FORT ST. JOHN, BRITISH COLUMBIA–(Marketwired – May 24, 2017) – Macro Enterprises Inc. (TSX VENTURE:MCR) –
| Summary of financial Results (thousands of dollars except per share amounts) |
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| Three months ended March 31 |
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| 2017 | 2016 | |||
| (unaudited) | (unaudited) | |||
| Revenues | $12,741 | $9,102 | ||
| EBITDA1 | (1,742) | (1,823) | ||
| Net (loss) earnings | (2,612) | (2,930) | ||
| Net (loss) earnings per share | ($0.08) | ($0.10) | ||
| Weighted average common shares outstanding (thousands) – basic | 30,303 | 30,061 | ||
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
Highlights
- The Company continues to materially exceed industry standard safety averages. As at March 31, 2017 Macro Enterprises has now exceeded 15 quarters and 3.0 million man hours worked without a single lost time injury.
- The Company is reporting shareholders’ equity of $79.5 million or $2.62 per share based on weighted average common shares outstanding as at March 31, 2017.
- The Company incurred business development costs in excess of $0.6 million for the period ending March 31, 2017, in addition to $3.0 million incurred in 2016, as accounted for in its operating expenditures, relating to large scale projects management remains optimistic will proceed and result in contracts.
- Total working capital as at March 31, 2017 was $41.8 million of which $33.2 million was held in cash. The Company continues to remain unleveraged and undrawn on its credit facilities.
First quarter results
Three months ended March 31, 2017 vs. three months ended March 31, 2016
Macro Enterprises Inc. posted consolidated revenue of $12.7 million, a slight increase over last year’s first quarter revenue results of $9.1 million. The increase over prior year was due to a general pick up in work activity carrying over from prior year, however, activity declined substantially quarter over quarter. Work levels continue to remain below historical averages as a result market uncertainty, some scheduling and permitting issues compounded by commodity price volatility. Revenue during the quarter was split fairly evenly between MSA maintenance and integrity work and smaller projects being performed. Revenue during the period ended March 31, 2016 included recurring integrity and maintenance work from its existing clients under master service agreements.
Operating expenses were 96.3 % of revenue in the quarter compared to 95.2 % in the same quarter last year. The Company’s operating margins remained higher than historical averages due to the mix of variable and necessary fixed costs being incurred. In addition, the Company incurred pre-job spending and business development costs on project work anticipated to commence in the second quarter. 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 $1.8 million, up $220,000 from the $1.6 million recorded prior year. The Company will continue to contain its overhead expenditures while ensuring its business development plans are achieved despite these challenging market conditions. The additional costs incurred during the quarter focused on specific project opportunities that the Company feels are highly likely to proceed.
Depreciation of property, plant and equipment was $1.4 million. The decrease over prior year 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 first quarter the Company recognized a non-cash loss of $461,000 on the mark-to-market fair value re-measurement of its preferred shares at period end.
Finance costs of $0.3 million were higher than prior year but remained in-line with its prior quarters’ fees. The increase over first 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.
Income tax recovery in the quarter of $750,000 was at an effective rate of 22.3% which approaches the enacted tax rates of 26% after appropriate deductions.
Net loss in the quarter was $2.6 million (($0.08) per share) compared to a net loss of $2.9 million (($0.10) per share) recognized prior year. The recognition of the loss during the quarter was a result of reduced levels of work activity compounded by diminished margins, impacted by pre-job spending and business development costs, and non-cash adjustments booked including a loss on re-measurement of the preferred shares and stock-based compensation charges.
Outlook
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 second quarter revenues to be almost double its first quarter revenues with a corresponding return to operational profitability. The Company incurred business development costs in excess of $0.6 million for the period ending March 31, 2017, in addition to the $3.0 million incurred in 2016, as accounting for in its operating expenditures, relating to large scale projects management remains optimistic 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. The Company anticipates other project work to pick up materially in the latter half of fiscal 2017.
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 regarding the expected terms, closing and intended use of the new credit facilities may include forward-looking information that involves various risks and uncertainties. These risks and uncertainties include the risk that by reason of oil prices, global economic conditions, government regulation of energy and resource companies, weather patterns, terrorist activity, the price and availability of alternative fuels, the availability of pipeline capacity, potential instability or armed conflict in oil-producing regions, material changes in the Company’s affairs, the results of due diligence investigations or other circumstances leading to a lack of appetite for the provision of the credit facilities on the part of the prospective lenders, the announced credit facilities are reduced in scope or are not advanced. They also include the risk that the Company is not the successful bidder or is otherwise not able to realize on potential growth opportunities identified by it. These risks and uncertainties may cause actual results to differ from information contained herein, and there can be no assurance that such forward-looking statements will prove to be accurate. These statements are based on the commitment letter in place and the expectations 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 expectations 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.
Frank Miles
President and C.E.O.
(250) 785-0033
Macro Enterprises Inc.
Jeff Redmond
Chief Financial Officer
(250) 785-0033
www.macroindustries.ca