CALGARY, Alberta, Nov. 07, 2018 (GLOBE NEWSWIRE) -- Tornado Global Hydrovacs Ltd. (“Tornado” or the “Company”) (TGH:TSX-V) today reported its unaudited condensed consolidated interim financial results for the Three and Nine Month periods ended September 30, 2018. The unaudited condensed consolidated interim financial statements and MD&A have been filed on SEDAR and can be reviewed under the Company’s profile at www.sedar.com.
Financial and Operating Highlights (in CAD $000’s except per share data)
| Three Months ended |
| Nine Months ended |
|Cost of sales||9,281||6,397||21,901||17,348|
|Selling and general administrative expenses||1,572||1,148||4,045||3,302|
|Depreciation and amortization||287||240||838||718|
|Loss on disposal of fixed assets||-||-||4||-|
|Change in fair value of derivative financial instruments||(86||)||(110||)||13||(149||)|
|Net finance income and other||3||16||(1||)||53|
|Gain on shares issued for debt||-||(151||)||-||(151||)|
|Loss before tax||274||79||(561||)||(780||)|
|Income tax expense||(212||)||-||(232||)||-|
|Net income (loss)||$||62||$||79||$||(793||)||$||(780||)|
|Net loss per share - basic and diluted||$||0.00||$||0.00||$||(0.01||)||$||(0.01||)|
|1||Earnings (loss) before interest, tax, depreciation, amortization and stock-based compensation (EBITDAS) and Earnings (loss) before interest and tax (EBIT) are not defined by IFRS. The definition of EBITDAS does not consider gains and losses on the disposal of assets, fair value changes in foreign currency forward contracts and non-cash components of stock-based compensation. While not an IFRS measure, EBITDAS is used by management, creditors, analysts, investors and other financial stakeholders to assess the Group’s performance and management from a financial and operational perspective.|
Three months ended September 30, 2018 and Recent Developments
- Revenue of $11,400 increased 49.6% compared to $7,619 in Q3/2017. The increase in revenue was due to the improvement in the hydrovac market equipment purchase demand from the municipal sector in both Canada and United States.
- Gross Profit of $2,119 increased by $897 compared to $1,222 in the same period of 2017 due to increased revenue and production efficiencies, including labour utilization, at the Company’s Stettler plant.
- EBITDAS of $547, comprising North America (positive $1,030), China (negative $334) and Corporate (negative $149), increased by $473 compared to $74 in Q3/2017, due to increased revenues and gross profit in North America. For the North America segment, EDITDAS during the quarter of $1,030 continued the improvement experienced in Q2/18 and increased significantly compared to Q1/2018.
- Net income of $62 decreased by $17 compared to net income of $79 in Q3/2017. This is due to the factors discussed above, offset by stock-based compensation expense of $69, income tax expense of $212 and change in fair value of derivative financial instruments of $24. In 2017 a one-time gain of $151 was recorded on shares issued for debt in Q3/2017.
- During the quarter an additional four custom designed skid-mounted hydrovac units were delivered to China for potential sale. Together with two demonstration units shipped in Q2, Tornado now has six skid-mounted units in China at the end of September.
- In October 2018, the Company’s wholly-owned subsidiary Tornado Global Hydrovacs (Beijing) Ltd. (“Tornado China”) entered into a five year strategic partnership agreement with Anhui Jianghuai Yangtian Automobile Co., Ltd. to manufacture the Company’s line-up of hydrovac trucks, which have been customized to satisfy all the Chinese regulatory requirements, for sale and operation in China. In addition, Tornado China executed a strategic partnership agreement with Daqing Haotian Xinda Technology Ltd. for an initial term of one year to assist Tornado China with developing a client base in the excavation market in Heilongjiang Province of China.
- In October 2018, the first shipment of hydrovac truck parts sourced by Tornado China was sent to Canada for the Company’s production of hydrovac trucks in Stettler, Canada.
Segmented information (in CAD $000’s)
|Three Months ended September 30, 2018||North America||China||Corporate||Total|
|Cost of sales||9,281||-||-||9,281|
|Selling and general administrative||1,089||334||149||1,572|
|Nine Months ended September 30, 2018||North America||China||Corporate||Total|
|Cost of sales||21,901||-||-||21,901|
|Selling and general administrative||2,585||954||506||4,045|
The market demand for hydrovac trucks in North America from the municipal sectors in both Canada and United States is expected to stay strong in Q4 2018 and into 2019. The Company is also benefiting from increased demand because of the significant design improvements of its hydrovac trucks. The Company continues to develop its sales and distribution relationship with its US strategic partner, Custom Truck One Source (“Custom Truck”). With Custom Truck’s integrated network of 23 locations across North America, the Company expects revenue growth in the 4th quarter of 2018. As a result, the Company expects strong financial performance in North America.
In China, the Company continues to execute its business plan. By the end of Q3 2018, the Company had four unique types of hydrovac products for demonstration and potential future revenue. Additional sales staff have been recruited and marketing demonstrations are scheduled for the remaining of the year.
In October 2018, as previously discussed, the Company entered into a five year strategic manufacturing partnership agreement and also executed a strategic marketing and sales partnership agreement for an initial term of one year to assist the Company with developing a client base in the excavation market in Heilongjiang Province of China.
As noted above, the Company has commenced sourcing parts from its Chinese supply chain at a lower cost back to Canada to improve the profitability and competitiveness of its North American manufactured hydrovac trucks.
As a result of these factors management believes the Company’s medium and long-term outlook is positive in China.
About Tornado Global Hydrovacs Ltd.
The Company designs and manufactures hydrovac trucks in Canada and sells hydrovac trucks for excavation service providers to the oil and gas industry and the municipal markets in Canada and the USA. Hydrovac trucks use high pressure water to pulverize soil and turn it into mud, and then vacuum up the resulting mud into its tank. Tornado currently operates in North America. The Company intends to expand its hydrovac business into China and has established a wholly owned operation in China with a head office in Beijing.
For more information about Tornado Global Hydrovacs Ltd., visit www.tornadotrucks.com or contact:
|Bill Rollins |
Chief Executive Officer
Phone: (403) 204-6333
|Al Robertson |
Chief Financial Officer
Phone: (403) 204 -6363
Neither the Exchange nor its Regulation Service Provider (as that term is defined in policies of the Exchange) accepts responsibility for the adequacy or accuracy of this news release
Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events. All statements other than statements of historical fact are forward-looking statements. The use of the words ‘‘may”, “expects”, “expected”, “believes”, “anticipates” and other words of a similar nature are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although the Company believes these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Such statements include statements regarding the Company’s outlook for the rest of the year and the anticipated benefits of its distribution relationship with Custom Truck, new strategic partnerships in China and the commencement of sourcing parts from China. Actual results could differ materially from those anticipated in these forward-looking statements as a result of prevailing economic conditions, receipt of requisite regulatory approvals, and other factors, many of which are beyond the control of the Company. The forward-looking statements contained in this news release represent the Company’s expectations as of the date hereof, and are subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable securities regulations.