Fourth Quarter is Tough for Western Canada’s WesternOne
WesternOne Inc. posted fourth quarter consolidated revenue of CDN $35.9 million compared to $88.2 million in last year’s fourth quarter. Gross profit was $13.1 million, compared to $18.5 million in the fourth quarter last year, and adjusted EBITDA dropped from $8.1 million in the year-ago period to $6.3 million this year. The year-over-year decline reflected continued challenges in WesternOne’s macro business environment and the related impact on business activity.
The company reduced headcount in the fourth quarter by 67 or 9 percent, for a total reduction of 675 or 50 percent in 2015. The company further reduced staff by 93 or 14 percent since the beginning of 2016.
Net loss from continuing operations attributable to shareholders was $10.6 million compared with net income of $12.5 million in the fourth quarter of 2014. Included in the net loss were non-cash pre-tax impairment charges on goodwill, intangible assets and fixed assets of $50.6 million in the quarter, in light of reduced demand for temporary modular buildings and consolidation of rental operations.
WIS, WesternOne’s infrastructure services division, posted Q4 revenue of $20.4 million compared to $28 million in the year-ago frame, and adjusted EBITDA of $5.5 million compared to $9 million in Q415. The decline was primarily caused by increased supply of rental equipment from competitors, primarily in the Alberta markets, and mild winter weather that adversely impacted heater rentals and fuel sales.
Britco, WesternOne’s modular construction and modular space rental division, recorded fourth quarter revenue of $15.5 million compared to $60.2 million a year ago. Adjusted EBITDA, however, improved from $0.3 million in Q414 to $1.9 million this year. Excluding the adjustment, adjusted EBITDA for Q414 would have been $7.4 million.
The year-over-year decline reflected Britco’s reduced manufacturing output and onsite work in light of low demand for temporary modular buildings from the industrial sectors in Canada and the United States.
For the full year, WesternOne posted $233 million in total revenue, compared to $373.9 million in 2014, a 37.7-percent decline.
“Despite the challenging market conditions throughout 2015, WesternOne maintained its disciplined capital management strategy through preserving cash generated from operating activities and substantially paying down bank indebtedness, thereby advancing a key initiative for 2015 – strengthening our balance sheet,” said Peter Blake, CEO of WesternOne.
“In 2016, as we continue to experience the macroeconomic headwinds that strongly weigh on our businesses, we plan to maintain our focus on prudent capital management and cost containment.”
Blake said that in the infrastructure group, the company will execute prudent capital management and will aim to generate earnings in existing and potentially new branch locations.
Despite the difficulties, WesternOne posted rental revenue of $59.9 million for the full year compared to $59.3 million in 2014.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.