News Story
TerraVest Income Fund Releases 2009 Q3 Financial Results
Tuesday November 03, 2009 16:05:09 EST
TerraVest Income Fund (TSX:TI.UN) today released its financial results for the 2009 third quarter.
For the 2009 third quarter, the Fund reported revenue of $54.3 million and net earnings of $507 thousand, or $0.03 per Unit, compared with revenue of $60.6 million and a net loss of $686 thousand, or $0.04 per Unit, for the 2008 third quarter. Year to date the Fund reported revenue of $165.3 million and net earnings of $6.7 million, or $0.34 per Unit, compared to revenue of $173.7 million and net earnings of $7.5 million, or $0.41 per Unit, for the comparative period in 2008. The Fund realized a significant reduction in earnings before interest, taxes, depreciation and amortization ("EBITDA")(1) in the third quarter of 2009 compared to the third quarter of 2008 as a result of the continuing weakness in the economic environment and the impact it had on the operating results of each of the Fund's portfolio businesses in the quarter.
On the energy side of the Fund's portfolio, low levels of natural gas drilling activity in Alberta had a significant impact on the results of RJV and Diamond's Coiled Tubing unit. At the same time, the lower price of oil in the third quarter of 2009, as compared to 2008, had a negative impact on the utilization rates of Diamond's service rigs. While there is little visibility on a turnaround in natural gas drilling levels and, by extension, RJV's business, management of Diamond is beginning to see some stability in activity levels for its service rigs at the current price level for oil.
On the non-energy side of the portfolio, Ezee - On's sales volume was down relative to 2008 as a result of supply chain delays, but the business' backlog for the balance of 2009 remains strong despite the correction in agricultural commodity prices. Don Park's revenue for the quarter was flat relative to 2008 as the downward pressure from reduced residential and commercial real estate activity in Ontario was offset by increased volume on resale residential HVAC products being driven by government incentive and rebate programs. Beco's sales volumes were lower for the quarter as compared to 2008, as retail level sales of the business' products did not meet anticipated volumes and supply chain delays caused product shortages. The restructuring of the Beco's business away from being a North American manufacturer to a direct importer is on track. Finally, Stylus' sales volumes were lower than 2008 for manufacturing, import and contract businesses, as the slowdown in North American consumer spending along with the reduced capital spending levels of the hospitality industry continues to take its toll on the business.
In light of these various challenges across the portfolio, the Fund will maintain its focus on cost control, operational efficiency, and prudent working capital management.
Highlights from the Fund's 2009 third quarter are as follows:
Continued...---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (000's except per unit amounts) Three months ended Nine months ended September 30 September 30 Sales 2009 2008 2009 2008 ---------------------------------------------------------------------------- RJV $ 2,661 $ 4,788 $ 14,425 $ 19,792 Ezee-On 2,708 3,227 10,631 10,058 Stylus 6,542 7,547 19,467 22,827 Don Park 24,553 24,497 64,237 69,008 Diamond 4,983 6,753 13,898 18,944 Beco 12,835 13,828 42,649 33,105 ---------------------------------------------------------------------------- 54,282 60,640 165,307 173,734 Cost of sales 42,839 46,055 133,178 131,771 ---------------------------------------------------------------------------- Gross profit 11,443 14,585 32,129 41,963 Selling, general and administrative expenses 8,738 9,672 24,834 25,983 ---------------------------------------------------------------------------- Earnings before the undernoted 2,705 4,913 7,295 15,980 ---------------------------------------------------------------------------- Amortization 1,363 1,552 4,156 4,952 Interest expense 336 595 1,047 2,162 Foreign exchange loss (gains) 235 (123) 729 (370) Loss on disposal of property, plant and equipment 4 3 26 8 ---------------------------------------------------------------------------- 1,938 2,027 5,958 6,752 ---------------------------------------------------------------------------- Earnings from operations 767 2,886 1,337 9,228 Impairment losses - 4,934 - 4,934 Gain on acquisition of partnership units for nil consideration - - (3,748) (2,505) Retractable non-controlling interest 189 (497) (897) 111 ---------------------------------------------------------------------------- 189 4,437 (4,645) 2,540 ---------------------------------------------------------------------------- Earnings (loss) before income taxes and non-controlling interest 578 (1,551) 5,982 6,688 Current and future income tax (recovery) 71 (935) (697) (1,939) ---------------------------------------------------------------------------- Earnings before non-controlling interest 507 (616) 6,679 8,627 Non-controlling interest - 70 - 1,132 ---------------------------------------------------------------------------- Net earnings (loss) for the period $ 507 $ (686) $ 6,679 $ 7,495 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Earnings (loss) per Unit (basic and diluted) $ 0.03 $ (0.04) $ 0.34 $ 0.41 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted distributable cash for the period $ 2,383 $ 4,655 $ 6,082 $ 11,953 Distributions declared - 3,228 5,409 7,635 ---------------------------------------------------------------------------- Adjusted distributable cash surplus for the period $ 2,383 $ 1,427 $ 673 $ 4,318 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Adjusted distributable cash payout ratio 0% 69% 89% 64% ---------------------------------------------------------------------------- ----------------------------------------------------------------------------