Mosaic Capital Corporation Reports Annual 2014 Financial Results and Net Income of $15.7 million

Calgary, Alberta (FSCwire) - Mosaic Capital Corporation ("Mosaic") (TSX–V Symbols: M, M.PR.A and M.WT) has released its audited annual consolidated financial statements for the year ended December 31, 2014.

"We are very pleased with our results from 2014," commented John Mackay, Executive Chairman and CEO. "It was a very busy year for us as we completed two financings raising a total of approximately $39.2 million and added three new businesses to our Industrial portfolio. In addition our financial numbers were good as we saw revenue grow by 81%, Adjusted EBITDA by 39%, Free Cash Flow 34% and twelve-month rolling Adjusted Return on Common Equity hit 59%. These are good results considering we had a challenging start to the year with unusually cold weather together with extremely wet weather as well as a truck drivers' strike at the Port Metro Vancouver. Over the past twelve months we have seen strong deal flow and continue to have a full pipeline. We continue to look for opportunities to diversify our cash flow both geographically and by industry and, with our strong balance sheet and a focused management team, we look forward to 2015."

2014 Financial and Operational Highlights

• April 2014 acquisition of industrial development land in Estevan, Saskatchewan by First West Properties;

• May 2014 signed agreement with Alberta-based lender for $25 million acquisition line of credit;

• June 2014 completed acquisition of 70% interest in Streamline Mechanical;

• June 2014 closed public offering for total gross proceeds of $28.8 million;

• August 2014 signed joint venture partnership agreement between First West Properties and Harbour Equity Capital Corp.;

• August 2014 increased quarterly common share dividend 33% to $0.08 per share;

• September 2014 completed acquisition of 75% interest in Place-Crete;

• October 2014 First West Properties completed an acquisition of a commercial building in Estevan, Saskatchewan;

• November 2014 completed acquisition of 75% interest in South East Construction;

• November 2014 increased quarterly common share dividend 25% to $0.10 per share;

• December 2014 closed public offering for total gross proceeds of $10.4 million;

• Net Income and Comprehensive Income for the year ended December 31, 2014 was $15.7 million (2013 - $11.6 million); and

• Preferred Security Payout Ratio⁴ of 51% and Combined Payout Ratio⁵ of 65% for the 12 month period ended December 31, 2014.

Selected Annual 2014 Highlights

RECONCILIATIONS FOR NON-IFRS FINANCIAL MEASURES

The following tables reconcile both Adjusted EBITDA and Free Cash Flow to income from continuing operations before income taxes, which is the most directly comparable measure under International Financial Reporting Standards ("IFRS") to each of those non-IFRS financial measures:

Notes:

1. On February 1, 2013, Mosaic announced that its wholly-owned subsidiary First West Properties L.P. completed the sale of its Decade warehouse located at 1820, 31^st Street North and its Braman warehouse located at 2930, 9^th Avenue North, both in Lethbridge, Alberta. The two warehouses were sold for aggregate consideration of $14.7 million which resulted in a gain on sale of real estate of $2.25 million. This gain resulted in a positive impact on income from continuing operations before income taxes, Adjusted EBITDA and Free Cash Flow in 2013. Gains of this nature within the Real Estate segment are unpredictable as to timing of occurrence and magnitude.
2. On August 1, 2014, Mosaic's subsidiary First West Developments L.P. entered into a joint venture with Harbour Equity Capital Corp. for the development of the Parker Industrial Park near Regina, Saskatchewan, which resulted in Mosaic recognizing, under IFRS, a non-cash gain of $1.4 million on the disposition of a 50% interest in First West Developments L.P. to Harbour Equity.

Adjusted Return on Common Equity compared to IFRS measure - There is no IFRS measure comparable to Adjusted Return on Common Equity. However, this ratio utilizes Free Cash Flow in its calculation and the most directly comparable measure under IFRS to Free Cash Flow is income from continuing operations before income taxes. Accordingly, dividing (i) income from continuing operations before income taxes less distributions/dividends declared to holders of Mosaic preferred securities and series "A" shares, in each case during the twelve-month rolling period ending December 31, 2014, by (ii) weighted average common shareholders' equity for the same period, yields a ratio of 52% (2013 - 43%).

Preferred Security Payout Ratio compared to IFRS measure - There is no IFRS measure comparable to Preferred Security Payout Ratio. However, this ratio utilizes Free Cash Flow in its calculation and the most directly comparable measure under IFRS to Free Cash Flow is income from continuing operations before income taxes. Accordingly, dividing (i) the total amount of distributions/dividends declared to holders of Mosaic preferred securities and series "A" shares during the period by (ii) income from continuing operations before income taxes for the period, for each of the years ended December 31, 2014 and December 31, 2013, yields payout ratios of 54% and 56% respectively.

Combined Payout Ratio compared to IFRS measure - There is no IFRS measure comparable to Combined Payout Ratio. However, this ratio utilizes Free Cash Flow in its calculation and the most directly comparable measure under IFRS to Free Cash Flow is income from continuing operations before income taxes. Accordingly, dividing (i) the total amount of distributions/dividends declared during the period to holders of Mosaic preferred securities, series "A" shares and common shares by (ii) income from continuing operations before income taxes for the period, for each of the years ended December 31, 2014 and December 31, 2013, yields payout ratios of 69% and 66% respectively.

THREE MONTH FINANCIAL HIGHLIGHTS

Revenue for the three months ended December 31, 2014 increased 136% or $32.21 million to $55.97 million when compared to the same period in 2013, primarily due to the addition of revenue from Streamline Mechanical L.P. ("Streamline"), Place-Crete Systems L.P. ("Place-Crete"), South East Construction L.P. ("SECON"), and growth in revenue from existing businesses within the Industrial segment.

Adjusted EBITDA for the three months ended December 31, 2014 increased 138% or $4.48 million to $7.72 million when compared to the same period in 2013. This can be primarily attributed to four factors:

• Adjusted EBITDA growth from existing businesses within the industrial segment.

• Three months of operations of Streamline that was not part of Mosaic in the 2013 comparative period.

• Three months of operations of Place-Crete that was not part of Mosaic in the 2013 comparative period.

• Two months of operations of SECON that was not part of Mosaic in the 2013 comparative period.

Free Cash Flow for the three months ended December 31, 2014 increased 76% or $2.58 million to $5.97 million when compared to the same period in 2013. The primary reasons for this increase are the factors discussed above.

ANNUAL FINANCIAL HIGHLIGHTS

Revenue for 2014 increased 81% over 2013 to $161.82 million due primarily to revenue attributable to the acquisitions consummated during 2014 and organic revenue growth of 8% within the Industrial segment.

Adjusted EBITDA for 2014 increased 39% over 2013 to $25.14 million. This increase was due primarily to incremental Adjusted EBITDA attributable to the acquisitions consummated during 2014 and organic Adjusted EBITDA growth of 2% within the Industrial segment.

Mosaic’s Industrial segment experienced generally adverse weather conditions in the first three quarters of 2014, followed by more favourable conditions in the fourth quarter. These conditions were a leading factor in limiting organic growth in revenue and Adjusted EBITDA for calendar 2014 to 8% and 2% respectively.

Free Cash Flow for 2014 increased 34% over 2013 to $17.73 million as a result of the factors discussed above.

Mosaic's audited annual consolidated financial results for the year ended December 31, 2014 and Management's Discussion and Analysis dated April 22, 2015 are available on SEDAR (www.sedar.com).

Non-IFRS Financial Measures

Below are definitions of key performance indicators used by management of Mosaic that are not recognized under IFRS and have no standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers.

¹Adjusted EBITDA:  is defined as income from continuing operations before income taxes and before (i) gain (loss) on sale of equipment, (ii) non-cash income and expenses, (iii) finance income and expenses, (iv) securities-based compensation expense, and (v) any unusual non-operating one-time items such as acquisition and reorganization costs.  Adjusted EBITDA is used by management to assess Mosaic's normalized cash generated on a consolidated basis and in its operating segments. Adjusted EBITDA is also a performance measure which may be utilized by investors to analyze the cash generated by Mosaic and its operating segments.

²Free Cash Flow:  is defined as Adjusted EBITDA less (i) non-controlling interests of Adjusted EBITDA, (ii) Mosaic's share of current income tax expense, and (iii) Mosaic's share of the Sustaining Capital Expenditures. Free Cash Flow is a performance measure used by management to summarize the funds available for (i) the payment of distributions to holders of preferred securities, series "A" shares and common shares, (ii) investment in capital expenditures made to grow the enterprise, and (iii) new acquisitions and working capital. Free Cash Flow is also a performance measure which may be utilized by investors to analyze the free cash available for preferred security distributions, common share dividends, acquisitions and additional investment into existing businesses.

Sustaining Capital Expenditures:  is defined as capital expenditures required to sustain the operations of Mosaic at its current level of operations and is calculated by subtracting those capital expenditures which are, as determined in the discretion of management, made to grow the enterprise and expected to generate additional Adjusted EBITDA from total capital expenditures for the period. An example of Sustaining Capital Expenditures would be the replacement of vehicles that have completed their useful life.

³Adjusted Return on Common Equity:  means that number, expressed as a percentage, that is obtained by dividing (i) Free Cash Flow less distributions declared to holders of preferred securities and series "A" shares during the period indicated, by (ii) weighted average common shareholders' equity for the period. Management believes Adjusted Return on Common Equity is a key performance measure as it indicates the return generated by Mosaic on its common equity. Management believes that this measure is most useful and relevant when measured over a twelve-month period, as opposed to quarterly periods. As a result, management is reporting on this financial metric over the trailing twelve-month period ended as of the last day of the most recently completed financial year, being December 31, 2014 (December 31, 2013 for the comparative period).

⁴Preferred Security Payout Ratio:  means that number, expressed as a percentage, which is the total amount declared (which includes cash paid as well as preferred securities distributed pursuant to the Mosaic distribution reinvestment plan ("DRIP")) to holders of preferred securities and series "A" shares during the period divided by Free Cash Flow for the period. Management believes that this measure may be useful to investors in assessing the likelihood that Mosaic will be able to continue to pay distributions on its preferred securities and series "A" shares.

⁵Combined Payout Ratio:  means that number, expressed as a percentage, which is the total amount declared (which includes cash paid as well as preferred securities distributed pursuant to the DRIP) to holders of preferred securities, series "A" shares and common shares during the period divided by Free Cash Flow for the period. Management believes that this measure may be useful to investors in assessing the likelihood that Mosaic will be able to continue to pay distributions on its preferred securities and pay dividends on its series "A" shares and common shares.

Investors are cautioned that the above non-IFRS measures should not be viewed as an alternative to measures that are recognized under IFRS such as net income or cash from operating activities. Mosaic's method of calculating the above non-IFRS measures may differ from that of other entities and therefore may not be comparable to measures utilized by them. 

ABOUT MOSAIC CAPITAL CORPORATION

Mosaic is an investment company based in western Canada that owns a portfolio of established businesses with competitive advantages that have a history of generating cash flow from their operations. Mosaic's objective is to create long-term value for our shareholders and business partners and to have that reflected in our share price. Mosaic believes that this is achieved by growing free cash flow per share and retained earnings. Mosaic does this by acquiring businesses that it understands at attractive prices, managing risk through extensive due diligence, creative transaction structuring and working closely with subsidiary businesses after acquisition.

FOR FURTHER INFORMATION PLEASE CONTACT:

Tim Taylor
Vice President
Mosaic Capital Corporation
400, 2424 – 4^th Street SW
Calgary, AB  T2S 2T4

Tel:  (403) 270-4658

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.

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, 2014 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.

To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/mosaic04222015.pdf

Source: Mosaic Capital Corporation (TSX Venture:M) http://www.mosaiccapitalcorp.com/

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