The U.S. operating subsidiary of Aveda Transportation and Energy Services Inc (TSXV: AVE) has agreed to purchase Hodges Trucking Co, an operator and owner of rig moving and heavy haul equipment based in Oklahoma City, Oklahoma. The acquisition, the value of which was not released, is expected to close in June. The seller in the transaction is Seventy Seven Energy Inc, a U.S. wellsite services and equipment business. Based in Calgary, Aveda is a provider of oilfield hauling services and equipment rentals. The company’s largest shareholder is Canadian private equity firm Werklund Capital, which invested in 2010.
Aveda Transportation and Energy Services Announces Another Transformative Acquisition by Signing a Definitive Agreement to Acquire Hodges Trucking
CALGARY, AB –(Marketwired – May 25, 2015) – Aveda Transportation and Energy Services Inc. (“Aveda” or the “Company”) (TSX VENTURE: AVE), a leading provider of oilfield hauling services and equipment rentals to the energy industry, today announced that, through its operating subsidiary in the US, it has signed a membership interest purchase agreement to acquire Oklahoma City, Oklahoma-based Hodges Trucking Company, L.L.C. (“Hodges”), a wholly-owned subsidiary of Seventy Seven Energy Inc. (“SSE”). Hodges currently owns approximately 900 pieces of rig moving and heavy haul equipment, including approximately 200 haul trucks, 400 trailers, 70 bed/pole trucks, 35 cranes, 40 forklifts/loaders and 160 service vehicles.
The transaction will be financed through the Company’s existing senior credit facility and a seller take-back note which will be secured by a second lien on all of Aveda’s fixed assets and accounts receivable.
Headquartered in Oklahoma City, Oklahoma, Hodges has been in operation since 1933 and has a footprint similar to Aveda’s US operations with terminals in Oklahoma, Texas, and Ohio. Hodges currently has over 300 employees.
Hodges’ gross revenue peaked at approximately US$166.0 million in 2012, dropping to US$139.4 million in 2013 and $123.7 million in 2014. EBITDA was US$34.0 million in 2012, US$13.6 million in 2013 and US$14.1 million in 2014. On a combined basis, Hodges’ and Aveda’s 2014 gross revenue would make it the largest rig moving company in North America (by gross revenue). Due to reduced drilling activity levels and energy market conditions, similar to many other oilfield services companies, Hodges generated reduced revenue and a net loss in the first quarter of 2015. Aveda is currently exploring all options for integration and consolidation to maximize future synergies between the two operating entities.
The transaction is expected to close on June 15, 2015. The transaction is subject to a number of standard conditions precedent to closing.
Aveda expects to report first quarter 2015 results after market close on May 29, 2015. The Company will host its first quarter fiscal 2015 results conference call on Monday, June 1, 2015 at 9:00 a.m. Eastern Time (ET). Executive Chairman David Werklund, President and CEO Kevin Roycraft and Vice-President, Finance and CFO Bharat Mahajan will discuss Aveda’s financial results for the quarter and then take questions from securities analysts.
To access the conference call by telephone, dial (647) 427-7450 or 1-888-231-8191. A live audio webcast of the conference call will be available at: http://event.on24.com/r.htm?e=1000563&s=1&k=4719451FA5F12C6BD33F8DBEB2E893BB.
The conference call webcast will be archived and available at: http://www.avedaenergy.com/investors/Conference-Calls/default.aspx until June 30, 2015.
About Aveda Transportation and Energy Services
Aveda provides specialized transportation services and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas, Pennsylvania, Oklahoma and North Dakota. Transportation services include both the equipment necessary to move the load as well as a trained, professional driver capable of securing, moving and manipulating the load at its origin and destination. Aveda’s rental operations include the rental of well-sites, tanks, mats, pickers, light towers and other equipment necessary for oilfield operations.
Aveda was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSX Venture Exchange. Aveda has major operations in Calgary, AB, Leduc, AB, Edson, AB, Mineral Wells, TX, Pleasanton, TX, Midland, TX, Williamsport, PA, Buckhannon, WV, Williston, ND, and Cherokee, OK. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE. For more information on Aveda please visit www.avedaenergy.com.
This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “achieve”, “could”, “believe”, “plan”, “intend”, “objective”, “continuous”, “ongoing”, “estimate”, “outlook”, “expect”, “may”, “will”, “project”, “should” or similar words, including negatives thereof, suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to: the anticipated closing of the Hodges acquisition, including timing thereof; and the Company’s strategy for integration and consolidation of acquisition targets. Aveda believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:
— the completion of the Hodges acquisition;
— the ability of Aveda to integrate and consolidate the Hodges operations;
— the ability of Aveda to retain Hodges customer relationships;
— the future performance of Aveda’s businesses and Hodges business;
— current business and economic trends;
— oil and natural gas commodity prices and production levels;
— capital expenditure programs and other expenditures by Aveda, Hodges and
— the ability of Aveda to retain and hire qualified personnel;
— the ability of Aveda to obtain parts, consumables, equipment,
technology, and supplies in a timely manner to carry out its activities;
— the ability of Aveda to maintain good working relationships with key
— the ability of Aveda to market its services successfully to existing and
— the ability of Aveda to obtain timely financing on acceptable terms;
— currency exchange and interest rates;
— risks associated with foreign operations;
— changes under governmental regulatory regimes and tax, environmental and
other laws in Canada and the United States; and
— a stable competitive environment.
Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risk that the Hodges acquisition is delayed or is not completed for any reason or the risks identified in Aveda’s annual information form and management discussion and analysis for the year ended December 31, 2014 (the “MD&A”), which are available for viewing on SEDAR at www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
This News Release contains the term “EBITDA” which is defined in the MD&A. EBITDA as presented does not have any standardized meanings prescribed by international financial reporting standards (“IFRS”) and therefore may not be comparable with the calculation of similar measures for other entities. Management uses EBITDA to analyze the operating performance of the business. EBITDA as presented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. Additionally, readers should note that the financial information for Hodges contained in this News Release is based on information provided by SSE and was prepared using U.S. GAAP, and accordingly may be different than if such information was prepared using IFRS.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
FOR FURTHER INFORMATION PLEASE CONTACT:
For more information, please contact:
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer
Photo courtesy of Aveda Transportation and Energy Services Inc