CALGARY, ALBERTA--(Marketwired - Aug. 18, 2014) - Mr. Wayne Wadley, President of CERF Incorporated (the "Company" or "CERF")(TSX VENTURE:CFL), is pleased to announce financial and operating results for the Company for the three months ended June 30, 2014.
"On the whole, CERF delivered a strong second quarter, increasing net income by more than $390 thousand, Adjusted EBITDA by 46%, and again reported revenues in excess of $10 million," stated Wayne Wadley, President and CEO. "Despite several construction related project delays that impacted our 4-Way business, we are very pleased to announce the eighth consecutive quarter in which CERF has delivered results exceeding those reported a year earlier."
Full details of the Company's financial results, in the form of the unaudited, condensed, consolidated interim financial statements and notes for the three months ended June 30, 2014 and Management's Discussion and Analysis of the results are available on SEDAR at www.sedar.com and on the Company's website at www.cerfcorp.com.
Selected Q2 2014 Financial Highlights:
- Net income increased to $257,000 or $0.02 per basic share in the quarter versus a net loss of $134,000 or ($0.01) per share during the prior year's quarter;
- Adjusted EBITDA increased 46% to $2,602,000 for the quarter ended June 30, 2014, compared to $1,784,000 for Q2 2013.
- EBITDA per basic share, increased 7% to $0.16 in the second quarter versus $0.15 in 2013;
- The Company paid dividends of $0.06 per share to shareholders in Q2 2014 while maintaining the annualized payout ratio to 65% from an annualized payout ratio of 89% as at Q1 2013; and
- During the second quarter, 252,900 warrants were executed resulting in proceeds of $796,000 and the exercise of 177,685 agent options resulted in proceeds of another $478,000.
Corporate Highlights:
CORPORATE
- As at August 13, 2014, 2,264,636 warrants have been exercised for total proceeds of $7.1 million and 245,006 agent options have been exercised for proceeds of $662,000.
EQUIPMENT RENTAL, SALES AND SERVICE ACQUISITIONS
- On May 28, 2014, CERF enhanced its capability to provide equipment used in directional drilling applications with the acquisition of the business and assets of Empire Tool Inc. ("Empire"), a privately owned oilfield service and rental business for $9.2 million or approximately 3.3 times Empire's 2013 adjusted and normalized EBITDA.
- On June 26, 2014, CERF announced the proposed strategic business combination with Winalta Inc. ("Winalta")(TSXV:WTA), a publically traded oilfield accommodation rentals business. With an implied purchase price of approximately $65 million including net debt, CERF is acquiring Winalta at approximately 4.8 times EV / 2014E EBITDA creating some of the following benefits:
- increased EBITDA margins;
- reduced cash flow volatility due to the contract backed nature of Winalta's business;
- expanded geographic positioning;
- a more diverse suite of rental assets; and
- greater overall market penetration amongst E&P clients.
"The additions of Empire and Winalta greatly enhance our size and scope in the oilfield rental and services space," stated Mr. Wadley. "Both acquisitions complement and significantly grow our equipment fleet, enabling us to service a much broader customer base. Subject to shareholder approval on August 27, 2014, we look forward to welcoming the entire Winalta team to join us in continuing to expand our business and add value for our shareholders."
WASTE MANAGEMENT
- Margins for MCL were $1,208,000, an increase of 770% when compared those delivered in the prior year's quarter. Improvements are a result of increased impacted soil volumes, operational productivity and the positive result of initiatives to improve the quality of revenue and reduce expenses which were implemented in the previous quarter.
Summary of Second Quarter Consolidated Financial Results:
Three months ended June 30, | ||||||||
(in $,000s except percentages and per share data) | 2014 | 2013 | $ Change | % | ||||
Revenue | 10,014 | 10,065 | -51 | -1 | % | |||
Direct Expenses | 7,661 | 8,301 | -640 | -8 | % | |||
Gross margin | 2,353 | 1,764 | 589 | 33 | % | |||
Net income (loss) | 257 | -134 | 391 | - | ||||
Net income (loss) per basic share | 0.02 | -0.01 | 0.03 | - | ||||
Adjusted EBITDA1 | 2,602 | 1,784 | 818 | 46 | % | |||
Adjusted Free Cash Flow | 667 | -963 | 1,630 | - | ||||
Annualized payout ratio | 65 | % | 89 | % | -24 | % | - | |
Dividends per basic share | $0.06 | $0.06 | - | - |
1 See Financial Measures Reconciliations on page 4 of CERF's Second Quarter 2014 MD&A
Summarized financial results for the three months ended June 30, 2014 follow:
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Unaudited) IN THOUSANDS OF CANADIAN DOLLARS
June 30, 2014 | December 31, 2013 | ||||
Assets | |||||
Current assetsCash | - | 557 | |||
Accounts receivable | 8,369 | 8,433 | |||
Inventory | 2,261 | 1,561 | |||
Income taxes recoverable | 21 | - | |||
Prepaid expenses and deposits | 519 | 397 | |||
11,170 | 10,948 | ||||
Non-current assets | |||||
Long-term receivable | 122 | 238 | |||
Property and equipment | 44,434 | 36,890 | |||
Intangibles and goodwill | 14,271 | 10,714 | |||
58,827 | 47,842 | ||||
Total assets | 69,997 | 58,790 | |||
Liabilities and Shareholders' Equity | |||||
Current liabilities: | |||||
Bank indebtedness | 957 | - | |||
Accounts payable and accrued liabilities | 4,837 | 5,339 | |||
Dividends payable | 1,055 | 963 | |||
Income taxes payable | - | 559 | |||
Current portion of long-term debt | 2,700 | 1,502 | |||
Current portion of finance leases | 282 | 314 | |||
9,831 | 8,677 | ||||
Non-current liabilities: | |||||
Long-term debt | 20,475 | 14,801 | |||
Obligation under finance leases | 3,980 | 4,106 | |||
Deferred income taxes | 2,286 | 2,115 | |||
26,741 | 21,022 | ||||
Total liabilities | 36,572 | 29,699 | |||
Shareholders' equity | |||||
Share capital | 37,510 | 32,894 | |||
Warrants | 787 | 835 | |||
Share purchase loans receivable | (93 | ) | (148 | ) | |
Contributed surplus | 732 | 744 | |||
Deficit | (5,511 | ) | (5,234 | ) | |
33,425 | 29,091 | ||||
Total liabilities and shareholders' equity | 69,997 | 58,790 |
See accompanying notes to the Condensed Consolidated Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited) IN THOUSANDS OF CANADIAN DOLLARS
Three months ended | Six months ended | ||||||||
June 30, 2014 | June 30, 2013 | June 30, 2014 |
June 30, 2013 | ||||||
Revenues | 10,014 | 10,065 | 22,439 | 21,538 | |||||
Direct expenses | |||||||||
Direct operating costs | 5,166 | 6,535 | 10,627 | 12,026 | |||||
Cost of sales of equipment, fuel and parts | 941 | 471 | 2,416 | 1,363 | |||||
Depreciation of equipment | 1,554 | 1,295 | 2,945 | 2,705 | |||||
7,661 | 8,301 | 15,988 | 16,094 | ||||||
Gross margin | 2,353 | 1,764 | 6,451 | 5,444 | |||||
Other expenses | |||||||||
General and administrative | 1,324 | 1,218 | 2,808 | 2,592 | |||||
Depreciation of other property and equipment | 42 | 26 | 73 | 53 | |||||
Amortization of intangible assets | 235 | 251 | 485 | 502 | |||||
Business acquisition expenses | 34 | - | 34 | 10 | |||||
Finance costs | 339 | 446 | 655 | 870 | |||||
1,974 | 1,941 | 4,055 | 4,027 | ||||||
Income (loss) before income taxes | 379 | (177 | ) | 2,396 | 1,417 | ||||
Income taxes (recovery) | |||||||||
Current | (179 | ) | (37 | ) | 452 | 540 | |||
Deferred | 301 | (6 | ) | 198 | (99 | ) | |||
122 | (43 | ) | 650 | 441 | |||||
Net income (loss) and comprehensive income | |||||||||
for the period | 257 | (134 | ) | 1,746 | 976 | ||||
Net income (loss) per share | |||||||||
Basic | 0.02 | (0.01 | ) | 0.11 | 0.08 | ||||
Diluted | 0.02 | (0.01 | ) | 0.11 | 0.08 | ||||
Weighted average number of shares outstanding | |||||||||
Basic | 16,629,850 | 11,671,096 | 16,362,058 | 11,671,096 | |||||
Diluted | 16,721,603 | 11,671,096 | 16,399,818 | 11,671,096 |
See accompanying notes to the Condensed Consolidated Interim Financial Statements
About CERF Incorporated
CERF Incorporated is a Canadian public corporation engaged in the rental, sale and service of industrial and construction equipment and waste management and environmental services. The Equipment Rental Segment includes the rental of residential, commercial and industrial construction-related equipment, including sales and service of equipment. It also includes the rental and sale of equipment to the drilling and service sectors of the oil and natural gas industry. The Waste Management Segment consists of complete waste facility management (six landfill sites in central Alberta) including waste facility design and construction services, recycling management and collection services, and consulting services. The Waste Management Segment also consists of waste removal and disposal from commercial, industrial and residential customers. CERF Incorporated trades on the TSXV under the symbol "CFL".
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.
Contact Information:
Wayne Wadley
President and CEO
(403) 850-4095
wwadley@cerfcorp.com
CERF Incorporated
Ken Stephens
Vice President Finance & CFO
(780) 410-2998 ext 371
kstephens@cerfcorp.com