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Macro Enterprises Inc. Announces 2018 Third Quarter Results


| Source: Macro Enterprises Inc.

FORT ST. JOHN, British Columbia, Nov. 22, 2018 (GLOBE NEWSWIRE) — Macro Enterprises Inc. (TSX-V: MCR) –

  Summary of financial results
  (thousands of dollars except per share amounts)
  Three months ended
September 30
Nine months ended
September 30
  2018 2017 2018 2017
Revenue $ 41,592 $ 39,098 $ 53,465 $ 77,083
EBITDA1 5,722 2,338 (613 ) 2,456
Net earnings  (loss) 1,807 919 (5,089 ) (1,396 )
Net earnings (loss) per share $ 0.06 $ 0.03 $ (0.17 ) $ (0.05 )
Weighted average common shares outstanding (thousands)         30,253   30,278

Note 1 – References to EBITDA are to net income from continuing operations before interest, taxes, amortization and impairment charge.  EBITDA is not an earnings measure recognized by International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning prescribed by IFRS.  Management believes that EBITDA is an appropriate measure in evaluating the Company’s performance.  Readers are cautioned that EBITDA should not be construed as an alternative to net income (as determined under IFRS) as an indicator of financial performance or to cash flow from operating activities (as determined under IFRS) as a measure of liquidity and cash flow. The Company’s method of calculating EBITDA may differ from the methods used by other issuers and, accordingly, the Company’s EBITDA may not be comparable to similar measures used by other issuers.


  • The Company continues to materially exceed industry standard safety averages.  As at September 30, 2018 Macro Enterprises has now exceeded 21 quarters and 3.8 million man hours worked without a single lost time injury.
  • The Company signed and executed an Amended and Restated Credit Agreement for a 1 year $15.0 million revolver and an $80 million letter of credit facility.  The letter of credit facility will be guaranteed on qualifying projects by Export Development Canada.
  • Total working capital as at September 30, 2018 was $34.8 million. The Company secured $21.5 million in 3rd party lease financing to aid in its capital asset additions during the period.   Total assets increased 40% over the December year end balances to $140 million.
  • The Company is reporting shareholders’ equity of $73.5 million or $2.43 per share based on weighted average common shares outstanding as at September 30, 2018.
  • Subsequent to period end, a Final Investment Decision on the Coastal GasLink Pipeline Project was received with a Notice to Proceed shortly thereafter.  Construction is scheduled to commence Q1 2019.
  • The Company expects revenues to exceed $170.0 million and achieve overall profitability for the fiscal year ended December 31, 2018.
  • The Company’s preliminary revenue forecast for 2019 is expected to exceed $250.0 million.

Third Quarter Results

Three months ended September 30, 2018 vs. three months ended September 30, 2017

Consolidated revenue for the quarter was $41.6 million which was comparable to the $39.1 million reported in the third quarter prior year.  However, quarter over quarter, the Company saw a significant uptick in construction revenue relating to the commencement of the North Montney Mainline pipeline project along with a larger facilities construction job that also started during the quarter.  Approximately 75% or $31.0 million of the revenue earned related to pipeline and facilities construction with the balance relating to maintenance and integrity services work being performed under existing master service agreements.  Prior year revenue relating to pipeline and facilities construction projects was approximately 61% or $23.9 million while the balance related to maintenance and integrity work.

Operating expenses were $34.4 million or 83% of revenue compared to $34.3 million or 88% of revenue in the third quarter last year.  As result of the increase in activity during the quarter the Company was able to realize economies of scale and recovery on many shared services being provided to the on-going projects.  The Company’s operating margins are generally expected to improve over the historical averages with the increase of work activity, however, all aspects of operations will continue to be monitored and streamlined to ensure efficiencies and savings are achieved while maintaining the highest degree of health, safety and environmental standards possible.

General and administrative expenses were $1.9 million, up $326,000 and representing a 13% increase from the $1.5 million incurred prior year.  The increase was to be expected and was a result of additional spending commensurate with the start-up of the North Montney Mainline pipeline project and various other expenditures relating to its joint operations.  Included in the Company’s general and administrative expenditures are professional fees, corporate wages, burdens and other overheads, including rents, insurance, travel and administrative supplies that are not charged directly to projects.

Depreciation of property, plant and equipment was $2.7 million and significantly higher than prior years’ depreciation.  The increase in depreciation directly correlated to the $20.8 million in new capital assets acquired and deployed during the quarter.  Depreciation is calculated at various declining balance methods across the Company’s multiple categories of property, plant and equipment and is used in guiding the annual capital expenditure estimates.  Residual values, methods of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.

During the third quarter the Company recognized a non-cash gain of $262,000 on the re-measurement of its preferred shares at period end.  The gain was a result of a 6.5% decrease in the book value of its common shares since June 30, 2018.

Finance costs of $536,000 were substantially higher than prior year due to the Company entering into an Amended and Restated Credit Agreement with members of its existing banking syndicate during the quarter along with incurring deferred finance costs on the issuance of $70 million in letters of credit relating to its substantial pipeline construction contracts.  In addition to the non-cash deferred transaction costs, interest charges, standby and admin fees associated with the new credit facility, other finance costs included $42,000 of effective interest rate payments made on its preferred shares.

Income tax recovery in the quarter of $0.6 million was at an effective rate of 25.9% which approaches the enacted tax rates of 27% after appropriate deductions.

Net income was $1.8 million ($0.06 per share) compared to a net income of $0.9 million ($0.03 per share) recognized during the three months ended September 30, 2017. The net income was a result of the commencement of the North Montney Mainline pipeline project, an increase to core business activities combined with significantly improved operating margins realized during the quarter.


The Company expects a significant increase in activity during the remainder of 2018 and beyond as a result of its joint venture activity with Spiecapag Canada Corp. and the Company’s continued focus on its blue chip pipeline owners and operators with their construction and maintenance programs across Canada.

In May 2018, the Federal Government of Canada announced it would be acquiring the Trans Mountain Expansion Project with commitments to see construction recommence in due course.  The Company is in contact with the key stakeholders of the Trans Mountain Expansion project and continues to await its notice to proceed with Spread 5B, that was awarded in 2017 and consists of approximately 85 kilometers of 36 inch pipeline along the Coquihalla-Hope corridor in British Columbia.  Construction is expected to last two years, with field construction to commence once the regulatory requirements for construction of the project have been satisfied.  The reimbursable type contract will be phased and has an initial estimated contract value of approximately CAD$375 million.  The exact timing on this project is still not determinable at this time.

In June 2018, the Company announced that its joint venture with Spiecapag Canada Corp. successfully negotiated and executed a construction contract with Coastal GasLink Pipeline Limited Partnership for pipeline construction services on the Coastal GasLink Pipeline Project that consists of approximately 166 kilometers of a 48 inch pipeline.  The initial estimated contract value is in excess of CAD$900 million with a Joint Venture split of 40/60 between Macro and Spiecapag.  In general, the civil work will be performed under a reimbursable type contract model while the mechanical scope will be performed under unit rates.  A Final Investment Decision (“FID”) was received on October 2, 2018 with a full notice to proceed issued shortly thereafter.  Pre-planning work is continuing with construction scheduled to begin in Q1 2019.  Current in-service date of for Coastal GasLink pipeline is scheduled for Q4 2021.

In August 2018, the Company announced that it has commenced construction of the Aitken Creek Section – Spread 2 of the North Montney Mainline Project that consists of approximately 67 km of NPS 42-inch pipeline and related facilities.  With accepted change orders to date, the contract, with NOVA Gas Transmission Ltd. (‘NGTL’), a subsidiary of TransCanada Pipelines Limited, is now valued in excess of CAD$220.0 million. (Original – CAD$200.0 million) The contract is a unit rate type contract with upfront milestone payments to fund initial working capital requirements.  Substantial completion is planned for Q1 2019.

In September 2018, the Company announced that it had been awarded a construction contract for the Groundbirch Compressor Station, a two-unit greenfield compressor station located near Dawson Creek, B.C., that is part of NGTL’s North Montney Mainline Project.  Work has commenced on the lump-sum contract which has an initial contract value in excess of CAD$37 million.

The Company remains very active bidding and estimating costs on projects for its larger clients and anticipates an increase in its general construction activities and a return to providing core maintenance and integrity work for its core customers during the balance of 2018 and into 2019.  The Company expects revenues to exceed CAD$170 million and to achieve overall profitability for the fiscal year ended December 31, 2018.

Based on continued construction on the North Montney Mainline pipeline project and the Groundbirch facilities project, the commencement of the Coastal GasLink pipeline project and initial estimates of other core business, the Company’s preliminary revenue forecast for 2019 now exceeds CAD$250 million.

Forward Looking Statements

Certain statements in this news release may include forward-looking information that involves various risks and uncertainties.  These may include, without limitation, statements regarding expected revenues, expenses and industry trends and the pursuit of strategic acquisitions.  These risks and uncertainties include, but are not restricted to, global economic conditions, government regulation of energy and resource companies, seasonal weather patterns, maintaining and increasing market share, terrorist activity, the price and availability of alternative fuels, the availability of pipeline capacity, and potential instability or armed conflict in oil producing regions.  These risks and uncertainties may cause actual results to differ from information contained herein.  There can be no assurance that such forward-looking statements will prove to be accurate.  Actual results and future events could differ materially from those anticipated in such statements.  These statements are based on the estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice.  Except as required by law, the Company assumes no obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.

For further information please contact:
Frank Miles
President & C.E.O.
Phone:  (250) 785-0033
Jeff Redmond
C.F.O. & Corporate Secretary
(250) 785-0033

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