Horizon North Logistics Inc. Announces Results For The Period Ended December 31, 2008



    CALGARY, Feb. 26 /CNW/ - TSX Symbol: HNL - Horizon North Logistics Inc.
("Horizon" or the "Corporation") reported its financial and operating results
for the three and twelve months ended December 31, 2008 and 2007.

    
    Highlights

    -------------------------------------------------------------------------
                            Three months ended             Year ended
    (000's except      December 31,  December 31,  December 31,  December 31,
     per share amounts)       2008          2007          2008          2007
    -------------------------------------------------------------------------
    Revenue            $    56,735   $    20,988   $   180,779   $    95,846
    EBITDAS(1)              13,891         3,469        45,143        23,054
    Operating earnings
     (loss)(1)               6,926        (1,199)       20,086         7,764
    Earnings before
     goodwill
     impairment loss
     (net of associated
     $4,373,000 tax
     recovery)(2)            4,199           217        12,588         6,080
    Earnings before
     goodwill
     impairment loss
     per share -
     diluted           $      0.04   $      0.00   $      0.11   $      0.07
    Goodwill
     impairment loss
     (net of associated
     $4,373,000 tax
     recovery)             110,537             -       110,537             -
    Goodwill impairment
     loss per share -
     diluted           $     (1.00)  $         -   $     (1.00)  $         -
    Net (loss) earnings   (106,338)          217       (97,949)        6,080
    Net (loss) earnings
     per share -
     diluted           $     (0.96)  $      0.00   $     (0.89)  $      0.07
    Total assets           246,667       321,413       246,667       321,413
    Funds from
     operations(3)          13,427         1,877        36,356        14,872
    Capital spending         7,378         9,144        56,174        32,104
    Proceeds from
     issuance of
     common shares               -        56,950             -        56,950
    Business
     acquisitions, net
     of cash acquired            1        57,969           581        59,170
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1)    EBITDAS (Earnings before interest, taxes, depreciation,
           amortization, gain/loss on disposal of property, plant and
           equipment and stock based compensation) and operating earnings
           (loss) 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 Corporation'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 Corporation's principal
           business activities prior to consideration of how those activities
           are financed or taxed. Investors should be cautioned, however,
           that EBITDAS and operating earnings (loss) should not be construed
           as alternatives to net earnings determined in accordance with GAAP
           as an indicator of the Corporation's performance. Horizon's method
           of calculating EBITDAS and operating earnings (loss) may differ
           from other entities and accordingly, EBITDAS and operating
           earnings (loss) may not be comparable to measures used by other
           entities. For a reconciliation of EBITDAS and operating earnings
           (loss) to net earnings, please refer to pages 3 and 4 of the News
           Release.
    (2)    Earnings before goodwill impairment loss is not a recognized
           measure under GAAP. Horizon's method of calculating earnings
           before goodwill impairment loss may differ from other entities and
           accordingly, earnings before goodwill impairment loss may not be
           comparable to measures used by other entities. For a
           reconciliation of earnings before goodwill impairment loss, please
           refer to pages 3 and 4 of the News Release.
    (3)    Funds from operations is not a recognized measure under GAAP.
           Management believes that in addition to cash flow from operations,
           funds from operations is a useful supplemental measure as it
           provides an indication of the cash flow generated by the
           Corporation's principal business activities prior to consideration
           of changes in working capital. Investors should be cautioned,
           however, that funds from operations should not be construed as an
           alternative to cash flow from operations determined in accordance
           with GAAP as an indicator of the Corporation's performance.
           Horizon's method of calculating funds from operations may differ
           from other entities and accordingly, funds from operations may not
           be comparable to measures used by other entities. Funds from
           operations is equal to cash flow from operations before changes in
           non-cash working capital items related to operations.
    

    Overview of Horizon's Objectives, Strategies and Outlook

    Horizon's results for 2008 reflect the impact of initiatives undertaken
since inception of the Corporation in June 2006 through 2008. On start up, the
Corporation's objective was to build a profitable, growth-oriented company to
provide services to remote resource development projects in Canada. The
strategy established to achieve this objective had the following elements:

    
    -   Acquire full-cycle businesses that provide services required by
        projects located in remote regions of Canada;
    -   Establish safety standards that meet and exceed the high expectations
        of customers that work in remote locations;
    -   Diversify the revenue stream so as not to be overly exposed to any
        one industry, in any one location and to minimize seasonality;
    -   Establish and maintain relationships with the aboriginal communities
        on whose land we work, the basis for which is meaningful
        participation in projects undertaken by the Corporation;
    -   Maintain a conservative balance sheet to allow the continued pursuit
        of growth opportunities whether they be in the form of additional
        acquisitions or internal growth projects; and
    -   Focus on maintaining and strengthening the team of employees and
        management to ensure the continued success and longevity of the
        organization.
    

    Much of the Corporation's acquisition and investment activity has focused
on establishing and growing the Camps & Catering operation. With manufacturing
facilities in Grande Prairie, Alberta and Kamloops, British Columbia and
catering operations headquartered in Sherwood Park, Alberta, the Corporation
now has the capacity to compete for workforce housing projects with top-tier
service providers in Western Canada. The prime example of the success of these
initiatives is the opening of the 500-bed BlackSand Executive Lodge near Fort
McMurray, Alberta in the third quarter of 2008. This facility, which is fully
contracted to a major operator in the area, will operate year-round,
moderating the seasonality of our traditional oil and gas drilling focused
camp business. The Northern Trailer Ltd. ("Northern") acquisition in late 2007
expanded manufacturing capacity in a different labour market and diversified
the revenue stream into the mining sector.
    The Matting operation has proven its ability to adjust to the changing
needs of its customers. The revenue mix in this segment changed significantly
from being heavily weighted to rentals in 2007 to a larger percentage of sales
in 2008. This impacted profitability as mat sales have a lower margin than mat
rentals, however service revenue increased in conjunction with the increase in
the number of customer owned mats that we manage on their behalf. Management
also responded to the shift in customer demand by selling used mats from the
rental fleet, thus reducing the investment in the segment and supporting
rental fleet utilization rates.
    The Marine Services operation saw increased activity relative to 2007
with the continued work associated with a customer's drilling program in the
Mackenzie Delta region of the Northwest Territories. Although small, this
operation is contributing to the Corporation's cash flow while we await
further progress on northern development projects such as the Mackenzie Gas
Project and offshore oil and gas development.
    The potential impact of these activities, however, will be significantly
dampened in 2009 by the worldwide economic situation which has had a
significant negative impact on the key drivers of our business, being crude
oil, natural gas and mineral prices. Our customers are primarily in the
upstream and downstream oil and gas industry and the mining industry and many
projects that were planned, or in their early phases of construction, are now
uneconomic at current commodity prices. Further exacerbating the situation is
the lack of access to capital to fund growth projects even for the largest of
our customers. These factors have combined to force existing and potential
customers to live within their means by significantly curtailing capital
spending plans to match reduced operating cash flow.
    Horizon's results for 2008 and 2009 have been and will be negatively
impacted by these market developments. In the fourth quarter of 2008, the
Corporation recognized a goodwill impairment loss in the amount of
$110,537,000 ($1.00 per share) after tax. The goodwill being carried on our
balance sheet arose from the acquisitions undertaken in 2006 and 2007 when
market conditions and industry outlooks were much stronger. Current business
prospects and related equity market valuations have resulted in a sustained
deficiency of the fair market value of Horizon's common shares relative to the
Corporation's net book value, thus necessitating this write-down.
    Activity levels and asset utilization rates will be significantly lower
in 2009 than they were in 2008. We are working with all our customers,
including those with which we have asset utilization contracts, to explore
ways to realize efficiencies and cost reductions for them and ourselves.
Controlling and reducing expenditures will be at the forefront in 2009.
Salaried employees will be subject to salary reductions, led by a 20% rollback
in the senior management ranks. Budgeted capital expenditures for 2009 have
been set at $12 million, a level that should allow for the continued repayment
of debt throughout the year. However, all capital expenditures will be
examined on an item by item basis to ensure they are justified in the
prevailing circumstances. Staffing levels across all our business units will
be monitored and adjusted as necessary to match anticipated activity levels
while at the same time attempting to maintain our core capabilities,
particularly at our manufacturing facilities.
    These pre-emptive actions are being taken to maintain the strength of the
Corporation's balance sheet to be in a position to continue our growth when
economic conditions improve. Having said that, management is of the view that
such a turnaround will not occur until 2010 at the earliest.

    
    Financial Results

    -------------------------------------------------------------------------
                            Three months ended December 31, 2008

                                                              Inter-
                                                            segment
                        Camps &            Marine             Elimi-
    (000's)            Catering  Matting Services Corporate nations    Total
    -------------------------------------------------------------------------
    Revenue             $45,944  $ 9,496  $ 1,718  $     -  $  (423) $56,735
    Expenses
      Cost of goods sold  8,685    4,241        -        -       (6)  12,920
      Operating          22,115    3,302    1,451        -     (382)  26,486
      General &
       administrative       570      201        -    2,701        -    3,472
      Foreign exchange
       loss (gain)            -      101        -     (135)       -      (34)
    -------------------------------------------------------------------------
    EBITDAS             $14,574  $ 1,651  $   267  $(2,566)  $  (35) $13,891

      Stock based
       compensation         154       38        3      119        -      314
      Depreciation &
       amortization       4,877    1,521      288       49      (36)   6,699
      (Gain) loss on
       disposal of
       equipment            (50)       2        -        -        -      (48)

    -------------------------------------------------------------------------
    Operating earnings
     (loss)             $ 9,593  $    90  $   (24) $(2,734)  $    1  $ 6,926
    ----------------------------------------------------------------

    Interest income                                                      (25)
    Interest expense on operating
     lines of credit                                                     171
    Interest expense on long-term
     debt                                                                423
    Earnings on equity investments                                      (180)
    Income tax expense                                                 2,338
                                                                   ----------
    Earnings before goodwill
     impairment loss                                               $   4,199
    Goodwill impairment loss                                         114,910
    Income tax recovery associated
     with goodwill impairment loss                                    (4,373)

                                                                   ----------
    Net loss                                                       $(106,338)
                                                                   ----------
                                                                   ----------



    -------------------------------------------------------------------------
                            Three months ended December 31, 2007
                                                              Inter-
                                                            segment
                        Camps &             Marine             Elimi-
    (000's)            Catering  Matting Services Corporate nations    Total
    -------------------------------------------------------------------------
    Revenue             $11,890  $ 7,047  $ 2,359  $     -  $  (308) $20,988
    Expenses
      Cost of goods sold  2,170      658        -        -      (10)   2,818
      Operating           8,269    2,082    1,120        -     (298)  11,173
      General &
       administrative     1,247      997        -    1,270        -    3,514
      Foreign exchange
       loss                   -       13        -        1        -       14
    -------------------------------------------------------------------------
    EBITDAS             $   204  $ 3,297  $ 1,239  $(1,271) $     -  $ 3,469

      Stock based
       compensation         267       88       (4)     268        -      619
      Depreciation &
       amortization       2,239    1,709      252       57        -    4,257
      Gain on disposal
       of equipment        (207)      (1)       -        -        -     (208)

    -------------------------------------------------------------------------
    Operating (loss)
     earnings           $(2,095) $ 1,501  $   991  $(1,596) $     -  $(1,199)
    ----------------------------------------------------------------

    Interest income                                                      (72)
    Interest expense on operating
     lines of credit                                                     228
    Interest expense on long-term
     debt                                                                 12
    Bridge financing fee                                                 650
    Earnings on equity investments                                       (97)
    Income tax recovery                                               (2,137)
                                                                   ----------
    Net earnings                                                     $   217
                                                                   ----------
                                                                   ----------



    -------------------------------------------------------------------------
                                 Year ended December 31, 2008
                                                              Inter-
                                                            segment
                       Camps &             Marine             Elimi-
    (000's)            Catering  Matting Services Corporate nations    Total
    -------------------------------------------------------------------------
    Revenue            $137,025 $ 36,166 $ 10,447  $     - $(2,859) $180,779
    Expenses
      Cost of goods
       sold              23,138   12,850      218        -    (193)   36,013
      Operating          69,456   14,481    7,288        -  (2,356)   88,869
      General &
       administrative     2,413      494        -    7,799       -    10,706
      Foreign exchange
       loss (gain)            -      179        -     (131)      -        48
    -------------------------------------------------------------------------
    EBITDAS            $ 42,018 $  8,162 $  2,941  $(7,668) $ (310) $ 45,143

      Stock based
       compensation         809      196       19      738       -     1,762
      Depreciation &
       amortization      16,037    6,060    1,075      174     (64)   23,282
      Loss (gain) on
       disposal of
       property, plant
       & equipment           30      (17)       -        -        -       13

    -------------------------------------------------------------------------
    Operating earnings
     (loss)            $ 25,142 $  1,923 $  1,847  $(8,580) $ (246) $ 20,086
    ---------------------------------------------------------------

    Interest income                                                      (39)
    Interest expense on operating
     lines of credit                                                     647
    Interest expense on long-term
     debt                                                              1,657
    Earnings on equity investments                                      (589)
    Income tax expense                                                 5,822
                                                                   ----------
    Earnings before goodwill
     impairment loss                                                  12,588
    Goodwill impairment loss                                         114,910
    Income tax recovery associated
     with goodwill impairment loss                                    (4,373)
                                                                   ----------

    Net loss                                                        $(97,949)
                                                                   ----------
                                                                   ----------



    -------------------------------------------------------------------------
                                 Year ended December 31, 2007
                                                              Inter-
                                                            segment
                        Camps &            Marine             Elimi-
    (000's)            Catering  Matting Services Corporate nations    Total
    -------------------------------------------------------------------------

    Revenue            $ 59,483 $ 32,019 $  5,850  $     2 $(1,508) $ 95,846
    Expenses
      Cost of goods
       sold               8,707    6,272        -        -     (57)   14,922
      Operating          34,580   12,611    4,163        -  (1,451)   49,903
      General &
       administrative     1,590      505        -    5,619       -     7,714
      Foreign exchange
       loss (gain)            4      (18)       -      267       -       253
    -------------------------------------------------------------------------
    EBITDAS            $ 14,602 $ 12,649 $  1,687  $(5,884) $    -  $ 23,054

      Stock based
       compensation         958      362       35    1,606       -     2,961
      Depreciation &
       amortization       7,240    4,995      931      139       -    13,305
      (Gain) loss on
       disposal of
       property, plant
       & equipment         (993)      17        -        -              (976)

    -------------------------------------------------------------------------
    Operating earnings
     (loss)            $  7,397 $  7,275 $    721  $(7,629) $    -  $  7,764
    ---------------------------------------------------------------

    Interest income                                                     (160)
    Interest expense on operating
     line of credit                                                      773
    Interest expense on long-term
     debt                                                                 24
    Bridge financing fee                                                 650
    Earnings on equity investments                                      (636)
    Income tax expense                                                 1,033
                                                                   ----------

    Net earnings                                                    $  6,080
                                                                   ----------
                                                                   ----------



    Camps & Catering

    Camps & catering revenue is comprised of camp and space rental revenue,
catering revenue, camp and space sales, and service revenue as follows:

                                                                        Year
                                     Three months ended                ended
    (000's except     -------------------------------------------- ----------
     rental days           March       June  September   December   December
     and mandays)           2008       2008       2008       2008       2008
                      -------------------------------------------- ----------
    Camps, catering &
     service revenue  $   18,787  $  17,969  $  27,288  $  32,380  $  96,424
    Camp sales
     revenue               6,197      3,430      6,563     10,245     26,435
    Space sales
     revenue               2,723      1,680      2,787      2,048      9,238
    Space rental
     revenue               1,100      1,473      1,084      1,271      4,928
                      -------------------------------------------- ----------
    Total revenue     $   28,807  $  24,552  $  37,722  $  45,944  $ 137,025
                      -------------------------------------------- ----------
                      -------------------------------------------- ----------
    EBITDAS           $    8,776  $   6,141  $  12,527  $  14,574  $  42,018
    Operating
     earnings         $    5,398  $   2,372  $   7,779  $   9,593  $  25,142
    Bed rental days(1)   148,775    115,854    154,682    168,311    587,622
    Catering mandays     122,188     85,909    117,959    137,839    463,895



                                                                        Year
                                     Three months ended                ended
    (000's except     -------------------------------------------- ----------
     rental days           March       June  September   December   December
     and mandays)           2007       2007       2007       2007       2007
                      -------------------------------------------- ----------
    Camps, catering &
     service revenue   $  21,161  $   8,365  $   8,051  $   9,741  $  47,318
    Camp sales revenue     2,286      7,055        675      2,149     12,165
                      -------------------------------------------- ----------
    Total revenue      $  23,447  $  15,420  $   8,726  $  11,890  $  59,483
                      -------------------------------------------- ----------
                      -------------------------------------------- ----------
    EBITDAS            $   8,534  $   4,495  $   1,369  $     204  $  14,602
    Operating earnings
     (loss)            $   6,768  $   3,065  $    (341) $  (2,095) $   7,397
    Bed rental days(1)   137,600     42,260     56,920     66,560    303,340
    Catering mandays     139,109     42,782     57,358     65,075    304,324

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

    Three months ended December 31, 2008

    The Camps & Catering segment earned $45,944,000 of revenue and generated
$14,574,000 of EBITDAS and $9,593,000 of operating earnings in the three
months ended December 31, 2008 as compared to $11,890,000 of revenue, $204,000
of EBITDAS and an operating loss of $2,095,000 in the three months ended
December 31, 2007.
    The increases in revenue and EBITDAS of $34,054,000 and $14,370,000
respectively in the three months ended December 31, 2008 are a result of
several factors.
    Northern contributed revenues of $14,914,000 in the three months ended
December 31, 2008 as compared to revenues of $3,051,000 in the three months
ended December 31, 2007. This increase is primarily due to the timing of the
acquisition of Northern on November 30, 2007, resulting in only one month of
revenues being included in the three months ended December 31, 2007. The
BlackSand Executive Lodge contributed $7,341,000 in revenues in the three
months ended December 31, 2008.
    The pre-existing operations of the Camps & Catering segment which
excluded Northern and the BlackSand Executive Lodge contributed to the
increased revenues by $14,850,000 in the three months ended December 31, 2008.
Bed rental days for the pre-existing operations increased from 66,560 in the
three months ended December 31, 2007 to 111,843 for the three months ended
December 31, 2008 primarily as a result of stronger activity in the oil sand
regions near Fort McMurray. The increase in rental days correlated to
increased camps, catering and service revenues of $13,502,000. There was also
an increase in camp sales revenue of $1,348,000 as several projects were
completed for third party customers. In three months ended December 31, 2007
the majority of our manufacturing capacity was dedicated to building the
BlackSand Executive Lodge as opposed to building camps for sale.
    Margins in the Camps & Catering segment were stronger in the three months
ended December 31, 2008 as compared to the same period in 2007 as our focus on
oil sand related projects, open style camps and the BlackSand Executive Lodge
operations had more of an impact than in the previous year. In addition,
included in the three months ended December 31, 2007 were two non-recurring
expense items, the first being a $570,000 write-down of a receivable related
to a customer dispute over work performed in the first quarter and a $560,000
write-down of inventory stemming from inventory count and valuation work
performed at year end. Depreciation and amortization in the three months ended
December 31, 2008 increased by $2,638,000 as compared to the three months
ended December 31, 2007 as a result of the Northern acquisition and the new
BlackSand Executive Lodge. Overall, operating earnings increased by
$11,688,000 in the three months ended December 31, 2008 as compared to the
same period in 2007 based on the above.

    Year ended December 31, 2008

    The Camps & Catering segment earned $137,025,000 of revenue and generated
$42,018,000 of EBITDAS and $25,142,000 operating earnings in the year ended
December 31, 2008 as compared to $59,483,000 of revenue, $14,602,000 of
EBITDAS and $7,397,000 of operating earnings in the year ended December 31,
2007.
    The increases in revenue and EBITDAS of $77,542,000 and $27,416,000
respectively for the year ended December 31, 2008 are a result of the
acquisition of Northern in late 2007 and the installation and completion of
the BlackSand Executive Lodge. The acquisition of Northern and the BlackSand
Executive Lodge contributed to the increased revenues by $44,139,000 and
$10,661,000 respectively.
    The pre-existing operations of the Camps & Catering segment which
excluded Northern and the BlackSand Executive Lodge contributed to the
increased revenues by $22,742,000. Bed rental days for the pre-existing
operations increased from 303,340 in the year ended December 31, 2007 to
415,255 in the year ended December 31, 2008 primarily as a result of the
increase in oil sand activity near Fort McMurray. The increase in rental days
correlated to increased camps, catering and service revenues of $27,827,000.
    Countering this increase was a decrease in camp sales revenue of
$5,085,000 as the manufacturing facilities of the pre-existing operations were
used to build the BlackSand Executive Lodge in the year ended December 31,
2008 as opposed to building camps for sale as they had been in the year ended
December 31, 2007. The $17,745,000 increase in operating earnings is a result
of the above, countered by an increase in depreciation and amortization of
$8,797,000 as a result of the Northern acquisition and the new BlackSand
Executive Lodge.

    Matting

    Matting revenue is comprised of mat rental revenue, mat sales,
installation & service, and other revenue as follows:

    
                                                                        Year
                                     Three months ended                ended
    (000's except     -------------------------------------------- ----------
     rental days           March       June  September   December   December
     and mats)              2008       2008       2008       2008       2008
                      -------------------------------------------- ----------
    Mat rental revenue $   1,926  $     840  $   1,303  $   1,394  $   5,463
    Mat sales revenue      2,805        145      7,387      4,447     14,784
    Installation,
     transportation,
     service and other
     revenue               5,275      2,802      4,187      3,655     15,919
                      -------------------------------------------- ----------
    Total revenue      $  10,006  $   3,787  $  12,877  $   9,496  $  36,166
                      -------------------------------------------- ----------
                      -------------------------------------------- ----------
    EBITDAS            $   3,129  $     456  $   2,926  $   1,651  $   8,162
    Operating earnings
     (loss)            $   1,613  $  (1,102) $   1,322  $      90  $   1,923
    Mat rental days      620,605    259,329    434,441    442,130  1,756,505
    Average mats in
     rental fleet         17,189     18,222     18,398     14,953     17,029
    Mats sold              3,324        369      9,449      6,951     20,093



                                                                        Year
                                     Three months ended                ended
    (000's except     -------------------------------------------- ----------
     rental days           March       June  September   December   December
     and mats)              2007       2007       2007       2007       2007
                      -------------------------------------------- ----------
    Mat rental revenue $     681  $   2,192  $   4,186  $   2,729  $   9,788
    Mat sales revenue      7,238        201        156      1,116      8,711
    Installation,
     transportation,
     service and other
     revenue               3,527      2,761      4,030      3,202     13,520
                      -------------------------------------------- ----------
    Total revenue      $  11,446  $   5,154  $   8,372  $   7,047  $  32,019
                      -------------------------------------------- ----------
                      -------------------------------------------- ----------
    EBITDAS            $   3,164  $   1,970  $   4,218  $   3,297  $  12,649
    Operating earnings $   2,102  $     802  $   2,870  $   1,501  $   7,275
    Mat rental days      192,546    665,159  1,227,611    953,349  3,038,665
    Average mats in
     rental fleet          6,280      8,763     14,842     16,608     11,880
    Mats sold              7,622        184        200      1,172      9,178
    

    Three months ended December 31, 2008

    The Matting segment earned revenues of $9,496,000, EBITDAS of $1,651,000
and operating earnings of $90,000 in the three months ended December 31, 2008
as compared to $7,047,000 of revenue, $3,297,000 of EBITDAS and $1,501,000 of
operating earnings in the three months ended December 31, 2007.
    Throughout 2008, the Matting segment experienced a shift in its revenue
generating activities from those of 2007 as customers purchased mats for their
own use instead of renting them. This is consistent with non-conventional,
year-round oil drilling programs compared to conventional, seasonal oil and
gas programs. This shift resulted in a year over year decrease in the three
months ended December 31, 2008 of 511,219 mat rental days and $1,335,000 mat
rental revenues and an increase of 5,779 mats sold and $3,331,000 in mat sales
revenue.
    Installation, transportation, service and other revenue increased by
$453,000 in the three months ended December 31, 2008 as compared to the same
period in 2007 as transportation and installation of sold mats remained
strong.
    This shift in revenues also resulted in the $1,646,000 decrease in
EBITDAS as mat rentals generate a higher margin than mat sales in the three
months ended December 31, 2008 as compared to the same period in 2007.

    Year ended December 31, 2008

    The Matting segment earned revenues of $36,166,000, EBITDAS of $8,162,000
and operating earnings of $1,923,000 in the year ended December 31, 2008 as
compared to $32,019,000 of revenue, $12,649,000 of EBITDAS and $7,275,000 of
operating earnings the year ended December 31, 2007. In 2008, the Matting
segment experienced a shift in its revenue generating activities from those of
2007 as customers purchased mats for their own use instead of renting them.
This is consistent with non-conventional, year-round oil drilling programs
compared to conventional, seasonal oil and gas programs. This shift resulted
in a decrease of 1,282,160 mat rental days and $4,325,000 mat rental revenues
and an increase of 10,915 mats sold and $6,073,000 in mat sales revenue. In
addition, there was an increase of $2,399,000, or 18%, in installation,
transportation, service and other revenue in 2008 as compared to 2007 as a
result of the increase of 7,500, or 20%, mats managed for customers. This
shift in revenues also resulted in the $4,487,000 decrease in EBITDAS as mat
rentals generate a higher margin than mat sales.

    Marine Services

    Marine Services revenue is comprised of tug and barge revenue, barge camp
revenue, and rental and other revenue as follows:


    
                                                                        Year
                                    Three months ended                 ended
                       ------------------------------------------- ----------
    (000's)                March      June   September   December   December
                            2008      2008        2008       2008       2008
                       ------------------------------------------- ----------
    Tug revenue          $     -   $   351     $ 3,281    $    83    $ 3,715
    Barge revenue            196       212         178         15        601
    Barge camp revenue     2,575       539         185      1,273      4,572
    Rental and other
     revenue                 608       269         335        347      1,559
                       ------------------------------------------- ----------
    Total revenue        $ 3,379   $ 1,371     $ 3,979    $ 1,718   $ 10,447
                       ------------------------------------------- ----------
                       ------------------------------------------- ----------
    EBITDAS              $ 2,150   $    96     $   428    $   267   $  2,941
    Operating earnings
     (loss)              $ 1,890   $  (170)    $   151    $   (24)  $  1,847


                                                                        Year
                                    Three months ended                 ended
                       ------------------------------------------- ----------
    (000's)                March      June   September   December   December
                            2007      2007        2007       2007       2007
                       ------------------------------------------- ----------
    Tug revenue          $     -   $   112     $ 1,440    $   544    $ 2,096
    Barge revenue              -        18         128        359        505
    Barge camp revenue         -        27         885      1,061      1,973
    Rental and other
     revenue                 265       221         395        395      1,276
                       ------------------------------------------- ----------
    Total revenue        $   265   $   378     $ 2,848    $ 2,359    $ 5,850
                       ------------------------------------------- ----------
                       ------------------------------------------- ----------
    EBITDAS              $   (48)  $  (611)    $ 1,107    $ 1,239    $ 1,687
    Operating (loss)
     earnings            $  (280)  $  (851)    $   861    $   991    $   721
    

    Three months ended December 31, 2008

    The Marine Services segment earned revenues of $1,718,000, EBITDAS of
$267,000 and generated an operating loss of $24,000 in the three months ended
December 31, 2008 as compared to revenues of $2,359,000, EBITDAS of $1,239,000
and operating earnings of $991,000 in the three months ended December 31,
2007.
    Barge camp and rental revenues were similar to the prior year as a season
long winter project was in place during the fourth quarters of 2008 and 2007
fully utilizing two of our barge camps. The decrease was mostly due to less
tug and barge activity during the three months ended December 31, 2008 as
there was little river-based activity in early 2008 as compared to a busier
October in 2007.

    Year ended December 31, 2008

    The waterways in the far north are frozen from mid-October through to
mid-June. Prior to the fourth quarter of 2007, the Marine Services segment
would typically earn the majority of its revenues in the third quarter when
the waterways were not frozen. However, the barges and barge camps can also be
used to facilitate winter projects by loading them with equipment, moving them
close to the work location and freezing them in over the winter months from
mid-October to mid-March to provide a base of operations. This kind of
planning provides an extended winter work season as operators do not have to
wait for thick ice to form on the waterways in order to transport equipment to
the work site. Horizon has provided this service in the winter drilling
seasons for 2007/2008 and 2008/2009, resulting in higher revenues in the year
ended December 31, 2008 as it has two quarters of the associated revenues and
earnings in 2008 compared to only one quarter in 2007. Horizon also utilized
its tugs more in the summer of 2008 than 2007, resulting in increased tug
revenues. Countering this increase in revenues are repair and maintenance
costs incurred to get the barge camps prepared for the fourth quarter of 2008
marine work.

    Corporate

    Three months ended December 31, 2008

    Corporate costs for the three months ended December 31, 2008 were
$2,701,000 as compared to $1,270,000 in the three months ended December 31,
2007. Costs in the three months ended December 31, 2008 included $475,000 in
connection with the departure of a Senior Executive. Excluding this item,
corporate costs amounted to 4% of revenue in the three months ended December
31, 2008 as compared to 6% in the three months ended December 31, 2007.

    Year ended December 31, 2008

    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. The increase in corporate costs to $7,799,000
in the year ended December 31, 2008 from $5,619,000 in the year ended December
31, 2007 is a result of the addition of corporate employees required to
support Horizon's growing operations. Also, corporate costs in the fourth
quarter of 2008 were increased by $475,000 in connection with the departure of
a Senior Executive.

    Other Items

    Foreign exchange loss

    Foreign exchange loss decreased for the year ended December 31, 2008 to
$48,000 as compared to $253,000 in the year ended December 31, 2007. The loss
in the year ended December 31, 2008 is a result of the weakening Canadian
dollar on lumber purchases from the U.S. The loss in the year ended December
31, 2007 was largely as a result of the refund of a U.S. dollar deposit
associated with the cancellation of a barge construction contract, and is
offset by slight gains on lumber purchases from the U.S.

    Interest income

    Interest income of $39,000 was earned on related party loans provided in
2008 and deposits held as guarantees. In the year ended December 31, 2007,
interest income of $160,000 was earned on the refunded deposit associated with
a cancelled barge construction contract.

    Interest on operating lines of credit and long-term debt

    Interest on operating lines of credit and long-term debt increased to
$2,304,000 in the year ended December 31, 2008 from $797,000 in the year ended
December 31, 2007. The increase in interest expense is attributable to the
increase in the average amount of debt held of $42,819,000 in the year ended
December 31, 2008 as compared to $15,430,000 in the year ended December 31,
2007.

    Bridge financing fee

    In the year ended December 31, 2007, a one-time $650,000 bridge financing
fee was incurred as a result of a $65,000,000 bridge credit facility which was
arranged for the Northern acquisition.

    Earnings on equity investments

    The earnings on equity investments of Kitikmeot Caterers Ltd.
("Kitikmeot"), Sakku Caterers Limited ("Sakku"), Mackenzie Valley Logistics
Inc. ("Mackenzie Valley"), and Mackenzie Delta Integrated Oilfield Services
("MDIOS") decreased to $589,000 in the year ended December 31, 2008 from
$636,000 in the year ended December 31, 2007. Activity in the Northwest
Territories has decreased in 2008 as compared to 2007, resulting in a loss on
equity investments of $191,000 in the year ended December 31, 2008 for
Mackenzie Valley, MDIOS and Beaufort Logistics Inc. as compared to earnings of
$636,000 in the year ended December 31, 2007. This loss is offset by earnings
on equity investments of $780,000 from Kitikmeot and Sakku which were acquired
at the end of 2007 and had no earnings in the comparative period.

    Income taxes

    Income tax expense increased to $1,449,000, an effective tax rate of
1.5%, in the year ended December 31, 2008 from $1,033,000, an effective tax
rate of 14.5%, in the year ended December 31, 2007. Included in the December
31, 2008 tax expense is approximately $4,373,000 of tax recovery attributable
to the goodwill impairment loss. If tax expense is adjusted for this recovery,
it results in an adjusted tax expense of $5,822,000. If loss before income
taxes is adjusted for the goodwill impairment loss to arrive at adjusted
earnings before income taxes of $18,410,000, the effective tax rate is 31.6%
as compared to 14.5% in 2007. The year over year increase in the effective tax
rate is attributable to the effective rate of 2007 being low due to the impact
of tax rate reductions on future tax balances.

    
    Liquidity and Capital Resources

    The Corporation has a strong working capital position and borrowing
capacity as set out below:

    -------------------------------------------------------------------------
    (000's)                                   December 2008    December 2007
    -------------------------------------------------------------------------
    Current assets                               $   49,951       $   37,945

    Operating lines of credit                         8,834           20,990
    Current liabilities excluding borrowings(1)      18,177           18,699
    Current portion of long-term debt                   488              871
    Current portion of capital leases                     -              109
    -------------------------------------------------------------------------
    Current liabilities                              27,499           40,669
    -------------------------------------------------------------------------
    Working capital (deficiency)(2)                  22,452           (2,724)

    Bank borrowings
        Operating lines of credit                     8,834           20,990
        Senior secured revolving term facility       38,400                -
    -------------------------------------------------------------------------
    Total bank borrowings                            47,234           20,990

    Available bank lines(3)                          80,500           25,500
    -------------------------------------------------------------------------
    Borrowing capacity(4)                            33,266            4,510
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Calculated as the sum of bank indebtedness, accounts payable and
        accrued liabilities, deferred revenue and income taxes payable.
    (2) Calculated as current assets less current liabilities.
    (3) Includes $80,000,000 available to Horizon (December 31, 2007 -
        $25,000,000) and $1,000,000 (Horizon's 50% portion - $500,000)
        available to Horizon's joint venture, Arctic Oil & Gas Services Inc.
    (4) Calculated as available bank lines less total bank borrowing.
    

    At December 31, 2008, Horizon's working capital position of $22,452,000
is significantly improved from the $2,724,000 working capital deficiency at
December 31, 2007. In 2008, Horizon renegotiated its senior secured revolving
term facility, resulting in the classification being long-term as opposed to
current. At December 31, 2007, the balance of the senior secured revolving
term facility was $10,000,000 and was included in current liabilities. In
addition, Horizon's funds from operations were $36,356,000 in the year ended
December 31, 2008 as compared to $14,872,000 in the year ended December 31,
2007. This increase has also contributed to the improvement of working
capital.
    In 2008, Horizon increased its operating line of credit from $15,000,000
to $20,000,000 and its senior secured revolving term facility from $10,000,000
to $60,000,000. Subsequent to December 31, 2008, Horizon renewed its operating
line of credit and senior secured revolving term credit facilities. The credit
facilities were renewed for an additional year, extending the maturity date on
the senior secured revolving term facility to February 1, 2010.
    During the year ended December 31, 2008, the Corporation spent
$56,174,000 on capital asset additions. The Camps & Catering segment added 500
beds through the completion of the BlackSand Executive Lodge near Fort
McMurray, Alberta, land for a second proposed executive lodge, and additional
beds and space to its fleet. The Matting segment replenished some of the mats
sold through the addition of 3,804 mats to its rental fleet. The remainder of
the capital additions included vehicles, leasehold improvements, camp &
catering supplies, and other miscellaneous additions.
    The Corporation's contractual obligations for the next five years are as
follows:

    
    -------------------------------------------------------------------------
    (000's)               Total   1 year or less   2 - 3 years   4 - 5 years
    -------------------------------------------------------------------------
    Operating lines
     of credit        $   8,834        $   8,834    $        -    $        -
    Long-term debt
     (excluding
     deferred
     financing costs)    39,112              488        16,220        22,404
    Operating leases      5,651            1,805         2,826         1,020
    -------------------------------------------------------------------------
    Total obligations $  53,597        $  11,127    $   19,046    $   23,424
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Balance Sheets (Unaudited)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (000's)                                   December 2008    December 2007
    -------------------------------------------------------------------------

    Assets

    Current assets:
        Cash                                         $        -   $    1,220
        Accounts receivable                              37,873       21,487
        Inventory                                         9,960       14,432
        Prepaid expenses                                  1,168          806
        Income tax receivable                               950            -
    -------------------------------------------------------------------------
                                                         49,951       37,945
    Property, plant and equipment, net                  147,924      111,241
    Goodwill                                                  -      114,549
    Intangible assets, net                               43,032       51,999
    Long-term investments                                 5,760        5,679
    -------------------------------------------------------------------------
                                                     $  246,667   $  321,413
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
        Bank indebtedness                            $    1,776   $        -
        Operating lines of credit                         8,834       20,990
        Accounts payable and accrued liabilities         14,234       13,899
        Deferred revenue                                  2,167        2,859
        Current portion of long-term debt                   488          871
        Current portion of capital lease obligations          -          109
        Income taxes payable                                  -        1,941
    -------------------------------------------------------------------------
                                                         27,499       40,669
    Long-term debt                                       38,110        1,019
    Capital lease obligations                                 -          398
    Future income tax liability                          11,456       13,528
    -------------------------------------------------------------------------
                                                         77,065       55,614
    Shareholders' equity:
        Share capital                                   257,505      257,515
        Contributed surplus                               5,564        3,802
        (Deficit) retained earnings                     (93,467)       4,482
    -------------------------------------------------------------------------
                                                        169,602      265,799

    -------------------------------------------------------------------------
                                                     $  246,667   $  321,413
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Operations and (Deficit) Retained Earning
    Three and Twelve months ended December 31, 2008 and 2007 (Unaudited)

    -------------------------------------------------------------------------
                              Three months ended         Twelve months ended
                                     December 31                 December 31
    (000's)                   2008          2007          2008          2007
    -------------------------------------------------------------------------


    Revenue             $   56,735    $   20,988    $  180,779    $   95,846
    Expenses:
      Cost of goods sold    12,920         2,818        36,013        14,922
      Operating             26,486        11,173        88,869        49,903
      General and
       administrative        3,472         3,514        10,706         7,714
      Stock based
       compensation            314           619         1,762         2,961
      Depreciation of
       property, plant
       and equipment         4,458         2,582        14,315         7,534
      Amortization of
       intangible assets     2,241         1,675         8,967         5,771
      (Gain) loss on
       disposal of
       property, plant
       and equipment           (48)         (208)           13          (976)
      Foreign exchange
       (gain) loss             (34)           14            48           253
    -------------------------------------------------------------------------
                            49,809        22,187       160,693        88,082
    -------------------------------------------------------------------------
    Operating earnings
     (loss)                  6,926        (1,199)       20,086         7,764

    Goodwill impairment
     loss                  114,910             -       114,910             -
    Interest income            (25)          (72)          (39)         (160)
    Interest expense
     on operating
     lines of credit           171           228           647           773
    Interest expense on
     long-term debt            423            12         1,657            24
    Bridge financing fee         -           650             -           650
    Earnings on equity
     investments              (180)          (97)         (589)         (636)
    -------------------------------------------------------------------------
    (Loss) earnings
     before income
     taxes                (108,373)       (1,920)      (96,500)        7,113

    Income taxes:
        Current income
         tax (recovery)
         expense            (1,191)          510         3,654         6,547
        Future income
         tax reduction        (844)       (2,647)       (2,205)       (5,514)
    -------------------------------------------------------------------------
                            (2,035)       (2,137)        1,449         1,033

    -------------------------------------------------------------------------
    Net (loss) earnings   (106,338)          217       (97,949)        6,080

    Retained earnings
     (deficit),
     beginning of period    12,871         4,265         4,482        (1,598)

    -------------------------------------------------------------------------
    (Deficit) retained
     earnings, end
     of period          $  (93,467)   $    4,482    $  (93,467)   $    4,482
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Loss) earnings
     per share:
        Basic           $    (0.96)   $     0.00    $    (0.89)    $    0.07
        Diluted         $    (0.96)   $     0.00    $    (0.89)    $    0.07
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Three and Twelve months ended December 31, 2008 and 2007 (Unaudited)

    -------------------------------------------------------------------------
                              Three months ended         Twelve months ended
                                     December 31                 December 31
    (000's)                   2008          2007          2008          2007
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operating activities:
    Net(loss) earnings  $ (106,338)   $      217    $  (97,949)   $    6,080
    Items not
     involving cash:
      Depreciation of
       property, plant
       and equipment         4,458         2,582        14,315         7,534
      Amortization of
       intangible assets     2,241         1,675         8,967         5,771
      Future  income tax
       reduction              (844)       (2,647)       (2,205)       (5,514)
      Stock based
       compensation            314           619         1,762         2,961
      Goodwill impairment
       loss                114,910             -       114,910             -
      Earnings on equity
       investments            (180)          (97)         (589)         (636)
      Gain on sale
       of property, plant
       and equipment        (1,134)         (472)       (2,855)       (1,324)
    -------------------------------------------------------------------------
                            13,427         1,877        36,356        14,872
      Changes in non-cash
       working capital
       items                (3,698)        1,020       (16,237)          248
    -------------------------------------------------------------------------
                             9,729         2,897        20,119        15,120
    Investing activities:
      Purchase of property,
       plant and equipment  (7,378)       (9,144)      (56,174)      (32,104)
      Proceeds on sale of
       property, plant
       and equipment         4,116         1,367         8,572         3,625
      Refund of deposit
       upon cancellation
       of barge contract         -             -             -         5,049
      Return of capital
       from equity
       investment                -           742           334         1,344
      Business acquisitions     (1)      (57,969)         (581)      (59,170)
    -------------------------------------------------------------------------
                            (3,263)      (65,004)      (47,849)      (81,256)
      Changes in non-cash
       working capital items     -            18           914        (3,074)
    -------------------------------------------------------------------------
                            (3,263)      (64,986)      (46,935)      (84,330)
    Financing activities:
      Issuance of
       common shares             -        56,950             -        56,950
      Proceeds from
       bank indebtedness        82             -         1,776             -
      Share issuance costs       -             -           (15)            -
      (Repayment of) proceeds
       from operating
       lines of credit      (5,804)        8,042       (12,156)       12,130
      Proceeds from
       long-term debt        4,800             -        43,800         1,143
      Repayment of
       long-term debt       (5,592)       (2,237)       (6,578)       (3,131)
      Payment of deferred
       financing costs           -             -          (622)            -
      Repayment of
       capital lease
       obligations               -            (9)         (507)           (9)
      Items not involving
       cash:
        Amortization of
         deferred financing
         costs                  48             -           108             -
    -------------------------------------------------------------------------
                            (6,466)       62,746        25,806        67,083
    Changes in non-cash
     working capital items       -           149          (210)          149
    -------------------------------------------------------------------------
                            (6,466)       62,895        25,596        67,232
    -------------------------------------------------------------------------
    Increase (decrease)
     in cash position            -           806        (1,220)       (1,978)

    Cash, beginning of
     period                      -           414         1,220         3,198

    -------------------------------------------------------------------------
    Cash, end of period $        -    $    1,220    $        -    $    1,220
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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 Corporation believes that the expectations
reflected in this press release are reasonable, but results may be affected by
a variety of variables. The Corporation relies on litigation protection for
"forward-looking" statements.





For further information:

For further information: Ric Peterson, Chairman, President and Chief
Executive Officer, or Bob German, Vice President Finance and Chief Financial
Officer, 1600, 505 - 3rd Street S.W., Calgary, Alberta, T2P 3E6, Telephone:
(403) 517-4654, Fax: (403) 517-4678; website: www.horizonnorth.ca


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