TSX Symbol: HNL
CALGARY, March 13, 2018 /PRNewswire/ - Horizon North
Logistics Inc. ("Horizon North" or the "Corporation") reported its
financial and operating results for the three and twelve months
ended December 31, 2017 and 2016.
Fourth Quarter Key Comments
- Results for Q4 2017 were stronger than Q4 2016 as a result of
higher volumes across all operations.
- The Modular Solutions business gained significant momentum
throughout Q4, closing 2017 with a backlog of $43.9 million and high probability opportunities
of $148.0 million compared to
$10.7 million and $50.0 million for year ended 2016;
- Horizon North finalized two new Aboriginal partnerships in Q4
of 2017, one north and one south of Fort
McMurray, Alberta. Working with and developing strong
Aboriginal relationships is one of Horizon North's core values;
and
- Subsequent to year end, Horizon North completed a $14.0 million acquisition of the 288 bed Moose
Haven Lodge south of Fort McMurray,
Alberta. This acquisition was a key part of Horizon North's
strategy to secure opportunities in the Fort McMurray, Alberta area.
Fourth Quarter Financial Summary
|
|
|
|
|
|
Three months ended
December 31
|
Twelve months ended
December 31
|
(000's except per
share amounts)
|
|
2017
|
|
2016
|
%
Change
|
|
2017
|
|
2016
|
%
Change
|
Revenue
|
$
|
82,664
|
$
|
60,420
|
37
|
$
|
324,082
|
$
|
250,935
|
29
|
EBITDAS(1)
|
|
6,786
|
|
4,609
|
47
|
|
30,045
|
|
28,661
|
5
|
EBITDAS as a % of
revenue
|
|
8%
|
|
8%
|
|
|
9%
|
|
11%
|
|
Operating (loss)
earnings
|
|
(4,074)
|
|
(8,304)
|
(51)
|
|
(5,935)
|
|
(22,204)
|
(73)
|
Operating (loss)
earnings as a % of revenue
|
|
(5%)
|
|
(14%)
|
|
|
(2%)
|
|
(9%)
|
|
Total (loss)
profit
|
|
(3,885)
|
|
(7,215)
|
(46)
|
|
(7,843)
|
|
(20,316)
|
(61)
|
Total comprehensive
(loss) income
|
|
(3,892)
|
|
(7,214)
|
(46)
|
|
(7,846)
|
|
(20,383)
|
(62)
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.03)
|
$
|
(0.05)
|
|
$
|
(0.05)
|
$
|
(0.15)
|
|
|
Diluted
|
$
|
(0.03)
|
$
|
(0.05)
|
|
$
|
(0.05)
|
$
|
(0.15)
|
|
Total
assets
|
$
|
479,750
|
|
485,101
|
(1)
|
$
|
479,750
|
$
|
485,101
|
(1)
|
Total Long-term loans
and borrowings
|
|
74,604
|
|
75,268
|
(1)
|
|
74,604
|
|
75,268
|
(1)
|
Funds from
operations
|
|
8,705
|
|
4,183
|
108
|
|
51,168
|
|
37,693
|
36
|
Net Capital
spending
|
|
1,645
|
|
7,655
|
(79)
|
|
(23,830)
|
|
18,692
|
(227)
|
|
|
|
|
|
|
|
|
|
|
|
Senior debt to
EBITDAS(1)
|
|
2.43:1.00
|
|
2.46:1.00
|
|
|
2.43:1.00
|
|
2.46:1.00
|
|
Total debt to
EBITDAS(1)
|
|
2.48:1.00
|
|
2.46:1.00
|
|
|
2.48:1.00
|
|
2.46:1.00
|
|
Debt to total
capitalization ratio(1)
|
|
0.19:1.00
|
|
0.19:1.00
|
|
|
0.19:1.00
|
|
0.19:1.00
|
|
Dividends
declared
|
$
|
2,894
|
$
|
2,893
|
|
$
|
11,573
|
$
|
11,112
|
|
Dividends declared
per share
|
$
|
0.02
|
$
|
0.02
|
|
$
|
0.08
|
$
|
0.08
|
|
|
|
(1)
|
See Non-GAAP
measures definitions within the press release for
details.
|
Fourth Quarter Overview
Results for the three months ended December 31, 2017 ("Q4 2017") improved across all
financial measures, compared to the three months ended December 31, 2016 ("Q4 2016"). The improvement
was driven by higher activity levels across all operations in
Industrial Services and increased project volumes in Modular
Solutions.
Revenues from camp rental and catering operations for Q4 2017
increased by 22% compared to Q4 2016 as a result of significantly
higher catering only activity and a camp equipment sale. Higher
catering only activity was primarily a result of recent Aboriginal
partnerships in the Fort McMurray,
Alberta area which resulted in an additional catering only
contract significantly increasing catering only volumes compared to
Q4 2016. Large camp activity increased, compared to Q4 2016, driven
by continued strong activity in the W5/W6 region south of
Grande Prairie, Alberta and higher
demand in the Fort McMurray,
Alberta region as a result of plant maintenance programs
underway by major oil sands producers. The higher activity levels
resulted in RevPAAB and utilization of $36 and 55% respectively, up from $32 and 45% in Q4 2016.
Revenues from Rentals and Logistics segment for Q4 2017 were
consistent with Q4 2016. Access mat utilization was 3% stronger as
a result of higher activity levels but was offset by softer pricing
which decreased 2% compared to Q4 2016. Relocatable structures
rental utilization strengthened by 9% as a result of an increase in
rental activity combined with a decrease in fleet size compared to
Q4 2016.
Modular Solutions revenues for Q4 2017 were above Q4 2016 as a
result of the increased number and scope of projects. The projects
in Q4 2017 included several government sponsored affordable housing
projects, a hotel project and several commercial condominium
projects compared to a single government sponsored affordable
housing project and one hotel project in Q4 2016.
Horizon North's EBITDAS in Q4 2017 increased compared to Q4 2016
mainly as a result of the higher activity levels and volumes
discussed above. Operating loss and loss per share for Q4 2017
improved compared to Q4 2016 as a result of stronger EBITDAS and
lower depreciation and amortization expense due to camp setup costs
becoming fully depreciated and used camp equipment sales throughout
the year.
Horizon North continued to maintain a strong focus on managing
the Statement of Financial Position through minimizing working
capital and a reduced capital program. Total loans and borrowings
were $74.6 million at December 31, 2017 compared to $75.3 million at December
31, 2016. As a result of the decreased debt and stronger
EBITDAS, the Debt to EBITDAS ratio was 2.48:1.00 compared to
2.46:1.00 at December 31, 2016.
Outlook
Horizon North's focus in 2018 will continue to be on building
out and expanding on initiatives started in 2017, initiatives
intended to strengthen and diversify the Industrial Services
business.
For 2018, Horizon North expects the revenue and EBITDAS momentum
seen in Q4 2017 to continue with the Industrial Services business
anticipating moderate strengthening of activity levels as compared
to 2017. Although commodity prices have shown some stability,
Horizon North does not expect to see any significant strengthening
in pricing from 2017 levels and will continue to focus on cost
control to improve EBITDAS levels. The Modular Solutions business
exited 2017 with a significant backlog and is anticipated to have
positive EBITDAS in 2018 through improving efficiencies as the
production rate increases to execute on backlog.
The Industrial Services business will be focused on continuing
to build-out and expand on the three phase strategy initiated in
2017:
- Leverage the Aboriginal relationships entered into in the
second half of 2017 which cover regions north and south of
Fort McMurray, Alberta. A
significant project undertaken in the second half of 2017 has shown
the potential of this region and 2018 is expected to bring several
similar projects;
- Focus on the Grande Prairie,
Alberta region through securing strategic land locations
positioning Horizon North to participate fully in the continued
high activity levels expected in the conventional W5/W6 market;
and
- Grow Horizon North's presence in the mining sector,
specifically on developing opportunities in northern Canada where Horizon North has a strong track
record.
Late in 2014 Horizon North under took several initiatives to
develop and secure suitable land positions near proposed LNG
project sites on British
Columbia's west coast. Horizon North maintained a longer
term view of LNG development and continued these initiatives,
completing the development of its land asset in Kitimat and building strong relationships with
regional First Nations and the municipality. Given the recent
renewed potential of LNG projects, Horizon North is now well
positioned to take full advantage of opportunities as they
arise.
The Modular Solutions business is expected to continue its
growth based on a strengthening backlog and high quality
opportunity pipeline which is underpinned largely by social
infrastructure and affordable housing projects, a focus by all
levels of government. The backlog and opportunity pipeline are
providing a higher level of visibility to the business requiring an
increase in labour force at our Kamloops,
British Columbia manufacturing facility to achieve a
critical mass of scale and manufacturing throughput. Horizon North
anticipates that Modular Solutions will continue its trend of
earnings improvement and contribute positive EBITDAS throughout
2018 as increased volumes drive improved economies of scale.
The strength of the Statement of Financial Position was a
priority for Horizon North throughout 2017, and will continue to be
a focus for 2018. Cost reduction measures across our operations and
the continued centralization of certain general and administrative
functions will drive improved cash flow through efficiencies. In
addition to a limited and tightly managed capital program, 2018
will continue to assess Horizon North's portfolio of assets to
ensure a focus on core business lines. This combination of actions
will help ensure the continued strength with respect to the
financial position of Horizon North.
Dividend payment
Horizon North announced today that its Board of Directors has
declared a dividend for the first quarter of 2018 at $0.02 per share. The dividend is payable to
shareholders of record at the close of business on March 31, 2018 to be paid on April 12, 2018. The Board of Directors regularly
monitors the strength of the Statement of Financial Position, cash
from operations and capital requirements to ensure the overall
sustainability of Horizon North is not compromised. The dividends
will be eligible dividends for Canadian tax purposes.
Additional Information
A copy of the Corporation's Consolidated Financial Statements
for the three and twelve months ended December 31, 2017 and 2016 and related
Management's Discussion and Analysis have been filed with the
Canadian securities regulatory authorities and is available on
SEDAR at www.sedar.com and www.horizonnorth.ca. Unless
otherwise indicated, the consolidated financial statements have
been prepared in accordance with International Financial Reporting
Standards and the reporting currency is in Canadian dollars.
Non-GAAP measures
Certain measures in this MD&A do not have any standardized
meaning as prescribed by generally accepted accounting principles
("GAAP") and, therefore, are considered non-GAAP measures. These
measures are regularly reviewed by the Chief Operating Decision
Maker and provide investors with an alternative method for
assessing the Corporation's operating results in a manner that is
focused on the performance of the Corporation's ongoing operations
and to provide a more consistent basis for comparison between
periods. These measures should not be construed as alternatives
to total profit and total comprehensive income determined in
accordance with GAAP as an indicator of the Corporation's
performance. The method of calculating these measures may
differ from other entities and accordingly, may not be comparable
to measures used by other entities. The following non-GAAP measures
are used to monitor the Corporation's performance:
EBITDAS: Earnings before
interest, taxes, depreciation, amortization, impairment, gain/loss
on disposal of property, plant and equipment and share based
compensation ("EBITDAS"). Management believes that in addition to
total profit and total comprehensive income, EBITDAS is a useful
supplemental measure as it provides an indication of the
Corporation's ability to generate cash flow in order to fund
working capital, service debt, pay current income taxes and fund
capital programs, and it is regularly provided to and reviewed by
the Chief Operating Decision Maker.
Debt to total
capitalization: Calculated as the ratio of debt to total
capitalization. Debt is defined as the sum of current and long-term
portions of loans and borrowings. Total capitalization is
calculated as the sum of debt and shareholders' equity.
Caution Regarding Forward-Looking Statements and
Information
Certain statements contained in this press
release constitute forward-looking statements or information
("forward-looking statements"). These statements relate to future
events or future performance of Horizon North. All statements other
than statements of historical fact are forward-looking statements.
The use of any of the words "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "should", "believe" and similar expressions are
intended to identify forward-looking statements.
In particular, such forward-looking statements include:
Under the heading "Outlook" the statement that:
"Horizon North's focus in 2018 will continue to be on building
out and expanding on initiatives started in 2017, initiatives
intended to strengthen and diversify the Industrial Services
business.
For 2018, Horizon North expects the revenue and EBITDAS momentum
seen in Q4 2017 to continue with the Industrial Services business
anticipating moderate strengthening of activity levels as compared
to 2017. Although commodity prices have shown some stability,
Horizon North does not expect to see any significant strengthening
in pricing from 2017 levels and will continue to focus on cost
control to improve EBITDAS levels. The Modular Solutions business
exited 2017 with a significant backlog and is anticipated to have
positive EBITDAS in 2018 through improving efficiencies as the
production rate increases to execute on backlog.
The Industrial Services business will be focused on continuing
to build-out and expand on the three phase strategy initiated in
2017:
- Leverage the Aboriginal relationships entered into in the
second half of 2017 which cover regions north and south of
Fort McMurray, Alberta. A
significant project undertaken in the second half of 2017 has shown
the potential of this region and 2018 is expected to bring several
similar projects;
- Focus on the Grande Prairie,
Alberta region through securing strategic land locations
positioning Horizon North to participate fully in the continued
high activity levels expected in the conventional W5/W6 market;
and
- Grow Horizon North's presence in the mining sector,
specifically on developing opportunities in northern Canada where Horizon North has a strong track
record.
Late in 2014 Horizon North under took several initiatives to
develop and secure suitable land positions near proposed LNG
project sites on British
Columbia's west coast. Horizon North maintained a longer
term view of LNG development and continued these initiatives,
completing the development of its land asset in Kitimat and building strong relationships with
regional First Nations and the municipality. Given the recent
renewed potential of LNG projects, Horizon North is now well
positioned to take full advantage of opportunities as they
arise.
The Modular Solutions business is expected to continue its
growth based on a strengthening backlog and high quality
opportunity pipeline which is underpinned largely by social
infrastructure and affordable housing projects, a focus by all
levels of government. The backlog and opportunity pipeline are
providing a higher level of visibility to the business requiring an
increase in labour force at our Kamloops,
British Columbia manufacturing facility to achieve a
critical mass of scale and manufacturing throughput. Horizon North
anticipates that Modular Solutions will continue its trend of
earnings improvement and contribute positive EBITDAS throughout
2018 as increased volumes drive improved economies of scale.
The strength of the Statement of Financial Position was a
priority for Horizon North throughout 2017, and will continue to be
a focus for 2018. Cost reduction measures across our operations and
the continued centralization of certain general and administrative
functions will drive improved cash flow through efficiencies. In
addition to a limited and tightly managed capital program, 2018
will continue to assess Horizon North's portfolio of assets to
ensure a focus on core business lines. This combination of actions
will help ensure the continued strength with respect to the
financial position of Horizon North".
The forward-looking statements and information are based on
certain assumptions made by Horizon North which include, but are
not limited to, assumptions relating to:
- industry activity for oil, natural gas and mineral exploration
and development in the western Canadian provinces and northern
territories;
- commodity prices;
- capital investment in the Canadian oil and gas sector;
- dividend payments;
- anticipated activity levels for 2018;
- operational results and capital spending;
- anticipated backlog in the Modular Solutions business;
- trade and other receivables;
- future operating costs and Corporation's access to
capital;
- the effects of regulation by governmental agencies;
- the competitive environment in which the Corporation
operates;
- the ability of the Corporation to attract and retain
personnel;
- the development of LNG and commodity transportation
infrastructure;
- the relationships between the Corporation and its customers;
and
- general economic and financial conditions.
Although Horizon North believes that the expectations and
assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because Horizon North cannot give any
assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of known and unknown risks and uncertainties. Such
risks and uncertainties include, but are not limited to, the
following:
- volatility in the price and demand for oil, natural gas and
minerals;
- fluctuations in the demand for the Corporation's services;
- availability of qualified personnel; and
- changes in regulation by governmental agencies, including
environmental regulation.
Readers are cautioned that the foregoing list of risks and
uncertainties is not exhaustive. Additional information on these
and other risk factors that could affect Horizon North's operations
and financial results are included in Horizon North's annual
information form which may be accessed through the SEDAR website at
www.sedar.com. In addition, the reader is cautioned that historical
results are not indicative of future performance. The
forward-looking statements and information contained in
this press release are made as of the date hereof and
Horizon North does not undertake any obligation to update publicly
or revise any forward-looking statements and information, whether
as a result of new information, future events or otherwise, unless
so required by applicable securities laws.
Certain information set out herein may be considered as
"financial outlook" within the meaning of applicable securities
laws. The purpose of this financial outlook is to provide readers
with disclosure regarding Horizon North's reasonable expectations
as to the anticipated results of its proposed business activities
for the periods indicated. Readers are cautioned that the financial
outlook may not be appropriate for other purposes.
About Horizon North
Horizon North is a publicly listed corporation (TSX: HNL.TO)
providing a full range of industrial, commercial, and residential
products and services. Our Industrial division supplies workforce
accommodations, camp management services, access solutions,
maintenance and utilities. Our Modular Construction division
integrates modern design concepts and technology with state of the
art, off-site manufacturing processes; producing high quality
building solutions for commercial and residential offerings
including offices, hotels, and retail buildings, as well as
distinctive single detached dwellings and multi-family residential
structures. As a result of our diverse product and service
offerings, Horizon North is uniquely positioned to meet the needs
of our customers in numerous sectors, anywhere in Canada.
SOURCE Horizon North Logistics Inc.