Entrec Corporation Approves 2014 Capital Expenditure Program and
Appoints John M. Stevens President & CEO
SPRUCE GROVE, ALBERTA--(Marketwired - Jan 15, 2014) - ENTREC
Corporation ("ENTREC" or the "Company") (TSX-VENTURE:ENT), a
leading provider of heavy lift and heavy haul services, today
approved a $46 million capital expenditure program for 2014. The
program consists of growth capital expenditures of $34 million and
$12 million in maintenance capital expenditures. ENTREC is also
pleased to announce the appointment of Mr. John M. Stevens as its
President and CEO. Mr. Stevens previously served as President and
COO and will now replace Rod Marlin as CEO who has transitioned to
the role of Executive Chairman.
"This is a very natural transition for ENTREC," said Rod Marlin,
ENTREC's Executive Chairman. "In John's previous role, he led our
Company through a transformational period of growth and is well
deserving of his new responsibilities as Chief Executive to take
our Company to the next level."
2014 Capital Expenditure Program
"Our 2014 growth capital expenditures will be specifically
focused on growing our mobile crane capabilities," said Mr.
Stevens. "We believe continued investment in this area will
increase our access to the recurring onsite maintenance, repair and
operation ("MRO") support work in the Alberta oil sands region, as
well as to the significant industrial construction work occurring
in both the oil sands and in Northwest BC.
ENTREC's 2014 capital expenditure program consists of the
following components:
Growth capital expenditures - cranes |
$ |
27 million |
Growth capital expenditures - heavy haul transportation |
|
5
million |
Other
growth capital expenditures |
|
2
million |
Maintenance capital expenditures |
|
12 million |
Total |
|
46 million |
Included in ENTREC's 2014 growth capital expenditures are the
purchase of $6.5 million of crane rental units. These units carry
favourable purchase options, which allow the Company to apply much
of its previous rental payments against the purchase price.
ENTREC's maintenance capital expenditures reflect its capital
maintenance program. The program is designed to keep the Company's
fleet efficient and profitable by replacing an equipment item when
it becomes cost-prohibitive to operate due to high maintenance and
operating costs.
ENTREC intends to fund its 2014 capital expenditure program from
its credit facilities, finance leases and cash from operating
activities. The Company also expects to have the flexibility to
increase its capital expenditure program throughout 2014 should
customer demand warrant. The Company does not believe it will need
to raise any additional equity to fund its 2014 capital expenditure
program.
2013 Capital Expenditures
During the year ended December 31, 2013, ENTREC expects to
report capital expenditures of approximately $59 million (subject
to final year-end adjustments), consisting of $53 million in growth
capital expenditures and $6 million in maintenance capital
expenditures. Crane equipment purchases accounted for approximately
$36 million of the capital expenditures, with the remainder
directed to tractors and heavy haul trailers, as well as to other
support equipment. At December 31, 2013, ENTREC's total net debt
was approximately $131 million (subject to final year-end
adjustments).
2014 Revenue Guidance
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
$250 and $270 million. This compares to estimated revenue of
approximately $213 million for the year ended December 31, 2013.
ENTREC expects revenue levels to trend upward throughout 2014 as
project work begins to ramp up and utilization levels increase. Any
business acquisitions completed in fiscal 2014 could increase this
revenue estimate. ENTREC's 2013 revenue results remain subject to
final year-end billing and accounting adjustments, and as a result,
may be different from current expectations.
"Our outlook for 2014 and 2015 remains very positive," said Mr.
Stevens. "Despite the lower demand levels we have seen in recent
months, quoting activity in our key markets continues to be strong
for work commencing in 2014."
ENTREC estimates its overall adjusted EBITDA margin for fiscal
2014 could approximate 25%. Consistent with the upward trend in
revenue, ENTREC believes its adjusted EBITDA margin will also
increase as the year progresses.
Oil sands demand is expected to ramp up beginning in the first
quarter of 2014 and continue to gain momentum as the year
progresses. Large heavy haul transportation contracts awarded to
ENTREC in the first half of 2013 should commence in the first and
second quarters of 2014 and continue through 2017. In addition,
ENTREC is working with oil sands customers on several large crane
and heavy haul transportation projects that will commence at
different times throughout the 2014 year. Certain of these projects
will extend through to 2017.
Consistent with its strategy, ENTREC is also successfully
expanding the amount of long-term maintenance, repair and operation
(MRO) contract work it performs in the Alberta oil sands region.
ENTREC was recently awarded a 5-year MRO contract with an oil sands
customer, which commenced in December 2013 and could generate up to
$15 million in annual revenue.
Northwest B.C. continues to be a busy area for ENTREC. The
Company is currently working on various mining, hydro-electric,
pipeline, and oil and natural gas projects in the region and is
providing crane and transportation services to support a
multi-billion-dollar revitalization of an aluminum smelter in
Kitimat, B.C. ENTREC will continue to expand its service
capabilities in this important region throughout 2014 in
preparation for the planned development of LNG facilities and is
currently in the process of expanding its operations into Prince
Rupert, B.C. These projects, along with ancillary infrastructure
developments, are expected to require extensive crane and heavy
haul transportation services.
With the acquisition of GT's Crane and Transportation Services
Inc. in 2013, ENTREC now has a leading market position in northeast
B.C. and northwest Alberta. ENTREC believes this will be a busy
area for the Company in 2014 as it supports oil and natural gas
projects in the region. The Company has also recently expanded its
operations into Fort St. John, B.C. to better serve customers in
this region.
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.
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 press
release relate to, but are not limited to: ENTREC's plan to execute
a 2014 capital expenditure program of $46 million;
expectation that ENTREC's 2014 capital expenditure program will be
funded from its credit facilities, finance leases and cash from
operating activities and that it will have the flexibility to
increase its 2014 capital expenditure program throughout 2014
should customer demand warrant; belief the Company will not need to
raise any additional equity to fund its 2014 capital expenditure
program; expectation the Company will incur capital expenditures of
approximately $59 million in 2013 and exit 2013 with total net debt
of approximately $131 million; estimate revenue could range between
$250 million and $270 million for the year ending December 31,
2014; estimate 2013 revenue will approximate $213 million, subject
to final year-end billing and accounting adjustments; expectation
revenue levels will trend upward throughout 2014 as project work
begins to ramp up and utilization levels increase; expectation that
oil sands demand will begin ramping up in the first and second
quarters of 2014 and continue to gain momentum as the year
progresses; estimate a recently awarded MRO contract, which
commenced in December 2013, could generate up to $15 million in
incremental annual revenue; belief ENTREC will continue to expand
its service capabilities in northwest B.C. in 2014 as it
anticipates the planned development of LNG facilities; belief
northwest Alberta and northeast B.C. will be a busy area for ENTREC
in 2014 as it supports oil and natural gas projects in the region;
and estimate ENTREC's overall adjusted EBITDA margin for fiscal
2014 could approximate 25% and increase as the year
progresses.
ENTREC's forward-looking statements involve a number of
significant assumptions. Key assumptions utilized in developing
forward-looking statements related to ENTREC's growth, revenue, and
adjusted EBITDA margin expectations include achieving its internal
revenue, net income and cash flow forecasts for 2014. 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 increases from current levels in 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 in 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 three and nine months ended
September 30, 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 are the volatility of the oil and
gas industry, its exposure to the Alberta oil sands, workforce
availability, 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 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.
ENTREC CorporationRod MarlinExecutive Chairman(780)
960-5647ENTREC CorporationJohn M. StevensPresident & CEO(780)
960-5625ENTREC CorporationJason VandenbergCFO(780)
960-5630www.entrec.com
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