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Mosaic Capital Corporation Reports Q1 2016 Financial Results

FSCWIRE

Mosaic Capital Corporation Reports Q1 2016 Financial Results

Calgary, Alberta (FSCwire) – Mosaic Capital Corporation (“Mosaic” or the “Company”) (TSX–V Symbols: M and M.PR.A) has released its unaudited consolidated financial statements for the three months ended March 31, 2016.

Selected Highlights

NOTE: During 2015, Mosaic divested two portfolio companies, Streamline Mechanical and Polar Geomatic. Pursuant to IFRS, the results of these discontinued operations and gains (losses) on divestiture are reported separately in the Consolidated Statement of Income and Comprehensive Income as “(Loss) income from discontinued operations”.

3 Months Ended March 31

All amounts are in thousands except %

2016

2015

% Change

Revenue(2)

$40,244

$38,416

+5%

Income from operations (2)

$4,952

$4,693

+5%

Adjusted EBITDA (1)(2)

$4,952

$4,708

+5%

Cash Flow Prior to Changes In Non-Cash Working Capital (3)

$4,502

$3,930

+15%

Free Cash Flow (1)(2)

$2,984

$3,358

(11%)

Increase (Decrease) In Free Cash Flow Per Common Share (Fully Diluted) (2)

(13%)

Net Income and Comprehensive Income Attributable to Shareholders (3)

$2,004

$22

+9,009%

Adjusted Return on Common Equity (rolling 12 months) (1)(2)

-8%

59%

Preferred Distribution Payout Ratio (1)(2)

109%

86%

Combined Payout Ratio (2)

138%

111%

Notes:

1. These non-IFRS financial measures do not have any standardized meaning under IFRS, may not be comparable to similar measures presented by other issuers and are defined and reconciled to their most directly comparable IFRS measure within our Management’s Discussion and Analysis for the three months ended March 31, 2016 under the sections “Non-IFRS Financial Measures” and “Reconciliation of Non-IFRS Financial Measures”, which document is available electronically at www.sedar.com under Mosaic’s profile.

2. Excludes results from discontinued operations for Q1 2015.

3. Includes results from discontinued operations for Q1 2015.

Q1 2016 Financial and Operational Highlights

  • Improved income from operations in Q1 2016 as compared to Q1 2015, driven by solid results and organic growth in the Infrastructure segment.
  • Significant shift in segment concentration: Due to corporate transactions and organic growth, Infrastructure now represents 77% of consolidated revenue and Diversified 19%, whereas Energy declined to 4%.
  • Continued challenging energy industry fundamentals impacted portfolio companies that are directly and indirectly associated with the industry. Companies not associated with the energy industry generally performed well.
  • Strong acquisition deal flow across expanding range of industries and geographies.
  • Maintained strong financial position including $37.9 million cash, $57.7 million working capital and $2.7 million long-term debt.

Financial Performance By Segment*

For the Three Months Ended March 31, 2016

All amounts are in thousands except %

CONSOLIDATED

Infrastructure

Energy

Diversified

Revenue

% of Total

% increase (decrease) year over year

$40,244

100%

+5%

$30,879

77%

+11%

$1,716

4%

(40%)

$7,354

19%

0%

Income From Operations

% increase (decrease) year over year

$4,952

+5%

$4,658

+57%

$187

(87%)

$908

(9%)

*Revenue and income from operations attributable to the Real Estate segment are immaterial.

Outlook

The repositioning of Mosaic’s portfolio together with organic growth in the Infrastructure segment reduced the Energy segment’s share of consolidated revenue to 4% in Q1 2016, while increasing Infrastructure segment’s share to 77%. Therefore, Energy industry fundamentals will have a minor effect on Mosaic’s 2016 results. With the diversity of Mosaic’s portfolio, each investee company has unique fundamentals and outlook. Please refer to the Outlook section of Mosaic’s Q1 2016 MD&A for narrative on the portfolio.

Mosaic is exceptionally well positioned to execute its strategic plan of diversified acquisitions in 2016 and beyond. In 2015, we expanded our acquisition team and transitioned much of our focus to outside of western Canada and toward slightly larger enterprises. Accomplishing this transition is taking time and effort, but we believe it is the optimal strategy for Mosaic.

This move to greater portfolio economic diversity, size and quality may result in somewhat higher valuations for targeted acquisitions. However, with our internal resources and access to capital we feel we can complete attractive acquisitions which will enhance Mosaic’s value and strength.

The Company continues to see solid deal flow from across Canada spanning a wide range of industrial sectors. This diversity provides the Company an exceptional vantage point to assess which sectors it views as most attractive for investment.

ABOUT MOSAIC CAPITAL CORPORATION

Mosaic is a Canadian investment company that owns a portfolio of established businesses which span a diverse range of industries and geographies. Mosaic’s strategy is to create long-term value for its shareholders through accretive acquisitions, long-term portfolio ownership, sustained cash flows and organic portfolio growth. Mosaic achieves its objectives by maintaining financial discipline, acquiring businesses at attractive valuations, performing extensive acquisition due diligence, utilizing optimal transaction structuring and working closely with subsidiary businesses after acquisition.

FOR FURTHER INFORMATION PLEASE CONTACT:

Allan Fowler
Chief Financial Officer
Mosaic Capital Corporation
400, 2424 – 4th Street SW
Calgary, AB T2S 2T4

Tel: (403) 270-4663

Forward-Looking Information

This news release contains forward-looking information and statements within the meaning of applicable Canadian securities laws (herein referred to as “forward-looking statements”) that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. All information and statements in this press release which are not statements of historical fact may be forward-looking statements. The words “believe”, “expect”, “intend”, “estimate”, “anticipate”, “project”, “scheduled”, and similar expressions, as well as future or conditional verbs such as “will”, “should”, “would”, and “could” often identify forward-looking statements. In particular this news release may contain forward-looking statements regarding anticipated financial and operating performance for Mosaic. Such statements or information, if any, are only predictions and reflect the current beliefs of management with respect to future events and are based on information currently available to management. Actual results and events may differ materially from those contemplated by these forward-looking statements due to these statements being subject to a number of risks and uncertainties. Undue reliance should not be placed on these forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature forward-looking statements involve assumptions and known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other things contemplated by the forward-looking statements will not occur. Some of the assumptions made by Mosaic upon which forward-looking statements are typically based include: the business operations of the operating businesses of Mosaic continuing on a basis consistent with prior years; the ability of Mosaic and its subsidiaries to access financing from time to time on favorable terms; the ability of Mosaic to realize anticipated benefits of acquisitions; the continuation of executive and operating management or the non-disruptive replacement of them on competitive terms; the ability of Mosaic to maintain reasonably stable operating and general administrative expenses; the current economic environment in western Canada (including commodity prices, such as oil prices) stabilizing and showing signs of strengthening over the coming year; and the economic environment in Canada not deteriorating due to the influence of international economic developments in the United States, Europe, Asia and elsewhere.

A number of factors could cause actual results to differ materially from the results stated in the forward-looking statements, including, but not limited to, risks related to: general economic and business conditions; the failure of Mosaic to identify acquisition targets or complete announced acquisitions; third parties honouring their contractual obligations with Mosaic and its subsidiaries; results of management’s ongoing efforts to sell, re-lease, lease, develop and improve real estate owned and being acquired indirectly by Mosaic through its subsidiaries; the failure to realize the anticipated benefits of Mosaic’s recent and future acquisitions; adverse fluctuations in commodity prices; competition for, among other things, capital, equipment and skilled personnel; the inability to generate sufficient cash flow from operations to meet current and future obligations; the inability to obtain required debt and/or equity capital on suitable terms; competition for acquisition targets; supply disruptions; adverse weather conditions; seasonality and fluctuations in results; and limited diversification of Mosaic’s subsidiaries. Should any of the risks or uncertainties facing Mosaic and its subsidiaries materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, activities or achievements could vary materially from those expressed or implied by any forward-looking statements contained in this news release.

Readers are cautioned that the foregoing list of risks is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Mosaic and its subsidiaries are included in Mosaic’s annual information form for the year ended December 31, 2015 which has been filed under Mosaic’s profile on SEDAR (www.sedar.com).

Although Mosaic believes that the expectations represented by any forward-looking-statements contained herein are reasonable based on the information available to them on the date of this news release, management cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. Any forward-looking statements herein contained are made as of the date of this press release and Mosaic does not assume any obligation to update or revise them to reflect new information, events or circumstances, except as required by law.

Neither the 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.

To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/Mosaic05272016.pdf
Source: Mosaic Capital Corporation (TSX Venture:M, TSX Venture:M.PR.A, TSX Venture:M.WT) http://www.mosaiccapitalcorp.com/

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