March 12, 2020 – St. Albert, AB – Enterprise Group, Inc. (“Enterprise,” or “the Company”) [TSX: E], a consolidator of services to the energy sector; focused primarily on construction services and specialized equipment rental, today released its Q4 2020 and FY2020 results.
OVERALL PERFORMANCE AND RESULTS OF OPERATIONS
|
Three months December 31, 2020 |
Three months December 31, 2019 |
Year ended December 31, 2020 |
Year ended December 31, 2019 |
|
| Revenue |
$3,883,145 |
$5,349,256 |
$15,520,105 |
$19,521,797 |
| Gross margin |
$1,787,065 |
$1,556,653 |
$5,194,638 |
$5,044,970 |
| Gross margin % |
46% |
29% |
34% |
26% |
| EBITDA(1) |
$1,402,092 |
$1,032,448 |
$3,703,808 |
$2,879,683 |
| Net loss and comprehensive loss |
$(2,137,763) |
$(1,197,074) |
$(5,033,709) |
$(5,035,705) |
| Loss per share |
$(0.04) |
$(0.02) |
$(0.10) |
$(0.09) |
- Identified and defined under “Non-IFRS Measures”.
The downturn in the energy industry, compounded by COVID-19, has significantly reduced activity throughout Enterprise’s business sector. Reduced activity from COVID-19 began at the end of the first quarter and has continued throughout 2020. Although COVID-19 protocols have allowed Enterprise’s customers to return to work, activity levels did not return to pre COVID-19 levels. Enterprise’s customers have also modified their behaviours and requirements due to COVID-19. Over the past few years, Enterprise has been updating and modernizing its systems and processes to be effectively used in a cloud computing environment. The Company’s fleet tracking, business intelligence and finance systems have all been modernized and, as a result, Enterprise was able to work effectively and adapt to COVID-19 protocols with respect to the workplace, social distancing and working remotely. Revenue for the three months ended December 31, 2020, was $3,883,145 compared to $5,349,256, a decrease of $1,466,111. Revenue for the year ended December 31, 2020, was $15,520,105 compared to $19,521,797, a decrease of $4,001,692.
The Company generated positive cash flow from operations for the year ended December 31, 2020 of $3,983,730 compared to $3,609,571 in the prior year. During the year ended December 31, 2020, the Company purchased and cancelled 1,547,500 shares at a cost of $235,415. As result, the Company’s share capital account was reduced by $2,222,581 representing the average share value of outstanding shares cancelled. Enterprise believes its stock remains undervalued and will continue to re-invest positive cash flow to buy-back shares to enhance shareholder value.
Gross margin for the three months ended December 31, 2020, was $1,787,065 compared to the prior period of $1,556,653, an increase of $230,412. On a percentage basis, gross margin for the three months increased 17 basis over the prior period. Utilizing the Canada Emergency Wage Subsidy program, the Company recorded $333,798 against direct costs for the three months ended December 31, 2020. Gross margin for the year ended December 31, 2020, was $5,194,638 or 34%, an increase of $149,668 compared to the prior year of $5,044,970 or 26%. On a percentage basis, gross margin for the year increased 8 basis points over the prior period. EBITDA was $1,402,092 for the three months ended December 31, 2020, an increase of $369,644 compared to the prior period. Utilizing the Canada Emergency Wage Subsidy program, the Company recorded $1,416,679 against direct costs for the year ended December 31, 2020. Also through utilizing the Canada Emergency Rent Subsidy program, the Company recorded $79,785 against direct costs for the year. EBITDA was $3,703,808 for the year ended December 31, 2020, an increase of $824,125 compared to the prior year.
In addition to the use of government programs, Enterprise is actively controlling and reducing costs through layoffs, compensation adjustments, premises consolidation, limiting business expenses and travel, contract re-negotiations and postponement of bonuses. It is uncertain if existing government programs will continue or if new programs will be put in place. The Company continues to monitor changes to all government programs and will alter its cost structure accordingly if required.
Despite reduced activity, the Company remains committed to maintaining a strong balance sheet and financial liquidity. During the year, Enterprise extended its bank loan facility for one year with a right to extend for a second year to September 2022. The Company believes it has enough liquidity through cash flow and borrowing capacity on its credit facility to execute its business plan.
On October 1, 2020, Westar acquired additional natural gas power generation assets by way of a share purchase. Westar acquired 100% of the outstanding shares for total consideration of $1,100,000 plus vendor take-back loans of $600,000. The acquired company was amalgamated with Westar.
About Enterprise Group, Inc.
Enterprise Group, Inc. is a consolidator of construction services companies operating in the energy, utility and transportation infrastructure industries. The Company’s focus is primarily 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
contact@enterprisegrp.ca
780-418-4400
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 defined as earnings before interest, taxes, depreciation and amortization, loss (gain) on disposal of property, plant and equipment, fair value adjustments, impairment losses and share-based payments.