Aveda Transportation and Energy Services Announces Results for the Second Quarter of 2016

CALGARY, AB--(Marketwired - August 15, 2016) - 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 results for the three and six months ended June 30, 2016.

2016 Second Quarter Business Highlights

• As a result of the significant slow-down experienced in the oil and gas sector owing to the drastic decline in the price of oil, revenue for the three months ended June 30, 2016 decreased by $14.1 million to $8.9 million, compared with revenue of $23.0 million for the same period in 2015. Another key factor contributing to the revenue decline was the fiercely competitive oilfield service environment where many suppliers are bidding work below the variable costs incurred to complete a job. The Company has put forth a concerted effort to only take on jobs where it could at least cover 100% of the variable costs associated with the jobs. This led to Aveda being selective with which customers it does business with and contributed to the significant revenue decline. It is worth noting that Company has seen a significant increase in revenue to start the third quarter of 2016. Aveda's preliminary July results show revenue of $7.2 million;
• Generated net loss for the three months ended June 30, 2016 of $9.8 million, compared to net income of $5.9 million for the same period in 2015. Loss per share was $0.51 compared to earnings per share of $0.31 in the comparative period. Onetime items related to the acquisition of Hodges Trucking Company, LLC (the "Acquisition") had a positive impact on 2015 earnings of approximately $9.9 million ($0.52 per share). Excluding the onetime items related to the Acquisition, the Company would have generated an operating loss of $4.0 million ($0.21 per share) in the second quarter of 2015;
• Generated Adjusted EBITDA loss¹ for the quarter ended June 30, 2016 of $3.7 million, compared with $2.2 million for the same period in 2015. It is worth noting that the Company's EBITDA performance has improved over the last three quarters as compared to the third quarter of 2015 where Aveda generated an Adjusted EBITDA loss of almost $6.7 million. Aveda expects a substantial improvement in EBITDA in the third quarter of 2016 as compared to the third quarter of 2015 and the first 2 quarters of 2016; and
• The Company ended the quarter with a net asset value per share⁶ of $1.74, $4.4 million in working capital with a working capital ratio of 1.6, and undrawn cash availability of $45.8 million on its senior debt facility.

2016 First Half Business Highlights

• Due to the factors discussed above, as compared to 2015, revenue for the six months ended June 30, 2016 declined by $38.7 million to $20.9 million, compared with revenue of $59.7 million for the same period in 2015;
• Generated net loss for the six months ended June 30, 2016 of $20.1 million, compared to net income of $4.8 million for the same period in 2015. Loss per share was $1.05 compared to earnings per share of $0.25 in the comparative period. Onetime items related to the Acquisition had a positive impact on 2015 earnings of approximately $9.9 million ($0.52 per share). Excluding the onetime items related to the Acquisition, the Company would have generated an operating loss of $5.1 million ($0.27 per share) in 2015;
• Generated an Adjusted EBITDA¹ loss for the six months ended June 30, 2016 of $7.6 million, a decrease of $9.8 million compared with Adjusted EBITDA¹ of $2.2 million for the same period in 2015; and
• The Company rebuilt most of its senior management team with the hiring of a new President & CEO, Vice-President of US Operations and a Vice-President of Canadian Operations who all have long-standing customer relationships and are focused on both profitable revenue generation and cost management.

"Aveda's second quarter results were disappointing as challenging conditions persisted for the oilfield services industry," said Ronnie Witherspoon, President and Chief Executive Officer of Aveda. "However we have seen a rebound in activity levels to start the third quarter of 2016. I am optimistic that the second half of 2016 will show improved results."

The Company's consolidated financial statements and Management's Discussion and Analysis are available on the Company's website at www.avedaenergy.com and the SEDAR website at www.sedar.com.

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 is generally linked to the economic conditions of the energy industry and the level of drilling activity in the WCSB and US.

Although the first 2 quarters of 2016 have been challenging, the Company has been steadily improving its Adjusted EBITDA performance since the third quarter of 2015. Relative to the first half of 2016, the rig count in both Canada and the United States has risen in the third quarter of 2016. In the second quarter of 2016 Aveda rebuilt its senior management team with individuals who have a great depth of oilfield service experience. Further, in the second quarter of 2016, the Company saw the loss of key competitors on both sides of the border. With the loss of key competitors, the increase in rig counts and the relationships that the new management team has brought, Aveda has seen a solid start to the third quarter of 2016. The revenue and Adjusted EBITDA results for the last 4 months are intended to give some context to this:

Based on the information above, Aveda believes that the second quarter of 2016 was the bottom from a revenue perspective and that results should significantly improve in the second half of 2016 from both a revenue and Adjusted EBITDA perspective.

Aveda has the most diversified geographic footprint and customer base in the North American rig moving market. This coupled with a very strong management team, talented workforce, and the largest fleet in the industry, Aveda is very well poised for success.

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, Oklahoma 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, Leduc, AB, Sylvan Lake, AB, Edson, AB, Pleasanton, TX, Midland, TX, Marshall, TX, Williston, ND, and Oklahoma City, OK. 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 expectations regarding the Company's revenue, EBITDA, Adjusted EBITDA 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.

The forward-looking statements regarding Aveda's potential revenue, EBITDA and Adjusted EBITDA are included herein to provide readers with an understanding of Aveda's anticipated cash flow and Aveda's ability to fund its expenditures based on the assumptions described herein. Readers are cautioned that this information may not be appropriate for other purposes.

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, 2015 (the "MD&A"), which are available for viewing on SEDAR at www.sedar.com. 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", "Adjusted EBITDA", "gross profit" "gross profit margin", "gross profit excluding depreciation and amortization" and "gross margin excluding depreciation and amortization" which are defined in the MD&A. The above terms as presented do not have any standardized meanings prescribed by international financial reporting standards ("IFRS") and therefore may not be comparable with the calculation of similar measures for other entities. Management uses EBITDA, Adjusted EBITDA, gross profit, gross profit margin, gross profit excluding depreciation and amortization, and gross margin excluding depreciation and amortization to analyze the operating performance of the business. These non-IFRS measures presented are not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.

This News Release contains the terms "cash flow", "working capital" and "working capital ratio", which do not have any standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities. As an indicator of the Company's performance, cash flow should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. The Company considers cash flow to be a key measure as it demonstrates the Company's underlying ability to generate the cash necessary to fund operations and support activities related to its major assets. Cash flow is determined by adding back changes in non-cash operating working capital to cash from operating activities. Management calculates working capital as current assets less current liabilities and uses this measure to analyze operating performance and leverage.

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.