TORONTO--(BUSINESS WIRE)--
Acasta Enterprises Inc. (TSX:AEF) (“Acasta” or the “Company”) today announced the release of its consolidated financial statements for the year and quarter ended December 31, 2017, management discussion and analysis (MD&A) and Annual Information Form (“AIF”). These documents, among others, will be posted on the Company’s website at www.acastaenterprises.com and SEDAR at www.sedar.com. All values in this news release and the Company’s financial disclosures are in Canadian dollars unless otherwise stated.
“Having completed the sale of Stellwagen, the Board and management intend to continue on the path of reducing Acasta’s overall indebtedness and focusing on the consumer products businesses. The Company is also in the process of streamlining its corporate operations with a view to materially reducing its cost structure and thereby strengthening its financial position,” commented Ian Kidson, Interim Chief Executive Officer of the Company.
Financial Highlights
- Acasta reported its first year as an operating company, consolidating the results of the three businesses that it acquired on January 3, 2017.
- Acasta’s 2017 consolidated results included revenues of $366.5 million, a net loss of $413.1 million or $4.65 per share, adjusted net income of $8.1 million or $0.09 per share and adjusted EBITDA of $134.4 million.
- Acasta reported impairment losses totaling $440.7 million ($423.6 million net of tax) during the year ended December 31, 2017, including goodwill and intangible asset impairments of $240.0 million related to Stellwagen Group Limited (“Stellwagen”) and a goodwill impairment of $200.7 million related to Apollo Health and Beauty Care Inc. (“Apollo”).
- As a result of the sale of Stellwagen, which closed on March 27, 2018, Acasta significantly reduced its over-all bank indebtedness to approximately U.S.$153.0 million and eliminated the additional indebtedness associated with Stellwagen’s on-balance sheet financings of several aircraft through the sale of Stellwagen.
Corporate Highlights
On March 27, 2018, the sale of Acasta’s Stellwagen business unit closed in exchange for:
- The cancellation of 26 million Class B Shares (reducing outstanding shares by 27.2%);
- U.S. $35.0 million in cash;
- The termination of the Stellwagen earn-out; and
- Up to an additional U.S.$5.0 million if proceeds from the sale of certain profit participating notes (“PPNs”) issued by a subsidiary of Stellwagen are below a specified threshold.
Our MD&A will provide additional details and will describe the results from each of the reportable segments in our portfolio.
2017 Financial Statements and Investor Conference Call
Acasta will release its fourth quarter and year-end 2017 financial results after market close on Monday April 2, 2018 instead of March 29, 2018 as previously announced.
Acasta’s senior management will host a conference call on Tuesday, April 3, 2018 at 9:00 a.m. (E.D.T.) to discuss the Company’s financial and operating results. Please dial 1-416-406-0743 or toll-free (Canada/US) 1-800-806-5484 with passcode 1948342#. To ensure your participation, please join approximately five minutes prior to the scheduled start of the conference call.
The conference call will be archived on the Company’s website at www.acastaenterprises.com and will be available for replay at 1-905-694-9451 or toll-free (Canada/US) 1-800-408-3053 with passcode 8204336#, expiring on May 15, 2018.
Advisories:
Cautionary Note Concerning Forward Looking Statements
This news release includes forward looking statements. All such statements constitute forward looking information within the meaning of applicable securities law and are made pursuant to the “safe harbour” provisions of applicable securities laws. Forward looking statements include, but are not limited to, monetizing the PPNs and statements about other anticipated future events or results, including comments with respect to Company’s future financial performance and condition. Forward looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions and are identified by words such as “will”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” or similar expressions concerning matters that are not historical facts. Such statements are based on current expectations of the Company’s management and inherently involve numerous risks and uncertainties, known and unknown, including economic factors. The forward-looking information contained in this news release is presented for the purpose of assisting readers in understanding the Company’s business and strategic priorities and objectives. A number of risks, uncertainties and other factors may cause actual outcomes or financial results to differ materially from the forward looking statements contained in this news release, including, among other factors, those referenced in the section entitled “Risk Factors” in the Company’s annual information form for the year ended December 31, 2017, a copy of which is available on the SEDAR website at www.sedar.com under the Company’s profile. Forward looking statements contained in this news release are not guarantees of future outcomes performance and, while forward looking statements are based on certain assumptions that the Company considers reasonable, actual events could differ materially from those expressed or implied by forward looking statements made by the Company. Readers are cautioned to consider these and other factors carefully when making decisions with respect to the Company and to not place undue reliance on forward looking statements. Circumstances affecting the Company may change rapidly. Except as may be expressly required by applicable law, Acasta does not undertake any obligation to update publicly or revise any such forward looking statements, whether as a result of new information, future events or otherwise. These cautionary statements expressly qualify all forward looking statements in this new release.
Non-IFRS Financial Performance Measures (Unaudited)
Adjusted net income (loss), EBITDA and adjusted EBITDA are not recognized measures under International Financial Reporting Standards (“IFRS”) and this data may not be comparable to data presented by other companies.
Adjusted net income (loss) is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted net income (loss) is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other financial data prepared in accordance with IFRS.
EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for finance costs, current and deferred income tax, depreciation and amortization expenses. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. EBITDA is intended to provide investors with information about the Company's continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other financial data prepared in accordance with IFRS.
Adjusted EBITDA is calculated by adjusting net income (loss) as recorded in the unaudited condensed consolidated interim statements of income (loss) and comprehensive income (loss) for the exclusion of certain other income and expense items determined in accordance with IFRS (the calculation for adjusted net income (loss)) and then further adjusting for finance costs, current and deferred income tax, depreciation and amortization expenses. The Company believes that this generally accepted measure allows the evaluation of the results of continuing operations and is useful in making comparisons between periods. Adjusted EBITDA is intended to provide investors with information about the Company’s continuing income generating capabilities. Management uses this measure to monitor and plan for the operating performance of the Company in conjunction with other data prepared in accordance with IFRS.
| ACASTA ENTERPRISES INC. | ||||||||||||||||||||||
| NON-IFRS FINANCIAL PERFORMANCE MEASURES RECONCILIATION (UNAUDITED) | ||||||||||||||||||||||
| (In thousands of Canadian dollars, except share and per share amounts) | ||||||||||||||||||||||
| Year Ended December 31, 2017 | ||||||||||||||||||||||
| Reportable Segments |
Year Ended December 31, 2016 |
|||||||||||||||||||||
|
NON-IFRS FINANCIAL PERFORMANCE MEASURES (in thousands of Canadian dollars, except share and per share amounts) |
Consumer Products |
Aviation | Other |
Acasta Consolidated |
Acasta Consolidated |
|||||||||||||||||
| Net income (loss) | $ | (180,622 | ) | $ | (249,050 | ) | $ | 16,606 | $ | (413,066 | ) | $ | (36,009 | ) | ||||||||
| Impairment of intangible assets and goodwill, net of tax | 186,002 | 237,571 | — | 423,573 | — | |||||||||||||||||
| Gain on redemption of Class A Shares | — | — | (3,699 | ) | (3,699 | ) | — | |||||||||||||||
| Net gain on disposal of property, plant and equipment | — | (206 | ) | — | (206 | ) | — | |||||||||||||||
| Qualifying Acquisition transaction costs | — | — | 4,627 | 4,627 | — | |||||||||||||||||
| ECN Acquisition transaction costs | — | 628 | — | 628 | — | |||||||||||||||||
| Costs to prepare aircraft for sale | — | 706 | — | 706 | — | |||||||||||||||||
| Net (gain) loss on foreign exchange | (1,063 | ) | 609 | (6,301 | ) | (6,755 | ) | — | ||||||||||||||
| Amortization of inventory fair value increment | 1,946 | — | — | 1,946 | — | |||||||||||||||||
| Other non-recurring costs | 359 | — | — | 359 | — | |||||||||||||||||
| Adjusted net income (loss) | $ | 6,622 | $ | (9,742 | ) | $ | 11,233 | $ | 8,113 | $ | (36,009 | ) | ||||||||||
| Net loss per share — basic and diluted(1) | $ | (4.65 | ) | $ | (3.85 | ) | ||||||||||||||||
| Adjusted net income (loss) per share — basic | $ | 0.09 | $ | (3.85 | ) | |||||||||||||||||
| Adjusted net income (loss) per share — diluted(1) | $ | 0.09 | $ | (3.85 | ) | |||||||||||||||||
| Weighted average number of Class B Shares outstanding — basic | 88,795,384 | 9,349,648 | ||||||||||||||||||||
| Weighted average number of Class B Shares outstanding — diluted(1) | 88,808,863 | 9,349,648 | ||||||||||||||||||||
| Finance costs | $ | 5,576 | $ | 25,954 | $ | 11,702 | $ | 43,232 | $ | — | ||||||||||||
| Current income tax expense | 9,009 | 880 | — | 9,889 | — | |||||||||||||||||
| Deferred income tax recovery | (22,232 | ) | (6,117 | ) | — | (28,349 | ) | — | ||||||||||||||
| Depreciation of property, plant and equipment and amortization of intangible assets | 30,966 | 53,349 | — | 84,315 | — | |||||||||||||||||
| EBITDA | $ | (157,303 | ) | $ | (174,984 | ) | $ | 28,308 | $ | (303,979 | ) | $ | (36,009 | ) | ||||||||
| Adjusted EBITDA | $ | 44,684 | $ | 66,754 | $ | 22,935 | $ | 134,373 | $ | (36,009 | ) | |||||||||||
|
________________________ |
||
| (1) | The dilutive impact of Class B Shares related to the Company’s DSU Plan was excluded from the computation of diluted weighted average number of Class B Shares outstanding in periods where the Company reported a net loss or adjusted net loss because their effect would have been anti-dilutive. | |
| ACASTA ENTERPRISES INC. | ||||||||||||||||||||||
| NON-IFRS FINANCIAL PERFORMANCE MEASURES RECONCILIATION (UNAUDITED) | ||||||||||||||||||||||
| (In thousands of Canadian dollars, except share and per share amounts) | ||||||||||||||||||||||
| Acasta Consolidated | ||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||
|
NON-IFRS FINANCIAL PERFORMANCE MEASURES (in thousands of Canadian dollars) |
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
Year Ended December 31, 2017 |
|||||||||||||||||
| Net income (loss) | $ | 4,198 | $ | (1,242 | ) | $ | (9,739 | ) | $ | (406,283 | ) | $ | (413,066 | ) | ||||||||
| Impairment of intangible assets and goodwill, net of tax | — | — | — | 423,573 | 423,573 | |||||||||||||||||
| Gain on redemption of Class A Shares | (3,699 | ) | — | — | — | (3,699 | ) | |||||||||||||||
| Net loss (gain) on disposal of property, plant and equipment (aircraft) | 1,083 | (1,289 | ) | — | — | (206 | ) | |||||||||||||||
| Qualifying Acquisition transaction costs | 4,627 | — | — | — | 4,627 | |||||||||||||||||
| ECN Acquisition transaction costs | — | 628 | — | — | 628 | |||||||||||||||||
| Costs to prepare aircraft for sale | 706 | — | — | — | 706 | |||||||||||||||||
| Net loss (gain) on foreign exchange | 124 | (1,468 | ) | (1,041 | ) | (4,370 | ) | (6,755 | ) | |||||||||||||
| Amortization of inventory fair value increment | 1,946 | — | — | — | 1,946 | |||||||||||||||||
| Other non-recurring costs | 359 | — | — | — | 359 | |||||||||||||||||
| Adjusted net income (loss) | $ | 9,344 | $ | (3,371 | ) | $ | (10,780 | ) | $ | 12,920 | $ | 8,113 | ||||||||||
| Net income (loss) per share — basic and diluted(1) | $ | 0.05 | $ | (0.01 | ) | $ | (0.11 | ) | $ | (4.49 | ) | $ | (4.65 | ) | ||||||||
| Adjusted net income (loss) per share — basic | $ | 0.11 | $ | (0.04 | ) | $ | (0.12 | ) | $ | 0.14 | $ | 0.09 | ||||||||||
| Adjusted net income (loss) per share — diluted(1) | $ | 0.11 | $ | (0.04 | ) | $ | (0.12 | ) | $ | 0.14 | $ | 0.09 | ||||||||||
| Weighted average number of Class B shares outstanding — basic | 85,642,902 | 88,435,533 | 90,494,283 | 90,494,283 | 88,795,384 | |||||||||||||||||
| Weighted average number of Class B shares outstanding — diluted(1) | 85,642,902 | 88,435,533 | 90,494,283 | 90,534,097 | 88,808,863 | |||||||||||||||||
| Finance costs | $ | 6,652 | $ | 10,045 | $ | 12,182 | $ | 14,353 | $ | 43,232 | ||||||||||||
| Current income tax expense | 4,034 | 3,494 | 1,189 | 1,172 | 9,889 | |||||||||||||||||
| Deferred income tax recovery | (3,090 | ) | (2,244 | ) | (2,381 | ) | (20,634 | ) | (28,349 | ) | ||||||||||||
| Depreciation of property, plant and equipment and amortization of intangible assets | 20,091 | 22,381 | 20,449 | 21,394 | 84,315 | |||||||||||||||||
| EBITDA | $ | 31,885 | $ | 32,434 | $ | 21,700 | $ | (389,998 | ) | $ | (303,979 | ) | ||||||||||
| Adjusted EBITDA | $ | 37,031 | $ | 30,305 | $ | 20,659 | $ | 46,378 | $ | 134,373 | ||||||||||||
|
________________________ |
||
| (1) | The dilutive impact of Class B Shares related to the Company’s DSU Plan was excluded from the computation of diluted weighted average number of Class B Shares outstanding in periods where the Company reported a net loss or adjusted net loss because their effect would have been anti-dilutive. | |
| ACASTA ENTERPRISES INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||||||
| (In thousands of Canadian dollars) | ||||||||||
|
As at December 31, 2017 |
As at December 31, 2016 |
|||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 26,139 | $ | 187 | ||||||
| Trade and other receivables | 39,644 | 597 | ||||||||
| Inventories | 48,423 | — | ||||||||
| Prepaid expenses and deposits | 54,548 | 25 | ||||||||
| Current portion of loans receivable | 11,257 | — | ||||||||
| Other current assets | 5,534 | — | ||||||||
| Restricted cash | — | 405,002 | ||||||||
| $ | 185,545 | $ | 405,811 | |||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | $ | 617,594 | $ | — | ||||||
| Intangible assets | 275,469 | — | ||||||||
| Goodwill | 176,552 | — | ||||||||
| Long-term loans receivable | 189,974 | — | ||||||||
| Non-current deposits | 5,077 | — | ||||||||
| Other non-current assets | 12,889 | 710 | ||||||||
| $ | 1,277,555 | $ | 710 | |||||||
| Total assets | $ | 1,463,100 | $ | 406,521 | ||||||
| Liabilities | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued liabilities | $ | 37,107 | $ | 8,779 | ||||||
| Current portion of long-term debt | 276,735 | — | ||||||||
| Income taxes payable | 7,232 | — | ||||||||
| Other current liabilities | 14,333 | 13,504 | ||||||||
| Class A Restricted Voting Shares subject to redemption | — | 409,342 | ||||||||
| $ | 335,407 | $ | 431,625 | |||||||
| Non-current liabilities | ||||||||||
| Long-term debt | $ | 707,211 | $ | — | ||||||
| Deferred tax liabilities | 20,306 | — | ||||||||
| Other non-current liabilities | 31,520 | — | ||||||||
| $ | 759,037 | $ | — | |||||||
| Total liabilities | $ | 1,094,444 | $ | 431,625 | ||||||
|
Shareholders’ equity (deficiency) |
||||||||||
| Share capital | $ | 849,383 | $ | 14,995 | ||||||
| Contributed surplus | 300 | — | ||||||||
| Warrants | 3,939 | 3,939 | ||||||||
| Deficiency | (457,104 | ) | (44,038 | ) | ||||||
| Accumulated other comprehensive loss | (27,862 | ) | — | |||||||
| Total shareholders’ equity (deficiency) | $ | 368,656 | $ | (25,104 | ) | |||||
| Total liabilities and shareholders’ equity (deficiency) | $ | 1,463,100 | $ | 406,521 | ||||||
| ACASTA ENTERPRISES INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS | ||||||||||
| (In thousands of Canadian dollars, except share and per share amounts) | ||||||||||
|
Year ended December 31, 2017 |
Year ended December 31, 2016 |
|||||||||
| Revenue | $ | 366,521 | $ | 1,845 | ||||||
| Cost of revenue, expenses, and other items | ||||||||||
| Cost of revenue | 187,616 | — | ||||||||
| Selling, general and administrative expense | 171,896 | 10,886 | ||||||||
| Finance costs | 43,232 | — | ||||||||
| Net unrealized loss on change in fair value of financial instruments | 2,909 | 26,968 | ||||||||
| Impairment of intangible assets and goodwill | 440,746 | — | ||||||||
| Net gain on foreign exchange | (6,755 | ) | — | |||||||
| Other income, net | (41,597 | ) | — | |||||||
| Loss before income tax | $ | (431,526 | ) | $ | (36,009 | ) | ||||
| Current income tax expense | 9,889 | — | ||||||||
| Deferred income tax recovery | (28,349 | ) | — | |||||||
| Net loss | $ | (413,066 | ) | $ | (36,009 | ) | ||||
| Comprehensive loss | ||||||||||
| Items that may be subsequently reclassified to net income (loss) | ||||||||||
| Foreign currency translation | $ | (29,377 | ) | $ | — | |||||
| Net movement in cash flow hedges, net of tax | 1,515 | — | ||||||||
| Other comprehensive loss | $ | (27,862 | ) | $ | — | |||||
| Total comprehensive loss | $ | (440,928 | ) | $ | (36,009 | ) | ||||
| Net loss per share | ||||||||||
| Basic | $ | (4.65 | ) | $ | (3.85 | ) | ||||
| Diluted | $ | (4.65 | ) | $ | (3.85 | ) | ||||
| Other comprehensive loss per share | ||||||||||
| Basic | $ | (0.31 | ) | $ | — | |||||
| Diluted | $ | (0.31 | ) | $ | — | |||||
| Weighted average number of Class B Shares outstanding | ||||||||||
| Basic | 88,795,384 | 9,349,648 | ||||||||
| Diluted | 88,795,384 | 9,349,648 | ||||||||
| ACASTA ENTERPRISES INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (In thousands of Canadian dollars) | ||||||||||
|
|
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|
Year ended December 31, 2017 |
Year ended December 31, 2016 |
|||||||||
| Operating activities | ||||||||||
| Net loss | $ | (413,066 | ) | $ | (36,009 | ) | ||||
| Adjustments for non-cash items and other adjustments: | ||||||||||
| Share-based compensation | 300 | — | ||||||||
| Depreciation of property, plant and equipment | 26,279 | — | ||||||||
| Amortization of intangible assets | 58,036 | — | ||||||||
| Gain on redemption of Class A Restricted Voting Shares | (3,699 | ) | — | |||||||
| Gain on disposal of property, plant and equipment | (206 | ) | — | |||||||
| Gain on revaluation of Stellwagen Vendors Earn-out | (37,143 | ) | — | |||||||
| Net unrealized (gain) loss on change in fair value of financial liabilities | (236 | ) | 26,968 | |||||||
| Finance costs | 43,232 | — | ||||||||
| Current income tax expense | 9,889 | — | ||||||||
| Deferred income tax recovery | (28,349 | ) | — | |||||||
| Impairment of intangible assets and goodwill | 440,746 | — | ||||||||
| Net gain on foreign exchange | (6,755 | ) | — | |||||||
| Amortization of inventory fair value increment | 3,360 | — | ||||||||
| Changes in non-cash working capital | (77,770 | ) | 8,688 | |||||||
| Net cash flows provided by (used in) operating activities | $ | 14,618 | $ | (353 | ) | |||||
| Income taxes paid | (4,920 | ) | — | |||||||
| Cash provided by (used in) operating activities | $ | 9,698 | $ | (353 | ) | |||||
|
Investing activities |
||||||||||
| Additions to loans receivable, net | $ | (198,875 | ) | $ | — | |||||
| Additions to property, plant and equipment | (311,317 | ) | — | |||||||
| Additions to intangible assets | (68,464 | ) | — | |||||||
| Proceeds on disposal of property, plant and equipment | 53,099 | — | ||||||||
| Proceeds from restricted cash to finance acquisitions | 106,240 | — | ||||||||
| Acquisition of Apollo | (161,545 | ) | — | |||||||
| Acquisition of JemPak | (55,448 | ) | — | |||||||
| Acquisition of Stellwagen | (90,781 | ) | — | |||||||
| Interest received on restricted cash and cash equivalents held in escrow | — | 4 | ||||||||
| Proceeds on maturity of restricted cash and cash equivalents held in escrow | — | 2,020,533 | ||||||||
| Investment in restricted cash and cash equivalents held in escrow | — | (2,022,383 | ) | |||||||
| Cash used in investing activities | $ | (727,091 | ) | $ | (1,846 | ) | ||||
|
Financing activities |
||||||||||
| Proceeds from debt and credit facilities | $ | 737,372 | $ | — | ||||||
| Repayment of debt | (91,187 | ) | — | |||||||
| Payment of debt issuance costs | (24,175 | ) | (635 | ) | ||||||
| Proceeds from restricted cash to fund redemption of Class A Restricted Voting Shares and deferred underwriters’ commission | 298,761 | — | ||||||||
| Redemption of Class A Restricted Voting Shares | (285,680 | ) | — | |||||||
| Proceeds from private placement of Class B Shares | 159,551 | — | ||||||||
| Payment of deferred underwriters’ commission | (13,081 | ) | — | |||||||
| Payment of share issuance costs related to private placement | (1,136 | ) | (75 | ) | ||||||
| Interest paid | (35,342 | ) | — | |||||||
| Cash provided by (used in) financing activities | $ | 745,083 | $ | (710 | ) | |||||
| Net increase (decrease) in cash and cash equivalents during the year | $ | 27,690 | $ | (2,909 | ) | |||||
| Foreign exchange impact on cash and cash equivalents held in foreign currencies | (1,738 | ) | — | |||||||
| Cash and cash equivalents, beginning of year | 187 | 3,096 | ||||||||
| Cash and cash equivalents, end of year | $ | 26,139 | $ | 187 | ||||||
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