 139% of revenue in the second quarter last year. The Company’s operating margins improved but remained higher than historical averages due to the mix of variable and necessary costs incurred. In addition, the Company incurred some pre-job spending and business development costs on project work anticipated to commence in the second half of the year. All aspects of the Company’s operations are diligently being monitored and streamlined to continue to realize efficiencies and costs savings while ensuring the highest degree of health, safety and environmental standards are maintained.
General and administrative expenses were $2.1 million, up $477,000 and representing a 30% increase from the $1.6 million incurred prior year. The significant increase is a result of increased operations and the Company actively scaling its business to accommodate prospective growth. However, as a result of uncertain market conditions, the Company will continue to its efforts to contain its overhead costs while maintaining its business development plans.
Depreciation of property, plant and equipment was $1.4 million and down slightly from prior year’s second quarter. The decrease was a result of reduced capital expenditures being made and the aging of the Company’s existing fleet of equipment. Depreciation is calculated at various declining balance methods across the Company’s multiple categories of property, plant and equipment and is used in guiding the annual capital expenditure estimates. Residual values, methods of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.
During the second quarter the Company recognized a non-cash gain of $715,000 on the mark-to-market re-measurement of its preferred shares at period end.
During the second quarter the Company recognized non-cash stock-based compensation charges of $35,000 relating to options granted in prior years.
Finance costs of $251,000 were higher than prior year but remained in-line with its prior quarters’ fees. The increase over second quarter 2016 was due to the premium fees and expenses paid to its banking syndicate for two waivers and amendments made under its senior secured credit facility. However, also included in the finance costs were $72,000 of amortized deferred transaction costs relating to the establishment of the credit facility and $42,000 of effective interest rate payments made on its preferred shares.
Net income was $0.3 million ($0.01 per share) compared to a net loss of $3.6 million (($0.12) per share) recognized during the three months ended June 30, 2016. The increase to a net income position was a result of a pickup in industry activity, with new larger projects for the Company commencing and a non-cash gain booked on the re-measurement of the preferred shares during the quarter.
With a solid balance sheet, enhanced liquidity and its industry leading health, safety and environmental practices, the Company is in excellent financial shape to address the continued market and commodity price volatility.
The Company will maintain its focus on working with blue chip pipeline owners and operators to carry out their construction and maintenance programs across Canada.
The Company expects third quarter revenues to exceed total revenues recognized during the first six months of the year with margins continuing to improve. The Company incurred business development costs in excess of $0.8 million for the period ending June 30, 2017, in addition to the $3.0 million incurred in 2016, as accounted for in its operating expenditures, relating to large scale projects management is confident will proceed and result in contracts. Recurring revenues from its existing master service agreements will continue to represent the bulk of activity for the calendar year. However, other project work may also commence later in the year.
Macro’s core business is providing pipeline and facilities construction and maintenance services to major companies in the oil and gas industry. The Company is based in Fort St. John, B.C. Its shares are listed on the TSX Venture Exchange under the symbol MCR. Information on the Company’s principal operating unit, Macro Industries Inc., can be found at www.macroindustries.ca.
Forward Looking Statements
Certain statements in this news release may include forward-looking information that involves various risks and uncertainties. These may include, without limitation, statements regarding expected revenues, expenses and industry trends and the pursuit of strategic acquisitions. These risks and uncertainties include, but are not restricted to, global economic conditions, government regulation of energy and resource companies, seasonal weather patterns, maintaining and increasing market share, terrorist activity, the price and availability of alternative fuels, the availability of pipeline capacity, and potential instability or armed conflict in oil producing regions. These risks and uncertainties may cause actual results to differ from information contained herein. There can be no assurance that such forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These statements are based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CONTACT: For further information please contact: Frank Miles President and C.E.O. Phone: (250) 785-0033 Jeff Redmond C.F.O. (250) 785-0033