Mosaic Capital Corporation Reports Annual 2015 Financial Results

Calgary, Alberta (FSCwire) - Mosaic Capital Corporation ("Mosaic" or the "Company") (TSX–V Symbols: M and M.PR.A) has released its audited annual consolidated financial statements for the year ended December 31, 2015.

Selected Annual 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”.  

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 year ended December 31, 2015 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.

1. Excludes results from discontinued operations.

1. Includes results from discontinued operations.           

2015 Financial and Operational Financial Highlights

• Challenging circumstances in western Canada as a result of the energy downturn impacted portfolio companies that are directly and indirectly associated with the energy industry.  Companies not associated with the energy industry generally performed well.

• Revenue growth in 2015 was primarily the result of full-year operating results from two acquisitions completed during 2014:  Place-Crete and South East Construction.

• Strong Mosaic financial position:

• $39.9 million cash, $60.4 million net working capital; $3.7 million long-term debt.

• Completed the successful sale of Streamline Mechanical in Q4, realizing cash proceeds of $13.7 million; $0.5 million in excess of original acquisition cash cost.

• Raised $26.5 million in Q1 through a private placement of Private Yield Securities.

• Strengthened and expanded Mosaic’s management and acquisition teams.

Financial Performance By Segment*

For the Year Ended December 31, 2015

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

2015 proved to be a challenging year for much of the western Canadian economy due to the direct and indirect impact of the continued downturn in the oil & natural gas industry.  The severity of the impact varied by company from virtually none to substantial.  In this challenging environment, Mosaic was able to further strengthen its financial position, reduce its exposure to the cyclical energy industry, generate positive earnings from all its continuing operations and improve its positioning for future growth.  

Through 2015, Mosaic continued to see much deal flow from across Canada.  However, a combination of the rapidly deteriorating western Canadian economy and elevated acquisition valuations elsewhere contributed to Mosaic not executing any acquisitions during the year.

Through the economic turbulence, Mosaic’s diverse portfolio generated record revenue of $182.3 million and income from operations of $19.8 million.

Infrastructure segment - Ambassador Mechanical, South East Construction and Place-Crete

Due primarily to the 2014 acquisitions of South East Construction and Place-Crete, the Infrastructure segment has become Mosaic’s largest segment, representing approximately three-quarters of consolidated revenue and income from operations.  The segment was not materially impacted by the downturn as the three businesses in the segment are not directly involved with the energy sector. 

Diversified – Kendall’s Supply, Printing Unlimited, Industrial Scaffold

Kendall’s Supply and Printing Unlimited were indirectly impacted by the downturn due to its effects on the communities in which their businesses are situated.  However, due to strong management in those businesses, both continued to report steady profit margins, albeit on reduced revenue.  Industrial Scaffold maintained its solid market position and financial results within its niche.

Energy – Remote Waste, Allied Cathodic

The Energy segment was directly impacted by the downturn.  While Streamline Mechanical exited 2014 with strong results, early in the year it became apparent that 2015 and beyond would be very challenging for the business.  Mosaic was able to consummate the successful sale of the business in Q4.  Remote Waste experienced softness in its market.  Management reacted aggressively, focussing on cost containment, market share expansion and initiation of a new business unit targeted at high-volume water purification.  Finally, for several years Polar Geomatic had struggled to achieve profitability, so had become a marginal part of the portfolio.  We sold the business in Q4.

Outlook

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 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 – 4^th Street SW
Calgary, AB  T2S 2T4

Tel:  (403) 270-4663

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, 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.

To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/Mosaic04222016.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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