Welcome!

News Feed Item

ENTREC Provides Operational Update, Lowers 2014 Revenue Guidance

SPRUCE GROVE, ALBERTA -- (Marketwired) -- 04/11/14 -- ENTREC Corporation (TSX VENTURE:ENT) ("ENTREC" or the "Company"), a leading provider of heavy lift and heavy haul services, today provided an operational update and lowered its 2014 revenue guidance.

As was guided in ENTREC's Q4 and year-end financial results press release on March 10, 2014, the Company has been experiencing lower levels of equipment utilization to begin 2014. ENTREC expects these lower levels of business activity to continue into the second quarter. These reduced expectations primarily relate to the timing and delays in oil sands construction projects.

Based on current expectations for future business activity, and assuming no business acquisitions are completed, ENTREC estimates revenue for the year ending December 31, 2014 could range between $230 and $250 million. This range represents a decline from ENTREC's previous revenue estimate of between $250 million and $270 million and compares to pro forma revenue of $237 million that ENTREC and each of its acquired businesses achieved on a combined basis in the year ended December 31, 2013.

"Our competitive position in our industry and long term outlook remains positive," said John M. Stevens, ENTREC's President and CEO. "We believe this period of lower activity will be temporary. We are now geographically positioned where we want to be, with a growing equipment fleet offering the complete range of crane and heavy haul transportation services in markets that will drive significant growth in our business over the long-term. These markets include the Alberta oil sands region, the development of LNG supply and infrastructure in northern British Columbia and north-west Alberta, and the Bakken region of North Dakota."

Subject to finalization of ENTREC's first quarter financial results, the Company estimates its first quarter 2014 revenue will approximate $61 million. ENTREC's 2014 first quarter revenue remains subject to final quarter-end billing and accounting adjustments, and as a result, may be different from current expectations. The Company expects revenue to trend upward in the second half of 2014 as project work begins to ramp up and utilization levels increase. ENTREC expects higher utilization levels in later 2014 could also continue into 2015, 2016, and 2017 due to the long-term nature of many oil sands projects.

With ENTREC's lowered revenue outlook for 2014, the Company also expects its 2014 adjusted EBITDA margin will decline from 2013. Lower equipment utilization levels will result in lower absorption of the fixed components of the Company's operating costs. In addition, the Company has experienced pricing pressure related to its heavy haul transportation services due to the current lag in oil sands construction projects. The Company has experienced significant increases in fuel costs over the past several months, which have also reduced the Company's profitability.

ENTREC currently estimates its adjusted EBITDA margin for 2014 could range between 20% and 22%. Consistent with the anticipated trend in revenue, ENTREC believes its adjusted EBITDA margin will also begin 2014 lower and then increase as the year progresses and utilization improves. Subject to finalization of ENTREC's first quarter financial results, the Company expects its 2014 first quarter adjusted EBITDA margin could approximate 17%. ENTREC's 2014 first quarter adjusted EBITDA margin remains subject to final quarter-end accounting adjustments, and as a result, may be different from current expectations.

ENTREC continues to review its overall capital expenditures needs and reiterates its $46 million capital expenditure program for 2014, which will position ENTREC to continue to expand its crane fleet in anticipation of future demand. As part of this review, the Company has reallocated approximately $5 million of capital expenditures to equipment types currently experiencing higher levels of utilization.

Company Lowering its Cost Structure

ENTREC is working to diligently manage its cost structure to drive higher profitability in the future. These measures included a 15% reduction in ENTREC's salary workforce in late March 2014 and closure of two branches. ENTREC is also working with its customers to recover a portion of the higher fuel costs through rate increases and fuel surcharges.

Normal Course Issuer Bid (NCIB)

In November 2013 ENTREC implemented a NCIB to purchase for cancellation, from time to time, its issued and outstanding common shares. Pursuant to the NCIB, ENTREC may purchase for cancellation up to a maximum of 8,561,671 common shares, being approximately 10% of the public float, during the NCIB's term. The NCIB commenced November 20, 2013 and will terminate on November 19, 2014 or such earlier time as it is completed or otherwise terminated at ENTREC's option.

In March and April 2014, the Company acquired 1,474,800 common shares for cancellation (representing 1.3% of ENTREC's issued and outstanding common shares) pursuant to the NCIB at an average purchase price of $1.49 per share.

Despite ENTREC's reduced guidance for 2014, the Company does not believe it will need to raise any additional equity to fund its 2014 capital expenditure program or NCIB. The Company intends to fund its 2014 capital expenditure program and NCIB purchases from its new asset-based debt facility, finance leases and cash from operating activities.

About ENTREC

ENTREC is a leading provider of heavy lift and heavy haul services with offerings encompassing crane services, heavy haul transportation, engineering, logistics and support. ENTREC provides these services to the oil and natural gas, construction, petrochemical, mining and power generation industries. ENTREC's common shares trade on the TSX Venture Exchange under the trading symbol "ENT".

Non-IFRS Financial Measures

Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, loss (gain) on disposal of property, plant and equipment, change in fair value of embedded derivative, share-based compensation, and non-recurring business acquisition and integration costs. In addition to net income, Adjusted EBITDA is a useful measure as it provides an indication of the financial results generated by ENTREC's principal business activities prior to consideration of how these activities are financed or how the results are taxed in various jurisdictions and before certain non-cash expenses.

Adjusted EBITDA also illustrates what ENTREC's EBITDA is, excluding the effect of non-recurring business acquisition and integration costs. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by revenue.

Please see ENTREC's Management Discussion & Analysis for the year ended December 31, 2013 for reconciliations of adjusted EBITDA and adjusted net income to net income, the most directly comparable financial measure calculated and presented in accordance with IFRS.

Forward-looking Statements

This press release contains forward-looking statements which reflect ENTREC's current beliefs and are based on information currently available to ENTREC. These statements require ENTREC to make assumptions it believes are reasonable and are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond ENTREC's control.

Examples of such forward-looking statements in this MD&A include, but are not limited to: expectation that ENTREC's equipment utilization will remain lower throughout the first half of 2014; estimate that revenue for the year ending December 31, 2014 could range between $230 million and $250 million; estimate that revenue for the first quarter ended March 31, 2014 could approximate $61 million; expectation that demand for the Company's services in the Alberta oil sands region will gain momentum as the year progresses; estimate that overall adjusted EBITDA margin for fiscal 2014 will decline from 2013 and could range between 20% and 22% for the year ending December 31, 2014 and approximate 17% for the quarter ended March 31, 2014; plan to complete a 2014 capital expenditure program of $46 million; intention that the 2014 capital expenditure program and NCIB purchases will be funded from the Company's asset-based debt facility, finance leases and cash from operating activities; and that ENTREC will not need to raise additional equity to fund its 2014 capital expenditure program or NCIB.

ENTREC's forward-looking statements involve a number of significant assumptions. Key assumptions utilized in developing forward-looking statements related to ENTREC's growth and revenue expectations include achieving its internal revenue, net income and cash flow forecasts for 2014 and beyond. Key assumptions involved in preparing ENTREC's internal forecasts include, but are not limited to, its expectations and estimates that: demand for crane and heavy haul transportation services in western Canada increase from current levels in the second half of 2014; ENTREC will be able to retain key personnel and attract additional high-quality personnel to support its planned revenue growth; construction projects and production activity in the Alberta oil sands region and in northern British Columbia continue at or above current levels; ENTREC is able to achieve anticipated revenues on current and future MRO contracts; the planned development of LNG facilities proceeds and certain customers choose to utilize ENTREC's services; there are no significant unplanned increases in ENTREC's cost structure, including those costs related to fuel and wages; market interest rates remain similar to current rates and that additional debt financing remains available to ENTREC on similar terms to its existing debt financing; there is no prolonged period of inclement weather that impedes or delays the need for crane and heavy haul transportation services; the competitive landscape in western Canada for crane and heavy haul transportation services does not materially change during the remainder of 2014; and there is no material adverse change in overall economic conditions.

Achieving these forecasts largely depends on a number of factors beyond ENTREC's control including several of the risks discussed further under "Business Risks" in ENTREC Management's Discussion & Analysis for the year ended December 31, 2013. The business risks that are most likely to affect ENTREC's ability to achieve its internal revenue, net income and cash flow forecasts for 2014 and beyond are the volatility of the oil and gas industry, its exposure to the Alberta oil sands, workforce availability, competition, weather and seasonality, availability of debt and equity financing, competition, and business integration risks. These risk factors are interdependent and the impact of any one risk or uncertainty on a particular forward-looking statement is not determinable.

ENTREC's intention to acquire shares pursuant to its NCIB is subject to potential fluctuations in the market price of its shares and the potential management may find another, more desirable use for its available funds.

ENTREC's ability to finance its capital expenditure program through its debt facilities depends on its ability to achieve debt financing terms acceptable to the lenders and ENTREC as well as meeting its internal cash flow forecasts.

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, ENTREC. These forward-looking statements are made as of the date of this press release. Except as required by applicable securities legislation, ENTREC assumes no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.

Neither the 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.

Contacts:
ENTREC Corporation
John M. Stevens
President & CEO
(780) 960-5625

ENTREC Corporation
Jason Vandenberg
CFO
(780) 960-5630
www.entrec.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
"Qosmos has launched L7Viewer, a network traffic analysis tool, so it analyzes all the traffic between the virtual machine and the data center and the virtual machine and the external world," stated Sebastien Synold, Product Line Manager at Qosmos, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Internet-of-Things discussions can end up either going down the consumer gadget rabbit hole or focused on the sort of data logging that industrial manufacturers have been doing forever. However, in fact, companies today are already using IoT data both to optimize their operational technology and to improve the experience of customer interactions in novel ways. In his session at @ThingsExpo, Gordon Haff, Red Hat Technology Evangelist, will share examples from a wide range of industries – includin...
"We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
Get deep visibility into the performance of your databases and expert advice for performance optimization and tuning. You can't get application performance without database performance. Give everyone on the team a comprehensive view of how every aspect of the system affects performance across SQL database operations, host server and OS, virtualization resources and storage I/O. Quickly find bottlenecks and troubleshoot complex problems.
Internet of @ThingsExpo has announced today that Chris Matthieu has been named tech chair of Internet of @ThingsExpo 2017 New York The 7th Internet of @ThingsExpo will take place on June 6-8, 2017, at the Javits Center in New York City, New York. Chris Matthieu is the co-founder and CTO of Octoblu, a revolutionary real-time IoT platform recently acquired by Citrix. Octoblu connects things, systems, people and clouds to a global mesh network allowing users to automate and control design flo...
"We are an all-flash array storage provider but our focus has been on VM-aware storage specifically for virtualized applications," stated Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
With 15% of enterprises adopting a hybrid IT strategy, you need to set a plan to integrate hybrid cloud throughout your infrastructure. In his session at 18th Cloud Expo, Steven Dreher, Director of Solutions Architecture at Green House Data, discussed how to plan for shifting resource requirements, overcome challenges, and implement hybrid IT alongside your existing data center assets. Highlights included anticipating workload, cost and resource calculations, integrating services on both sides...
Unless your company can spend a lot of money on new technology, re-engineering your environment and hiring a comprehensive cybersecurity team, you will most likely move to the cloud or seek external service partnerships. In his session at 18th Cloud Expo, Darren Guccione, CEO of Keeper Security, revealed what you need to know when it comes to encryption in the cloud.
"We're a cybersecurity firm that specializes in engineering security solutions both at the software and hardware level. Security cannot be an after-the-fact afterthought, which is what it's become," stated Richard Blech, Chief Executive Officer at Secure Channels, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
"We are the public cloud providers. We are currently providing 50% of the resources they need for doing e-commerce business in China and we are hosting about 60% of mobile gaming in China," explained Yi Zheng, CPO and VP of Engineering at CDS Global Cloud, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web co...
Between 2005 and 2020, data volumes will grow by a factor of 300 – enough data to stack CDs from the earth to the moon 162 times. This has come to be known as the ‘big data’ phenomenon. Unfortunately, traditional approaches to handling, storing and analyzing data aren’t adequate at this scale: they’re too costly, slow and physically cumbersome to keep up. Fortunately, in response a new breed of technology has emerged that is cheaper, faster and more scalable. Yet, in meeting these new needs they...
When it comes to cloud computing, the ability to turn massive amounts of compute cores on and off on demand sounds attractive to IT staff, who need to manage peaks and valleys in user activity. With cloud bursting, the majority of the data can stay on premises while tapping into compute from public cloud providers, reducing risk and minimizing need to move large files. In his session at 18th Cloud Expo, Scott Jeschonek, Director of Product Management at Avere Systems, discussed the IT and busin...