Horizon North Logistics Inc. Announces Results For The Period Ended September
30, 2009

CALGARY, Nov. 5 /CNW/ - TSX Symbol: HNL - Horizon North Logistics Inc. ("Horizon" or the "Corporation") reported its financial and operating results for the three and nine months ended September 30, 2009 and 2008.

    
    Highlights

    -------------------------------------------------------------------------
                                   Three      Three         Nine        Nine
                                  months     months       months      months
                                   ended      ended        ended       ended
    (000's except per          September   September   September   September
    share amounts)              30, 2009    30, 2008    30, 2009    30, 2008
    -------------------------------------------------------------------------
    Revenue                     $ 32,048    $ 53,692    $112,812    $124,044
    EBITDAS (1)                    5,035      14,273      32,434      31,252
    Operating (loss)
     earnings (1)                   (571)      7,453      13,696      13,160
    Net (loss) earnings             (105)      5,004       9,480       8,389
    Net earnings per share
     - diluted                  $   0.00    $   0.05    $   0.09    $   0.08
    Total assets                 222,285     368,934     222,285     368,934
    Total long-term financial
     liabilities (2)              21,717      54,542      21,717      54,542
    Funds from operations (3)      4,383       9,770      29,281      22,929
    Capital spending               1,605      10,161       9,675      48,796
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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.
    (2) Long-term financial liabilities include operating lines of credit,
        the current and long-term portions of long-term debt, the current and
        long-term portions of capital lease obligations.
    (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.

    Key Points

      -  Strong financial position with continued debt reduction in the
         quarter; available borrowing capacity of $58.8 million under credit
         facilities of $80.5 million;

      -  4.8 million shares repurchased and cancelled under Normal Course
         Issuer Bid for $5.8 million.

      -  Substantial reduction in revenues, EBITDAS and earnings as a result
         of reduced activity and margin contraction;

      -  Results include remediation costs at the BlackSand Executive Lodge
         of $539,000 and costs of starting the blast resistant structures
         business of $179,000;
    

Overview

Revenues for the three months ended September 30, 2009 decreased $21.6 million as compared to the same period in the prior year. Reduced activity levels were seen in all of Horizon's segments as a result of the global economic and financial downturn.

Camp & Catering revenues decreased $11.6 million as demand for accommodation and support services declined significantly with lowered exploration and drilling activity and reduction of activity on many oil sands projects. Demand also declined significantly for the sales of new and used camps and for camp rental and catering services.

Matting revenues decreased $7.8 million primarily due to a decrease in the number of mats sold as customers shifted from purchases to rentals, while the majority of mats purchased were lower priced used mats rather than new mats. Mat rental activity was up significantly, but reduced rental rates and bundling of transportation and installation services to remain competitive resulted in lower service revenues.

Marine Service revenues decreased $2.9 million due to reduced tug and barge revenue, reflecting reduced activity in the Northwest Territories.

EBITDAS and operating earnings decreased by $9.2 million and $8.0 million respectively as compared to the same period in the prior year. The global economic and financial downturn has led to a decrease in demand for oilfield service and support activities and has led to increased customer focus on costs resulting in narrower margins on many of Horizon's products and services.

Outlook

Horizon's businesses are continuing to experience the impact of the global recession through reduced activity levels and margin contraction as competitors vie for fewer jobs. Horizon's customers in the conventional oil and gas exploration and production business have seen their cash flows reduced dramatically by lower commodity prices, which has led to 2009 drilling activity declining to levels not seen in over a decade. Relief from this situation is unlikely to occur until general economic activity improvements spur increased industrial demand for commodities, in particular for natural gas.

Crude oil prices have improved from their recent low in the $35 US per barrel range to the high $70's US per barrel. The combination of this price improvement and labour and materials cost deflation has helped restart a number of northern Alberta oil sands projects. As a result, the number of new camp projects that have been put out to bid has increased over the last few months. Horizon's investments in camp and catering facilities in the region should benefit from this increase in activity and help offset the continued depressed conventional oil and gas market.

The mining industry has seen an improvement in commodity prices and access to capital markets. Horizon has done substantial business with mining industry participants in the past and anticipates that a number of delayed projects will be coming back on-stream in the near future. Development of shale gas resources in remote regions of north-eastern British Columbia are in their early stages and the Corporation is exploring opportunities to enter this market.

Horizon's strong and improving financial position should ensure that the Corporation sees its way through these difficult economic times and allow it to take advantage of opportunities that might be available near the bottom of the economic cycle.

During the third quarter of 2009, the Corporation repaid $1.8 million of bank borrowings and exited the quarter with $58.8 million of borrowing capacity under its $80.5 million bank credit facility. Also during the third quarter, the Corporation repurchased and cancelled 4,766,600 common shares for total cash consideration of $5.8 million. The Corporation was of the view that its shares were undervalued in the market, and given its strong financial position the repurchase of shares represented an attractive investment that will benefit all shareholders.

    
    Financial Results
    -------------------------------------------------------------------------
                             Three months ended September 30, 2009
                                                            Inter-
                                                           segment
                   Camps &              Marine              Elimi-
    (000's)       Catering   Matting  Services Corporate   nations     Total
    -------------------------------------------------------------------------
    Revenue       $ 26,103  $  5,118  $  1,109  $      -  $   (282) $ 32,048
    Expenses
      Cost of
       goods sold    4,846       743         -         -        (4)    5,585
      Operating     15,629     2,504     1,285         -      (278)   19,140
      General &
       administrative  825        83         2     1,345         -     2,255
      Foreign
       exchange
       loss (gain)      18        (3)       (3)       21         -        33
    -------------------------------------------------------------------------
    EBITDAS       $  4,785  $  1,791  $   (175) $ (1,366)  $     -  $  5,035

      Stock based
       compensation    101        22         1       (50)        -        74
      Depreciation &
       amortization  4,155     1,397       292        65       (10)    5,899
      Gain on
       disposal of
       property,
       plant &
       equipment      (367)        -         -         -         -      (367)

    -------------------------------------------------------------------------
    Operating
     earnings
     (loss)       $    896  $    372  $   (468) $ (1,381)  $    10  $   (571)
    ---------------------------------------------------------------

    Interest
     income                                                               (8)
    Interest
     expense on
     operating
     lines of
     credit                                                               42
    Interest
     expense on
     long-term debt                                                      127
    Earnings on
     equity
     investments                                                        (260)
    Income tax
     recovery                                                           (367)
                                                                    ---------
    Net loss                                                        $   (105)
                                                                    ---------
                                                                    ---------



    -------------------------------------------------------------------------
                             Three months ended September 30, 2008
                                                            Inter-
                                                           segment
                   Camps &              Marine              Elimi-
    (000's)       Catering   Matting  Services Corporate   nations     Total
    -------------------------------------------------------------------------
    Revenue       $ 37,722  $ 12,877  $  3,979  $      -  $   (886) $ 53,692
    Expenses
      Cost of
       goods sold    5,821     6,142         -         -      (187)   11,776
      Operating     18,800     3,633     3,551         -      (590)   25,394
      General &
       administrative  574       146         -     1,495         -     2,215
      Foreign
       exchange
       loss              -        30         -         4         -        34
    -------------------------------------------------------------------------
    EBITDAS       $ 12,527  $  2,926  $    428  $ (1,499) $   (109) $ 14,273

      Stock based
       compensation    220        53         4       169         -       446
      Depreciation &
       amortization  4,495     1,566       273        44       (22)    6,356
      Loss (gain)
       on disposal
       of property,
       plant &
       equipment        33       (15)        -         -         -        18

    -------------------------------------------------------------------------
    Operating
     earnings
     (loss)       $  7,779  $  1,322  $    151  $ (1,712) $    (87) $  7,453
    ---------------------------------------------------------------

    Interest
     income                                                               (6)
    Interest
     expense on
     operating
     lines of
     credit                                                              129
    Interest
     expense on
     long-term debt                                                      593
    Loss on
     equity
     investments                                                          28
    Income tax
     expense                                                           1,705
                                                                    ---------
    Net earnings                                                    $  5,004
                                                                    ---------
                                                                    ---------
    

Camps & Catering

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

    
                            Three months ended         Nine months ended
    (000's except              September 30                September 30
     rental days        -------------------------   -------------------------
     and mandays)             2009          2008          2009          2008
                        -----------   -----------   -----------   -----------
    Revenue from
     operations
      Camps, catering &
       service revenue  $   17,535    $   27,288    $   59,563    $   64,044
      Camp sales revenue     6,184         6,563        21,424        16,190
      Space sales
       revenue               1,321         2,787         2,616         7,190
      Space rental
       revenue               1,063         1,084         3,154         3,657
                        -----------   -----------   -----------   -----------
    Revenue from
     operations         $   26,103    $   37,722    $   86,757    $   91,081
      Contract
       cancellation fee          -             -         8,000             -
                        -----------   -----------   -----------   -----------
    Total Revenue       $   26,103    $   37,722    $   94,757    $   91,081
                        -----------   -----------   -----------   -----------
                        -----------   -----------   -----------   -----------
    EBITDAS
      Operations        $    4,785    $   12,527    $   23,217    $   27,444
      Contract
       cancellation fee          -             -         8,000             -
                        -----------   -----------   -----------   -----------
    Total EBITDAS       $    4,785    $   12,527    $   31,217    $   27,444
                        -----------   -----------   -----------   -----------
    Operating earnings
      Operations        $      896    $    7,779    $    9,885    $   15,549
      Contract
       cancellation fee          -             -         8,000             -
                        -----------   -----------   -----------   -----------
    Total Operating
     earnings           $      896    $    7,779    $   17,885    $   15,549
                        -----------   -----------   -----------   -----------
    Bed rental days(1)     109,417       154,682       242,116       419,611
    Catering mandays(2)     87,439       117,959       203,910       326,056

    (1) One bed rental day equals the rental of one bed for one day.
    (2) One catering manday equals 3 meals for one person for one day.
    

Revenue from the Camps & Catering segment decreased by $11,619,000 in the three months ended September 30, 2009 as compared to the three months ended September 30, 2008.

Camps, catering and service revenues decreased $9,753,000 in the three months ended September 30, 2009 as compared to the three months ended September 30, 2008.

Revenues from the BlackSand facilities decreased by $5,373,000 or 42% as compared to the same period in the prior year. Bed rental days decreased 28%, from 66,042 days in Q3 2008 to 47,287 days in Q3 2009 as occupancy levels increased steadily throughout Q3 2008 before peaking at 1,049 utilized beds in December 2008. In Q3 2009, the average number of utilized beds was 713. On a per bed rental day basis, revenues declined from $196/day in Q3 2008 to $160/day in Q3 2009 due to renegotiated contract terms with a major customer in Q2 2009, and a change in the mix of rooms with more craft rooms utilized as opposed to higher-priced executive rooms.

Revenues from conventional equipment decreased by $4,341,000 or 29% as compared to the same period in the prior year. Bed rental days decreased by 30%, from 88,640 days in Q3 2008 to 62,130 days in Q3 2009, as overall support and service activity levels dropped. On a per bed rental day basis, revenues declined from $106/day in Q3 2008 to $81/day in Q3 2009 due to competitive pressures.

Revenues from service work remained consistent at $4,954,000 in Q3 2009 as compared to $4,992,000 Q3 2008, as service work followed specific camp sales and installation projects.

Combined camp and space sales revenues decreased $1,845,000 in the three months ended September 30, 2009 as compared to the three months ended September 30, 2008. General economic pressures resulted in less overall demand for newly manufactured units as compared to the same period in the prior year. Sales of used units during the quarter came from older, lower valued units as increased competition drove down pricing.

EBITDAS and operating earnings were negatively affected by a number of factors compared to the same period in the prior year. Margins at the BlackSand facilities declined from 47% in Q3 2008 to 27% in Q3 2009 as overall rates charged decreased as part of the amended contract terms discussed above. Additionally, in Q3 2008 there were a significant number of beds billed on a take-or-pay basis for which full revenues were earned that did not have associated catering and housekeeping costs. Included in Q3 2009 were costs incurred to correct moisture accumulation problems at BlackSand of $539,000 and costs related to the initial setup of the blast resistant structures business of $177,000.

Matting

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

    
                            Three months ended         Nine months ended
    (000's except              September 30                September 30
     rental days        -------------------------   -------------------------
     and mats)                2009          2008          2009          2008
                        -----------   -----------   -----------   -----------
    Mat rental revenue  $    1,504    $    1,303    $    3,717    $    4,069
    Mat sales revenue        1,220         7,387         3,340        10,337
    Installation,
     transportation,
     service and other
     revenue                 2,394         4,187         7,227        12,264
                        -----------   -----------   -----------   -----------
    Total revenue       $    5,118    $   12,877    $   14,284    $   26,670
                        -----------   -----------   -----------   -----------
                        -----------   -----------   -----------   -----------
    EBITDAS             $    1,791    $    2,926    $    4,073    $    6,511
    Operating earnings
     (loss)             $      372    $    1,322    $     (466)   $    1,833
    Mat rental days        649,750       434,441     1,493,597     1,314,375
    Average mats in
     rental fleet           13,421        18,398        13,125        18,054
    Mats sold
      New mats                 870         9,119         2,144        11,423
      Used mats              1,738           330         3,828         1,719
                        -----------   -----------   -----------   -----------
    Total mats sold          2,608         9,449         5,972        13,142
    

Revenue from the Matting segment decreased $7,759,000 in the three months ended September 30, 2009 as compared to the three months ended September 30, 2008.

Mat rental revenues for the three months ended September 30, 2009 were $201,000 higher than the three months ended September 30, 2008. Mat rental days were significantly higher during the quarter especially in the latter part of the quarter as rental days picked up considerably due to increasing activity related to shale gas development projects in north-eastern British Columbia. Mat utilization was considerably higher, with 53% of mats rented during the quarter as compared to 26% during the same period in the prior year. Mat rental rates in the quarter were $2.31/mat rental day as compared to $3.00/mat rental day in Q3 2008 with general economic conditions and competition having a negative effect on pricing.

Mat sales revenues for the three months ended September 30, 2009 were $6,167,000 lower than the three months ended September 30, 2008. The total number of mats sold decreased significantly as customers shifted from mat purchases to mat rentals. The shift was a result of the type of projects being undertaken and a focus by customers of reducing capital expenditures. Revenue per mat sold was $468/mat as compared to $782/mat in the same period in 2008. The majority of mats sold in Q3 2009 were used mats which typically sell at a discount from new mats.

Installation, transportation, service and other revenue for the three months ended September 30, 2009 were $1,793,000 lower than the three months ended September 30, 2008. The decrease was driven primarily by a drop in trucking activity as mat management customers remained focused on project specific services and reduced staging and strategic relocation work. There was also an increase in the amount of bundled services during the quarter, with transportation and installation services included within rental rates in order to compete more effectively on rental jobs.

EBITDAS and operating earnings decreased by $1,135,000 and $950,000 respectively, driven primarily by the decrease in overall mat sales as compared to the same period in the prior year. Rental margins were negatively impacted by competitive pressures and the bundling of transportation and installation services resulting in decreased margins for these services as well. Efforts are focused on reducing costs in a number of areas, including a shift in manufacturing towards construction of hybrid mats, which utilize a combination of oak and softwood material while still retaining structural rigidity and durability. The hybrid mats are less costly to manufacture, and their reduced weight helps lower trucking and installation costs.

Marine Services

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

    
                            Three months ended         Nine months ended
                               September 30                September 30
                        -------------------------   -------------------------
    (000's)                   2009          2008          2009          2008
                        -----------   -----------   -----------   -----------
    Tug revenue         $      517    $    3,281    $      547    $    3,632
    Barge revenue              191           178           191           586
    Barge camp revenue          75           185         3,033         3,299
    Rental and other
     revenue                   326           335         1,085         1,212
                        -----------   -----------   -----------   -----------
    Total revenue       $    1,109    $    3,979    $    4,856    $    8,729
                        -----------   -----------   -----------   -----------
                        -----------   -----------   -----------   -----------
    EBITDAS             $     (175)   $      428    $    1,645    $    2,674
    Operating (loss)
     earnings           $     (468)   $      151    $      768    $    1,871
    

Revenues from the Marine Services segment for the three months ended September 30, 2009 decreased $2,870,000 as compared to the same period in the prior year.

Tug and barge revenues were significantly lower in the three months ended September 30, 2009, down $2,751,000 as overall activity in the Northwest Territories was very slow. Very little work was contracted over the summer months during the period where the northern waterways are typically open. Similarly, barge camp revenue was very limited during the quarter.

Rental and other revenues were generated mainly from storage of equipment and supplies for customers and were consistent with the same period in 2008.

EBITDAS and operating earnings for the three months ended September 30, 2009 were $603,000 and $619,000 lower as compared to the same period in 2008 as a result of lower activity levels in the region, and several preventative maintenance projects which were begun during the quarter totalling $610,000.

Corporate

Corporate costs are the costs of the head office which include the Chief Executive Officer, President, Chief Financial Officer, Vice President of Safety, Corporate Secretary, Corporate Accounting staff, and associated costs of supporting a public company. Overall cash costs were $1,366,000 (excluding Stock Based Compensation and Depreciation & Amortization) in the three months ended September 30, 2009 as compared to $1,499,000 in the same period in 2008. This decrease is largely a result of salary rollbacks implemented in the second quarter of 2009, led by senior management at 20%, and an overall focus on managing costs throughout the difficult economic times.

Other Items

Interest on operating lines of credit and long-term debt

Interest on operating lines of credit and long-term debt decreased to $169,000 in the three months ended September 30, 2009 from $722,000 in the three months ended September 30, 2008. This decrease is attributable to a decrease in the weighted average amount of debt held to $18,946,000 in the three months ended September 30, 2009 as compared to $52,896,000 in the three months ended September 30, 2008, and a reduction in interest rates.

Earnings on equity investments

Earnings on equity investments in the three months ended September 30, 2009 were $260,000, generated primarily by Kitikmeot Caterers Ltd. ("Kitikmeot") which provided catering services to a mining project in Nunavut. Mackenzie Valley Logistics Inc. ("Mackenzie Valley") and Mackenzie Delta Integrated Oilfield Services Ltd. ("MDIOS") generated minimal income as activity in the Northwest Territories was very limited.

Liquidity and Capital Resources

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

    
    -------------------------------------------------------------------------
                                                                   Increase/
    (000's)                    September 2009   December 2008   (Decrease) $
    -------------------------------------------------------------------------
    Current assets                   $ 40,511        $ 50,465       $ (9,954)

    Operating lines of credit           8,206           8,834           (628)
    Current liabilities
     excluding borrowings(1)           13,730          18,177         (4,447)
    Current portion of
     long-term debt                       255             488           (233)
    -------------------------------------------------------------------------
    Current liabilities                22,191          27,499         (5,308)
    -------------------------------------------------------------------------
    Working capital(2)                 18,320          22,966         (4,646)

    Bank borrowings
      Operating lines
       of credit                     $  8,206        $  8,834       $   (628)
      Senior secured revolving
       term facility                   13,511          39,112        (25,601)
    -------------------------------------------------------------------------
    Total bank borrowings              21,717          47,946        (26,229)

    Available bank lines(3)            80,500          80,500              -
    -------------------------------------------------------------------------
    Borrowing capacity(4)            $ 58,783        $ 32,554       $ 26,229
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Calculated as the sum of bank indebtedness, accounts payable and
        accrued liabilities and deferred revenue.
    (2) Calculated as current assets less current liabilities.
    (3) Includes $80,000,000 available to Horizon 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.
    

In the nine months ended September 30, 2009, Horizon's working capital position decreased $4,646,000 and bank borrowings decreased $26,229,000. Bank borrowings were reduced in the nine months ending September 30, 2009 using the cash flow from operations and proceeds from the sale of used equipment which remained after funding capital additions.

During the three and nine months ended September 30, 2009, the Corporation spent $1,605,000 and $9,675,000 on capital asset additions respectively. Year to date capital spending was related to the addition of 3,485 hybrid mats to the Matting rental fleet to replenish mats sold, camp rental assets, the expansion of camp manufacturing capacity in Grande Prairie, vehicle replacements, leasehold improvements, camp and catering supplies, and other miscellaneous additions. Horizon evaluates and manages its capital spending plans taking into account proceeds from disposals, which at September 30, 2009 totaled $8,196,000.

The Corporation was granted approval from the Toronto Stock Exchange for a normal course issuer bid to repurchase up to a maximum of 7,426,978 common shares of the Corporation over the period from July 24, 2009 to July 23, 2010. All shares repurchased will be cancelled. As at November 5, 2009 4,766,600 shares have been repurchased for cancellation for total cash consideration of $5,841,088.

The Corporation does not anticipate having any issues with respect to credit facility covenant violations. The Corporation is in compliance with its four debt covenants on its bank borrowings as set out below:

    
    -------------------------------------------------------------------------
    Debt Covenant                                         September 30, 2009
    -------------------------------------------------------------------------
    Current ratio(1) - must be greater than 1.2:1                     1.83:1
    Debt(2) to EBITDAS(3)(4) - must be less than 2:1                   0.5:1
    Debt service coverage(5) - must be greater than 1.5:1             23.8:1
    Debt(2) to total capitalization(6) - must be less than 0.5:1      0.11:1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Current ratio is calculated as ratio of current assets to current
        liabilities.
    (2) Calculated as the sum of operating lines of credit and long-term
        debt.
    (3) EBITDAS (Earnings before interest, taxes, depreciation, amortization,
        gain/loss on disposal of property, plant and equipment and stock
        based compensation) is not a recognized measure 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. Investors should
        be cautioned, however, that EBITDAS should not be construed as an
        alternative to net earnings determined in accordance with GAAP as an
        indicator of the Corporation's performance. Horizon's method of
        calculating EBITDAS may differ from other entities and accordingly,
        EBITDAS may not be comparable to measures used by other entities.
    (4) Debt to EBITDAS is calculated as the ratio of debt to trailing
        12 months EBITDAS.
    (5) Debt service coverage is calculated as the ratio of trailing
        12 months EBITDAS less cash taxes to debt service. EBITDAS less cash
        taxes is calculated as the trailing 12 months EBITDAS less trailing
        12 months current tax expense. Debt service is calculated as the sum
        of trailing 12 months interest expense on operating lines of credit,
        trailing 12 months interest expense on long-term debt and current
        portion of long-term debt.
    (6) Debt to total capitalization is calculated as the ratio of debt to
        total capitalization. Total capitalization is calculated as the sum
        of debt and shareholder's equity.

    Consolidated Balance Sheets (Unaudited)

    -------------------------------------------------------------------------
    (000's)                                   September 2009   December 2008
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Cash                                          $    122        $      -
      Accounts receivable                             25,170          37,873
      Inventory                                       12,458           9,960
      Prepaid expenses                                 2,146           1,682
      Income tax receivable                              615             950
    -------------------------------------------------------------------------
                                                      40,511          50,465
    Property, plant and equipment, net               138,655         147,924
    Goodwill                                             441               -
    Intangible assets, net                            37,255          43,032
    Long-term investments                              6,023           5,760
    -------------------------------------------------------------------------
                                                    $222,885        $247,181
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Bank indebtedness                             $      -        $  1,776
      Operating lines of credit                        8,206           8,834
      Accounts payable and accrued liabilities        10,718          14,234
      Deferred revenue                                 3,012           2,167
      Current portion of long-term debt                  255             488
    -------------------------------------------------------------------------
                                                      22,191          27,499
    Long-term debt                                    13,256          38,624
    Future income tax liability                       14,021          11,456
    -------------------------------------------------------------------------
                                                      49,468          77,579
    Shareholders' equity:
      Share capital                                  246,334         257,505
      Contributed surplus                             11,070           5,564
      Deficit                                        (83,987)        (93,467)
    -------------------------------------------------------------------------
                                                     173,417         169,602

    -------------------------------------------------------------------------
                                                    $222,885        $247,181
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Operations and (Deficit) Retained Earnings
    Three and nine months ended September 30, 2009 and 2008 (Unaudited)

    -------------------------------------------------------------------------
                                    Three months ended    Nine months ended
    (000's except per                  September 30          September 30
     share amounts)                    2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revenue                        $ 32,048   $ 53,692   $112,812   $124,044

    Expenses:
      Cost of goods sold              5,585     11,776     18,305     22,854
      Operating                      19,140     25,394     55,252     62,622
      General and administrative      2,255      2,215      6,776      7,234
      Stock based compensation           74        446        182      1,448
      Depreciation of property,
       plant and equipment            3,655      4,114     13,205      9,857
      Amortization of intangible
       assets                         2,244      2,242      6,728      6,726
      (Gain) loss on disposal of
       property, plant and equipment   (367)        18     (1,377)        61
      Foreign exchange loss              33         34         45         82
    -------------------------------------------------------------------------
                                     32,619     46,239     99,116    110,884
    -------------------------------------------------------------------------
    Operating (loss) earnings          (517)     7,453     13,696     13,160

    Interest income                      (8)        (6)       (27)       (14)
    Interest expense on operating
     lines of credit                     42        129        194        476
    Interest expense on long-term debt  127        593        981      1,234
    (Earnings) loss on equity
     investments                       (260)        28       (503)      (409)
    -------------------------------------------------------------------------
    (Loss) earnings before
     income taxes                      (472)     6,709     13,051     11,873

    Income taxes
      Current tax expense                74      2,807        935      4,845
      Future tax (recovery) expense    (441)    (1,102)     2,636     (1,361)
    -------------------------------------------------------------------------
                                       (367)     1,705      3,571      3,484

    -------------------------------------------------------------------------
    Net (loss) earnings and other
     comprehensive (loss) income       (105)     5,004      9,480      8,389

    (Deficit) retained earnings,
     beginning of period            (83,882)     7,867    (93,467)     4,482

    -------------------------------------------------------------------------
    (Deficit) retained earnings,
     end of period                 $(83,987)  $ 12,871   $(83,987)  $ 12,871
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                        $   0.00   $   0.05   $   0.09   $   0.08
      Diluted                      $   0.00   $   0.05   $   0.09   $   0.08
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    Three and nine months ended September 30, 2009 and 2008 (Unaudited)

    -------------------------------------------------------------------------
                                    Three months ended    Nine months ended
                                       September 30          September 30
    (000's)                            2009       2008       2009       2008
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operating activities:

    Net (loss) earnings            $   (105)  $  5,004   $  9,480   $  8,389
    Items not involving cash:
      Depreciation of property,
       plant and equipment            3,655      4,114     13,205      9,857
      Amortization of intangible
       assets                         2,244      2,242      6,728      6,726
      Future income tax (recovery)
       expense                         (441)    (1,102)     2,636     (1,361)
      Stock based compensation           74        446        182      1,448
      (Earnings) loss on equity
       investments                     (260)        28       (503)      (409)
      Gain on sale of property,
       plant and equipment             (784)      (962)    (2,447)    (1,721)
    -------------------------------------------------------------------------
                                      4,383      9,770     29,281     22,929
    Changes in non-cash working
     capital items                    3,350     (9,960)     6,868    (13,101)
    -------------------------------------------------------------------------
                                      7,733       (190)    36,149      9,828
    Investing activities:

    Purchase of property, plant
     and equipment                   (1,605)   (10,161)    (9,675)   (48,796)
    Purchase of intangibles            (626)         -       (626)         -
    Proceeds on sale of property,
     plant and equipment              2,924      1,208      8,196      4,456
    Return of capital from
     equity investments                (349)       334        240        334
    Business acquisitions              (818)         -       (818)      (580)
    -------------------------------------------------------------------------
                                       (474)    (8,619)    (2,683)   (44,586)
    Changes in non-cash working
     capital items                    1,394        346      1,394        914
    -------------------------------------------------------------------------
                                        920     (8,273)    (1,289)   (43,672)
    Financing activities:

    (Repayment of) proceeds from
     bank indebtedness                 (251)       666     (1,776)     1,694
    Share purchase costs                (53)         -        (53)         -
    Share issue costs                     -          -          -        (15)
    Repurchase of shares             (5,793)         -     (5,793)         -
    (Repayment of) proceeds from
     operating lines of credit       (1,132)       258       (628)    (6,352)
    Proceeds from long-term debt      7,200      8,200      7,200     39,000
    Repayment of long-term debt      (7,615)      (207)   (32,801)      (986)
    Repayment of capital leases           -       (454)         -       (507)
    -------------------------------------------------------------------------
                                     (7,644)     8,463    (33,851)    32,834
    Changes in non-cash working
     capital items                     (887)         -       (887)      (210)
    -------------------------------------------------------------------------
                                     (8,531)     8,463    (34,738)    32,624
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash position                      122          -        122     (1,220)
    Cash, beginning of period             -          -          -      1,220
    -------------------------------------------------------------------------
    Cash, end of period            $    122   $      -   $    122   $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
      Income taxes paid            $    701   $    817   $    549   $  4,800
      Interest income received            8          4         27         12
      Interest paid                     192        524      1,360      1,551
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

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.

SOURCE Horizon North Logistics Inc.

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


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