Horizon North Logistics Inc. Announces Results for the Period Ended September 30, 2007



    CALGARY, Nov. 13 /CNW/ - Horizon North Logistics Inc. ("Horizon" or the
"Company") reported its financial and operating results for the three and nine
months ended September 30, 2007 and 2006. These 2007 results are not
comparable to the results for 2006 due to the significant transactions
completed by the Company in the last year.

    
    Financial Results
    -------------------------------------------------------------------------
                                      Three months ended September 30, 2007
                                       Camps &         Marine
                                      Catering       Services        Matting
    -------------------------------------------------------------------------
    Revenue                          8,727,023      2,849,119      8,371,150
    Expenses
      Cost of goods sold               607,511              -        337,047
      Operating                      6,591,373      1,740,775      3,178,585
      General & administrative         159,834              -        639,505
      Foreign exchange (gain)/loss           -              -         (1,376)
    -------------------------------------------------------------------------
    EBITDAS                          1,368,305      1,108,344      4,217,389

      Stock based compensation         237,053          3,194         77,700
      Depreciation & amortization    1,749,360        243,249      1,270,164
      Gain on disposal of equipment   (276,180)             -              -
    -------------------------------------------------------------------------
    Operating earnings (loss)         (341,928)       861,901      2,869,525
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                      Three months ended September 30, 2007
                                                Inter-segment
                                     Corporate   Eliminations          Total
    -------------------------------------------------------------------------
    Revenue                                  -       (670,494)    19,276,798
    Expenses
      Cost of goods sold                     -              -        944,558
      Operating                              -       (670,494)    10,840,239
      General & administrative       1,228,128              -      2,027,467
      Foreign exchange (gain)/loss     266,523              -        265,147
    -------------------------------------------------------------------------
    EBITDAS                         (1,494,651)             -      5,199,387

      Stock based compensation         355,279              -        673,226
      Depreciation & amortization       28,479              -      3,291,252
      Gain on disposal of equipment          -              -       (276,180)
    -------------------------------------------------------------------------
    Operating earnings (loss)       (1,878,409)             -      1,511,089
    ----------------------------------------------------------
    Interest income                                                  (72,314)
    Interest expense on operating line                               167,555
    Interest expense on long-term debt                                 2,199
    Loss on equity investments                                       255,688
    Income tax expense                                               552,464
                                                                 ------------
    Net earnings                                                     605,497
                                                                 ------------
                                                                 ------------
    Earnings per share
      Basic                                                            $0.01
      Diluted                                                          $0.01
                                                                 ------------
                                                                 ------------
    

    Camps & Catering

    The Camps & Catering segment earned $8.7 million of revenue and generated
$1.4 million of EBITDAS and a $0.3 million operating loss in the three months
ended September 30, 2007. Camp and catering revenue is comprised of camp
rental revenue, catering revenue, camp sales, service and other revenue as
follows:

    
                    September 2007     June 2007    March 2007    Total 2007
    Camp rental
     revenue             2,105,778     2,909,164     7,578,584    12,593,526
    Catering revenue     3,911,078     2,773,044     9,733,283    16,417,405
    Camp sales revenue     674,539     7,055,461     2,286,020    10,016,020
    Installation,
     service & other
     revenue             2,035,628     2,681,865     3,848,642     8,566,135
                      -------------------------------------------------------
    Total revenue        8,727,023    15,419,534    23,446,529    47,593,086
                      -------------------------------------------------------
                      -------------------------------------------------------
    EBITDAS              1,368,305     4,495,504     8,533,684    14,397,493
    Operating earnings
     (loss)               (341,928)    3,065,361     6,767,107     9,490,540
    Camp rental days         2,846         2,113         6,880        11,839
    Catering mandays        57,358        42,782       139,109       239,249
    

    A significant portion of revenue in the third quarter was generated by
catering services, resulting in lower EBITDAS and operating earnings as
catering services have lower operating margins. The second quarter revenues
were generated largely by camp sales which have higher margins than catering
services. The first quarter revenues were generated largely by camp rentals
and the associated catering services, resulting in the highest revenue,
EBITDAS and operating earnings of the three quarters as rentals charge a
premium in the winter drilling season.

    Marine Services

    The Marine Services segment earned $2.8 million of revenue and generated
$1.1 million of EBITDAS and $0.9 million of operating earnings in the three
months ended September 30, 2007. Revenue for the quarter consists of
$1.4 million in tug revenue, $1.0 million in barge revenue, and $0.4 million
in rental and other revenue. The waterways in the far north are frozen from
mid-October and through to mid-June; therefore, the majority of the segment's
revenues, EBITDAS, and operating earnings are earned in the third quarter.

    Matting

    The matting segment earned revenues of $8.4 million, EBITDAS of $4.2
million and operating earnings of $2.9 million in the three months ended
September 30, 2007. Matting revenue is comprised of mat rental revenue, mat
sales, installation & service, and other revenue as follows:

    
                    September 2007     June 2007    March 2007    Total 2007

    Mat rental revenue   4,185,377     2,192,774       680,534     7,058,685
    Mat sales revenue      156,200       200,706     7,238,488     7,595,394
    Installation,
     transportation,
     service and other
     revenue             4,029,573     2,760,718     3,527,373    10,317,664
                      -------------------------------------------------------
    Total revenue        8,371,150     5,154,198    11,446,395    24,971,743
                      -------------------------------------------------------
                      -------------------------------------------------------
    EBITDAS              4,217,389     1,970,263     3,165,036     9,352,688
    Operating earnings   2,869,525       803,025     2,103,736     5,776,286
    Mat rental days      1,227,611       665,159       192,546     2,085,316
    Average mats in
     rental fleet           14,842         8,763         6,280        10,303
    Mats sold                  200           184         7,622         8,006
    

    A significant portion of revenue in the third quarter was generated by
mat rentals, resulting in higher EBITDAS and operating earnings as mat rentals
have higher operating margins. The second quarter revenues were also generated
largely by mat rentals, but were lower than the third quarter as a result of
spring break-up and a slowdown in activity from the first quarter. The first
quarter typically experiences significant mat sales and mat rentals, resulting
in the most significant revenues, but lower EBITDAS and operating earnings as
mat sales are the main revenue stream and generate lower margins.

    Corporate

    Corporate costs are the costs of the head office which includes the Chief
Executive Officer, President, Chief Financial Officer, Vice President of
Safety, Corporate Secretary, Corporate Accounting staff, and associated costs
of supporting a public company.

    Liquidity and Capital Resources

    As a result of activities during the nine months ended September 30,
2007, the Company has a strong working capital position and minimal debt as
set out below:

    
    -------------------------------------------------------------------------
                                               September 2007  December 2006
    -------------------------------------------------------------------------
    Current assets                               $ 27,731,042   $ 27,262,865

    Operating line of credit                       12,947,500      8,860,000
    Accounts payable and accrued liabilities        8,334,582      9,690,804
    Deferred revenue                                        -        169,811
    Income taxes payable                            1,320,554              -
    Current portion of long-term debt               1,266,211        756,260
    -------------------------------------------------------------------------
    Current liabilities                            23,868,847     19,476,875
    -------------------------------------------------------------------------
    Working capital(1)                              3,862,195      7,785,990
    -------------------------------------------------------------------------
    Long-term debt                                    666,453        728,101
    -------------------------------------------------------------------------
    (1) Calculated as current assets less current liabilities.
    

    During the three months ended September 30, 2007, the Company spent
$8.8 million on capital assets. The Matting segment added 2 semi-trucks to its
fleet, bringing the total fleet to 9 trucks; completed the renovations of its
Grande Prairie manufacturing shop; and manufactured 4,111 additional mats for
its rental fleet. The Camps & Catering segment added four 42-man dorms, one
office, three 8-man dorms, and one 23-man executive dorm to its fleet. The
remainder of the capital additions included vehicles, leasehold improvements,
camp & catering supplies, and other miscellaneous additions.

    Outlook

    First impressions by many analysts are that the recently announced
Alberta government royalty changes will have a negative impact on activity
levels in the conventional oil and gas sector. Analysts also are forecasting
that the royalty changes will have little impact on oil sands projects,
particularly when the impact of the corporate tax rate reductions recently
announced by the Canadian federal government are considered. This outlook is
supported by announcements from a number of oil sands project operators, after
the royalty changes were made public, that they will be proceeding with their
plans to build or expand their facilities.
    These developments bode well for the continuation of Horizon's strategy
to strengthen and expand its core camp and catering and matting businesses
with a focus on northern oil sands and mining projects. On October 1, the
Company took another significant step in the execution of this plan with the
announcement of the acquisition of the businesses that operate under the name
Northern Trailer ("Northern"). Northern brings with it a strong group of
employees situated outside of the tight Alberta labor market, a revenue stream
weighted heavily to the mining sector, and significant camp manufacturing
capacity. The acquisition will be financed with equity, either through the
issuance of shares to the vendors or with funds received from our recently
announced subscription receipts private placement transaction.
    Horizon should now have the operational and financial foundation from
which to pursue large jobs associated with remote northern resource
development projects that generate long term, year round revenue streams.


    
    Consolidated Balance Sheets
    September 30, 2007 and December 31, 2006 (Unaudited)
    -------------------------------------------------------------------------
                                               September 2007  December 2006
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash                                       $    414,734   $  3,198,247
      Accounts receivable                          20,276,699     18,197,449
      Inventory                                     5,856,466      4,972,951
      Prepaid expenses                              1,183,143        354,221
      Income taxes recoverable                              -        539,997
    -------------------------------------------------------------------------
                                                   27,731,042     27,262,865
    Property, plant and equipment, net             86,155,445     73,951,868
    Goodwill                                       85,324,264     84,243,279
    Intangible assets, net                         30,944,803     34,533,492
    Long-term investments                           3,461,722      3,525,112
    -------------------------------------------------------------------------
                                                 $233,617,276   $223,516,616
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Operating line of credit                   $ 12,947,500   $  8,860,000
      Accounts payable and accrued liabilities      8,334,582      9,690,804
      Deferred revenue                                      -        169,811
      Income taxes payable                          1,320,554              -
      Current portion of long-term debt             1,266,211        756,260
    -------------------------------------------------------------------------
                                                   23,868,847     19,476,875
    Long-term debt                                    666,453        728,101
    Future income tax liability                    14,708,683     17,440,663
    -------------------------------------------------------------------------
                                                   39,243,983     37,645,639
    Shareholders' equity:
      Share capital                               186,925,483    186,628,355
      Contributed surplus                           3,182,475        840,585
      Retained earnings (deficit)                   4,265,335     (1,597,963)
    -------------------------------------------------------------------------
                                                  194,373,293    185,870,977
    Segmented information
    Subsequent events
    -------------------------------------------------------------------------
                                                 $233,617,276   $223,516,616
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings (Loss) and Retained Earnings
    (Deficit)
    Three and nine months ended September 30, 2007 and 2006 (Unaudited)
    -------------------------------------------------------------------------
                              Three months ended           Nine months ended
                                    September 30                September 30
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
    Revenue           $ 19,276,798  $  3,751,610  $ 74,858,548  $  5,209,518

    Expenses:
      Cost of goods
       sold                944,558             -    12,104,254             -
      Operating         10,840,239     2,319,507    36,721,713     4,105,051
      General and
       administrative    2,027,467     1,086,632     6,207,913     1,585,963
      Foreign exchange
       loss                265,147             -       239,356         7,017
      Stock based
       compensation        673,226       264,858     2,341,890       264,858
      Depreciation of
       property, plant
       and equipment     1,908,660       372,295     4,951,981     1,101,522
      Amortization of
       intangible
       assets            1,382,592             -     4,095,768             -
      Gain on disposal
       of property,
       plant and
       equipment          (276,180)            -      (767,625)      (13,785)
    -------------------------------------------------------------------------
                        17,765,709     4,043,292    65,895,250     7,050,626
    -------------------------------------------------------------------------
    Operating earnings
     (loss)              1,511,089      (291,682)    8,963,298    (1,841,108)
    Interest income        (72,314)     (419,482)      (87,609)     (420,055)
    Interest expense
     on operating line
     of credit             167,555         6,219       544,870        21,096
    Interest expense
     on long-term debt       2,199        21,760        11,567       104,797
    Loss (earnings) on
     equity investments    255,688       156,436      (539,130)      365,129
    -------------------------------------------------------------------------
    Earnings (loss)
     before income
     taxes               1,157,961       (56,615)    9,033,600    (1,912,075)
    Income taxes
      Current tax
       expense
       (recovery)        1,385,128       (41,680)    6,037,403       (67,035)
      Future tax
       reduction          (832,664)      (28,668)   (2,867,101)     (468,628)
    -------------------------------------------------------------------------
                           552,464       (70,348)    3,170,302      (535,663)
    -------------------------------------------------------------------------
    Net earnings
     (loss)                605,497        13,733     5,863,298    (1,376,412)
    Retained earnings
     (deficit),
     beginning of
     period              3,659,838    (2,123,924)   (1,597,963)     (733,779)
    -------------------------------------------------------------------------
    Retained earnings
     (deficit), end of
     period           $  4,265,335  $ (2,110,191) $  4,265,335  $ (2,110,191)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss)
     per share:
      Basic           $       0.01  $          -  $       0.07  $      (0.06)
      Diluted         $       0.01  $          -  $       0.07  $      (0.06)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Three and nine months ended September 30, 2007 and 2006 (Unaudited)
    -------------------------------------------------------------------------
                              Three months ended           Nine months ended
                                    September 30                September 30
                              2007          2006          2007          2006
    -------------------------------------------------------------------------
    Cash provided by
     (used in):
    Operating activities:
      Net earnings
       (loss)         $    605,497  $     13,733  $  5,863,298  $ (1,376,412)
      Items not
       involving cash:
        Depreciation
         of property,
         plant and
         equipment       1,908,660       372,295     4,951,981     1,101,522
        Amortization
         of intangible
         assets          1,382,592             -     4,095,768             -
        Future tax
         reduction        (832,664)      (28,668)   (2,867,101)     (468,628)
        Stock based
         compensation      673,226       264,858     2,341,890       264,858
        Loss (earnings)
         on equity
         investments       255,688       156,436      (539,130)      365,129
        Gain on
         disposal of
         property, plant
         and equipment    (248,937)            -      (852,133)      (13,785)
    -------------------------------------------------------------------------
                         3,744,062       778,654    12,994,573      (127,316)
        Changes in
         non-cash working
         capital items  (1,473,569)    2,300,540      (771,197)    1,628,454
    -------------------------------------------------------------------------
                         2,270,493     3,079,194    12,223,376     1,501,138
    Investing activities:
      Purchase of
       property, plant
       and equipment    (8,786,296)   (3,661,531)  (22,959,848)   (3,802,929)
      Proceeds on
       disposal of
       property, plant
       and equipment       716,822             -     2,258,274        15,000
      Refund of deposit
       upon cancellation
       of barge
       contract          5,048,549             -     5,048,549             -
      Return of capital
       from equity
       investment          231,354             -       602,520             -
      Business
       acquisitions, net
       of cash
       acquired         (1,148,890)  (95,854,005)   (1,200,538)  (95,854,005)
    -------------------------------------------------------------------------
                        (3,938,461)  (99,515,536)  (16,251,043)  (99,641,934)
      Changes in
       non-cash working
       capital items        15,641             -    (3,092,320)            -
    -------------------------------------------------------------------------
                        (3,922,820)  (99,515,536)  (19,343,363)  (99,641,934)
    Financing activities:
    Issuance of common
     shares                      -   144,038,698             -   144,038,698
      Repayment of due
       to related
       parties                   -   (15,750,000)            -   (15,750,000)
      Proceeds from
       operating line of
       credit           15,105,000        72,500    38,192,500        72,500
      Repayment of
       operating line of
       credit          (14,134,000)      (16,750)  (34,105,000)      (35,438)
      Proceeds from
       long-term debt      298,580             -     1,142,995     2,000,000
      Repayment of
       long-term debt     (202,583)   (1,800,000)     (894,021)   (2,012,351)
    -------------------------------------------------------------------------
                         1,066,997   126,544,448     4,336,474   128,313,409

    -------------------------------------------------------------------------
    Increase (decrease)
     in cash position     (585,330)   30,108,106    (2,783,513)   30,172,613

    Cash (bank
     indebtedness),
     beginning of
     period              1,000,064        59,357     3,198,247        (5,150)
    -------------------------------------------------------------------------
    Cash, end of
     period           $    414,734  $ 30,167,463  $    414,734  $ 30,167,463
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    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