Horizon North Logistics Inc. Announces Results for the Period Ended December 31, 2007



    CALGARY, Feb. 27 /CNW/ - Horizon North Logistics Inc. ("Horizon" or the
"Company") reported its financial and operating results for the three and
twelve months ended December 31, 2007 and 2006. These 2007 results are not
comparable to the results for 2006 due to the significant transactions
completed by the Company in the last year.


    
    Financial Results
    -------------------------------------------------------------------------
                                        Three months ended December 31, 2007
    (000's except per                   Camps &                      Marine
     share amounts)                    Catering       Matting       Services
    -------------------------------------------------------------------------
    Revenue                              11,889         7,047          2,359
    Expenses
      Cost of goods sold                  2,170           657              -
      Operating                           8,269         2,517          1,120
      General & administrative            1,247           563              -
      Foreign exchange loss                   -            13              -
    -------------------------------------------------------------------------
    EBITDAS                                 203         3,297          1,239

      Stock based compensation              266            89             (4)
      Depreciation & amortization         2,239         1,709            252
      Gain on disposal of equipment        (208)            -              -
    -------------------------------------------------------------------------
    Operating earnings (loss)            (2,094)        1,499            991
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                        Three months ended December 31, 2007
    (000's except per                                Inter-segment
     share amounts)                    Corporate      Eliminations     Total
    -------------------------------------------------------------------------
     Revenue                                   -             (308)    20,987
     Expenses
       Cost of goods sold                      -              (10)     2,817
       Operating                               -             (298)    11,608
       General & administrative            1,270                -      3,080
       Foreign exchange loss                   -                -         13
    -------------------------------------------------------------------------
    EBITDAS                               (1,270)               -      3,469

      Stock based compensation               268                -        619
      Depreciation & amortization             57                -      4,257
      Gain on disposal of equipment            -                -       (208)
    -------------------------------------------------------------------------
    Operating earnings (loss)             (1,595)               -     (1,199)
    -------------------------------------------------------------
    Interest income                                                      (72)
    Interest expense on operating lines                                  228
    Bridge financing fee                                                 650
    Interest expense on long-term debt                                    12
    Loss on equity investments                                           (97)
    Income tax recovery                                               (2,137)
                                                                    ---------
    Net earnings                                                         217
                                                                    ---------
                                                                    ---------
    Earnings per share
      Basic                                                            $0.00
      Diluted                                                          $0.00
                                                                    ---------
                                                                    ---------


    -------------------------------------------------------------------------
                                       Three months ended December 31, 2006
    (000's except per                   Camps &                      Marine
     share amounts)                    Catering       Matting       Services
    -------------------------------------------------------------------------
    Revenue                              14,645         3,466          1,428
    Expenses
      Cost of goods sold                  2,393           181              -
      Operating                           8,375         2,096          1,380
      General & administrative               80           119              4
      Foreign exchange gain                  (4)            -              -
    -------------------------------------------------------------------------
    EBITDAS                               3,801         1,070             44

      Stock based compensation               75            49             11
      Depreciation & amortization         1,490           906            181
    -------------------------------------------------------------------------
    Operating earnings (loss)             2,236           115           (148)
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                       Three months ended December 31, 2006
    (000's except per                                Inter-segment
     share amounts)                    Corporate      Eliminations     Total
    -------------------------------------------------------------------------
    Revenue                                    6              (176)   19,369
    Expenses
      Cost of goods sold                       -                 -     2,574
      Operating                                -              (176)   11,675
      General & administrative             1,252                 -     1,455
      Foreign exchange gain                    -                 -        (4)
    -------------------------------------------------------------------------
    EBITDAS                               (1,246)                -     3,669

      Stock based compensation               441                 -       576
      Depreciation & amortization             21                 -     2,598
    -------------------------------------------------------------------------
    Operating earnings (loss)             (1,708)                -       495
    --------------------------------------------------------------
    Interest income                                                     (183)
    Interest expense on operating lines                                   14
    Interest expense on long-term debt                                    89
    Loss on equity investments                                          (290)
    Income tax expense                                                   353
                                                                    ---------
    Net earnings                                                         512
                                                                    ---------
                                                                    ---------
    Earnings per share
      Basic                                                            $0.01
      Diluted                                                          $0.01
                                                                    ---------
                                                                    ---------

    The Camps & Catering segment earned $59,483,000 of revenue and generated
$14,602,000 of EBITDAS and $7,397,000 of operating earnings in the year ended
December 31, 2007. Camps & catering revenue is comprised of camp rental
revenue, catering revenue, camp sales, service and other revenue as follows:

    -------------------------------------------------------------------------
                                                                       Three
                                                               Year   months
                                Three months ended            ended    ended
    ------------------------------------------------------ -------- ---------
    (000's except                   Sept-
     rental days        December    ember    June    March December December
     and mandays)           2007     2007    2007     2007     2007     2006
    Camps & catering
     revenue               7,964    6,017   5,682   17,312   36,975   10,089
    Camp sales revenue     2,149      675   7,055    2,286   12,165    3,699
    Installation, service
     & other revenue       1,776    2,036   2,682    3,849   10,343      857
    ------------------------------------------------------ -------- --------
    Total revenue         11,889    8,728  15,419   23,447   59,483   14,645
    ------------------------------------------------------ -------- --------
    ------------------------------------------------------ -------- --------
    EBITDAS                  205    1,368   4,495    8,534   14,602    3,801

    Operating earnings
     (loss)               (2,093)    (342)  3,065    6,767    7,397    2,236

    Bed rental days(1)    66,560   56,920  42,260  137,600  303,340   66,140

    Catering mandays      65,075   57,358  42,782  139,109  304,324   81,246

    (1) One bed rental day equals the rental of one bed for one day.
    

    Activity levels in the Camps & Catering segment in 2007 reflect the
traditional seasonality of the conventional oil and gas exploration and
production sector. The seasonality of this segment will be reduced in 2008
with the acquisition of Northern Trailer whose customer base is focused on the
mining sector and the opening of the Black Sand Executive Lodge serving oil
sands operators in the Fort McMurray region. This segment experienced an
overall pricing decline of approximately 15% during the course of the year due
to reduced activity levels in the western Canadian sedimentary basin stemming
from low natural gas prices and Alberta provincial government royalty
increases. During the fourth quarter of 2007, the Camps & Catering segment
recorded two non recurring expense items, the first being a $570,000 write
down of a receivable related to a customer dispute over work performed during
the first quarter and a $560,000 write down of inventory stemming from
inventory count and valuation work performed at year end.

    Matting

    The Matting segment earned revenues of $32,019,000, EBITDAS of
$12,649,000 and operating earnings of $7,275,000 in the year ended
December 31, 2007. Matting revenue is comprised of mat rental revenue, mat
sales, installation & service, and other revenue as follows:

    
    -------------------------------------------------------------------------
                                                                       Three
                                                               Year   months
                              Three months ended              ended    ended
    ------------------------------------------------------ -------- ---------
    (000's except                 Sept-
     rental days     December     ember    June    March   December December
     and mats)           2007      2007    2007     2007       2007     2006
    Mat rental
     revenue            2,729     4,185   2,193      681      9,788      649
    Mat sales
     revenue            1,116       156     201    7,238      8,711      169
    Installation,
     transportation,
     service and
     other revenue      3,203     4,030   2,760    3,527     13,520    2,648
    -----------------------------------------------------  -------- --------
    Total revenue       7,048     8,371   5,154   11,446     32,019    3,466
    -----------------------------------------------------  -------- --------
    -----------------------------------------------------  -------- --------
    EBITDAS             3,297     4,217   1,970    3,165     12,649    1,070

    Operating earnings  1,498     2,870     803    2,104      7,275      115

    Mat rental days   953,349 1,227,611 665,159  192,546  3,038,665  174,214

    Average mats in
     rental fleet      16,608    14,842   8,763    6,280     11,880    6,283

    Mats sold           1,172       200     184    7,622      9,178      193
    

    In 2007, the Matting segment saw a shift in its traditional revenue
generating activities. In the past, the mat rental business was strongest in
the second quarter when spring break up made ground conditions too soft to
move equipment without the use of mats. Utilization of the rental fleet
remained strong in the second half of the year due primarily to increased work
on in situ oil sands projects which tend to have more year round activity. Mat
rental prices declined in the fourth quarter as customers were looking for
discounts for large, long-term orders. Mat sales, which have traditionally
occurred in the first quarter after Christmas and before spring break-up, also
got off to an early start with some sizable orders being filled in the fourth
quarter.
    Mat rentals generate a higher margin than mat sales and as a result,
EBITDAS as a percent of revenue fluctuates as the quarterly revenue stream
changes from rentals to sales.

    Marine Services

    The Marine Services segment earned $5,850,000 of revenue and generated
$1,687,000 of EBITDAS and $721,000 of operating earnings in the year ended
December 31, 2007. Revenue for the year consists of $2,096,000 in tug revenue,
$505,000 in barge revenue, $1,973,000 in barge camp revenue and $1,276,000 in
rental and other revenue. The waterways in the far north are frozen from
mid-October through to mid-June; therefore, the majority of the segment's
revenues, EBITDAS, and operating earnings are earned in the third quarter. In
2007, revenues in the fourth quarter were higher than usual with the rental of
the three barge camps and barges contributing approximately $900,000 to annual
revenues.

    Corporate

    Corporate costs are the costs of the head office which include 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.

    
    Liquidity and Capital Resources

    The Company has a strong working capital position and minimal debt as set
    out below:

    -------------------------------------------------------------------------
    (000's)                      December 2007    December 2006    June 2006
    -------------------------------------------------------------------------
    Current assets               $      37,945    $      27,263  $       969

    Operating lines of credit           20,990            8,860          123
    Current liabilities excluding
     borrowings(1)                      18,699            9,861          765
    Due to related parties                   -                -       15,750
    Current portion of
     long-term debt                        871              756        1,800
    Current portion of
     capital leases                        109                -            -
    -------------------------------------------------------------------------
    Current liabilities                 40,669           19,477       18,438
    -------------------------------------------------------------------------
    Working capital (deficiency)(2)     (2,724)           7,786      (17,469)
    -------------------------------------------------------------------------

    Long-term debt and capital
     lease obligations                   1,417              728            -
    -------------------------------------------------------------------------
    (1) Calculated as the sum of accounts payable and accrued liabilities,
        deferred revenue and income taxes payable.
    (2) Calculated as current assets less current liabilities.
    

    Virtually all borrowings of Horizon are classified as current liabilities
as at December 31, 2007. Subsequent to December 31, 2007, Horizon renegotiated
its senior secured revolving term facility increasing it to a $35,000,000
senior secured revolving term facility. The terms of the renegotiated facility
permit Horizon to extend the revolving facility for a period of 364 days prior
to the initial maturity date. If the option to extend the facility is denied
or Horizon requests the facility be converted to a non-revolving term
facility, Horizon will commence making monthly payments equal to one
twenty-fourth of the balance outstanding at the term out date on the first day
of the thirteenth month subsequent to the term out date. These terms will
improve Horizon's working capital position in 2008 as the facility will be
classified as long-term until such time as the facility terms out. At December
31, 2007, Horizon had $10,000,000 drawn on the senior secured revolving term
facility.
    During the year ended December 31, 2007, the Company spent $32,104,000 on
capital asset additions. The Camps & Catering segment added 430 beds and
3,240 square feet of space to its fleet. The Matting segment added 15
additional semi-trucks to its fleet, bringing the total fleet to 15 trucks,
purchased 5 additional loaders, increased the mat rental fleet with the
addition of 10,349 mats, expanded the mat manufacturing facility in Grande
Prairie, Alberta, and added a mat manufacturing facility in the Fort McMurray
region of Alberta. The Marine Services segment purchased an office building in
Inuvik, Northwest Territories. The remainder of the capital additions included
vehicles, leasehold improvements, camp & catering supplies, and other
miscellaneous additions.

    Outlook

    Many analysts are of the view that the recently announced Alberta
government royalty changes will have a negative impact on activity levels in
the conventional oil and gas sector. Analysts also are forecasting that the
royalty changes will have little impact on oil sands projects, particularly
when the impact of the corporate tax rate reductions recently announced by the
Canadian federal government are considered. This outlook is supported by
announcements from a number of oil sands project operators, after the royalty
changes were made public, that they will be proceeding with their plans to
build or expand their facilities.
    These developments bode well for the continuation of Horizon's strategy
to strengthen and expand its core camp and catering and matting businesses
with a focus on northern oil sands and mining projects.
    Horizon should now have the operational and financial foundation from
which to pursue large jobs associated with remote northern resource
development projects that generate long term, year round revenue streams.

    
    Consolidated Balance Sheets (Unaudited)
    -------------------------------------------------------------------------
                                               December 2007   December 2006
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash                                     $       1,220   $       3,198
      Accounts receivable                             21,487          18,198
      Inventory                                       14,432           4,973
      Prepaid expenses                                   806             354
      Income taxes recoverable                             -             540
    -------------------------------------------------------------------------
                                                      37,945          27,263
    Property, plant and equipment, net               111,241          73,952
    Goodwill                                         114,549          84,243
    Intangible assets, net                            51,999          34,534
    Long-term investments                              5,679           3,525
    -------------------------------------------------------------------------
                                               $     321,413   $     223,517
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Operating lines of credit                $      20,990   $       8,860
      Accounts payable and accrued
       liabilities                                    13,899           9,691
      Deferred revenue                                 2,859             170
      Current portion of long-term
       debt                                              871             756
      Current portion of capital leases                  109               -
      Income taxes payable                             1,941               -
    -------------------------------------------------------------------------
                                                      40,669          19,477

    Long-term debt                                     1,019             728

    Capital lease obligations                            398               -

    Future income tax liability                       13,528          17,441
    -------------------------------------------------------------------------
                                                      55,614          37,646

    Shareholders' equity:
      Share capital                                  257,515         186,628
      Contributed surplus                              3,802             841
      Retained earnings (deficit)                      4,482          (1,598)
    -------------------------------------------------------------------------
                                                     265,799         185,871
    -------------------------------------------------------------------------
                                               $     321,413   $     223,517
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings (Loss) and Retained Earnings
    (Deficit)
    Three and twelve months ended December 31, 2007 and 2006 (Unaudited)
    -------------------------------------------------------------------------
                                 Three months ended      Twelve months ended
                                    December 31               December 31
                                 2007          2006      2007           2006
    -------------------------------------------------------------------------
    Revenue                 $  20,987     $  19,369 $  95,846      $  24,578

    Expenses:
      Cost of goods sold        2,817         2,574    14,922          2,574
      Operating                11,608        11,675    48,329         15,779
      General and
       administrative           3,080         1,455     9,288          3,041
      Foreign exchange
       (gain) loss                 13            (4)      253              3
      Stock based compensation    619           576     2,961            841
      Depreciation of property,
       plant and equipment      2,582         1,319     7,534          2,424
      Amortization of
       intangible assets        1,675         1,279     5,771          1,279
      Gain on disposal of
       property, plant
       and equipment             (208)            -      (976)           (14)
    -------------------------------------------------------------------------
                               22,186        18,874    88,082         25,927
    -------------------------------------------------------------------------
    Operating earnings (loss)  (1,199)          495     7,764         (1,349)

    Interest income               (72)         (183)     (160)          (603)
    Interest expense on
     operating lines of
     credit                       228            14       773             35
    Bridge financing fee          650             -       650              -
    Interest expense on
     long-term debt                12            89        24            194
    Loss (earnings) on
     equity investments           (97)         (290)     (636)            75
    -------------------------------------------------------------------------
    Earnings (loss) before
     income taxes              (1,920)          865     7,113         (1,050)

    Income taxes
      Current tax expense
       (recovery)                 510         1,142     6,547          1,075
      Future tax reduction     (2,647)         (789)   (5,514)        (1,258)
    -------------------------------------------------------------------------
                               (2,137)          353     1,033           (183)
    -------------------------------------------------------------------------
    Net earnings (loss)          (217)          512     6,080           (867)

    Retained earnings
     (deficit),
     beginning of period        4,265        (2,110)   (1,598)          (731)
    -------------------------------------------------------------------------
    Retained earnings
     (deficit), end of
     period                  $  4,482     $  (1,598) $  4,482      $  (1,598)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per
     share:
      Basic                  $   0.00     $    0.01  $   0.07      $   (0.06)
      Diluted                $   0.00     $    0.01  $   0.07      $   (0.06)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Cash Flows
    Three and twelve months ended December 31, 2007 and 2006 (Unaudited)
    -------------------------------------------------------------------------
                                 Three months ended      Twelve months ended
                                    December 31               December 31
                                 2007          2006      2007           2006
    -------------------------------------------------------------------------
    Cash provided by
     (used in):

    Operating activities:
      Net earnings (loss)   $     217     $     512 $   6,080      $    (867)
      Items not involving
       cash:
        Depreciation of
         property, plant
         and equipment          2,582         1,319     7,534          2,424
        Amortization of
         intangible assets      1,675         1,279     5,771          1,279
        Future tax reduction   (2,647)         (789)   (5,514)        (1,258)
        Stock based
         compensation             619           576     2,961            841
        Loss (earnings) on
         equity investments       (97)         (290)     (636)            75
        Gain on disposal of
         property, plant
         and equipment           (472)          (79)   (1,324)           (93)
    -------------------------------------------------------------------------
                                1,877         2,528    14,872          2,401

    Changes in non-cash
     working capital
     items                      1,019        (4,930)      248         (3,302)
    -------------------------------------------------------------------------
                                2,896        (2,402)   15,120           (901)

    Investing activities:
      Purchase of property,
       plant and equipment     (9,144)       (3,674)  (32,104)        (7,477)
      Proceeds on disposal
       of property, plant
       and equipment            1,367           171     3,625            186
      Refund of deposit
       upon cancellation of
       barge contract               -             -     5,049              -
      Return of capital from
       equity investment          741             -     1,344              -
      Business acquisitions,
       net of cash acquired   (57,969)      (14,434)  (59,170)      (110,288)
    -------------------------------------------------------------------------
                              (65,005)      (17,937)  (81,256)      (117,579)

    Changes in non-cash
     working capital
     items                         18        (8,955)   (3,074)        (8,955)
    -------------------------------------------------------------------------
                              (64,987)      (26,892)  (84,330)      (126,534)

    Financing activities:
      Issuance of common
       shares                  56,950           (69)   56,950        143,970
      Repayment of due to
       related parties              -             -         -        (15,750)
      Proceeds from operating
       lines of credit         22,470         9,052    60,663          9,124
      Repayment of operating
       lines of credit        (14,428)         (372)  (48,533)          (408)
      Proceeds from long-term
       debt                         -           174     1,143          2,174
      Repayment of long-term
       debt                    (2,237)       (6,460)   (3,131)        (8,472)
      Repayment of capital
       lease obligations           (9)            -        (9)             -
    -------------------------------------------------------------------------
                               62,746         2,325    67,083        130,638
    Changes in non-cash
     working capital
     items                        149             -       149              -
    -------------------------------------------------------------------------
                               62,895         2,325    67,232        130,638
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash position                804       (26,969)   (1,978)         3,203
    Cash (bank indebtedness),
     beginning of period          416        30,167     3,198             (5)
    -------------------------------------------------------------------------
    Cash, end of period     $   1,220     $   3,198 $   1,220      $   3,198
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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.





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