CALGARY, Aug. 12, 2016 /CNW/ – Mosaic Capital Corporation (“Mosaic” or the “Company“) (TSXâV Symbols: M and M.PR.A) has released its unaudited consolidated financial statements for the three months and six months ended June 30, 2016.
Selected Highlights
NOTE: During 2015, Mosaic divested two portfolio companies, Streamline Mechanical and Polar Geomatic. Pursuant to IFRS, the results of these discontinued operations and gains (losses) on divestiture are reported separately in the Consolidated Statement of Income and Comprehensive Income as “(loss) income from discontinued operations”.
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3 Months Ended June 30 |
6 Months Ended June 30 |
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All amounts are in thousands except % |
2016 |
2015 |
% Change |
2016 |
2015 |
% Change |
|
Revenue(2) |
$48,270 |
$43,738 |
+10% |
$88,514 |
$82,154 |
+8% |
|
Income from operations (2) |
$5,139 |
$5,268 |
-2% |
$10,091 |
$9,961 |
+1% |
|
Adjusted EBITDA (1)(2) |
$5,175 |
$5,313 |
-3% |
$10,127 |
$10,021 |
+1% |
|
Cash Flow Prior to Changes In Non-Cash |
$5,279 |
$5,097 |
+4% |
$9,781 |
$9,027 |
+8% |
|
Free Cash Flow (1)(2) |
$3,570 |
$3,473 |
+3% |
$6,554 |
$6,831 |
-4% |
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Increase (Decrease) In Free Cash Flow Per |
0% |
(8%) |
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Net Income and Comprehensive Income |
$2,201 |
$656 |
+236% |
$4,205 |
$678 |
+520% |
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Adjusted Return on Common Equity |
-2% |
33% |
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Preferred Distribution Payout Ratio (1)(2) |
92% |
94% |
100% |
90% |
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Combined Payout Ratio (1)(2) |
116% |
119% |
126% |
115% |
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Notes: |
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1. |
These non-IFRS financial measures do not have any standardized meaning under IFRS, may not be comparable to similar measures presented by other issuers and are defined and reconciled to their most directly comparable IFRS measure within our Management’s Discussion and Analysis for the three months and six months ended June 30, 2016 under the sections “Non-IFRS Financial Measures” and “Reconciliation of Non-IFRS Financial Measures”, which document is available electronically at www.sedar.com under Mosaic’s profile. |
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2. |
Excludes results from discontinued operations for Q2 2015. |
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3. |
Includes results from discontinued operations for Q2 2015. |
Q2 2016 Financial and Operational Highlights
- Solid fundamentals in the Infrastructure and Diversified industry segments, together with the portfolio’s reduced exposure to upstream energy contributed to the portfolio’s growth in revenue and Free Cash Flow in Q2 2016.
- Mark Gardhouse announced as new CEO during Q2 2016. Mark brings significant experience in private equity. John Mackay to continue his involvement with Mosaic as Executive Chairman.
- The internally funded $29.5 million acquisition of Mackow Industries (“Mackow“) is expected to positively impact revenue, income from operations, cash flows and payout ratios commencing in Q3 2016. Mackow is a metals fabrication company which participates directly in the North American transit bus and motor coach industry.
- Mosaic continues to see strong acquisition deal flow across wide range of industries and geographies.
- Continued strong financial position including $27.1 million cash, $56.2 million working capital and $2.0 million long-term debt as at June 30, 2016.
Financial Performance By Segment*
For the Six Months Ended June 30, 2016
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All amounts are in thousands |
CONSOLIDATED |
Infrastructure |
Diversified |
Energy |
|
Revenue % of Total
% increase (decrease) year |
$88,514 100%
8% |
$65,019 74%
11% |
$19,570 22%
12% |
$3,340 4%
(38%) |
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Income From Operations
% increase (decrease) year |
$10,091
1% |
$8,374
16% |
$3,254
26% |
$483
(76%) |
*Revenue and income from operations attributable to the Real Estate segment are immaterial.
Outlook
Mosaic welcomed Mark Gardhouse as our new CEO effective July 11, 2016. Mark brings significant private equity investment experience to Mosaic and will lead Mosaic’s portfolio growth initiatives. Former CEO John Mackay will continue his active involvement in the Company as Executive Chairman.
The acquisition of Mackow, announced August 2 & 8, 2016 (the “Mackow Acquisition“), together with the two previously announced energy-related divestitures in 2015 (Streamline Mechanical and Polar Geomatic) have materially improved the strategic positioning of Mosaic’s portfolio. We anticipate that inclusion of Mackow’s operating results in Mosaic’s consolidated results will improve Mosaic’s operating metrics and payout ratios.
The Mackow Acquisition is the largest in Mosaic’s history. The majority of Mackow’s revenues are from fabrication of metal components designed for installation in transit buses and motor coaches. The majority of these buses and motor coaches are sold into the U.S. market. We view the North American public and private mass transportation market as having solid long-term fundamentals.
Through 2015 and thus far in 2016, we expanded our acquisition team, broadened our geographic focus and geared our efforts toward somewhat larger, non-cyclical enterprises. This move to greater portfolio economic diversity, size and quality may result in somewhat higher valuations for targeted acquisitions. However, with our internal resources and access to capital we feel we can complete attractive acquisitions which will enhance Mosaic’s value and strength.
The Company continues to see solid deal flow from across Canada spanning a wide range of industrial sectors. Mosaic’s diverse deal-flow and unique business strategy provides the Company an exceptional vantage point to assess which sectors it views as most attractive for investment.
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 creative transaction structuring and working closely with subsidiary businesses after acquisition.
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 including the anticipated positive impact of the Mackow Acquisition on revenue, income from operations, cash flows and payout ratios. 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. Some of the assumptions made by Mosaic upon which forward-looking statements are typically based include: the business operations of the operating businesses of Mosaic continuing on a basis consistent with prior years; the ability of Mosaic and its subsidiaries to access financing from time to time on favorable terms; the ability of Mosaic to realize anticipated benefits of acquisitions; the continuation of executive and operating management or the non-disruptive replacement of them on competitive terms; the ability of Mosaic to maintain reasonably stable operating and general administrative expenses; the current economic environment in western Canada (including commodity prices, such as oil prices) stabilizing and showing signs of strengthening over the coming year; the economic environment in Canada not deteriorating due to the influence of international economic developments in the United States, Europe, Asia and elsewhere; and continuing solid long-term fundamentals in the North American mass transportation market.
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 any 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, 2015 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.
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
