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 record revenue for the three and
nine months ended September 30, 2012.
2012 BUSINESS HIGHLIGHTS
-- Revenue for the nine months ended September 30, 2012 grew by $7.7
million to $60.3 million compared with revenue of $52.6 million for the
same period in 2011;
-- Generated net loss for the nine months ended September 30, 2012 of $0.8
million, as compared to net income of $2.3 million for the same period
in 2011;
-- Generated Adjusted EBITDA(1) for the nine months ended September 30,
2012 of $7.2 million, a decrease of $1.5 million compared with Adjusted
EBITDA(1) of $8.7 million for the same period in 2011;
-- Expanded equipment base by acquiring $22.5 million of net additional
equipment and leaseholds during the first nine months of 2012;
-- Commenced operations in new branches in Pleasanton, TX and Midland, TX.
The Company signed a new lease on a new Pennsylvania facility that will
see its operations move from New Columbia to Williamsport, PA in early
2013;
-- Raised $8.0 million ($7.2 million net of financing costs) in new equity
financing, and increased its existing credit facility to $50 million
from $35 million;
-- Acquired selected assets of 1st Rate Energy Services Inc. and a private
company called Complete Energy Services Inc. together referred to as
"Complete" for approximately $7.5 million. As a result of the
acquisition the Company increased its rental fleet by 270 pieces of
equipment and established operation in Sylvan Lake, AB ;
-- The Company elected to close its Crossfield, AB rental operation and
combine it with the newly acquired Sylvan Lake, AB operation;
-- Following consecutive periods of poor performance, the Company elected
to close its Melita, MB and Grande Prairie, AB branches and allocated
its fleet assets amongst other branches; and
-- Relocated Nisku, AB branch to Leduc, AB and added rig moving to the
operation along with service work.
Note:
(1) See MD&A Section 8: Non-IFRS Measure
"Despite current market pressures, we have demonstrated that our customers value
our services highly which allowed us to continue to grow our operations" said
David Werklund, Executive Chairman of Aveda "We continue to build on our
strength and lay the foundation for future growth, to become a highly profitable
transportation and rentals company to serve the energy industry."
The Company's consolidated financial statements and Management's Discussion and
Analysis are available on the Company's website at www.avedaenergy.com or the
SEDAR website at www.sedar.com.
Financial Overview
(in thousands, except
per share and ratio
amounts)
----------------------
Nine Nine Three Three
Months Months Months Months
ended Ended Ended Ended
September September % Change September September % Change
30, 2012 30, 2011 2011 - 2012 30, 2012 30, 2011 2010 - 2011
----------------------------------------------------------------
Revenue 60,316 52,607 14.7% 19,936 18,106 10.1%
Gross
profit(5) 10,596 12,857 -17.6% 3,492 4,557 -23.4%
Gross margin 17.6% 24.4% -28.1% 17.5% 25.2% -30.4%
Adjusted
EBITDA(1) 7,208 8,677 -16.9% 2,863 2,890 -0.9%
Adjusted
EBITDA(1)
as a
percentage
of revenue 12.0% 16.5% -27.5% 14.4% 16.0% -10.0%
Net income
(loss) (761) 2,263 -133.6% (431) 1,676 -125.7%
Net income
(loss) as a
percentage
of revenue -1.3% 4.3% -129.3% -2.2% 9.3% -123.4%
Adjusted
EBITDA per
share(1,2) 0.86 1.52 -43.4% 0.29 0.50 -42.0%
Earnings per
share -
basic and
diluted(2) (0.09) 0.40 -122.5% (0.04) 0.29 -113.8%
Current
ratio 2.94 0.65 352.1% 2.94 0.65 352.1%
Debt to
equity
ratio(3) 1.53 1.43 6.3% 1.53 1.43 6.3%
Debt to
EBITDA
ratio(3, 4) 3.76 1.74 116.3% 3.76 1.74 116.3%
Net capital
assets Not Not
addition 22,448 12 Meaningful 11,908 (1) Meaningful
Notes:
(1) This News Release contains the term Adjusted EBITDA. Adjusted EBITDA as
presented does not have any standardized meaning prescribed by
international financial reporting standards (IFRS) and therefore it may
not be comparable with the calculation of similar measures for other
entities. Management uses Adjusted EBITDA to analyze the operating
performance of the business. Adjusted EBITDA as presented is not
intended to represent cash provided by operating activities, net
earnings or other measures of financial performance calculated in
accordance with IFRS. It is defined as earnings before interest, taxes,
depreciation and amortization excluding foreign exchange gains or
losses which are primarily related to the US dollar activities of the
Company and can vary significantly depending on exchange rate
fluctuations, which are beyond the control of the Company, and write
downs of intangible assets, goodwill impairment, financing costs, gains
or losses on disposal of assets, stock based compensation, fees and
expenses on settlement of debt and losses on extinguishment of debt.
(2) 2011 Per share amounts calculated to take into consideration the
Company's 30:1 share consolidation which took place on November 28,
2011 as if the share consolidation had been in effect throughout 2011.
(3) Debt includes, revolving credit facility, loans and borrowings,
obligations under finance lease and convertible debenture as per their
carrying amounts on the balance sheet.
(4) Nine and three months ended September 30 debt to EBITDA ratio
calculated using Adjusted EBITDA for the trailing 12 months.
(5) Gross profit calculated as revenue less direct operating expense.
Outlook
The Company earns revenue primarily by providing specialized transportation
services to companies engaged in drilling for exploration, development and
production of petroleum resources. Demand for the Company's transportation
services is therefore linked to the economic conditions of the energy industry
and the general level of activity in the exploration, development and production
of petroleum resources in Western Canada and in the US. Drilling activity in the
WCSB and in the US has in recent history been affected by amongst other things,
low natural gas prices and higher than normal natural gas inventories in storage
caused by many factors including reduced demand for commodities as a consequence
of a global recession and the temporary oversupply of natural gas caused by the
fast development of shale gas resources in the US.
Countering these factors is a strong price for oil, which has allowed
oil-focused regions to experience increasing rig counts. Two of Aveda's newest
branches are benefitting from such increases in Texas, while other US branches
have been successful in maintaining revenues and margins despite reduced
rig-counts in gas-focused regions such as the Dallas-Ft. Worth basin and the
Utica and Marcellus Shale.
In the WCSB, although up to July 2012 rig counts were higher than 2011, levels
of activity failed to ramp up(1) to the expected levels in Q3 due mainly to
rainy weather conditions. A return to higher activity levels is expected in Q4
as oil and gas companies increase drilling operations with the arrival of the
cold weather and the use of their remaining drilling budgets, although it is
uncertain if rig counts will return to 2011 levels for the remaining of the
year.
Opportunities for expansion and growth continue to appear strongest in the US.
According to the Baker Hughes Rig Count(2), drilling activity in the Eagleford
and Permian basins has increased on average 30.8% year over year. This has
allowed Aveda to grow significantly in these areas, with the opening of two new
branches (Pleasanton and Midland) in 2012. The Mineral Wells branch is expected
to maintain revenues by acquiring new customers in higher activity areas, to
compensate for reduced activity in the Dallas/Ft. Worth gas basin where it
operates. Similarly, Pennsylvania has experienced a decline of 30% in active
rigs due to the predominance of gas plays in the region, but Aveda's local
branch has been able to maintain equipment utilization due to excellent customer
relationships and recognized superior operational efficiencies compared to
competitors. It is expected that rig counts will continue the downward trend in
Pennsylvania gas plays, however management believes the decline may be partially
offset by the relocation of rigs to oil plays further west in the state.
The North American economy faces several macro-economic uncertainties, such as,
the US fiscal cliff related to the Budget Control Act, the on-going European
debt crisis, and the impact of the economic slowdown in China. It is not clear
at this time what impact, if any, these uncertainties will have on the North
American oil and gas industry and conversely on the operations of the Company.
The Company is monitoring these macro-economic issues through feedback from its
customers and will adjust its operations as necessary.
(1) June Warren Nickels Rig Locator, accessed on October 15, 2012, at
www.riglocator.ca
(2) Baker Hughes Rig Count, accessed on October 15, 2012,
http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm
About Aveda Transportation and Energy Services
Aveda provides specialized transportation of products, materials, supplies 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 and Pennsylvania.
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 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, Slave Lake, AB, Leduc, AB,
Sylvan Lake, AB Mineral Wells, TX, Pleasanton, TX, Midland, TX and New Columbia,
PA. 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 expectation to maintain revenue 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.
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, 2011 (the "MD&A"). 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 and Adjusted EBITDA which are
defined in the MD&A. EBITDA and Adjusted EBITDA as presented do not have any
standardized meaning prescribed by international financial reporting standards
(IFRS) and therefore may not be comparable with the calculation of similar
measures for other entities. Management uses Adjusted EBITDA to analyze the
operating performance of the business. Adjusted EBITDA as presented is not
intended to represent cash provided by operating activities, net earnings or
other measures of financial performance calculated in accordance with IFRS.
FOR FURTHER INFORMATION PLEASE CONTACT:
Aveda Transportation and Energy Services Inc.
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer
(403) 264-5769
bharat.mahajan@avedaenergy.com
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