Vertex Resource Group Ltd. Reports Record Third Quarter 2024 Results
Canada NewsWire
SHERWOOD PARK, AB, Nov. 14, 2024
SHERWOOD PARK, AB, Nov. 14, 2024 /CNW/ - (TSXV: VTX) - Vertex Resource Group Ltd. ("Vertex" or the "Company") reports its financial and operational results for the third quarter ended September 30, 2024. The following should be read in conjunction with the Management Discussion and Analysis ("MD&A") and the unaudited condensed consolidated interim financial statements of Vertex for the period ended September 30, 2024, which are available on SEDAR+ at www.sedarplus.ca.
Vertex achieved its highest level of activity for fiscal 2024 in the current quarter, reporting an adjusted EBITDA(1) of $11.9 million, surpassing the previous company record by $1.0 million. This milestone was primarily reached by multiple service lines working together to successfully complete a significant turnaround project.
Key financial results for the three and nine-months September 30, 2024, and 2023 are as follows:
HIGHLIGHTS
Three Months ended Nine Months ended
September 30, September 30,
(in thousands of Canadian Dollars) 2024 2023 2024 2023
Gross revenue 62,405 68,323 179,295 190,127
Less flow through subcontractor
costs 126 1,518 1,808 4,211
Net revenue 62,279 66,805 177,487 185,916
Profit margin 17,566 17,321 47,433 49,328
Profit margin % 28 % 26 % 27 % 27 %
Adjusted EBITDA (1) 11,924 10,589 28,871 30,160
Adjusted EBITDA % 19 % 16 % 16 % 16 %
Free cash flow (1) 6,936 5,391 9,115 13,892
Adjusted EBITDA per share, basic
and diluted (1) 0.11 0.09 0.26 0.26
Earnings per share, basic and
diluted 0.02 0.01 0.01 0.03
(1) See "Non-IFRS Financial
Measures"
HIGHLIGHTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024
-- Vertex achieved record Adjusted EBITDA(1) for any quarter in company
history
-- Profit margin increased 2.3% compared to Q3 2023.
-- Adjusted EBITDA(1) as a percentage of revenue increased 3.3% compared to
Q3 2023.
-- Free cash flow(1) increased to $6.9 million compared to $5.4 million in
Q3 2023.
-- Vertex executed the largest industrial cleaning project in company
history generating revenue of $11 million.
HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
-- Amended the $76.0 million Credit Facilities including extension of the
maturity date to May 31, 2027, and an increase to the syndicate term loan
of $5.0 million.
-- $1.0 million spent on shares repurchased and cancelled during the Normal
Course Issuer Bid.
-- General and administrative expenses decreased to $18.6 million from $19.2
million in the same period of 2023.
OUTLOOK
Vertex does not anticipate any significant changes in the economic environment we operate in, in the foreseeable future. While adjustments to interest rates have occurred, it is too soon to tell how inflationary pressures will be impacted. To continue delivering results to our stakeholders, we remain focused on maintaining financial stability by closely monitoring our expenses and optimizing our operations.
As Vertex adjusts to customer and market needs, we continually evaluate the return on assets that we deploy to ensure we have a strong balance sheet that supports future strategic initiatives. Operational and administrative efficiencies are identified as key drivers for financial performance, with a clear aim to enhance adjusted EBITDA and net income. The dedication to these strategic pillars is expected to support Vertex's journey through the final quarter of 2024 and into 2025.
ABOUT VERTEX
Since 1962, Vertex has been a leading North American provider of environmental services. Headquartered in Sherwood Park, Alberta, Vertex employs a staff of approximately 1,000 employees and lease operators that provide services to help clients achieve their developmental and operational goals. From initial site selection, consultation and regulatory approval, through construction, operation and maintenance, to conclusion and environmental cleanup, Vertex provides a wide array of services to customers operating in industries such as energy, mining, utilities, private development, public infrastructure, construction, telecommunications, forestry, agriculture and government.
Vertex principally operates in Canada with select locations in the United States.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
NON-IFRS FINANCIAL MEASURES
This release includes certain terms or performance measures that are not defined under International Financial Reporting Standards ("IFRS"), including "Adjusted EBITDA". The data presented is intended to provide additional information that should not be considered in isolation or as a substitute measure of performance prepared in accordance with IFRS. The non-IFRS measures should be read in conjunction with the Company's financial statements and accompanying notes.
A) "Adjusted EBITDA" is a non-IFRS financial measure
which is calculated by adjusting net income (loss)
for the sum of income taxes, finance costs including
interest accretion on lease liabilities, depreciation
of property and equipment and right of use assets,
amortization of intangible assets, share-based compensation,
restructuring costs and impairment. The Company uses
Adjusted EBITDA as an indicator of its principal business
activities operational performance prior to consideration
of how its activities are financed and the impact
of taxation, non-cash depreciation and amortization,
restructuring costs and other non-cash expenses such
as impairments required under IFRS. Adjusted EBITDA
does not have a standardized meaning prescribed by
IFRS and is not necessarily comparable to similar
measures provided by other companies. Adjusted EBITDA
is used by many analysts as an important analytical
tool and the management of Vertex believes it is useful
for providing readers with additional clarity on Vertex's
operational performance. This measure is also considered
important by the Company's lenders in determining
compliance by the Company with the financial covenants
under its lending arrangements.
B) "Free cash flow" is a non-IFRS financial measure.
The most directly comparable GAAP measure for free
cash flow is cash flow from operating activities.
A summary of the reconciliation of cash flow from
operating activities to free cash flow is set forth
in the table below. Management uses the term "free
cash flow" for its own performance measure and to
provide shareholders and potential investors with
a measurement of the Company's efficiency and its
ability to generate the cash necessary to fund its
future growth expenditures, to repay debt and provide
shareholder returns.
C) "Adjusted Working Capital" is a non-IFRS financial
measure which is calculated by reducing current liablities
by the current portion of loans and borrowings, lease
liablities and other liabilities. Adjusted working
capital is used by Vertex to monitor its capital structure,
liquidity, and it's ability to fund current operations.
D) "Adjusted EBITDA per share, basic and diluted" is
a non-financial measure which is calculated by dividing
adjusted EBITDA by the weighted average shares outstanding
-- basic and diluted.
Reconciliations of adjusted EBITDA, free cash flow and adjusted working capital are provided in the following tables.
ADJUSTED EBITDA Three months ended Nine months ended
September 30, September 30,
2024 2023 2024 2023
Net income for the
period 1,513 1,167 705 3,782
Add:
Depreciation and
amortization 6,994 5,851 19,290 17,158
Finance costs 2,894 3,162 8,482 8,758
Share-based
compensation 59 50 178 150
Income tax expense 464 359 216 312
Adjusted EBITDA 11,924 10,589 28,871 30,160
FREE CASH FLOW Three months ended Nine months ended
September 30, September 30,
2024 2023 2024 2023
Cash flows from
operating activities 9,700 11,782 29,781 38,772
Changes in non-cash
operating working
capital items 2,190 (1,391) (1,026) (9,188)
Maintenance capex (2,297) (3,887) (12,390) (11,732)
Cash interest (2,224) (2,027) (6,357) (6,270)
Depreciation of right of
use assets - real
property (1,057) (1,326) (2,960) (3,404)
Proceeds from disposal of
property and equipment 624 2,230 2,067 5,714
Free cash flow 6,936 5,381 9,115 13,892
ADJUSTED WORKING CAPITAL September 30, December 31,
2024 2023
Current assets 64,696 70,408
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