Market Overview

Strad Announces Fourth Quarter Results

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/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES ("U.S.")/

The news release contains "forward-looking information and statements" within the meaning of applicable securities laws. For full disclosure of the forward-looking information and statements and the risks to which they are subject, see the "Cautionary Statement Regarding Forward-Looking Information and Statements" later in this news release.

CALGARY, Feb. 26, 2020 /CNW/ - Strad Inc. today announced its financial results for the year-ended December 31, 2019. All amounts are stated in Canadian dollars unless otherwise noted.

YEAR-END FINANCIAL AND OPERATIONAL HIGHLIGHTS

  • Subsequent to year-end, Strad entered into an arrangement agreement with 2238399 Alberta Ltd. ("Acquireco") to privatize the Company;

  • Revenue increased 9% to $130.2 million compared to $119.9 million in 2018;

  • Revenue for Industrial Matting in Canada was $59.9 million, up 37%, and in the United States ("U.S.") was $23.8 million, up 42% compared with 2018;

  • Net income improved to $1.1 million compared to a net loss of $(1.0) million in 2018;

  • EBITDA(1) increased 33% to $36.1 million compared to $27.2 million in 2018;

  • Capital additions totaled $32.8 million and was deployed to grow and maintain the Company's Industrial Matting fleet to meet the expected demand in Canada and the U.S.;

  • Approved $25.0 million of capital for 2020 to grow and maintain the Company's Industrial Matting fleet in Canada and the U.S.;

  • Grew the Industrial Matting fleet by 21% to 135,415 mats from 111,710 mats in 2018;

  • Changed corporate name to Strad Inc. to better reflect the direction of the Company as it continues to focus on customers from a wide ranged of industrial sectors;

  • Purchased and canceled 117,898 common shares in 2019 at an average price of $1.81 under the current normal course issuer bid ("NCIB") that was renewed on November 28, 2019. Under the previous NCIB, Strad purchased and canceled 2,668,971 common shares at an average price of $1.56; and

  • Funded debt(2) decreased to $8.5 million at December 31, 2019, compared to $14.0 million at December 31, 2018. Funded debt(2) to covenant EBITDA(3) ratio was 0.3 : 1.0 at December 31, 2019.

FOURTH QUARTER FINANCIAL AND OPERATIONAL HIGHLIGHTS

  • Revenue increased 22% to $39.4 million compared to $32.3 million for the same period in 2018;

  • Revenue for Industrial Matting Canada was $22.0 million, up 58%, and in the U.S. was $5.8 million, up 25% compared with the same period in 2018;

  • Net loss for the fourth quarter was $(0.5) million compared to a net loss of $(5.4) million for the same period in 2018;

  • EBITDA(1) increased 2% to $10.8 million as compared to $10.6 million for the same period in 2018. EBITDA increased in part due to a $2.9 million improvement in Industrial Matting EBITDA and offset by a $2.2 million decline in Equipment Rentals EBITDA; and

  • Capital additions totaled $3.7 million and was deployed to grow and maintain the Company's Industrial Matting fleet to meet the expected demand in Canada and the U.S.

Notes:

(1)

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS, and, accordingly, Strad's use of such a term may not be comparable to similarly defined measures presented by other entities; see "Non-IFRS and Additional IFRS Measures and Reconciliations".

(2)

Funded debt includes bank indebtedness plus long-term debt less cash.

(3)

Covenant EBITDA, as defined in the Company's credit facility agreement, is based on trailing twelve month EBITDA plus share based payments, plus additional one-time charges, less right of use asset amortization, less interest expense associated with leases.

 

"2019 marked our first full year of our strategy focused on the high growth industrial matting market, which has allowed us to participate in a broader range of sectors across North America including construction and the maintenance of large-scale infrastructure projects. This focus has significantly diversified our revenue and customer base, providing increased sustainability through commodity and economic turbulence," said Andy Pernal, President and CEO of Strad. "In January 2019, we dedicated our entire growth capital budget to Industrial Matting, confident this segment would drive growth and profitability. And it has, with a 38% increase in revenue and a 58% increase in EBITDA for the year. Our goal to double our matting fleet by 2021 is ahead of schedule as we continue to see strong demand for matting as its core drivers of environmental protection, safety and project efficiency remain paramount to the North American industrial construction sector."

"The fourth quarter highlighted the potential for Industrial Matting to deliver high rates of return as three projects launched in the third quarter of 2019 continued through to the end of the year, resulting in a 35% increase in EBITDA for the segment.  Our strong results for the quarter were underpinned by higher Canadian utilization rates of 58%, and a 25% increase in revenue from our US business.  These developments contributed to a 50% increase in revenue for the quarter compared to 2018," said Michael Donovan, CFO of Strad. "With our available cash flow for the year, we invested $32.4 million to maintain and grow our matting fleet, made payments on our long-term debt, and bought back over 9% of our shares through our NCIB."

FOURTH QUARTER EARNINGS CONFERENCE CALL

As a result of the Arrangement Agreement signed on February 23, 2020 between Strad Inc. and Acquireco, the Company has elected to cancel the fourth quarter earnings conference call previously scheduled for Friday February 28, 2020 at 8am (MST).

YEAR-END FINANCIAL HIGHLIGHTS
(in thousands of Canadian dollars)


Three months ended December 31, 2019


Industrial Matting

Equipment Rentals

Corporate

Total

Revenue

27,757

11,625

39,382

Operating expenses

15,062

8,939

24,001

Selling, general and administration

1,547

2,092

1,045

4,684

Share based payments

25

33

58

Gain on property, plant and equipment disposals

(68)

(105)

(173)

Gain on foreign exchange

(13)

(19)

(32)

EBITDA(1)(2)

11,204

685

(1,045)

10,844

Depreciation and amortization(3)

4,868

6,294

161

11,323

EBIT(4)

6,336

(5,609)

(1,206)

(479)

Interest expense



316

316

Income tax recovery



(295)

(295)

Net (loss) income



(1,227)

(500)






Equipment Fleet:





Matting fleet at period end

135,415

135,415

Average matting fleet

136,770

136,770

Equipment fleet at period end

5,860

5,860

Average Equipment fleet

5,860

5,860

 


Three months ended December 31, 2018


Industrial Matting

Equipment Rentals

Corporate

Total

Revenue

18,493

13,810

32,303

Operating expenses

8,675

9,059

17,734

Selling, general and administration

1,422

1,935

605

3,962

Share based payments

29

40

15

84

(Gain) loss on property, plant and equipment disposals

(17)

(204)

3

(218)

Loss on foreign exchange

64

78

142

EBITDA(1,2)

8,320

2,902

(623)

10,599

Depreciation and amortization(3)

3,475

14,570

208

18,253

EBIT(4)

4,845

(11,668)

(831)

(7,654)

Interest expense



235

235

Income tax recovery



(2,518)

(2,518)

Net income (loss)



1,452

(5,371)






Equipment Fleet:





Matting fleet at period end

111,710

111,710

Average matting fleet

107,900

107,900

Equipment fleet at period end

6,120

6,120

Average equipment fleet

6,140

6,140

Notes:

(1)

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS, and, accordingly, Strad's use of such term may not be comparable to similarly defined measures presented by other entities; see "Non-IFRS and Additional IFRS Measures and Reconciliations".

(2)

The current period results include impacts from the adoption of IFRS 16 "Leases", which was adopted by the Company on January 1, 2019. These impacts are discussed in further detail as noted in note 4 of the Audited Consolidated Financial Statements for the years ended December 31, 2019 and 2018. Comparative information has not been restated, and therefore, may not be comparable.

(3)

Included in depreciation and amortization for the year-ended December 31, 2019 are impairment charges of $nil related to the impairment of Equipment Rentals assets during the fourth quarter of 2019 as compared to $10.9 million for the same period of 2018.

(4)

Earnings (loss) before interest and tax ("EBIT") is an additional measure under IFRS, see "Non-IFRS and Additional IFRS Measures and Reconciliations".

 

(in thousands of Canadian dollars)


Year-ended December 31, 2019


Industrial Matting

Equipment Rentals

Corporate

Total

Revenue

$

83,697

$

46,539

$

$

130,236

Operating expenses

43,843

32,823

76,666

Selling, general and administration

5,902

8,059

3,745

17,706

Share based payments

96

128

17

241

Gain on property, plant and equipment disposals

(136)

(234)

(370)

Gain on foreign exchange

(23)

(36)

(20)

(79)

EBITDA (1,2)

34,015

5,799

(3,742)

36,072

Depreciation and amortization(3)

18,338

16,772

606

35,716

EBIT (4)

15,677

(10,973)

(4,348)

356

Interest expense



1,321

1,321

Income tax recovery



(2,058)

(2,058)

Net (loss) income



(3,611)

1,093






Equipment Fleet:





Matting fleet at period end

135,415

135,415

Average matting fleet

128,190

128,190

Equipment fleet at period end

5,860

5,860

Average equipment fleet

5,900

5,900

 


Year-ended December 31, 2018


Industrial Matting

Equipment Rentals

Corporate

Total

Revenue

$

60,463

$

59,459

$

$

119,922

Operating expenses

33,826

44,056

77,882

Selling, general and administration

5,197

6,960

2,987

15,144

Share based payments

113

158

61

332

Gain on property, plant and equipment disposals

(256)

(527)

(5)

(788)

Loss (gain) on foreign exchange

67

97

(6)

158

EBITDA (1,2)

21,516

8,715

(3,037)

27,194

Depreciation and amortization(3)

7,468

26,497

404

34,369

EBIT (4)

14,048

(17,782)

(3,441)

(7,175)

Interest expense



812

812

Income tax recovery



(6,970)

(6,970)

Net income (loss)



2,717

(1,017)






Equipment Fleet:





Matting fleet at period end

111,710

111,710

Average matting fleet

91,780

91,780

Equipment fleet at period end

6,120

6,120

Average equipment fleet

6,100

6,100

Notes:

(1)

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS, and, accordingly, Strad's use of such term may not be comparable to similarly defined measures presented by other entities; see "Non-IFRS and Additional IFRS Measures and Reconciliations"

(2)

The current period results include impacts from the adoption of IFRS 16 "Leases", which was adopted by the Company on January 1, 2019. These impacts are discussed in further detail as noted in note 4 of the Audited Consolidated Financial Statements for the years ended December 31, 2019 and 2018. Comparative information has not been restated, and therefore, may not be comparable

(3)

Included in depreciation and amortization for the year-ended December 31, 2019 are impairment charges of $nil related to the impairment of Equipment Rentals assets during the fourth quarter of 2019 as compared to $10.9 million for the same period of 2018

(4)

Earnings (loss) before interest and tax ("EBIT") is an additional measure under IFRS, see "Non-IFRS and Additional IFRS Measures and Reconciliations"

 

FINANCIAL POSITION AND RATIOS


(in thousands of Canadian dollars, except ratio amounts)

As at December 31, 2019

As at December 31, 2018




Working capital(1)

10,321

19,333

Funded debt(2)

8,512

14,009

Total assets

173,188

175,477




Funded debt to EBITDA(3)

0.3 : 1.0

0.5 : 1.0

Notes:

(1)

Working capital is calculated as current assets less current liabilities.

(2)

Funded debt includes bank indebtedness plus long-term debt less cash.

(3)

EBITDA is based on trailing twelve months adjusted EBITDA plus share based payments, plus severance and transaction costs.

 

FOURTH QUARTER RESULTS

Strad reported an increase in revenue of 22% and an increase in EBITDA of 2%, during the three months ended December 31, 2019, as compared to the same period in 2018. During the three months ended December 31, 2019, EBITDA in the Industrial Matting segment improved by 35% to $11.2 million as compared to $8.3 million for the same period of 2018. Contributing to the improvement was a reduction in operating expenses of $0.6 million from the adoption of IFRS 16. Equipment Rentals segment EBITDA for the three months ended December 31, 2019 decreased by 76% to $0.7 million from $2.9 million. Equipment Rentals EBITDA included a $0.8 million reduction in operating expenses from the adoption of IFRS 16. During the three months ended December 31, 2019, Strad reported net income of $(0.5) million compared to a net loss of $(5.4) million for the same period in 2018.

For the three months ended December 31, 2019, Strad's Industrial Matting segment reported an increase in revenue and EBITDA of 50% and 35% respectively, as compared to the same period in 2018. The increase in revenue was a result of three large matting projects in Canada that started in the third quarter of 2019, with two of these projects ending early in the first quarter of 2020 and another carrying through the second quarter of 2020. Furthermore during the quarter, the U.S. had multiple small scale projects and a 64% growth in the overall matting fleet as compared to the same period of 2018. Earnings before interest and taxes ("EBIT") from Industrial Matting increased by 31% to $6.3 million in 2019 from $4.8 million in 2018. The increase in EBIT is primarily the result of the increase in EBITDA which was offset by increased depreciation of $0.5 million related to the adoption of IFRS 16.

Strad's Equipment Rentals segment reported a decrease in revenue of 16% and EBITDA of 76% during the three months ended December 31, 2019, as compared to the same period in 2018. The decrease in revenue was driven by significantly lower rig activity in addition to a decrease in average customer pricing. The decrease in U.S. revenue during the period was also driven by lower rig activity in the Bakken, Marcellus, and the Rockies regions by 4%, 29%, and 15%, respectively, as compared to the same period in 2018. EBIT from the Equipment Rentals segment was a loss of $(5.6) million in 2019 as compared to a loss of $(11.7) million during the same period of 2018. EBIT improved as there were no impairment charges for the year-ended December 31, 2019 as compared to 2018 where impairment charges of $10.9 million were included in depreciation expense. This was offset by the same factors that led to a decrease in EBITDA for 2019.

For the three months ended December 31, 2019, capital expenditures were $3.3 million in Industrial Matting, of which $1.3 million of capital was deployed in the U.S., and $2.0 million in Canada. Capital expenditures for Equipment Rentals amounted to $0.1 million. The majority of the capital additions were related to wood matting additions, which were acquired to prepare for and to support industrial matting projects.

OUTLOOK

Fiscal 2019 ended with continued strong growth for the Company's Industrial Matting Segment. For 2019, revenue and EBITDA were $83.7 million and $34.0 million respectively compared to $60.5 million and $21.5 million in 2018. Heading into the first quarter of 2020, the Company continues to carry momentum in the Canadian matting market, with one of the three major projects that started in Q3 2019 expected to carry through to the second quarter of 2020. In Canada, the Trans Mountain expansion and associated projects continue to progress albeit slowly. The expansion cleared one of the last major hurdles when the Supreme Court of Canada unanimously dismissed the B.C. appeal against the project.

While the pipeline projects in Canada provide significant opportunity for the matting business, we believe the prospects in the United States could offer substantial growth opportunities for years to come. To date, we have won a number of smaller projects and quoted on several large-scale projects of extended duration. With increasing environmental responsibility and regulation throughout North America, we expect the overall matting market to expand as we also look to increase our market share. The potential size of the matting market in the United States is an order of magnitude greater than that of Canada, and to that end our 2020 capital program has devoted two thirds of the approved $25.0 million to the U.S. market. Lower rig counts forecasted for the U.S. in 2020 could however impact on our drilling related matting activity throughout the year. In 2019, we deployed $16.2 million of a total $31.9 million in capital in the United States. Overall, our 2019 investment in the matting fleet brought our total fleet size to 135,415 mats.

Early in 2020, rig counts and activity levels are ahead of expectations in Canada however, we have limited visibility into producer spending in the second half of the year. Overall, we continue to see challenging times ahead for the Equipment Rentals business throughout North America. Fourth quarter rig counts were down approximately 28% year-over-year in Canada and 16% year-over-year in the U.S. The Canadian rig forecast for 2020 estimates only slight improvements as compared to 2019 rig counts. The rig counts in the U.S. are also anticipated to remain lower than 2019 which will impact activity levels for both equipment rentals.

Since our first Normal Course Issuer Bid ("NCIB") was announced in the later half of 2017, we have repurchased 5,555,189 shares representing over 9% of our outstanding shares. We continue to view our NCIB program as a key component of our total shareholder return and will continue to be active in repurchasing shares when it is advantageous to do so.

In 2020 we look to increase our matting fleet further, while our strong cash flow generation and minimal debt balance continue to provide the flexibility to evaluate various alternatives to create shareholder value.

RESULTS OF OPERATIONS

Industrial Matting


Three months ended December 31,

Year-ended December 31,

(in thousands of Canadian dollars)

2019

2018

%

2019

2018

%








Canadian revenue

$

21,965

$

13,869

58%

59,852

43,629

37%

U.S. revenue

5,792

4,624

25%

23,845

16,834

42%

Total Revenue

27,757

18,493

50%

83,697

60,463

38%








EBITDA(1)(2)

11,204

8,320

35%

34,015

21,516

58%

EBITDA as a percentage of revenue

40%

45%


41%

36%









EBIT(3)

6,336

4,845

31%

15,677

14,048

12%

EBIT as a percentage of revenue

23%

26%


19%

23%









Capital expenditures(4)

3,286

11,941

(72)%

31,926

31,307

2%

Property, plant and equipment

72,028

64,921

11%

72,028

64,921

11%








Equipment Fleet:







Canadian matting fleet

92,065

85,200

8%

92,065

85,200

8%

U.S. matting fleet

43,350

26,510

64%

43,350

26,510

64%

Matting fleet at period end(5)

135,415

111,710

21%

135,415

111,710

21%








Canadian average matting fleet

93,730

82,160

14%

92,630

71,030

30%

U.S. average matting fleet

43,040

25,740

67%

35,560

20,750

71%

Average matting fleet(6)

136,770

107,900

27%

128,190

91,780

40%








Canadian average utilization

58%

45%


38%

34%


U.S. average utilization

35%

45%


37%

36%


Average utilization %(7)

48%

45%


38%

35%


Notes:



(1)

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS, and, accordingly, Strad's use of such term may not be comparable to similarly defined measures presented by other entities; see "Non-IFRS and Additional IFRS Measures and Reconciliations".

(2)

The current period results include impacts from the adoption of IFRS 16 "Leases", which was adopted by the Company on January 1, 2019. These impacts are discussed in further detail as noted in note 4 of the Audited Consolidated Financial Statements for the years ended December 31, 2019 and 2018. Comparative information has not been restated, and therefore, may not be comparable.

(3)

Earnings (loss) before interest and tax ("EBIT") is an additional measure under IFRS, see "Non-IFRS and Additional IFRS Measures and Reconciliations".

(4)

Includes purchases of intangible assets and excludes purchases of right of use assets.

(5)

Matting fleet balances are as at December 31, 2019 and 2018. 

(6)

Matting fleet balances are averages for the three months and year-ended December 31, 2019 and 2018.

(7)

Utilization includes matting on rent only and is calculated using gross asset value.

 

Revenue for the three months ended December 31, 2019 increased 50% to $27.8 million, as compared to $18.5 million during the same period of 2018. The increased revenue was driven by a 58% increase in Canadian revenue. The increase in Canadian revenue for the three months ended December 31, 2019 was primarily due to three large matting projects that started in the third quarter of 2019, with two of these projects ending early in the first quarter of 2020 and another carrying through the first quarter of 2020. Further contributing to the improved revenue in Canada was an increase in Canadian average matting fleet by 14%, combined with a higher average utilization to 58% from 45%. This was offset by a decrease in Canadian average pricing by 17% due to a change in project mix year-over-year. The 25% improvement in U.S. revenue to $5.8 million also contributed to the increase in revenue for the three months ended December 31, 2019, as compared to $4.6 million for the same period of 2018. This was due to multiple small scale projects, highlighted by the 67% increase in average matting fleet in the U.S. This was offset by a 10% decline in average utilization, which was in line with a decrease in average customer pricing by 26%.

The Company's average matting fleet for the three months ended December 31, 2019 increased 27% to 136,770 mats as compared to 107,900 for the same period of 2018.

EBITDA for the three months ended December 31, 2019, increased 35% to $11.2 million as compared to $8.3 million for the same period of 2018. EBITDA as a percentage of revenue was 40% for the three months ended December 31, 2019, compared to 45% for the same period of 2018. The overall EBITDA increase was driven primarily by the increase in revenue, and from a $0.6 million reduction in operating expenses due to the adoption of IFRS 16. This was offset by a 74% increase in operating expenses during the three months ended December 31, 2019 to $15.1 million as compared to $8.7 million for the same period of 2018.

EBIT for the three months ended December 31, 2019, increased by 31% to $6.3 million as compared to $4.8 million during the same period of 2018. The primary driver for the increase in EBIT were the same factors that increased EBITDA, which was offset by the depreciation of $0.5 million related to the adoption of IFRS 16.

Revenue for the year-ended December 31, 2019, increased 38% to $83.7 million from $60.5 million for the same period in 2018. Canadian revenue increased 37% to $59.9 million for the year-ended December 31, 2019, as compared to $43.6 million for the same period of 2018. This was primarily due to three large matting projects that started midway through the third quarter of 2019, with two of these projects ending early in the first quarter of 2020 and another carrying through the first quarter of 2020. Further contributing to the increase in Canadian revenue for the year-ended December 31, 2019, was an increase in average matting fleet to 92,630 mats as compared to 71,030 mats in 2018, combined with an increase in Canadian average utilization to 38% from 34%. Further impacting the increase in Canadian revenue for the year-ended December 31, 2019, was the timing of a large scale matting project which began in the fourth quarter of 2018 and carried through to the beginning of the second quarter of 2019. This was offset by a 6% decrease in average Canadian pricing year-over-year. In the U.S., revenue increased 42% to $23.8 million, compared to $16.8 million during the same period in 2018, primarily due to a number of smaller projects throughout the year. The increased revenue was also due to a 71% increase in U.S. average fleet, while average utilization remained flat. An 11% decrease in average customer pricing partially offset the increase in U.S. revenue.

During the year-ended December 31, 2019, EBITDA increased 58% to $34.0 million compared to $21.5 million during the same period of 2018. The increase in EBITDA is primarily due to the increase in revenue year-over-year and a $2.2 million reduction of operating expenses due to the adoption of IFRS 16. This was offset by a 30% increase in operating expenses year-over-year. EBITDA as a percentage of revenue increased to 41% for the year-ended December 31, 2019, as compared to 36% for the same period in 2018.

EBIT for the year-ended December 31, 2019, increased 12% to $15.7 million as compared to $14.0 million for the same period in 2018. The increase in EBIT is primarily driven by an increase in EBITDA, which was offset by the increased depreciation due to matting fleet growth and the accelerated depreciation of $2.6 million of capital assets with no remaining useful life. Furthermore, offsetting the increase in EBIT was the depreciation of $2.2 million related to the adoption of IFRS 16, which did not occur in the same period of 2018.

Operating expenses for the three months and year-ended December 31, 2019, increased 74% and 30% respectively, to $15.1 million and $43.8 million as compared to $8.7 million and $33.8 million during the same period of 2018. The increase in operating expenses for the three months ended December 31, 2019 was primarily due to cost of goods sold for the sale of used fleet and non-recoverable hauling costs for various projects. Further contributing to the increase in operating expenses were service costs, such as mat cleaning and installation costs. This was offset by the adoption of IFRS 16, that resulted in decreased rent and lease payments of $0.6 million. The increase in operating expenses for the year-ended December 31, 2019 was due to trucking and hauling costs, service costs, and cost of goods sold related to used mats sold to customers during the year, as compared to the same period in 2018. This was offset by the adoption of IFRS 16, which led to changes in lease accounting resulting in decreased rent and lease related expenses of $2.2 million.

Equipment Rentals


Three months ended December 31,

Year-ended December 31,

(in thousands of Canadian dollars)

2019

2018

%

2019

2018

%








Canadian revenue

5,131

7,112

(28)%

22,163

33,770

(34)%

U.S. revenue

6,494

6,698

(3)%

24,376

25,689

(5)%

Total Revenue

11,625

13,810

(16)%

46,539

59,459

(22)%








EBITDA(1)(2)

685

2,902

(76)%

5,799

8,715

(33)%

EBITDA as a percentage of revenue

6%

21%


12%

15%









EBIT (3)

(5,609)

(11,668)

nm

(10,973)

(17,782)

nm

EBIT as a percentage of revenue

(48)%

(84)%


(24)%

(30)%









Capital expenditures(4)

66

97

(32)%

368

1,171

(69)%

Property, plant and equipment

54,637

71,790

(24)%

54,637

71,790

(24)%








Equipment Fleet:







Canadian equipment fleet

3,770

4,225

(11)%

3,770

4,225

(11)%

U.S. equipment fleet

2,090

1,895

10%

2,090

1,895

10%

Equipment fleet at period end(5)

5,860

6,120

(4)%

5,860

6,120

(4)%








Canadian average equipment fleet

3,800

4,250

(11)%

3,870

4,200

(8)%

U.S. average equipment fleet

2,060

1,890

9%

2,030

1,900

7%

Average equipment fleet(6)

5,860

6,140

(5)%

5,900

6,100

(3)%







Canadian average utilization

29%

31%


30%

32%


U.S. average utilization

34%

43%


38%

41%


Average utilization %(7)

31%

36%


34%

34%









Rig Counts(8)







Western Canada

138

193

(28)%

132

189

(30)%

Bakken

53

55

(4)%

55

54

2%

Marcellus

53

75

(29)%

70

77

(9)%

Rockies

58

68

(15)%

69

68

1%

Notes:



(1)

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS, and, accordingly, Strad's use of such term may not be comparable to similarly defined measures presented by other entities; see "Non-IFRS and Additional IFRS Measures and Reconciliations".

(2)

The current period results include impacts from the adoption of IFRS 16 "Leases", which was adopted by the Company on January 1, 2019. These impacts are discussed in further detail as noted in note 4 of the Audited Consolidated Financial Statements for the years ended December 31, 2019 and 2018. Comparative information has not been restated, and therefore, may not be comparable.

(3)

Earnings (loss) before interest and tax ("EBIT") is an additional measure under IFRS, see "Non-IFRS and Additional IFRS Measures and Reconciliations".

(4)

Includes purchases of intangible assets and excludes purchases of right of use assets. 

(5)

Equipment rentals fleet balances are as at December 31, 2019 and 2018. 

(6)

Equipment rentals fleet balances are averages for the three months and year-ended  December 31, 2019 and 2018.

(7)

Equipment utilization includes surface equipment on rent only and is calculated using gross asset value.

(8)

Source: Baker Hughes "North America Rotary Rig Count". Rig Counts are average rig counts for the period.

 

Revenue for the three months ended December 31, 2019, decreased 16% to $11.6 million from $13.8 million during the same period in 2018. The decreased revenue was due to a 28% and 3% decrease in Canadian and U.S. revenue, respectively. The decrease in Canadian revenue was primarily driven by a 28% decrease in rig counts in Western Canada. Further impacting the decrease in Canadian revenue for the three months ended December 31, 2019 was a 20% decrease in average customer pricing, while average utilization decreased to 29% as compared to 31% for the same period in 2018. U.S. revenue for the three months ended December 31, 2019 decreased by 3% as compared to the same period of 2018. This was driven by the decrease in rig counts in the Bakken, Marcellus, and the Rockies region by 4%, 29%, and 15%, respectively. Contributing to the decrease in U.S. revenue for the three months ended December 31, 2019 was an 8% decrease in average customer pricing, and a decrease in average utilization by 9% as compared to the same period of 2018.

For the three months ended December 31, 2019, EBITDA decreased 76% to $0.7 million from $2.9 million for the same period of 2018. EBITDA as a percentage of revenue decreased to 6% during the three months ended December 31, 2019, compared to 21% for the same period of 2018. The decrease in EBITDA was driven primarily by the decrease in revenue. This was offset by a $0.8 million reduction in operating expenses due to the IFRS 16 adoption.

EBIT for the three months ended December 31, 2019, was $(5.6) million compared to $(11.7) million during the same period of 2018. The increase in EBIT is driven primarily due to a decrease in depreciation expense, as the Company incurred $10.9 million in depreciation expense during the fourth quarter 2018 for the impairment of rental equipment assets, which did not occur in 2019. The increase in EBIT during the three months ended December 31, 2019 was partially offset by the depreciation of $0.8 million related to the adoption of IFRS 16.

Revenue for the year-ended December 31, 2019, decreased 22% to $46.5 million from $59.5 million for the same period of 2018. The decrease in revenue was primarily due to a 34% decrease in Canadian revenue to $22.2 million from $33.8 million as compared to 2018. The decrease in revenue was driven by a 30% decrease in western Canadian rig activity and an 18% decrease in average customer pricing. Furthermore, average utilization in Canada for the year-ended December 31, 2019 decreased slightly to 30% as compared to 32% year-over-year. For the year-ended December 31, 2019, U.S. revenue decreased 5% to $24.4 million from $25.7 million as compared to the same period of 2018. Rig counts for the year-ended December 31, 2019, in Marcellus region decreased by 9%, counts in Bakken and the Rockies regions remained flat, which led to a slight decline in average utilization to 38% as compared to 41% year-over-year. This was offset by an 11% increase in average customer pricing as compared to the year-ended December 31, 2018.

During the year-ended December 31, 2019, EBITDA decreased 33% to $5.8 million from $8.7 million during the same period in 2018. EBITDA as a percentage of revenue decreased to 12% for the year-ended December 31, 2019, compared to 15% for the same period in 2018. The decrease in EBITDA was driven primarily by the decrease in revenue and an increase in non-recoverable hauling costs of $0.9 million related to the transfer of equipment from Canada to the U.S. This was offset by a $3.0 million decrease in operating expenses year-over-year due to the adoption of IFRS 16.

EBIT for the year-ended December 31, 2019, was $(11.0) million compared to $(17.8) million during the same period in 2018. EBIT increased during the year-ended December 31, 2019, primarily by the decrease in depreciation expense, as the Company incurred $10.9 million in depreciation expense during the fourth quarter of 2018 for the impairment of rental equipment assets, which did not occur in 2019. This was offset by the decrease in EBITDA, as well as depreciation of $3.1 million related to the adoption of IFRS 16.

Operating expenses for the three months and year-ended December 31, 2019, decreased by 1% and 25% respectively, to $8.9 million and $32.8 million as compared to $9.1 million and $44.1 million during the same period of 2018. The decrease in operating expenses for the three months and year-ended December 31, 2019, is primarily the result of lower activity levels and the adoption of IFRS 16. The adoption of IFRS 16 led to changes in lease accounting which resulted in decreased rent and lease related expense by $3.0 million for the year-ended December 31, 2019.

Subsequent event

On February 23, 2020, Strad Inc. entered into an arrangement agreement (the "Arrangement Agreement") with 2238399 Alberta Ltd. ("Acquireco") to privatize the Company. Pursuant to the Arrangement Agreement, Acquireco will acquire all of the issued and outstanding class A shares  ("Strad Shares") of Strad Inc. pursuant to a series of steps, including the implementation of a plan of arrangement under the Business Corporations Act (Alberta) (the "Transaction"). Under the terms of the Arrangement Agreement, Strad Shares held by executive officers, certain directors and certain employees ("Ongoing Shareholders") will in exchange for each one Strad Share, receive one share in Acquireco. Under the terms of the Arrangement Agreement, each holder of Strad Shares, including any shares issued upon the exercise of stock options, and excluding Ongoing Shareholders, will receive $2.39 in cash in exchange for each Strad Share.

As part of the Arrangement Agreement, Strad Inc. has also agreed to pay a termination fee of $4.0 million or an expense reimbursement of up to $1.5 million to Acquireco if the Arrangement Agreement is terminated in certain circumstances.

The Transaction is subject to customary Toronto Stock Exchange, court and regulatory approvals, including approval of not less than 66 2/3% of the votes cast by holders of Strad Shares. The Arrangement is expected to be completed in the second quarter of 2020.

LIQUIDITY AND CAPITAL RESOURCES

(in thousands of Canadian dollars)

December 31, 2019

December 31, 2018




Current assets

$

32,624

$

36,625

Current liabilities

22,303

17,292

Working capital(1)

10,321

19,333




Banking facilities



Operating facility

1,509

762

Syndicated revolving facility

7,003

12,934

Total facility borrowings

8,512

13,696




Total credit facilities(2)

48,500

48,500

Unused credit capacity

39,988

34,804

Notes:

(1)

Working capital is a Non-IFRS measure and calculated by Strad as current assets less current liabilities, as derived from the Company's consolidated statement of financial position; see "Non-IFRS and Additional IFRS Measures and Reconciliations".

(2)

Facilities are subject to certain limitations on accounts receivable, inventory, and net book value of fixed assets and are secured by a general security agreement over all of the Company's assets. As at December 31, 2019, Strad had access to $48.5 million of credit facilities.

 

As at December 31, 2019, working capital was $10.3 million compared to $19.3 million at December 31, 2018. The change in current assets was a result of a 4% decrease in accounts receivable to $30.9 million for the fourth quarter of 2019 compared to $32.0 million for the fourth quarter of 2018. The decrease in accounts receivable was primarily due to the timing of collections as compared to the same period of 2018. Inventory and prepaids decreased by 77% and 58% to $0.4 million and $0.9 million at December 31, 2019, respectively from $1.8 million and $2.1 million at December 31, 2018 respectively. The decrease in inventory was due to mats held in inventory at December 31, 2018, which were sold in the first quarter of 2019 and the decrease in prepaids was due to a large deposit made in the fourth quarter of 2018 for the purchase of mats, which were sold to a customer in the first quarter of 2019.

The increase in current liabilities is primarily the result of an increase in current lease liabilities to $5.6 million as a result of the adoption of IFRS 16. This was offset by an 8% decrease in accounts payable and accrued liabilities to $15.1 million at December 31, 2019, compared to $16.4 million at year end. The decrease in accounts payable was primarily due to the timing of payments made for the fourth quarter of 2019.

Cash flow from operating activities for the year-ended December 31, 2019, increased to $46.6 million compared to $29.8 million for the same period of 2018, due to increased cash generated from used fleet sales, increased interest expense due to the adoption of IFRS 16, and a decrease in non-cash working capital. Funds from operations for the three months ended December 31, 2019, increased to $14.6 million compared to $11.5 million for the three months ended December 31, 2018. Capital expenditures totaled $3.7 million and $32.8 million for the three months and year-ended December 31, 2019 as compared to $12.2 million and $33.8 million for the same period of 2018. Management monitors funds from operations and the timing of capital additions to ensure adequate capital resources are available to fund Strad's capital program.

As at December 31, 2019, the Company is committed to pay $15.0 million of trade payables. Additionally for the next twelve months, Strad has a commitment of $5.6 million related to leases for facilities and fleet, and will be committed to spend approximately $25.0 million over the next twelve months for capital expenditures. As at December 31, 2019, the Company has a commitment of $6.8 million related to leases for facilities and fleet, which have varying terms over the next five years.

As at December 31, 2019, the Company's syndicated banking facility consists of an operating facility with a maximum principal amount of $7.0 million CAD and $5.0 million USD, and a $36.5 million CAD syndicated revolving facility, both of which are subject to certain limitations on accounts receivable, inventory, and net book value of fixed assets and are secured by a general security agreement over all of the Company's assets. As at December 31, 2019, the Company had access to the maximum credit facilities. The syndicated banking facility will mature on September 29, 2021. The syndicated banking facility bears interest at bank prime plus a variable rate, which is dependent on the Company's funded debt to covenant EBITDA ratio.

Based on the Company's funded debt to covenant EBITDA ratio, the interest rate on the syndicated credit facility is bank prime plus 0.50% on prime rate advances and at the prevailing rate plus a stamping fee of 1.50% on bankers' acceptances. For the year-ended December 31, 2019, the overall effective rates on the operating facility and revolving facility were 3.82% and 4.17%, respectively. As of December 31, 2019, $1.5 million was drawn on the operating facility and $7.0 million was drawn on the revolving facility. Required payments on the revolving facility are interest only.

As at December 31, 2019, the Company was in compliance with all of the financial covenants under its credit facilities.

The relevant definitions related to the financial debt covenant ratio terms as set forth in the Company's syndicated banking facility are as follows:

  • Funded debt includes bank indebtedness plus long-term debt less cash.
  • Covenant EBITDA is based on trailing twelve months adjusted EBITDA plus share based payments, plus additional one-time charges, less right of use asset amortization, less interest expense associated with leases.
  • Interest expense ratio is calculated as the ratio of trailing twelve month EBITDA plus share based payments to trailing twelve month interest expense on loans and borrowings.

The above noted definitions are not recognized under IFRS and are provided strictly for the purposes of the financial covenant calculation.

Financial Debt Covenants

As at December 31, 2019

As at December 31, 2018

Funded debt to EBITDA ratio (not to exceed 3.0:1)



Funded debt

$

8,512

$

14,009

Covenant EBITDA

30,116

26,877

Ratio

0.3

0.5




EBITDA to interest coverage ratio (no less than 3.0:1)



Covenant EBITDA

30,116

26,877

Covenant interest expense

1,046

812

Ratio

28.8

33.1

 

NON-IFRS AND ADDITIONAL IFRS MEASURES AND RECONCILIATIONS

Certain supplementary measures in this Press Release do not have any standardized meaning as prescribed under IFRS and, therefore, are considered non-IFRS measures. These measures are described and presented in order to provide shareholders and potential investors with additional information regarding the Company's financial results, liquidity and its ability to generate funds to finance its operations. These measures are identified and presented, where appropriate, together with reconciliations to the equivalent IFRS measure. However, they should not be construed as alternative measures to IFRS measures, and as they do not have standardized meanings or standardized methods of calculation, the may not be consistent with or comparable to similar measures presented by other companies. These measures are further explained below.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is not a recognized measure under IFRS.  Management believes that in addition to net income (loss), EBITDA is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed and taxed. EBITDA is calculated as net income (loss) before interest, taxes, and depreciation and amortization. Segmented EBITDA is based upon the same calculation for defined business segments, which are comprised of Industrial Matting and Equipment Rentals. The Company's method of calculating EBITDA may differ from that of other organizations and, accordingly, its EBITDA may not be comparable to that of other companies.

Earnings (loss) before interest and taxes ("EBIT") is an additional measure under IFRS. Management believes that in addition to net income (loss), EBIT is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed and taxed.

Funds from operations are cash flow from operating activities excluding changes in non-cash working capital. Funds from operations is a non-IFRS measure commonly used in industrial services industries, such as Pipeline, Oil and Gas, Transmission and Distribution, as well as Construction, to assist in measuring a company's ability to finance its capital programs, debt repayments and other financial obligations. Funds from operations is not intended to represent net cash generated from operating activities or other measures of financial performance in accordance with IFRS. It is a supplemental measure to gauge performance of the Company before non-cash items. The Company's method of calculating funds from operations may differ from that of other organizations and, accordingly, its funds from operations may not be comparable to that of other companies.

Working capital is calculated as current assets minus current liabilities, as derived from the Company's consolidated statement of financial position. Working capital, cash forecasting, and banking facilities are used by Management to ensure funds are available to finance growth opportunities. 

Funded debt is a measure used in calculating our bank financial covenants. Funded debt is calculated as bank indebtedness plus long-term debt less cash from syndicate institutions.

Reconciliation of Funds from Operations

(in thousands of Canadian dollars)


Three months ended December 31,

Year-ended December 31,


2019

2018

2019

2018






Net cash generated from operating activities

9,365

6,230

46,598

29,801

Less:





Changes in non-cash working capital

(5,265)

(5,197)

1,404

(3,840)

Funds from Operations

14,630

11,427

45,194

33,641

 

Reconciliation of EBITDA and EBIT

(in thousands of Canadian dollars)


Three months ended December 31,

Year-ended December 31,


2019

2018

2019

2018






Net (loss) income:

(500)

(5,371)

1,093

(1,017)

Add (deduct):





Depreciation and amortization

11,323

18,253

35,716

34,369

Income tax recovery

(295)

(2,518)

(2,058)

(6,970)

Interest expense

316

235

1,321

812

EBITDA(1)

10,844

10,599

36,072

27,194

(Deduct):





Depreciation and amortization

(11,323)

(18,253)

(35,716)

(34,369)

EBIT

(479)

(7,654)

356

(7,175)

(1) The current period results include impacts from the adoption of IFRS 16 "Leases", which was adopted by the Company on January 1, 2019. These impacts are discussed in further detail as noted in note 4 of the Audited Consolidated Financial Statements for the years ended December 31, 2019 and 2018. Comparative information has not been restated, and therefore, may not be comparable.

 

Reconciliation of quarterly non-IFRS and additional IFRS measures

(in thousands of Canadian dollars)




Three months ended


Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019






Net (loss) income:

(500)

1,736

(1,704)

1,566

Add (deduct):





Depreciation and amortization

11,323

8,245

8,997

7,150

Income tax (recovery) expense

(295)

(76)

(1,820)

132

Interest expense

316

344

310

351

EBITDA(1)

10,844

10,249

5,783

9,199

(Deduct):





Depreciation and amortization

(11,323)

(8,245)

(8,997)

(7,150)

EBIT

(479)

2,004

(3,214)

2,049

(1) The current period results include impacts from the adoption of IFRS 16 "Leases", which was adopted by the Company on January 1, 2019. These impacts are discussed in further detail as noted in note 4 of the Audited Consolidated Financial Statements for the years ended December 31, 2019 and 2018. Comparative information has not been restated, and therefore, may not be comparable.

 


Three months ended


Dec 31, 2018

Sep 30, 2018

Jun 30, 2018

Mar 31, 2018






Net (loss) income:

(5,371)

890

3,861

(397)

Add (deduct):





Depreciation and amortization(1)

18,253

5,444

5,240

5,432

Income tax (recovery) expense

(2,518)

(62)

(4,428)

38

Interest expense

235

230

157

190

EBITDA(2)

10,599

6,502

4,830

5,263

(Deduct):





Depreciation and amortization

(18,253)

(5,444)

(5,240)

(5,432)

EBIT

(7,654)

1,058

(410)

(169)

(1) Included in depreciation and amortization for the three months ended December 31, 2018, are impairment charges of $10.9 million related to the impairment

of Equipment Rentals assets during the fourth quarter of 2018.

(2) During the second quarter of 2018, the Company changed the method of calculation for EBITDA by no longer adjusting for gains or losses resulting from foreign exchange or the disposal of property, plant and equipment during the normal course of business. These changes have been updated for prior period balances.

 

Reconciliation of funded debt


(in thousands of Canadian dollars)



Year-ended
December 31, 2019

Year-ended
December 31, 2018

Bank indebtedness at syndicate banks

1,509

762

Long term debt

7,003

12,934

Lease liabilities

313

Funded Debt

8,512

14,009

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

Certain statements and information contained in this Press Release constitute forward-looking information and statements within the meaning of applicable securities laws and are made as of the date of this Press Release. The use of any of the words "expect", "plan", "continue", "estimate", "anticipate", "potential", "targeting", "intend", "could", "might", "should", "believe", "may", "predict", or "will" and similar expressions are intended to identify forward-looking information or statements. More particularly, this Press Release  contains forward-looking statements concerning the Company's business plans, including its focus on the growth of its matting fleet, expectations regarding future business prospects and growth opportunities, future capital expenditures of the Company, including its 2020 capital budget, planned allocations of capital expenditures, and funding thereof, by way of cash flow, the competitive environment for equipment rentals in North America, the Company's view of the NCIB and its expectation that it will continue purchasing thereunder, our expectations regarding cash flow and debt balance in 2020, anticipated growing demand for the Company's products and services in 2020 and beyond, and anticipated revenue allocations amongst our service offerings, drilling activity in North America, pricing of the Company's products and services, and expectations for 2020 and potential for improved profitability, and the potential for growth and expansion of certain components of the Company's business, including further capital being allocated to increase our matting fleet, expanding our matting offerings in the U.S., anticipated benefits from cost reductions and timing thereof, manufacturing capacity to meet anticipated demand for the Company's products, and expected exploration and production industry activity including the effects of industry trends, including the potential of LNG infrastructure in Canada and large scale matting projects in the U.S., on demand for the Company's products. These statements relate to future events or to the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this Press Release. The forward-looking information and statements included in this Press Release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates, and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and 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 information or statements. In addition to other material factors, expectations, and assumptions which may be identified in this Press Release and other continuous disclosure documents of the Company referenced herein, assumptions have been made in respect of such forward-looking statements and information regarding, among other things: the Company will continue to conduct its operations in a manner consistent with past operations; the general continuance of current industry conditions; anticipated financial performance, business prospects, impact of competition, strategies, the general stability of the economic and political environment in which the Company operates; exchange and interest rates; tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services and the adequacy of cash flow; debt and ability to obtain financing on acceptable terms to fund its planned expenditures, which are subject to change based on commodity prices; market conditions and future oil and natural gas prices; and potential timing delays. Although Management considers these material factors, expectations, and assumptions to be reasonable based on information currently available to it, no assurance can be given that they will prove to be correct.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with the Canadian Securities Regulatory Authorities and may be accessed through the SEDAR website (www.sedar.com) or at the Company's website. The forward-looking statements and information contained in this Press Release  are expressly qualified by this cautionary statement. The Company does not undertake any obligation to publicly update or revise any forward looking statements or information, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

Strad Inc.
Consolidated Statement of Financial Position
As at December 31, 2019 and 2018

(in thousands of Canadian dollars)

As at December 31, 2019

As at December 31, 2018


$

$

Assets



Current assets



Trade receivables

30,867

32,013

Inventories

423

1,839

Prepaids and deposits

876

2,063

Lease receivable - current portion

351

Income taxes receivable

107

710

Total current assets

32,624

36,625




Non-current assets



Property, plant and equipment

126,924

136,978

Intangible assets

1,272

1,448

Right of use assets

11,697

Income tax receivable

287

305

Lease receivable

91

Deferred income tax assets

293

121

Total non-current assets

140,564

138,852

Total assets

173,188

175,477




Liabilities



Current liabilities



Bank indebtedness

1,509

762

Accounts payable and accrued liabilities

15,087

16,373

Income taxes payable

107

Lease liabilities - current portion

5,600

157

Total current liabilities

22,303

17,292




Non-current liabilities



Long-term debt

7,003

12,934

Lease liabilities

6,749

156

Deferred income tax liabilities

7,128

9,151

Total liabilities

43,183

39,533




Equity



Share capital

140,737

147,664

Contributed surplus

13,309

13,068

Accumulated other comprehensive income

20,275

23,439

Deficit

(44,316)

(48,227)

Total equity

130,005

135,944

Total liabilities and equity

173,188

175,477

 

Strad Inc.
Consolidated Statement of Income (Loss) and Comprehensive Income (Loss)
For the years ended December 31, 2019 and 2018

(in thousands of Canadian dollars, except per share amounts)


Year-ended December 31,


2019

2018


$

$

Revenue

130,236

119,922

Expenses



Operating expenses

76,666

77,882

Depreciation

29,885

34,070

Amortization of intangible assets

542

299

Amortization of right of use assets

5,289

Selling, general and administration

17,706

15,144

Share-based payments

241

332

Gain on disposal of property, plant and equipment

(370)

(788)

(Gain) loss on foreign exchange

(79)

158

Interest expense

1,321

812

Loss before income tax

(965)

(7,987)

Income tax recovery

(2,058)

(6,970)

Income (loss) for the period

1,093

(1,017)




Other comprehensive income (loss)



Items that may be reclassified subsequently to net income



Cumulative translation adjustment

(3,164)

5,148

Deferred tax expense on foreign exchange gain

(4,344)

Total comprehensive loss

(2,071)

(213)







Income per share:



Basic

$0.02

($0.02)

Diluted

$0.02

($0.02)

 

Strad Inc.
Consolidated Statement of Cash Flow
For the years ended December 31, 2019 and 2018

(in thousands of Canadian dollars)


Year-ended December 31,


2019

2018


$

$

Cash flow provided by (used in)



Operating activities



Net income (loss) for the period

1,093

(1,017)

Adjustments for items not affecting cash:



Depreciation and amortization

35,716

34,369

Deferred income tax recovery

(2,197)

(6,710)

Share-based payments

241

332

Interest expense

1,321

812

Unrealized foreign exchange (gain) loss

(121)

202

Gain on disposal of property, plant and equipment

(370)

(788)

Book value of used fleet sales in operating activities

9,511

6,441

Changes in items of non-cash working capital

1,404

(3,840)

Net cash generated from operating activities

46,598

29,801




Investing activities



Purchase of property, plant and equipment

(32,428)

(32,568)

Proceeds from sale of property, plant and equipment

376

1,778

Purchase of intangible assets

(367)

(1,182)

Proceeds from sale of other assets

1,272

Changes in items of non-cash working capital

1,790

364

Net cash used in investing activities

(30,629)

(30,336)




Financing activities



Repayment of long-term debt

(9,431)

(4,342)

Borrowings

3,500

6,500

Repayment of lease liabilities

(5,235)

(332)

Repayment of shareholder loan

91

Normal course issuer bid

(4,278)

(4,098)

Interest expense

(1,321)

(812)

Changes in items of non-cash working capital

(3)

11

Net cash used in financing activities

(16,677)

(3,073)

Effect of exchange rate changes on cash and cash equivalents

(39)

987

Decrease in cash and cash equivalents

(747)

(2,621)




Cash and cash equivalents (including bank indebtedness) - beginning of year

(762)

1,859

Cash and cash equivalents (including bank indebtedness) - end of period

(1,509)

(762)




Cash paid for income tax

120

457

Cash paid for interest

1,332

810

 

ABOUT STRAD

Strad specializes in industrial matting and equipment rentals for projects of any size, from a network of branches across Canada and the United States. Strad aims to exceed customer expectations in many industrial sectors, including Pipeline, Oil and Gas, Transmission & Distribution, as well as Construction.

Strad is headquartered in Calgary, Alberta, Canada. Strad is listed on the Toronto Stock Exchange under the trading symbol "SDY".

SOURCE Strad Inc.

View original content: http://www.newswire.ca/en/releases/archive/February2020/26/c6417.html

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