Enterprise Group Announces Results for First Quarter 2018

Enterprise Group, Inc. (the “

Company

” or “

Enterprise

”) (TSX:E), a consolidator of services to the energy sector; focused primarily on specialized equipment rental; today released its Q1 2018 results.

Consolidated:	Three months ended March 31, 2018			Three months ended March 31, 2017 restated(2)			Change
Revenue	$	6,810,906		$	7,015,278		($	204,372	)
Gross margin	$	2,126,160		$	2,695,739		($	569,579	)
Gross margin %		31	%		38	%		(7	%)
EBITDA(1)	$	1,487,253		$	1,835,990		($	348,737	)
Income before tax	$	290,616		$	210,495		$	80,121
Net income (loss) and comprehensive income (loss)	$	3,190,242		($	50,627	)	$	3,240,869
EPS	$	0.06		$	0.00		$	0.06

(1) Identified and defined under “Non-IFRS Measures”.(2) In March 2018, the Company closed a transaction to divest substantially all the assets of CTHA. The net operations of CTHA, including the prior period, are presented as a single amount in the consolidated statements of income (loss) and comprehensive income (loss).

• Revenue for the three months ended March 31, 2018 of $6,810,906 is relatively consistent with the prior period with a slight decrease of $204,372 or 3%.  The Company continues to see increased activity. However, with no construction work completed in the first quarter of 2018 on a major construction project in Northeastern B.C., the increased activity experienced with other customers did not fully offset the loss of revenue earned in the first quarter of 2017 associated with that project.  Although this project has received government approval to continue, no construction work was completed in the first quarter of 2018.  Enterprise recently responded to bids for the supply of specialized equipment to support construction work that will take place in 2018.
• Gross margin for the three months ended March 31, 2018 of $2,126,160 or 31%, decreased compared to the prior period and EBITDA for the same period decreased by $348,737 to $1,487,253.  The decreases in gross margin and EBITDA are consistent with decreased revenue associated with the major construction project described above.  Also, as explained above, the revenue earned from increased customer activity that partially offset the lost revenue from that project, was at lower margins compared to the prior period.
• In March 2018, the Company closed a transaction to divest substantially all the assets of Calgary Tunnelling & Horizontal Augering Ltd. (“CTHA”).  CTHA provided specialized trenchless solutions for the energy, utility and infrastructure industries. Gross cash proceeds from the transaction was $20,694,992.  Enterprise will utilize tax assets and tax losses to offset the gain on this transaction to minimize cash tax payable.  All proceeds from the transaction were deployed towards reducing the Company’s debt.
• During 2017, the Company integrated and upgraded its financial and reporting systems along with its rental fleet tracking and deployment system.  Immediate efficiencies and cost savings were experienced after implementing these systems.  Further enhancements to these systems continue and during the first quarter of 2018 the Company deployed a proprietary asset tracking and dispatch software called “Star”.  The software is comprised of multiple components that work together and exchange information over a central data base.  Star allows the fleet manager the ability to ensure the highest level of service to the client, while lowering costs and delivering maximum equipment performance.
• Over the last 2 years, the Company has made significant improvements to its statement of financial position and overall total debt.  At March 31, 2018, after adjusting for goodwill and deferred taxes, the Company has assets in excess of total debt of approximately $54,000,000.  Enterprise will continue to look for opportunities to improve its financial position and opportunities that will allow the Company to diversify and expand.

StarChain Update

Development on the StarChain technology continues.  Enterprise’s technology development group is currently performing infield testing with success.  Management expects to offer its customers specialized equipment capable of several remote controllable features in H2 of 2018.   The Company’s equipment offerings will enable its customers to automate and/or schedule the performance of the equipment which optimizes usage, delivering several benefits such as; reduced fuel expenses, lowering onsite maintenance costs, real-time reporting among many others.   

About Enterprise Group, Inc.

Enterprise Group, Inc. is a consolidator of services to the energy sector.  The Company’s focus is primarily on specialized equipment rental. The Company’s strategy is to acquire complementary service companies in Western Canada, consolidating capital, management, and human resources to support continued growth. More information is available at the Company’s website  www.enterprisegrp.ca. Corporate filings can be found on www.sedar.com.

For questions or additional information, please contact:Leonard Jaroszuk, President & CEO, or Desmond O’Kell, Senior Vice-President 780-418-4400 [e-mail]

Forward Looking InformationCertain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Company’s future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Non-IFRS MeasuresThe Company uses International Financial Reporting Standards (“IFRS”).  EBITDA is not a measure that has any standardized meaning prescribed by IFRS and is therefore referred to as a non-IFRS measure.  This news release contains references to EBITDA.  This non-IFRS measure used by the Company may not be comparable to a similar measure used by other companies.  Management believes that in addition to net income, 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 or how the results are taxed.  EBITDA is calculated as net income excluding depreciation, amortization, interest, taxes and stock based compensation.