Horizon North Logistics Inc. Announces Results For The Period Ended September
30, 2010
TSX Symbol: HNL
CALGARY, Nov. 4 /CNW/ - Horizon North Logistics Inc. ("Horizon" or the "Corporation") reported its financial and operating results for the quarter ended September 30, 2010 and 2009.
Third Quarter Highlights
- Revenue and EBITDAS increased 100% and 234% respectively compared to
Q3 2009;
- 91% increase in bed rental days compared to Q3 2009;
- 29% increase in mat rental days compared to Q3 2009;
- 111% increase in manufacturing revenues as compared to Q3 2009.
Financial Summary
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Three Months Three Months Nine Months Nine Months
(000's except Ended Ended Ended Ended
per share September 30, September 30, September 30, September 30,
amounts) 2010 2009 2010 2009
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Revenue from
operations $ 67,660 $ 33,837 $ 157,633 $ 109,988
Cancellation fee - - - 8,000
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Total revenue $ 67,660 $ 33,837 $ 157,633 $ 117,988
EBITDAS(1) from
operations 17,452 5,272 34,461 25,081
Cancellation fee - - - 8,000
-------------------------------------------------------
Total EBITDAS(1) 17,452 5,272 34,461 33,081
Earnings (loss)
from operations(1) 10,489 (334) 13,895 6,343
Cancellation fee - - - 8,000
-------------------------------------------------------
Total operating
earnings (loss)(1) 10,489 (334) 13,895 14,343
Net earnings (loss) 7,214 (105) 8,401 9,480
Net earnings per
share - diluted $ 0.07 $ 0.00 $ 0.08 $ 0.09
Total assets 275,824 222,285 275,824 222,285
Total long-term
financial
liabilities(2) 48,083 21,717 48,083 21,717
Funds from
operations(3) 15,205 4,620 29,809 29,925
Capital spending 13,491 1,605 35,900 9,675
Debt to total
capitalization
ratio(4) 0.21:1 0.11:1 0.21:1 0.11:1
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(1) EBITDAS (Earnings before interest, taxes, depreciation, amortization,
accretion of notes payable, 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 (loss), 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,
and current and long-term portions of long-term debt.
(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.
(4) Debt to total capitalization is calculated as the ratio of debt to
total capitalization. Debt is defined as the sum of operating lines
of credit and long-term debt. Total capitalization is calculated as
the sum of debt and shareholder's equity
Overview and Outlook
Horizon's core businesses continue to be driven by oil sands development activity in northern Alberta. Our expanded BlackSand facilities near Fort McMurray, Alberta are running at capacity and are expected to remain full through 2011. Our manufacturing facilities are fully utilized and are 75% booked through 2011, primarily dedicated to oil sands related projects.
Activity in the western Canadian mining sector has continued to build following improved mineral pricing, with a number of new and expanding camp manufacturing and management projects on the horizon.
Opportunities continue to develop related to unconventional natural gas development projects with potential to participate through camp manufacturing and/or provision of camp rental and catering and management services.
Our road and location matting business has also benefited from increased activity and continues to experience strong utilization which we expect to continue through the rest of 2010 and into 2011.
Highlights for the quarter included:
- 91% increase in bed rental days compared to Q3 2009;
- 29% increase in mat rental days compared to Q3 2009;
- 111% increase in manufacturing revenues as compared to Q3 2009.
These factors contributed to a 100% increase in revenue from operations for the three months ended September 30, 2010 to $67.7 million as compared to $33.8 million in the same period of the prior year.
EBITDAS for the quarter improved significantly over the same period in the prior year to $17.5 million or 26% of revenues as compared to $5.3 million or 16% of revenues in the prior year. Significant factors affecting EBITDAS for the quarter were:
- EBITDAS from the Camps & Catering segment grew significantly with
increased contributions from both the BlackSand operations and
manufacturing projects;
- EBITDAS from the Matting segment increased slightly and showed
improved margins at 39% of revenues;
- EBITDAS from Marine Services was $2.7 million or 55% of revenues in
the current period as a result of some one-time summer projects
compared to a slight loss in the prior year.
Activity is expected to continue to increase driven mainly by the Camps & Catering segment on both rental and catering and manufacturing activity. As a result, the Corporation's combined cash flow and borrowing capacity through our credit facilities will be sufficient to support existing capital and operational plans.
Financial Results
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Three months ended September 30, 2010
Inter-
segment
Camps & Marine Elimin-
(000's) Catering Matting Services Corporate ations Total
-------------------------------------------------------------------------
Revenue $ 54,632 $ 8,298 $ 4,954 $ - $ (224) $ 67,660
Expenses
Cost of
goods sold 12,118 1,486 - - - 13,604
Operating 28,600 3,495 2,243 - (225) 34,113
General &
adminis-
trative 707 101 - 1,742 - 2,550
Foreign
exchange
(gain) loss (21) (43) 2 3 - (59)
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EBITDAS $ 13,228 $ 3,259 $ 2,709 $ (1,745) $ 1 $ 17,452
Stock based
compensation 114 9 2 194 - 319
Depreciation
& amorti-
zation 4,936 1,399 298 97 (21) 6,709
Gain on
disposal of
property,
plant and
equipment (65) - - - - (65)
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Total
operating
earnings
(loss) $ 8,243 $ 1,851 $ 2,409 $ (2,036) $ 22 $ 10,489
---------------------------------------------------------------
Interest income (9)
Interest
expense on
operating lines
of credit 43
Interest expense
on long-term
debt 371
Loss on equity
investments 7
Accretion of
notes payable 184
Income tax
expense 2,679
----------
Net earnings $ 7,214
----------
----------
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Three months ended September 30, 2009
Inter-
segment
Camps & Marine Elimin-
(000's) Catering Matting Services Corporate ations Total
-------------------------------------------------------------------------
Revenue $ 27,892 $ 5,118 $ 1,109 $ - $ (282) $ 33,837
Expenses
Cost of
goods sold 4,846 743 - - (4) 5,585
Operating 17,174 2,504 1,285 - (278) 20,685
General &
adminis-
trative 832 83 2 1,345 - 2,262
Foreign
exchange
loss (gain) 18 (3) (3) 21 - 33
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EBITDAS $ 5,022 $ 1,791 $ (175) $ (1,366) $ - $ 5,272
Stock based
compensation 101 22 1 (50) - 74
Depreciation
& amorti-
zation 4,155 1,397 292 65 (10) 5,899
Gain on
disposal of
property,
plant and
equipment (367) - - - - (367)
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Total
operating
earnings
(loss) $ 1,133 $ 372 $ (468) $ (1,381) $ 10 $ (334)
---------------------------------------------------------------
Interest income (8)
Interest expense
on operating
lines of credit 42
Interest expense
on long-term
debt 127
Earnings on
equity
investments (23)
Income tax
recovery (367)
----------
Net loss $ (105)
----------
----------
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Nine months ended September 30, 2010
Inter-
segment
Camps & Marine Elimin-
(000's) Catering Matting Services Corporate ations Total
-------------------------------------------------------------------------
Revenue $130,656 $ 23,474 $ 5,583 $ - $ (2,080) $157,633
Expenses
Cost of goods
sold 26,326 4,832 - - (188) 30,970
Operating 70,771 11,364 3,584 - (1,797) 83,922
General &
adminis-
trative 2,274 330 7 5,725 - 8,336
Foreign
exchange
(gain) loss (4) (63) 4 7 - (56)
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EBITDAS $ 31,289 $ 7,011 $ 1,988 $ (5,732) $ (95) $ 34,461
Stock based
compensation 356 68 8 576 - 1,008
Depreciation
& amorti-
zation 14,050 4,078 889 290 (56) 19,251
Loss on
disposal of
property,
plant and
equipment 219 76 - 12 - 307
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Total operating
earnings
(loss) $ 16,664 $ 2,789 $ 1,091 $ (6,610) $ (39) $ 13,895
---------------------------------------------------------------
Interest income (23)
Interest expense
on operating
lines of credit 213
Interest expense
on long-term
debt 934
Loss on equity
investments 204
Accretion of
notes payable 130
Income tax
expense 4,036
----------
Net earnings $ 8,401
----------
----------
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Nine months ended September 30, 2009
Inter-
segment
Camps & Marine Elimin-
(000's) Catering Matting Services Corporate ations Total
-------------------------------------------------------------------------
Revenue
Revenue from
operations $ 91,933 $ 14,284 $ 4,856 $ - $ (1,085) $109,988
Cancellation
fee 8,000 - - - - 8,000
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Total revenue $ 99,933 $ 14,284 $ 4,856 $ - $ (1,085) $117,988
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Expenses
Cost of
goods sold 15,793 2,521 - - (9) 18,305
Operating 50,469 7,179 3,194 - (1,076) 59,766
General &
adminis-
trative 1,789 334 20 4,648 - 6,791
Foreign
exchange
loss (gain) 18 177 (3) (147) - 45
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EBITDAS
EBITDAS from
operations $ 23,864 $ 4,073 $ 1,645 $ (4,501) $ - $ 25,081
Cancellation
fee 8,000 - - - - 8,000
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Total EBITDAS $ 31,864 $ 4,073 $ 1,645 $ (4,501) $ - $ 33,081
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Stock based
compensation 226 60 7 (111) - 182
Depreciation
& amorti-
zation 14,496 4,466 870 175 (74) 19,933
(Gain) loss
on disposal
of property,
plant and
equipment (1,390) 13 - - - (1,377)
Earnings (loss)
from operations
Operating
earnings
(loss) $ 10,532 $ (466) $ 768 $ (4,565) $ 74 $ 6,343
Cancellation
fee 8,000 - - - - 8,000
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Total operating
earnings
(loss) $ 18,532 $ (466) $ 768 $ (4,565) $ 74 $ 14,343
---------------------------------------------------------------
Interest income (24)
Interest expense
on operating
lines of credit 194
Interest expense
on long-term debt 981
Loss on equity
investments 141
Income tax expense 3,571
----------
Net earnings $ 9,480
----------
----------
Camps & Catering
Camps & Catering revenue is comprised of camp rental and catering revenue, camp and space unit sales, equipment and space rental revenue, and service revenue from transportation and installation.
(000's except bed Three months ended Nine months ended
rental days and September 30 September 30
catering only --------------------------- ---------------------------
days) 2010 2009 2010 2009
------------- ------------- ------------- -------------
Camp rental and
catering
revenue $ 28,458 $ 14,246 $ 71,066 $ 53,042
Camp and space
sales revenue 15,785 7,484 36,032 23,394
Rental revenue 1,109 1,277 4,531 2,856
Service revenue 9,280 4,885 19,027 12,641
------------- ------------- ------------- -------------
Revenue from
operations $ 54,632 $ 27,892 $ 130,656 $ 91,933
Cancellation fee - - - 8,000
------------- ------------- ------------- -------------
Total revenue $ 54,632 $ 27,892 $ 130,656 $ 99,933
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
EBITDAS
Operations $ 13,228 $ 5,022 $ 31,289 $ 23,864
Cancellation fee - - - 8,000
------------- ------------- ------------- -------------
Total EBITDAS $ 13,228 $ 5,022 $ 31,289 $ 31,864
------------- ------------- ------------- -------------
Operating earnings
Operations $ 8,243 $ 1,133 $ 16,664 $ 10,532
Cancellation fee - - - 8,000
------------- ------------- ------------- -------------
Total operating
earnings $ 8,243 $ 1,133 $ 16,664 $ 18,532
------------- ------------- ------------- -------------
Bed rental days(1) 131,989 69,262 354,643 257,899
Catering only
days(2) 52,801 27,974 109,655 106,867
(1) One bed rental day equals the rental of one bed and the provision of
related catering and housekeeping services for one day.
(2) One catering only day equals the provision of catering and
housekeeping services with no related bed rental for one day.
Revenue from operations in the Camps & Catering segment was $54,632,000 for the three months ended September 30, 2010, compared to $27,892,000 for the same period in 2009, an increase of $26,740,000 or 96%. EBITDAS from operations for the three months ended September 30, 2010 was $13,228,000 or 24% of revenue compared to $5,022,000, or 18% of revenue in the same period in 2009.
Camp rental and catering revenue
Revenues from camp rental and catering operations were $28,458,000 for the three months ended September 30, 2010 compared to $14,246,000 for the same period in 2009, an increase of $14,212,000, or 100%. Revenues are derived from the following main business areas: (a) the BlackSand facilities which include the Executive Lodge and craft camp facilities, north of Fort McMurray, Alberta and (b) the Conventional camp and catering operations which include open camps, drill camps, catering only work, and ancillary equipment rentals.
(a) BlackSand
Revenues from the BlackSand facilities for the three months ended
September 30, 2010 were $17,420,000 as compared to $7,557,000 for the
same period in 2009. The increase of $9,863,000 came primarily from
higher utilization and an increased number of rentable beds. The
third quarter of 2010 was the first fully operational quarter for the
expanded lodge and craft camp facilities. Throughout the second
quarter of 2010, 144 newly manufactured beds were added to the
Executive Lodge and 191 beds were redeployed from the existing open
camp fleet and added to the craft camp. Total rentable beds available
were 1,300 in the third quarter of 2010 as compared to 965 in the
same period in 2009. Bed rental days for the three months ended
September 30, 2010 were 107,858 as compared to 47,287 in the same
period in 2009, for an average utilization of 90% during the three
months ended September 30, 2010 as compared to average utilization of
53% during the same period in 2009. On a per bed rental day basis,
revenues increased to $162 per day for the three months ended
September 30, 2010 from $160 per day in the same period in 2009 as a
result of the rental mix between executive and craft accommodations.
The higher utilization for the three months ended September 30, 2010
was from increased activity by oil sands operators on turn-around
projects and regular operational maintenance work as compared to the
same period of 2009 when many oil sands operators had reduced
activity waiting for signs of a more stable economy.
(b) Conventional camp rental and catering
Revenues from open camp and drill camp operations, which combine both
bed rental and provision of catering and housekeeping services, for
the three months ended September 30, 2010 were $3,399,000 as compared
to $3,230,000 for the same period in 2009, an increase of $169,000.
The increase in revenue was driven by higher volumes in the drill
camp business which were offset by slightly lower volumes in the
open camp business. Of note, 191 beds were redeployed from the open
camp fleet in early 2010. Bed rental days were 24,131 for the three
months ended September 30, 2010 as compared to 21,975 for the same
period in 2009, an increase of 2,156 days with the majority of the
increase from the drill camp business. Revenues per bed rental day
basis were slightly lower at $141 per day in the three months ended
September 30, 2010 as compared to $147 in the same period in 2009.
The lower revenue per bed rental day is a result of the mix of
equipment and service in the open camp business. The increased bed
days in the drill camp business indicate a higher level activity
however the utilization of the drill camp fleet was 6% in the three
months ended September, 30 2010 compared to 10% for the same period
in 2009. The decrease in utilization is a result of the net addition
of 31 drill camps which occurred in the fourth quarter of 2009.
Revenue generated by the provision of bed rental only for the three
months ended September 30, 2010 was $1,643,000 as compared to
$389,000 in the same period in 2009. The increase was from a single
short-term contract for equipment rental only in the third quarter of
2010.
Revenues from the provision of catering and housekeeping only
services, with no associated bed rentals, for the three months ended
September 30, 2010 was $5,996,000 as compared to $3,070,000 in the
same period in 2009, an increase of $2,926,000. Catering only days
were 52,801 in the three months ended September 30, 2010 as compared
to 27,974 for the same period in 2009. The majority of the increased
volume was from the mining sector in the Northwest Territories where
the Corporation operates a customer owned camp at a gold mine under
construction. Catering and housekeeping only revenues associated with
this project are expected to keep pace with ongoing, increasing
development. The remainder of the increase in volume came from
catering and housekeeping only on customer owned drill camps, which
was consistent with the increased drilling activity in western
Canada.
Camp and space sales revenue
Camp and space sales revenues for the three months ended September 30, 2010 were $15,785,000 as compared to $7,484,000 for the same period in 2009.
The increase of $8,301,000 in the three months ended September 30, 2010 came from two large projects which were announced in the second quarter of 2010. The Kamloops, British Columbia and Grande Prairie, Alberta plants completed orders in hand and internal production during the beginning of the quarter then ramped up mid-August to full production on these new projects in September. This production level is expected to continue well into 2011. For the same period of 2009 both production facilities had smaller projects and had scaled back resources in response to the slower economic conditions.
Rental revenue
Space rental revenues for the three months ended September 30, 2010 were $1,109,000 as compared to $1,277,000 in the same period 2009. Rental fleet utilization was 80% for the three months ended September 30, 2010 as compared to 73% in the same period 2009 with increased volumes offset by competitive pricing conditions.
Service revenue
Revenues from service work for the three months ended September 30, 2010 were $9,280,000 as compared to $4,885,000 in the same period of 2009, an increase of $4,395,000. Service revenue is comprised of camp mobilization, demobilization, transportation and installation work. This revenue is largely driven by activity levels in the camp rental and catering business and camp and space sales business. For the three months ended September 30, 2010 activity in both the camp rentals and camp and space sales was up significantly over the same period of 2009 as discussed above.
EBITDAS
EBITDAS from the Camps & Catering operations for the three months ended September 30, 2010 was $13,228,000 or 24% of revenue as compared to $5,022,000 or 18% of revenue for the same period of 2009. In the third quarter of 2009 additional costs of $540,000 were incurred to remediate some moisture issues at the BlackSand lodge and on an adjusted basis, the EBITDAS in the three months ended September 30, 2009 would have been $5,562,000 or 20% of revenue. The increase in EBITDAS, as a percentage of revenue, came primarily from higher utilization and improved efficiencies at the BlackSand facilities. EBITDAS, as a percentage of revenue, from the other operations remained relatively consistent for the three months ended September 30, 2010 as compared to the same period of 2009.
Matting
Matting revenue is comprised of mat rental revenue, mat sales revenue, 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) 2010 2009 2010 2009
------------- ------------- ------------- -------------
Mat rental revenue $ 2,208 $ 1,504 $ 4,862 $ 3,717
Mat sales revenue 2,059 1,220 6,635 3,340
Installation,
transportation,
service and other
revenue 4,031 2,394 11,977 7,227
------------- ------------- ------------- -------------
Total revenue $ 8,298 $ 5,118 $ 23,474 $ 14,284
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
EBITDAS $ 3,259 $ 1,791 $ 7,011 $ 4,073
Operating earnings
(loss) $ 1,851 $ 372 $ 2,789 $ (466)
Mat rental days 1,034,474 649,750 2,364,414 1,493,597
Average mats in
rental fleet 13,400 13,421 12,673 13,125
Mats sold
New mats 2,305 870 5,019 2,144
Used mats 951 1,738 6,312 3,828
------------- ------------- ------------- -------------
Total mats sold 3,256 2,608 11,331 5,972
Revenues from the Matting segment for the three months ended September 30, 2010 were $8,298,000 as compared to $5,118,000 for the same period of 2009, an increase of $3,180,000 or 62%.
Mat rental revenues for the three months ended September 30, 2010 were $2,208,000 as compared to $1,504,000 in the same period of 2009, an increase of $704,000, or 47%. Mat rental days were 1,034,474 for the three months ended September 30, 2010 compared to 649,750 in the same period 2009. Activity was driven by stronger shale gas activity, demand from oil sands operators and by wet weather which required customers to rent mats and extend existing rentals. The increase in mat rental days was partially offset by slightly lower rental rates. Mat rental rates for the third quarter of 2010 were $2.13 per day as compared to $2.31 per day in the same period in 2009, a decrease of $0.18 per day. The year to date 2010 daily mat rental rate of $2.06 compared to the third quarter 2010 rate of $2.13 indicates that as rental demand increases daily mat rental rates are strengthening as well.
Mat sales revenues for the three months ended September 30, 2010 were $2,059,000 as compared to $1,220,000 for the same period in 2009, an increase of $839,000 or 69% of revenue. The total number of mats sold increased compared to the same period in 2009, as overall customer demand and activity levels increased in 2010. Revenue per mat sold during the third quarter of 2010 was $632, up from $468 in the third quarter of 2009. The higher revenue per mat is reflective of the mix of new and used mats sold, as new mats have a higher selling price than used mats.
Installation, transportation, service and other revenues for the three months ended September 30, 2010 were $4,031,000 as compared to $2,394,000 for the same period in 2009, an increase of $1,637,000 or 68%. Service revenue is driven primarily from the mat rental and mat sale business with the increase following stronger mat sales and mat rental days, as well as movement of 41,000 customer owned mats.
EBITDAS for the three months ended September 30, 2010 was $3,259,000 or 39% of revenue as compared to $1,791,000 or 35% of revenue for the same period in 2009. The increase is attributable to increased utilization of the mat rental fleet and the mix of more new mats sold as a percentage of total mats.
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) 2010 2009 2010 2009
------------- ------------- ------------- -------------
Tug revenue $ 2,476 $ 517 $ 2,476 $ 547
Barge revenue 151 191 151 191
Barge camp revenue 1,591 75 1,692 3,033
Rental and other
revenue 736 326 1,264 1,085
------------- ------------- ------------- -------------
Total revenue $ 4,954 $ 1,109 $ 5,583 $ 4,856
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
EBITDAS $ 2,709 $ (175) $ 1,988 $ 1,645
Operating earnings
(loss) $ 2,409 $ (468) $ 1,091 $ 768
Revenues from the Marine Services segment for the three months ended September 30, 2010 were $4,954,000 as compared to $1,109,000 in the same period in 2009, an increase of $3,845,000. Tug and barge revenues were driven by a customer's offshore ocean rig refurbishment project. The project occurred as a direct result of increased scrutiny placed on offshore drilling projects. This work was performed to facilitate mobilization of the drilling vessel into US waters where it will provide relief capability for future offshore drilling. This work will not recur in 2011. There were 200 tug days in the third quarter of 2010 as compared to 57 in the same period in 2009. Barge camp revenues were related to the ongoing provision of two barge camps and associated service and support personnel at a customer's mining project in Nunavut. Rental and other revenue in the three months ended September 30, 2010 includes a penalty fee of $250,000 related to a customer postponing their 2010/2011 barge camp rental commitments.
EBITDAS for the three months ended September 30, 2010 was $2,709,000 as compared to a loss of $175,000 for same period in 2009, an increase of $2,884,000. As a percentage of revenue, EBITDAS for the three months ended September 30, 2010 was 55% compared to a loss of 16% in the same period of 2009. The third quarter of 2009 had one time expenses of $610,000 for repairs to a base camp facility, while the third quarter of 2010 included a penalty fee of $250,000. Normalizing for these factors EBITDAS for three months ended September 30, 2010 would have been $2,459,000 or 52% of revenue compared to $435,000 or 39% of revenue in the same period of 2009. The increase as a percent of revenue is mainly due to a large portion of the revenues being generated from the barge camp rentals which require minimal ongoing support costs.
Corporate
Corporate costs are the costs of the head office which include the Executive Chairman, President and Chief Executive Officer, Chief Financial Officer, Vice President of Safety, Vice President of Aboriginal Relations, Corporate Secretary, Corporate Accounting staff, and associated costs of supporting a public company. Cash costs for the three months ended September 30, 2010 were $1,742,000 as compared to $1,345,000 in the same period in 2009. This increase of $397,000 is related to additional staff and higher incentive compensation estimates based on the increased level of activity anticipated in 2010.
Consolidated Balance Sheets
September 30, 2010 and December 31, 2009 (Unaudited)
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September 30, December 31,
(000's) 2010 2009
-------------------------------------------------------------------------
Assets
Current assets:
Cash $ 4,496 $ 3,724
Accounts receivable 44,807 23,218
Inventory 13,670 11,834
Prepaid expenses 3,065 1,830
Income tax receivable - 990
-------------------------------------------------------------------------
66,038 41,596
Other assets 2,966 3,061
Property, plant and equipment, net 173,438 156,426
Intangible assets, net 28,987 35,320
Goodwill 2,136 2,136
Long-term investments 2,259 2,463
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$ 275,824 $ 241,002
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Liabilities and Shareholders' Equity
Current liabilities:
Operating lines of credit $ 1,200 $ 6,900
Accounts payable and accrued liabilities 19,310 12,391
Deferred revenue 14,112 2,068
Income taxes payable 724 -
Current portion of long-term debt 1,640 1,939
-------------------------------------------------------------------------
36,986 23,298
Long-term debt 45,243 35,863
Future income tax liability 15,032 12,687
-------------------------------------------------------------------------
97,261 71,848
Shareholders' equity:
Share capital 245,353 245,353
Contributed surplus 12,820 11,812
Deficit (79,610) (88,011)
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178,563 169,154
-------------------------------------------------------------------------
$ 275,824 $ 241,002
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Consolidated Statements of Operations and Deficit
For the quarter ended September 30, 2010 and 2009 (Unaudited)
-------------------------------------------------------------------------
Three months ended Nine months ended
(000's except per September 30 September 30
share amounts) 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenue $ 67,660 $ 33,837 $ 157,633 $ 117,988
Expenses:
Cost of goods sold 13,604 5,585 30,970 18,305
Operating 34,113 20,685 83,922 59,766
General and
administrative 2,550 2,262 8,336 6,791
Stock based
compensation 319 74 1,008 182
Depreciation of
property, plant
and equipment 4,564 3,655 12,829 13,205
Amortization of
intangible assets 2,145 2,244 6,422 6,728
(Gain) loss on
disposal of
property, plant
and equipment (65) (367) 307 (1,377)
Foreign exchange
(gain) loss (59) 33 (56) 45
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57,171 34,171 143,738 103,645
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Operating earnings
(loss) 10,489 (334) 13,895 14,343
Interest income (9) (8) (23) (24)
Interest expense on
operating lines of
credit 43 42 213 194
Interest expense on
long-term debt 371 127 934 981
Accretion of notes
payable 184 - 130 -
Loss (earnings) on
equity investments 7 (23) 204 141
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Earnings (loss)
before income
taxes 9,893 (472) 12,437 13,051
Income taxes
Current tax
expense 1,397 74 1,691 935
Future tax expense
(recovery) 1,282 (441) 2,345 2,636
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2,679 (367) 4,036 3,571
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Net earnings (loss)
and other
comprehensive
income (loss) 7,214 (105) 8,401 9,480
Deficit, beginning
of period (86,824) (83,882) (88,011) (93,467)
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Deficit, end of
period $ (79,610) $ (83,987) $ (79,610) $ (83,987)
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Earnings per share:
Basic $ 0.07 $ - $ 0.08 $ 0.09
Diluted $ 0.07 $ - $ 0.08 $ 0.09
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Consolidated Statements of Cash Flows
For the quarter ended September 30, 2010 and 2009 (Unaudited)
-------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
(000's) 2010 2009 2010 2009
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Cash provided by
(used in):
Operating
activities:
Net earnings
(loss) $ 7,214 $ (105) $ 8,401 $ 9,480
Items not involving
cash:
Depreciation of
property, plant
and equipment 4,564 3,655 12,829 13,205
Amortization of
intangible assets 2,145 2,244 6,422 6,728
Future tax expense
(recovery) 1,282 (441) 2,345 2,636
Stock based
compensation 319 74 1,008 182
Amortization of
other assets 36 - 95 -
Accretion of
notes payable 184 - 130 -
Loss (earnings)
on equity
investments 7 (23) 204 141
Gain on sale of
property, plant
and equipment (546) (784) (1,625) (2,447)
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15,205 4,620 29,809 29,925
Changes in non-cash
working capital
items (4,220) 2,675 1,675 5,358
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10,985 7,295 31,484 35,283
Investing
activities:
Purchase of
property, plant
and equipment (13,491) (1,605) (35,900) (9,675)
Purchase of
intangibles (30) (626) (89) (626)
Proceeds on sale
of property,
plant and equipment 1,512 2,924 7,684 8,196
Business
acquisitions - (818) - (818)
-------------------------------------------------------------------------
(12,009) (125) (28,305) (2,923)
Changes in non-cash
working capital
items (5,852) 1,394 (5,813) 1,394
-------------------------------------------------------------------------
(17,861) 1,269 (34,118) (1,529)
Financing activities:
(Repayment of)
proceeds from bank
indebtedness (2,135) 782 - 435
Share purchase costs - (53) - (53)
Repurchase of shares - (5,793) - (5,793)
Repayment of
operating lines of
credit (7,500) (1,132) (5,700) (628)
Proceeds from
long-term debt 24,900 7,200 45,043 7,200
Repayment of
long-term debt (4,010) (7,615) (36,092) (32,801)
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11,255 (6,611) 3,251 (31,640)
Changes in non-cash
working capital
items 117 (887) 155 (1,048)
-------------------------------------------------------------------------
11,372 (7,498) 3,406 (32,688)
-------------------------------------------------------------------------
Increase in cash
position 4,496 1,066 772 1,066
Cash, beginning of
period - - 3,724 -
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Cash, end of
period $ 4,496 $ 1,066 $ 4,496 $ 1,066
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Supplementary
information:
Income taxes
(received) paid $ (224) $ 701 $ 10 $ 2,163
Interest income
received 9 8 23 24
Interest paid 176 192 1,145 1,299
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This press release may contain forward-looking statements that are subject to risk factors associated with the oil and gas and mining businesses and the overall economy. The Corporation believes that the expectations reflected in this press release are reasonable, but results may be affected by a variety of variables. The Corporation relies on litigation protection for "forward-looking" statements.
For further information: Bob German, President and Chief Executive Officer, or Scott Matson, Vice President Finance and Chief Financial Officer, 1600, 505 - 3rd Street S.W., Calgary, Alberta, T2P 3E6, Telephone: (403) 517-4654, Fax: (403) 517-4678, website: www.horizonnorth.ca
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