Mr. Dustin Haw reports

TERRAVEST ANNOUNCES SECOND QUARTER RESULTS FOR FISCAL 2023 AND DIVIDEND DECLARATION

TerraVest Industries Inc. has released its results for the second quarter ended March 31, 2023, and has declared its quarterly dividend.

Second quarter and six months review and outlook

Business Performance

Management believes that there are certain non-IFRS financial measures that can be used to assist shareholders in analyzing the performance of TerraVest. The table below highlights certain financial results and reconciles net income to adjusted earnings before interests, income taxes, depreciation and amortization ("EBITDA") for the second quarter and six months ended March 31, 2023 and the comparative periods in fiscal 2022.

Sales for the second quarter and six months ended March 31, 2023 were $176,858 and $354,056 versus $137,764 and $269,128 for the prior comparable periods. This represents increases of 28% and 32% respectively. However, TerraVest acquired all of the issued and outstanding shares of T.S.X. Transport Inc. ("TSX") in October 2022, of Mississippi Tank and Manufacturing Company ("MTC") in March 2022, as well as a controlling interest of 66.8% in Green Energy Services Inc. ("GES") in November 2021, of which only GES and MTC partially contributed to the prior comparable periods. A subsidiary of TerraVest also acquired assets of Secure Energy (Drilling Services) Inc. ("SES") in March 2023, which are included in its results. Excluding GES (only for the six months period), TSX and MTC, sales for the second quarter and six months ended March 31, 2023 were $161,811 and $254,194 versus $135,227 and $234,830 for the prior comparable periods. This represents increases of 20% and 8% respectively for TerraVest's base portfolio (excluding TSX, MTC and GES), which are the result of higher demand for oil and gas processing equipment and services in Western Canada, as well as LPG storage and distribution equipment. Sales for the HVAC segment remained relatively flat versus the prior comparable periods.

Net income for the second quarter and six months ended March 31, 2023 were $11,444 and $24,530 versus $9,134 and $19,712 for the prior comparable periods. This represents increases of 25% and of 24% respectively, which is a result of higher sales for TerraVest's base porfolio of businesses and the positive contribution of GES, MTC and TSX. The increases were partially offset by additional financing cost incurred, as a result of higher interest rates versus the prior comparable periods and increased debt levels to support working capital needs and finance business acquisitions. Other variances are also highlighted in the table above.

Adjusted EBITDA for the second quarter and six months ended March 31, 2023 were $32,222 and $62,460 versus $21,174 and $41,470 for the prior comparable periods. This represents increases of 52% and 51% respectively, which are primarily the result of the addition of GES, MTC and TSX and the reasons highlighted above.

The table below reconciles cash flow from operating activities to cash available for distribution for the second quarter and six months ended March 31, 2023 and the comparative periods in fiscal 2022.

Cash flow from operating activities for the second quarter and six months ended March 31, 2023 were $19,164 and $41,047 versus $12,225 and $11,888 for the prior comparable periods. This represents increases of 57% and 245% respectively. The increase in cash flow from operating activities is largely attributable to the increase in net income and the stabilization of working capital levels compared to the prior period where working capital levels were increasing, as a result of increased activity in certain of TerraVest's businesses combined with significant increases in steel and other raw materials pricing. The increase in cash flow from operating activities was partially offset by additional interest paid.

Maintenance capital expenditures were $3,317 for the second quarter ended March 31, 2023 versus $1,926 for the prior comparable period representing an increase of 72%, which is mainly explained by the timing of maintenance capital expenditures. During the second quarter, TerraVest's total purchase of property, plant and equipment paid was $7,222 of which $3,905 is considered growth capital. The growth capital incurred during the second quarter was used to add to the Company's rental fleet, to automate and expand certain manufacturing processes in a few of TerraVest's subsidiaries, and to increase its asset base in one of its service businesses. These growth projects are expected to result in increased capacity and greater efficiencies in several of TerraVest's businesses.

Cash available for distribution for the second quarter and six months ended March 31, 2023 increased by 28% and 45% respectively versus the prior comparable periods. These increases are a result of reasons explained above and previously in this press release.

The dividend payout ratio for the second quarter and six months ended March 31, 2023 were 13% and 10% versus 13% for the prior comparable periods.

Outlook

The overall business environment continues to present challenges. Although many travel and workplace restrictions have been lifted in North America, cost inflation, supply chain disruption and labour shortages continue to persist for many of TerraVest's businesses. Rising interest rates and the threat that brings to the overall economy also pose challenges moving forward. However, TerraVest is well-positioned for continued growth with its diverse portfolio of cash generating businesses. The Company continues to make targeted investments to improve manufacturing efficiency, add complimentary product lines, and pursue its acquisition strategy.

Business Combinations

On March 1, 2023, a subsidiary of TerraVest entered into an acquisition agreement to acquire assets of Secure Energy (Drilling Services) Inc. ("SES"), a subsidiary of Secure Energy Inc. SES provides integrated fluids solutions such as on-site water sourcing, filtration, pumping, storage and heating services. The business combination has been accounted for using the acquisition method with the results of operations included in earnings from the date of acquisition.

On October 2, 2022, a subsidiary of TerraVest entered into a share purchase agreement to acquire all the issued and outstanding shares of JCAC Fortin Inc., the holding company of TSX. TSX is a privately-owned Quebec transport company that provides drop deck transportation services between Quebec and Eastern United States. The business combination has been accounted for using the acquisition method with the results of operations included in earnings from the date of acquisition.

CONSOLIDATED RESULTS OF OPERATIONS

The following section provides the financial results of TerraVest's operations for the second quarter and six months ended March 31, 2023 and the comparative periods in fiscal 2022.

Sales for the second quarter and six months ended March 31, 2023 increased by 28% and 32% respectively versus the prior comparable periods. The reasons have been explained previously in this press release.

Gross profit for the second quarter and six months ended March 31, 2023 increased by 47% respectively versus the prior comparable periods. This is primarily explained by the contribution of GES, MTC and TSX and by increased sales volumes for most of TerraVest's base portfolio businesses, partially offset by a less favorable product mix.

Administration expenses for the second quarter and six months ended March 31, 2023 increased by 55% and 51% respectively versus the prior comparable periods. The variation is mainly the result of the addition of GES, MTC and TSX. TerraVest also recognized an expense of $3,084 in the second quarter ended March 31, 2023 following the settlement of the working capital adjustment with the prior owner of ECR. In addition, in the first quarter of fiscal 2023, one of TerraVest's subsidiaries incurred non-recurring relocation fees to finalize the retirement of one of its manufacturing plants and consolidate its activities to one of its existing facilities.

Selling expenses for the second quarter and six months ended March 31, 2023 increased by 25% and 29% respectively versus the prior comparable periods. The increases are explained by the hiring of additional sales personnel and additional commission expense as a result of increased sales in certain product lines. The addition of GES and MTC also contributed to the increase in selling expenses for the six months ended March 31, 2023 versus the prior comparable period.

Financing costs for the second quarter and six months ended March 31, 2023 increased by 89% and 91% respectively versus the prior comparable periods. The increase is primarily explained by additional interest expenses as a result of increased debt balances following recent business acquisitions and increases in interest rates on floating rate debt versus the prior comparable periods.

Other (gains) losses variance for the second quarter and six months ended March 31, 2023 is a result of an unfavorable change in fair value of investments in equity instruments and in a limited partnership, an increased gain on disposal or property, plant and equipment for rental and a non-recurring gain on remeasurement of an equity interest that was realized in the prior comparable period. The variance for the second quarter ended March 31, 2023 is also explained by a gain on foreign exchange and an unfavorable change in fair value of derivative financial instruments.

Income tax expense for the second quarter and six months ended March 31, 2023 increased versus the prior comparable periods, which is the result of increased taxable earnings and the timing of income tax expense adjustments.

As a result of the above, net income attributable to common shareholders for the second quarter and six months ended March 31, 2023 increased by 5% and 9% versus the prior comparable periods.

DIVIDENDS

TerraVest is pleased to announce that The Board of Directors has declared its quarterly dividend of $0.125 per common share payable on July 10, 2023 to shareholders of record as at the close of business on June 30, 2023. The dividend is designated an "eligible dividend" for Canadian income tax purposes.

Additional information can be found in TerraVest's annual consolidated financial statements and MD&A which are available on SEDAR at www.sedar.com.

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