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Mosaic Capital Corporation Reports Record Q2 2019 Financial Results

CALGARY , Aug. 14, 2019 /CNW/ - Mosaic Capital Corporation ("Mosaic" or the "Company") (TSX–V Symbols: M and M.DB) has released its unaudited consolidated financial results for the three and six months ended June 30, 2019 . The Company's financial statements and management's discussion and analysis ("MD&A") for the period ended June 30, 2019 can be accessed under Mosaic's profile on SEDAR at www.sedar.com and on the Company's website at www.mosaiccapitalcorp.com.

Mosaic Capital (CNW Group/Mosaic Capital Corporation)

Selected Financial Highlights





Three months ended June 30,

Six months ended June 30,

(in $000s, except as noted)


2019


2018

% Change


2019


2018

% Change




(restated) (2)




(restated) (2)


Revenue

$

116,854

$

91,054

28%

$

212,991

$

159,016

34%

Adjusted EBITDA (1)

$

9,794

$

7,355

33%

$

17,013

$

10,328

65%

per share

$

0.92

$

0.69

33%

$

1.60

$

0.98

63%

as a % of revenue


8.38%


8.08%

4%


7.99%


6.49%

23%

Net (loss) income and comprehensive











(loss) income

$

(239)

$

(1,092)

78%

$

(3,303)

$

4,560

-172%

Net (loss) income attributable to











equity holders

$

(2,811)

$

(3,223)

13%

$

(7,702)

$

3,351

-330%

per share

$

(0.26)

$

(0.30)

13%

$

(0.73)

$

0.32

328%

Free Cash Flow (1)

$

3,548

$

575

517%

$

5,318

$

(280)

1,999%

per share

$

0.33

$

0.05

516%

$

0.50

$

(0.03)

1,995%

Preferred securities distributions











declared

$

1,496

$

1,496

-

$

2,975

$

2,975

-

Common share dividends declared

$

1,127

$

1,115

1%

$

2,242

$

2,228

1%

per share

$

0.11

$

0.11

-

$

0.21

$

0.21

-

TTM Preferred Distribution Payout











Ratio (1)







38%


87%

-57%

TTM Combined Payout Ratio (1)







66%


152%

-57%

Weighted avg. common shares











outstanding


10,617,235


10,606,183

-


10,612,672


10,590,015

-

Note:

(1)  Adjusted EBITDA, Free Cash Flow, Trailing twelve-month ("TTM") Preferred Distribution Payout Ratio and TTM Combined Payout Ratio are not recognized measures under IFRS. Refer to "Non-GAAP Measures".

 

For the three-month period ended and as at June 30, 2019 , Mosaic:

  • increased revenue by 28% over the same period in 2018 to a record second quarter level of $116.9 million , largely driven by improved activity levels and market share gains in its underlying portfolio companies;

  • generated record second quarter Adjusted EBITDA of $9.8 million which was an increase of 33% over the prior year period, largely driven by improved profitability levels at certain portfolio companies in the Diversified segment;

  • provided dividends of $1.1 million to our shareholders;

  • posted a trailing twelve-month Combined Payout Ratio of 66%, which was a sequential improvement from 81% at March 31, 2019 ; and

  • maintained a healthy balance sheet with $13.4 million in cash, $60.3 million in working capital and Total Debt to Gross EBITDA leverage of 1.27.


Segmented Financial Performance





Three months ended June 30,

Six months ended June 30,

(in $000s, except as noted)


2019


2018

% Change


2019


2018

% Change




(restated) (2)




(restated) (2)


Revenue:











Infrastructure

$

82,116

$

62,388

32%

$

148,835

$

105,095

42%

Diversified


31,197


26,453

18%


56,886


48,984

16%

Energy


3,539


2,112

68%


7,242


4,767

52%

Real Estate


2


101

-98%


28


170

-84%

Corporate


-


-

-


-


-

-

Total revenue

$

116,854

$

91,054

28%

$

212,991

$

159,016

34%












Adjusted EBITDA (1)











Infrastructure

$

6,123

$

5,490

12%

$

10,618

$

6,836

55%

Diversified


4,571


3,526

30%


8,056


6,751

19%

Energy


278


(207)

234%


877


(98)

995%

Real Estate


(6)


23

-126%


(69)


(91)

24%

Corporate


(1,172)


(1,477)

21%


(2,469)


(3,070)

20%

Total adjusted EBITDA

$

9,794

$

7,355

33%

$

17,013

$

10,328

65%

as a % of revenue


8.38%


8.08%



7.99%


6.49%


Note:

(1)  Adjusted EBITDA is defined as earnings before finance costs, taxes, depreciation and amortization, and other non-cash items. Adjusted EBITDA is not a recognized measure under IFRS. Refer to "Non-GAAP Measures".

 

Outlook

Mosaic's second quarter 2019 financial and operating results illustrate the positive impact of the Company's ongoing focus to drive sustainable improvements at the portfolio company level as well as continued discipline with corporate overhead costs. With strong year-over-year growth contributions from the majority of our core operating segments, Mosaic delivered record second quarter levels of Adjusted EBITDA. 

Looking into the second half of 2019, the Company is well positioned to continue its growth trend. While seasonality and the project related nature of certain operations pose risks to the precise timing of this growth profile, Management believes the Company is well situated for long-term growth and profitability.

Mark Gardhouse , President and CEO commented "Mosaic's second quarter results represent a fourth consecutive quarter of record financial achievements. We have made a number of improvements to our management processes and oversight of our portfolio operations that have not only proven to be successful for near-term financial results but should also help drive long-term success. We are particularly pleased to deliver a continued reduction in our Combined Payout Ratio, exiting the second quarter of 2019 at an improved level of 66%. We look forward to the remainder of 2019 and into the future for the continued creation of long-term shareholder value."

Mosaic's growth strategy is centered on the acquisition of controlling equity interests in new portfolio companies with a specific focus on growing Free Cash Flow per share while maintaining a strong balance sheet. Supplementing this, Mosaic's management team adds value with strong operational and strategic focus by actively engaging with its portfolio companies to improve results and capture growth opportunities.  

Mosaic's pipeline of high quality acquisition opportunities remains strong and the Company will continue to pursue its strategy to grow through new and tuck-in acquisitions with a focus on building an increasingly diversified portfolio of private, mid-market companies that offer strong free cash flow while maintaining a healthy balance sheet.

Conference Call

Management will hold a conference call to discuss second quarter 2019 results on Thursday, August 15th, 2019 at 10:00 AM ET . All interested parties are invited to join the conference call by dialing 1-855-353-9183 from within Canada or the U.S. or 403-532-5601 from Calgary or internationally, then entering the participant Code 63121#. A recording of the conference call will be made available on Mosaic's website at www.mosaiccapitalcorp.com.

ABOUT MOSAIC CAPITAL CORPORATION

Mosaic is a Canadian investment company that owns a portfolio of established businesses which span a diverse range of industries and geographies. Mosaic's strategy is to create long-term value for its shareholders through accretive acquisitions, long-term portfolio ownership, sustained cash flows and organic portfolio growth. Mosaic achieves its objectives by maintaining financial discipline, acquiring businesses at attractive valuations, performing extensive acquisition due diligence, utilizing optimal transaction structuring and working closely with subsidiary businesses after acquisition. 

Reader Advisory

Non-GAAP Measures

Selected financial information for the three and six month periods ended June 30, 2019 are set out above and includes the following measures that are not recognized under International Financial Reporting Standards ("IFRS") and are non-generally accepted accounting principles ("Non-GAAP") measures: Adjusted EBITDA, Free Cash Flow, Preferred Distribution Payout Ratio and Combined Payout Ratio. This information should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2019 and 2018 and Mosaic's MD&A for the period ended June 30, 2019 available under Mosaic's profile on SEDAR at www.sedar.com. Further information regarding these Non-GAAP measures is contained in Mosaic's MD&A. 

Forward-Looking Statements

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 news 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. Forward-looking statements included in this news release include, but are not limited to:

  • the overall business strategy and objectives of Mosaic;
  • the Company's expectation of long-term growth, profitability and diversity of cash flow;
  • the Company's ability to drive sustainable improvements at the portfolio company level;
  • the Company's expectation of continued creation of long-term shareholder value; and
  • management's expectation that is recent acquisitions will result in future benefits to the Company.


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, forecasts, projections and other things contemplated by the 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 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; 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 any forward-looking statements contained in this news release.

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.

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.

SOURCE Mosaic Capital Corporation


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