Mr. Bill Rollins reports

TORNADO GLOBAL HYDROVACS REPORTS FIRST QUARTER 2018 RESULTS

Tornado Global Hydrovacs Ltd. has released its unaudited condensed consolidated financial results for the three months ended March 31, 2018. The unaudited condensed consolidated financial statements and management's discussion and analysis have been filed on SEDAR and can be reviewed at SEDAR.

                   FINANCIAL AND OPERATING HIGHLIGHTS 
                               (in $000s
                          except per-share data)
                                                      Three months ended March 31,
                                                            2018             2017

Revenue                                                   $4,831           $5,989
Cost of sales                                              3,943            5,092
Gross profit                                                 888              897
Selling and general administrative expenses                1,244              973
Depreciation and amortization                                256              256
Stock-based compensation                                      68                -
Net finance income and other                                  (1)             (10)
(Loss) before tax                                           (679)            (322)
Income tax recovery                                           44                -
Net (loss)                                                 ($635)           ($322)
Net (loss) per share -- basic and diluted                     $-           ($0.01)
EBITDAS (1)                                                ($356)            ($76)
EBIT (1)                                                   ($684)           ($332)

Three months ended March 31, 2018 (dollar amounts are in thousands unless otherwise indicated):

• Revenue of $4,831 decreased 19.3 per cent compared with $5,989 in first quarter 2017. The decrease in revenue was due to a delay in completion and delivery of hydrovac trucks during the quarter. Three completed trucks held in inventory as at March 31, 2018, were delivered and sold in early second quarter 2018.
• Despite the decreased revenue, gross profit of $888 was comparable with $897 in the same period of 2017 due to production efficiencies at the company's Stettler plant.
• Selling and general and administrative expenses of $1,244 increased by $271 compared with $973 in the same period of 2017. The increase is principally due to increased employee costs of the North America operation and increased overhead costs of the China operation and corporate.
• EBITDAS (earnings (loss) before interest, tax, depreciation, amortization and stock-based compensation) (1) of negative $356, comprising North America ($96), China (negative $287) and corporate (negative $165), decreased by $280 compared with negative $76 in first quarter 2017, due to increased selling and general and administrative expenses. For the North American segment, EDITDAS during the quarter of $96 decreased significantly compared with fourth quarter 2017, due to decreased activity levels. For China, negative EDITDA during the quarter was ($287) and is expected to stay at this level until there is an increase in the scope of operations.
• Net loss of $635 increased by $313 compared with a loss of $322 in first quarter 2017. This is due to the factors discussed above, together with stock-based compensation expense of $68.

(1) Earnings (loss) before interest, tax, depreciation, amortization and stock-based compensation (EBITDAS) and earnings (loss) before interest and tax (EBIT) are not defined by IFRS (international financial reporting standards). The definition of EBITDAS does not consider gains and losses on the disposal of assets, fair value changes in foreign currency forward contracts, and non-cash components of stock-based compensation. While not an IFRS measure, EBITDAS is used by management, creditors, analysts, investors and other financial stakeholders to assess the group's performance and management from a financial and operational perspective.

Outlook

The market demand in North America from the municipal sectors in both Canada and United States is expected to stay strong during 2018. The company is also benefiting from increased demand because of the significant design improvements of its hydrovac trucks. The company continues to develop its relationship with its U.S. partner and expects revenue growth in the second half of 2018. As a result, the company expects strong financial performance in North America.

In China, the company continues to execute its business plan to capitalize on this significant market opportunity. By the end of second quarter 2018, the company expects to have four unique products for demonstration and potential future revenue. As a result of these factors, management believes the company's medium- and long-term outlook is positive in China.

About Tornado Global Hydrovacs Ltd.

The company designs and manufactures hydrovac trucks in Canada and sells hydrovac trucks for excavation service providers to the oil and gas industry and the municipal markets in Canada and the United States. Hydrovac trucks use high-pressure water to pulverize soil and turn it into mud, and then vacuum up the resulting mud into its tank. Tornado currently operates in North America. The company intends to expand its hydrovac business into China and has established a wholly owned operation in China with a head office in Beijing.

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