Entrec increased revenue by 63% for the third quarter of this year to $59.1m, from $36.3m during the same period in 2012. The firm said that the improvement reflected the company’s continued expansion into higher margin crane services. The increase also reflects greater cross-utilisation of equipment resources across geographic areas, which enhanced margins by reducing Entrec’s reliance on third party contractors.
Last quarter saw the Canadian firm purchase GT Crane and Transportation Services, a move that further strengthened its position in the Alberta Sands region. Despite this Entrec acknowledged it had seen weaker demand from the conventional oil and natural gas industry in 2013. However, Entrec said it expected oil sands demand to ramp up in beginning of the first quarter of 2014 and continue to gain momentum as the year progressed. It added that several large heavy haul transportation contracts awarded to Entrec in the first half of 2013 would commence in the first quarter of 2014 and continue through 2017.
Entrec said it was also expanding the amount of long-term maintenance, repair and operation (MRO) contract work it performed in the Alberta oil sands region. It has recently secured a 5-year MRO contract with an oil sands customer that would generate up to $15m in incremental annual revenue. The company revealed that it was also making good progress on cross-selling its crane and heavy haul transportation services to existing and new oil sands customers.
With a strong outlook for demand for its services, Entrec has increased its 2013 capital expenditure program to $57m, from $53m, with the additional $4m relating to the purchase of equipment for a specific customer project. It will fund both its 2013 and 2014 programmes through credit facilities, finance leases, and cash from operating activities. Entrec added that it expected to have the flexibility to increase its capital expenditure program throughout 2014 should customer demand warrant it.
The company does not believe it will need to raise any additional equity to fund its 2014 capital expenditure program. Indeed, the company said it intends to use repurchase some shares during 2014.
John M Stevens, Entrec’s president and COO, said: "We continued to make great strides toward our long-term growth objectives in the third quarter, we acquired GT’s Crane and Transportation Services Inc. This acquisition made us the leading heavy lift and heavy haul company in northeast BC and northwest Alberta and strongly positions us to benefit from future investments in LNG-driven natural gas production and infrastructure in these regions."
"Our business generates a significant amount of cash from operating activities. In addition to completing another robust capital expenditure program, we plan to utilise some of our projected free cash flow in 2013 and 2014 to execute an NCIB program. Our debt levels also remain conservative allowing for additional flexibility in our capital allocation."
The company also stated its intention to repurchase its own stock from the public in order to cancel it. The firm said that it plans to implement a normal-course issuer bid (NCIB) programme in the fourth quarter of 2013, subject to the approval of the TSX Venture Exchange. This will enable it to purchase issued and outstanding common shares of the company on the open market.
