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



    CALGARY, Aug. 9 /CNW/ - Horizon North Logistics Inc. ("Horizon" or the
"Company") reported its financial and operating results for the three and six
months ended June 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
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                                            Three months ended June 30, 2007
                                       Camps &         Marine
                                      Catering       Services        Matting
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    Revenue                         15,419,534        377,726      5,154,198
    Expenses
      Cost of goods sold             4,880,684              -        193,523
      Operating                      5,974,972        978,146      2,982,487
      General & administrative          68,374         10,718          7,925
    -------------------------------------------------------------------------
    EBITDAS                          4,495,504       (611,138)     1,970,263

      Stock based compensation         219,697         17,970         97,025
      Depreciation & amortization    1,691,223        222,223      1,071,584
      Gain on disposal of equipment   (480,777)             -         (1,371)

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    Operating earnings (loss)        3,065,361       (851,331)       803,025
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                            Three months ended June 30, 2007
                                                Inter-segment
                                     Corporate   Eliminations          Total
    -------------------------------------------------------------------------
    Revenue                                  -       (253,537)    20,697,921
    Expenses
      Cost of goods sold                     -              -      5,074,207
      Operating                        (13,449)      (253,537)     9,668,619
      General & administrative       1,799,219              -      1,886,236
    -------------------------------------------------------------------------
    EBITDAS                         (1,785,770)             -      4,068,859

      Stock based compensation         491,459              -        826,151
      Depreciation & amortization       28,423              -      3,013,453
      Gain on disposal of assets             -              -       (482,148)

    -------------------------------------------------------------------------

    Operating earnings (loss)       (2,305,652)             -        711,403
    ----------------------------------------------------------

    Interest income                                                   (3,805)
    Interest expense on operating line                               189,632
    Interest expense on long-term debt                                 3,338
    Earnings on equity investments                                  (429,362)
    Income tax expense                                               197,435
                                                                -------------
    Net earnings                                                     754,165
                                                                -------------
                                                                -------------
    Earnings per share
      Basic                                                            $0.01
      Diluted                                                          $0.01
                                                                -------------
                                                                -------------
    

    Camps & Catering
    The Camps & Catering segment earned $15.4 million of revenue and
generated $4.5 million of EBITDAS and $3.1 million of operating earnings in
the three months ended June 30, 2007. Revenue for the quarter consisted of
camp rental revenue of $4.1 million, catering revenue of $2.8 million, camp
sales revenue of $7.1 million, and service and other revenue of $1.4 million.
The Camps & Catering segment experienced traditional spring break-up
associated with Western Canadian oil and gas operations as illustrated in the
camp rental days decreasing from 5,962 in the first quarter to 2,107 in the
second quarter and catering mandays decreasing from 139,109 in the first
quarter to 42,781 in the second quarter. Camp sales revenue was generated by
sales to mining companies with the equipment destined for Hope Bay and Baffin
Island in Nunavut.
    Camp manufacturing capacity for the remainder of the year will be
primarily allocated to equipment for the rental fleet.

    Marine Services
    The Marine Services segment earned $377,726 of revenue and generated an
operating loss of $851,331 in the three months ended June 30, 2007. The second
quarter results for the Marine Services segment are typically minimal due to
the conditions for marine work only being suitable at the end of the quarter
once winter conditions have dissipated. Operating earnings and EBITDAS for the
three months ended June 30, 2007 as compared to the three months ended
June 30, 2006 are lower as a result of significant maintenance and repairs
being performed on the tug boats in the three months ended June 30, 2007.
    The contract to build six double hulled, combination flat deck fuel
oil/deck cargo barges has been cancelled. The contract provided for such
cancellation, with a full refund of amounts paid to date, in the event that
certain construction quality and timing specifications were not met. Recent
inspections by Horizon personnel and consultants revealed construction
deficiencies that would not allow the vessels to meet specified quality
standards and delivery dates. The party with which Horizon had contracted to
build the barges has refunded the full amount of the progress payments made to
date. We are pursuing various alternatives for constructing double hulled
barges.

    Matting
    The matting segment earned revenues of $5.2 million, EBITDAS of
$2.0 million and operating earnings of $803,025 in the three months ended
June 30, 2007. Matting revenue consists of mat rental revenue of $2.2 million,
mat sales of $201,000, installation & service of $2.6 million, and other
revenue of $199,000. In the three months ended June 30, 2007, the segment had
665,159 mat rental days and sold 184 mats. During the three months ended
June 30, 2007, the average number of mats in the rental fleet was 8,763.
    The Company reopened its manufacturing facility in the Fort McMurray
region at the end of the second quarter and will be manufacturing
approximately 500 mats per month. In addition, the Grande Prairie
manufacturing facility has moved to a new location.

    Corporate
    Reducing operating earnings are the corporate 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. The second quarter
witnessed higher than usual costs as a result of listing fees and legal
expenses associated with moving from the TSX Venture Exchange to the TSX. In
addition, costs were incurred to reorganize the Camps & Catering segment into
a partnership structure.

    Liquidity and Capital Resources

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

    
    -------------------------------------------------------------------------
                                                    June 2007  December 2006
    -------------------------------------------------------------------------
    Current assets                               $ 25,192,518   $ 27,262,865

    Operating line of credit                       11,976,500      8,860,000
    Accounts payable and accrued liabilities        5,687,164      9,690,804
    Deferred revenue                                        -        169,811
    Income taxes payable                            2,322,587              -
    Current portion of long-term debt                 786,309        756,260
    -------------------------------------------------------------------------
    Current liabilities                            20,772,560     19,476,875
    -------------------------------------------------------------------------
    Working capital(1)                              4,419,958      7,785,990
    -------------------------------------------------------------------------
    Long-term debt                                    851,029        728,101
    -------------------------------------------------------------------------
    (1) Calculated as current assets less current liabilities.
    

    During the three months ended June 30, 2007, the Company spent
$9.8 million on capital assets. The Marine Services segment made an additional
$3.4 million in instalments for the 6 barges being built, whose contract has
now been cancelled. The Matting segment added 1 additional semi-truck to its
fleet, bringing the total fleet to 7 trucks; completed the second
manufacturing shop in the Fort McMurray region; and manufactured 3,574
additional mats for its rental fleet. The Camps & Catering segment added a
42-man sleeper, two offices and a double-wide office/recreation unit to its
fleet. The remainder of the capital additions included vehicles, leasehold
improvements, camp & catering supplies, and other miscellaneous additions.

    Outlook

    The outlook for 2007 remains unchanged from what was outlined in our
December 31, 2006 annual report. Although Horizon's results for the first and
second quarters were somewhat better than expected, we do not anticipate an
improvement in activity levels in the Canadian oil and gas exploration and
production sector until 2008.
    The Mackenzie Gas Project is proceeding through the regulatory process.
Recent developments including the announced settlement between the Government
of Canada and the Dene Tha' First Nation of northern Alberta, Imperial Oil and
ExxonMobil's acquired exploration rights in the Beaufort Sea north of
Tuktoyaktuk, and the appointment of Gaétan Caron as the chair of the NEB with
a mandate to complete the Mackenzie Gas Pipeline hearings, all have positive
implications for the project. Although Horizon anticipates that North American
energy supply and demand fundamentals will result in the project ultimately
being completed, the timing of construction is uncertain at this time.
    Horizon is continuing to strengthen and expand its core camp and catering
and matting businesses with a focus on northern oil sands and mining projects.
This should in turn allow the Company to participate in Mackenzie Gas Project
in a more meaningful way than its current capabilities would allow.
    The Company's activities continue to be supported by a strong balance
sheet with working capital of $4.4 million and a negligible debt to equity
ratio.



    
    Consolidated Balance Sheets
    June 30, 2007 and December 31, 2006 (Unaudited)
    -------------------------------------------------------------------------
                                                    June 2007  December 2006
    -------------------------------------------------------------------------

    Assets
    Current assets:
      Cash                                       $  1,000,064   $  3,198,247
      Accounts receivable                          18,630,646     18,197,449
      Inventory                                     4,998,924      4,972,951
      Prepaid expenses                                562,884        354,221
      Income taxes recoverable                              -        539,997
    -------------------------------------------------------------------------
                                                   25,192,518     27,262,865
    Property, plant and equipment, net             84,143,843     73,951,868
    Goodwill                                       84,591,166     84,243,279
    Intangible assets, net                         31,820,316     34,533,492
    Long-term investments                           3,948,764      3,525,112
    -------------------------------------------------------------------------
                                                 $229,696,607   $223,516,616
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Operating line of credit                   $ 11,976,500   $  8,860,000
      Accounts payable and accrued liabilities      5,687,164      9,690,804
      Deferred revenue                                      -        169,811
      Income taxes payable                          2,322,587              -
      Current portion of long-term debt               786,309        756,260
    -------------------------------------------------------------------------
                                                   20,772,560     19,476,875
    Long-term debt                                    851,029        728,101
    Future income tax liability                    15,275,576     17,440,663
    -------------------------------------------------------------------------
                                                   36,899,165     37,645,639
    Shareholders' equity:
      Share capital                               186,628,355    186,628,355
      Contributed surplus                           2,509,249        840,585
      Retained earnings (deficit)                   3,659,838     (1,597,963)
    -------------------------------------------------------------------------
                                                  192,797,442    185,870,977
    -------------------------------------------------------------------------
                                                 $229,696,607   $223,516,616
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings (Loss) and Retained Earnings
    (Deficit)
    Three and six months ended June 30, 2007 and 2006 (Unaudited)
    -------------------------------------------------------------------------
                        Three months ended June 30  Six months ended June 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Revenue               $20,697,921  $   532,658  $55,581,750  $ 1,457,908
    Expenses:
      Cost of goods sold    5,074,207            -   11,159,696            -
      Operating             9,668,619      475,688   26,794,637    1,785,544
      General and
       administrative       1,886,236      455,459    3,241,492      506,348
      Stock based
       compensation           826,151            -    1,668,664            -
      Depreciation of
       property, plant
       and equipment        1,656,865      363,837    3,043,321      729,227
      Amortization of
       intangible assets    1,356,588            -    2,713,176            -
      Gain on disposal
       of property, plant
       and equipment         (482,148)           -     (491,445)     (13,785)
    -------------------------------------------------------------------------
                           19,986,518    1,294,984   48,129,541    3,007,334
    -------------------------------------------------------------------------
    Operating earnings
     (loss)                   711,403     (762,326)   7,452,209   (1,549,426)
    Interest income            (3,805)        (573)     (15,295)        (573)
    Interest expense on
     operating line of
     credit                   189,632       12,721      377,315       14,877
    Interest expense on
     long-term debt             3,338       23,235        9,368       83,037
    Loss (earnings) on
     equity investments      (429,362)     208,693     (794,818)     208,693
    -------------------------------------------------------------------------
    Earnings (loss)
     before income taxes      951,600   (1,006,402)   7,875,639   (1,855,460)

    Income taxes
      Current tax expense
       (recovery)           1,439,135      (11,333)   4,652,275      (25,355)
      Future tax reduction (1,241,700)     (34,853)  (2,034,437)    (439,960)
    -------------------------------------------------------------------------
                              197,435      (46,186)   2,617,838     (465,315)

    -------------------------------------------------------------------------
    Net earnings (loss)       754,165     (960,216)   5,257,801   (1,390,145)

    Retained earnings
     (deficit), beginning
     of period              2,905,673   (1,163,708)  (1,597,963)    (733,779)

    -------------------------------------------------------------------------
    Retained earnings
     (deficit), end of
     period               $ 3,659,838  $(2,123,924) $ 3,659,838  $(2,123,924)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss)
     per share:
      Basic               $      0.01  $     (0.05) $      0.06  $     (0.09)
      Diluted             $      0.01  $     (0.05) $      0.06  $     (0.09)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Three and six months ended June 30, 2007 and 2006 (Unaudited)
    -------------------------------------------------------------------------
                        Three months ended June 30  Six months ended June 30
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------
    Cash provided by
     (used in):
    Operating activities:
      Net earnings (loss) $   754,165  $  (960,216) $ 5,257,801  $(1,390,145)
      Items not involving
       cash:
        Depreciation of
         property, plant
         and equipment      1,656,865      363,837    3,043,321      729,227
        Amortization of
         intangible assets  1,356,588            -    2,713,176            -
        Future tax
         reduction         (1,241,700)     (34,853)  (2,034,437)    (439,960)
        Stock based
         compensation         826,151            -    1,668,664            -
        Loss (earnings) on
         equity investments  (429,362)     208,693     (794,818)     208,693
        Gain on disposal
         of property, plant
         and equipment       (545,759)           -     (603,196)     (13,785)
    -------------------------------------------------------------------------
                            2,376,948     (422,539)   9,250,511     (905,970)
      Changes in non-cash
       working capital
       items                4,117,266      180,288      702,372     (672,086)
    -------------------------------------------------------------------------
                            6,494,214     (242,251)   9,952,883   (1,578,056)
    Investing activities:
      Purchase of
       property, plant
       and equipment       (9,775,337)    (129,032) (14,173,552)    (141,398)
      Proceeds on disposal
       of property, plant
       and equipment        1,237,009            -    1,541,452       15,000
      Proceeds on
       liquidation of
       equity investment            -            -      371,166            -
      Business
       acquisitions                 -            -      (51,648)           -
    -------------------------------------------------------------------------
                           (8,538,328)    (129,032) (12,312,582)    (126,398)
      Changes in non-cash
       working capital
       items                  (50,362)           -   (3,107,961)           -
    -------------------------------------------------------------------------
                           (8,588,690)    (129,032) (15,420,543)    (126,398)

    Financing activities:
      Proceeds from
       operating line of
       credit              14,505,000            -   23,087,500            -
      Repayment of
       operating line of
       credit             (15,756,750)      (6,750) (19,971,000)     (18,688)
      Proceeds from
       long-term debt         191,449            -      844,415    2,000,000
      Repayment of
       long-term debt        (252,818)    (112,351)    (691,438)    (212,351)
    -------------------------------------------------------------------------
                           (1,313,119)    (119,101)   3,269,477    1,768,961

    -------------------------------------------------------------------------
    Increase (decrease)
     in cash position      (3,407,595)    (490,384)  (2,198,183)      64,507
    Cash (bank
     indebtedness),
     beginning of period    4,407,659      549,741    3,198,247       (5,150)

    -------------------------------------------------------------------------
    Cash, end of period   $ 1,000,064  $    59,357  $ 1,000,064  $    59,357
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplementary
     information:
      Income taxes paid   $ 1,812,425  $         -  $ 2,421,055  $         -
      Interest income
       received                (3,805)        (573)     (15,295)        (573)
      Interest paid           193,027       35,956      387,342       97,914
    

    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


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