WesternOne Inc. Reports 2016 Q4 and Full Year Results

March 30, 2017

VANCOUVER, BC (March 30, 2017) WesternOne Inc. (“WesternOne”) (Toronto Stock Exchange: WEQ and WEQ.DB) today announced the release of its financial results for the year ended December 31, 2016.

The results, consisting of WesternOne’s audited financial statements for the year ended December 31, 2016 and Management’s Discussion and Analysis (“MD&A”) dated March 30, 2017, are available on SEDAR (www.sedar.com).

2016 Q4 and annual financial summary:

  • WesternOne recorded Q4 consolidated revenue of $20.7 million, gross profit of $6.7 million and adjusted EBITDA (as defined below) of $3.1 million, compared to the respective amounts of $20.5 million, $8.0 million and $4.5 million in Q4 of 2015. WesternOne’s operating results from continuing operations excluded the businesses of its subsidiary Britco LP (“Britco”) for 2016 (and comparative information in prior years, as appropriate) as WesternOne classified Britco as discontinued operations in accordance with IFRS. Readers can refer to WesternOne’s news release dated March 6, 2017 for details relating to its sale of Britco’s Rental and US Manufacturing businesses for total cash consideration of approximately $45.1 million (the “Transactions”). 
  • Revenue generated from WesternOne Infrastructure Services (“WIS”) was consistent with the prior year period due to a comparatively colder winter season in Alberta in late 2016, increasing rental demand for temporary construction heaters and related fuel and services, although the related positive impact was offset by compressed rental rates and fuel margins as a result of competition. Gross profit and adjusted EBITDA decreased due to the compressed operating leverage, as operating costs remained high to keep up with the higher rental volumes. 
  • Net change in cash position from continuing operations was negative $7.2 million, compared to negative $7.7 million in Q4 of 2015. The negative change in cash position was primarily due to rental fleet investments to meet heat-related demands and working capital deployed in respect of the construction heat season. Cash collections relating to the construction heat season has been underway throughout early 2017 and is expected to continue in Q2 of 2017. 
  • Net loss from continuing operations attributable to shareholders was $31.9 million ($1.87 per share), compared to net income of $29.3 million ($25.87 per share) in Q4 of 2015. Included in the net loss were non-cash pre-tax impairment charges on goodwill and intangible assets  of $18.5 million in Q4 of 2016, in light of the weak equipment rentals market conditions in Western Canada. The Q4 financial results also included non-cash pre-tax finance expense of $0.2 million, relating to changes in the fair value of convertible debentures at year-end. Excluding these non-cash items on an after-tax basis, net loss for Q4 of 2016 would have been $13.6 million ($0.80 per share), compared to net loss of $2.1 million ($1.82 per share) in the prior year after adjusting for like items.
  • On March 6, 2017, pursuant to the Transactions WesternOne made a lump sum repayment of $25.7 million towards the senior credit facility. Total bank indebtedness after the repayment was $10.0 million, down significantly from $45.2 million at the end of 2016 and $42.8 million at the end of 2015.

(1)    “Adjusted EBITDA” is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS. “Adjusted EBITDA” refers to net income or loss from continuing operations before interest, taxes, depreciation and amortization, and other specified items that would impact comparability including, where applicable, non-operational income and expenses, securities-based compensation and other gains or losses. The use of the term “non-operational income and expenses” is defined by WesternOne as those that do not impact operating decisions taken by WesternOne’s management as well as items of an unusual nature that do not reflect WesternOne’s ongoing operations. For a full description of adjusted EBITDA, refer to “Non-IFRS Measures” in the MD&A dated March 30, 2017. 
(2)    Represents amount attributable to shareholders.
(3)    Income/(Loss) per share for prior periods have been adjusted on a retroactive basis to reflect the consolidation of WesternOne’s issued and outstanding common shares on the basis of one post-consolidation common share for every 35 pre-consolidation common shares (the 
Consolidation”). The Consolidation was completed on October 31, 2016.

“The operating environment of our WIS business remained challenging throughout Q4. While we benefited from a colder winter heat season compared to the previous year, WIS continued to be negatively impacted by market-driven factors including reduced construction activities particularly in Alberta and rental rate competition in all major markets. In spite of these challenges, our strategy of redeploying rental fleet to targeted markets and focusing on major projects within the heat business has helped us maintain market share and competitiveness,” said Peter Blake, CEO of WesternOne. “We will continue to focus on growing revenues and managing capital returns and liquidity as we continue to navigate through the current economic environment.”

Conference Call 

Peter Blake, CEO, and the management team will host a conference call at 11:00am (Eastern time) or 8:00am (Pacific time), on Friday, March 31, 2017 to review the financial results and corporate developments for the year ended December 31, 2016. 

To participate in this conference call, please dial one of the following numbers approximately 10 minutes prior to the commencement of the call, and ask to join the WesternOne conference call.       

Dial in numbers:  Toll Free 1-888-390-0546
  International or Local Toronto 1-416-764-8688

Conference Call Replay 

If you cannot participate on March 31, 2017, a replay of the conference call will be available by dialing one of the following replay numbers. You will be able to dial in and listen to the conference two hours after the meeting end time, and the replay will be available until April 17, 2017. Please enter the Replay ID number 515879 followed by the # key.  

Replay Dial-In:  Toll Free 1-888-390-0541
  International or Local Toronto  1-416-764-8677

Forward-looking Information 

Certain statements in this news release may constitute “forward-looking” information that involves known and unknown risks, uncertainties and other factors, and it may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information is identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such information includes, without limitation, statements with respect to: timing of cash collections in respect of working capital as at December 31, 2016; and WesternOne’s intention to continue to focus on growing revenues and managing capital returns and liquidity in the current economic environment. Actual events or results may differ materially. 

Forward-looking information contained in this news release is based on certain key expectations and assumptions made by WesternOne, including, without limitation: the stability of the economy in Western Canada, the impact of the current economic climate in Western Canada on WesternOne’s operations will remain consistent with WesternOne’s current expectations, the increased competitive environment in which WesternOne and its business units operate; a protracted period of lower crude oil prices; the supply and demand for WesternOne’s products and services and the related impact on the pricing on such products and services will remain consistent with WesternOne’s current expectations; and management’s assessment of future plans and operations. Although the forward-looking information contained in this news release is based upon what WesternOne’s management believes to be reasonable assumptions, WesternOne cannot assure investors that actual results will be consistent with such information. Forward-looking information reflects current expectations of management regarding future events and operating performance as of the date of this news release. Such information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, and a description of these factors can be found under “Risk Factors” in WesternOne’s Annual Information Form dated March 30, 2017 and MD&A dated March 30, 2017, which are both available on SEDAR (www.sedar.com).

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management’s current beliefs and is based on information currently available to WesternOne. The forward-looking information is made as of the date of this news release and WesternOne assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

About WesternOne 

WesternOne seeks to acquire and grow businesses in the construction and infrastructure services sectors in order to generate value for its shareholders.

Additional Information

Additional information relating to WesternOne and other public filings, is available on SEDAR at www.sedar.com or on WesternOne’s website at www.weq.ca.

For investor relations information, please contact:

Andrew Greig, Manager of Investor Relations
WesternOne Inc.
Suite 910, 925 West Georgia Street
Vancouver, BC V6C 3L2
Phone:  (604) 678-4042
E-mail:  agreig@weq.ca

Trading Symbols
Toronto Stock Exchange: WEQ and WEQ.DB