Horizon North Logistics Inc. Announces Results for the Period Ended December 31, 2006



    CALGARY, March 15 /CNW/ - Horizon North Logistics Inc. ("Horizon" or the
"Company") reported its financial and operating results for the three and six
months ended December 31, 2006. These 2006 results are not comparable to the
results for 2005 due to the significant transactions completed by the Company
in the last six months.
    As of July 1, 2006, Horizon had recently become a public Company with
certain minor assets as a result of a spin out from the merger transaction
between Mullen Group Income Fund and Producers Oilfield Services Inc.
    On July 26, 2006 the Company announced that it had entered into a letter
of intent, on a bought deal basis, with a group of underwriters pursuant to
which the underwriters agreed to purchase 34,000,000 subscription receipts as
principal for resale at a price of $3.25 per Subscription Receipt for gross
proceeds to Horizon of $110,500,000. The subscription receipts were exchanged
for shares September 28, 2006 and resulted in net proceeds to Horizon of
$104,810,544. In addition, the Company received $39,196,595 and issued
16,330,713 common shares on the exercise of outstanding warrants. These funds
were used to acquire all of the shares of Shanco Camp Services Ltd.
("Shanco"), Legacy Industrial Camps Inc. ("Legacy"), Swamp Mats Inc. ("Swamp
Mats") on September 28, 2006, and Fortier & Associates Camp Catering Inc.
("Fortier") on November 30, 2006, as follows:

    
                                 --------------------------------------------
                                        Shanco         Legacy     Swamp Mats
                                 --------------------------------------------
    Cash                          $ 57,433,264   $  9,887,352   $ 35,087,212
    Common shares                   16,384,985      2,667,324      9,526,155
                                 --------------------------------------------
    Total consideration           $ 73,818,249   $ 12,554,676   $ 44,613,367
                                 --------------------------------------------
                                 --------------------------------------------



                                       Fortier          Total
                                 -----------------------------
    Cash                          $ 14,594,017   $117,001,845
    Common shares                    3,660,000     32,238,464
                                 -----------------------------
    Total consideration           $ 18,254,017   $149,240,309
                                 -----------------------------
                                 -----------------------------
    

    The acquisitions resulted in a significant change in the operations and
results of the Company for the six months ended December 31, 2006 as compared
to the year ended June 30, 2006. The Company's suite of services now include
camp manufacturing, sales, service, transportation and rental and catering;
mat manufacturing, sales, rental, transportation and installation; and tug
boat and barge services on the Mackenzie River.
    "Starting a new company is exciting and challenging and I am pleased with
how the numerous components have come together in a short period of time. The
newly acquired business units are working together to improve operations and
to prepare for the opportunities in front of us. Results for the quarter ended
December 31, 2006 were somewhat muted by the significant decline in drilling
activity in western Canada. However, our businesses performed relatively well
and the Company is well positioned, from both an operations and financial
perspective, to continue to pursue new opportunities," stated Ric Peterson,
Chairman and Chief Executive Officer.

    
    Financial Results

                             ------------------------------------------------
                                    Six months ended December 31, 2006
                                 Camps &          Marine
                                Catering      Transportation       Matting
                             ------------------------------------------------
    Revenue                     15,059,061        4,868,391        3,465,720
    Expenses
      Cost of goods sold         2,393,119                -          180,533
      Operating                  8,847,198        3,331,871        2,096,100
      General & administrative      83,858           37,032          119,515
      Foreign exchange (gain)
       loss                         (3,929)               -                -
                             ------------------------------------------------
    EBITDAS(1)                   3,738,815        1,499,488        1,069,572

      Stock based compensation      74,785           18,095           48,630
      Depreciation &
       amortization              1,646,350          397,256          905,866

                             ------------------------------------------------
    Operating earnings
     (loss)(1)                   2,017,680        1,084,137          115,076
                             ------------------------------------------------

    Interest income
    Interest expense on
     operating line of credit
    Interest expense on
     long-term debt
    (Earnings) loss on
     equity investments
    Income tax expense
     (recovery)

    Net earnings (loss)



                             ------------------------------------------------
                                    Six months ended December 31, 2006
                                              Inter-segment
                                Corporate      Eliminations         Total
                             ------------------------------------------------
    Revenue                          8,220         (281,550)      23,119,842
    Expenses
      Cost of goods sold                 -                -        2,573,652
      Operating                          -         (281,550)      13,993,619
      General & administrative   2,301,611                -        2,542,016
      Foreign exchange (gain)
       loss                             71                -           (3,858)
                             ------------------------------------------------
    EBITDAS(1)                  (2,293,462)               -        4,014,413

      Stock based compensation     699,075                -          840,585
      Depreciation &
       amortization                 20,797                -        2,970,269

                             ------------------------------------------------
    Operating earnings
     (loss)(1)                  (3,013,334)               -          203,559
                             ------------------------------------------------

    Interest income                                                 (602,198)
    Interest expense on
     operating line of credit                                         20,127
    Interest expense on
     long-term debt                                                  110,260
    (Earnings) loss on
     equity investments                                             (133,805)
    Income tax expense
     (recovery)                                                      283,214
                                                               --------------

    Net earnings (loss)                                              525,961
                                                               --------------
                                                               --------------



                             ------------------------------------------------
                                    Three months ended December 31, 2006
                                 Camps &          Marine
                                Catering      Transportation       Matting
                             ------------------------------------------------
    Revenue                     14,644,862        1,428,407        3,465,720
    Expenses
      Cost of goods sold         2,393,119                -          180,533
      Operating                  8,375,307        1,379,680        2,096,100
      General & administrative      79,752            4,243          119,515
      Foreign exchange
       (gain) loss                  (3,929)               -                -
                             ------------------------------------------------
    EBITDAS(1)                   3,800,613           44,484        1,069,572

      Stock based compensation      74,785           10,857           48,630
      Depreciation &
       amortization              1,489,991          181,320          905,866

                             ------------------------------------------------
    Operating earnings
     (loss)(1)                   2,235,837         (147,693)         115,076
                             ------------------------------------------------

    Interest income
    Interest expense on
     operating line of credit
    Interest expense on
     long-term debt
    (Earnings) loss on
     equity investments
    Income tax expense
     (recovery)
    Net earnings (loss)



                             ------------------------------------------------
                                    Three months ended December 31, 2006
                                              Inter-segment
                                Corporate      Eliminations         Total
                             ------------------------------------------------
    Revenue                          6,220         (176,977)      19,368,232
    Expenses
      Cost of goods sold                 -                -        2,573,652
      Operating                          2         (176,977)      11,674,112
      General & administrative   1,251,874                -        1,455,384
      Foreign exchange
       (gain) loss                      71                -           (3,858)
                             ------------------------------------------------
    EBITDAS(1)                  (1,245,727)               -        3,668,942

      Stock based compensation     441,455                -          575,727
      Depreciation &
       amortization                 20,797                -        2,597,974

                             ------------------------------------------------
    Operating earnings
     (loss)(1)                  (1,707,979)               -          495,241
                             ------------------------------------------------

    Interest income                                                 (182,716)
    Interest expense on
     operating line of credit                                         18,100
    Interest expense on
     long-term debt                                                   84,308
    (Earnings) loss on
     equity investments                                             (290,241)
    Income tax expense
     (recovery)                                                      353,562
                                                               --------------

    Net earnings (loss)                                              512,228
                                                               --------------
                                                               --------------



                             ------------------------------------------------
                                      Twelve months ended June 30, 2006
                                 Camps &          Marine
                                Catering      Transportation       Matting
                             ------------------------------------------------
    Revenue                      3,637,433        1,915,058                -
    Expenses
      Operating                  3,337,526        2,341,821                -
      General & administrative     172,172          122,652                -
      Foreign exchange
       (gain) loss                       -            7,017                -
                             ------------------------------------------------
    EBITDAS(1)                     127,735         (556,432)               -

      Depreciation &
       amortization              1,000,207          890,565                -
      (Gain) loss on disposal
       of property, plant
       & equipment                (146,475)               -                -

                             ------------------------------------------------
      Operating loss(1)           (725,997)      (1,446,997)               -
                             ------------------------------------------------

    Interest expense on
     operating line of credit
    Interest expense on
     long-term debt
    (Earnings) loss on
     equity investments
    Income tax expense
     (recovery)
    Net earnings (loss)



                             ------------------------------------------------
                                     Twelve months ended June 30, 2006
                                              Inter-segment
                                Corporate      Eliminations         Total
                             ------------------------------------------------

    Revenue                              -                -        5,552,491
    Expenses
      Operating                          -                -        5,679,347
      General & administrative     397,926                -          692,750
      Foreign exchange
       (gain) loss                       -                -            7,017
                             ------------------------------------------------
    EBITDAS(1)                    (397,926)               -         (826,623)

      Depreciation &
       amortization                      -                -        1,890,772
      (Gain) loss on disposal
       of property, plant
       & equipment                       -                -         (146,475)

                             ------------------------------------------------
      Operating loss(1)           (397,926)               -       (2,570,920)
                             ------------------------------------------------

    Interest expense on
     operating line of credit                                         15,666
    Interest expense on
     long-term debt                                                  117,309
    (Earnings) loss on
     equity investments                                              208,693
    Income tax expense
     (recovery)                                                     (546,045)
                                                               --------------

    Net earnings (loss)                                           (2,366,543)
                                                               --------------
                                                               --------------

    (1) Operating earnings (loss) and EBITDAS (Earnings before interest,
        taxes, depreciation, amortization, and stock based compensation) are
        not recognized measures under Canadian generally accepted accounting
        principles (GAAP). Management believes that in addition to net
        earnings, EBITDAS is a useful supplemental measure as it provides an
        indication of the Company's ability to generate cash flow in order to
        fund working capital, service debt, pay current income taxes and fund
        capital programs. Management believes that in addition to net
        earnings, operating earnings (loss) is a useful supplemental measure
        as it provides an indication of the results generated by the
        Company's principal business activities prior to consideration of how
        those activities are financed or taxed. Investors should be
        cautioned, however, that operating earnings (loss) and EBITDAS should
        not be construed as alternatives to net earnings determined in
        accordance with GAAP as an indicator of the Company's performance.
        Horizon's method of calculating operating earnings (loss) and EBITDAS
        may differ from other entities and accordingly, operating earnings
        (loss) and EBITDAS may not be comparable to measures used by other
        entities.
    

    Camps & Catering

    As a result of the acquisitions of Shanco, Legacy and Fortier, revenue of
the Camps & Catering segment increased $11.5 million from $3.6 million in the
twelve months ended June 30, 2006 to $15.1 million in the six months ended
December 31, 2006. Of the $15.1 million in revenue earned in the six months
ended December 31, 2006, $14.6 million was earned in the second quarter,
subsequent to the acquisitions. Revenue for the six months ended December 31,
2006 consisted of camp rental revenue of $5.2 million, catering and service
revenue of $5.2 million, camp sales revenue of $3.7 million, and other revenue
of $959,000. In the six months ended December 31, 2006, the segment had
3,307 camp rental days, 85,332 catering mandays, and sold one 36-man camp,
three 20-man camps, one 16-man camp, two dorms and four tester's units.
Operating earnings also increased $2.7 million from an operating loss of
$726,000 in the twelve months ended June 30, 2006 to operating earnings of
$2.0 million in the six months ended December 31, 2006. Of the $2.0 million in
operating earnings earned in the six months ended December 31, 2006, $2.2
million was earned in the second quarter subsequent to the acquisitions and
countered the $218,000 operating loss generated in the first quarter.

    Marine Transportation

    Revenue in the Marine Transportation segment increased $3.0 million from
$1.9 million in the year ended June 30, 2006 to $4.9 million in the six months
ended December 31, 2006. In the six months ended December 31, 2006, the
segment had 797 barge days and 216 tug days. Operating earnings also increased
$2.5 million from an operating loss of $1.4 million in the twelve months ended
June 30, 2006 to operating earnings of $1.1 million in the six months ended
December 31, 2006.
    In 2005, decisions were made to delay planned drilling programs in the
western arctic for at least one winter; therefore, there was limited activity
in the north during the twelve months ended June 30, 2006. Activities for the
winter of 2007 are expected to increase in comparison to the winter of 2006;
therefore, there has been a significant increase in Marine Transportation
activity for the six months ended December 31, 2006.

    Matting

    Matting operations are a new addition to the operations of Horizon as a
result of the acquisition of Swamp Mats on September 28, 2006. Operations in
the three months ended December 31, 2006 contributed revenues of $3.5 million
and operating earnings of $115,000. Matting revenue consists of mat rental
revenue of $837,000, mat sales of $169,000, installation & service of
$2.2 million, and other revenue of $259,000. In the three months ended
December 31, 2006, the matting segment had 174,214 mat rental days and sold
193 mats. Matting typically has a slow period through the winter, however,
activities normally increase in late-March to early-April as spring break-up
occurs and mats are used to extend the winter drilling season.

    Corporate

    Reducing the increase in operating earnings are the corporate costs of
the head office which was established in June 2006 and includes the Chief
Executive Officer, President, Chief Financial Officer, Vice President of
Safety, Corporate Secretary, Corporate Accounting staff, and associated costs
of supporting a public company.

    Outlook

    The relative softness of crude oil and natural gas prices and the
resulting announcements of reductions of capital spending budgets by oil and
gas exploration and production companies will have a sharp negative impact on
activity levels in 2007, particularly subsequent to spring break-up. However,
the economic fundamentals remain strong for major oil sands projects, a market
in which Horizon is looking to expand operations. The mining sector is also
growing in Canada's North. We are currently working with a number of mining
customers and will be looking to expand operations in this market.
    The Mackenzie Gas Project is proceeding through the regulatory process
with the permitting decision expected in early 2008. Although Horizon
anticipates the project will be approved, delays in the decision to proceed
with the project by the sponsoring partners could have an impact on future
activity levels for the Company's assets based in the Northwest Territories.
    Activity levels in the Company's Camp and Catering segment will be
relatively strong during the upcoming winter season. The Company's catering
operation based in Inuvik, Northwest Territories will also see increased
activity levels this winter relative to a year ago. The addition of Fortier
expanded and strengthened the operating capabilities of the segment and should
allow the management team to pursue opportunities in the larger than 500 man
camp market.
    The Matting segment is seeing the start of its seasonal increase in
activity due to the weather conditions in Northern Alberta which saw heavy
snow fall prior to the arrival of cold temperatures. This snow cover insulated
the ground, not allowing the normal deep penetration of frost which in turn
leads to early spring like conditions.
    The Marine segment, which is also based in Inuvik, has completed its
seasonal shut down of barging operations due to the ice cover on the
waterways. Barging activity will commence again in June 2007.
    Horizon exits the six months ended December 31, 2006 with a working
capital position of $7.5 million and a debt to equity ratio of less than 0.01.
This strong balance sheet will allow the Company to continue its expansion
activities through additional acquisitions and expansion of its fleet of
operating assets.
    As of today's date, the total issued and outstanding stock options to
purchase common shares issued by Horizon to its directors, officers and
employees is 3,814,000.
    Of that total, Insiders have been issued 1,980,000 options to purchase
common shares of Horizon as follows: 1,560,000 options at $3.35 on July 25,
2006; 200,000 options at $3.56 on September 21, 2006 and 220,000 options
at $3.25 on March 15, 2007. The options issued to Insiders on July 25, 2006
have a term of 10 years and all options issued subsequent to that date have a
term of 5 years.

    
    Consolidated Balance Sheets
    December 31 and June 30, 2006
    -------------------------------------------------------------------------
                                              December 2006        June 2006
    -------------------------------------------------------------------------

    Assets
    Current assets:
      Cash                                    $   3,198,247    $      59,357
      Accounts receivable                        18,197,449          527,200
      Inventory                                   4,972,951           64,352
      Prepaid expenses                              354,221          191,487
      Income taxes recoverable                      539,997          126,410
    -------------------------------------------------------------------------
                                                 27,262,865          968,806

    Property, plant and equipment, net           73,951,868       22,210,872

    Goodwill                                     84,243,279        2,890,000

    Intangible assets, net                       34,533,492                -

    Long-term investments                         3,525,112        3,391,307

    -------------------------------------------------------------------------
                                              $ 223,516,616    $  29,460,985
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Operating line of credit                $   8,860,000    $     123,500
      Accounts payable and accrued
       liabilities                                9,690,804          764,654
      Deferred revenue                              169,811                -
      Current portion of long term debt             756,260        1,800,000
      Due to related parties                              -       15,750,000
    -------------------------------------------------------------------------
                                                 19,476,875       18,438,154

    Long-term debt                                  728,101                -

    Future income tax liability                  17,440,663        2,745,410
    -------------------------------------------------------------------------
                                                 37,645,639       21,183,564
    Shareholders' equity:
      Share capital                             186,628,355       10,401,345
      Contributed surplus                           840,585                -
      Deficit                                    (1,597,963)      (2,123,924)
    -------------------------------------------------------------------------
                                                185,870,977        8,277,421

    -------------------------------------------------------------------------
                                              $ 223,516,616    $  29,460,985
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings (Loss) and
     Retained Earnings (Deficit)
    Six months ended December 31 and year ended June 30, 2006
    -------------------------------------------------------------------------
                                          December 31, 2006    June 30, 2006
    -------------------------------------------------------------------------

    Revenue                                   $  23,119,842    $   5,552,491

    Expenses:
      Cost of goods sold                          2,573,652                -
      Operating                                  13,993,619        5,679,347
      General and administrative                  2,542,016          692,750
      Stock based compensation                      840,585                -
      Depreciation of property, plant
       and equipment                              1,691,061        1,890,772
      Amortization of intangible assets           1,279,208                -
      Gain on disposal of property, plant
       and equipment                                      -         (146,475)
      Foreign exchange (gain)/loss                   (3,858)           7,017
    -------------------------------------------------------------------------
                                                 22,916,283        8,123,411
    -------------------------------------------------------------------------
    Operating earnings (loss)                       203,559       (2,570,920)

    Interest income                                (602,198)               -
    Interest expense on operating line
     of credit                                       20,127           15,666
    Interest expense on long-term debt              110,260          117,309
    (Earnings) loss on equity investments          (133,805)         208,693
    -------------------------------------------------------------------------
    Earnings (loss) before income taxes             809,175       (2,912,588)

    Income tax expense (recovery):
      Current                                     1,101,367         (103,355)
      Future                                       (818,153)        (442,690)
    -------------------------------------------------------------------------
                                                    283,214         (546,045)

    -------------------------------------------------------------------------
    Net earnings (loss)                             525,961       (2,366,543)

    Retained earnings (deficit),
     beginning of period                         (2,123,924)         242,619

    -------------------------------------------------------------------------
    Deficit, end of period                    $  (1,597,963)   $  (2,123,924)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per share:
      Basic                                   $        0.01    $       (0.19)
      Diluted                                 $        0.01    $       (0.19)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Six months ended December 31 and year ended June 30, 2006
    -------------------------------------------------------------------------
                                          December 31, 2006    June 30, 2006
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operating activities:
      Net earnings (loss)                     $     525,961    $  (2,366,543)
      Items not involving cash:
        Depreciation of property, plant
         and equipment                            1,691,061        1,890,772
        Amortization of intangible assets         1,279,208                -
        Future income taxes                        (818,153)        (442,690)
        Stock based compensation                    840,585                -
        (Earnings) loss on equity investment       (133,805)         208,693
        Gain on disposal of property, plant
         and equipment                              (78,681)        (146,475)
    -------------------------------------------------------------------------
                                                  3,306,176         (856,243)

    Changes in non-cash working capital items    (2,629,143)         520,443
    -------------------------------------------------------------------------
                                                    677,033         (335,800)
    Investing activities:
      Purchase of property, plant and equipment  (7,336,134)      (1,436,657)
      Proceeds on sale of property, plant
       and equipment                                170,875          206,347
      Business acquisitions, net of cash
       acquired                                (110,287,569)               -
    -------------------------------------------------------------------------
                                               (117,452,828)      (1,230,310)

      Changes in non-cash working capital
       items                                     (8,955,697)               -
    -------------------------------------------------------------------------
                                               (126,408,525)      (1,230,310)
    Financing activities:
      Issuance of share capital                 143,969,953                -
      Proceeds from operating line of credit      9,125,000          132,500
      Repayment of operating line of credit        (388,500)          (9,000)
      Proceeds from long-term debt                  174,216        2,156,424
      Repayment of long-term debt                (8,260,287)        (776,126)
      Repayment of due to related parties       (15,750,000)               -
    -------------------------------------------------------------------------
                                                128,870,382        1,503,798

    -------------------------------------------------------------------------
    Increase (decrease) in cash position          3,138,890          (62,312)

    Cash, beginning of period                        59,357          121,669

    -------------------------------------------------------------------------
    Cash, end of period                       $   3,198,247    $      59,357
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
      Income taxes paid                       $   5,087,895    $      35,740
      Interest income received                     (602,198)               -
      Interest paid                                 318,088          153,215
    -------------------------------------------------------------------------
                                              $   4,807,785    $     188,955
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    This press release may contain forward-looking statements that are
    subject to risk factors associated with the oil and gas and mining
    businesses and the overall economy. The Company believes that the
    expectations reflected in this press release are reasonable, but results
    may be affected by a variety of variables. The Company relies on
    litigation protection for "forward-looking" statements.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.





For further information:

For further information: Ric Peterson, Chairman and Chief Executive
Officer, or Bob German, Vice President Finance and Chief Financial Officer,
Telephone: (403) 517-4654, Fax: (403) 517-4678


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890