/NOT FOR DISTRIBUTION TO UNITED
STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
CALGARY, Nov. 29, 2013 /CNW/ - Northern Frontier Corp.
(TSX-V: FFF) (the "Corporation" or "Northern
Frontier") today announced its operating and financial
results for the third quarter of fiscal 2013. The Corporation's
condensed interim consolidated financial statements and
management's discussion and analysis ("MD&A") can be
viewed on SEDAR at www.sedar.com. All financial information is
prepared in accordance with International Financial Reporting
Standards ("IFRS") and all dollar amounts are expressed in
Canadian dollars unless otherwise indicated.
Northern Frontier achieved several key strategic
milestones during the quarter including (refer to the Corporation's
news release dated September 27, 2013
for additional details):
- the closing of an equity offering for $18.3 million;
- the establishment of a $42.0
million senior credit facility;
- the establishment of a $12.0
million subordinated credit facility;
- the closing of the acquisition the NEC Group and CRC assets for
$56.0 million (the
"Acquisition");
- completion of the Corporation's qualifying transaction as a
capital pool company; and
- the reclassification of the Corporation as a Tier 1 issuer on
the TSX Venture Exchange.
President and CEO Chris
Yellowega commented, "during the third quarter we took
several significant steps towards realizing our vision of creating
a diverse maintenance, logistics and civil services business for
the industrial energy industry. The NEC Group Acquisition provides
a solid platform for us to launch our strategy and initiate our
growth plans."
The Acquisition
On a trailing twelve month basis, with assumed
pro forma fully loaded public costs for the same period, the
Corporation estimates that it completed the Acquisition and related
financings for the equivalent of 3.75 times the adjusted earnings
before interest, taxes, depreciation and amortization
("EBITDA"). EBITDA is a non-GAAP financial measure, refer to
the "Non-GAAP Measures" section of the Corporation's
MD&A and Final Long Form Prospectus dated September 4, 2013 for details.
The Acquisition was completed on September 27, 2013, as such the financial results
of Northern Frontier only include the operating activities of the
Acquisition for three days. Management estimates that if the
Acquisition had occurred on January 1,
2013, on a pro forma basis including fully loaded public
costs of Northern Frontier, the combined entities would have
generated the following for the nine months ended September 30, 2013 as compared to the stand-alone
results of the NEC Group for the year ended December 31, 2012:
|
|
|
|
|
(in 000's,
except as noted) |
|
Nine
months ended
Sep 30, 2013 (2) |
|
Twelve
months ended
Dec 31, 2012 (3) |
|
|
(Pro
forma) |
|
|
Revenue |
|
$ |
52,646 |
|
$ |
42,596 |
Gross Profit |
|
$ |
14,615 |
|
$ |
12,871 |
|
as a % of revenue |
|
|
27.8% |
|
|
30.2% |
EBITDA
(1) |
|
$ |
12,818 |
|
$ |
11,161 |
|
as a % of revenue |
|
|
24.3% |
|
|
26.2% |
(1) |
Refer to the "Non-GAAP Measures" disclosure. |
(2) |
Pro forma unaudited consolidated financial results giving
effect to the Acquisition of the NEC Group and CRC assets as if it
occurred on January 1, 2013. Refer to the cautionary statement
regarding "Pro Forma Financial Information" included later
in this news release. |
(3) |
NEC Group and CRC assets stand-alone financial results with no
pro forma adjustment for public company costs or actual financial
results of the Corporation for the same period. For additional
information refer to the Final Prospectus issued by the Corporation
on September 4, 2013. |
|
|
Management negotiated the Acquisition based on
the financial results of fiscal 2012. The business has continued to
grow throughout 2013 and management is very pleased with the
overall financial performance achieved by the NEC Group.
The preliminary value allocated to the net asset
acquired was:
|
|
|
|
|
|
Fair value of net assets acquired (in
000's) |
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
|
$ |
11,456 |
Input tax credit receivable |
|
|
|
|
341 |
Prepaid expenses |
|
|
|
|
26 |
Trade payables, other payables and accrued
liabilities |
|
|
|
|
(8,323) |
Income taxes payable |
|
|
|
|
(974) |
|
|
|
|
|
2,526 |
|
|
|
|
|
|
Property and equipment |
|
|
|
|
32,207 |
Land |
|
|
|
|
4,000 |
Intangible assets |
|
|
|
|
13,425 |
Goodwill |
|
|
|
|
12,607 |
Obligations under finance leases |
|
|
|
|
(2,910) |
Deferred taxes |
|
|
|
|
(5,876) |
|
|
|
|
|
|
Total consideration |
|
|
|
$ |
55,979 |
|
|
|
|
|
|
Northern Frontier Financial Results
Financial results of the NEC Group have been
included in the Corporation's results since the date of acquisition
on September 27, 2013.
For the three month period ended September 30, 2013, the Corporation had revenues
of $0.5 million, expenditures of
$0.9 million and incurred a net loss
and comprehensive loss of $0.4
million. This compares to no revenues, expenses of
$0.1 million and a net loss and
comprehensive loss of $0.1 million
for the three month period ended August 31,
2012. For the 10 month period ended September 30, 2013, Corporation had revenues of
$0.5 million, expenditures of
$2.1 million and incurred a net loss
and comprehensive loss of $1.6
million. This compares to no revenues, expenses of
$0.1 million and a net loss and
comprehensive loss of $0.1 million
for the nine month period ended August 31,
2012.
Proposed Bought Deal Equity Financing
Monty Balderston,
Executive Vice President and CFO added, "in addition to our third
quarter accomplishments, we are very excited to have added investor
support through our recently announced $10.1
million bought deal equity financing lead by Acumen Capital
Financial Partners Limited (the "Bought Deal") and look
forward to putting this capital to work in 2014 as we see several
business opportunities that we are confident that we can capitalize
on." Refer to the Corporation's news release dated November 27, 2013 for additional details.
Implementation of Dividend Policy
Contingent on closing of the Bought Deal, the
Corporation also announced that as part of its long-term strategy
to maximize shareholder value, it has approved the implementation
of a dividend policy ("Dividend Policy") commencing in
fiscal 2014, whereby Northern Frontier intends to pay an annual
aggregate dividend of $0.26 per
common share, quarterly in arrears which equates to a 7.4% yield
for participants of the equity offering completed on September 27, 2013 and the bought deal that is
anticipated to close on or about December
17, 2013. The Corporation will review the Dividend Policy on
an ongoing basis and may amend the policy at any time in light of
Northern Frontier's then current financial position, profitability,
cash flow, debt covenant compliance, legal requirement s and other
factors considered relevant. As such, no assurances can be made
that any future dividends will be declared and/or paid.
Outlook
Northern Frontier operates in the steam assisted
gravity drainage ("SAGD") market of northeastern
Alberta. Activity levels for this
market have been growing and management believes it may continue to
grow in excess of 20% annually for the next few years. For the
remainder of fiscal 2013, management expects that the pace of
activity will lessen towards year-end as the completion of summer
projects and transitioning to winter projects occur. Further, the
end of year holiday period tends to limit activity volumes in the
fourth quarter. Management believes that Northern Frontier's
overall corporate performance will be consistent with expectations
as previously disclosed. The Corporation currently services three
key clients in the area and is focused on adding additional clients
and services in this evolving market. Management is pleased with
the strength of the NEC Group and is focused on staging the company
for its next phase of growth.
About Northern Frontier
Northern Frontier provides sustaining capital
services to large industrial energy customers in the SAGD region of
northeastern Alberta. NEC's head
office and shop is located in Lac La
Biche, Alberta and its field location is in Conklin, Alberta which is central to the
substantial industrial energy production developments in the
vicinity. The business focuses on the ongoing demand for services
to support operating facilities, sustaining capital expenditures to
maintain production levels of those facilities and the development
of new production capacity.
Non-GAAP Measures
EBITDA is defined as earnings before
interest, taxes, depreciation and amortization and other specific
expenses and exclusive of the charges paid to CRC for the rental of
assets included in the Acquisition, net of associated costs
incurred by CRC related to these assets. EBITDA is a supplemental
non-GAAP financial measure that is not recognized under IFRS and
does not have a standardized meaning prescribed by IFRS. EBITDA
should not be considered as an alternative to, or more meaningful
than net profit and comprehensive income or cash flows from
operating activities as determined in accordance with IFRS or as an
indicator of operating performance or liquidity. Management
believes that EBITDA is a useful supplemental measure as it
provides an indication of the results generated by the principal
business activities of the Acquisition after considering CRC's
former related party relationship with the NEC Group and prior to
consideration of how these activities are financed or how the
results are taxed in various jurisdictions. The computations of
EBITDA may not be comparable to other similarly titled measures of
other companies, and accordingly EBITDA may not be comparable to
measures used by other companies.
Pro Forma Financial
Information
The pro forma financial information is not
intended to be indicative of the financial results of the
Corporation which would have actually resulted has the acquisition
occurred as assumed. Further, the pro forma financial information
is not necessarily indicative of the financial results which may be
achieved in the future.
Forward Looking Information
This news release includes certain statements
that constitute forward-looking statements under applicable
securities legislation. All statements other than statements of
historical fact are forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
"may", "will", "should", "expect", "plan", "anticipate", "believe",
"estimate", "predict", "potential", "continue", or the negative of
these terms or other comparable terminology. These statements are
made as of the date of this news release and the Corporation does
not undertake to publicly update these forward-looking statements
except in accordance with applicable securities laws. These
forward-looking statements include management's expectations with
regards to the Corporation's future growth and industry activity
levels and the Dividend Policy.
These statements are only predictions and are
based on current expectations, estimates, projections and
assumptions, which the Corporation believes are reasonable but
which may prove to be incorrect. As a result, such
forward-looking statements should not be unduly relied upon. In
making such forward-looking statements, assumptions have been made
regarding the demand for the Corporation's services and its ability
to meet such demand and the Corporation's future financial and
operating results. Although the Corporation believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future outcome and actual developments may differ materially from
those in the forward-looking statements.
By its nature, forward-looking information
involves numerous assumptions, known and unknown risks and
uncertainties, both general and specific, that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur. These risks and
uncertainties are set out in the MD&A. For more information on
the Corporation, investors should review the Corporation's
continuous disclosure filings that are available at
www.sedar.com.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE Northern Frontier Corp.