FLINT Corp. (“FLINT” or the "Company") (TSX: FLNT) today announced its results for the three and nine months ended September 30, 2024. All amounts are in Canadian dollars and expressed in thousands of dollars unless otherwise noted.
“EBITDAS” and “Adjusted EBITDAS” are not standard measures under IFRS. Please refer to the Advisory regarding Non-GAAP Financial Measures at the end of this press release for a description of these items and limitations of their use.
“In the third quarter, we reached record levels of activity with $211.6 million in revenue and successfully executed 13 turnarounds. Adjusted EBITDAS rose by 24.4% year over year. Our dedication to client-centric service and on-time, on-budget contract execution will continue to drive our growth” said Barry Card, Chief Executive Officer.
“We successfully onboarded over 850 new employees in the third quarter, reaching a workforce high of 4,450 in September. Over 2 million exposure hours were worked throughout the quarter without a single recordable incident, showcasing our commitment to safety as it is an integral part of how we deliver services to our clients daily,” added Mr. Card.
THIRD QUARTER HIGHLIGHTS
- Revenue for the three months ended September 30, 2024 was $211.6 million, representing an increase of $24.6 million or 13.1% from the same period in 2023 and an increase of $46.7 million or 28.3% from the second quarter of 2024.
- Gross profit for the three months ended September 30, 2024 was $23.8 million, representing an increase of $4.0 million or 20.3% from the same period in 2023 and an increase of $5.8 million or 32.1% from the second quarter of 2024.
- Gross profit margin for the three months ended September 30, 2024 was 11.2%, as compared to 10.6% in the same period in 2023 and 10.9% in the second quarter of 2024.
- Adjusted EBITDAS for the three months ended September 30, 2024 was $13.4 million, representing an increase of $2.6 million or 24.4% from the same period in 2023 and an increase of $5.1 million or 61.7% from the second quarter of 2024.
- Adjusted EBITDAS margin was 6.3% for the three months ended September 30, 2024 representing an increase of 0.5% from the same period in 2023 and an increase of 1.3% from the second quarter of 2024.
- Selling, general and administrative ("SG&A") expenses for the three months ended September 30, 2024 were $10.9 million, representing an increase of $1.9 million or 20.9% from the same period in 2023 and an increase of $0.8 million or 7.4% from the second quarter of 2024. As a percentage of revenue, SG&A expenses for the three months ended September 30, 2024 was 5.2%, as compared to 4.8% in the same period in 2023 and 6.2% in the second quarter of 2024.
- Liquidity, including cash and available credit facilities, was $48.6 million at September 30, 2024, as compared to $34.4 million at September 30, 2023.
- New contract awards and renewals totaled approximately $67.4 million for the three months ended September 30, 2024 and $18.3 million for the month of October. Approximately 85% of the work is expected to be completed in 2024.
Revenue for the three and nine months ended September 30, 2024 was $211,594 and $522,779 compared to $187,017 and $506,063 for the same periods in 2023, representing an increase of 13.1% and 3.3%. The increase in revenue was primarily due to the 13 turnarounds that were performed in the third quarter this year, compared to 6 turnarounds that were performed in the same period of 2023.
Gross profit for the three and nine months ended September 30, 2024 was $23,757 and $54,745 compared to $19,740 and $50,368 for the same periods in 2023, representing an increase of 20.3% and 8.7%. Gross profit margin for three and nine months ended September 30, 2024 was 11.2% and 10.5%, compared to 10.6% and 10.0% to for the same periods in 2023. The increase in gross profit margin was primarily due to the mix of work compared to the same period of 2023.
SG&A expenses for the three and nine months ended September 30, 2024 were $10,934 and $31,171, in comparison to $9,045 and $26,785 for the same periods in 2023, representing an increase of 20.9% and 16.4%. As a percentage of revenue, SG&A expenses for the three and nine months ended September 30, 2024 were 5.2% and 6.0% compared to 4.8% and 5.3% for the same periods in 2023. The increase in SG&A expenses, both on an absolute basis and as a percentage of revenue, is primarily due to higher personnel costs to support the Company's organic growth strategy and increased professional fees to assist in the ongoing continuous improvements in the business post the implementation of the Company's enterprise resource planning system.
For the three and nine months ended September 30, 2024, Adjusted EBITDAS was $13,433 and $24,926 compared to $10,796 and $24,134 for the same periods in 2023. As a percentage of revenue, Adjusted EBITDAS was 6.3% and 4.8% for the three and nine months ended September 30, 2024 compared to 5.8% and 4.8% for the same periods in 2023.
Income from continuing operations for the three months ended September 30, 2024 was $5,305 compared to $2,789 for the same period in 2023. The income variance was primarily driven by the increase in turnaround activity partially offset by higher SG&A expenses. Loss from continuing operations for the nine months ended September 30, 2024 was $69 compared to $12,639 for the same period in 2023. The loss variance was driven by the impairment of intangible assets, goodwill and PP&E recognized in the second quarter of 2023.
LIQUIDITY AND CAPITAL RESOURCES
FLINT has an asset-based revolving credit facility (the “ABL Facility”) providing for maximum borrowings of up to $50.0 million with a Canadian chartered bank. The amount available under the ABL Facility will vary from time to time based on the borrowing base determined with reference to the accounts receivable of FLINT and certain of its subsidiaries. The maturity date of the ABL Facility is April 14, 2027.
The Company anticipates that its liquidity (cash on hand and available credit facilities) and cash flow from operations will be sufficient to meet its short-term contractual obligations. To maintain compliance with its financial covenants through September 30, 2025, the Company has the ability to pay interest on the Senior Secured Debentures in kind, which requires approval by the holder of the Senior Secured Debentures at its sole discretion
As at September 30, 2024, the issued and outstanding share capital included 110,001,239 Common Shares, 127,732 Series 1 Preferred Shares, and 40,111 Series 2 Preferred Shares.
The Series 1 Preferred Shares (having an aggregate value of $127.732 million) are convertible at the option of the holder into Common Shares at a price of $0.35/share and the Series 2 Preferred Shares (having an aggregate value of $40.111 million) are convertible into Common Shares at a price of $0.10/share.
The Series 1 and Series 2 Preferred Shares have a 10% fixed cumulative preferential cash dividend payable when the Company has sufficient monies to be able to do so, including under the provisions of applicable law and contracts affecting the Company. The Board of Directors of the Company does not intend to declare or pay any cash dividends until the Company's balance sheet and liquidity position supports the payment. As at September 30, 2024, the accrued and unpaid dividends on the Series 1 and Series 2 shares totaled $106.0 million. Any accrued and unpaid dividends are convertible in certain circumstances at the option of the holder into additional Series 1 and Series 2 Preferred Shares.
On June 30, 2024, Canso, in its capacity as portfolio manager for and on behalf of certain accounts that it manages and sole holder of the Senior Secured Debentures, agreed to accept the issuance of Senior Secured Debentures on June 30, 2024 with a principal amount of $5,205 in order to satisfy the interest that would otherwise become due and payable on such date.
