Mr. Leonard Jaroszuk reports
ENTERPRISE GROUP ANNOUNCES RESULTS FOR FIRST QUARTER 2018
Enterprise Group Inc. has released its first quarter 2018 results.
Three months ended Three months ended
March 31, 2018 March 31, 2017, restated (2)
Revenue $6,810,906 $7,015,278
Gross margin 2,126,160 2,695,739
Gross margin % 31% 38%
EBITDA (1) 1,487,253 1,835,990
Income before tax 290,616 210,495
Net income (loss) and comprehensive income (loss) 3,190,242 ($50,627)
EPS 0.06 0.00
(1) Identified and defined under non-international financial reporting standards measures.
(2) In March, 2018, the company closed a transaction to divest substantially all the assets of Calgary
Tunnelling & Horizontal Augering Ltd. The net operations of CTHA, including the prior period, are presented
as a single amount in the consolidated statements of income (loss) and comprehensive income (loss).
Revenue for the three months ended March 31, 2018, of $6,810,906 is relatively consistent with the prior period with a slight decrease of $204,372, or 3 per cent.
The company continues to see increased activity. However, with no construction work completed in the first quarter of 2018 on a major construction project in northeastern British Columbia, the increased activity experienced with other customers did not fully offset the loss of revenue earned in the first quarter of 2017 associated with that project. Although this project has received government approval to continue, no construction work was completed in the first quarter of 2018. Enterprise recently responded to bids for the supply of specialized equipment to support construction work that will take place in 2018.
Gross margin for the three months ended March 31, 2018, of $2,126,160 or 31 per cent, decreased compared with the prior period and earnings before interest, taxes, depreciation and amortization for the same period decreased by $348,737 to $1,487,253. The decreases in gross margin and EBITDA are consistent with decreased revenue associated with the major construction project described in this news release. Also, as explained, the revenue earned from increased customer activity that partially offset the lost revenue from that project, was at lower margins compared with the prior period.
In March, 2018, the company closed a transaction to divest substantially all the assets of Calgary Tunnelling & Horizontal Augering. CTHA provided specialized trenchless solutions for the energy, utility and infrastructure industries. Gross cash proceeds from the transaction were $20,694,992. Enterprise will utilize tax assets and tax losses to offset the gain on this transaction to minimize cash tax payable. All proceeds from the transaction were deployed toward reducing the company's debt.
During 2017, the company integrated and upgraded its financial and reporting systems along with its rental fleet tracking and deployment system. Immediate efficiencies and cost savings were experienced after implementing these systems. Further enhancements to these systems continue and during the first quarter of 2018, the company deployed a proprietary asset tracking and dispatch software called Star. The software consists of multiple components that work together and exchange information over a central database. Star allows the fleet manager the ability to ensure the highest level of service to the client, while lowering costs and delivering maximum equipment performance.
Over the last two years, the company has made significant improvements to its statement of financial position and overall total debt. At March 31, 2018, after adjusting for goodwill and deferred taxes, the company has assets in excess of total debt of approximately $54-million. Enterprise will continue to look for opportunities to improve its financial position and opportunities that will allow the company to diversify and expand.
Development on the StarChain technology continues. Enterprise's technology development group is currently performing infield testing with success. Management expects to offer its customers specialized equipment capable of several remote controllable features in second half of 2018. The company's equipment offerings will enable its customers to automate and/or schedule the performance of the equipment which optimizes usage, delivering several benefits such as reduced fuel expenses, lowering on-site maintenance costs, real-time reporting among many others.
About Enterprise Group Inc.
Enterprise Group is a consolidator of services to the energy sector. The company's focus is primarily on specialized equipment rental. The company's strategy is to acquire complementary service companies in Western Canada, consolidating capital, management and human resources to support continued growth.
We seek Safe Harbor.
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