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Acasta Enterprises Inc
Symbol C : AEF
Shares Issued 70,215,298
Close 2018-05-15 C$ 2.50
Recent Sedar Documents

Acasta Enterprises loses $168.81-million in Q1

2018-05-16 01:59 ET - News Release

Mr. Ian Kidson reports

ACASTA ENTERPRISES REPORTS FIRST QUARTER RESULTS

Acasta Enterprises Inc. has released its consolidated financial results for the quarter ended March 31, 2018, and provided the following corporate update.

Financial and operating highlights

Acasta's results from continuing operations for the three-month period ended March 31, 2018, included revenues of $67.0-million, a net loss of $38.9-million or 44 cents per share (basic and diluted), an adjusted net loss of $25.2-million or 28 cents per share (basic and diluted), and adjusted EBITDA (defined in the non-IFRS (international financial reporting standards) measures section) of negative $4.6-million, compared with revenues of $63.8-million, a net loss of $300,000 or nil per share (basic and diluted), an adjusted net income of $3.1-million or four cents per share (basic and diluted), and adjusted EBITDA of $12.6-million for the three-month period ended March 31, 2017.

Acasta's results from discontinued operations for the three-month period ended March 31, 2018, included revenues of $22.5-million, a net loss of $129.9-million or $1.45 per share (basic and diluted), an adjusted net loss of $96.8-million or $1.08 per share (basic and diluted), and adjusted EBITDA of negative $81.9-million, compared with revenues of $29.2-million, a net income of $4.5-million or five cents per share (basic and diluted), an adjusted net income of $6.2-million or seven cents per share (basic and diluted), and adjusted EBITDA of $24.5-million for the three-month period ended March 31, 2017.

On March 27, 2018, Acasta closed the sale of Stellwagen Group, disposing of and derecognizing substantially all of the net assets in the former aviation reportable segment.

On May 14, 2018, Acasta monetized its interest in the Stelloan profit participating notes (PPNs) for net proceeds of approximately $28.5-million. These proceeds exclude the additional $5-million (U.S.) in downside protection due from the purchaser of Stellwagen pursuant to the sale agreement.

As a result of the sale of Stellwagen and the PPNs, Acasta has effectively reduced its total indebtedness by approximately $68.8-million.

Acasta entered into a definitive agreement to sell JemPak Corp. on May 10, 2018, to Henkel Canada Corp., a wholly owned subsidiary of Henkel AG & Co. KGaA, at a purchase price of $118-million on a cash and debt-free basis, subject to customary working capital adjustments and indemnities. The parties expect the transaction to close on or about May 31, 2018.

At March 31, 2018, the company was in breach of certain financial leverage ratio covenants under its credit agreements. Failure to meet these covenants at March 31, 2018, caused the debt outstanding under the credit facility and U.S. credit facility to be presented as a current liability, which the company would not be able to satisfy if called by its lenders. In response, the company sought and obtained waivers from the lenders in respect of such covenants subsequent to March 31, 2018, and also modified terms of the covenant requirements under the lenders' credit agreements that resulted in an increase in the maximum permissible debt-to-EBITDA ratios for the period through the earlier of the sale of JemPak and July 31, 2018, subject to certain conditions.

First quarter 2018 results conference call

Acasta's senior management will host a conference call on Wednesday, May 16, 2018, at 9 a.m. EDT, to discuss the company's financial and operating results. Please dial 1-416-406-0743 or toll-free (Canada/the United States) 1-800-806-5484 with passcode 3696205 followed by the pound key. To ensure your participation, please join approximately five minutes prior to the scheduled start of the conference call.

The conference call will be archived on the company's website and will be available for replay at 1-905-694-9451 or toll-free (Canada/U.S.) 1-800-408-3053 with passcode 8033218 followed by the pound key, expiring on June 21, 2018.

Non-IFRS financial performance measures (unaudited)

Adjusted net income (loss), EBITDA and adjusted EBITDA are not recognized measures under IFRS and these data may not be comparable with data presented by other companies.

Adjusted net income (loss) is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS. The company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted net income (loss) is intended to provide investors with information about the company's continuing income-generating capabilities. Management uses this measure to monitor and plan for the operating performance of the company in conjunction with other data prepared in accordance with IFRS.

EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for finance costs, current and deferred income tax, and depreciation and amortization expenses. The company believes that this measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. EBITDA is intended to provide investors with information about the company's continuing income-generating capabilities. Management uses this measure to monitor and plan for the operating performance of the company in conjunction with other data prepared in accordance with IFRS.

Adjusted EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS, being the calculation for adjusted net income (loss), and then further adjusting for finance costs, current and deferred income tax, and depreciation and amortization expenses. The company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted EBITDA is intended to provide investors with information about the company's continuing income-generating capabilities. Management uses this measure to monitor and plan for the operating performance of the company in conjunction with other data prepared in accordance with IFRS.

            UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS)  
                       (in thousands of Canadian dollars, except per-share amounts)             
                                                                                    
                                                  Three months ended March 31, 2018  Three months ended March 31, 2017

Revenue                                                                  $   67,014                         $   63,774
Cost of revenue, expenses and other items                                                                            
Cost of revenue                                                              53,324                             44,714
Selling, general and administrative expense                                  24,016                             20,958
Finance costs                                                                13,848                              1,238
Impairment of goodwill                                                       12,248                                  -
Net loss on foreign exchange                                                  1,449                                149
Other loss (income), net                                                      2,194                             (3,675)
Income (loss) before income tax                                             (40,065)                               390
Current income tax expense                                                      547                              3,016
Deferred income tax recovery                                                 (1,743)                            (2,353)
Net (loss) from continuing operations                                       (38,869)                              (273)
Net income (loss) from discontinued operations, net of tax                 (129,945)                             4,471
Net income (loss)                                                          (168,814)                             4,198
Other comprehensive (loss) from discontinued operations, net of tax               -                             (1,529)
Total comprehensive income (loss)                                          (168,814)                             2,669
Net income (loss) per share                                                
Basic -- continuing operations                                           $    (0.44)                                 -
Basic -- discontinued operations                                         $    (1.45)                        $     0.05
Diluted -- continuing operations                                         $    (0.44)                                 -
Diluted -- discontinued operations                                       $    (1.45)                        $     0.05

We seek Safe Harbor.

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