CALGARY, May 10, 2017 /CNW/ – Petrowest Corporation (“Petrowest” or the “Company”) (TSX:PRW) announced today its consolidated financial results for the three months ended March 31, 2017 and announces refinancing and restructuring update.
CORPORATE UPDATE
Petrowest announces the Company has proposed to its current lenders that with a continuation of the non-core asset disposition program, including the sale of the R Bee Crushing division, refinancing as previously contemplated is no longer necessary. With the Company's large asset base and the recent strong equipment re-sale market, the Company expects that proceeds from the asset disposition program will be sufficient to fully retire existing bank debt. Ernst & Young Orenda Corporate Finance Inc. have been engaged to assist in the marketing of assets offered for sale. On completion of the asset disposition program, Petrowest will continue with a management plan that is focused on core competencies in providing construction and infrastructure services, the investment in Peace River Hydro Partners, and debt levels that are manageable on a go-forward basis. On May 9, 2017 the Company discontinued negotiations to refinance existing bank loans as referred to in the March 30, 2017 press release.
2017 FIRST QUARTER FINANCIAL SUMMARY
In the three months ended March 31, 2017 compared to the same quarter in 2016, the Company:
(1) See “Non-IFRS Measures” and additional information in Petrowest's Management Discussion and Analysis (“MD&A”) for the three months ended March 31, 2017, available under Petrowest's profile on the SEDAR website at www.sedar.com.
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FINANCIAL RESULTS
|
Three months ended |
||||
|
($000's) |
2017 |
2016 |
|||
|
Revenue from continuing operations |
29,107 |
19,541 |
|||
|
Operating expense |
22,265 |
19,266 |
|||
|
Gross margin from continuing operations(1) |
6,842 |
275 |
|||
|
General and administrative |
1,534 |
1,191 |
|||
|
Adjusted EBITDA from continuing operations (1) |
5,308 |
(916) |
|||
|
Amortization of property and equipment |
2,539 |
4,725 |
|||
|
Amortization of intangible assets |
– |
43 |
|||
|
Share-based compensation |
97 |
323 |
|||
|
Gain on disposal of property and equipment |
– |
(1,211) |
|||
|
Foreign exchange loss |
5 |
15 |
|||
|
Operating gain (loss) |
2,667 |
(4,811) |
|||
|
Gain on equity investment in PRHP |
(883) |
(38) |
|||
|
Net finance expense |
1,675 |
1,042 |
|||
|
Net earnings (loss) and comprehensive earnings (loss) From continuing operations before income tax |
1,875 |
(5,815) |
|||
|
Net earnings (loss) and comprehensive earnings (loss) From Discontinued operations |
(5,165) |
452 |
|||
|
Current income tax expense |
2 |
22 |
|||
|
Deferred income tax recovery |
– |
(1,422) |
|||
|
Net and comprehensive loss |
(3,292) |
(3,963) |
|||
|
Total assets |
114,833 |
152,507 |
|||
|
Total liabilities |
83,899 |
94,826 |
|||
|
Funds from (used in) Operations(1) |
4,114 |
(1,837) |
|||
|
(1) |
See “Non-IFRS Measures” and additional information in Petrowest's Management Discussion and Analysis (“MD&A”) for the three months ended March 31, 2017, available under Petrowest's profile on the SEDAR website at www.sedar.com. |
INDUSTRY OVERVIEW AND OUTLOOK
Entering 2017, industry activity levels in Western Canada have seen a significant increase year over year, including drilling activity in the oil and gas sector. Oil and gas producers rig released ~2,350 wells across Canada in the first quarter of 2017, an increase of 115 per cent from ~1,090 wells drilled in the first three months a year ago.
Petrowest remains cautiously optimistic of activity levels in 2017. Oil and gas producers' 2017 capital programs are expected to be up ~20% in Western Canada, with the leading unconventional resource plays up over 50% compared to 2016. In addition, significant pipeline expansions and midstream work have been publicly announced to date and are expected to get underway in 2017. In the Civil Infrastructure sector, the Alberta Government reconfirmed its infrastructure budget on March 16, 2017, including $3.0 billion for roads and bridges from 2017-2022 of which $900 million is expected in 2017.
On March 30, 2017, Petrowest provided a Corporate Review Update, including equipment utilization strategies, cost reductions and the potential sale of R Bee Crushing division. Petrowest is well underway with implementing and executing on initiatives identified in the Corporate Review Process, partially reflected in our first quarter results.
Peace River Hydro Partners
BC Hydro provides construction bulletin updates bi-weekly located on www.sitecproject.com. In addition, BC Hydro provides quarterly updates on the project. As of April 28, 2017, BC Hydro disclosed that the Main Civil Works contractors are well underway on both the north and south banks, including drilling and the installation of geotechnical instrumentation, excavation on the north and south banks, as well as on the north bank inlet cofferdam and south bank approach channel. Petrowest has been a key contributor to the Peace River Hydro Partners to accelerate production in the second half of 2016 and into 2017. Petrowest continues to help support operations through its Rental division to the Peace River Hydro Partners.
SELECTED FINANCIAL INFORMATION AND NON-IFRS MEASURES:
Selected financial information for the three months ended March 31, 2017 and 2016 is set out above and includes the following non-IFRS financial measures: Gross margin from continuing operations, Gross margin percentage, Adjusted EBITDA from continuing operations, Adjusted EBITDA from continuing operations percentage, Total Adjusted EBTIDA, Funds from (used in) Operations. These terms do not have standardized meanings as prescribed by IFRS, and, therefore, may not be comparable with the calculation of similar measures presented by other issuers. This information should be read in conjunction with the consolidated financial statements for the three months ended March 31, 2017 and the Company's Management, Discussion and Analysis (“MD&A”), available under the Company's profile on the SEDAR website at www.sedar.com. Further information respecting the non-IFRS financial measures is contained in the Company's MD&A.
FORWARD LOOKING INFORMATION:
Certain information and statements contained in this news release constitute forward-looking information. The information and statements contained in this news release that are not historical facts are forward-looking statements. Forward-looking statements (often, but not always, identified by the use of words such as “seek”, “plan”, “continue”, “estimate”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “expect”, “may”, “anticipate” or “will” and similar expressions) may include plans, expectations, opinions, or guidance that are not statements of fact.
Forward looking statements in this news release include the Company's expressed proposal that with a continuation of the asset disposition program, refinancing as previously contemplated is no longer necessary, the Company's expectations regarding the anticipated sale of the R Bee Crushing division, the Company's expectations that the asset disposition program will generate sufficient proceeds to fully retire existing bank debt, and that on completion of the asset disposition program, Petrowest will continue with a management plan that is focused on core competencies in providing construction and infrastructure services, the investment in Peace River Hydro Partners, and debt levels that are manageable on a go-forward basis. Readers should review the cautionary statement respecting forward-looking information that appears below. Any forward-looking statements are made as of the date hereof and Petrowest does not undertake to publicly update and review such statements to reflect new events, subsequent events or otherwise, except to the extent events and circumstances have occurred that are reasonably likely to cause actual results to differ materially from material forward-looking information for a period that is not yet complete or as otherwise required by law.
Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by government agencies and companies undertaking infrastructure projects and oil and gas explorers and producers), the credit risk to which Petrowest is exposed in the conduct of its business, fluctuations in prevailing commodity prices or currency and interest rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of Petrowest's various business divisions to access equipment (including parts) and new technologies and to maintain relationships with key suppliers, the ability of Petrowest's various business divisions to attract and maintain key personnel and other qualified employees, various environmental risks to which Petrowest's business divisions are exposed in the conduct of their operations, inherent risks associated with the conduct of the businesses in which Petrowest's business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities. Forward-looking information concerning the Company's proposal that with a continuation of the asset disposition program, refinancing as previously contemplated is no longer necessary is based on management's expectations that the asset dispositions will occur on terms estimated by management. Forward-looking information concerning the anticipated sale of the R Bee Crushing division is based upon the ongoing marketing for sale thereof. Forward-looking information concerning the Company's expectations that the asset disposition program will generate sufficient proceeds to fully retire existing bank debt is based on management's expectations that the asset disposition program will occur on terms favourable to Petrowest and within the range of sale proceeds estimated by management. Forward-looking information concerning Petrowest's continuation following the asset disposition program with a management plan that is focused on core competencies in providing construction and infrastructure services, the investment in Peace River Hydro Partners, and debt levels that are manageable on a go-forward basis are based upon the current competitive environment in which Petrowest's business divisions operate, expectations relating to future economic and operating conditions and current and announced projects.
Although management of Petrowest believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this news release. All of the forward looking statements of Petrowest contained in this news release are expressly qualified, in their entirety, by this cautionary statement. The various risks to which Petrowest is exposed are described under “Risk Factors” in Petrowest's Annual Information Form, available under Petrowest's profile on the SEDAR website at www.sedar.com.
ABOUT PETROWEST
Petrowest is a diversified infrastructure company with primary operations based in northeastern British Columbia and Alberta. Petrowest's operations are focused on industrial and civil infrastructure projects, gravel crushing and hauling activities, as well as pre-drilling and post-completion energy services.
SOURCE Petrowest Corporation
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