TORONTO, ONTARIO--(Marketwire - Nov. 14, 2012) -
NOT FOR DISTRIBUTION TO THE U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Tuckamore Capital (TSX:TX)(TSX:TX.DB.B)(TSX:TX.DB.C) today announced its results for the three and nine months ended September 30, 2012.
| 9 months | 9 months | |||||
| ($ millions, except per share amounts) | Q3 2012 | Q3 2011 | 2012 | 2011 | ||
| Revenue | 189.5 | 158.2 | 554.2 | 439.5 | ||
| Gross profit | 39.7 | 36.8 | 107.5 | 96.4 | ||
| Selling, general & administrative expenses | 27.1 | 21.6 | 80.8 | 67.9 | ||
| Net (loss) income from continuing operations | (5.1 | ) | 4.3 | (19.0 | ) | 22.5 |
| Adjusted EBITDA from continuing operations | 12.6 | 14.3 | 26.7 | 26.7 | ||
| Basic (loss) income per share from continuing operations | (0.07 | ) | 0.06 | (0.27 | ) | 0.31 |
Revenue for the three and nine months ended September 30, 2012 was $189.5 million and $554.2 million, versus $158.2 million and $439.5 million produced in 2011. Gross profit for three and nine months ended September 30, 2012 was $39.7 million and $107.5 million representing a gross profit margin of 20.9% and 19.4%. For the same period last year, the Company reported gross profit of $36.8 million and $96.4 million representing a gross profit margin of 23.2% and 21.9% percent. Adjusted EBITDA was $12.6 million and $26.7 million for the three and nine months ended September 30, 2012, compared to $14.3 million and $26.7 million for the corresponding periods in 2011.
MARKETING
The Marketing segment had mixed results in the quarter. Gemma had a challenging quarter with lower revenues in comparison to the same quarter in the prior year. Gemma's revenues decreased due to a reduction in business volumes from a few key clients. In addition, Gemma experienced increased costs associated with regulatory changes for certain clients in the financial sector. IC Group had improved results compared to the same period in the prior year. The positive results were directly related to increased sales to existing clients and an overall improvement in margins due to the realization of operational efficiencies.
INDUSTRIAL SERVICES
The Industrial Services segment had a mixed quarter with ClearStream reporting solid results while Quantum Murray had a disappointing quarter, although improved from the previous quarter.
At ClearStream most divisions continue to experience increased business volumes. The Oil Sands division was impacted by a delay in a large turnaround project, which will positively impact the fourth quarter results. The Fabrication and Conventional Industrial Services divisions in particular had significant EBITDA contribution which exceeded prior year results.
Quantum Murray had a disappointing quarter with all divisions reporting lower results compared to the same prior year period. The third quarter however was improved from the prior two quarters largely due to improvements in the Demolition division, where a review of the internal bidding processes and restructuring measures have been undertaken. The Environmental division had a satisfactory quarter with the Hazmat division being a major contributor to the group's profitability. The Metals division was negatively affected by the Demolition division's decreased activity thereby decreasing metals volumes and gross margins.
OTHER
Gusgo continues to have improved results over the previous year due to an increase in business from one of its larger clients and the addition of a new significant client. Favourable gross margins have been realized as a result of achieving operational improvement with one client.
For Titan while economic improvements in the general construction market have resulted in higher revenues compared to last year, these gains were offset by lower than anticipated revenues from the oil & gas and government market segments. EBITDA was slightly lower compared to prior year due to some margin erosion as a result of competitive pressures on larger tender sales and higher labour costs.
LIQUIDITY AND CAPITAL RESOURCES
The funding of working capital to support ClearStream's growth continues to be a challenge for Tuckamore. Management of cash resources continues to consume a considerable amount of management time. Subsequent to the quarter end, Tuckamore reached an agreement with its senior lender to amend the financial covenants related to the Senior Credit Facility.
FOURTH QUARTER OUTLOOK
The fourth quarter operations outlook remains optimistic. ClearStream is expected to continue the trend of increased business activity due to the stimulated oil and gas industry. All divisions within ClearStream are anticipating a busy fourth quarter. The Conventional Industrial Services division is expecting increased volumes with the start-up of a new significant contract. The Oil Sands division will benefit from a scheduled turnaround in the final quarter of the year. The Transportation division is expecting continued strong volumes. The Wear Technology division has had recent contract wins which will improve results in the next quarter.
At Quantum Murray there will be a continued focus on cost management and profitable completion of current projects at the Demolition division. The Environmental division has a healthy backlog which should translate into solid results in the upcoming quarter. There is uncertainty for the next quarter at the Metal division due to unstable scrap prices.
At Gemma, although performance and quality remain consistent and above targets, several clients' volume forecasts have been reduced due to either strategy changes or regulatory demands. Focus on new business development to diversify and expand Gemma's customer base.
IC Group is anticipating a solid fourth quarter with comparable results to the prior two quarters with some upside potential as a few large existing clients are expanding their loyalty programs to different regions and accessing additional product lines.
In the other segment, both Titan and Gusgo are expecting a solid final quarter of the year. At Titan, the fourth quarter is seasonally busy as demand for tire chains and snow removal product increases. As well activity in the oil sands maintenance and construction for the remainder of 2012 is expected to continue at its present pace.
Gusgo is expecting comparable results to the prior three quarters with a stable customer base with consistent business volumes.
About Tuckamore
Tuckamore has investments in 7 businesses representing a diverse cross-section of the Canadian economy.
Forward-looking information
This press release contains certain forward-looking information. Certain information included in this press release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results and may include statements or information regarding the future plans or prospects of Tuckamore or the Operating Partnerships and reflects management's expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of Tuckamore and the Operating Partnerships. Without limitation, information regarding the future operating results and economic performance of Tuckamore and the Operating Partnerships constitute forward-looking information. Such forward-looking information reflects management's current beliefs and is based on information currently available to management of Tuckamore and the Operating Partnerships. Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking information including risks related to investments, conditions of capital markets, economic conditions, dependence on key personnel, limited customer bases, interest rates, regulatory change, ability to meet working capital requirements and capital expenditures needs of the Operating Partners, factors relating to the weather and availability of labour.
These factors should not be considered exhaustive. In addition, in evaluating this information, investors should specifically consider various factors, including the risks outlined under "Risk Factors," which may cause actual events or results to differ materially from any forward-looking statement. In formulating forward-looking information herein, management has assumed that business and economic conditions affecting Tuckamore and the Operating Partnerships will continue substantially in the ordinary course, including without limitation with respect to general levels of economic activity, regulations, taxes and interest rates. Although the forward- looking information is based on what management of Tuckamore and the Operating Partnerships consider to be reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with this forward-looking information, and management's assumptions may prove to be incorrect. This forward-looking information is made as of the date of this press release, and Tuckamore does not assume any obligation to update or revise it to reflect new events or circumstances except as required by law. Undue reliance should not be placed on forward-looking information. Tuckamore is providing the forward-looking financial information set out in this PRESS RELEASE for the purpose of providing investors with some context for the "Fourth Quarter Outlook" presented. Readers are cautioned that this information may not be appropriate for any other purpose.
Non-standard measures
The terms "EBITDA" and "adjusted EBITDA", (collectively the "Non-IFRS measures") are financial measures used in this press release that are not standard measures under International Financial Reporting Standards ("IFRS"). Tuckamore's method of calculating Non-IFRS measures may differ from the methods used by other issuers. Therefore, Tuckamore's Non-IFRS measures, as presented may not be comparable to similar measures presented by other issuers.
EBITDA refers to net earnings determined in accordance with IFRS, before depreciation and amortization, interest expense and income tax expense. EBITDA is used by management and the Directors as well as many investors to determine the ability of an issuer to generate cash from operations. Management also uses EBITDA to monitor the performance of Tuckamore's reportable segments and believes that in addition to net income or loss and cash provided by operating activities, EBITDA is a useful supplemental measure from which to determine Tuckamore's ability to generate cash available for debt service, working capital, capital expenditures, income taxes and distributions. Tuckamore has provided a reconciliation of income to EBITDA in its press release.
Adjusted EBITDA refers to EBITDA excluding the gain or loss on reduction or sale of ownership interest (dilution gains or losses), the write-down of goodwill and intangible assets, restructuring costs, gain on re-measurement of investments, gain on debt extinguishment, fair value adjustments on stock based compensation expense and the impairment of long-term investments. Tuckamore has used Adjusted EBITDA as the basis for the analysis of its past operating financial performance. Adjusted EBITDA is used by Tuckamore and management believes it is a useful supplemental measure from which to determine Tuckamore's ability to generate cash available for debt service, working capital, capital expenditures, and income taxes. Adjusted EBITDA is a measure that management believes facilitates the comparability of the results of historical periods and the analysis of its operating financial performance which may be useful to investors.
Investors are cautioned that the Non-standard Measures are not alternatives to measures under IFRS and should not, on their own, be construed as an indicator of performance or cash flows, a measure of liquidity or as a measure of actual return on the shares. These Non-standard Measures should only be used in conjunction with the financial statements included in the press release and Tuckamore's (formally Newport Partners Income Fund) annual audited financial statements available on SEDAR at www.sedar.com or www.tuckamore.ca.
| TUCKAMORE CAPITAL MANAGEMENT INC. | ||||||
| Consolidated Interim Balance Sheets | ||||||
| (In thousands of Canadian dollars) | ||||||
| (unaudited) | ||||||
| September 30, 2012 | December 31, 2011 | |||||
| Assets | ||||||
| Current Assets: | ||||||
| Cash | $ | 13,428 | $ | 28,625 | ||
| Cash and short-term investments held in trust | 4,061 | 8,108 | ||||
| Accounts receivable | 180,320 | 149,371 | ||||
| Inventories | 28,233 | 37,464 | ||||
| Prepaid expenses | 4,802 | 3,486 | ||||
| Other current assets | 3,064 | 3,046 | ||||
| Current assets of discontinued operations | - | 3,517 | ||||
| $ | 233,908 | $ | 233,617 | |||
| Property, plant and equipment | 66,634 | 63,709 | ||||
| Goodwill | 76,667 | 76,667 | ||||
| Intangible assets | 70,734 | 78,928 | ||||
| Other assets | 1,767 | 3,114 | ||||
| $ | 449,710 | $ | 456,035 | |||
| Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued liabilities | 96,441 | 91,173 | ||||
| Deferred revenue | 4,434 | 8,608 | ||||
| Current portion of obligations under capital leases | 4,914 | 5,540 | ||||
| Current portion of senior credit facility | - | 10,000 | ||||
| Current liabilities of discontinued operations | - | 651 | ||||
| $ | 105,789 | $ | 115,972 | |||
| Obligations under capital leases | 11,277 | 3,681 | ||||
| Senior credit facility | 90,755 | 85,705 | ||||
| Secured debentures | 151,197 | 146,314 | ||||
| Unsecured debentures | 17,517 | 14,215 | ||||
| Deferred tax liability | 11,640 | 12,510 | ||||
| Shareholders' equity | 61,535 | 77,638 | ||||
| $ | 449,710 | $ | 456,035 | |||
| TUCKAMORE CAPITAL MANAGEMENT INC. | |||||||||||||
| Consolidated Interim Statements of (Loss) Income and Comprehensive (Loss) Income | |||||||||||||
| (In thousands of Canadian dollars, except per share amounts) | |||||||||||||
| (unaudited) | |||||||||||||
| Three months ended | Nine months ended | ||||||||||||
| September 30 | September 30 | ||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||
| Revenues | $ | 189,536 | $ | 158,202 | $ | 554,193 | $ | 439,496 | |||||
| Cost of revenues | (149,874 | ) | (121,431 | ) | (446,668 | ) | (343,059 | ) | |||||
| Gross profit | 39,662 | 36,771 | 107,525 | 96,437 | |||||||||
| Selling, general and administrative | (27,094 | ) | (21,562 | ) | (80,826 | ) | (67,852 | ) | |||||
| Amortization of intangible assets | (2,910 | ) | (2,838 | ) | (7,870 | ) | (9,648 | ) | |||||
| Depreciation | (4,247 | ) | (5,647 | ) | (11,255 | ) | (12,944 | ) | |||||
| Income from equity investments | - | - | - | 372 | |||||||||
| Interest expense | (4,956 | ) | (6,720 | ) | (15,740 | ) | (18,216 | ) | |||||
| Accretion of secured and unsecured debentures | (2,824 | ) | (2,466 | ) | (8,185 | ) | (5,528 | ) | |||||
| (Loss) gain on debt extinguishment | (724 | ) | - | (3,535 | ) | 37,451 | |||||||
| Gain on remeasurement | - | 7,281 | - | 7,281 | |||||||||
| Gain on bargain purchase | - | 709 | - | 709 | |||||||||
| Restructuring costs | (926 | ) | - | (926 | ) | - | |||||||
| Fair value adjustment to stock based compensation expense | - | - | - | (883 | ) | ||||||||
| Transaction costs | - | (910 | ) | - | (2,293 | ) | |||||||
| (Loss) income before income taxes | $ | (4,019 | ) | $ | 4,618 | $ | (20,812 | ) | $ | 24,886 | |||
| Income tax expense - current | (632 | ) | (6 | ) | (644 | ) | (14 | ) | |||||
| Income tax (expense) recovery - deferred | (403 | ) | (300 | ) | 2,432 | (2,394 | ) | ||||||
| Net (loss) income from continuing operations | $ | (5,054 | ) | $ | 4,312 | $ | (19,024 | ) | $ | 22,478 | |||
| Income from discontinued operations (net of income tax) | - | 13,421 | 1,962 | 15,953 | |||||||||
| Net (loss) income and comprehensive (loss) income | $ | (5,054 | ) | $ | 17,733 | $ | (17,062 | ) | $ | 38,431 | |||
| (Loss) income per share | |||||||||||||
| Basic: | |||||||||||||
| Continuing operations | $ | (0.07 | ) | $ | 0.06 | $ | (0.27 | ) | $ | 0.31 | |||
| Net (loss) income | $ | (0.07 | ) | $ | 0.25 | $ | (0.24 | ) | $ | 0.54 | |||
| Diluted: | |||||||||||||
| Continuing operations | $ | (0.07 | ) | $ | 0.06 | $ | (0.27 | ) | $ | 0.31 | |||
| Net (loss) income | $ | (0.07 | ) | $ | 0.25 | $ | (0.24 | ) | $ | 0.53 | |||
| TUCKAMORE CAPITAL MANAGEMENT INC. | |||||||
| Consolidated Interim Statements of Cash Flows | |||||||
| (In thousands of Canadian dollars) | |||||||
| (unaudited) | |||||||
| Nine months ended | Nine months ended | ||||||
| September 30, 2012 | September 30, 2011 | ||||||
| Cash provided by (used in): | |||||||
| Operating activities: | |||||||
| Net (loss) income for the period | $ | (17,062 | ) | $ | 38,431 | ||
| Items not affecting cash: | |||||||
| Income from discontinued operations | (1,962 | ) | (15,953 | ) | |||
| Amortization of intangible assets | 7,870 | 9,648 | |||||
| Depreciation | 11,255 | 12,944 | |||||
| Deferred income tax (recovery) expense | (2,432 | ) | 2,394 | ||||
| Income from equity investments, net of cash received | - | 372 | |||||
| Accretion expense and non-cash deferred financing costs | 8,304 | 5,656 | |||||
| Gain on re-measurement of investment | - | (7,281 | ) | ||||
| Gain on bargain purchase | - | (709 | ) | ||||
| Loss (gain) on extinguishment of debt | 3,535 | (37,451 | ) | ||||
| Stock based compensation expense | 959 | 2,793 | |||||
| Changes in non-cash working capital | (22,890 | ) | (33,662 | ) | |||
| Distributions from discontinued operations | - | 1,634 | |||||
| Cash provided by discontinued operations | 106 | 1,779 | |||||
| $ | (12,317 | ) | $ | (19,405 | ) | ||
| Investing activities: | |||||||
| Acquisition of businesses, net of cash acquired | - | (31,865 | ) | ||||
| Proceeds on disposal of investments | 7,866 | 38,730 | |||||
| Purchase of property, plant and equipment | (3,008 | ) | (1,633 | ) | |||
| Net proceeds on disposal of property, plant and equipment | 321 | 733 | |||||
| Purchase of software | (29 | ) | (763 | ) | |||
| Increase in other assets | (1,027 | ) | (2,000 | ) | |||
| Cash used in discontinued operations | (7 | ) | (69 | ) | |||
| $ | 4,116 | $ | 3,133 | ||||
| Financing activities: | |||||||
| Increase of long-term debt | - | 11,016 | |||||
| Repayment of long-term debt | (6,200 | ) | - | ||||
| Decrease (increase) in cash held in trust | 4,047 | (4,372 | ) | ||||
| Repayment of capital lease obligations | (4,458 | ) | (3,978 | ) | |||
| Cash used in discontinued operations | (385 | ) | (1,269 | ) | |||
| $ | (6,996 | ) | $ | 1,397 | |||
| Decrease in cash | (15,197 | ) | (14,875 | ) | |||
| Cash, beginning of period - continuing operations | 28,340 | 27,230 | |||||
| Cash, beginning of period - discontinued operations | 285 | 509 | |||||
| Cash, end of period | $ | 13,428 | $ | 12,864 | |||
| Cash, end of period - continuing operations | $ | 13,428 | $ | 10,280 | |||
| Cash, end of period - discontinued operations | - | 2,584 | |||||
| Supplemental cash flow information: | |||||||
| Interest paid | 20,984 | 9,362 | |||||
| Cash acquired upon acquisition | - | (1,575 | ) | ||||
| Supplemental disclosure of non-cash financing and investing activities: | |||||||
| Acquisition of property, plant and equipment through capital leases | 11,446 | 2,287 | |||||
| Debt and accrued interest repaid through issuance of debentures | - | 152,951 | |||||
Contact Information:
Keith Halbert
Chief Financial Officer
416-775-3796
keith@tuckamore.ca
www.tuckamore.ca