- Published: 23 November 2012
- Written by Editor
Mosaic Capital Corporation Reports Third Quarter 2012 Financial Results and Income from Operations of $6.8 million
Calgary, Alberta CANADA, November 23, 2012 /FSC/ - Mosaic Capital Corporation (M - TSX Venture, M.PR.A - TSX Venture), has released its unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2012.
"Our third quarter financial results are the strongest we have seen in the history of Mosaic," commented John Mackay, Executive Chairman and CEO of Mosaic. Mr. Mackay added, "During the quarter we saw growth and increased utilization in all of our subsidiaries as well as the addition of Kendall's Supply Ltd. on August 1st.
Also during the quarter First West Properties Ltd. was paid approximately $1.3 million in connection with the assignment of a purchase agreement relating to raw land in Lethbridge. We continue to see robust performance in the financial metrics we view most important, Income from Operations & Adjusted EBITDA $6.8MM up 297% and Free Cash Flow $3.8MM up 184% over the comparable three month period. Management is encouraged by these strong results and believes that Mosaic's solid financial position which was bolstered by our recent $25 million Preferred Security offering will allow us to take advantage of the robust pipeline of acquisition opportunities. We are also pleased with the organic growth in the businesses within our industrial segment for the first nine months of 2012, which without taking into account the acquisition of Ambassador Mechanical and Kendall's Supply saw Revenue up 8.49% and Adjusted EBITDA up 21.9% over the comparable nine month period."
Third Quarter 2012 Financial and Operational Highlights
* 2012 Q3 Revenue increased 227% from Q3 2011 to $22.1 million;
* 2012 Q3 Income from Operations & Adjusted EBITDA1 increased 297% from Q3 2011 to $6.8 million;
* 2012 Q3 Free Cash Flow2 increased 184% from Q3 2011 to $3.8 million;
* Preferred Security Payout Ratio3 was 33% for the three months and 49% for the nine months ended September 30, 2012;
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Selected Third Quarter 2012 Highlights
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All amounts are in thousands Q3 2012 Q3 2011 % Change
except % and share data
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Revenue $22,143 $6,768 +227%
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Income from Operations $6,870 $1,728 +297%
& Adjusted EBITDA(1)
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Cash Flow prior to $6,766 $1,610 +320%
-cash working capital
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Free Cash Flow(2) $3,860 $1,358 +184%
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Selected Year-to-date Financial Results
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All amounts are in thousands FY 2012 FY 2011 % Change
except % and share data
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Revenue $53,759 $16,544 +224%
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Income from Operations
& Adjusted EBITDA(1) $12,974 $3,972 +226%
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Cash Flow prior to
non-cash working capital $12,662 $2,072 +511%
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Free Cash Flow(2) $7,773 $2,912 +167%
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Results for the three months ended September 30, 2012
As at September 30, 2012, working capital was $32,033 (Dec 31, 2011 - $23,997) an increase of $8,036, primarily as a result of the net change related to the acquisitions of Ambassador Mechanical Corp. ("Ambassador Mechanical") and Kendall's Supply Ltd. ("Kendall's Supply") and the reclassification of income producing properties to assets available for sale. Total assets increased from $70,043 to $102,520 primarily as a result of an increase in accounts receivable and goodwill and intangible assets in connection with the acquisitions of Ambassador Mechanical and Kendall's Supply. Total liabilities increased from $8,806 to $32,554 primarily as a result of an increase of accounts payable and accrued liabilities, deferred contract revenue, notes payable and operating loan in connection with the acquisitions of Ambassador Mechanical and Kendall's Supply.
For the three months ended September 30, 2012, revenue increased by $15,375 to $22,143 (2011 - $6,768) which was primarily related to an increase in overall activity levels in the Industrial Segment which included incremental revenue from Ambassador Mechanical and Kendall's Supply. The increase in operating expense for the three month period to $15,273 (2011 - $5,040) was primarily related to higher costs attributable to increased activity in the Industrial Segment operations which included Ambassador Mechanical and Kendall's Supply in the period. The increase in income from continuing operations before tax to $5,313 (2011 - $1,055) was primarily a result of increased activity in the Industrial Segment which included Ambassador Mechanical and Kendall's Supply for the period.
Results for the nine months ended September 30, 2012
For the nine months ended September 30, 2012 revenue increased to $53,759 (2011 - $16,544) which was primarily as a result of an increase in overall activity levels in the Industrial Segment which included incremental revenue from Ambassador Mechanical and Kendall's Supply. The increase in operating expense to $40,785 (2011 - $12,572) was primarily related to the same reasons as were the case in the three month period ended September 30, 2012. The increase in income from continuing operations before tax to $9,223 (2011 - $1,840) was primarily related to the same reasons as were the case in the three month period ended September 30, 2012.
Mosaic's financial results for the three and nine months ended September 30, 2012 and Management's Discussion and Analysis dated November 22, 2012 are available on SEDAR (www.sedar.com).
Non-IFRS Financial Measures
Below are definitions of key performance indicators used by management of Mosaic that are not recognized under IFRS and have no standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers.
(1)Adjusted EBITDA: is defined as Income from continuing operations before tax and before (i) gain (loss) on sale of equipment; (ii) non-cash expenses such as amortization; (iii) finance income and expenses; (iv) securities compensation expense; and (v) any unusual non-operating one-time items such as acquisition and reorganization costs. Adjusted EBITDA is used by management to assess Mosaic's normalized cash generated on a consolidated basis and in its operating segments. Adjusted EBITDA is also a performance measure which may be utilized by investors to analyze the cash generated by Mosaic and its operating segments.
(2)Free Cash Flow: is defined as Adjusted EBITDA less (i) non-controlling interest of Adjusted EBITDA, (ii) Mosaic's share of current income tax expense, and (iii) Mosaic's share of the Sustaining Capital Expenditures. Free Cash Flow is a performance measure used by management to summarize the funds available for (i) the payment of distributions to holders of preferred securities, series "A" shares and common shares, (ii) investment in capital expenditures made to grow the enterprise, (iii) new acquisitions and working capital.
Sustaining Capital Expenditures: is defined as capital expenditures required to sustain the operations of Mosaic at its current level of operations and is calculated by subtracting those capital expenditures which are, as determined in the discretion of management, made to grow the enterprise and expected to generate additional Adjusted EBITDA from total capital expenditures for the period. An example of Sustaining Capital Expenditures would be the replacement of vehicles that have completed their useful life.
(3)Preferred Security Payout Ratio: means that number, expressed as a percentage, which is the total amount paid (including dividends, cash paid and satisfied by the issuance of preferred securities pursuant to Mosaic's distribution reinvestment plan) to holders of preferred securities and series "A" shares during the period divided by Free Cash Flow for the period. Management believes that this measure may be useful to investors in assessing the likelihood that Mosaic is able to continue to make distributions on preferred securities and series "A" shares.
ABOUT MOSAIC CAPITAL CORPORATION
Mosaic is an investment company based in western Canada that owns a portfolio of established businesses with unique competitive advantages that have a history of generating strong sustainable cash flow from their operations. Mosaic's objective is to create long term value for our shareholders and business partners and to have that reflected in our share price. We believe that this is achieved by growing free cash flow per share and retained earnings. We do this by acquiring businesses that we understand at attractive prices and we manage our risk through extensive due diligence, creative transaction structuring and working closely with our businesses after acquisition.
FOR FURTHER INFORMATION PLEASE CONTACT:
Tim Taylor
Vice President, Investor Relations
Mosaic Capital Corporation
400, 2424 - 4th Street SW
Calgary, AB T2S 2T4
Tel: (403) 270-4658
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Information
This news release contains forward-looking information and statements within the meaning of applicable Canadian securities laws (herein referred to as "forward-looking statements") that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. All information and statements in this press release which are not statements of historical fact may be forward-looking statements. The words "believe", "expect", "intend", "estimate", "anticipate", "project", "scheduled", and similar expressions, as well as future or conditional verbs such as "will", "should", "would", and "could" often identify forward-looking statements. In particular this news release may contain forward-looking statements regarding anticipated financial and operating performance for Mosaic. Such statements or information, if any, are only predictions and reflect the current beliefs of management with respect to future events and are based on information currently available to management. Actual results and events may differ materially from those contemplated by these forward-looking statements due to these statements being subject to a number of risks and uncertainties. Undue reliance should not be placed on these forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature forward-looking statements involve assumptions and known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, projections and other forward-looking statements will not occur. A number of factors could cause actual results to differ materially from the results stated in the forward-looking statements, including, but not limited to, risks related to: general economic and business conditions; the failure of Mosaic to identify acquisition targets or complete announced acquisitions; third parties honouring their contractual obligations with Mosaic and its subsidiaries; results of management's ongoing efforts to sell, re-lease, lease, develop and improve real estate owned and being acquired indirectly by Mosaic through its subsidiaries; the failure to realize the anticipated benefits of Mosaic's recent and future acquisitions; adverse fluctuations in commodity prices; competition for, among other things, capital, equipment and skilled personnel; the inability to generate sufficient cash flow from operations to meet current and future obligations; the inability to obtain required debt and/or equity capital on suitable terms; competition for acquisition targets; supply disruptions; adverse weather conditions; seasonality and fluctuations in results; and limited diversification of Mosaic's subsidiaries. Should any of the risks or uncertainties facing Mosaic and its subsidiaries materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, activities or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this news release.
Readers are cautioned that the foregoing list of risks is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Mosaic and its subsidiaries are included in Mosaic's annual information form for the year ended December 31, 2011 which has been filed under Mosaic's profile on SEDAR (www.sedar.com).
Although Mosaic believes that the expectations represented by any forward-looking-statements contained herein are reasonable based on the information available to them on the date of this news release, management cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. Any forward-looking statements herein contained are made as of the date of this press release and Mosaic does not assume any obligation to update or revise them to reflect new information, events or circumstances, except as required by law.
Mosaic Capital Corporation
400, 2424 - 4th Street SW
Calgary, Alberta T2S 2T4
