2013 BUSINESS HIGHLIGHTS

-Revenue for the twelve months ended December 31, 2013 grew by approximately $5.4 million to $88.7 million compared with revenue of $83.3 million for the same period in 2012, US revenue increased by 29.8% which offset a 24.3% decline in Canadian revenue resulted in overall revenue increase of 6.4%;

 

-Generated net income for the twelve months ended December 31, 2013 of $5.3 million, as compared to net loss of $1.3 million for the same period in 2012;

 

-Generated Adjusted EBITDA1 for the twelve months ended December 31, 2013 of $15.0 million after incurring $0.7 in acquisition expenses, an increase of $5.2 million compared with Adjusted EBITDA1 of $9.8 million for the same period in 2012. Excluding acquisition expenses, Adjusted EBITDA1 would have been $15.7 million;

 

-Expanded equipment base by acquiring $6.3 million ($4.6 million net of disposals) of additional equipment and leaseholds in the year 2013, including the addition of two cranes and invested $0.5 million in the Company’s new ERP system;

 

-Generated net cash provided by operating activities for the year ended December 31, 2013 of $12.5 million, an increase of $4.2 million compared to $8.3 million for the same period in 2012;

 

-Repaid loans and borrowings of $2.3 million in the year ended December 31, 2013 from internally generated cash flow;

 

-Relocated the Company’s Pennsylvania branch from New Columbia to Williamsport, Pennsylvania;

 

-Commenced operation of a new satellite branch in Buckhannon, West Virginia;

 

-Converted $4.7 million of convertible debenture into 1,850,980 common shares of the Company at a price of $2.55 per share;

 

-Acquired all outstanding shares of Lon Dan Enterprises Ltd., which carries on business as Belair Rentals for an initial purchase price of $4.0 million and contingent consideration currently estimated $1.5 million if the acquired business achieves certain financial targets. As a result of the acquisition the Company established operations in Edson, AB, thus enabling the Company to better serve our clients in the Edson region and improve the utilization of the Company’s existing rental equipment;

 

-Relocated the Company’s US head office from Mineral Wells, TX to Houston, TX to be closer and better serve the Company’s US clients;

 

-Signed an asset purchase agreement to acquire the operating assets of Williston, North Dakota based
M&K Hotshot & Trucking, Inc. and M&K Rig Service, Inc. (collectively "M&K"). The M&K acquisition was completed on January 31, 2014;

 

Note:

1 See page 3 of this news release for definition of Adjusted EBITDA and Debt to EBITDA.

-In connection with the M&K acquisition, the Company closed a $23.0 million bought deal private placement offering of 6.4 million Subscription Receipts of the Company (the "Subscription Receipts") at a price of $3.60 per Subscription Receipt. Subsequent to the year end, concurrent with the closing of the M&K acquisition, all Subscription Receipts automatically converted into 6.4 million common shares of the Company; and

 

-In connection with the M&K acquisition, the Company entered into an agreement with its senior credit facility holder which the availability under its current operating facility (i) be increased to $75.0 million effective December 31, 2013; (ii) be extended to January 1, 2018; (iii) have the interest rate decreased by 50 basis points as long as Undrawn Availability (as defined in the Facility agreement) is greater than $10.0 million; and (iv) the removal of all financial covenants as long as the Undrawn Availability is greater than $15.0 million.

"The Aveda team continues to execute on our growth strategy, and at the same time consistently improve our operations to better serve our customers," said Kevin Roycraft, President and Chief Executive Officer of Aveda. "I thank our team for all their efforts and look forward to many more successes."

The Company is pleased to announce that, subject to the receipt of TSX Venture Exchange approval, it has engaged Transcend Resource Group. ("Transcend"), a Vancouver, British Columbia based investor relations firm, to conduct certain investor relations activities on behalf of the Company, including the publication and dissemination of articles regarding the Company. Pursuant to a service agreement entered into between the Company and Transcend, Transcend will provide investor relations activities on behalf of the Company for a three month-term. Pursuant to the agreement, Transcend will receive a monthly fee of $2,500. Prior to the entering into of the agreement outlined above, Transcend had no direct or indirect interest in the Company or its securities.

The Company also announces that Kris Miks has resigned as the Company’s Corporate Secretary. The Company thanks Mr. Miks for his contributions to our successes over the years.

The Company will host its fourth quarter fiscal 2013 results conference call on Thursday, May 1st, 2014 at 9:00 a.m. Eastern Time (ET). Executive Chairman David Werklund, President and CEO Kevin Roycraft and Vice-President, Finance and CFO Bharat Mahajan will discuss Aveda’s financial results for the quarter and then take questions from securities analysts.

Outlook

Aveda earns revenue primarily by providing specialized transportation services to companies engaged in the exploration, development and production of petroleum resources. As a result, demand for Aveda’s transportation services are generally linked to the economic conditions of the energy industry and the general level of drilling activity in the exploration, development and production of petroleum resources in Western Canada and United States.

In recent history, total drilling activity in the WCSB and US has been negatively impacted due to, in part, lower natural gas prices. This has largely been the result of increased supply driven by the fast development of shale gas resources in the US. Countering the decline in natural gas drilling has been a relatively strong price for oil. The average West Texas Intermediate ("WTI") spot price during April 2014 was approximately $100, just below the average monthly high of $104 during 20131. This consistently strong WTI price has resulted in oil-focused regions to experience robust rig counts, such as those surrounding Aveda’s Pleasanton and Midland. During April 2014 the average number of rigs within approximately a 100 mile radius of Pleasanton and Midland were 209 and 360. Of that rig count, nearly all were drilling for oil (89% in Pleasanton and 99% in Midland)2.

In the WCSB, at the end December 2013, rig counts were approximately 10% higher than the count at the same time last year3. Despite this increase, overall counts remain well below 2011 levels due to, in part, on-going export capacity bottlenecks and limited capital expenditures, particularly in natural gas plays. Although future natural gas activity remains uncertain in Canada, TD Canada Trust4 ("TD") recently identified that based on forward-looking shipping commitments, the demand for Canadian natural gas in 2014 may be the strongest in 5 years. TD also expects, over the shorter term, prices and demand will remain relatively strong due to the colder than expected winter (inventories in the U.S. are more than 30% below the five year average). TD’s relatively positive outlook may be further reinforced by Pembina Pipeline Corp.’s ("Pembina") announcement that they are proceeding with their phase III expansion, which will result in a new 270 km pipeline from Fox Creek, Alberta to Edmonton, Alberta. This expansion is the largest in Pembina’s history and will have an ultimate capacity of 500,000 barrels per day. This expansion is under-pinned by long-term contracts with 30 customers and is expected to be in service in late 2016 and mid-20175. In addition, many industry analysts are citing Canadian Natural Resources Ltd.’s $3.13 Billion dollar acquisition of Devon Energy Corp.’s Canadian conventional business, which was the largest acquisition by a Canadian energy company since Suncor Energy Inc. acquired Petro Canada in 2009, may be the start of an active merger and acquisition year in Western Canada. Adam Waterous, Vice Chairman at Scotia Waterous, stated that recently there has been "ferocious demand on the part of buyers" (both foreign and Canadian).