Canada NewsWire
CALGARY, Nov. 6, 2019
Challenging Alberta economic conditions continue to impact oil sands spending and quarterly results
Restructuring into a leaner organization focused on operational excellence and superior customer service
Amended revolving credit facility to allow for further financial flexibility
Quarterly dividend suspended to support operations
CALGARY, Nov. 6, 2019 /CNW/ - Stuart Olson Inc. (TSX: SOX) ("Stuart Olson" or the "Company") today announced financial results for the third quarter and first nine months of 2019.
"While third quarter revenue increased year-over-year for each of our operating groups, margin from our Commercial Systems Group continued to improve and our longer-term sales funnel remains robust, our current business landscape remains challenging. To address the continued challenging market conditions, we are taking decisive actions that include a comprehensive restructuring into a leaner, more vertically integrated organization with direct lines of communication to operations and customers. We are confident this new organizational structure is an effective response to the capital spending slowdown by our oil sands customers and the impacts of working through the development phase of infrastructure projects," said David LeMay, President and CEO of Stuart Olson.
"This organizational structure combined with the completed refinancing of our convertible debentures, the recent amendment of our revolving credit facility and the decision to suspend the quarterly dividend, all provide our business a stronger foundation in which to operate. We continue to believe we are executing on the appropriate strategies, and I want to underscore that the actions we are taking today are a result of project deferral conditions and the decision to right size our business to better align with current market activity levels is an appropriate one," commented Mr. LeMay. "These actions support our ongoing diversification strategy, and we expect them to deliver long-term growth and value for stakeholders."
FINANCIAL HIGHLIGHTS
Three months ended | Nine months ended | |||
September 30 | September 30 | |||
$ millions, except percentages and per share amounts | 2019 | 2018 | 2019 | 2018 |
Contract revenue | 243.1 | 223.7 | 703.4 | 738.8 |
Contract income | 21.2 | 24.7 | 65.3 | 74.5 |
Contract income margin | 8.7% | 11.0% | 9.3% | 10.1% |
Adjusted EBITDA | 11.1 | 11.8 | 26.1 | 28.9 |
Adjusted EBITDA margin | 4.6% | 5.3% | 3.7% | 3.9% |
Net (loss) earnings | (2.0) | 3.9 | (6.8) | 6.6 |
(Loss) earnings per share | ||||
Basic (loss) earnings per share | (0.07) | 0.14 | (0.24) | 0.24 |
Diluted (loss) earnings per share | (0.07) | 0.12 | (0.24) | 0.24 |
Adjusted free cash flow | (2.4) | 10.2 | (6.8) | 19.6 |
Adjusted free cash flow per share | (0.09) | 0.37 | (0.24) | 0.71 |
$ millions | Sep. 30, | Dec. 31, | ||
Backlog | 1,627.4 | 1,567.4 | ||
Working capital | 62.3 | (10.9) | ||
Long-term debt (excluding current portion) | 55.3 | 43.1 | ||
Convertible debentures (excluding equity portion) (1)(2) | 145.6 | 78.2 | ||
Total assets | 734.3 | 625.3 | ||
Notes: | (1) The convertible debentures issued in 2014 are presented as a current liability of $79.9 million as at September 30, 2019 and as a current liability of $78.2 million as at December 31, 2018. Refer to Note 13 of the September 30, 2019 Condensed Consolidated Interim Financial Statements for further information. |
(2) Outstanding convertible debentures, excluding the equity portion, declined to $65.7 million after repayment of the 2014 convertible debentures on October 23, 2019. | |
(3) Stuart Olson adopted IFRS 16 using the cumulative catch-up approach on January 1, 2019. Please refer to Note 3 of the September 30, 2019 Condensed Consolidated Interim Financial Statements and the first quarter 2019 MD&A for further information. |
These financial results are presented in conformance with International Financial Reporting Standards ("IFRS"). All figures are in Canadian dollars unless otherwise noted. Certain financial and operational measures referred to in this press release, including "contract income margin", "adjusted EBITDA", "adjusted EBITDA margin", "backlog", "adjusted free cash flow", "adjusted free cash flow per share" and "net long-term indebtedness to adjusted EBITDA", are not prescribed measures under IFRS. For a description of these measures, see the "Non-IFRS Measures" section in Stuart Olson's September 30, 2019 Management's Discussion & Analysis ("MD&A").
THIRD QUARTER ("Q3") 2019 OVERVIEW
2019 OUTLOOK
Consolidated Outlook
Industrial Group
Buildings Group
Commercial Systems Group
Corporate Group
CONFERENCE CALL AND WEBCAST
Stuart Olson will hold a conference call and webcast to discuss its 2019 third quarter results on Thursday, November 7, 2019 at 8:15 a.m. Mountain Time (10:15 a.m. Eastern Time). The webcast will be broadcast live and will also be available for replay in the Presentations & Events subsection under Investor Relations on the Company's website at www.stuartolson.com. For those unable to listen during the live webcast, a replay will be available on the website shortly after the conclusion of the conference call for a period of 90 days. Financial analysts and institutional investors who wish to ask questions during the conference call are invited to call 1-888-390-0546 (Canada and USA) or 1-587-880-2171 (outside Canada and USA). For those unable to participate on the live call, a replay will be made available until Thursday, November 21, 2019 by dialing 1-888-390-0541 (Canada and USA) or 1-416-764-8677 (outside Canada and USA), pin 402730. The public is invited to listen to the live conference call, webcast or the replay.
ABOUT STUART OLSON INC.
Stuart Olson Inc. provides general contracting and electrical building systems contracting in the public and private construction markets as well as general contracting, electrical, mechanical and specialty trades, such as insulation, cladding and asbestos abatement, in the industrial construction and services market. The Company operates office locations and projects throughout Western Canada, Ontario and the territories. In 2019 Stuart Olson was recognized as one of Alberta's Top Employers for the third consecutive year. Stuart Olson's common shares are listed on the Toronto Stock Exchange under the symbol "SOX". www.stuartolson.com
FORWARD-LOOKING INFORMATION
This press release contains certain statements that may constitute forward-looking information within the meaning of applicable securities laws. This forward-looking information includes, without limitation, the statements made under the section titled "2019 Outlook" including, without limitation, those relating to expectations regarding changes in:
(i) | revenues; |
(ii) | Stuart Olson's backlog and the implication that such backlog will be converted into revenues; |
(iii) | expectations regarding changes in 2019 adjusted EBITDA and adjusted EBITDA margin; |
(iv) | economic conditions; |
(v) | the future benefit of organizational restructuring; and |
(vi) | the outlook for each of Stuart Olson's operating groups. |
Often, but not always, forward-looking information can be identified by the use of such words as "may", "will", "expect", "believe", "plan", "intend", "estimate", "outlook", "forecast", "should", "anticipate", "seek", "continue", "see", "project", "predict", "propose", "targeting", "potential", "could", "might", "grow", "momentum" and other similar terminology, including statements concerning possible or assumed future results. Forward-looking information is based on management's reasonable assumptions, analysis and estimates in respect of its experience and perception of trends, current economic conditions, government policies and expected developments, as well as other material factors that it considers to be relevant at the time of making such statements.
The forward-looking information in this press release is included solely for the purpose of assisting investors in understanding the Company's financial position and the results of its operations as at the date hereof. By its nature, forward-looking information involves known and unknown risks and uncertainties, which give rise to the possibility that management's assumptions, analysis and estimates will be incorrect and that the Company's anticipated results will not be achieved. Although the Company believes that the statements with respect to forward-looking information are reasonable and current, such statements should not be interpreted as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. Forward-looking information is necessarily subject to a number of factors that may cause actual results to differ materially from those results implied by the expectations suggested by such information. Those factors include, without limitation, the risks and uncertainties described in the Company's Annual Information Form filed with the securities regulatory authorities in Canada under the Company's profile at www.sedar.com. Readers are encouraged to consider the foregoing risks and other factors carefully when evaluating the forward-looking information and are cautioned not to place undue reliance upon such information when making investment decisions.
The forward-looking information in this press release is current to the date hereof, and is subject to change following such date. While the Company may elect to do so, unless required by applicable law, it undertakes no obligation to update this information to reflect new information or circumstances at any particular time.
SOURCE Stuart Olson Inc.
View original content: http://www.newswire.ca/en/releases/archive/November2019/06/c4604.html