TSXV: DUG │OTCQX: DSTFF
TORONTO, Nov. 29, 2018 /CNW/ - Distinct Infrastructure
Group Inc. ("Distinct", "DIG" or the "Company") today released its
financial results for the three-month and nine-month periods ended
September 30, 2018.
Summary
- Third quarter Revenue of $21.4
million was a 1.9% increase over the $21 million reported in the third quarter of
2017. Revenue for the nine months ended September 30, 2018 was $61.5 million, an increase of 36.1% over the
$45.2 million in revenue for the nine
months ended September 30, 2017.
- EBITDA was $3.4 million in the
quarter compared to $7.3 million in
the third quarter of last year. For the nine months ended
September 30, 2018, EBITDA was
$6.8 million compared to $3.1 million in the previous year, an increase of
119.4%.
- Third quarter Net Loss of $0.57
million compared to Net Income of $5.4 million in the third quarter of 2017. The
Net Loss for the nine months ended September
30, 2018 was $2.8 million
compared to Net Loss of $5.2 million
for the nine months ended September 30,
2017 which is an increase of 46.2% from the same period last
year.
- On September 12, 2018, the
Company completed an offering of $10
million of unsecured subordinated convertible debenture
units. Each unit consisted of $1,000
principal amount of unsecured subordinated convertible debt and 225
common share purchase warrants (the "Warrants"). Each Warrant
entitles the holder to acquire one common share of the Company at
an exercise price of $0.70 at any
time up to September 12, 2020
(subject to adjustment in certain customary events).
- Strong results continued in Central
Canada followed by the acquisition of Crown Utilities on
November 2017.
Third Quarter 2018 Financial Highlights
Income
Statement
|
All Figures in
CAD
|
|
|
|
|
Three Months
Ended
|
Nine Months
Ended
|
|
September 30,
2018
|
September 30,
2017
|
September 30,
2018
|
September 30,
2017
|
Revenue
|
$21,447,225
|
$21,027,836
|
$61,464,917
|
$45,161,385
|
Expenses
|
$19,314,699
|
$14,286,827
|
$58,166,513
|
$43,557,269
|
|
|
|
|
|
EBITDA
|
$3,366,315
|
$7,253,690
|
$6,781,650
|
$3,093,195
|
Adjusted
EBITDA
|
$3,398,000
|
$7,267,000
|
$6,877,184
|
$3,149,668
|
|
|
|
|
|
Net Income
(Loss)
|
($566,525)
|
$5,426,436
|
($2,776,305)
|
($5,166,804)
|
EPS
(Basic)
|
($0.01)
|
$0.15
|
($0.06)
|
($0.15)
|
Overview
"The third quarter of 2018 represented a deviation from past
trends due to the decrease in workload," said Joe Lanni, DIG's Co-CEO. "This never before seen
decrease in workload, coupled with the Corporation's investment in
increased personnel and equipment to meet the anticipated increase
in workload, has put pressure on the Corporation's gross margins
and profit. Discounting the expenses associated with the
discontinued operations, the Corporation would have realized a
profit for the third quarter."
Mr. Lanni went on to say, "Despite the challenges faced by the
Company's operations in Ontario,
Crown Utilities continues to grow as demand for its services
increase. We anticipate that opportunities in Manitoba will continue to grow which should
result in stronger results for its central operations."
"Given the decrease in workload, the Corporation will be
undertaking a number of initiatives to reduce overall costs and
realign its assets to maximize productivity, revenue and
profitability," said Alex Agius,
DIG's Co-CEO. "The implementation of the initiatives should result
in a greater diversified customer mix as well as a more efficient
workforce and fleet. Some of the initiatives include the reduction
of field personnel, back office support and management as well as
reducing the number of inefficient and/or high maintenance
equipment and disposal of under-utilized assets. The Company
anticipates annualized cost savings of approximately $5 million to $7
million which will result in a reduction in long term debt
on assets and an increase in margins."
The construction industry in Canada is seasonal in nature for companies
like Distinct that performs most of their work outdoors. As a
result, less work is typically performed in the winter and early
spring months than in the summer and fall months. Accordingly,
Distinct has historically experienced a seasonal pattern in its
operating results, with the first half of the year generating lower
revenue and profitability than the second half of the year. The
second half of 2018 has deviated from past trends due to the
slowdown of workload from one of the Company's clients.
Q3 Operating Results
Revenue – Revenues for the quarter ending September 30, 2018 were $21,447,255, a slight increase over the revenues
for the same quarter last year of $21,027,836. Despite the slowdown in the workload
from one of the Company's significant client which started in
mid-August and will continue through the remainder of fiscal 2018,
the Company was able to increase its revenue year over year largely
due to the performance of Crown Utilities and the strong demand for
its services in Manitoba.
Gross Profit Margin – Gross profit (revenue less direct
costs) reached $6,817,920 for the
quarter ended September 30, 2018
compared to $9,711,898 from the third
quarter of 2017. Gross profit margin for the third quarter was
31.8% compared to gross profit margin of 46.2% for the third
quarter of last year. The decrease in gross profit was primarily
due to the Company increasing its investments in personnel and
equipment in anticipation of client programs that were subsequently
scaled back by the client. This scale back is expected to continue
through 2019. The Company has taken the initiative to re-organize
and right size its business giving the company the ability to both
grow a more diversified customer mix, as well as an even more
efficient team and fleet. Once these initiatives are fully
implemented, the Company anticipates that gross profit margins will
return to historic levels.
Net Income / Loss – The Company reported a net loss of
$566,525 for the third quarter of
2018 as compared to net income of $5,426,436 for the third quarter of 2017.
Excluding the loss after income taxes from discontinued operations,
the Corporation would have realized net income from continuing
operations of $790,040. The decrease
of net income year over year was largely due to the decrease in
workload of one of the Corporation's significant clients.
About Distinct Infrastructure Group:
Distinct Infrastructure Group Inc. is a turnkey solutions firm
providing design, engineering, construction and maintenance
services to telecommunication firms, utilities and government
bodies. Distinct's full service suite of offerings includes
underground construction, aerial construction, inventory
management, and technical services including fibre to the building
and home. The Company's head offices are located in Toronto, Ontario, with additional offices in
Winnipeg, Manitoba.
Non-IFRS / GAAP Measures
EBITDA, Adjusted EBITDA are non-GAAP/IFRS figures. "EBITDA"
represents net income plus income tax, one-time finance expenses
and depreciation. "Adjusted EBITDA" represents EBITDA plus
share-based compensation and one-time costs.
Neither 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 Statements
This news release contains "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and applicable Canadian securities legislation.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "plans",
"anticipated", "expects" or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might" or "will
be taken", "occur" or "be achieved". Distinct is subject to
significant risks and uncertainties which may cause the actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward looking statements contained in this
release. Distinct cannot assure investors that actual results will
be consistent with these forward looking statements and Distinct
assumes no obligation to update or revise the forward looking
statements contained in this release to reflect actual events or
new circumstances.
SOURCE Distinct Infrastructure Group Inc.