Macro Enterprises Inc. Announces 2017 Fourth Quarter and Year End Results

FORT ST. JOHN, British Columbia, April 11, 2018 (GLOBE NEWSWIRE) --

Macro Enterprises Inc. (TSX VENTURE:MCR)

Summary of financial results
(thousands of dollars except per share amounts)
Three months ended
December 31
Year ended
December 31
2017 2016 2017 2016
(unaudited)
Revenues $26,897 $21,408 $ 103,980 $54,436
EBITDA1 416 93 2,872 (4,311)
Net loss (2,050) (1,790) (3,446) (8,656)
Net loss per share ($0.07) ($0.06) ($0.11) ($0.28)
Weighted average common shares outstanding (thousands) 30,273 30,129

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.

Highlights

  • The Company continues to materially exceed industry standard safety averages. As at December 31, 2017 Macro Enterprises has now exceeded 18 quarters and 3.5 million man hours worked without a single lost time injury.

  • The Company generated $3.4 million in positive cash flow from operations for the year compared to ($0.6) million used in operations prior year.

  • Total working capital as at December 31, 2017 was $42.9 million of which $38.1 million was held in cash. The Company continues to remain unleveraged and undrawn on its credit facilities.

  • The normal course issuer bid was renewed for another 12 months in December 2017 after re-purchasing 120,900 common shares for an average price of $1.86 per common share.

  • The Company announced its 50/50 JV signed a $375 million phased reimbursable type contract for construction work on the Trans Mountain Expansion Project.

  • The Company made a $1.5 million investment for a 10% interest in a private Canadian company with expertise in tunnel boring.

  • The Company is reporting shareholders’ equity of $78.6 million or $2.60 per share based on the weighted average common shares outstanding as at December 31, 2017.

Fourth quarter results

Three months ended December 31, 2017 vs. three months ended December 31, 2016

Consolidated revenue was $26.9 million compared to $21.4 million in the fourth quarter last year representing an increase of $5.5 million or 26%. The increase in revenues during the quarter was anticipated as a result of higher activity in the oil & gas industry. However, market conditions, commodity uncertainty, scheduling and permitting issues will all continue to impact activity levels in the foreseeable future. Similar to prior year’s fourth quarter, revenues primarily related to non-discretionary maintenance and integrity work performed under master service agreements. Also, during the quarter, planning work commenced on the Trans Mountain Expansion Project with field construction set to commence once the regulatory requirements for construction of the project have been satisfied. The project has since announced that it was suspending all non-essential spending and would not be committing additional resources to the project until greater clarity is achieved.

Operating expenses were 91.4% of revenue in the quarter compared to 84.4% in the same quarter last year. The Company’s operating margins remained lower than historical averages due to continuing competitive pricing pressure together with rising variable and fixed costs. In addition, the Company incurred pre-job spending and business development costs on project work anticipated for the new fiscal year. 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.

General and administrative expenses were $2.2 million, up $822,000 from the $1.4 million recorded prior year. The increase is a result of increased operations and the Company actively scaling its business to accommodate prospective growth. Significant costs were incurred on business development and related professional fees bidding and negotiating prospectively large multi-year pipeline contracts.

Depreciation of property, plant and equipment was $1.8 million. The increase over prior year resulted from approximately $3.0 million of new automotive and construction equipment acquired during the fourth quarter. 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 gain of $286,000 on the mark-to-market fair value re-measurement of its preferred shares at period end.

Finance costs of $235,000 were slightly less than prior year but remained in-line with the previous quarters’ fees. Included in finance costs were standby fees, interest charges on capital leases, $72,000 of amortized deferred transaction costs relating to the credit facility and $42,000 of effective interest rate payments made on the Company’s preferred shares.

Net loss in the quarter was $2.0 million (($0.07) per share) compared to a net loss of $1.8 million recorded prior year ($0.06 per share). The loss was a result of diminished margins, increased general and administrative costs and the recognition of $286,000 in non-cash mark-to-market adjustments on its preferred shares recorded during the quarter.

Outlook

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’s first half of revenues for 2018 are expected to be challenging and significantly lower than last year.

During fiscal 2017 the Company announced that its 50/50 joint venture with Spiecapag Canada Corp. successfully negotiated and executed a construction contract with Trans Mountain Pipeline L.P. for pipeline construction work on the Trans Mountain Expansion Project.

The contract is for the construction of approximately 85 kilometers of 36 inch pipeline along the Coquihalla-Hope corridor in British Columbia referred to as pipeline “Spread 5B”. Construction is expected to last two years, with field construction to commence once the regulatory requirements for construction of the project have been satisfied. The reimbursable type contract will be phased and has an initial estimated contract value of approximately $375 million. The project has since announced it was suspending all non-essential spending and would not be committing additional resources to the project until greater legal clarity is achieved.

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.

For further information please contact:
Frank Miles
President and C.E.O.
Phone: (250) 785-0033
Jeff Redmond
C.F.O.
(250) 785-0033

Source:Macro Enterprises Inc.