Aveda Transportation and Energy Services Reports Solid Third Quarter Results

CALGARY, Alberta, Nov. 20, 2017 (GLOBE NEWSWIRE) -- Aveda Transportation and Energy Services Inc. (“Aveda” or the “Company”) (TSX-V:AVE), North America’s largest dedicated rig moving company, today announced its results for the three months and nine months ended September 30, 2017.

“We’ve been fortunate to build a team for Aveda that shows a passion for excellence and commitment to the goals of the organization, allowing us to execute at a new level,” said Ronnie Witherspoon, President and Chief Executive Officer for Aveda. “I’m proud of their achievements over the last year, and look forward to the excitement of tackling the future together. I believe our foundation and practices, along with strong vision, will lead to continued success as we navigate forward.”

2017 Third Quarter Business Highlights

• Generated record revenue for the three months ended September 30, 2017 of $53.5 million. This is the most revenue Aveda has ever reported in any quarter in the Company’s history. Aveda has now reported five sequential quarters of revenue growth and three sequential quarters of record revenue. Revenue in the third quarter of 2017 increased by $32.5 million or almost 160%, compared with revenue of $21.0 million for the same period in 2016;
• For the three months ended September 30, 2017, the Company reported gross profit before depreciation and amortization¹ of $9.2 million. Gross profit excluding depreciation and amortization¹ in the third quarter of 2017 increased by $6.2 million or 215% compared to $2.9 million in 2016;
• Generated Adjusted EBITDA¹ of $4.7 million for the three months ended September 30, 2017. This amount of Adjusted EBITDA¹ continues the strong performance the Company has experienced throughout fiscal 2017.  Adjusted EBITDA¹ in the third quarter of 2017 increased by $4.6 million compared to $0.1 million in the third quarter of 2016;
• Net loss for the three months ended September 30, 2017 decreased by $4.5 million to $1.1 million, compared to a net loss of $5.6 million for the same period in 2016. Loss per share was $0.02 compared to $0.30 in the comparative period;
• Aveda expanded its operational footprint by opening a new terminal in Martins Ferry, OH. The Ohio terminal is expected to contribute to fourth quarter results; and
• Aveda ended the quarter with a net asset value per share⁶ of $0.64, $20.4 million in working capital with a current ratio of 1.7:1, and undrawn cash availability of $32.8 million on its senior debt facility.

First Nine Months 2017 Business Highlights

• Generated record revenue for the nine months ended September 30, 2017 of $146.5 million. This is the most revenue that Aveda has ever reported in the first three quarters of any year in the Company’s history. Revenue in the first nine months of 2017 increased by almost $105.0 million or approximately 250%, compared with revenue of $41.9 million for the same period in 2016;
• Gross profit excluding depreciation and amortization¹ in the first nine months of 2017 increased by $23.1 million to $25.7 million compared to $2.6 million in 2016;
• Reported Adjusted EBITDA¹ of $12.4 million for the nine months ended September 30, 2017. Adjusted EBITDA¹ in the first nine months of 2017 increased by almost $20.0 million compared to a loss of $7.5 million in the comparative period of 2016;
• Net loss for the nine months ended September 30, 2017 decreased by almost $20.0 million to $5.8 million, compared to a net loss of $25.7 million for the same period in 2016. Loss per share was $0.12 compared to $1.35 in the comparative period;
• In addition to the opening of the Martins Ferry, OH terminal discussed above, Aveda expanded its operational footprint by opening new terminals in Midland, Texas and Casper, WY in 2017;
• Aveda restructured its debt in the first quarter of 2017 as further outlined in the September MD&A and in the news release dated January 13, 2017;
• The Company also raised gross proceeds of $22.9 million through an equity offering as outlined in the news release dated, February 22, 2017; and
• As a result of both successfully restructuring its debt and raising the equity outlined above, the Company now has a significantly stronger balance sheet.

The Company’s consolidated financial statements and management’s discussion and analysis (“September MD&A”) for the three and nine months ended September 30, 3017 are available on the Company’s website at www.avedaenergy.com and the SEDAR website at www.sedar.com. 

Investor Relations Update

The Company has posted an updated corporate presentation and fact sheet to its website. The updated information can be found at www.avedaenergy.com/investor-hub/presentations/default.aspx.

Aveda’s CEO and CFO also expect to be presenting at the World Outlook Financial Conference on February 2^nd and 3^rd 2018 in Vancouver.

Conference Call

The Company will host its third quarter fiscal 2017 results conference call on Tuesday, November 21, 2017 at 10:30 a.m. Eastern Time (ET). President and CEO, Ronnie Witherspoon and Vice-President, Finance and CFO, Bharat Mahajan will discuss Aveda's financial results for the quarter and then take questions from securities analysts.

To access the conference call by telephone, dial (416) 915-3239 or (403) 351-0324. A live audio webcast of the conference call will be available at: http://services.choruscall.ca/links/aveda20171121.html

The conference call webcast will be archived and available until December 31, 2017 at: http://www.avedaenergy.com/investor-hub/conference-calls/default.aspx.

Financial Overview

Outlook

Aveda earns revenue primarily by providing specialized transportation services to companies engaged in the exploration, development and production of petroleum resources. As a result, demand for Aveda’s transportation services is generally linked to the economic conditions of the energy industry and the level of drilling activity in the US and the WCSB.

Relative to the first half of 2016, both oil and natural gas prices have rebounded and rig counts in both Canada and the United States have substantially risen in the first three quarters of 2017 and stabilized into the fourth quarter. Based both on general market enthusiasm with respect to commodity prices and discussions with Aveda’s customers, management expects 2018 to be an even stronger year in terms of drilling activity. Accordingly, the Company is planning for increased activity levels through its equipment activation and refurbishment program. The Company began refurbishing its working fleet as well as idled assets in the third quarter of 2017. This refurbishment program also included upgrading and enhancing the capabilities of several of the Company’s assets. In the third quarter of 2017, the Company invested approximately $1.8 million of capital into its fleet and estimates that its direct operating expenses were negatively impacted by $0.1 to $0.2 million as result of the refurbishment and reactivation program. The Company anticipates making similar investments in the fourth quarter of 2017. Aveda is expected to have most of its equipment activated and working in the first quarter of 2018 to ensure the Company is able to take advantage of what appears to be a year of stronger activity. As these assets are activated and refurbished, the Company will need additional people to operate them. Aveda is expecting to hire approximately 120 employees in the fourth quarter of 2017. Aveda is committed to improving the quality of its revenue by shifting more revenue to owned equipment versus the use of third party subcontractors.

The Company also anticipates that it will increase its hoisting capacity by reengineering several of its assets in 2018. Accordingly, Aveda is planning to invest $6.0 million in its capital program in 2018, with approximately $3.0 to $4.0 million allocated towards maintenance capital and the remainder towards purchasing and reengineering hoisting equipment.

Based on the information above, Aveda expects to see continued improvements in revenue, Adjusted EBITDA and net income results in 2018.

About Aveda Transportation and Energy Services

Aveda provides specialized transportation services and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas, Pennsylvania, Wyoming, Oklahoma, Ohio and North Dakota. Aveda balances Performance, Safety and Value for our Customers through Leadership, Financial Discipline and Proper Planning, while providing a culture of Family for our employees. Aveda strives for a world where its operations improve the daily experience of our customers, our employees, and every person we meet on the road to success.

Aveda was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSX Venture Exchange. Aveda has major operations in Calgary, AB, Leduc, AB, Edson, AB, Pleasanton, TX, Midland, TX, Pecos, TX, Marshall, TX, Williston, ND, Casper, WY, Williamsport, PA, Martins Ferry, OH and Oklahoma City, OK. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE. Aveda has 15 locations which cover North America’s most prolific oil and gas plays. The Company has almost 1,500 pieces of modern, well maintained equipment and employs 560 team members. Aveda’s unique differentiator is our advanced operational and safety culture. For more information on Aveda please visit www.avedaenergy.com.

For more information, please contact:
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer
(403) 264-5769
bharat.mahajan@avedaenergy.com

This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to: demand for the Company’s services and general industry activity level; the Company’s growth opportunities; and expectations regarding the Company’s revenue, EBITDA, Adjusted EBITDA and equipment utilization. Aveda believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:

• the performance of Aveda’s businesses, including current business and economic trends;
• oil and natural gas commodity prices and production levels;
• the effect of the rebranding on Aveda’s businesses;
• capital expenditure programs and other expenditures by Aveda and its customers:
• the ability of Aveda to retain and hire qualified personnel;
• the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;
• the ability of Aveda to maintain good working relationships with key suppliers;
• the ability of Aveda to market its services successfully to existing and new customers;
• the ability of Aveda to obtain timely financing on acceptable terms;
• currency exchange and interest rates;
• risks associated with foreign operations;
• changes under governmental regulatory regimes and tax, environmental and other laws in Canada and the United States; and
• a stable competitive environment.

The forward-looking statements regarding Aveda's potential revenue, EBITDA and Adjusted EBITDA are included herein to provide readers with an understanding of Aveda's anticipated cash flow and Aveda's ability to fund its expenditures based on the assumptions described herein.  Readers are cautioned that this information may not be appropriate for other purposes. 

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in Aveda’s annual information form and management discussion and analysis for the year ended December 31, 2016 (the "MD&A"), which are available for viewing on SEDAR at www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

This News Release contains the terms “EBITDA”, “Adjusted EBITDA”, “gross profit”, “gross profit margin”, “gross profit excluding depreciation and amortization” and “gross margin excluding depreciation and amortization” which are defined in the MD&A. The above terms as presented do not have any standardized meanings prescribed by international financial reporting standards (“IFRS”) and therefore may not be comparable with the calculation of similar measures for other entities. Management uses EBITDA, Adjusted EBITDA, gross profit, gross profit margin, gross profit excluding depreciation and amortization, and gross margin excluding depreciation and amortization to analyze the operating performance of the business. These non-IFRS measures presented are not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.

This News Release contains the terms "cash flow", "working capital" and "working capital ratio", which do not have any standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities.  As an indicator of the Company's performance, cash flow should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. The Company considers cash flow to be a key measure as it demonstrates the Company's underlying ability to generate the cash necessary to fund operations and support activities related to its major assets. Cash flow is determined by adding back changes in non-cash operating working capital to cash from operating activities. Management calculates working capital as current assets less current liabilities and uses this measure to analyze operating performance and leverage.

Notes:

1. See September MD&A Section 8.
2. Current ratio calculated as current assets divided by current liabilities.
3. Debt includes loans and borrowings and note payable as per their carrying amounts on the balance sheet.
4. Gross margin is calculated as gross profit divided by revenue.
5. Gross margin excluding depreciation and amortization is calculated by dividing gross profit excluding depreciation and amortization by revenue.
6. Net asset value per share calculated by dividing total equity ($36.5 million) by the common shares outstanding (57.4 million).

Neither 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.