Aveda Transportation and Energy Services Inc. ("Aveda" or the "Company") (TSX
VENTURE:AVE), a leading provider of oilfield hauling services and equipment
rentals to the energy industry, today announced record revenue, Adjusted
EBITDA(1) and net income for the nine and three months ended September 30, 2013.
2013 Third Quarter Business Highlights
-- Revenue for the three months ended September 30, 2013 grew by almost
$3.5 million to $23.4 million, compared with revenue of $19.9 million
for the same period in 2012;
-- Reported 14 consecutive quarters of record revenue growth as compared to
the same period of the prior year. US revenues grew by 39.4% to $17.4
million compared to $12.5 million in the third quarter of 2012;
-- Generated net income for the three months ended September 30, 2013 of
$2.7 million, an increase of $3.1 million compared to a $0.4 million
loss for the same period in 2012. Net income per share increased to
$0.27 compared to a loss per share of $0.04 in the comparative period;
-- Increased Adjusted EBITDA(1) by 57.9% to $4.5 million in the third
quarter of 2013 as compared to $2.9 million in the same period of 2012;
-- Received a $2.3 million (net of fees) refund for Scientific Research and
Investment Tax Credits related to Aveda's predecessor company from 1993
- 1999;
-- Disposed of redundant capital assets for proceeds of $1.3 million
recording a gain from disposal of assets of $0.6 million;
-- The Company's solid EBITDA results and positive cash flow generation
reduced bank debt by $1.7 million during the three months ended
September 30, 2013;
-- Commenced operation of a new satellite branch in Buckhannon, West
Virginia; and
-- The Company recently announced that it has gained the unilateral right
to convert $4.7 million of convertible debentures to common shares of
the Company. If the debentures had been converted at September 30, 2013,
the Company's Debt to EBITDA(1) ratio would have improved from 1.65 to
1.33.
2013 First Three Quarters' Business Highlights
-- Revenue for the nine months ended September 30, 2013 grew by $6.6
million to $66.9 million, compared with revenue of $60.3 million for the
same period in 2012. Aveda achieved this revenue growth despite an
average year-over-year rig count decline of approximately 7% in the
areas the Company operates in;
-- Generated net income for the nine months ended September 30, 2013 of
$4.8 million, an increase of $5.6 million compared to a $0.8 million
loss for the same period in 2012. Net income per share increased to
$0.48 compared to a loss per share of $0.09 in the comparative period;
Note:
(1) See the Financial Overview table of this news release for definition
of Adjusted EBITDA and Debt to EBITDA.
-- Generated Adjusted EBITDA(1) for the nine months ended September 30,
2013 of $12.0 million, an increase of $4.8 million compared with
Adjusted EBITDA(1) of $7.2 million for the same period in 2012, an
increase of 66.3% year over year;
-- Generated net cash provided by operating activities for the nine months
ended September 30, 2013 of $10.9 million, an increase of $6.6 million
compared to $4.3 million for the same period in 2012;
-- Repaid loans and borrowings of $9.5 million in the nine months ended
September 30, 2013 after investing $2.1 million in new capital assets
and $0.4 million in the Company's new ERP system; and
-- Relocated the Company's Pennsylvania branch from New Columbia to
Williamsport, Pennsylvania.
In addition, to accommodate Aveda's expected growth, the Company will be moving
its US Corporate Office from Mineral Wells, TX to Houston TX in the first
quarter of 2014. This move will put the Company in close proximity to the
headquarters of many current and potential customers.
"The Aveda team has repeatedly demonstrated our ability to execute and deliver
solid results every quarter this year," said Kevin Roycraft, President and Chief
Executive Officer of Aveda. "I thank our team for their efforts and look forward
to continued success."
The Company will host its third quarter fiscal 2013 results conference call on
Tuesday, November 5th at 9:00 a.m. Eastern Time (ET). Executive Chairman David
Werklund, President and CEO Kevin Roycraft and Vice-President, Finance and CFO
Bharat Mahajan will discuss Aveda's financial results for the quarter and then
take questions from securities analysts.
To access the conference call by telephone, dial (647) 427-7450 or
1-888-231-8191. A live audio webcast of the conference call will be available at
http://www.newswire.ca/en/webcast/detail/1249937/1377223.
The conference call webcast will be archived and available at
http://www.avedaenergy.com/investors/Conference-Calls/default.aspx until
December 31, 2013.
The Company's consolidated financial statements and Management's Discussion and
Analysis are available on the Company's website at www.avedaenergy.com or the
SEDAR website at www.sedar.com.
Financial Overview
(in thousands, except per share and ratio amounts)
Nine Nine Three Three
Months Months % Months Months %
Ended Ended Change Ended Ended Change
September September 2012 - September September 2012 -
30, 2013 30, 2012 2013 30, 2013 30, 2012 2013
------------------------------------------------------------
Revenue 66,871 60,316 10.9% 23,376 19,936 17.3%
Gross profit(5) 14,002 10,596 32.1% 5,166 3,492 47.9%
Gross margin 20.9% 17.6% N/A 22.1% 17.5% N/A
Gross profit(5)
excluding
depreciation
and
amortization 19,875 15,203 30.7% 7,112 5,426 31.1%
Gross margin
excluding
depreciation
and
amortization 29.7% 25.2% N/A 30.4% 27.2% N/A
Adjusted
EBITDA(1) 11,987 7,208 66.3% 4,520 2,863 57.9%
Adjusted
EBITDA(1) as a
percentage of
revenue 17.9% 12.0% N/A 19.3% 14.4% N/A
Net income
(loss) 4,812 (761) 732.3% 2,689 (431) 723.9%
Net income
(loss) as a
percentage of
revenue 7.2% -1.3% N/A 11.5% -2.2% N/A
Adjusted
EBITDA(1) per
share 1.20 0.86 39.5% 0.45 0.29 55.2%
Earnings per
share - basic 0.48 (0.09) 633.3% 0.27 (0.04) 775.0%
Earnings per
share - diluted 0.45 (0.09) 600.0% 0.25 (0.04) 725.0%
Current ratio(2) 2.16 2.94 -26.5% 2.16 2.94 -26.5%
Debt to equity
ratio(3) 0.81 1.52 -46.7% 0.81 1.52 -46.7%
Debt to EBITDA
ratio(3, 4) 1.65 3.76 -56.1% 1.65 3.76 -56.1%
Adjusted debt to
EBITDA ratio(6) 1.33 N/A N/A 1.33 N/A N/A
Notes:
(1) This News Release contains the term Adjusted EBITDA. Adjusted EBITDA as
presented does not have any standardized meaning prescribed by international
financial reporting standards (IFRS) and therefore it may not be comparable
with the calculation of similar measures for other entities. Management uses
Adjusted EBITDA to analyze the operating performance of the business.
Adjusted EBITDA as presented is not intended to represent cash provided by
operating activities, net earnings or other measures of financial
performance calculated in accordance with IFRS. It is defined as earnings
before interest, taxes, depreciation and amortization excluding foreign
exchange gains or losses which are primarily related to the US dollar
activities of the Company and can vary significantly depending on exchange
rate fluctuations, which are beyond the control of the Company, and write
downs of intangible assets, goodwill impairment, financing costs, gains or
losses on disposal of assets, stock based compensation, fees and expenses on
settlement of debt and losses on extinguishment of debt.
(2) Current ratio calculated as current assets divided by current
liabilities.
(3) Debt includes loans and borrowings as per their carrying amounts on the
balance sheet.
(4) EBITDA used is Adjusted EBITDA for the trailing twelve months.
(5) Gross profit calculated as revenue less direct operating expense.
(6) Aveda recently announced that it has gained the unilateral right to
convert $4.7 million of convertible debentures to common shares of the
Company. Management intends to convert these debentures into common shares
of Aveda before the end of the year. For the purposes of this calculation,
it is assumed that these debentures had been converted to equity on
September 30, 2013.
Outlook
Aveda earns revenue primarily by providing specialized transportation services
to companies engaged in the exploration, development and production of petroleum
resources. As a result, demand for Aveda's transportation services are generally
linked to the economic conditions of the energy industry and the general level
of drilling activity in the exploration, development and production of petroleum
resources in Western Canada and United States.
In recent history, total drilling activity in the WCSB and United States has
been negatively impacted due to, in part, lower natural gas prices. This has
largely been the result of increased supply driven by the fast development of
shale gas resources in the United States. Countering the decline in natural gas
drilling has been a relatively strong price for oil which has resulted in
oil-focused regions, such as those surrounding Aveda's Pleasanton and Midland,
TX branches, to experience robust rig counts. In the third quarter of 2013, the
average West Texas Intermediate spot price was approximately $106 per barrel,
compared to $94 per barrel during the first half of 2013(1).
In Alberta's portion of the WCSB, third quarter rig counts increased
approximately 9% relative to the same period in 2012. Despite this increase,
overall counts remain below 2011 levels due to, in part, on-going export
capacity bottlenecks and limited capital expenditures, particularly in natural
gas plays. Instead, many companies with natural gas assets have shifted their
focus towards cautious investments in liquids-rich plays, divesting from dry gas
assets and reducing overall capital expenditure in expectation of market
improvements(2).
Although future natural gas activity remains uncertain in Canada, a recent CIBC
report(3) suggests that several years of declining natural gas production has
resulted in a gradual decrease in supply. As a result, in combination with the
expectation of increasing demand, they are forecasting higher natural gas prices
in 2014 relative to what has been experienced in 2013. CIBC also suggests that
recent events in Canada such as British Columbia's efforts to reach an agreement
on a tax framework for LNG exports have focused attention on Canada's world
class shale gas resources. Increasing confidence in Canada's natural gas market
may be illustrated through the recent announcement by Petronas (a Malaysian
state-owned oil and gas company) that they intend to invest $36 billion in the
building of both a liquid natural gas plant in British Columbia, as well as the
pipeline to feed it. If this occurs, it will represent one of the largest direct
investments in Canada by any country(4).
Although there is no shortage of future opportunities in Canada, it appears that
at this time, opportunities for expansion and growth are strongest in the US.
According to the Baker Hughes Rig Count(5), drilling activity in the Eagleford
and Permian basins remain close to the highest levels experienced in the last
ten years. The slight decline compared to previous years is not expected to
represent any significant reduction in Aveda's activity levels in these regions
as rig efficiencies have resulted in more frequent rig moves. The consistently
high activity levels have allowed Aveda to grow significantly in these areas,
with the opening of two new branches (Pleasanton and Midland) in 2012. In
contrast, the Barnett basin, which is primarily serviced by the Mineral Wells,
TX branch, continues to face significant declines in rig counts. As a result,
the Mineral Wells branch continues to work on maximizing revenue and EBITDA by
focusing efforts on acquiring new customers in higher activity, liquids-rich
areas to the north.
(1) U.S. Energy Information Administration, accessed on October 21, 2013, at
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rwtc&f=d
(2)
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/encana-puts-brakes-on-liquids-plays/article8656404/
(3)
http://www.theglobeandmail.com/globe-investor/investment-ideas/research-reports/article14748216.ece/BINARY/NaturalGas.pdf
(4)
http://www.vancouversun.com/technology/Petronas+potential+investment+pegged+billion/9004488/story.html
(5) Baker Hughes Rig Count, accessed on October 21, 2013, at
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother
As with the Barnett basin, the Marcellus, which is serviced by Aveda's
Williamsport, PA branch, continues to experience significant decreases in rig
count and it is expected that rig counts will continue a slow downward trend in
Pennsylvania gas plays. However, despite the declines, overall, the branch
continued to maintain a solid revenue stream. Aveda's new satellite branch in
Buckhannon, WV, which is managed by Aveda's Williamsport team, began operations
at the beginning of the third quarter. The branch is strategically located to
service clients in the Utica basin, an area that has experienced significant
growth in rig counts over the last two years. However, the branch is
experiencing slower than expected growth. The Company will closely monitor this
branch's performance and implement action plans for improvement, before
evaluating its options on whether it will maintain operations at the current
location.
The Company continues to assess the market conditions for its services and
allocates resources accordingly. The Company plans to expend approximately $2.5
- $3.0 million on capital expenditures for the remainder of the year. The
Company is evaluating the merits of acquiring cranes, instead of relying on
third party crane operators. The result of the crane evaluation may result in
additional capital expenditure of up to $1.5 million in 2013.
About Aveda Transportation and Energy Services
Aveda provides specialized transportation services and equipment required for
the exploration, development and production of petroleum resources in the
Western Canadian Sedimentary Basin and in the United States of America
principally in and around the states of Texas and Pennsylvania. Transportation
services include both the equipment necessary to move the load as well as a
trained, professional driver capable of securing, moving and manipulating the
load at its origin and destination. Aveda's rental operations include the rental
of tanks, mats, pickers, light towers and other equipment necessary for oilfield
operations.
Aveda was incorporated in 1994 as a private company to serve the oil and gas
industry. In the spring of 2006 the Company went public on the TSX Venture
Exchange. Aveda has major operations in Calgary, AB, Slave Lake, AB, Leduc, AB,
Sylvan Lake, AB Mineral Wells, TX, Pleasanton, TX, Midland, TX, Williamsport, PA
and Buckhannon, WV. Aveda is publicly traded on the TSX Venture Exchange under
the symbol AVE. For more information on Aveda please visit www.avedaenergy.com.
This News Release contains certain forward-looking statements and
forward-looking information (collectively referred to herein as "forward-looking
statements") within the meaning of applicable Canadian securities laws. All
statements other than statements of present or historical fact are
forward-looking statements. Forward-looking statements are often, but not
always, identified by the use of words such as "anticipate", "achieve", "could",
"believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate",
"outlook", "expect", "may", "will", "project", "should" or similar words,
including negatives thereof, suggesting future outcomes. In particular, this
News Release contains forward-looking statements relating to: demand for the
Company's services and general industry activity level; the Company's growth
opportunities; and expectation to maintain revenue and equipment utilization.
Aveda believes the expectations reflected in such forward-looking statements are
reasonable as of the date hereof but no assurance can be given that these
expectations will prove to be correct and such forward-looking statements should
not be unduly relied upon.
Various material factors and assumptions are typically applied in drawing
conclusions or making the forecasts or projections set out in forward-looking
statements. Those material factors and assumptions are based on information
currently available to Aveda, including information obtained from third party
industry analysts and other third party sources. In some instances, material
assumptions and material factors are presented elsewhere in this News Release in
connection with the forward-looking statements. Readers are cautioned that the
following list of material factors and assumptions is not exhaustive. Specific
material factors and assumptions include, but are not limited to:
-- the performance of Aveda's businesses, including current business and
economic trends;
-- oil and natural gas commodity prices and production levels;
-- the effect of the rebranding on Aveda's businesses;
-- capital expenditure programs and other expenditures by Aveda and its
customers:
-- the ability of Aveda to retain and hire qualified personnel;
-- the ability of Aveda to obtain parts, consumables, equipment,
technology, and supplies in a timely manner to carry out its activities;
-- the ability of Aveda to maintain good working relationships with key
suppliers;
-- the ability of Aveda to market its services successfully to existing and
new customers;
-- the ability of Aveda to obtain timely financing on acceptable terms;
-- currency exchange and interest rates;
-- risks associated with foreign operations;
-- changes under governmental regulatory regimes and tax, environmental and
other laws in Canada and the United States; and
-- a stable competitive environment.
Forward-looking statements are not a guarantee of future performance and involve
a number of risks and uncertainties, some of which are described herein. Such
forward-looking statements necessarily involve known and unknown risks and
uncertainties, which may cause Aveda's actual performance and financial results
in future periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to, the risks
identified in Aveda's annual information form and management discussion and
analysis for the year ended December 31, 2012 (the "MD&A"). Any forward-looking
statements are made as of the date hereof and, except as required by law, Aveda
assumes no obligation to publicly update or revise such statements to reflect
new information, subsequent or otherwise.
This News Release contains the terms EBITDA and Adjusted EBITDA which are
defined in the MD&A. EBITDA and Adjusted EBITDA as presented do not have any
standardized meaning prescribed by international financial reporting standards
(IFRS) and therefore may not be comparable with the calculation of similar
measures for other entities. Management uses Adjusted EBITDA to analyze the
operating performance of the business. Adjusted EBITDA as presented is not
intended to represent cash provided by operating activities, net earnings or
other measures of financial performance calculated in accordance with IFRS.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Aveda Transportation and Energy Services Inc.
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer
(403) 264-5769
bharat.mahajan@avedaenergy.com
www.avedaenergy.com
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