16:27:34 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



ZCL Composites Inc
Symbol ZCL
Shares Issued 30,234,362
Close 2015-03-05 C$ 6.30
Market Cap C$ 190,476,481
Recent Sedar Documents

ZCL earns $16.3-million in 2014, boosts dividend

2015-03-05 18:33 ET - News Release

Mr. Ron Bachmeier reports

ZCL COMPOSITES REPORTS Q4 AND FISCAL 2014 FINANCIAL RESULTS

ZCL Composites Inc. has released its financial results for the fourth quarter and year ended Dec. 31, 2014.

Year 2014 compared with 2013

  • Record revenue of $170.8-million, up $9.1-million or 6 per cent from $161.7-million;
  • Record net income of $16.3-million or 54 cents per share (basic and fully diluted), up $1.9-million or five cents per share from $14.4-million or 49 cents per share (basic and fully diluted);
  • Record adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $27.1-million, up $1.5-million or 6 per cent from $25.6-million;
  • Backlog of $31-million, down $7.9-million or 20 per cent from $38.9-million;
  • Quarterly dividend of 4.5 cents per share, up 13 per cent from four cents per share in the third quarter of 2014.

Fourth quarter 2014 compared with fourth quarter 2013

  • Revenue of $48.2-million, up $10.5-million or 28 per cent from $37.7-million;
  • Net income of $4.9-million or 16 cents per share (basic and fully diluted), up $3.1-million or 10 cents per share from $1.8-million or six cents per share (basic and fully diluted);
  • Adjusted EBITDA of $7.7-million, up $3.7-million or 94 per cent from $4-million.

"I view 2014 as a year of achievement for ZCL," said Ron Bachmeier, president and chief executive officer. "We set annual records for several financial performance metrics and delivered a return on capital employed of 29 per cent. Our balance sheet continues to be strong, with working capital of $62.6-million and a net cash position of $25.8-million. As there is uncertainty in certain markets that we serve due to the decline in oil and gas prices, we will continue exercising prudence on our capital allocation decisions, leaving us with flexibility to take advantage of any growth opportunities that may arise.

"Looking ahead, we remain encouraged about our prospects. As we enter 2015, we expect that we may initially see lower levels of activity at ZCL due to the uncertainty in the energy markets. However, we feel that the diversity of our product offerings in the retail petroleum, water and industrial corrosion markets, which should benefit from lower commodity energy prices, will allow us to grow our business in 2015 and capitalize on the opportunities that will present themselves in the current environment."

Financial results

Revenue for the year ended Dec. 31, 2014, was a record $170.8-million, up $9.1-million or 6 per cent from $161.7-million for the year ended Dec. 31, 2013. The underground operating segment grew 14 per cent, and both petroleum products and water products achieved record annual revenues. The above-ground operating segment revenue was down 21 per cent from 2013.

Gross profit for the year ended Dec. 31, 2014, was $34.5-million, up $1-million or 3 per cent from $33.5-million a year earlier. Gross margin was 20 per cent of revenue for 2014, down slightly from 21 per cent a year earlier, with the decrease attributable to the above-ground operating segment.

Net income for the year ended Dec. 31, 2014, was $16.3-million, up $1.9-million or 13 per cent from $14.4-million a year earlier. Net income per diluted share for 2014 was 54 cents, up five cents or 10 per cent from 49 cents per diluted share a year earlier. Net income included a foreign exchange gain of $1-million that arose on the translation of U.S.-dollar assets and liabilities held in the Canadian legal entities.

Backlog

As of Dec. 31, 2014, backlog was $31-million, down $7.9-million or 20 per cent from $38.9-million a year earlier. The overall decrease primarily resulted from a reduction in the underground backlog of $8-million, which was partially offset by a small increase in above-ground backlog. The underground backlog decline reflects the significant amount of preorders that the Canadian sales group received at the end of 2013 relative to 2014; an acceleration of product sales to certain customers in the fourth quarter of 2014 that otherwise would have been recorded as backlog at year end; and temporary customer indecision due to the oil price drop. ZCL's Canadian sales team is currently focused on obtaining preorders for the first quarter of 2015.

Financial position

At Dec. 31, 2014, ZCL's balance sheet had working capital (current assets less current liabilities) of $62.6-million, up $14.7-million or 31 per cent from $47.8-million at Dec. 31, 2013. Net cash increased $10.6-million throughout the 2014 fiscal year to $25.8-million, primarily due to increases in cash flows from operations throughout the year of $20.8-million. Return on capital employed remains strong at 29 per cent for the year ended Dec. 31, 2014.

Dividends

Given the company's financial strength and ability to generate cash from operations, the board declared a 13-per-cent increase in the quarterly dividend to 4.5 cents per share for the fourth quarter of 2014, up from four cents per share previously. The dividend will be paid on April 15, 2015, to the shareholders of record as of March 31, 2015.

2015 outlook

In 2015, ZCL's operations group plans to incur capital investment at a level similar to 2014, in order to further progress lean initiatives within its facilities. ZCL's maintenance capital requirements are historically between $3-million and $5-million annually. For 2015, similar to 2014, ZCL's capital budget is planned to be at the upper end of that range in order to continue to upgrade certain of its existing facilities and equipment with the intent to further improve lead times and process flow.

                               SUMMARY FINANCIAL RESULTS
                 (in thousands of dollars, except per-share amounts)

                                                   For the three months ended
              
                                         Dec. 31,    Sept. 30,     June 30,    March 31,
                                            2014         2014         2014         2014
Revenue                                $  48,195    $  49,361    $  41,687    $  31,592
Net income                                 4,895        5,557        4,492        1,372
Adjusted EBITDA                            7,702        8,834        7,382        3,159
Basic earnings per share                    0.16         0.19         0.15         0.05
Diluted earnings per share                  0.16         0.18         0.15         0.05
Adjusted EBITDA per diluted share           0.25         0.29         0.24         0.10
Dividends declared per share                0.04         0.04        0.035        0.035


                                                   For the three months ended

                                         Dec. 31,    Sept. 30,     June 30,    March 31,
                                            2013         2013         2013         2013

Revenue                                $  37,715    $  43,931    $  47,250    $  32,809
Net income                                 1,769        4,993        5,087        2,536
Adjusted EBITDA                            3,975        8,512        8,316        4,797
Basic earnings per share                    0.06         0.17         0.17         0.09
Diluted earnings per share                  0.06         0.17         0.17         0.09
Adjusted EBITDA per diluted share           0.13         0.28         0.28         0.16
Dividends declared per share                0.03         0.03        0.025        0.025

Management's discussion and analysis and financial statements

The company's management's discussion and analysis and consolidated financial statements for the years ended Dec. 31, 2014, and 2013 are available on SEDAR and the ZCL website.

Conference call

ZCL has scheduled an investor conference call for 9 a.m. MT (11 a.m. ET) on Friday, March 6, 2015, to discuss its financial and operating results for the year and fourth quarter ended Dec. 31, 2014.

To access the conference call by telephone, please call 647-427-7450 from the Greater Toronto Area, or dial toll-free 888-231-8191 from elsewhere in North America. An audio webcast may be accessed through the investor events tab on the ZCL website. Audio replays will be available on the ZCL website shortly after the conclusion of the conference call.

The conference call will include prepared remarks by Mr. Bachmeier and by ZCL's chief financial officer, Kathy Demuth. After the prepared remarks, ZCL will accept questions from analysts and institutional investors. The public is invited to listen to the conference call in real time or by replay.

We seek Safe Harbor.

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