WesternOne Inc. Reports 2017 Q2 Results

August 10, 2017
VANCOUVER, BC (August 10, 2017) WesternOne Inc. (“WesternOne”) (Toronto Stock Exchange: WEQ and WEQ.DB) today announced the release of its financial results for the three and six months ended June 30, 2017.
 
The results, consisting of WesternOne’s unaudited interim financial statements for the three and six months ended June 30, 2017 and Management’s Discussion and Analysis (“MD&A”) dated August 10, 2017, are available on SEDAR (www.sedar.com).
 
2017 Q2 financial summary:
 
  • WesternOne recorded Q2 consolidated revenue from continuing operations of $14.1 million, an increase of 11.3 % from $12.7 million in the prior year period. The increase was mainly due to higher rental activity levels for both Aerial and Heat rental divisions and related fuel and service revenues, as a result of a cooler spring season increasing heat-related rentals, WesternOne’s increased sales efforts, and more effective fleet redeployment within existing branches. 
  • Q2 gross profit and adjusted EBITDA (as defined below) were $2.1 million and negative $1.8 million respectively, compared to the respective amounts of $3.1 million and negative $0.2 million in the prior year period. Despite the revenue growth, gross profit and adjusted EBITDA were adversely impacted by rental rate compression, increased operating costs from elevated levels of fleet on rent, and non-recurring factors including lower profit contribution from reduced level of fleet disposals to preserve fleet available on hand and costs associated with branch consolidation and/or relocation in Burnaby and Victoria in BC. 
  • Q2 net cash from operating activities of continuing operations was $5.6 million, an increase of 97.0% from $2.8 million in the prior year period. The increase was mainly due to incremental cash flow from collection of accounts receivable relating to the Heat rental division which benefited from cooler regional temperatures in the early part of 2017. Net change in cash position from continuing operations was $4.0 million, compared to negative $6.5 million in the prior year period. Other major factors leading to the higher net cash inflow included proceeds from the sale of WesternOne’s Canadian modular manufacturing operations in early May 2017, and reduced loan repayment and related interest charges due to a significantly reduced senior bank loan balance. As at June 30, 2017, the outstanding senior bank loan (after offsetting operating loans with cash on hand) was $9.4 million, compared to $44.8 million as at December 31, 2016. 
  • Q2 net loss from continuing operations attributable to shareholders was $9.8 million ($0.58 per share), compared to $19.1 million ($16.87 per share) in prior year period. Included in net loss were non-cash finance expenses relating to changes in the fair value of convertible debentures at quarter-end. Excluding the related non-cash effects on an after-tax basis, net loss for Q2 would have been $6.8 million ($0.40 per share), compared to net loss of $5.8 million ($5.08 per share) in the prior year period.

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  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 August 10, 2017. 
  2. Represents amount attributable to shareholders.
  3. 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.
“Our Q2 operating results reflect encouraging increases in fleet on rent in many of our markets, offset by lingering rental rate compression throughout the Western Canadian equipment rental market. We believe the positive signs from improved time utilization of rental fleets in the region will support the gradual return of rental rates to historic norms,” said Mr. Peter Blake, CEO of WesternOne. “We strive to maintain this positive momentum through continued focus on sales and marketing efforts, and effective redeployment of fleet capital for enhanced returns. We are also excited about prospects for our new technology tool, the Wedge Remote Monitoring System, which was piloted in late 2016 to highly favourable reviews, providing customers another reason to choose WesternOne as its heat and fuel service provider for the coming season.”
 
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, August 11, 2017 to review the financial results and corporate developments for the three and six months ended June 30, 2017. 
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 August 11, 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 August 18, 2017. Please enter the Replay ID number 101908 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: management’s belief that improvements in time utilization of rental fleets in Western Canada will support the gradual return of rental rates to historical norms; and management’s focus on sales and marketing efforts and effective deployment of fleet capital for enhanced returns. 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: net receivables are collectible, payments to suppliers will continue under current terms, and the bank guarantee will follow the terms in the facility letter between WesternOne and a Canadian chartered bank (the “Amended Facility Letter”); 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; rental rates will remain compressed throughout 2017; 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; management’s assessment of future plans and operations; WesternOne will be able to grow through acquisitions and organic expansion; WesternOne will be able to: (i) fund debt maturities and to meet current and future obligations; (ii) collect net receivables; (iii) integrate newly acquired businesses; (iv) maintain payments to suppliers under current terms; and (v) expand its product offering and customer base; critical accounting estimates; WesternOne will be able to discharge its liabilities; the future repayments of the Amended Credit Facility; the basis on which the interest rates and standby fee relating to the Amended Credit Facility are calculated; the impact from the wind-down of WesternOne’s Australian operations will remain consistent with WesternOne’s current expectations; the impact from estimating the cost of a non-cancellable lease contract and finalization of post-closing adjustments in the sale of the assets of Pacific Coast Modular Construction LP (formerly Britco LP); the impact from macroeconomic headwinds on WesternOne’s primary markets in Western Canada and the related impact on residential and commercial construction activities, particularly in Alberta, will remain consistent with WesternOne’s current expectations; rental activity levels are expected to continue to stabilize and may mildly improve; and the contractual requirements of WesternOne under the Amended Credit Facility are met and the demand feature is not exercised by the Canadian chartered bank. 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 August 10, 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 Inc. seeks to acquire and grow businesses in the construction and infrastructure services sectors in Western Canada. Its primary business platform, WesternOne Infrastructure Services, is a leading provider of construction heat services and aerial equipment rentals to businesses in the construction, infrastructure, film and television industries in Western Canada. 
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
 
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.
 
http://www.weq.ca/sites/default/files/docs/news/q2_fy_17_news_release_final.pdf