TERRAVEST ANNOUNCES THIRD QUARTER RESULTS FOR FISCAL 2025 AND DIVIDEND DECLARATION

Executive Summary

• TerraVest Industries Inc. reported its financial results for the third quarter and nine months ended June 30, 2025, alongside the declaration of a quarterly dividend.
• The company reported significant year-over-year growth in sales and Adjusted EBITDA, driven largely by recent acquisitions including Tankcon, Simplex, LBT, Entrans, and Aureus.
• Despite the top-line growth, net income for the quarter decreased slightly due to increased financing costs, depreciation, and foreign exchange losses associated with the acquisition-related debt and operations.

Key Details

• Dividend Declaration: Board declared a quarterly dividend of $0.175 per common share, payable on October 10, 2025, to shareholders of record as of September 30, 2025.
• Third Quarter Financials (Ended June 30, 2025):
  • Sales: $405,707 (up 70% from $238,129 in Q3 2024).
  • Net Income: $13,306 (down 8% from $14,387 in Q3 2024).
  • Adjusted EBITDA: $68,098 (up 39% from $49,062 in Q3 2024).
  • Cash Flow from Operating Activities: $27,957 (down 38% from $45,303 in Q3 2024).
  • Cash Available for Distribution: $34,576 (up 8% from $31,992 in Q3 2024).
  • Dividend Payout Ratio: 10%.
• Nine Months Financials (Ended June 30, 2025):
  • Sales: $951,742 (up 40% from $681,162 in prior year).
  • Net Income: $77,086 (up 30% from $59,419 in prior year).
  • Adjusted EBITDA: $182,685 (up 29% from $142,052 in prior year).
  • Cash Flow from Operating Activities: $98,785 (down 22% from $127,022 in prior year).
  • Cash Available for Distribution: $90,740 (up 16% from $78,096 in prior year).
  • Dividend Payout Ratio: 11%.
• Base Portfolio Performance (Excluding Recent Acquisitions):
  • Q3 Sales: $233,016 vs $238,129 (decrease of 2%).
  • Nine Months Sales: $536,362 vs $544,352 (decrease of 1%).
  • Base portfolio declines attributed to softer demand for storage tanks, compressed gas transportation equipment, and energy processing equipment, partially offset by increased demand for domestic compressed gas tanks and sales in Service and HVAC/Containment segments.
• Acquisitions:
  • Tankcon FRP Inc.: Acquired in May 2025; manufacturer of FRP tank trailers.
  • Simplex, Inc.: Acquired in April 2025; designs/manufactures electrical test systems and fuel supply systems.
  • L.B.T., Inc.: Acquired in April 2025; manufacturer of tank trailers.
  • EnTrans Holding, Inc.: Acquired in March 2025; manufacturer of tank trailers and transportation solutions.
  • Aureus Energy Services Inc.: Canadian assets acquired in January 2025; provides water management heating and hot oiling services.
• Capital Expenditures:
  • Maintenance Capital Expenditures (Q3): $4,571 (down 23% from $5,953 in Q3 2024).
  • Total PP&E Purchased (Q3): $12,317, of which $7,746 was growth capital used for new manufacturing product lines and asset base expansion.
• Expense Variances:
  • Administration expenses increased 74% (Q3) and 58% (9-month) due to acquisition-related costs and amortization of intangible assets.
  • Financing costs increased 195% (Q3) and 69% (9-month) due to higher interest on long-term debt from acquisitions and lease liabilities.
  • Other gains/losses included favorable changes in fair value of equity instruments and a gain on bargain purchase from the Aureus acquisition (9-month period).
• Outlook:
  • Management notes uncertainty in North American manufacturing due to recent tariff announcements, though domestic-focused portfolio limits impact.
  • Company is well-positioned to pursue acquisition strategy with new credit facility obtained in March 2025.

Notable Quotes

• "In general, TerraVest's portfolio of businesses is performing well. Recent acquisitions have made a meaningful contribution and we expect this to continue throughout the fiscal year."
• "Recent tariff announcements have created an environment of uncertainty in North America's manufacturing sector... However, TerraVest's portfolio businesses are well-positioned manufacturing products predominantly for their domestic markets, which greatly limits the impacts of any potential tariffs."