Company Announcements

TORONTO , May 14, 2026 /CNW/ - TerraVest Industries Inc., (TSX: TVK) ("TerraVest" or the "Company") announces its results for the second quarter ended March 31, 2026 and the declaration of its quarterly dividend.

SECOND QUARTER AND SIX MONTHS REVIEW AND OUTLOOK

Business Performance

Management believes that there are certain non‐IFRS financial measures that can be used to assist shareholders in analyzing the performance of TerraVest. The table below highlights certain financial results and reconciles net income to Adjusted earnings before interests, income taxes, depreciation and amortization ("Adjusted EBITDA") for the second quarter and six months ended March 31, 2026 and the comparative periods in fiscal 2025.

Sales for the second quarter and six months ended March 31, 2026 were $442,565 and $850,915 versus $311,450 and $546,035 for the prior comparable periods. This represents increases of 42% and 56% respectively. The favorable net change in sales for the second quarter is generated by the 2026 and 2025 business combinations for $150,906, partially offset by a decrease in TerraVest base portfolio of $19,791. TerraVest acquired all the issued and outstanding shares of KBK Industries, LLC ("KBK") in January 2026, of Tankcon FRP Inc. ("Tankcon") in May 2025, of Simplex, Inc. ("Simplex") and L.B.T., Inc. ("LBT") in April 2025 and of EnTrans Holding, Inc. ("Entrans") in March 2025. In addition, TerraVest acquired all the Canadian assets of New Wave Energy Services Ltd. ("Wave") in September 2025 and of Aureus Energy Services Inc. ("Aureus") in January 2025. The reduction represents a decrease of 7% for TerraVest's base portfolio (excluding KBK, Tankcon, Simplex, LBT and Entrans). Wave and Aureus results can't be excluded from TerraVest results as their activities have been fully integrated into one of TerraVest's existing subsidiaries whose operations are similar in nature.

The decrease in sales for TerraVest base portfolio businesses versus the prior comparable period is a result of customer induced delivery delays on product, pricing pressure on domestic tanks and storage tanks markets, along with the closure of Iowa Steel Fabricators, LLC and the timing of job completions in the second quarter of 2025 in the Processing Equipment segment. The foreign exchange impact had an unfavorable effect of $14,550 and $15,252 on sales for the second quarter and six months ended March 31, 2026, compared to the exchange rates of the prior comparable periods. Without this negative foreign exchange effect, the increases in sales would have been 47% and 59%, respectively.

Net income for the second quarter and six months ended March 31, 2026 were $12,724 and $47,955 versus $33,349 and $63,780 for the prior comparable periods. This represents decreases of 62% and 25% respectively. For the second quarter ended March 31, 2026 the decrease is mainly explained by additional depreciation and amortization expenses and financing costs as a result of business acquisitions, an unfavorable change in fair value of investment in equity instruments and a gain on bargain purchase recognized in the second quarter of 2025. These factors, combined with lower sales from TerraVest base portfolio businesses and an unfavorable product mix, explain these decreases.

For the six-month period ending March 31, 2026, the decrease is partially offset by a favorable change in fair value of contingent considerations due to Entrans acquisition. Other variances are also highlighted in the table above.

Adjusted EBITDA for the second quarter and six months ended March 31, 2026 were $75,503 and $143,289 versus $65,687 and $114,587 for the prior comparable periods. This represents increases of 15% and 25% respectively, which is the result of the reasons explained above. The foreign exchange impact had a negative effect on Adjusted EBITDA of $2,826 for the quarter ended March 31, 2026 and $4,410 for the six-month period ended March 31, 2026.

The table below reconciles cash flow from operating activities to Cash Available for Distribution for the second quarter and six months ended March 31, 2026 and the comparative periods in fiscal 2025.

Cash flow from operating activities for the second quarter and six months ended March 31, 2026 were $58,540 and $155,088 versus $34,225 and $70,828 for the prior comparable periods. This represents increases of 71% and 119% respectively. The increase is attributable to a favorable change in non-cash working capital items compared to the prior period, mainly explained by a decrease in accounts receivable and an increase in accounts payable and customer deposits, partially offset by an increase in inventories.

Maintenance Capital Expenditures were $11,196 for the second quarter ended March 31, 2026 versus $9,699 for the prior comparable period representing an increase of 15%, which is primarily explained by the timing of such expenditures as well as TerraVest's portfolio growth following the 2026 and 2025 business combinations. During the second quarter ended March 31, 2026, TerraVest's total purchase of property, plant and equipment ("PP&E") paid was $22,759 of which $11,563 is considered growth capital. The growth capital incurred during the second quarter was mainly used to invest in new manufacturing product lines.

Cash Available for Distribution for the second quarter and six months ended March 31, 2026 decreased by 6% and increased by 12% respectively versus the prior comparable periods. The trend is a result of reasons explained above and elsewhere in this press release.

Outlook

In general, TerraVest's portfolio of businesses is performing in line with management expectations, with two notable exceptions. Demand for tank trailers continues to be soft, while demand for industrial steel tanks continues to be stronger than expected. Recent acquisitions have made a meaningful contribution, and we expect this to continue throughout this fiscal year. Opportunities to enhance performance through synergies between recent acquisitions and the base portfolio of businesses continue to exist and are a focus for management.

Recent tariff announcements have created an environment of uncertainty in North America's manufacturing sector. TerraVest does benefit from a diverse manufacturing footprint in North America that allows us to mitigate against direct tariff-related impacts. TerraVest continues to address the topic by leveraging both its footprint but also supply chain to minimize the impact on the company. However, the current context has resulted in softer demand for certain of TerraVest's businesses.

The Company continues to make targeted investments to improve its manufacturing efficiency and expand its product lines, particularly in end-markets where it has a meaningful presence.

Business Combinations

In January 2026, a subsidiary of TerraVest entered into a share purchase agreement to purchase all the issued and outstanding shares of KBK. Headquartered in Woodlands, Texas, KBK is a manufacturer of aboveground and underground fiberglass tanks and steel storage tanks for the convenience store ("c-store"), agricultural, chemical, infrastructure and energy markets. This business is part of our HVAC and Containment Equipment operating segment.

A partially owned subsidiary of TerraVest also acquired control of another business, through the purchase of 60% of its issued and outstanding shares, which is individually not significant.

CONSOLIDATED RESULTS OF OPERATIONS

The following section provides the financial results of TerraVest's operations for the second quarter and six months ended March 31, 2026 and the comparative periods in fiscal 2025.

Sales for the second quarter and six months ended March 31, 2026 increased by 42% and 56% respectively versus the prior comparable periods. The reasons have been explained previously in this press release.

Gross profit for the second quarter and six months ended March 31, 2026 increased by 21% and 31% respectively versus the prior comparable periods. This is primarily explained by the contribution of KBK, Tankcon, Simplex, LBT and Entrans, partially offset by an unfavorable product mix.

Administration expenses for the second quarter and six months ended March 31, 2026 increased by 71% and 92% respectively versus the prior comparable periods. The increase in administration expenses is mainly due to the addition of KBK, Tankcon, Simplex, LBT and Entrans.

Selling expenses for the second quarter and six months ended March 31, 2026 increased by 29% and 32% respectively versus the prior comparable periods. The increase in selling expenses is explained by the addition of KBK, Tankcon, Simplex, LBT and Entrans. Selling expenses also increased as a result of continued investment in marketing and promotional activities.

Financing costs for the second quarter and six months ended March 31, 2026 increased by 70% and 125% respectively versus the prior comparable periods. The increase is primarily explained by additional interest expense on long-term debt and on lease liabilities as a result of the acquisition of KBK, Tankcon, Simplex, LBT and Entrans.

Other (gains) losses variance for the six months ended March 31, 2026 was mainly driven by a favorable change in fair value of contingent considerations from the Entrans acquisition. In addition, this was partially offset by an unfavorable change in fair value of investment in equity instruments, and a gain on bargain purchase recognized in the prior comparable period, applicable to both the second quarter and six-month periods. TerraVest also realized a gain on foreign exchange versus a loss in the prior comparable quarter and a lesser gain on foreign exchange for the six-month period versus fiscal 2025.

Income tax expense variance for the second quarter and six months ended March 31, 2026 is the result of the variation in taxable earnings and the timing of income tax expense adjustments.

As a result of the above, net income attributable to common shareholders for the second quarter and six months ended March 31, 2026 decreased by 64% and 24% respectively versus the prior comparable periods.

DIVIDENDS

TerraVest is pleased to announce that the Board of Directors has declared a quarterly dividend of $0.20 per common share payable on July 10, 2026 to shareholders of record as at the close of business on June 30, 2026.

Additional information can be found in TerraVest's annual consolidated financial statements and MD&A which are available on SEDAR+ at www.sedarplus.ca.

NON‐IFRS FINANCIAL MEASURES

The Company uses measures (and ratios) that are not in accordance with IFRS to provide investors with supplemental metrics to assess and measure its operating performance and financial position from one period to the next. These metrics are presented as a complement to enhance the understanding of TerraVest's operating results but not in substitution of IFRS results.

Adjusted EBITDA, Cash Available for Distribution, Dividend Payout Ratio, Maintenance Capital Expenditures and Working Capital are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. TerraVest's definitions may differ from those of other issuers and therefore may not be comparable to similarly titled measures used by other issuers.

Adjusted EBITDA : is defined as net income adjusted for income tax expense, financing costs, depreciation, amortization, change in fair value of derivative financial instruments, change in fair value of investment in equity instruments and investment in a limited partnership, change in fair value of contingent considerations, gains or losses on foreign exchange, gains or losses on disposal of other property, plant and equipment and property, plant and equipment for rental, gains or losses on disposal of intangible assets, gains or losses on lease modification, gains or losses on remeasurement of equity interest, gain on bargain purchase, gains or losses on sale of business, non ‑ recurring acquisition ‑ related costs, impairment charges and other non ‑ recurring and/or non ‑ operations related items that do not reflect the current ongoing operations of TerraVest. Management believes this is a useful metric in evaluating the ongoing operating performance of TerraVest. Readers are cautioned that Adjusted EBITDA should not be construed as an alternative to net income determined in accordance with IFRS as an indicator of TerraVest's performance.

Cash Available for Distribution : is defined as cash flow from operating activities adjusted for changes in non-cash operating working capital, maintenance capital expenditures and repayment of lease liabilities. Management believes that cash available for distribution, as a liquidity measure, is a useful metric that provides an indication of the cash available from ongoing operations that can be distributed to shareholders as a dividend. Readers are cautioned that Cash Available for Distribution should not be construed as an alternative to cash flow from operating activities determined in accordance with IFRS as an indicator of TerraVest's liquidity and cash flows.

Dividend Payout Ratio : is defined as dividends paid in cash during the period divided by Cash Available for Distribution for the period. Management believes that Dividend Payout Ratio is a useful metric as it provides an indication of TerraVest's ability to sustain its current dividend policy. There is no directly comparable IFRS measure for Dividend Payout Ratio.

Maintenance Capital Expenditures : is defined as capital expenditures made to sustain the operations of TerraVest's operating businesses and to maintain the productive capacity of the businesses over an economic cycle, whether or not they yield significant cost or production efficiencies. Management believes that Maintenance Capital Expenditures should be funded by cash flow from existing operating activities and, therefore, deducted in determining Cash Available for Distribution. There is no directly comparable IFRS measure for M aintenance C apital Expenditures.

Working Capital : is calculated by subtracting current liabilities from current assets. Management uses Working Capital as a measure for assessing overall liquidity. There is no directly comparable IFRS measure for Working Capital.

Caution Regarding Forward-Looking Statements

This news release contains forward-looking statements. All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding our strategic direction and evaluation of the business segments and TerraVest as a whole, and other plans and objectives of or involving TerraVest. Readers can identify many of these statements by looking for words such as "expects" and "will" or similar terms or variations of these words. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements require us to make assumptions and, accordingly, forward looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements. 

Assumptions and analysis about the performance of TerraVest as a whole and its business segments, the markets in which the business segments compete and the prospects and values of the business segments are considered in setting the business plan for TerraVest, plans and/or ability to pay dividends, outlook for operations, financial position, results and cash flows, other plans and objectives and in making related forward-looking statements. Such assumptions include, without limitation, demand for products and services of the business segments in respect of the Canadian and other markets in which the businesses are active will be stable, and that input costs to business segments do not vary significantly from levels experienced historically. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements.

SOURCE TerraVest Industries Inc.