SYS-CON MEDIA Authors: Pat Romanski, Sean Houghton, Glenn Rossman, Ignacio M. Llorente, Xenia von Wedel

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
“We help people build clusters, in the classical sense of the cluster. We help people put a full stack on top of every single one of those machines. We do the full bare metal install," explained Greg Bruno, Vice President of Engineering and co-founder of StackIQ, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
AppZero has announced that its award-winning application migration software is now fully qualified within the Microsoft Azure Certified program. AppZero has undergone extensive technical evaluation with Microsoft Corp., earning its designation as Microsoft Azure Certified. As a result of AppZero's work with Microsoft, customers are able to easily find, purchase and deploy AppZero from the Azure Marketplace. With just a few clicks, users have an Azure-based solution for moving applications to the...
The cloud is becoming the de-facto way for enterprises to leverage common infrastructure while innovating and one of the biggest obstacles facing public cloud computing is security. In his session at 15th Cloud Expo, Jeff Aliber, a global marketing executive at Verizon, discussed how the best place for web security is in the cloud. Benefits include: Functions as the first layer of defense Easy operation –CNAME change Implement an integrated solution Best architecture for addressing network-l...
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The BPM world is going through some evolution or changes where traditional business process management solutions really have nowhere to go in terms of development of the road map. In this demo at 15th Cloud Expo, Kyle Hansen, Director of Professional Services at AgilePoint, shows AgilePoint’s unique approach to dealing with this market circumstance by developing a rapid application composition or development framework.
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com...
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Media announced today that Aruna Ravichandran, VP of Marketing, Application Performance Management and DevOps at CA Technologies, has joined DevOps Journal’s authors. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Aruna's inaugural article "Four Essential Cultural Hacks for DevOps Newbies" discusses how to demonstrate the...
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
"Our premise is Docker is not enough. That's not a bad thing - we actually love Docker. At ActiveState all our products are based on open source technology and Docker is an up-and-coming piece of open source technology," explained Bart Copeland, President & CEO of ActiveState Software, in this SYS-CON.tv interview at DevOps Summit at Cloud Expo®, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Verizon Enterprise Solutions is simplifying the cloud-purchasing experience for its clients, with the launch of Verizon Cloud Marketplace, a key foundational component of the company's robust ecosystem of enterprise-class technologies. The online storefront will initially feature pre-built cloud-based services from AppDynamics, Hitachi Data Systems, Juniper Networks, PfSense and Tervela. Available globally to enterprises using Verizon Cloud, Verizon Cloud Marketplace provides a one-stop shop fo...
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, p...
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's