August 13 - Entrec Corporation - an Alberta, Canada headquartered provider of heavy lift and heavy haul services - has issued its financial results for the three months ending June 30, 2013 (Q2 2013).
For the three months ending June 30, 2013, revenue grew by 72 percent year-on-year to CAD49.3 million (USD 47.77 million). The increase included CAD15.6 million (USD15.12 million) of acquisition related growth from companies purchased over the last 12 months. Organic growth contributed CAD5 million (USD4.84 million) (11 percent) of the year-on-year revenue growth.
Q2 2013 EBITA, before acquisition and integration costs, increased to CAD12.7 million (USD12.31 million) from CAD8.1 million (USD7.85 million) in the comparative quarter of 2012. As a percentage of revenue, Q2 2013 EBITA fell by 2.3 percentage points year-over-year to 25.8 percent - a result of lower utilisation of equipment during the trading period.
Adjusted net income increased to CAD4.5 million in Q2 2013, from CAD3.2 million (USD3.1 million) in Q2 2012, reflecting the higher revenue. Adjusted net income for the Q2 2013 period included CAD0.8 million (USD0.7 million) in non-recurring acquisition and integration costs - primarily related to the acquisition of GT's - compared to CAD0.4 million (USD0.39 million) during the same period of 2012.
"We continued to grow revenues and respond to customer demand during the second quarter, even while contending with poor weather conditions in some of our key operating areas," said John M. Stevens, Entrec's president and chief operating officer. "We also further expanded our business with an agreement to acquire GT's Crane and Transportation Services. The transaction, which closed on July 2, 2013, brings us an additional 45 cranes, 130 trailers and 50 tractors, and positions Entrec as a leading heavy lift and heavy haul company in Northeast British Columbia and Northwest Alberta.
"While second quarter revenue came in slightly below our original expectations, we view our results as positive in light of the unusually poor weather conditions," added Stevens.
According to Entrec its Q2 revenues typically get off to a slow start due to the spring snow melt and wet conditions that make the ground less capable of supporting vehicles with heavy loads. Activity levels usually return to normal levels in May and June as ground conditions improve. However in Q2 2013, the company experienced heavy rains and flooding in several operating regions during May and June, hampering Entrec's ability to complete projects.
However, Stevens noted that conditions have improved: "Since the beginning of the third quarter, operating conditions and activity levels are now largely back to normal."
To meet the demand for its services, Entrec has enhanced its owned crane and trailer fleet with short-term rentals. This provides greater financial flexibility due to lower capital outlays but generates lower cash flows due to rental costs involved.
Most of the equipment Entrec rents comes with purchase options, including a provision to apply previous rental payments against the purchase price. In the first half of 2013 Entrec bought out CAD4.3 million (USD4.17 million) of rental equipment. It plans to acquire an additional CAD4.1 million (USD3.97 million) of rental crane and specialised trailer units in the second half of 2013. Entrec expects the buy-out to reduce rental expenses by CAD1.9 million (USD1.84 million).
"Our outlook for the remainder of 2013 and 2014 is positive," said Stevens. "Our tremendous growth over the past year has positioned us to capture a larger share of the growing industrial development occurring throughout Western Canada, most notably in Alberta's oil sands region and throughout Northern British Columbia."