WINNIPEG, November 29, 2016 – Empire Industries Ltd. (TSX-V: EIL) (“Empire” or the “Company”) today reported its unaudited consolidated financial results for the quarter ended September 30, 2016. The unaudited consolidated financial statements and MD&A have been filed on SEDAR and can be viewed at www.sedar.com or at www.empind.com.
Summary of the Third Quarter 2016 Performance
- Revenues decreased by $6.0 million, or 16% (to $32.3 million from $38.4 million in the 3rd quarter 2015)
- Consolidated Adjusted EBITDA decreased by $0.1 million, or 6% to $2.0 million from $2.1 million in the 3rd quarter of 2016 versus the 3rd quarter 2015 with the decrease all attributed to the Steel Fabrication segment. Segmented Adjusted EBITDA for Media-Based Attractions increased to $2.9 million in the 3rd quarter of 2016 versus $2.4 million in the 3rd quarter 2015.
- Net Income (Loss) decreased by $1.3 million, or 132% (to ($0.3) million from $1.0 million in the third quarter 2015)
- Contract Backlog remains strong at $125 million CAD.
For the quarter and nine month periods ended Sept 30
| ($ millions except per share amounts) | Q3 2016 | Q3 2015 | YTD 2016 | YTD 2015 | ||||
| Financial Results | ||||||||
| Revenue | 32.3 | 38.4 | 90.5 | 97.6 | ||||
| Adjusted EBITDA ($)1 | 2.0 | 2.1 | 4.4 | 5.1 | ||||
| Adjusted EBIT ($)1 | 1.4 | 1.6 | 2.6 | 4.0 | ||||
| Net income (loss) from all operations | (0.3) | 1.0 | 6.5 | 1.0 | ||||
| Financial Position (at Sept 30) | ||||||||
| Total assets | 76.4 | 80.1 | ||||||
| Long-term debt (including current portion) | 6.7 | 2.5 | ||||||
| Shareholders’ equity | 22.4 | 23.6 | ||||||
| Adjusted EBITDA per share | ||||||||
| Basic | 0.031 | 0.033 | 0.068 | 0.019 | ||||
| Diluted | 0.031 | 0.033 | 0.060 | 0.018 | ||||
| Net Income per share | ||||||||
| Basic | (0.004) | 0.015 | 0.102 | 0.017 | ||||
| Diluted | (0.004) | 0.015 | 0.090 | 0.016 | ||||
1 Adjusted earnings (loss) before interest, tax, depreciation and amortization (Adjusted EBITDA) is not defined by IFRS. The definition of Adjusted EBITDA does not take into account the Group’s share of profit of an associate investment, gains and losses on the disposal of assets, fair value changes in foreign currency forward contracts and non-cash components of stock based compensation. Adjusted EBIT is the result of the Group’s Adjusted EBITDA less depreciation and amortization expenses. While not IFRS measures, Adjusted EBITDA and Adjusted EBIT are used by management, creditors, analysts, investors and other financial stakeholders to assess the Group’s performance and management from a financial and operational perspective.
“We made significant progress this quarter towards firmly establishing Empire as the go-to company for industry leading, technologically advanced rides” said Guy Nelson, Empire’s Executive Chairman and CEO. “Our results reflect a movement towards higher margin activities in 2017. The year-over year decline in third quarter Revenues and EBITDA is a consequence of our steel fabrication segment. We are addressing this by re-focusing our steel fabrication assets on serving our media-based attractions segment and global steel supply chain projects.”
The company has successfully positioned itself to become a globally competitive leader in the higher margin, rapidly growing, media-based attractions market niche. The company expects to benefit from its strategic focus on a market niche that is expected to grow rapidly for many years to come as it works to convert its record high pipeline of outstanding proposals into a backlog of contracts. The annual global attractions trade show in Orlando in mid-November continued to provide the company’s Dynamic Attractions business with momentum winning two prestigious awards, further confirming that its strategic positioning in this vibrant industry is very well conceived.
The media-based attractions segment continues to build several new, first generation media-based ride system products concurrently. There continues to be challenges from an earned revenue and profit perspective because of the sheer number of new complex ride systems and service offerings being introduced at the same time. The company is excited about the future related to this investment in world class, innovative ride systems for next generation media-based attractions. Our profit performance is expected to improve as second generation products get produced that take advantage of the learning curve associated with the first generation products. Notwithstanding the lower margins on first generation ride systems, the company continues to be a net generator of profit.
The media-based attractions segment’s recently launched Unlimited Attractions™ division in Orlando is offering prospective customers a much broader range of the products and services (show elements) that transform its unique ride systems into true, media-based attractions. These services include story concept, lighting, scenery, media, and special effects.
The weaker Canadian dollar will continue to positively impact profit margins because the media-based attractions are sold predominantly in US dollars. There are costs that are incurred in US dollars as well, but there continues to be a net advantage of manufacturing in Canada and exporting in US dollars.
The company also has a strategic investment in telescope design and manufacturing. The investment in telescope design and manufacturing is strategic because it provides the company with a unique, globally competitive competency in equipment design and the manufacturing prowess to build very complex, mobile equipment, including telescopes and telescope enclosures. This unique competency has also helped to make our complex ride systems used in media-based attractions business, so much in demand. Dynamic Structures’ award of a $10 million contract to complete the conceptual design and produce the detailed design for the Thirty Meter Telescope (TMT) enclosure is well underway and will continue to be impacting operations throughout 2017. The design contract was separated from the supply and installation contract because the Canadian Government wanted to stay on time for the master schedule for TMT. The TMT Corporation completed its alternative site selection process and selected the Canary Islands in Spain. This was necessitated in the event that the Hawaiian site does not obtain the required approvals in a timely manner. A decision selecting the TMT site will take place in 2017 and the supply and installation contract is expected to be awarded shortly thereafter. We remain confident that the TMT enclosure will be supplied and installed by Dynamic Structures, even if the site location is changed because we are the only company that has this specialized expertise, having designed and built more than half the world’s large telescope enclosures.
The company continues to have a material investment in steel fabrication and assembly capacity. The company has made the strategic decision to focus these competencies on the steel intensive requirements of its media-based attractions and steel fabrication supply chain opportunities that it is uniquely positioned to pursue in Canada and China. The company plans to reduce its focus on competing in domestic steel fabrication in Western Canada and China.
The Group will continue to shelter its profits from income tax through the utilization of loss carry forwards and investment tax credits. Its balance sheet will strengthen throughout the year as its equity increases because of earnings and its working capital increases because of the financing it has arranged.
Conference Call Information
Empire’s management team will be holding an investor/analyst conference call to discuss the third quarter results and the outlook for the company. The call-in details are as follows:
| Time/Date: | December 1, 2016 at 2:00PM Eastern Time |
| Dial-in Number: | 1-800-319-4610 (Canada/USA toll-free)
1-416-915-3239 (Toronto) |
Callers should dial in 5 – 10 minutes prior to the scheduled start time and ask to join the Empire Industries Third Quarter 2016 Results Conference Call.
Reader Advisory
This news release contains forward-looking statements, within the meaning of applicable securities legislation, concerning Empire’s business and affairs. In certain cases, forward-looking statements can be identified by the use of words such as ‘‘plans’’, ‘‘expects’’ or ‘‘does not expect’’, ‘‘budget’’, ‘‘scheduled’’, ‘‘estimates’’, “forecasts’’, ‘‘intends’’, ‘‘anticipates’’ or variations of such words and phrases or state that certain actions, events or results ‘‘may’’, ‘‘could’’, ‘‘would’’, ‘‘might’’ or ‘‘will be taken’’, ‘‘occur’’ or ‘‘be achieved’’. These forward looking statements are based on current expectations, and are naturally subject to uncertainty and changes in circumstances that may cause actual results to differ materially. Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking information is provided as of the date of this press release, and Empire assumes no obligation to update or revise them to reflect new events or circumstances, except as may be required under applicable securities laws. Neither the 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.
