Aveda Transportation and Energy Services Announces 2016 Results and Provides Operational Update for the First Quarter of 2017

Apr 11, 2017

CALGARY, AB --(Marketwired - April 11, 2017) - Aveda Transportation and Energy Services Inc. ("Aveda" or the "Company") (TSX VENTURE: AVE), a leading provider of oilfield hauling services and equipment rentals to the energy industry, is pleased to announce its results for the three months and year ended December 31, 2016.

2017 First Quarter Business Highlights


--  The Company anticipates a substantial increase in revenue in the first
    quarter of 2017 as compared to the first quarter of 2016 due to
    increased drilling activity as well as enhanced marketing efforts by the
    new management team, sales team and the Company's terminal managers.
    Preliminary revenue results for the first quarter of 2017 indicate
    revenues of approximately $39.0 - $41.0 million compared to $12.0
    million in the first quarter of 2016. Accordingly, the Company expects
    to enjoy substantial increases in gross profit and EBITDA in the first
    quarter of 2017 as compared to the first quarter of 2016;
--  Aveda restructured its debt in the first quarter of 2017 as outlined in
    the news release dated January, 13, 2017;
--  The Company also raised gross proceeds of $22.8 million through an
    equity offering as outlined in the news released dated, February 22,
    2017; and
--  As a result of both successfully restructuring its debt and raising the
    equity outlined above, the Company now has a strong balance sheet.

2016 Fourth Quarter Business Highlights


--  Despite a 13% decrease in average rig counts in the fourth quarter of
    2016 versus the fourth quarter of 2015, revenue for the three months
    ended December 31, 2016 increased by almost $14.0 million to $31.4
    million ($0.4 million higher than the Company's guidance), compared with
    revenue of $17.5 million for the same period in 2015. Compared to the
    third quarter of 2016, revenue increased by over $10.4 million from
    $21.0 million to $31.4 million;
--  Gross profit excluding depreciation and amortization(1) in the fourth
    quarter of 2016 increased by almost $6.0 million to $4.7 million
    compared to a loss of $1.3 million in 2015. Comparing to the third
    quarter of 2016, gross profit excluding depreciation and amortization(1)
    increased by 62% from $2.9 million to $4.7 million;
--  Adjusted EBITDA(1) in the fourth quarter of 2016 increased by almost
    $7.0 million to $0.6 million (excluding the impact of the selling and
    administrative expense items discussed on page 9 of the MD&A, Adjusted
    EBITDA would have been $1.0 million in the fourth quarter of 2016)
    compared to a loss of $6.3 million in the fourth quarter of 2015.
    Comparing the second half of 2016 to the second half of 2015, Adjusted
    EBITDA increased by almost $14.0 million;
--  Net loss for the three months ended December 31, 2016 decreased by $5.0
    million to $6.1 million, compared to a net loss of $11.2 million for the
    same period in 2015. Loss per share was $0.32 compared to $0.59 in the
    comparative period;
--  Aveda expanded its operational footprint by reopening its operations in
    Williamsport, PA and a new terminal in Casper, WY; and
--  Aveda ended the year with a net asset value per share(6) of $1.19, $15.1
    million in working capital with a working capital ratio of 2.0:1, and
    undrawn cash availability of $35.5 million on its senior debt facility.

Year Ended December 31, 2016 Business Highlights


--  Due to the significant declines in oil and gas commodity prices and
    drilling activity in the first half of 2016, as compared to 2015,
    revenue for the year ended December 31, 2016 declined by 28% to $73.3
    million, compared with revenue of $101.3 million for the same period in
    2015;
--  Generated net loss for the year ended December 31, 2016 of $31.8
    million, compared to $26.5 million for the same period in 2015. Loss per
    share was $1.67 compared to $1.38 in the comparative period;
--  Generated an Adjusted EBITDA(1) loss for the year ended December 31,
    2016 of $6.9 million, compared with $10.7 million for the same period in
    2015; and
--  The Company rebuilt most of its senior management team with the hiring
    of a new President & CEO, Vice-President of US Operations and a Vice-
    President of Canadian Operations who all have long-standing customer
    relationships and are focused on both profitable revenue generation and
    cost management.

"Aveda has posted an astounding increase in Adjusted EBITDA of almost $14 million in the second half of 2016, compared to the same period of 2015. Revenue over that same period has increased by almost $11.0 million thanks to the strong marketing efforts of our sales team, operational management team and senior leadership team," said Ronnie Witherspoon, President and Chief Executive Officer of Aveda. "I am extremely proud of the results we've posted in such a short time together and look forward to continued success in 2017."

The Company's consolidated financial statements and Management's Discussion and Analysis are available on the Company's website at www.avedaenergy.com and the SEDAR website at www.sedar.com.

Investor Relations Update

The Company has posted an updated corporate presentation to its website. The updated corporate presentation can be found at http://www.avedaenergy.com/investor-hub/presentations/default.aspx.

Aveda will also be a presenter at the Richmond Club in Toronto on April 20, 2017. In addition to the live audience, a video is taken of each presenter and synchronized with the company's PowerPoint slides so that people on the Internet can see exactly what the live audience sees. Internet web statistics show that each video is seen 300-500 times over the first thirty days of the video being posted on the Richmond Club website.


Aveda's CEO and CFO also expect to be making presentations to retail and institutional investors in May 2017 after the Company has released its Q1 2017 results.

Financial Overview




(in thousands, except per share and ratio amounts)

                                                    Three    Three
                          Year     Year            Months   Months
                         Ended    Ended % Change    Ended    Ended % Change
                      December December   2015 - December December   2015 -
                      31, 2016 31, 2015     2016 31, 2016 31, 2015     2016
                      ------------------------------------------------------
Revenue                 73,286  101,315    -27.7%  31,400   17,545     79.0%
Gross profit (loss)(1) (10,807) (13,217)    18.2%     123   (8,443)   101.5%
Gross margin(4)          -14.7%   -13.0%     N/A      0.4%   -48.1%     N/A
Gross profit
 (loss)(1)excluding
 depreciation and
 amortization            7,273    8,339    -12.8%   4,696   (1,276)   468.0%
Gross margin excluding
 depreciation and
 amortization(5)           9.9%     8.2%     N/A     15.0%    -7.3%     N/A
Adjusted EBITDA
 (loss)(1)              (6,940) (10,710)    35.2%     600   (6,271)   109.6%
Adjusted EBITDA(1) as
 a percentage of
 revenue                  -9.5%   -10.6%     N/A      1.9%   -35.7%     N/A
Net income (loss)      (31,844) (26,541)   -20.0%  (6,148) (11,171)    45.0%
Net loss as a
 percentage of revenue   -43.5%   -26.2%     N/A    -19.6%   -63.7%     N/A
Adjusted EBITDA
 (loss)(1) per share     (0.36)   (0.56)   -35.7%    0.03    (0.33)  -109.1%
Earnings per share -
 basic and diluted       (1.67)   (1.38)   -21.0%   (0.32)   (0.59)   -45.8%
Current ratio(2)           2.0      1.7     19.3%     2.0      1.7     19.3%
Debt to equity
 ratio(3)                  4.1      1.3    226.2%     4.1      1.3    226.2%




Outlook

Aveda earns revenue primarily by providing specialized transportation services to companies engaged in the exploration, development and production of petroleum resources. As a result, demand for Aveda's transportation services is generally linked to the economic conditions of the energy industry and the level of drilling activity in the US and the WCSB.

Although 2016 was challenging, the Company has been steadily improving its performance and most recently was able to generate positive Adjusted EBITDA in the third and fourth quarters of 2016. Relative to the first half of 2016, both oil and natural gas prices have rebounded and rig counts in both Canada and the United States have risen in the third and fourth quarters of 2016. Activity levels, particularly in the United States are starting to increase. The Company has continued to see this positive trend continue in 2017.

The Company restructured its senior leadership team in the first half of 2016 with individuals that have extensive relationships in the oil and gas sector. Through these relationships, the Company is being invited to participate in an increased amount of bid activity. In the second quarter of 2016, the Company had temporarily shuttered its operations in the northeastern United States. The Company's revenue results since the new management team took over are as follows:

http://www.marketwire.com/library/MwGo/2017/4/11/11G135653/Images/revenuechart-74abbee69bd3a41b8fb4d57c155b4ea4.jpg

Based on the information above, Aveda expects to see improvements in Adjusted EBITDA and net income results in 2017.

About Aveda Transportation and Energy Services

Aveda provides specialized transportation services and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas, Oklahoma and North Dakota. Transportation services include both the equipment necessary to move the load as well as a trained, professional driver capable of securing, moving and manipulating the load at its origin and destination. Aveda's rental operations include the rental of well-sites, tanks, mats, pickers, light towers and other equipment necessary for oilfield operations.

Aveda was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSX Venture Exchange. Aveda has major operations in Calgary, AB, Leduc, AB, Edson, AB, Pleasanton, TX, Midland, TX, Pecos, TX, Marshall, TX, Williston, ND, Casper, WY and Oklahoma City, OK. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE. For more information on Aveda please visit www.avedaenergy.com.

This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to: demand for the Company's services and general industry activity level; the Company's growth opportunities; and expectations regarding the Company's revenue, EBITDA, Adjusted EBITDA and equipment utilization. Aveda believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:


--  the performance of Aveda's businesses, including current business and
    economic trends;
--  oil and natural gas commodity prices and production levels;
--  the effect of the rebranding on Aveda's businesses;
--  capital expenditure programs and other expenditures by Aveda and its
    customers:
--  the ability of Aveda to retain and hire qualified personnel;
--  the ability of Aveda to obtain parts, consumables, equipment,
    technology, and supplies in a timely manner to carry out its activities;
--  the ability of Aveda to maintain good working relationships with key
    suppliers;
--  the ability of Aveda to market its services successfully to existing and
    new customers;
--  the ability of Aveda to obtain timely financing on acceptable terms;
--  currency exchange and interest rates;
--  risks associated with foreign operations;
--  changes under governmental regulatory regimes and tax, environmental and
    other laws in Canada and the United States; and
--  a stable competitive environment.

The forward-looking statements regarding Aveda's potential revenue, EBITDA and Adjusted EBITDA are included herein to provide readers with an understanding of Aveda's anticipated cash flow and Aveda's ability to fund its expenditures based on the assumptions described herein. Readers are cautioned that this information may not be appropriate for other purposes.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in Aveda's annual information form and management discussion and analysis for the year ended December 31, 2016 (the "MD&A"), which are available for viewing on SEDAR at www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

This News Release contains the terms "EBITDA", "Adjusted EBITDA", "gross profit" "gross profit margin", "gross profit excluding depreciation and amortization" and "gross margin excluding depreciation and amortization" which are defined in the MD&A. The above terms as presented do not have any standardized meanings prescribed by international financial reporting standards ("IFRS") and therefore may not be comparable with the calculation of similar measures for other entities. Management uses EBITDA, Adjusted EBITDA, gross profit, gross profit margin, gross profit excluding depreciation and amortization, and gross margin excluding depreciation and amortization to analyze the operating performance of the business. These non-IFRS measures presented are not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.

This News Release contains the terms "cash flow", "working capital" and "working capital ratio", which do not have any standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities. As an indicator of the Company's performance, cash flow should not be considered as an alternative to, or more meaningful than, net cash from operating activities as determined in accordance with IFRS. The Company considers cash flow to be a key measure as it demonstrates the Company's underlying ability to generate the cash necessary to fund operations and support activities related to its major assets. Cash flow is determined by adding back changes in non-cash operating working capital to cash from operating activities. Management calculates working capital as current assets less current liabilities and uses this measure to analyze operating performance and leverage.

Notes:


(1)  See MD&A Section 8.
(2)  Current ratio calculated as current assets divided by current
     liabilities.
(3)  Debt includes loans and borrowings and note payable as per their
     carrying amounts on the balance sheet.
(4)  Gross margin is calculated as gross profit divided by revenue.
(5)  Gross margin excluding depreciation and amortization is calculated by
     dividing gross profit excluding depreciation and amortization by
     revenue.
(6)  Net asset value per share calculated by dividing total equity ($22.7
     million) by common shares outstanding (19.1 million).


Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FOR FURTHER INFORMATION PLEASE CONTACT:


For more information, please contact:
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer
(403) 264-5769
bharat.mahajan@avedaenergy.com




Source: Aveda Transportation and Energy Services

Contact us

US Corporate Office

333 North Sam Houston Pkwy East
Suite 1200
Houston, TX 77060

(888) 664-1380

info@avedaenergy.com
Canada Corporate Office

Suite 300, 435 - 4th Ave SW
Calgary, AB T2P 3AB
Canada

(888) 829-1370

info@avedaenergy.com