ST. ALBERT, Alberta, August 10, 2018 (FSCWire) — Enterprise Group, Inc. (the “Company” or “Enterprise”) (TSX: E), a consolidator of services to the energy sector; focused primarily on specialized equipment rental; today released its Q2 2018 results.
| Consolidated: |
Three months ended |
Three months ended |
Six months ended |
Six months ended |
| Revenue |
$3,240,620 |
$4,232,452 |
$10,050,856 |
$11,247,731 |
| Gross margin |
$(1,312,114) |
$476,785 |
$813,380 |
$3,172,524 |
| Gross margin % |
(40%) |
11% |
8% |
28% |
| EBITDA(1) |
$(2,181,411) |
$(269,222) |
$(694,156) |
$1,566,125 |
| Loss before tax |
$(3,920,374) |
$(2,193,845) |
$(3,629,757) |
$(1,957,270) |
| Net loss |
$(3,334,737) |
$(1,587,305) |
$(144,494) |
$(1,637,931) |
| EPS |
$(0.06) |
$(0.03) |
$0.00 |
$(0.03) |
(1) Identified and defined under “Non-IFRS Measures”.
(2) In March 2018, the Company closed a transaction to divest substantially all the assets of CTHA. The net operations of CTHA, including the prior period, are presented as a single amount in the consolidated statements of income (loss) and comprehensive income (loss).
• The Company’s operations are subject to seasonality and historically experiences lower activity in the second quarter. The second quarter of 2018 was no exception with spring break thaw and road bans slowing activity. Many customers also chose to delay the re-start of operations after spring thaw and only began renting equipment in June and July.
• Despite the reduced activity during the second quarter, for the six months ended June 30, 2018, the Company generated positive cash flow from operations of $1,857,387 and over the same period the Company purchased and cancelled 310,500 shares valued at $142,100. Enterprise believes it’s stock remains undervalued and will continue to re-invest positive cash flow to buy-back shares to enhance shareholder value. Enterprise is in the process of obtaining approval for a normal course issuer bid to purchase up to 10% of its outstanding stock.
• Over the last 2 years, the Company has made significant improvements to its statement of financial position and overall total debt and continues to make regular debt repayments. At June 30, 2018, after adjusting for goodwill and deferred taxes, the Company has assets more than total debt of approximately $50,000,000. Enterprise will continue to look for opportunities to improve its financial position and opportunities that will allow the Company to diversify and expand.
• For the six months ended June 30, 2018, Enterprise added $2,267,114 of capital assets to complement its rental fleet. Most of the equipment added, was at the request of, or in consultation with Enterprise’s customers, and as a result, these additions were generating revenue shortly after acquired. Also, in June 2018, Enterprise acquired property that it was previously renting in Pouce Coupe, British Columbia. Ownership of the Pouce Coupe property will allow for diversification and expansion in that region to better service customers.
• Revenue for the three months ended June 30, 2018, of $3,240,620 decreased by $991,832 or 23% when compared with the prior period. Revenue for the six months ended June 30, 2018, of $10,050,856 decreased by $1,196,875 compared to the prior period because of the slower second quarter as explained above.
• Gross margin for the three months ended June 30, 2018, of $(1,312,114) or (40%), decreased compared to the prior period and EBITDA for the same period decreased to $(2,181,411). The decrease in gross margin and EBITDA are consistent with decreased revenue as explained above. During the second quarter, Enterprise was successful maintaining its existing customer base, however customer demand was for lower margin services compared to demand in the prior period. Management is committed to maintaining a high quality of service provided to its customers to position the Company to benefit from future increases in activity levels and additional work from large project approvals. Gross margin for the six months ended June 30, 2018, was $813,380, a decrease of $2,359,144 from the prior period. The decrease is due to slower second quarter activity as explained above.
Outlook
The second half of 2018 continues to look positive and we anticipate growth throughout the industry. The restart of the Site C Damn project in Fort St. John, B.C., is expected to begin in 2018, the purchase of the Trans Mountain pipeline by the Federal Government has increased the likelihood of this project proceeding, and the final decision on the LNG Canada project is also likely by the end of 2018.
As a result of ongoing discussions with customers, management’s confidence is building in its outlook for the Company and its services. Management remains confident in its strategic and operational plans and has a seasoned leadership team to guide the Company. Enterprise is committed to its customer base throughout the Western Canadian provinces and strives to provide excellent customer service and is excited about its future prospects.
About Enterprise Group, Inc.
Enterprise Group, Inc. is a consolidator of services to the energy sector. The Company’s focus is primarily on specialized equipment rental. The Company’s strategy is to acquire complementary service companies in Western Canada, consolidating capital, management, and human resources to support continued growth. More information is available at the Company’s website www.enterprisegrp.ca. Corporate filings can be found on www.sedar.com.
For questions or additional information, please contact:
Leonard Jaroszuk, President & CEO, or
Desmond O’Kell, Senior Vice-President
780-418-4400
contact@enterprisegrp.ca
Forward Looking Information
Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Company’s future performance. The use of any of the words “could”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company’s current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The Company’s Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
Non-IFRS Measures
The Company uses International Financial Reporting Standards (“IFRS”). EBITDA is not a measure that has any standardized meaning prescribed by IFRS and is therefore referred to as a non-IFRS measure. This news release contains references to EBITDA. This non-IFRS measure used by the Company may not be comparable to a similar measure used by other companies. Management believes that in addition to net income, EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company’s principal business activities prior to consideration of how those activities are financed or how the results are taxed. EBITDA is calculated as net income excluding depreciation, amortization, interest, taxes and stock based compensation.