TORONTO, ONTARIO - TerraVest Industries Inc., (TSX: TVK) ('TerraVest' or the 'Corporation') announces its results for the third quarter ended June 30, 2025 and the declaration of a quarterly dividend.
THIRD QUARTER AND NINE-MONTH RESULTS AND OUTLOOK
Business performance
Management believes that certain non-IFRS financial measures may be used to assist shareholders in analyzing TerraVest's performance. The table below presents certain financial results and reconciles net earnings to adjusted earnings before interest, taxes, depreciation and amortization ('Adjusted EBITDA') for the third quarter and nine months ended June 30, 2025 and for the corresponding periods of fiscal 2024.
Sales for the third quarter and nine months ended June 30, 2025 amounted to $405,707 and $951,742 compared to $238,129 and $681,162 for the corresponding periods last fiscal year. This represents increases of 70% and 40% respectively. However, TerraVest acquired all of the issued and outstanding shares of Tankcon FRP Inc. ('Tankcon') in May 2025, Simplex, Inc. ('Simplex') and L.B.T., Inc. ('LBT') in April 2025, EnTrans Holding, Inc. ('Entrans') in March 2025, and Advance Engineered Products Ltd. ('Advance') in April 2024. In addition, TerraVest acquired all of the Canadian assets of Aureus Energy Services Inc. ('Aureus') in January 2025 and all of the operating assets of the subsidiaries of Highland Tank Holdings, LLC ('Highland') in November 2023. Of these companies, only Highland and Advance contributed partially to the results for the same nine-month period last year. Excluding Tankcon, Simplex, LBT and Entrans, sales for the third quarter ended June 30, 2025 amounted to $233,016 compared to $238,129 for the same period last fiscal year, and excluding the same acquisitions plus Highland and Advance, sales for the nine months ended June 30, 2025 were $536,362 compared to $544,352 for the same period last fiscal year. This represents declines of 2% and 1%, respectively, for TerraVest's core portfolio (excluding Tankcon, Simplex, LBT, Entrans, Advance, and Highland). Aureus' results cannot be excluded from TerraVest's results since Aureus' activities have been fully integrated into the activities of one of TerraVest's existing subsidiaries, which are of a very similar nature.
The decrease in sales in TerraVest's core portfolio compared to the same periods last year was primarily due to lower demand for storage tanks, certain compressed gas transmission equipment product lines and power transformation equipment, as well as a productivity issue in one of the compressed gas equipment subsidiaries, partially offset by higher demand for domestic compressed gas tanks and higher sales in the HVAC and storage equipment and service segments.
Net earnings for the third quarter and nine months ended June 30, 2025 were $13,306 and $77,086 compared to $14,387 and $59,419 for the same periods last fiscal year. This represents a decrease of 8% and an increase of 30%, respectively. The quarterly decrease in net income was mainly due to additional depreciation and amortization and financing costs due to business acquisitions and a foreign exchange loss. This quarterly decrease was partially offset by the positive contribution from business acquisitions and a favourable change in the fair value of an investment in equity securities and derivative financial instruments. The increase in net income for the nine months ended June 30, 2025 compared to the same period last year was primarily due to positive contributions from business acquisitions, some of which contributed only partially to the result in the same period last year, a favourable change in the fair value of an equity investment and a gain on an acquisition on favourable terms. The increase for the nine-month period was partially offset by the same factors as those listed for the quarterly change.
Cash flows from operating activities for the third quarter and nine months ended June 30, 2025 amounted to $27,957 and $98,785 compared to $45,303 and $127,022 for the corresponding periods last fiscal year. This represents decreases of 38% and 22%, respectively. The decreases are explained by additional interest paid and income taxes paid and an unfavourable change in working capital items, mainly inventory levels and customer deposits, partially offset by higher net income.
Maintenance capital expenditures amounted to $4,571 for the third quarter ended June 30, 2025 compared to $5,953 for the same period last fiscal year, representing a decrease of 23% mainly due to the timing of these capital expenditures and the nature of capital projects in progress. During the third quarter ended June 30, 2025, TerraVest's total paid acquisitions of property, plant and equipment were $12,317, of which $7,746 is considered to be investment for business growth. The business growth investment incurred in the third quarter consisted primarily of investments in new manufacturing product lines and the expansion of its asset base in one of its service businesses.
Cash available for distribution for the third quarter and nine months ended June 30, 2025 increased by 8% and 16%, respectively, compared to the same periods last year. These increases are the result of the reasons explained above and elsewhere in this press release.
Prospects
In general, TerraVest's portfolio of companies is performing well. Recent acquisitions have made a significant contribution and we expect this to continue throughout the year. Opportunities for performance improvement from synergies between recent acquisitions and the core portfolio of companies continue to exist and are a priority for management.
Recent tariff announcements have created an environment of uncertainty in the North American manufacturing sector. This uncertainty has resulted in lower demand recently for a few TerraVest companies. However, TerraVest's portfolio companies are well positioned, manufacturing products primarily for their domestic markets, which significantly limits the impacts of potential tariffs.
The Company continues to make targeted investments to improve production efficiencies and expand its product lines, particularly in end markets where it has a significant presence. With the new credit facility secured in March 2025, TerraVest is very well positioned to pursue its acquisition strategy.
Business combinations
In May 2025, certain subsidiaries of TerraVest entered into an agreement to acquire all of the issued and outstanding shares of Tankcon FRP Inc. as well as certain assets of affiliated entities, Tankcon Leasing Inc. and 9271-7743 Quebec Inc. (hereinafter jointly referred to as 'Tankcon'). Headquartered in Blainville, Quebec, Tankcon is a leading North American manufacturer and lessor of fibre-reinforced polymer ('FRP') trailers.
In April 2025, a subsidiary of TerraVest entered into an agreement to acquire all of the issued and outstanding shares of Simplex, Inc. ('Simplex'). Headquartered in Springfield, Illinois, Simplex is a leading technology company that designs and manufactures electrical test systems (test stands) and fuel systems for the standby power generation industry.
In April 2025, a subsidiary of TerraVest entered into an agreement to acquire all of the issued and outstanding shares of L.B.T., Inc. ('LBT'). LBT, headquartered in Omaha, Nebraska, is a leading North American manufacturer of tank trailers.
In March 2025, a subsidiary of TerraVest entered into an agreement to acquire all of the issued and outstanding shares of EnTrans Holding, Inc. ('Entrans'). Headquartered in Athens, Tennessee, Entrans is a leading North American manufacturer of tank trailers, providing transportation solutions.
In January 2025, Green Energy Services Inc. ('GES'), a partially owned subsidiary of TerraVest, entered into an acquisition agreement to acquire all of the Canadian assets of Aureus Energy Services Inc. ('Aureus'). Aureus provides water management, heating and hot oil services to the energy sector in Western Canada. The hot oil services business was sold in the second quarter of fiscal 2025.
Gross earnings for the third quarter and nine months ended June 30, 2025 increased by 52% and 35%, respectively, compared to the same periods last year. This is mainly explained by the contribution of Tankcon, Simplex, LBT, Aureus and Entrans for the third quarter and nine months ended June 30, 2025 and Advance and Highland for the nine months ended June 30, 2025. A less favourable product mix and reduced activity levels in certain companies in TerraVest's core portfolio partially offset the increase in gross margin compared to the same periods last year.
Administrative expenses for the third quarter and nine months ended June 30, 2025 increased by 74% and 58%, respectively, compared to the same periods last year. The increases in administrative expenses are mainly explained by the addition of Entrans, LBT, Simplex, Advance and Highland (Advance and Highland being only for the nine-month period) and by additional business acquisition costs compared to the same periods last year. TerraVest also incurred an additional amortization expense on intangible assets as a result of numerous business acquisitions in the current and prior year.
Selling expenses for the third quarter and nine months ended June 30, 2025 increased by 42% and 33%, respectively, compared to the same periods last year. The increases in selling expenses are mainly explained by the addition of Entrans, Simplex, Advance and Highland (Advance and Highland being for the nine-month period only) and higher commission expenses resulting from higher sales of certain product lines.
Finance costs for the third quarter and nine months ended June 30, 2025 increased by 195% and 69%, respectively, compared to the same periods last year. The increases are mainly due to an additional interest expense on long-term debt due to the increase in the level of debt following the acquisitions of Entrans, LBT, Simplex and Tankcon, and by the additional interest expense on lease liabilities resulting from additional lease liabilities compared to the same periods last year. Amortization of finance costs also increased compared to the same periods last year due to an amendment to the credit facilities in March 2025. The change for the nine months ended June 30, 2025 also stems from costs incurred for the early repayment of an outstanding term loan that was refinanced as part of the amendment to the revolving operating credit facility.
The change in other (gains) losses for the third quarter and nine months ended June 30, 2025 is the result of a favourable change in the fair value of the equity investment and a gain on a bargain acquisition related to the acquisition of Aureus (for the nine-month period only), partially offset by a foreign exchange loss resulting from the U.S. dollar exposure of a TerraVest subsidiary (gain for the nine-month period). The variation is also explained by a non-recurring gain on the disposal of a building in the second quarter of fiscal 2024.
The change in income tax expense for the third quarter and nine months ended June 30, 2025 is explained by the change in taxable income and the timing of income tax expense adjustments.
As a result of the above, net earnings attributable to common shareholders for the third quarter and nine months ended June 30, 2025 decreased by 6% and increased by 32%, respectively, compared to the same periods last year.
DIVIDENDS
TerraVest is pleased to announce that the Board of Directors has declared a quarterly dividend of $0.175 per common share payable on October 10, 2025 to shareholders of record on September 30, 2025. The dividend is deemed to be an 'eligible dividend' for Canadian income tax purposes.
Contact:
Dustin Haw
TerraVest Industries Inc.Chief
Executive Officer
Email: ir@terravestindustries.com
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