Solid growth anticipated driven by strong fundamentals in core markets and further synergies from adopting new business model
DRUMMONDVILLE, QUEBEC--(Marketwired - Feb. 16, 2015) -
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NAPEC Inc. ("NAPEC" or the "Corporation") (TSX:NPC) today unveiled its strategic plan (the "Plan") for the 2015-2017 period. The Corporation anticipates solid revenue and profitability growth over the Plan's horizon driven by strong industry fundamentals in its core markets and further benefits and efficiencies from the gradual implementation of its new business model.
"This Plan will position NAPEC as a company with two core competencies operating in two countries. It leverages the foundation built in 2014 with the adoption of a new business model and its implementation in the United States. We are gradually realizing cost savings and synergy gains in that market and we will implement the new structure in Canada during 2015 and 2016", said Pierre L. Gauthier, President and Chief Executive Officer of NAPEC.
NAPEC's core competencies consist of providing construction and maintenance services for electrical transmission and distribution networks, as well as substations in North America. It also involves a wide array of construction and maintenance services for gas utility distribution networks and gas-powered and electric-powered heavy equipment for various markets in the United States. Given strong industry fundamentals and favourable trends, the Corporation believes demand for its services will grow substantially.
In the electricity market, the North American transmission and distribution infrastructure has suffered from under-investment and is aging, prompting the need for more maintenance, upgrade or replacement.
Another major trend involves the gradual change in sources of electricity generation in North America. Coal has historically been the leading source of electricity generation in the United States, but it is increasingly being supplanted by natural gas due to its availability and low cost, while many old coal-fired generating facilities will have to close due to high retrofitting costs to comply with more stringent regulation. In Ontario, coal has been phased out and new capacity will mainly stem from renewable sources, including hydroelectricity.
From a trailing 12-month revenue base of $290 million as of September 30, 2014, the Plan calls for revenue to double to $600 million by the end of 2017, while profitability should improve through the mix of revenues derived from higher margin segments and synergies from the implementation of the new business model. NAPEC projects to return to its historical EBITDA margin in the range of 7-8%.
Revenue growth will be mainly achieved by further expanding NAPEC's presence in the northeastern United States and by increasing its market share in Ontario. The Corporation also intends to proceed with selective acquisitions that will provide additional expertise or equipment to support its expansion.
"We are very optimistic about the future and this Plan further strengthens our convictions. Our vision is to build on NAPEC's core activities of construction, installation and maintenance for electrical and gas grids and to leverage the strength of its subsidiaries, which enjoy leading positions and solid reputations in their markets. Meanwhile, corporate management will provide the vision and the financial resources required to achieve and even surpass these strategic objectives, to the benefit of our shareholders", concluded Mr. Gauthier.
EBITDA is a measure that has no standardized meaning prescribed by IFRS and is thus considered to be a non-IFRS measure. Therefore, this measure may not be comparable to similar measures presented by other issuers. This measure is presented and described in this release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.
This document contains forward-looking statements that reflect management's current expectations regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management assumes no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.
OVERVIEW OF THE CORPORATION
NAPEC is a corporation operating in the energy sector. The Corporation is a leading service provider to the public utility and heavy industrial markets mainly in Quebec, Ontario, and the eastern United States. NAPEC and its subsidiaries build and maintain electrical transmission and distribution grids, as well as networks for gas utilities. In addition, the Corporation installs gas-powered and electric-powered heavy equipment for utilities, industrial gas power plants, and petrochemical facilities in North America.