FORT ST. JOHN, BRITISH COLUMBIA -- (Marketwired) -- 03/30/17 -- Macro Enterprises Inc. (TSX VENTURE: MCR) -
Summary of financial results (thousands of dollars except per share amounts) ----------------------------------------------- Three months ended Year ended December 31 December 31 ----------------------------------------------- 2016 2015 2016 2015 ----------------------------------------------- (unaudited) Revenues $ 21,408 $ 12,910 $ 54,436 $ 114,836 EBITDA(1) 93 4,285 (4,311) 21,481 Net income (loss) (1,790) 1,137 (8,656) 9,171 Net income (loss) per share $ (0.06) $ 0.04 $ (0.28) $ 0.29 ----------------------------------------------- Weighted average common shares outstanding (thousands) 30,129 30,117 ------------------------
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 December 31, 2016 Macro Enterprises has now exceeded 14 quarters and 2.9 million man-hours worked without a single lost time injury. -- Revenue in the quarter was 66% greater than fourth quarter revenue in 2015 and 8% greater than its previous quarter. -- The Company is reporting a $0.1 million EIBITDA despite incurring $1.85 million in non-cash other charges, including stock-based compensation, impairment on receivables and a mark-to-market re-measurement loss. -- The Company incurred business development costs in excess of $3.0 million in 2016, as accounted for in its operating expenditures, relating to large scale projects management remains optimistic will proceed and result in contracts. -- The Company is reporting shareholders' equity of $81.9 million or $2.72 per share based on weighted average common shares outstanding as at December 31, 2016. -- The normal course issuer bid was renewed for another 12 months in December 2016 after re-purchasing 120,000 common shares for an average price of $1.76 per common share. -- The Company reached a settlement agreement with a client converting $3.0 million in aged accounts receivable to cash subsequent to period end. Total working capital as at December 31, 2016 was $42.6 million of which $37.4 million was held in cash. -- The Company continues to actively evaluate and adjust its costs such that it can ensure cash flow positive operations.
Fourth quarter results
Three months ended December 31, 2016 vs. three months ended December 31, 2015
Consolidated revenue was $21.4 million compared to $12.9 million in the fourth quarter last year representing an increase of $8.5 million or 66%. The increase over prior year was a result of a general pick up in work activity. Work levels still remain below historical averages as a result of depressed market conditions and commodity price volatility. Revenue during the quarter primarily related to non-discretionary maintenance and integrity work performed under master service agreements. Revenues recognized in the fourth quarter prior year related to the completion of a large facilities project and various integrity digs and maintenance work completed for its clients under Master Service Agreements.
Operating expenses were 84.4% of revenue in the quarter compared to 78.9% 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. All aspects of the Company's operations are being actively examined and streamlined to realize efficiencies and costs savings while ensuring the highest degree of health, safety and environmental standards are maintained. These efficiencies and savings are showing up in the results of operations despite the temporarily deficient margins being experienced.
General and administrative expenses were $1.4 million, down $285,000 from the $1.7 million recorded prior year. The significant decline is a result of diminished operations concurrent with the Company actively reducing its overhead costs. These reductions have been achieved through headcount and scheduling optimizations, scrutiny of administrative expenditures and a focused effort to cut unnecessary costs. The Company will continue to contain its overhead expenditures while ensuring its business development plans are achieved despite these challenging market conditions.
Depreciation of property, plant and equipment was $1.7 million. The decrease over prior year was a result of reduced capital expenditures in the fiscal year 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 fourth quarter the Company recognized a non-cash loss of $855,000 on the mark-to-market fair value re-measurement of its preferred shares at period end.
During the fourth quarter the Company recognized an additional $0.4 million in impairment charges due to a settlement arrangement reached on an aged accounts receivable with a long term client. In the prior year the Company reduced its impairment on receivables charge by $0.2 million for taxes subsequently collected on monies remitted for the original write down.
During the fourth quarter the Company recognized a non-cash stock-based compensation charge of $0.6 million. The charge in part represents the impact of the modified strike price made during the quarter on its options that remain outstanding. The Company anticipates recognizing an additional $0.1 million in stock-based compensation over the next 2 quarters. The non-cash stock-based compensation charge relate to options granted in fiscal 2014 and in August 2015.
Finance costs of $0.3 million were slightly higher than prior year. The increase over fourth quarter 2015 was largely due to the premium fees paid to its banking syndicate for the amendment and waiver of its interest coverage ratio during the quarter. However, also included in the finance costs were $72,000 of amortized deferred transaction costs relating to the establishment of the Company's senior secured credit facility.
Income tax recovery in the quarter of $0.1 million was at an effective rate of 4.0% which is significantly lower than the enacted tax rates of 26% after appropriate deductions. The decrease over the enacted tax rates related to timing differences being realized during the quarter as a result of the yearend accounting for the Company's deferred income tax liability and other accounting adjustments.
Net loss in the quarter was $1.8 million (($0.06) per share) compared to $1.1 million ($0.04 per share). The recognition of the loss during the quarter compared to prior year's net income was a result of reduced margins and multiple non-cash adjustments booked including impairment to receivables, a loss on re-measurement of the preferred shares and the additional stock-based compensation charge recorded for modifying option strike prices.
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 first quarter revenues to be comparable to first quarter 2016, however, expects first half revenues to materially improve over the prior year. Recurring revenues from its existing master service agreements will continue to represent the bulk of activity for the calendar year. The Company incurred business development costs in excess of $3.0 million in 2016, as accounted for in its operating expenditures, relating to large scale projects and construction contracts that management remains optimistic will result. The Company anticipates other project work to pick up in the back 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 in northeastern B.C. and northwestern Alberta. The Company's corporate office is in Fort St. John, British Columbia. Its shares are listed on the TSX Venture Exchange under the symbol MCR. Information on the Company's principal operations 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.
Macro Enterprises Inc.
President and C.E.O.
Macro Enterprises Inc.