CALGARY, ALBERTA -- (Marketwired) -- 05/29/13 -- Aveda Transportation and Energy Services Inc. (TSX VENTURE: AVE) ("Aveda" or the "Company"), a leading provider of oilfield hauling services and equipment rentals to the energy industry, today announced record revenue and Adjusted EBITDA(1) for the three months ended March 31, 2013.
2013 BUSINESS HIGHLIGHTS
-- Revenue for the quarter ended March 31, 2013 grew by $0.9 million to $23.5 million, compared with revenue of $22.6 million for the same period in 2012. Aveda achieved this revenue growth despite an average year-over-year rig count decline of approximately 9% in the areas the Company operates in;-- Generated net income for the quarter ended March 31, 2013 of $1.7 million, an increase of $1.3 million compared to $0.4 million for the same period in 2012. Net income per share for 2013 was $0.17 compared to net income per share of $0.06 in the comparative period;-- Generated Adjusted EBITDA(1) for the quarter ended March 31, 2013 of $4.3 million, an increase of $1.4 million compared with Adjusted EBITDA(1) of $2.9 million for the same period in 2012; and-- Relocated the Company's Pennsylvania branch from New Columbia to Williamsport, PA.
"Through the hard work of our team members, we were able to achieve profitable results despite market weakness in certain locations," said Kevin Roycraft, President and Chief Executive Officer of Aveda. "The Aveda team is off to a strong start, we will continue to build upon the success we have achieved."
The Company will host its first quarter fiscal 2013 results conference call on Wednesday, May 29th at 4:00 p.m. Eastern Time (ET). President and CEO Kevin Roycraft and Vice-President, Finance and CFO Bharat Mahajan will discuss Aveda's financial results for the quarter and then take questions from securities analysts.
To access the conference call by telephone, dial (647) 427-7450 or (888) 231-8191. A live audio webcast of the conference call will be available at http://www.newswire.ca/en/webcast/detail/1151875/1257551.
The conference call webcast will be archived and available at http://www.avedaenergy.com/investors/Conference-Calls/default.aspx until June 30, 2013.
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.
(in thousands, except per share and ratio amounts) Three Three Months Months Ended Ended % March March Change 31, 31, 2012- 2013 2012 2013 --------------------Revenue 23,471 22,600 3.9%Gross profit(4) 4,859 4,286 13.4%Gross margin 20.7% 19.0% N/AGross profit(4) excluding depreciation and amortization 6,841 5,551 23.2%Gross margin excluding depreciation and amortization 29.1% 24.6% N/AAdjusted EBITDA(1) 4,306 2,924 47.3%Adjusted EBITDA(1) as a percentage of revenue 18.3% 12.9% N/ANet income 1,723 440 291.6%Net income as a percentage of revenue 7.3% 1.9% N/AAdjusted EBITDA(1) per share 0.43 0.41 4.9%Earnings per share - basic 0.17 0.06 183.3%Earnings per share - diluted 0.16 0.06 166.7%Current ratio 2.06 2.41 -14.4%Debt to equity ratio(2) 1.14 1.50 -24.3%Debt to EBITDA ratio(2)(3) 2.67 2.74 -2.6%Net capital assets addition 299 4,532 -93.4%Notes:(1) This News Release contains the term Adjusted EBITDA. Adjusted EBITDA aspresented does not have any standardized meaning prescribed by internationalfinancial reporting standards (IFRS) and therefore it may not be comparablewith the calculation of similar measures for other entities. Management usesAdjusted EBITDA to analyze the operating performance of the business.Adjusted EBITDA as presented is not intended to represent cash provided byoperating activities, net earnings or other measures of financialperformance calculated in accordance with IFRS. It is defined as earningsbefore interest, taxes, depreciation and amortization excluding foreignexchange gains or losses which are primarily related to the US dollaractivities of the Company and can vary significantly depending on exchangerate fluctuations, which are beyond the control of the Company, and writedowns of intangible assets, goodwill impairment, financing costs, gains orlosses on disposal of assets, stock based compensation, fees and expenses onsettlement of debt and losses on extinguishment of debt.(2) Debt includes, revolving credit facility, loans and borrowings,obligations under finance lease and convertible debenture as per theircarrying amounts on the balance sheet.(3) Three months ended March 31 debt to EBITDA ratio calculated usingAdjusted EBITDA for the trailing 12 months.(4) Gross profit calculated as revenue less direct operating expense.
The Company earns revenue primarily by providing specialized transportation services to companies engaged in 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 drilling activity in the exploration, development and production of petroleum resources in Western Canada and in the United States. Drilling activity in the WCSB and in the United States 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 due to the development of shale gas resources in the United States.
Countering these factors is a strong price for oil, which has allowed oil-focused regions to experience increasing rig counts. Although oil has had a recent reduction in the first quarter of 2013 and is expected to remain closer to $90/bbl(1) in the second quarter, the Pleasanton and Midland branches are still benefitting from such prices, while other US branches are making efforts to minimize the impact of declining revenue and margin reductions stemming from continued low activity levels in natural gas focused regions.
The first quarter of 2013 showed average rig count in WCSB decline from the same period in 2012. Spring break-up season has been slow; however a higher rig count for 2013 is expected when break-up season is over(2), despite the unfavourable conditions caused by export capacity bottlenecks. Large capital expenditure projects continue to be challenged by said conditions, as exemplified by the late 2012 announcement of delays in large projects such as the Fort Hill and Joslyn oil sands mines(3). Within WCSB gas plays, various companies have reduced capital expenditure investments due to the low returns experienced from the exploration and production of low-priced natural gas. Instead, these companies have shifted their focus towards cautious investments in liquids-rich plays, divesting from dry gas assets and reducing overall capital expenditure in expectation of market improvements(4).
In Canada, 2013 as whole remains highly uncertain due to the market conditions described, including the risk of additional delays or cancellations in major upstream projects in Canada and continually depressed natural gas prices. However, a slightly more optimistic outlook has been expressed by the major players represented by the PSAC, but it remains to be seen whether such expectations will come to fruition.
Opportunities for expansion and growth continue to appear strongest in the US. According to the Baker Hughes Rig Count(5), drilling activity in the Eagleford and Permian basins remains close to the highest levels experienced in the last 10 years, although in both basins, rig counts in April 2013 have stabilized 8% lower than the same period in 2012. Rig counts remain, however, at very high levels compared to previous years, and the slight decline shown is not expected to represent any significant reduction in Aveda's activity levels in these regions. The high activity levels experienced have allowed Aveda to grow significantly in these areas, with the opening of two new branches (Pleasanton and Midland, TX) in 2012. In contrast, the Mineral Wells, TX branch has faced significant decline in rig counts in the Dallas/Ft. Worth Basin (Barnett Shale play), and the branch is working to maximize revenue and EBITDA by focusing efforts at acquiring new customers in higher activity areas. The branch faces significant decreases in revenue compared to 2012, and no major recovery is expected in the short term due to the significant reductions in rig counts in the region (40% to 50% decline in rig counts). Pennsylvania is also facing significant declining rig counts in the surrounding area. The declining rig counts have created significant downward price pressure stemming from a fierce competitive environment and a shrinking market size. It is expected that rig counts will continue a slow downward trend in Pennsylvania gas plays, which management believes may be partially offset by the relocation of rigs to oil plays further west in the state and into Ohio.
(1) Petroleum Services Association of Canada, Drilling Activity Forecast Update, April 25 2013
(2) Petroleum Services Association of Canada, Drilling Activity Forecast Update, April 25 2013
(5) Baker Hughes Rig Count, accessed on March 7, 2013, at http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm
The Midland terminal, the newest of Aveda's operations, continues to increase its activities as it is established within the Permian Basin client base. The terminal is expected to realize its full potential in mid-2013.
The North American economy faces several macro-economic uncertainties, such as the anemic gross domestic product growth rate, and political uncertainties that relates to the oil and gas industries. 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.
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 Williamsport, 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, 2012 (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.
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.
Aveda Transportation and Energy Services Inc.
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer