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Press release from CNW Group

Horizon North Logistics Inc. Announces Results For The Period Ended September 30, 2010

Thursday, November 04, 2010

Horizon North Logistics Inc. Announces Results For The Period Ended September 30, 201018:59 EDT Thursday, November 04, 2010TSX Symbol: HNLCALGARY, 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 << ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- Revenue from operations $ 67,660 $ 33,837 $ 157,633 $ 109,988 Cancellation fee - - - 8,000 ------------------------------------------------------- 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 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (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 OutlookHorizon'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 << ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- 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 ---------- ---------- ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- 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) ---------- ---------- ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- 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 ---------- ---------- ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- Total revenue $ 99,933 $ 14,284 $ 4,856 $ - $ (1,085) $117,988 ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- EBITDAS EBITDAS from operations $ 23,864 $ 4,073 $ 1,645 $ (4,501) $ - $ 25,081 Cancellation fee 8,000 - - - - 8,000 ------------------------------------------------------------------------- Total EBITDAS $ 31,864 $ 4,073 $ 1,645 $ (4,501) $ - $ 33,081 ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- 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 & CateringCamps & 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 revenueRevenues 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 revenueCamp 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 revenueSpace 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 revenueRevenues 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.EBITDASEBITDAS 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.MattingMatting 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 ServicesMarine 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.CorporateCorporate 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) ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- $ 275,824 $ 241,002 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- 178,563 169,154 ------------------------------------------------------------------------- $ 275,824 $ 241,002 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- 57,171 34,171 143,738 103,645 ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- 2,679 (367) 4,036 3,571 ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- Deficit, end of period $ (79,610) $ (83,987) $ (79,610) $ (83,987) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share: Basic $ 0.07 $ - $ 0.08 $ 0.09 Diluted $ 0.07 $ - $ 0.08 $ 0.09 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- 15,205 4,620 29,809 29,925 Changes in non-cash working capital items (4,220) 2,675 1,675 5,358 ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------- Cash, end of period $ 4,496 $ 1,066 $ 4,496 $ 1,066 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>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