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Net income for the first quarter ended December 31, 2024 was $30,431 versus $19,303 for the prior comparable period. This represents an increase of 58%, which is the result of the positive contributions of AEPL and HT, a gain on foreign exchange on balance receivable from TerraVest' subsidiaries denominated in US dollars and a reduction in financing costs. The increase in net income was partially offset by additional depreciation and amortization expense as a result of business acquisitions in fiscal 2024, decreased sales in some of TerraVest's base portfolio businesses and an unfavorable change in fair value of derivative financial instruments. Other variances are also highlighted in the table above.

Adjusted EBITDA for the first quarter ended December 31, 2024 was $48,900 versus $49,056 for the prior comparable period. This represents a decrease of less than 1% which is the result of the reasons explained above and highlighted in the table above.

The table below reconciles cash flow from operating activities to Cash Available for Distribution for the first quarter ended December 31, 2024 and the comparative period in fiscal 2024.

Cash flow from operating activities for the first quarter ended December 31, 2024 was $36,603 versus $38,553 for the prior comparable period. This represents a decrease of 5%. The decrease in cash flow from operating activities is largely attributable to an unfavorable change in non-cash operating working capital items versus the prior comparable period, mainly explained by an increase in prepaid expenses and deposits related to supplier deposits for biogas contracts. The decrease in cash flow from operating activities was partially offset by less interest paid.

Maintenance Capital Expenditures were $5,702 for the first quarter ended December 31, 2024 versus $6,909 for the prior comparable period representing a decrease of 17%, which is primarily explained by the timing of such capital expenditures. During the first quarter ended December 31, 2024, TerraVest's total purchase of PP&E paid was $15,693 of which $9,991 is considered growth capital. The growth capital incurred during the first quarter was mainly used to add to the Company's rental fleet and invest in a new manufacturing product line.

Cash Available for Distribution for the first quarter ended December 31, 2024 increased by 5% versus the prior comparable period. This increase is a result of reasons explained above and elsewhere in this press release.

Outlook

TerraVest's businesses continue to perform well. Recent acquisitions have made a meaningful contribution and we expect this to continue into the 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. However, TerraVest's portfolio businesses are well-positioned manufacturing products predominantly for their domestic markets, which greatly limits the impacts of any future tariffs.

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. With the new credit facility obtained in October 2023 and the more recent equity offering, TerraVest is very well-positioned to pursue its acquisition strategy.

CONSOLIDATED RESULTS OF OPERATIONS

The following section provides the financial results of TerraVest's operations for the first quarter ended December 31, 2024 and the comparative period in fiscal 2024.

Sales for the first quarter ended December 31, 2024 increased by 3% versus the prior comparable period. The reasons have been explained previously in this press release.

Gross profit for the first quarter ended December 31, 2024 increased by 8% versus the prior comparable period. This is primarily explained by the contribution of HT and AEPL, partially offset by reduced activity levels in some of TerraVest's base portfolio businesses.

Administration expenses for the first quarter ended December 31, 2024 increased by 30% compared to the prior comparable period. The increase in administration expenses is mainly due to the addition of HT and AEPL and by additional amortization of intangible assets as a result of the business acquisitions in the prior fiscal year. The increase in administration expenses was partially offset by non‑recurring relocation fees related to the retirement of one of its manufacturing plants and by business acquisition expenses incurred in the prior comparable quarter.

Selling expenses for the first quarter ended December 31, 2024 increased by 28% versus the prior comparable period. The increase in selling expenses is explained by the addition of HT and AEPL and by increased commission expenses to support sales growth in certain product lines.

Financing costs for the first quarter ended December 31, 2024 decreased by 29% versus the prior comparable period. The decrease is primarily explained by less interest expense as a result of decreased debt balances combined with lower interest rates on floating rate debt versus the prior comparable period. The decrease in financing costs was partially offset by additional interest on lease liabilities as a result of additional lease liabilities compared to the first quarter of fiscal 2024.

Other (gains) losses variance for the first quarter ended December 31, 2024 is the result of a gain on foreign exchange on balance receivable from TerraVest' subsidiaries denominated in US dollars and a favorable change in fair value of investment in equity instruments, partially offset by an unfavorable change in fair value of derivative financial instruments.

Income tax expense variance for the first quarter ended December 31, 2024 is mainly the result of the variation in taxable earnings.

As a result of the above, net income attributable to common shareholders for the first quarter ended December 31, 2024 increased by 65% versus the prior comparable period.

DIVIDENDS

TerraVest is pleased to announce that The Board of Directors has declared a quarterly dividend of $0.175 per common share payable on April 10, 2025 to shareholders of record as at the close of business on March 31, 2025.

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

This news release makes reference to certain non‑IFRS financial measures. These measures are not recognized measures under IFRS and do not have a standardized meaning 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. The Company uses non‑IFRS financial measures including adjusted EBITDA, cash available for distribution, dividend payout ratio and maintenance capital expenditures.

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, 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 Maintenance Capital 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.

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