Horizon North Logistics Inc. Announces Results for the Period Ended June 30, 2008



    CALGARY, Aug. 6 /CNW/ - TSX Symbol: HNL - Horizon North Logistics Inc.
("Horizon" or the "Company") reported its financial and operating results for
the three and six months ended June 30, 2008 and 2007.
    Overall revenues for Horizon increased $8,236,000 to $28,934,000 in the
three months ended June 30, 2008 and $14,745,000 to $70,327,000 in the six
months ended June 30, 2008 compared to the same periods in 2007. EBITDAS also
increased $709,000 to $4,778,000 in the three months ended June 30, 2008 and
$2,456,000 to $16,932,000 in the six months ended June 30, 2008. Activity
levels for the Camps & catering segment increased from the comparative period,
countering a decrease in camp sales revenue, thereby maintaining consistent
revenue levels with those in the comparative period. The November 2007
Northern Trailer Ltd. ("Northern") acquisition resulted in higher revenues and
EBITDAS for the Camps & catering segment. Mat rental activity levels were
lower in the three months ended June 30, 2008 as compared to the three months
ended June 30, 2007, resulting in lower revenues and EBITDAS. The Marine
segment had two of its barge camps on stand-by for the three months, resulting
in higher revenues and EBITDAS.
    A key component of Horizon's strategy is to diversify the revenue stream
so as not to be overly exposed to any one industry, in any one location and to
minimize seasonality. In the six months ended June 30, 2008, revenues by
industry included: 47% - conventional oil and gas; 18% - oil sands; 9% -
mining; 9% - utilities; 8% - construction; and 9% - other.

    
    Financial Results

    -------------------------------------------------------------------------
                               Three months ended June 30, 2008
                                                            Inter-
                                                           segment
                   Camps &              Marine              Elimi-
    (000's)       Catering   Matting  Services  Corporate  nations     Total
    -------------------------------------------------------------------------
    Revenue       $ 24,543  $  3,787  $  1,371  $      -  $   (767) $ 28,934
    Expenses
      Cost of
       goods sold    3,271       219         -         -         -     3,490
      Operating     14,505     2,725     1,275         -      (667)   17,838
      General &
       administrative  657       354         -     1,784         -     2,795
      Foreign
       exchange gain     -        33         -         -         -        33
    -------------------------------------------------------------------------
    EBITDAS          6,110       456        96    (1,784)     (100)    4,778

      Stock based
       compensation    218        52         6       232         -       508
      Depreciation &
       amortization  3,536     1,522       260        41        (6)    5,353
      Loss (gain)
       on disposal
       of property,
       plant &
       equipment        15       (16)        -         -         -        (1)

    -------------------------------------------------------------------------
    Operating
     earnings
     (loss)       $  2,341  $ (1,102) $   (170) $ (2,057) $    (94) $ (1,082)
    ---------------------------------------------------------------

    Interest income                                                      (35)
    Interest expense
     on operating
     lines of credit                                                     133
    Interest expense
     on long-term
     debt                                                                401
    Earnings on
     equity
     investments                                                        (173)
    Income tax
     recovery                                                           (258)
                                                                    ---------

    Net loss                                                        $ (1,150)
                                                                    ---------
                                                                    ---------


    -------------------------------------------------------------------------
                               Three months ended June 30, 2007
                                                            Inter-
                                                           segment
                   Camps &              Marine              Elimi-
    (000's)       Catering   Matting  Services  Corporate  nations     Total
    -------------------------------------------------------------------------
    Revenue       $ 15,420  $  5,154  $    378  $      -  $   (254) $ 20,698
    Expenses
      Cost of
       goods sold    4,881       194         -         -         -     5,075
      Operating      5,976     2,982       978       (13)     (254)    9,669
      General &
       administrative   68        34        11     1,799         -     1,912
      Foreign
       exchange gain     -       (26)        -         -         -       (26)
    -------------------------------------------------------------------------
    EBITDAS          4,495     1,970      (611)   (1,786)        -     4,068

      Stock based
       compensation    220        97        18       492         -       827
      Depreciation &
       amortization  1,691     1,072       222        28         -     3,013
      Gain on
       disposal of
       property,
       plant &
       equipment      (481)       (1)        -         -         -      (482)

    -------------------------------------------------------------------------
    Operating
     earnings
     (loss)       $  3,065  $    802  $   (851) $ (2,306) $      -  $    710
    ---------------------------------------------------------------

    Interest income                                                       (4)
    Interest expense
     on operating
     lines of credit                                                     189
    Interest expense
     on long-term debt                                                     3
    Earnings on
     equity
     investments                                                        (430)
    Income tax
     expense                                                             198
                                                                    ---------

    Net earnings                                                    $    754
                                                                    ---------
                                                                    ---------


    Camps & Catering

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


                     3 months ended                3 months ended
    (000's except --------------------          -------------------
     rental days      June     March     Total      June     March     Total
     and mandays)     2008      2008      2008      2007      2007      2007
                  --------- --------- --------- --------- --------- ---------
    Camps,
     catering &
     service
     revenue      $ 17,960  $ 18,771  $ 36,731  $  8,365  $ 21,160  $ 29,525
    Space rental
     revenue         1,473     1,100     2,573         -         -         -
    Space sales
     revenue         1,680     2,723     4,403         -         -         -
    Camp sales
     revenue         3,430     6,197     9,627     7,055     2,286     9,341
                  --------- --------- --------- --------- --------- ---------
    Total revenue $ 24,543  $ 28,791  $ 53,334  $ 15,420  $ 23,446  $ 38,866
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------
    EBITDAS       $  6,110  $  8,760  $ 14,870  $  4,495  $  8,534  $ 13,029
    Operating
     earnings     $  2,341  $  5,382  $  7,723  $  3,065  $  6,768  $  9,833
    Bed rental
     days(1)        99,364   128,766   228,130    42,265   137,600   179,865
    Catering
     mandays        85,909   122,188   208,097    42,782   139,109   181,891
    (1) One bed rental day equals the rental of one bed for one day.
    

    Revenue in the Camps & catering segment increased $9,123,000, or 59% in
the three months ended June 30, 2008 as compared to the three months ended
June 30, 2007. Horizon's recent acquisition, Northern, contributed a total of
$9,065,000 in revenues in the form of $3,338,000 in camp sales, $1,680,000 in
space sales, $1,473,000 in space rental, $508,000 in camp rental, and
$2,066,000 in installation, service and other revenue. Northern generated
EBITDAS of $1,995,000, or 22% of revenue. Revenue in the three months ended
June 30, 2008 for Horizon's pre-existing operations was relatively consistent
at $15,478,000 with those from the three months ended June 30, 2007. However,
the revenue in the three months ended June 30, 2008 is primarily revenue
generated by camp rental, catering and service revenue, replacing $7,055,000
of camp sales revenue in the three months ended June 30, 2007. The increase in
camps, catering and service revenue is largely attributable to increased work
in the oil sands operations near Fort McMurray, Alberta. EBITDAS generated by
the pre-existing operations amounted to $4,023,000 or 26% of revenue, as
compared to 29% in 2007. The lower EBITDAS percent was due to the change in
revenue mix as camps, catering and service revenue typically has lower margins
than camp sales.

    Matting

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

    
                    3 months ended                 3 months ended
    (000's except -------------------           -------------------
     rental days      June     March     Total      June     March     Total
     and mats)        2008      2008      2008      2007      2007      2007
                  --------- --------- --------- --------- --------- ---------
    Mat rental
     revenue      $    840  $  1,926  $  2,766  $  2,192  $    681  $  2,873
    Mat sales
     revenue           145     2,805     2,950       201     7,238     7,439
    Installation,
     transportation,
     service and
     other revenue   2,802     5,275     8,077     2,761     3,527     6,288
                  --------- --------- --------- --------- --------- ---------
    Total revenue $  3,787  $ 10,006  $ 13,793  $  5,154  $ 11,446  $ 16,600
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------
    EBITDAS       $    456  $  3,129  $  3,585  $  1,970  $  3,164  $  5,134
    Operating
     earnings
     (loss)       $ (1,102) $  1,613  $    511  $    802  $  2,102  $  2,904
    Mat rental
     days          259,329   620,605   879,934   665,159   192,546   857,705
    Average mats in
     rental fleet   18,222    17,189    17,526     9,704     6,280     7,980
    Mats sold          369     3,324     3,693       184     7,622     7,806
    

    Revenue in the three months ended June 30, 2008 decreased $1,367,000 as
compared to the three months ended June 30, 2007, as a result of the decline
in mat rental revenue. As rental revenue has the highest margins, this also
resulted in a decrease in EBITDAS of $1,514,000 to $456,000 or 12% of revenue
in the three months ended June 30, 2008 as compared to $1,970,000 or 38% of
revenue in the three months ended June 30, 2007. Mat rental days declined
405,830 rental days to 259,329 rental days in the three months ended June 30,
2008 as compared to 665,159 rental days in the three months ended June 30,
2007. Mat rentals are highest when the ground is soft as a result of spring
break-up or wet weather. In the second quarter of 2008, a late spring break-up
combined with very wet weather in northern Alberta did not allow for movement
of mats, resulting in the significant decline in rental days for the three
months ending June 30, 2008 as compared to the three months ending June 30,
2007. Operating earnings decreased $1,904,000 from operating earnings of
$802,000 in the three months ended June 30, 2007 to an operating loss of
$1,102,000 in the three months ended June 30, 2008. In addition to the
decrease in EBITDAS, operating earnings decreased $450,000 as a result of
increased depreciation expense related to the significant additions to the mat
rental and trucking fleets in 2007.

    
    Marine Services

                      3 months ended               3 months ended
                  -------------------           -------------------
                      June     March     Total      June     March     Total
    (000's)           2008      2008      2008      2007      2007      2007
                  --------- --------- --------- --------- --------- ---------
    Revenue       $  1,371  $  3,379  $  4,750  $    378  $    265  $    643
    EBITDAS             96     2,150     2,246      (611)      (48)     (659)
    Operating
     earnings
     (loss)           (170)    1,890     1,720      (851)     (280)   (1,131)
    

    The second quarter results for the Marine Services segment are typically
minimal due to spring conditions prohibiting marine transportation work until
the ice has completely melted in early to mid-June. However, in the three
months ended June 30, 2008, the Marine Services segment had two of its barge
camps on standby, resulting in additional revenue, EBITDAS and operating
earnings as compared to the three months ended June 30, 2007. Countering this
increase generated by the barge camp rental were the normal course repair and
maintenance costs incurred to get the tugs and barges prepared for the third
quarter marine work.

    Liquidity and Capital Resources

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

    
    -------------------------------------------------------------------------
                                                              June  December
                                                              2008      2007
    -------------------------------------------------------------------------
    Current assets                                        $ 40,505  $ 37,945

    Operating lines of credit                               14,380    20,990
    Current liabilities excluding borrowings(1)             20,733    18,699
    Current portion of long-term debt                          658       871
    Current portion of capital leases                          131       109
    -------------------------------------------------------------------------
    Current liabilities                                     35,902    40,669
    -------------------------------------------------------------------------

    Working capital (deficiency)(2)                          4,603    (2,724)
    -------------------------------------------------------------------------

    Long-term debt and capital lease obligations            31,576     1,417
    -------------------------------------------------------------------------
    (1) Calculated as the sum of accounts payable and accrued liabilities,
        bank indebtedness, deferred revenue and income taxes payable.
    (2) Calculated as current assets less current liabilities.
    

    In the first quarter of 2008, 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 improved Horizon's working
capital position in 2008 as the facility is classified as long-term until such
time as the facility terms out.
    During the three months ended June 30, 2008, the Company spent
$19,874,000 on capital asset additions. The Camps & catering segment added
7,850 square feet to its space rental fleet, while also continuing
construction of the Black Sand Executive Lodge ("Black Sand"), a 500-bed camp
which is situated in the Fort McMurray, Alberta oil sands region. The Camps &
catering segment also purchased land for a proposed second executive lodge.
The Matting segment purchased 6 additional loaders. The remainder of the
capital additions included vehicles, leasehold improvements, camp & catering
supplies, and other miscellaneous additions.
    The company's capital spending program for 2008 amounts to $57,000,000
which includes expansion capital of approximately $40,000,000 including
Black Sand and additional rental mats. The remaining $17,000,000 capital
spending is maintenance capital for the camp and space rental fleets, yard
improvements, vehicles, loaders, and marine equipment. The combination of
existing credit facilities and cash flow from operations will be sufficient to
finance these investments.

    Outlook

    Continued high commodity prices of oil, gas and minerals have put a
positive light on the continued development of Canada's resources. Many such
projects are taking place or are being planned in regions of Canada that do
not have the infrastructure to support large workforces. 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 now has 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
    June 30, 2008 and December 31, 2007 (Unaudited)
    -------------------------------------------------------------------------
                                                             June   December
    (000's)                                                  2008       2007
    -------------------------------------------------------------------------

    Assets
    Current assets:
      Cash                                              $       -  $   1,220
      Accounts receivable                                  25,197     21,487
      Inventory                                            13,601     14,432
      Prepaid expenses                                      1,707        806
    -------------------------------------------------------------------------
                                                           40,505     37,945

    Property, plant and equipment, net                    142,186    111,241

    Goodwill                                              114,910    114,549

    Intangible assets, net                                 47,515     51,999

    Long-term investments                                   5,941      5,679

    -------------------------------------------------------------------------
                                                        $ 351,057  $ 321,413
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Bank indebtedness                                 $   1,028  $       -
      Operating lines of credit                            14,380     20,990
      Accounts payable and accrued liabilities             16,500     13,899
      Deferred revenue                                      2,815      2,859
      Income taxes payable                                    390      1,941
      Current portion of long-term debt                       658        871
      Current portion of capital leases                       131        109
    -------------------------------------------------------------------------
                                                           35,902     40,669

    Long-term debt                                         31,253      1,019

    Capital leases                                            323        398

    Future income tax liability                            13,403     13,528
    -------------------------------------------------------------------------
                                                           80,881     55,614

    Shareholders' equity:
      Share capital                                       257,505    257,515
      Contributed surplus                                   4,804      3,802
      Retained earnings                                     7,867      4,482
    -------------------------------------------------------------------------
                                                          207,176    265,799


    -------------------------------------------------------------------------
                                                        $ 351,057  $ 321,413
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Operations and Retained Earnings
    Three and six months ended June 30, 2008 and 2007 (Unaudited)
    -------------------------------------------------------------------------
                                    Three months ended      Six months ended
    (000's) except per                         June 30               June 30
     share amounts                     2008       2007       2008       2007
    -------------------------------------------------------------------------

    Revenue                       $  28,934  $  20,698  $  70,327  $  55,582

    Expenses:
      Cost of goods sold              3,490      5,075     11,102     11,160
      Operating                      17,838      9,669     36,466     26,795
      General and administrative      2,795      1,912      5,779      3,266
      Stock based compensation          508        827      1,002      1,669
      Depreciation of property,
       plant and equipment            3,111      1,657      5,743      3,043
      Amortization of intangible
       assets                         2,242      1,356      4,484      2,713
      Loss (gain) on disposal
       of property, plant and
       equipment                         (1)      (482)        43       (491)
      Foreign exchange loss (gain)       33        (26)        48        (25)
    -------------------------------------------------------------------------
                                     30,016     19,988     64,667     48,130
    -------------------------------------------------------------------------
    Operating earnings (loss)        (1,082)       710      5,660      7,452

    Interest income                     (35)        (4)       (55)       (15)
    Interest expense on operating
     lines of credit                    133        189        429        377
    Interest expense on long-term
     debt                               401          3        559          9
    Earnings on equity investments     (173)      (430)      (437)      (795)
    -------------------------------------------------------------------------
    Earnings (loss) before income
     taxes                           (1,408)       952      5,164      7,876

    Income taxes
      Current tax expense               602      1,439      2,038      4,652
      Future tax reduction             (860)    (1,241)      (259)    (2,034)
    -------------------------------------------------------------------------
                                       (258)       198      1,779      2,618

    -------------------------------------------------------------------------
    Net earnings (loss)              (1,150)       754      3,385      5,258

    Other comprehensive income            -          -          -          -

    -------------------------------------------------------------------------
    Comprehensive income             (1,150)       754      3,385      5,258

    Retained earnings (deficit),
     beginning of period              9,017      2,906      4,482     (1,598)

    -------------------------------------------------------------------------
    Retained earnings, end of
     period                       $   7,867  $   3,660  $   7,867  $   3,660
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per share:
      Basic                       $   (0.01) $    0.01  $    0.03  $    0.06
      Diluted                     $   (0.01) $    0.01  $    0.03  $    0.06
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Three and six months ended June 30, 2008 and 2007 (Unaudited)
    -------------------------------------------------------------------------
                                    Three months ended      Six months ended
                                               June 30               June 30
    (000's)                            2008       2007       2008       2007
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operating activities:
      Net earnings                $  (1,150) $     754  $   3,385  $   5,258
      Items not involving cash:
        Depreciation of property,
         plant and equipment          3,111      1,657      5,743      3,043
        Amortization of intangible
         assets                       2,242      1,356      4,484      2,713
        Future tax reduction           (860)    (1,241)      (259)    (2,034)
        Stock based compensation        508        827      1,002      1,669
        Earnings on equity
         investments                   (173)      (430)      (437)      (795)
        Gain on disposal of
         property, plant and
         equipment                     (376)      (546)      (759)      (603)
    -------------------------------------------------------------------------
                                      3,302      2,377     13,159      9,251
      Changes in non-cash working
       capital items                  8,199      4,117     (3,141)       702
    -------------------------------------------------------------------------
                                     11,501      6,494     10,018      9,953
    Investing activities:
      Purchase of property,
       plant and equipment          (19,874)    (9,776)   (38,635)   (14,174)
      Proceeds on sale of
       property, plant and
       equipment                      1,636      1,238      3,248      1,542
      Return of capital from
       equity investment                  -          -          -        371
      Business acquisitions             (48)         -       (580)       (52)
    -------------------------------------------------------------------------
                                    (18,286)    (8,538)   (35,967)   (12,313)
      Changes in non-cash working
       capital items                   (208)       (51)       568     (3,108)
    -------------------------------------------------------------------------
                                    (18,494)    (8,589)   (35,399)   (15,421)
    Financing activities:
      Proceeds from bank
       indebtedness                   1,028          -      1,028          -
      Share issuance costs                -          -        (15)         -
      (Repayment of) proceeds
       from operating lines of
       credit                         2,002     (1,252)    (6,610)     3,117
      Proceeds from long-term debt    3,500        191     30,800        844
      Repayment of long-term debt      (205)      (252)      (779)      (691)
      Repayment of capital leases       (27)         -        (53)         -
    -------------------------------------------------------------------------
                                      6,298     (1,313)    24,371      3,270
      Changes in non-cash working
       capital items                      -          -       (210)         -
    -------------------------------------------------------------------------
                                      6,298     (1,313)    24,161      3,270

    -------------------------------------------------------------------------
    Decrease in cash position          (695)    (3,408)    (1,220)    (2,198)

    Cash, beginning of period           695      4,408      1,220      3,198
    -------------------------------------------------------------------------
    Cash, end of period           $       -  $   1,000  $       -  $   1,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
      Income taxes paid           $     842  $   1,812  $   3,983  $   2,421
      Interest paid                     535        193      1,027        387
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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