Mr. Frank Miles reports

MACRO ENTERPRISES INC. ANNOUNCES 2014 THIRD QUARTER RESULTS

Macro Enterprises Inc. has released its financial results for the third quarter of fiscal 2014.

                                                                            
                         SUMMARY OF FINANCIAL RESULTS
                       (In thousands, except per share)

                                            Three months         Nine months
                                          ended Sept. 30,     ended Sept. 30,
                                          2014      2013      2014      2013

Revenue                                $34,132   $60,056  $158,609  $157,460
EBITDA                                   4,198    14,283    12,028    39,118
Net earnings                             1,385     9,220     4,033    24,615
Net earnings per share                   $0.04     $0.30     $0.13     $0.91

Highlights

• The company continues to materially exceed industry standard safety averages. In the nine-month period ended Sept. 30, 2014, Macro Enterprises exceeded one million man hours worked without a single lost-time injury.
• The company is reporting its 13th consecutive profitable quarter with net income of $1.4-million in what is a cyclical industry.
• The company is reporting shareholders' equity of $81.8-million, or $2.70 per share, based on common shares issued and outstanding as at Sept. 30, 2014.
• The company continues to build on and maintains a strong working capital position of $41.9-million as at Sept. 30, 2014.
• The company's third quarter operating margins improved to 22 per cent, now approaching its expected historical averages.

Results of operations

Three months ended Sept. 30, 2014, versus three months ended Sept. 30, 2013

Consolidated revenue was $34.1-million compared with $60.1-million in the third quarter last year. Most of the revenue in the quarter was derived from a series of integrity digs for one of the company's key clients, the commencement of a larger facilities job and carryover work from two other large facilities projects that had commenced in the prior quarters. The reduction in revenue being recognized compared with prior year is due to the overall reduced work levels experienced and the size and scope of the jobs being performed during the quarter. In the third quarter of last year, the company's best third quarter on record, most of the revenue was derived from five larger projects covering pipeline and facility construction, and pipeline repair work.

Operating expenses were $26.7-million, or 78 per cent of revenue, compared with $43.9-million, or 73 per cent of revenue, in the third quarter last year. The company was successful in improving its operating margins quarter over quarter, from 87 per cent being recognized in second quarter 2014 to 78 per cent in the third quarter, for an effective improvement of 9 per cent, which now aligns with historical operating margins.

General and administrative expenses were $1.9-million, up slightly compared with prior year, but reduced from the levels of the two most recent quarters reported. The company's general and administrative expenditures reflects costs incurred in connection with the bid processes, professional fees, corporate wages, burdens and various other overheads, including rents, insurance, travel and administrative supplies that are not charged directly to projects. The company has incurred and anticipates growing these costs as it continues to evaluate, bid and pursue large-scale project opportunities.

Total depreciation expense of $2.1-million was $200,000 higher than prior year's third quarter, reflecting additional assets acquired with accelerated depreciation schedules and the commencement of depreciation on the expansion of the company's mechanics shop.

Interest expense of $300,000 was approximately $100,000 higher than the third quarter last year as a result of new finance leases entered into during the first nine months of fiscal 2014.

Other (gains) and expenses included $400,000 in bad debt expense relating to the write-off of an aged account receivable for a disputed balance.

During the third quarter the company issued stock options to its directors, management, employees and a consultant, and as such recorded a related non-cash stock-based compensation charge of $945,000.

Income tax expense in the quarter of $400,000 was at an effective tax rate of 22.5 per cent, which approximates the enacted tax rates after appropriate deductions.

Net income was $1.4-million (four cents per share) compared with $9.2-million (30 cents per share). The decrease in net income is a result of reduced levels of work activity during the quarter compared with prior year further impacted by reduced operating margins being achieved and a non-cash stock-based compensation charge being incurred as a result of options being granted during the quarter. Compared with second quarter 2014, the company's net income increased $900,000 as a result of improved margins being achieved despite the slight reduction in quarter-over-quarter revenue being recognized and the stock option grant.

Outlook

Activity in the oil and gas industry in Western Canada remains active. Macro is strategically pursuing multiple large-scale potential projects that combine commercial, logistic and time scheduled criteria that are conducive to minimizing risk, and maximizing the synergies of pipeline and facility construction. Macro is continuing to see benefits from numerous pipeline integrity and facility projects derived from its multiple major clients. However, primarily as a result of client project scheduling delays, the company is anticipating revenues in the fourth quarter of fiscal 2014 to be less than those recorded in the fourth quarter of fiscal 2013. Total revenues for the fiscal year ended Dec. 31, 2014, is expected to be approximately 90 per cent of revenues recognized in the prior year. The company is targeting margins more in line with historical averages and as such expects to see continued financial improvements to its operations over the balance of fiscal 2014, as experienced in the third quarter.

As part of its strategy, the company is seeking out pipeline and facilities construction contracts in connection with the liquefied natural gas (LNG) projects being planned on the West Coast of British Columbia, an industry that is anticipated to bring substantial economic activity to British Columbia over the next 30 years. Macro has completed bid processes and has entered into discussions with the LNG project owners regarding future pipeline and facilities construction.

Macro has been approached by multiple major clients to assist with budget and constructability estimates for major pipeline and facility projects that are not LNG related. These projects are scheduled for approvals by mid-2015.

We seek Safe Harbor.