Aveda Transportation and Energy Services Inc. (CVE:AVE) has reported unexpectedly strong quarterly earnings, with cost containment driving a strong improvement in margins, say analysts at brokerage and investment banking firm Stifel Nicolaus Canada Wednesday.
The Calgary-based oil transportation service provider, which has a buy recommendation and $3.50 price target from Stifel, returned earnings of 16 cents per share for the first quarter of 2013, well up on the Stifel estimate and consensus of 3 cents per share, according to the analyst research report released Wednesday.
Net income of $1.7 million was posted for the three months that ended March 31, compared to the $0.4 million recorded for the same period in 2012, an increase of $1.3 million or 291.6 per cent year-on-year and also up on the Stifel estimate of $0.3 million, a 479 per cent improvement on the forecast figure.
EBITDA was $4.2 million, which exceeded both Stifel Nicolaus’ estimate of $3.1 million by $1.1 million or 34 per cent and the consensus estimate of $3.2 million by $1 million or 30 per cent.
EBITDA margins were also up on the figures for the year before, with the 17.7 per cent recorded well up on the 12.4 per cent Aveda posted a year ago.
Revenue of $23.5 million, while representing an increase of $0.9 million or 2 per cent on the $22.6 million recorded in the same quarter a year ago, came in slightly under Stifel Nicolaus’ forecast figure for the quarter of $23.8 million, but in line with the consensus figure.
The company reported revenue of $13.7 million in the United States for the quarter, a bump of 47 per cent year on year, but slightly down on the Stifel Nicolaus estimate which pegged revenue for the quarter to come in at $14.5 million, the same figure as that recorded for the last quarter of 2012.
The analyst, Lara J. King, singled out the company’s newly grown margins for mention in her note.
“In 2012, Aveda closed some of its underperforming locations in Canada and, in the United States, shifted assets to higher-activity regions. In our opinion, Aveda's ability to grow its EBITDA margins meaningfully demonstrates the success of this program. We believe that Aveda's expanded rental assets are also having a positive impact on the company's EBITDA margins.”
In Canada, revenue of $9.8 million was reported, well down on the year ago figure of $13.2 million for a drop of 26 per cent, but 5 per cent up on Stifel’s estimate of $9.3 million.
"Through the hard work of our team members, we were able to achieve profitable results despite market weakness in certain locations," said president and chief executive officer Kevin Roycraft, in a company statement released with the figures. "The Aveda team is off to a strong start, we will continue to build upon the success we have achieved."
Shares in the company were lately trading flat on the TSX Venture Exchange on the day of the announcements, with the stock rising as high as $2.35 and as low as $2.25 in intraday trading from an open of $2.30.