Mr. Tim Taylor reports

MOSAIC CAPITAL CORPORATION REPORTS ANNUAL 2013 FINANCIAL RESULTS AND NET INCOME OF $11.6-MILLION

Mosaic Capital Corp. has released its audited annual consolidated financial statements for the year ended Dec. 31, 2013.

"Mosaic is built on the foundation of cash flow from an industrially and geographically diverse group of companies, and we saw the benefits of that diversification in 2013," commented John Mackay, executive chairman and chief executive officer. "In 2013, we added Industrial Scaffold to our portfolio and acquired the remaining 25 per cent of Remote Waste, increasing Mosaic's holding to 100 per cent. Moving forward, we will continue to acquire new businesses and will continue growing our existing businesses both organically and through acquisitions. As with many companies in Canada and North America, we had some challenges due to weather in 2013 and the first quarter of 2014. Our businesses in Saskatchewan and Manitoba felt the effects of mother nature with both wet and extremely cold weather. However, even with these unpredictable events, our diversification of businesses provided positive results as we saw increases in revenue, adjusted EBITDA and free cash flow for the year. Going into 2014, we have a strong balance sheet and excellent deal flow as we look to add additional acquisitions."

  
                  FINANCIAL HIGHLIGHTS
 (all amounts are in thousands except per-cent and share data)

                                                2013       2012

Revenue                                      $89,289    $75,815
Net income and comprehensive income          $11,594    $10,929
Adjusted EBITDA                              $18,049    $16,764

Financial and operational highlights for 2013:

• February, 2013, sale of warehouses in Lethbridge, Alta., by First West Properties;
• September, 2013, acquisition of 67.5 per cent of Industrial Scaffold, located in Crofton, B.C., and with operations across British Columbia and in Alberta;
• October, 2013, increased common share dividend by 50 per cent to six cents per share;
• November, 2013, purchase of commercial real estate in Saskatoon, Sask., by First West Properties;
• December, 2013, acquisition of remaining 25 per cent of Remote Waste;
• Net income and comprehensive income for the year ended Dec. 31, 2013, of $11.6-million (2012: $10.9-million);
• Preferred security payout ratio of 57 per cent for the 12-month period ended Dec. 31, 2013;
• For the year ended Dec. 31, 2013, the industrial segment saw organic growth in revenue of 1.2 per cent while adjusted earnings before interest, taxes, depreciation and amortization decreased 8.3 per cent. This organic calculation is without the inclusion of Industrial Scaffold and Kendal's Supply.

Three-month financial highlights

Revenue for the three months ended Dec. 31, 2013, increased 8 per cent or $1,702 to $23,758 when compared with the same period in 2012, primarily due to the addition of revenue from Industrial Scaffold, which was acquired on Sept. 1, 2013. This increase was partially offset by a decrease in revenue at Ambassador due to project delays, and Winnipeg experiencing its coldest winter since 1979, as well as decreased revenue in the real estate segment as a result of the sale of two properties in February, 2013.

Adjusted earnings before interest, taxes, depreciation and amortization for the three months ended Dec. 31, 2013, decreased 15 per cent or $551 to $3,239 when compared with the same period in 2012. The following were the major contributing factors between the periods in 2013 compared with 2012:

• During the three-month period ended Dec. 31, 2013, Ambassador experienced a decrease in income as a result of the completion of a number of lower-margin projects, project delays and adverse weather conditions, which accounted for the underutilization of direct labour and increased operating costs. However, over the same period, Ambassador's backlog increased from approximately $40,000 to over $60,000.
• During the three-month period ended Dec. 31, 2013, the real estate segment income decreased as a result of the sale of the two properties in February, 2013. This decrease was not fully offset by the additional income generated from the commercial property acquired in November, 2013.
• During the three-month period ended Dec. 31, 2013, activity in southeast Saskatchewan experienced a decrease due to reduced industry activity levels and adverse weather conditions, which impacted Mosaic's businesses in the region.
• During the three-month period ended Dec. 31, 2013, activity in Northern Alberta experienced an increase in exploration activity levels, which impacted Mosaic's businesses in the region.
• The addition of positive income from operations for Industrial Scaffold was not part of Mosaic in the 2012 comparative period.

Free cash flow for the three-month period ended Dec. 31, 2013, increased 10 per cent or $318 to $3,392 when compared with the same period in 2012. The primary reasons for the increase in free cash flow are a decrease in the non-controlling interest of adjusted earnings before interest, taxes, depreciation and amortization due to the acquisition of the remaining 25 per cent of Remote Waste and the reduction of Mosaic's share of current income tax expense.

Annual financial highlights

Revenue for the year ended Dec. 31, 2013, increased 18 per cent or $13,474 to $89,289 when compared with the same period in 2012. The primary reasons for the increase in revenue are organic revenue growth within four businesses in the industrial segment, the addition of four months of revenue for Industrial Scaffold and the additional seven months of revenue for Kendall's Supply. This increase was partially offset by decreased revenue as a result of the sale of two properties in the real estate segment in February, 2013.

The adjusted earnings before interest, taxes, depreciation and amortization for the year ended Dec. 31, 2013, increased 8 per cent or $1,285 to $18,049 when compared with the same period in 2012. This can be primarily attributed to four factors:

• Four months of operations of Industrial Scaffold that were not part of Mosaic in the 2012 comparative period;
• Twelve months of operations of Kendall's Supply in the current period as compared with five months of operations in the comparative period;
• A gain on sale of real estate within the real estate segment;
• A decrease in income from operations for Ambassador due to lower-margin projects and project delays, resulting from cold weather conditions, which resulted in the underutilization of direct labour and therefore increased operating costs during the three-month period ended Dec. 31, 2013. As of Dec. 31, 2013, Ambassador was working on approximately $25,100 of projects, which all had a weather-related delay of some type.

Free cash flow for the year ended Dec. 31, 2013, increased 22 per cent or $2,377 to $13,224 when compared with the same period in 2012. This increase in free cash flow can be attributed to the same factors as resulted in the increase in adjusted earnings before interest, taxes, depreciation and amortization, as well as the acquisition of the remaining 25 per cent of Remote Waste. Free cash flow per common share for the year ended Dec. 31, 2013, increased 25 per cent to $1.66 from $1.33 in the comparable period.

Mosaic's audited annual consolidated financial results for the year ended Dec. 31, 2013, and management's discussion and analysis dated April 23, 2013, are available on SEDAR.

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