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 and Adjusted
EBITDA(1) for the three months ended March 31, 2014.
2014 BUSINESS HIGHLIGHTS
-- Revenue for the quarter ended March 31, 2014 grew by $12.0 million to
$35.5 million, compared with revenue of $23.5 million for the same
period in 2013. US revenue increased by 82.5% and Canadian revenue
increased by 6.9% which resulted in overall revenue increase of 51.1%;
-- Generated net income for the quarter ended March 31, 2014 of $2.5
million, an increase of approximately $0.8 million compared to $1.7
million for the same period in 2013. Net income per share for 2014 was
$0.15 compared to net income per share of $0.17 in the comparative
period;
-- Generated Adjusted EBITDA(1) for the quarter ended March 31, 2014 of
$6.6 million, an increase of $2.3 million compared with Adjusted
EBITDA(1) of $4.3 million for the same period in 2013;
-- Expanded equipment base by acquiring $2.4 million of additional
equipment and leaseholds in the quarter ended March 31, 2014, including
the addition of two cranes;
-- On January 31, 2014, completed the acquisition of the operating assets
of Williston, North Dakota based M&K Hotshot Trucking, Inc. and M&K Rig
Service, Inc. (collectively "M&K"); and
-- In connection with the completion of M&K acquisition, in December 2013
the Company closed a $23.0 million bought deal private placement
offering of 6.4 million Subscription Receipts of the Company (the
"Subscription Receipts") at a price of $3.60 per Subscription Receipt.
Concurrent with the closing of the M&K acquisition, all Subscription
Receipts automatically converted into 6.4 million common shares of the
Company.
"We are extremely pleased to have delivered another solid quarter of results,"
said Kevin Roycraft, President and Chief Executive Officer of Aveda "We have
delivered these results despite having to overcome the tough industry and
weather conditions some of our competitors have talked about. These results are
true testament to all the hard work and efforts of our dedicated employees."
The Company announces that Jason McCormick has been appointed as Corporate
Secretary of the Company.
The Company will host its first quarter fiscal 2014 results conference call on
Thursday, May 29th, 2014 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/1358301/1503345.
The conference call webcast will be archived and available at
http://www.avedaenergy.com/investors/Conference-Calls/default.aspx until July
31, 2014.
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)
Three Three
Months Months % Change 2013
Ended March Ended March -
31, 2014 31, 2013 2014
------------------------------------------
Revenue 35,455 23,471 51.1%
Gross profit(5) 7,541 4,859 55.2%
Gross margin 21.3% 20.7% N/A
Gross profit(5) excluding
depreciation and amortization 10,289 6,841 50.4%
Gross margin excluding
depreciation and amortization 29.0% 29.1% N/A
Adjusted EBITDA(1) 6,572 4,306 52.6%
Adjusted EBITDA(1) as a percentage
of revenue 18.5% 18.3% N/A
Net income 2,544 1,723 47.6%
Net income as a percentage of
revenue 7.2% 7.3% N/A
Adjusted EBITDA(1) per share 0.38 0.43 -11.6%
Earnings per share - basic 0.15 0.17 -11.8%
Earnings per share - diluted 0.15 0.16 -6.3%
Current ratio(2) 1.77 2.06 -14.1%
Debt to equity ratio(3) 0.56 1.14 -50.9%
Debt to EBITDA ratio(3, 4) 2.20 2.67 -17.5%
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 is calculated as revenue less direct operating expense.
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 level of
drilling activity in the WCSB and US.
In recent history, total drilling activity in the WCSB and US has been
negatively impacted due to, in part, lower average natural gas prices. This has
largely been the result of increased supply driven by the fast development of
shale gas resources in the US. 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 Williston, Pleasanton and Midland
branches, to experience robust rig counts. In the first quarter of 2014, the
average West Texas Intermediate ("WTI") spot price was approximately $99 per
barrel, compared to $94 per barrel during the first quarter of 2013(6).
(6) U.S. Energy Information Administration, accessed on May 8, 2014, at
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rwtc&f=d
In Alberta's portion of the WCSB, first quarter rig counts increased by
approximately 3% relative to the same period in 2013(7). Despite this increase,
overall counts remain below 2012 levels due to, in part, on-going export
capacity bottlenecks and limited capital expenditures, particularly in natural
gas plays.
(7) Rig Locator, accessed on May 8, 2014
Although future activity remains uncertain in Canada, many industry analysts are
forecasting a positive 2014. Patrick Meneley, Vice Chair of Investment Banking
with TD Securities, stated that "the painfully cold winter dramatically
increased the drawdown of gas in storage, which will drive a continued demand
for gas as the system re-establishes a supply". Dan Tsubouchi, head of research
for Haywood Securities in Calgary, stated that "we're seeing a turning point for
the Canadian oil and gas sector"(8). Increasing confidence in Canada's oil and
gas market can be further illustrated through the 11.2% increase in the S&P TSX
E&P Index (peer group of large independent producers) in the first quarter of
2014, compared to the S&P TSX Composite which only increased 5.2% during the
same period(9). As well, during the first four months of 2014, there has been
$3.3 billion worth of equity issuances by oil and gas companies, compared to
only $500.0 million during the same period a year before signaling increased
confidence in the market(8).
(8)
http://business.financialpost.com/2014/04/30/investment-for-oil-and-gas-on-the-upswing/?__lsa=2314-bee8
(9) http://arcfinancial.com/research/energy-charts/capital-markets-thaw
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(10), drilling activity in the Bakken,
Eagleford and Permian basins remain close to the highest levels experienced in
the last ten years. The consistently high activity levels have allowed Aveda to
grow significantly in these areas. Both the Midland, TX and Pleasanton, TX
branches continue to experience increases in activity as they become established
providers in their respective basins. Aveda's newly acquired terminal in
Williston, ND, located in the center of the highly active Bakken region,
continues to show significant potential as the experienced M&K team is
integrated into the Company. 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 branch is focusing on maximizing revenue and
EBITDA by re-directing efforts on acquiring new customers in higher activity,
liquids-rich areas to the north. As with the Barnett basin, the Marcellus, which
is serviced by Aveda's Williamsport, PA branch, is experiencing decrease in
activity.
(10) Baker Hughes Rig Count, accessed on May 8, 2014, at
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview
Overall, 2014 is expected to be a strong year for Aveda as oil prices are
expected to remain strong and natural gas prices start to recover. First quarter
results were positively impacted due to the Canadian dollar depreciating against
the US dollar. As Aveda's business grows in the US, this should continue to
positively impact results.
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, Pennsylvania and North Dakota.
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 well-sites, 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, Edson, AB, Mineral Wells, TX, Pleasanton, TX, Midland, TX,
Williamsport, PA, Buckhannon, WV and Williston, ND. 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, 2013 (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
Aveda Transportation and Energy (TSXV:AVE)
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