TERRAVEST ANNOUNCES SECOND QUARTER RESULTS FOR FISCAL 2025 AND DIVIDEND DECLARATION

TORONTO, May 14, 2025 /CNW/ - TerraVest Industries Inc., (TSX: TVK) ("TerraVest" or the "Company") announces its results for the second quarter ended March 31, 2025 and the declaration of its quarterly dividend.

SECOND QUARTER AND SIX MONTHS REVIEW AND OUTLOOK 

Business Performance

Management believes that there are certain non–IFRS financial measures that can be used to assist shareholders in analyzing the performance of TerraVest. The table below highlights certain financial results and reconciles net income to Adjusted earnings before interests, income taxes, depreciation and amortization ("Adjusted EBITDA") for the second quarter and six months ended March 31, 2025 and the comparative periods in fiscal 2024.

Sales for the second quarter and six months ended March 31, 2025 were $311,450 and $546,035 versus $214,943 and $443,033 for the prior comparable periods. This represents increases of 45% and 23% respectively. However, TerraVest acquired all of the issued and outstanding shares of EnTrans Holding, Inc. ("Entrans") in March 2025, of Advance Engineered Products Ltd. ("AEPL") in April 2024 and of another non-significant acquisition, and all the Canadian assets of Aureus Energy Services Inc. ("Aureus") in January 2025 and all operating assets of  the subsidiaries of Highland Tank Holdings LLC ("HT") in November 2023, of which only HT partially contributed to the prior comparable period. Excluding Entrans, Aureus, AEPL and a non–significant acquisition, sales for the second quarter ended March 31, 2025 were $244,662 versus $214,943 for the prior comparable period and excluding the same acquisitions plus HT, sales for the six months ended March 31, 2025 were $368,371 versus $372,480 for the prior comparable period. This represents an increase of 14% and a decrease of 1% respectively for TerraVest's base portfolio (excluding Entrans, Aureus, AEPL, a non-significant acquisition and HT).

The increase in sales for TerraVest base portfolio businesses for the second quarter ended March 31, 2025 is the result of increased sales for the HVAC and Containment Equipment segment, for domestic compressed gas tanks, for certain compressed gas transportation equipment product lines as well as for oil and gas processing equipment versus the prior comparable period. For the first six months ended March 31, 2025, the overall weaker demand for oil and gas processing equipment and for transportation equipment in Canada is one of the primary reasons for the decrease in sales versus the prior comparable period.

Net income for the second quarter and six months ended March 31, 2025 were $33,349 and $63,780 versus $25,729 and $45,032 for the prior comparable periods. This represents increases of 30% and 42% respectively, which are the result of the positive contributions from the business acquisitions listed above, an increase in sales for TerraVest's base portfolio businesses for the second quarter ended March 31, 2025, a favorable product mix and a gain on bargain purchase, partially offset by additional depreciation and amortization expense as a result of business acquisitions. TerraVest also realized a gain on foreign exchange in the six months ended March 31, 2025, contributing to the increase in net income versus the prior comparable period. Other variances are also highlighted in the table above.

Adjusted EBITDA for the second quarter and six months ended March 31, 2025 were $65,687 and $114,587 versus $43,934 and $92,990 for the prior comparable periods. This represents increases of 50% and 23% respectively, which is the result of the reasons explained above.

The table below reconciles cash flow from operating activities to Cash Available for Distribution for the second quarter and six months ended March 31, 2025 and the comparative periods in fiscal 2024.

Cash flow from operating activities for the second quarter and six months ended March 31, 2025 were $34,225 and $70,828 versus $43,166 and $81,719 for the prior comparable periods. This represents decreases of 21% and 13% respectively. The decreases are attributable to an unfavorable change in non-cash working capital items, mainly accounts receivable, partially offset by more cash generated from the change in accounts payable level and customer deposits. In addition, TerraVest had reduced its inventory levels in the second quarter of fiscal 2024, which had a favorable impact on change in non-cash operating working capital items in the prior comparable period. The decrease in cash flow from operating activities was partially offset by increased net income.

Maintenance Capital Expenditures were $9,699 for the second quarter ended March 31, 2025 versus $6,241 for the prior comparable period representing an increase of 55%, which is primarily explained by the timing of such capital expenditures and the growth of TerraVest's portfolio of businesses. During the second quarter ended March 31, 2025, TerraVest's total purchase of property, plant and equipment ("PP&E") paid was $17,984 of which $8,285 is considered growth capital. The growth capital incurred during the second quarter was mainly used to add to the Company's rental fleet and invest in a new manufacturing product line.

Cash Available for Distribution for the second quarter and six months ended March 31, 2025 increased by 39% and 22% respectively versus the prior comparable periods. These increases are a result of reasons explained above and elsewhere in this press release.

Outlook

TerraVest's businesses continue to perform well. Recent acquisitions have made a meaningful contribution and we expect this to continue throughout the fiscal year. Opportunities to enhance performance through synergies between recent acquisitions and the base portfolio of businesses continue to exist and are a focus for management.

Recent tariff announcements have created an environment of uncertainty in North America's manufacturing sector. However, TerraVest's portfolio businesses are well-positioned manufacturing products predominantly for their domestic markets, which greatly limits the impacts of any potential tariffs.

The Company continues to make targeted investments to improve its manufacturing efficiency and expand its product lines, particularly in end-markets where it has a meaningful presence. With the new credit facility obtained in March 2025, TerraVest is very well-positioned to pursue its acquisition strategy.

Business Combinations

On March 17, 2025, a subsidiary of TerraVest entered into an agreement to acquire all the issued and outstanding shares of Entrans. Headquartered in Athens Tennessee, Entrans is a premier North American manufacturer of tank trailers and transportation solutions.

On January 1, 2025, TerraVest's partially owned subsidiary, Green Energy Services Inc. ("GES"), entered into an acquisition agreement to acquire all the Canadian assets of Aureus. Aureus provides water management heating activities and hot oiling services to the Western Canadian energy industry. The hot oiling services business was sold during the second quarter ended March 31, 2025.

TerraVest acquired all the issued and outstanding shares of another business which is individually not significant.

Subsequent Events

On April 4, 2025, a subsidiary of TerraVest entered into a share purchase agreement to purchase all of the issued and outstanding shares of L.B.T., Inc. ("LBT") for a consideration of US$16,000, including the assumption of certain liabilities, and subject to closing adjustments, paid using the amended revolving operating credit facility. Headquartered in Omaha Nebraska, LBT is a premier North American manufacturer of tank trailers.

On April 30, 2025, a subsidiary of TerraVest entered into a share purchase agreement to purchase all of the issued and outstanding shares of Simplex, Inc. ("Simplex") for a consideration of US$28,000, including the assumption of certain liabilities, and subject to closing adjustments, paid using the amended revolving operating credit facility. Headquartered in Springfield Illinois, Simplex is a leading technology company that designs and manufactures electrical test systems (load banks) and fuel supply systems for the standby power generation industry.

On May 1, 2025, a subsidiary of TerraVest entered into a share purchase agreement to purchase all of the issued and outstanding shares of Tankcon FRP Inc. ("Tankcon") as well as certain assets from affiliated entities for a consideration of $27,800, subject to closing adjustments, of which $2,500 was paid with the issuance of TerraVest shares and the remaining was paid in cash using the amended revolving operating credit facility. Headquartered in Blainville Québec, Tankcon is a premier North American manufacturer of fiber-reinforced polymer ("FRP") tank trailers and lessor of such trailers.

CONSOLIDATED RESULTS OF OPERATIONS

The following section provides the financial results of TerraVest's operations for the second quarter and six months ended March 31, 2025 and the comparative periods in fiscal 2024.

Sales for the second quarter and six months ended March 31, 2025 increased by 45% and 23% respectively versus the prior comparable periods. The reasons have been explained previously in this press release.

Gross profit for the second quarter and six months ended March 31, 2025 increased by 44% and 26% respectively versus the prior comparable periods. This is primarily explained by the contribution of Aureus, Entrans, AEPL and HT, a more favorable product mix and tighter cost control in the HVAC and Containment Equipment segment, partially offset by reduced activity levels in some of TerraVest's base portfolio businesses.

Administration expenses for the second quarter and six months ended March 31, 2025 increased by 58% and 45% respectively compared to the prior comparable periods. The increases in administration expenses are mainly due to the addition of Entrans, AEPL and HT (the latter is only for the six months ended March 31, 2025) and to additional business acquisition-related costs versus the prior comparable periods. TerraVest also incurred additional amortization of intangible assets expense as a result of the numerous business acquisitions completed in the current and prior fiscal year.

Selling expenses for the second quarter and six months ended March 31, 2025 increased by 26% and 27% respectively versus the prior comparable periods. The increases in selling expenses are explained by the addition of Entrans, AEPL and HT (the latter is only for the six months ended March 31, 2025) and by increased commission expenses as a result of increased sales in certain product lines.

Financing costs for the second quarter and six months ended March 31, 2025 increased by 43% and 8% respectively versus the prior comparable periods. The increases are primarily explained by a fee incurred for the early repayment of an outstanding term loan refinanced as part of the amendment of the revolving operating credit facility on March 17, 2025 and by additional interest on lease liabilities as a result of additional lease liabilities compared to the prior periods. The increases are partially offset by reduced interest expenses on revolving credit facilities and long-term debt as a result of reduced debt level up to March 17, 2025 and lower interest rates on floating rate debt versus the prior comparable periods.

Other (gains) losses variance for the second quarter and six months ended March 31, 2025 are a result of a gain on foreign exchange resulting from a US dollar exposure on one of TerraVest's subsidiaries (slight loss for the second quarter ended March 31, 2025), a favorable change in fair value of investment in equity instruments and a gain on bargain purchase on the acquisition of Aureus, partially offset by an unfavorable change in fair value of derivative financial instruments. The variation is also explained by a non–recurring gain on disposal of a building in the second quarter of fiscal 2024.

Income tax expense variance for the second quarter and six months ended March 31, 2025 is the result of the variation in taxable earnings and the timing of income tax expense adjustments.

As a result of the above, net income attributable to common shareholders for the second quarter and six months ended March 31, 2025 increased by 26% and 43% respectively versus the prior comparable periods.

DIVIDENDS

TerraVest is pleased to announce that The Board of Directors has declared a quarterly dividend of $0.175 per common share payable on July 10, 2025 to shareholders of record as at the close of business on June 30, 2025.

Additional information can be found in TerraVest's annual consolidated financial statements and MD&A which are available on SEDAR+ at www.sedarplus.ca.

Non–IFRS Financial Measures

This news release makes reference to certain non–IFRS financial measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. TerraVest's definitions may differ from those of other issuers and therefore may not be comparable to similarly titled measures used by other issuers. The Company uses non–IFRS financial measures including adjusted EBITDA, cash available for distribution, dividend payout ratio and maintenance capital expenditures.

Adjusted EBITDA: is defined as net income adjusted for income tax expense, financing costs, depreciation, amortization, change in fair value of derivative financial instruments, change in fair value of investment in equity instruments and investment in a limited partnership, gains or losses on foreign exchange, gains or losses on disposal of other property, plant and equipment and property, plant and equipment for rental, gains or losses on disposal of intangible assets, gains or losses on lease modification, gains or losses on remeasurement of equity interest, gain on bargain purchase, gains or losses on sale of business, non-recurring acquisition related costs, impairment charges and other non-recurring and/or non-operations related items that do not reflect the current ongoing operations of TerraVest. Management believes this is a useful metric in evaluating the ongoing operating performance of TerraVest. Readers are cautioned that Adjusted EBITDA should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of TerraVest's performance.

Cash Available for Distribution: is defined as cash flow from operating activities adjusted for changes in non-cash operating working capital, maintenance capital expenditures and repayment of lease liabilities. Management believes that Cash Available for Distribution, as a liquidity measure, is a useful metric that provides an indication of the cash available from ongoing operations that can be distributed to shareholders as a dividend. Readers are cautioned that Cash Available for Distribution should not be construed as an alternative to cash flow from operating activities determined in accordance with IFRS as an indicator of TerraVest's liquidity and cash flows.

Dividend Payout Ratio: is defined as dividends paid in cash during the period divided by Cash Available for Distribution for the period. Management believes that Dividend Payout Ratio is a useful metric as it provides an indication of TerraVest's ability to sustain its current dividend policy. There is no directly comparable IFRS measure for Dividend Payout Ratio.

Maintenance Capital Expenditures: is defined as Capital Expenditures made to sustain the operations of TerraVest's operating businesses and to maintain the productive capacity of the businesses over an economic cycle, whether or not they yield significant cost or production efficiencies. Management believes that Maintenance Capital Expenditures should be funded by cash flow from existing operating activities and, therefore, deducted in determining Cash Available for Distribution. There is no directly comparable IFRS measure for Maintenance Capital Expenditures.

Working Capital: is calculated by subtracting current liabilities from current assets. Management uses Working Capital as a measure for assessing overall liquidity. There is no directly comparable IFRS measure for Working Capital.

Caution Regarding Forward-Looking Statements

This news release contains forward-looking statements. All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding our strategic direction and evaluation of the business segments and TerraVest as a whole, and other plans and objectives of or involving TerraVest. Readers can identify many of these statements by looking for words such as "expects" and "will" or similar terms or variations of these words. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements require us to make assumptions and, accordingly, forward looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements. 

Assumptions and analysis about the performance of TerraVest as a whole and its business segments, the markets in which the business segments compete and the prospects and values of the business segments are considered in setting the business plan for TerraVest, plans and/or ability to pay dividends, outlook for operations, financial position, results and cash flows, other plans and objectives and in making related forward-looking statements. Such assumptions include, without limitation, demand for products and services of the business segments in respect of the Canadian and other markets in which the businesses are active will be stable, and that input costs to business segments do not vary significantly from levels experienced historically. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements.

SOURCE TerraVest Industries Inc.