Horizon North Logistics Inc. Announces Results For The Period Ended June 30,
2010
CALGARY, Aug. 9 /CNW/ - TSX Symbol: HNL - Horizon North Logistics Inc. ("Horizon" or the "Corporation") reported its financial and operating results for the quarter ended June 30, 2010 and 2009.
Overview and Outlook
Our core businesses continue to show improvement with increased oil sands development activity in northern Alberta being the primary driver. Our expanded BlackSand camp facilities near Fort McMurray, Alberta are running at capacity, and the production backlog at our manufacturing plants is now well into 2011.
With improved mineral prices, the mining industry in western Canada is becoming more active and we are participating in a number of new and expanding camp manufacturing and management projects in this sector.
Our road and location matting business has enjoyed increased activity levels associated with unconventional natural gas and in-situ oil sands development projects, which we expect to continue through the latter half of the year.
Highlights for the quarter included:
- 49% increase in bed rental days compared to Q2 2009;
- 55% increase in mat rental days compared to Q2 2009;
- Award of $140 million of camp manufacturing contracts;
- Continued ramp up of camp manufacturing personnel, up 22% in the
quarter and 177% compared to this time last year.
These factors contributed to an increase in revenue from operations of 29% for the three months ended June 30, 2010 as compared to the same period in the prior year (excluding the $8.0 million cancellation fee in 2009).
EBITDAS margins for the quarter amounted to 17% of revenue as compared to 21% of revenue in the same period in the prior year, and were negatively impacted by the following factors:
- Lower margins were realized on manufacturing projects undertaken as
work performed in the quarter was focused on jobs that were bid and
awarded in the relatively depressed market conditions of late 2009;
- Margins on sales of our first blast resistant structures were
negative as customer pricing on the initial units was set prior
to the final determination of construction and finishing costs.
Market demand for this product is growing, with recent orders
carrying pricing that will result in significantly improved profit
margins;
- Contribution from the Marine segment was a slight loss as activity
levels in the western Arctic remain low in comparison to oil & gas
exploration projects ongoing in the second quarter of 2009.
We expect quarterly revenues to continue to increase resulting in an uplift in year over year revenues as a result of the factors described above. From a financing perspective, the Corporation's combined cash flow and borrowing capacity on our credit lines will be sufficient to support our existing capital and operational plans.
Financial Summary
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Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
(000's except per June 30, June 30, June 30, June 30,
share amounts) 2010 2009 2010 2009
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Revenue from operations $ 45,851 $ 35,574 $ 89,973 $ 76,151
Cancellation fee - 8,000 - 8,000
-----------------------------------------------
Total Revenue $ 45,851 $ 43,574 $ 89,973 $ 84,151
EBITDAS from
operations(1) 7,876 7,419 17,327 19,809
Cancellation fee - 8,000 - 8,000
-----------------------------------------------
Total EBITDAS 7,876 15,419 17,327 27,809
Earnings from
operations(1) 869 1,267 3,724 6,677
Cancellation fee - 8,000 - 8,000
-----------------------------------------------
Total operating earnings 869 9,267 3,724 14,677
Net earnings 171 5,883 1,283 9,585
Net earnings per share
- diluted $ - $ 0.05 $ 0.01 $ 0.09
Total assets 252,907 228,013 252,907 228,013
Total long-term financial
liabilities(2) 34,509 21,914 34,509 21,914
Funds from operations(3) 7,045 13,936 14,700 25,305
Capital spending 13,568 2,027 26,809 8,070
Debt to total
capitalization ratio 0.17:1 0.11:1 0.17:1 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
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 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 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 may differ from
other entities and accordingly, EBITDAS and operating earnings may
not be comparable to measures used by other entities. For a
reconciliation of EBITDAS and operating earnings to net earnings,
please refer to page 2 of the Management's Discussion and Analysis.
(2) Long-term financial liabilities include operating lines of credit,
the 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.
Financial Results
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Three months ended June 30, 2010
Inter-
segment
Camps & Marine Elimina-
(000's) Catering Matting Services Corporate tions Total
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Revenue
Revenue
from
operations $ 40,437 $ 5,686 $ 396 $ - $ (668) $ 45,851
Cancellation
fee - - - - - -
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Total revenue $ 40,437 $ 5,686 $ 396 $ - $ (668) $ 45,851
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Expenses
Cost of
goods sold 10,731 588 - - - 11,319
Operating 20,561 3,261 970 - (646) 24,146
General &
adminis-
trative 866 117 7 1,549 - 2,539
Foreign
exchange
loss (gain) 3 (27) - (5) - (29)
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EBITDAS
EBIDTAS
from
operations $ 8,276 $ 1,747 $ (581) $ (1,544) $ (22) $ 7,876
Cancellation
fee - - - - - -
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Total EBITDAS $ 8,276 $ 1,747 $ (581) $ (1,544) $ (22) $ 7,876
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Stock based
compensation 120 32 3 202 - 357
Depreciation
& amorti-
zation 4,655 1,344 296 120 (20) 6,395
Loss (gain)
on disposal
of property,
plant &
equipment 264 (21) - 12 - 255
Earnings (loss)
from operations
Operating
earnings
(loss) $ 3,237 $ 392 $ (880) $ (1,878) $ (2) $ 869
Cancellation
fee - - - - - -
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Total
operating
earnings
(loss) $ 3,237 $ 392 $ (880) $ (1,878) $ (2) $ 869
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Interest
income (14)
Interest
expense on
operating
lines of
credit 99
Interest
expense on
long-term
debt 331
Loss on
equity
investments 150
Accretion
of notes
payable (147)
Income tax
expense 279
----------
Net earnings $ 171
----------
----------
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Three months ended June 30, 2009
Inter-
segment
Camps & Marine Elimina-
(000's) Catering Matting Services Corporate tions Total
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Revenue
Revenue
from
operations $ 29,925 $ 4,039 $ 1,992 $ - $ (382) $ 35,574
Cancellation
fee 8,000 - - - - 8,000
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Total revenue $ 37,925 $ 4,039 $ 1,992 $ - $ (382) $ 43,574
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Expenses
Cost of
goods sold 7,491 539 - - (5) 8,025
Operating 15,280 2,034 1,059 - (377) 17,996
General &
adminis-
trative 493 100 4 1,518 - 2,115
Foreign
exchange
loss (gain) - 121 - (102) - 19
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EBITDAS
EBIDTAS from
operations $ 6,661 $ 1,245 $ 929 $ (1,416) $ - $ 7,419
Cancellation
fee 8,000 - - - - 8,000
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Total EBITDAS $ 14,661 $ 1,245 $ 929 $ (1,416) $ - $ 15,419
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Stock based
compensation 17 23 3 154 - 197
Depreciation
& amorti-
zation 5,204 1,513 289 59 (32) 7,033
Gain on
disposal of
property,
plant &
equipment (1,027) (51) - - - (1,078)
Earnings
(loss) from
operations
Operating
earnings
(loss) $ 2,467 $ (240) $ 637 $ (1,629) $ 32 $ 1,267
Cancellation
fee 8,000 - - - - 8,000
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Total operating
earnings
(loss) $ 10,467 $ (240) $ 637 $ (1,629) $ 32 $ 9,267
---------------------------------------------------------------
Interest
income (10)
Interest
expense on
operating
lines of
credit 88
Interest
expense on
long-term
debt 419
Earnings on
equity
investments (22)
Income tax
expense 2,909
----------
Net earnings $ 5,883
----------
----------
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.
Three months ending Six months ending
June 30 June 30
(000's except bed ----------------------- -----------------------
rental days and 2010 2009 2010 2009
catering only days) ----------- ----------- ----------- -----------
Camp rental and catering
revenue $ 21,275 $ 14,321 $ 44,669 $ 38,814
Camp and space sales
revenue 14,349 11,306 20,043 15,910
Rental revenue 1,057 1,014 1,559 1,533
Service revenue 3,756 3,284 9,753 7,784
----------- ----------- ----------- -----------
Revenue from operations $ 40,437 $ 29,925 $ 76,024 $ 64,041
Cancellation fee - 8,000 - 8,000
----------- ----------- ----------- -----------
Total revenue $ 40,437 $ 37,925 $ 76,024 $ 72,041
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EBITDAS
Operations $ 8,276 $ 6,661 $ 18,061 $ 18,842
Cancellation fee - 8,000 - 8,000
----------- ----------- ----------- -----------
Total EBITDAS $ 8,276 $ 14,661 $ 18,061 $ 26,842
----------- ----------- ----------- -----------
Operating earnings
Operations $ 3,237 $ 2,467 $ 8,421 $ 9,399
Cancellation fee - 8,000 - 8,000
----------- ----------- ----------- -----------
Total operating earnings $ 3,237 $ 10,467 $ 8,421 $ 17,399
----------- ----------- ----------- -----------
Bed rental days(1) 106,130 71,258 222,654 188,637
Catering only days(2) 31,314 30,872 56,854 78,893
(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.
Revenues in the second quarter of 2009 included a cancellation fee of $8,000,000 related to the restructuring of a long-term contract with a large oil sands client, which flowed directly into EBITDAS and operating earnings.
Revenue from operations in the Camps & Catering segment was $40,437,000 for the three months ended June 30, 2010, compared to $29,925,000 for the same period in 2009, an increase of $10,512,000. EBITDAS from operations for the three months ended June 30, 2010 was $8,276,000 or 20% of revenue compared to $6,661,000 or 22% of revenue the same period in 2009.
Camp rental and catering revenue
Revenues from camp rental and catering operations were $21,275,000 for the three months ended June 30, 2010 compared to $14,321,000 for the same period in 2009, an increase of $6,954,000. Revenues are derived from the following main business areas: the BlackSand facilities which include the Executive Lodge and craft camp facilities, north of Fort McMurray, Alberta, and the conventional camp and catering operations which include open camps, rig camps, catering only work, and ancillary equipment rentals.
BlackSand
Revenues from the BlackSand facilities for the three months ended June 30, 2010 were $15,754,000 as compared to $7,415,000 for the same period in 2009. The increase of $8,339,000 came from higher volumes and slightly higher revenue per day based on the mix of rentable rooms between executive and craft accommodations.
Bed rental days for the three months ended June 30, 2010 were 95,954 as compared to 46,497 in the same period in 2009 which translates into utilization of approximately 86% during the second quarter of 2010 as compared to average utilization of 53% during the second quarter of 2009. Both volume and utilization levels in the second quarter of 2010 were significantly improved, as oil sands operators continued to ramp up both new and previously delayed projects. Volumes and utilization in second quarter of 2009 were lower as a number of oil sands operators moved to temporarily postpone or delay projects in response to both lower oil prices and general economic circumstances. On a bed rental per day basis, revenues increased to $164 per day in the second quarter of 2010 from $159 per day in the same period in 2009.
Expansion of both the craft camp facilities and the Executive Lodge was undertaken in 2010. The craft camp facilities were expanded in the first quarter of 2010, adding 230 beds. These beds were redeployed from the underutilized facilities in the conventional camp rental and catering part of the business. Expansion of the Executive Lodge was completed in the second quarter of 2010 adding 144 newly manufactured beds. The additional beds brought the total rentable beds at the BlackSand facilities to approximately 1,300 at the end of June 2010.
Conventional Camp Rental and Catering
Revenues from open camp and rig camp operations, which combine both bed rental and provision of catering and housekeeping services, for the three months ended June 30, 2010 were $1,460,000 as compared to $3,427,000 for the same period in 2009, a decrease of $1,967,000. The decrease was driven by lower volumes with bed rental days of 10,176 for the three months ended June 30, 2010 as compared to 24,761 for the same period in 2009. The majority of this decrease was a result of lower open camp activity with decreased utilization across our operating locations. As a result, approximately 230 beds were redeployed for use at the BlackSand craft camp facilities from various operating locations. Revenues per bed rental day basis were slightly higher at $143 per day in the three months ended June 30, 2010 as compared to $138 in the same period in 2009. Revenue generated by the provision of bed rental only for the three months ended June 30, 2010 was $514,000 as compared to $502,000 for the same period in 2009.
Revenues from the provision of catering and housekeeping only services, with no associated bed rentals, for the three months ended June 30, 2010 was $3,547,000 as compared to $2,977,000 for the same period in 2009, an increase of $570,000. Catering only days were 31,314 in the three months ended June 30, 2010 as compared to 30,872 for the same period in 2009. Higher revenue was from increasing mining activity in the Northwest Territories where the corporation operates a customer owned camp at a gold mine under construction. The mine construction project is in the ramp-up phase and catering and housekeeping revenues are expected to keep pace with ongoing development.
Camp and space sales revenue
Camp and space sales revenues for the three months ended June 30, 2010 were $14,349,000 as compared to $11,306,000 for the same period in 2009. Included in the second quarter revenue was $1,442,000 related to the sale of blast resistant structures, with the balance from the completion of design and engineering work for a large oil sands camp project which was announced at the end of April 2010.
Revenues in 2009 were mainly from two larger projects with stronger margins. Projects undertaken in 2010 to date have been lower margin projects bid and awarded in more difficult economic times. Our manufacturing facilities have now cleared the majority of these lower margin backlog projects and units from our recently awarded camp manufacturing contracts started production late in the second quarter of 2010.
Rental revenue
Space rental revenues for the three months ended June 30, 2010 were $1,057,000 as compared to $1,014,000 for the same period in 2009, an increase of $43,000. Rental fleet utilization was consistent each quarter at 76%.
Service revenue
Revenues from service work for the three months ended June 30, 2010 were $3,756,000 as compared to $3,284,000 for the same period in 2009, an increase of $472,000. Service revenues were higher in the quarter mainly driven by the increase in manufacturing and rental activity.
EBITDAS from the BlackSand facilities for the three months ended June 30, 2010 was $5,980,000 or 38% of revenue as compared to $1,861,000 or 25% of revenue for the same period in 2009. The increased EBITDAS percentage is a result of both higher volumes and utilization for the three months ended June 30, 2010 as compared to the same period in 2009.
EBITDAS from the operations other than BlackSand in the three months ended June 30, 2010 were $2,296,000 or 9% of revenue as compared to $4,800,000 or 21% of revenue for the same period in 2009. The blast resistant units sold were the first production units for this product and as such, the production process had not been optimized. The EBITDAS on sale of these first units was a loss of approximately $700,000. Normalizing for this sale, EBITDAS for the three months ended June 30, 2010 was $2,996,000 or 12% of revenue. Decreased volumes from the conventional camp rental and catering business contributed lower EBITDAS, as did lower margin service work. Manufacturing projects undertaken during the quarter contributed lower margins as they were bid and awarded in more difficult economic times.
Matting
Matting revenue is comprised of mat rental revenue, mat sales revenue, installation, transportation, service, and other revenue as follows:
Three months ended Six months ended
June 30 June 30
(000's except trucking, ----------------------- -----------------------
rental days and mats) 2010 2009 2010 2009
----------- ----------- ----------- -----------
Mat rental revenue $ 1,525 $ 1,309 $ 2,654 $ 2,214
Mat sales revenue 889 597 4,576 2,120
Installation,
transportation, service
and other revenue 3,272 2,133 7,946 4,832
----------- ----------- ----------- -----------
Total revenue $ 5,686 $ 4,039 $ 15,176 $ 9,166
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EBITDAS $ 1,747 $ 1,245 $ 3,752 $ 2,282
Operating earnings (loss) $ 392 $ (240) $ 938 $ (838)
Mat rental days 833,659 538,209 1,329,940 843,847
Average mats in rental
fleet 12,190 12,479 12,673 12,958
Mats sold
New mats 659 48 2,714 1,274
Used mats 1,010 981 5,361 2,090
----------- ----------- ----------- -----------
Total mats sold 1,669 1,029 8,075 3,364
Revenues from the Matting segment for the three months ended June 30, 2010 were $5,686,000 as compared to $4,039,000 for the same period in 2009, an increase of $1,647,000.
Mat rental revenues for the three months ended June 30, 2010 were $1,525,000 as compared to $1,309,000 for the same period in 2009, an increase of $216,000. This increase was driven by higher mat rental days of 833,659 for the three months ended June 30, 2010 compared to 538,209 for the same period in 2009, driven by both shale gas activity and wet weather which required customers to rent mats and extend existing rentals. The increase in mat rental days was partially offset by lower rental rates. Mat rental rates for the second quarter of 2010 were $1.83 per day as compared to $2.43 per day for the same period in 2009, a decrease of $0.60 per day. The three months ended June 30, 2010 had a large rental contract that was at a discounted rental rate. This accounted for $0.30 per day of the rate decrease with the remainder from continuing competitive pressure from existing competitors.
Mat sales revenues for the three months ended June 30, 2010 were $889,000 as compared to $597,000 for the same period in 2009. The total number of mats sold increased as compared to the same period in 2009, as overall customer demand and activity levels increased in 2010. Revenue per mat sold during the second quarter of 2010 was $533, down from $580 in the second quarter of 2009. Although a higher percentage of mats sold in the second quarter of 2010 were new mats, they were mostly oak edge mats which are a combination of oak and other softwood lumbers, and sell at a lower price than solid oak mats. This effect, combined with market pressure on used mat pricing, combined to lower the overall revenue per mat figure.
Installation, transportation, service and other revenues for the three months ended June 30, 2010 were $3,272,000 as compared to $2,133,000 for the same period in 2009. The increase was from service associated with increased mat sales and mat rental days, as well as movement of approximately 41,000 customer owned mats.
EBITDAS for the three months ended June 30, 2010 was $1,747,000 as compared to $1,245,000, and consistent at 31% of revenue in both periods of 2010 and 2009. The increase of $502,000 in EBITDAS is attributable to increased volumes in all areas.
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 Six months ended
June 30 June 30
----------------------- -----------------------
(000's) 2010 2009 2010 2009
----------- ----------- ----------- -----------
Tug revenue $ - $ 30 $ - $ 30
Barge revenue - - - -
Barge camp revenue 101 1,676 101 2,958
Rental and other revenue 295 286 528 759
----------- ----------- ----------- -----------
Total revenue $ 396 $ 1,992 $ 629 $ 3,747
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EBITDAS $ (581) $ 929 $ (721) $ 1,820
Operating (loss) earnings $ (880) $ 637 $ (1,318) $ 1,236
Revenue from the Marine Services segment for the three months ended June 30, 2010 was $396,000 as compared to $1,992,000 for the same period in 2009. Revenues in the second quarter of 2009 were primarily related to equipment rentals in support of drilling programs which did not take place in the second quarter of 2010. Also included in the second quarter 2009 revenue was a customer payment of a $500,000 penalty for postponing their 2009/2010 barge camp rental commitments.
EBITDAS for the three months ended June 30, 2010 was a loss of $581,000 as compared to income of $929,000 for the same period in 2009, a decrease of $1,510,000. The majority of the decrease was related to overall lower activity levels in the region. In the three months ended June 30, 2010, the John Wurmlinger accommodation/work barge was dry docked and underwent a comprehensive out of water inspection. This type of inspection is required every four years to meet Transport Canada's regulations, and was undertaken to ensure the vessel would be ready to satisfy upcoming customer project commitments. In addition to constructing dry dock facilities, incremental costs of $141,000 were incurred related to this project.
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, Corporate Secretary, Corporate Accounting staff, and associated costs of supporting a public company. Cash costs for the three months ended June 30, 2010 were $1,549,000 as compared to $1,518,000 for the same period in 2009. This increase of $29,000 is related to additional staff and higher incentive compensation estimates based on the increased level of activity anticipated in 2010.
Consolidated Balance Sheets (Unaudited)
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June December
(000's) 2010 2009
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Assets
Current assets:
Cash $ - $ 3,724
Accounts receivable 27,240 23,218
Inventory 13,990 11,834
Prepaid expenses 2,532 1,830
Income taxes receivable 763 990
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44,525 41,596
Other assets 3,002 3,061
Property, plant and equipment, net 169,876 156,426
Intangible assets, net 31,102 35,320
Goodwill 2,136 2,136
Long-term investments 2,266 2,463
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$ 252,907 $ 241,002
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 2,135 $ -
Operating lines of credit 8,700 6,900
Accounts payable and accrued liabilities 16,252 12,391
Deferred revenue 15,135 2,068
Current portion of long-term debt 1,711 1,939
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43,933 23,298
Long-term debt 24,098 35,863
Future income tax liability 13,750 12,687
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81,781 71,848
Shareholders' equity:
Share capital 245,353 245,353
Contributed surplus 12,501 11,812
Deficit (86,728) (88,011)
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171,126 169,154
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$ 252,907 $ 241,002
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Consolidated Statements of Operations and (Deficit) Retained Earnings
For the quarter ended June 30, 2010 and 2009 (Unaudited)
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Three months ended Six months ended
(000's) except per June 30 June 30
share amounts 2010 2009 2010 2009
-------------------------------------------------------------------------
Revenue $ 45,851 $ 43,574 $ 89,973 $ 84,151
Expenses:
Cost of goods sold 11,319 8,025 17,366 12,720
Operating 24,146 17,996 49,809 39,081
General and administrative 2,539 2,115 5,468 4,529
Stock based compensation 357 197 689 108
Depreciation of property,
plant and equipment 4,256 4,791 8,265 9,550
Amortization of intangible
assets 2,139 2,242 4,277 4,484
Loss (gain) on disposal
of property, plant and
equipment 255 (1,078) 372 (1,010)
Foreign exchange (gain)
loss (29) 19 3 12
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44,982 34,307 86,249 69,474
-------------------------------------------------------------------------
Operating earnings 869 9,267 3,724 14,677
Interest income (14) (10) (14) (16)
Interest expense on operating
lines of credit 99 88 170 152
Interest expense on long-term
debt 331 419 785 854
Accretion of notes payable (147) - (54) -
Loss (earnings) on equity
investments 150 (22) 197 164
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Earnings before income taxes 450 8,792 2,640 13,523
Income taxes
Current tax (recovery)
expense (64) 737 294 861
Future tax expense 343 2,172 1,063 3,077
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279 2,909 1,357 3,938
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Net earnings and other
comprehensive income 171 5,883 1,283 9,585
Deficit, beginning of
period (86,899) (89,765) (88,011) (93,467)
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Deficit, end of period $ (86,728) $ (83,882) $ (86,728) $ (83,882)
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Earnings per share:
Basic $ - $ 0.05 $ 0.01 $ 0.09
Diluted $ - $ 0.05 $ 0.01 $ 0.09
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Consolidated Statements of Cash Flows
For the quarter ended June 30, 2010 and 2009 (Unaudited)
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Three months ended Six months ended
June 30 June 30
(000's) 2010 2009 2010 2009
-------------------------------------------------------------------------
Cash provided by (used in):
Operating activities:
Net earnings $ 171 $ 5,883 $ 1,283 $ 9,585
Items not involving cash:
Depreciation of property,
plant and equipment 4,256 4,791 8,265 9,550
Amortization of intangible
assets 2,139 2,242 4,277 4,484
Future income tax expense 343 2,172 1,063 3,077
Stock based compensation 357 197 689 108
Amortization of other
assets 32 - 59 -
Accretion of notes
payable (147) - (54) -
Loss (earnings) on
equity investments 150 (22) 197 164
Gain on sale of property,
plant and equipment (256) (1,327) (1,079) (1,663)
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7,045 13,936 14,700 25,305
Changes in non-cash working
capital items 18,918 5,477 5,799 3,272
-------------------------------------------------------------------------
25,963 19,413 20,499 28,577
Investing activities:
Purchase of property, plant
and equipment (13,568) (2,027) (22,409) (8,070)
Purchase of intangibles (43) - (59) -
Proceeds on sale of property,
plant and equipment 2,072 3,868 6,172 5,272
Return of capital from
equity investments - 589 - 589
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(11,539) 2,430 (16,296) (2,209)
Changes in non-cash working
capital items (2,483) - 39 -
-------------------------------------------------------------------------
(14,022) 2,430 (16,257) (2,209)
Financing activities:
(Repayment of) proceeds
from bank indebtedness (498) 251 2,135 (377)
Proceeds from operating
lines of credit 1,800 1,719 1,800 504
Proceeds from long-term
debt 8,400 - 20,143 -
Repayment of long-term
debt (21,730) (23,244) (32,082) (25,186)
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(12,028) (21,274) (8,004) (25,059)
Changes in non-cash working
capital items 87 72 38 (161)
-------------------------------------------------------------------------
(11,941) (21,202) (7,966) (25,220)
-------------------------------------------------------------------------
Decrease in cash position - 641 (3,724) 1,148
Cash, beginning of period - 507 3,724 -
-------------------------------------------------------------------------
Cash, end of period $ - $ 1,148 $ - $ 1,148
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Supplementary information:
Income taxes (received)
paid $ (66) $ (1,679) $ 234 $ 7,009
Interest income received 14 10 14 2,197
Interest paid 445 615 969 39
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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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