North American Energy Partners Inc. ("NAEP") announced results for the quarter and year ended December 31, 2013.
According to a release, as previously announced, the Company has transitioned from a March 31 year end to a December 31 year end. All year end figures represent four quarters ending December 31.
The Company announced its fourth quarter Consolidated EBITDA earned from continuing operations is $15.1 million with a margin of 13.8 percent. The annual Consolidated EBITDA earned from continuing operations is $43.5 million with a margin of 9.2 percent. This is a result of a more efficient cost structure that the Company implemented over the past year.
The Company has prepared its consolidated financial statements in conformity with accounting principles generally accepted in the United States (US GAAP). Unless otherwise specified, all dollar amounts discussed are in Canadian dollars.
Highlights of the Year Ended December 31, 2013
-Consolidated EBITDA earned from continuing operations of $43.5 million is up from $28.1 million for the year ended December 31, 2012 despite an annual revenue drop of $125.0 million.
-Gross profit margin of 9.7 percent, up from 4.0 percent in the year ended December 31, 2012.
-NAEP completed the sale of its Piling related assets and liabilities on July 12, 2013 resulting in $219.4 million of net proceeds after closing and disposal costs. In addition, NAEP may receive up to $92.5 million in additional proceeds over the next three years, contingent on the purchaser achieving prescribed EBITDA thresholds from the assets and liabilities sold. The first instalment of the contingent proceeds, based on the period from the closing of the sale to June 30, is to be received no later than September 30.
-NAEP used a portion of its Piling net proceeds to pay the $16.3 million outstanding on its Term A Facility.
-NAEP announced on July 22, 2013 that it elected to redeem $150.0 million of its 9.125 percent Series 1 Debentures. The debenture retirement was completed on August 27, 2013 and it is expected to reduce annual interest cost by approximately $13.7 million.
-On October 9, 2013 NAEP signed a three year Fifth Amended and Restated Credit Agreement with its existing banking syndicate. The facility provides for a 1.5 percent lower interest rate and increased borrowing flexibility by securing the facility through a combination of working capital and equipment.
-On October 10, 2013 NAEP announced that it had obtained the required consents to amend the trust indenture related to its 9.125 percent Series 1 Debentures. Holders of approximately 95 percent of the principal amount of debentures provided valid consents. The amendment allows NAEP to make certain payments of up to $30 million, subject to limitations.
-On October 17, 2013 NAEP announced its intention to purchase and subsequently cancel up to 1.8 million common shares. NAEP had reached this limit of purchases on December 19, 2013. This represented 5 percent of its issued and outstanding common shares.
For the year ended December 31, 2013, revenue was $470.5 million, down from $595.4 million for the year ended December 31, 2012. The decrease from 2012 reflects lower reclamation and heavy civil construction volumes, with a reduction in reclamation work at Base Plant, Jackpine and Muskeg River mines and the 2012 completion of heavy civil construction at the Jackpine and Muskeg River mines. Heavy civil construction work performed at the Mildred Lake Mine Relocation ("MLMR") project partially offset these volumes. Work performed in constructing a mechanically stabilized earth ("MSE") wall on the same MLMR project wrapped up in first part of 2013.
For the year ended December 31, 2013, gross profit was $45.7 million or 9.7 percent of revenue, up from $24.0 million or 4.0 percent of revenue in the previous year. The increase in gross profit and margin from 2012 primarily reflects a $20.3 million reduction in operating lease costs as a result of the refinancing of a portion of operating leases to capital leases. Project margin improvements on the MLMR heavy civil construction project and the Joslyn mine site development work, as a result of the execution of previously unsigned change-orders, the benefits realized from equipment cost savings initiatives and a reduction in the use of rental equipment helped to offset the effect of lower equipment utilization.
Martin Ferron, President and Chief Executive Officer of the Company commented, "The very positive quarterly profitability performance showcased the effectiveness of the cost structure improvements we have made over the last eighteen months. Despite the anticipated challenging demand conditions, we achieved well in excess of our targeted 10 percent EBITDA margin in the fourth quarter. We are now poised to perform even better as our revenues gradually climb and, on that theme, we are encouraged by a recent uptick in bidding activity. Of particular note, we have already replaced our non-recurring project work from 2013 and we have started to secure work at the new Fort Hills mine site and accomplished some revenue diversification in the form of a local road-building contract. We are hopeful that the depreciation of the loonie (Canadian dollar) over the last few months, together with our customers' success in capturing better oil prices, will have a rejuvenating effect on oil sands mining activity for 2014."
North American Energy Partners Inc. is a provider of heavy construction and mining services in Canada.
((Comments on this story may be sent to firstname.lastname@example.org))