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Press release from CNW Group

Horizon North Logistics Inc. Announces Fourth Consecutive Quarter of Increasing Revenues and EBITDAS

Wednesday, August 01, 2012

Horizon North Logistics Inc. Announces Fourth Consecutive Quarter of Increasing Revenues and EBITDAS17:58 EDT Wednesday, August 01, 2012TSX Symbol: HNLCALGARY, Aug. 1, 2012 /CNW/ - Horizon North Logistics Inc. ("Horizon" or the "Corporation") reported its financial and operating results for the three and six months ended June 30, 2012 and 2011.Second Quarter HighlightsFourth consecutive quarter of increasing consolidated revenues and EBITDAS;Second quarter revenues and EBITDAS included a payment of $5.1 million representing an end of contract billing for minimum utilization over the term of a particular contract in excess of actual utilization;Growth was led by the Camps & Catering segment, excluding the $5.1 million payment, revenues increased by $37.1 million, andContinued investment and focus on the Alberta oil sands region with 64% of second quarter revenues generated from oil sands related projects.Second Quarter Financial Summary                                   Three months ended June 30  Six months ended June 30(000's except per share amounts)     2012    2011   % Change    2012    2011   % ChangeRevenue   $ 139,551  $ 86,607         61%  $ 268,148  $ 189,766         41%EBITDAS(1)     40,463    22,019         84%    74,908    44,824         67%EBITDAS as a % of revenue     29%    25%        28%    24%    Operating earnings(1)     30,056    14,652         105%    56,136    30,193         86%Total profit     21,769    10,233         113%    40,630    21,145         92%Total comprehensive income     21,854    10,233         114%    40,646    21,145         92%Earnings per share                             - basic   $ 0.20  $ 0.10   100%  $ 0.38  $ 0.20   90% - diluted   $ 0.20  $ 0.10   100%  $ 0.37  $ 0.20   85%Total assets     428,494    315,251         36%    428,494    315,251         36%Long-term loans and borrowings     86,161    42,773         101%    86,161    42,773         101%Funds from operations(2)     30,422    17,232         77%    57,845    34,399         68%Capital spending     35,346    30,423              69,523    56,247          Debt to total capitalization ratio(3)     0.26    0.19        0.26    0.19    (1)   See financial measures definitions on the last page of the press release for details.  Overview and OutlookHorizon reported its fourth consecutive quarter of increasing revenue and EBITDAS, with results for the three months ended June 30, 2012 establishing new records for both revenue and EBITDAS. Revenue and EBITDAS are expected to maintain at or near current levels for the remaining two quarters of 2012 with increases coming early in 2013 as new assets are deployed and with winter projects getting underway.Oil sands development and related activities continue to be the main driver of Horizon's growth with 64% of consolidated second quarter revenues driven from these activities. With robust oil sands development expected to continue, Horizon will focus the majority of its capital deployment in support of oil sands development. As a result of the focus on oil sands development seasonality in Horizon's revenue has been significantly reduced.Horizon's manufacturing facilities continue to be highly utilized, with capacity allocated between external sales projects and investment in the camp rental fleet. During the first six months of the year, 77% of capacity was allocated to third party sales projects with the remaining 23% dedicated to internal fleet build projects. Considering the current manufacturing backlog, allocation of production for the remainder of 2012 will continue to be heavily weighted to third party sales, consistent with the first half of 2012.Horizon's matting division had its strongest second quarter on record. Wet conditions along with the mix of oil sands related projects drove very strong utilization in the access mat rental fleet and significant mat sales. The remainder of 2012 will see rentals and sales continue to be driven by; oil sand, natural gas, and pipeline development projects.Dividend PaymentHorizon North Logistic Inc. announced today that its Board of Directors has declared a dividend for the third quarter of 2012 at $0.05 per share. The dividend is payable to shareholders of record at the close of business on September 28, 2012 to be paid on October 12, 2012. The dividends are eligible dividends for Canadian tax purposes.Second Quarter Financial Results                                        Three months ended June 30, 2012     (000's)    Camps &Catering    Matting    MarineServices    Corporate   Inter-segmentEliminations    TotalRevenue  $ 116,937  $ 25,232  $ 679  $ -  $(3,297)  $ 139,551Expenses                                Direct costs    78,349    18,918    500    (1)   (3,174)    94,592   Selling & administrative    1,635    153    4    2,704   -    4,496EBITDAS    36,953    6,161    175    (2,703)   (123)    40,463EBITDAS as a % of revenue    32%    24%    26%    -   -    29%Share based payments    339    52    -    262   -    653Depreciation & amortization    7,290    2,152    106    130   (38)    9,640Loss (gain) on disposal of property,  plant and equipment    142    (28)    -    -   -    114Operating earnings (loss)  $ 29,182  $ 3,985  $ 69  $ (3,095)  $(85)  $ 30,056Finance costs                            849Loss on equity investments                            19Income tax expense                            7,419Other comprehensive income                            (85)Total comprehensive income                          $ 21,854Earnings per share - basic & diluted                          $ 0.20                                                               Three months ended June 30, 2011     (000's)    Camps &Catering    Matting    MarineServices    Corporate   Inter-segmentEliminations    TotalRevenue  $ 74,695  $ 12,255    $975  $ -  $(1,318)  $ 86,607Expenses                                Direct costs    53,313    8,711    746    2   (1,280)    61,492   Selling & administrative    853    95    7    2,141   -    3,096EBITDAS  $ 20,529  $ 3,449    $222  $ (2,143)  $(38)  $ 22,019EBITDAS as a % of revenue    27%    28%    23%    -   -    25%Share based payments    90    9    1    53   -    153Depreciation & amortization    5,557    1,507    115    88   (22)    7,245Gain on disposal of property,  plant and equipment    (1)    (30)    -    -   -    (31)Operating earnings (loss)  $ 14,883  $ 1,963    $106  $ (2,284)  $(16)  $ 14,652Finance costs                            576Loss on equity investments                            20Income tax expense                            3,823Other comprehensive income                            -Total comprehensive income                          $ 10,233Earnings per share - basic & diluted                          $ 0.10                                                               Six months ended June 30, 2012     (000's)    Camps &Catering    Matting    MarineServices    Corporate   Inter-segmentEliminations    TotalRevenue  $ 229,123  $ 43,570  $ 1,420  $ -  $(5,965)  $ 268,148Expenses                                Direct costs    156,509    32,773    894    -   (5,574)    184,602   Selling & administrative    2,648    264    4    5,722   -    8,638EBITDAS    69,966    10,533    522    (5,722)   (391)    74,908EBITDAS as a % of revenue    31%    24%    37%    -   -    28%Share based payments    372    63    1    307   -    743Depreciation & amortization    13,611    3,909    217    244   (61)    17,920Loss (gain) on disposal of property,  plant and equipment    137    (28)    -    -   -    109Operating earnings (loss)  $ 55,846  $ 6,589  $ 304  $ (6,273)  $(330)  $ 56,136Finance costs                            1,543Gain on equity investments                            (27)Income tax expense                            13,990Other comprehensive income                            (16)Total comprehensive income                          $ 40,646Earnings per share                                - basic                          $ 0.38   - diluted                          $ 0.37                                                               Six months ended June 30, 2011     (000's)    Camps &Catering    Matting    MarineServices    Corporate   Inter-segmentEliminations    TotalRevenue  $ 160,818  $ 30,096    $1,807  $ -  $(2,955)  $ 189,766Expenses                                Direct costs    118,031    22,179    1,205    2   (2,864)    138,553   Selling & administrative    1,727    194    7    4,461   -    6,389EBITDAS  $ 41,060  $ 7,723    $595  $ (4,463)  $(91)  $ 44,824EBITDAS as a % of revenue    26%    26%    33%    -   -    24%Share based payments    174    19    2    114   -    309Depreciation & amortization    10,968    2,817    222    172   (38)    14,141Loss on disposal of property,  plant and equipment    83    98    -    -   -    181Operating earnings (loss)  $ 29,835  $ 4,789    $371  $ (4,749)  $(53)  $ 30,193Finance costs                            1,189Loss on equity investments                            41Income tax expense                            7,818Other comprehensive income                            -Total comprehensive income                          $ 21,145Earnings per share - basic & diluted                          $ 0.20                                                            Camps & Catering                                  Three months ended June 30  Six months ended June 30(000's except bed rental days and cateringonly days)     2012    2011   %change    2012    2011   %changeCamp rental and catering operations revenue   $ 60,109  $ 43,978   37%  $ 135,111  $ 90,461   49%Manufacturing sales and service revenue     54,036    28,541   89%    87,350    66,784   31%Space rental and service revenue     2,792    2,176   28%    6,662    3,573   86%Total revenue   $ 116,937  $ 74,695   57%  $ 229,123  $ 160,818   42%                              EBITDAS   $ 36,953  $ 20,529   80%  $ 69,966  $ 41,060   70%EBITDAS as % of revenue     32%    27%   19%    31%    26%   19%                              Operating earnings   $ 29,182  $ 14,883   96%  $ 55,846  $ 29,835   87%Bed rental days(1)     250,403    206,491   21%    587,577    416,046   41%Catering only days(2)     53,697    45,618   18%    126,216    104,563   21%(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 from the Camps & Catering segment were $116.9 million for the three months ended June 30, 2012 compared to $74.7 million for the three months ended June 30, 2011, an increase of $42.2 million or 56%. EBITDAS for the three months ended June 30, 2012 were $37.0 million or 32% of revenue compared to $20.5 million or 27% of revenue for the three months ended June 30, 2011, an increase of $16.5 million or 80%.Included in revenue and EBITDAS for the quarter was a payment of $5.1M representing an end of contract billing for minimum utilization over the term of a particular contract in excess of the actual utilization. Excluding this payment, revenues were $111.8 million and EBITDAS were $31.9 million or 29% of revenues, significantly above the same period of 2011.Horizon's Camps & Catering segment continued its trend of strong revenue and EBITDAS growth driven mainly by significant oil sands development activity and investment by oil sands operators. 66% of segment revenue, for the six months ended June 30, 2012 were derived from oil sands related activity compared to 64% for the same period of 2011.Camp rental and catering operations revenueRevenues are derived from the following main business areas: large camp operations, drill camp operations, catering only operations, and the associated service work with each operation. Service work includes the transportation, setup and de-mobilization of the camp and catering operations. Revenues from camp and catering operations were $60.1 million for the three months ended June 30, 2012 compared to $44.0 million for the three months ended June 30, 2011, an increase of $16.1 million or 37%.The table below outlines the key performance metrics used by management to measure performance in the large camp and drill camp operations.                                 Three months ended June 30(000's for revenue only)     2012   2011      Largecamp   Drillcamp   Total   Largecamp   Drillcamp   TotalRevenue     $49,363   $808   $50,171   $34,917   $867   $35,784Bed rental days     246,237   4,166   250,403   201,201   5,290   206,491Revenue per bed rental day     $180(1)   $194   $180(1)   $174   $164   $173                           Rentable beds at period end     5,116   950   6,066   3,861   1,018   4,879Available beds(2)     5,108   950   6,058   3,657   1,018   4,675Utilization(3)     53%   5%   45%   60%   6%   49%                                                            Six months ended June 30(000's for revenue only)     2012   2011      Largecamp   Drillcamp   Total   Largecamp   Drillcamp   TotalRevenue     $102,143   $8,963   $111,106   $68,227   $4,059   $72,286Bed rental days     539,975   47,602   587,577   391,496   24,550   416,046Revenue per bed rental day     $180(1)   $188   $180(1)   $174   $165   $174                           Rentable beds at period end     5,116   950   5,961   3,861   1,018   4,879Average rentable beds available(2)     4,894   950   5,844   3,488   1,018   4,506Utilization(3)     61%   26%   55%   62%   13%   51%(1)Revenue per bed rental day for the three months ended June 30, 2012 and the six months ended June 30, 2012 excludes the $5.1 million payment.(2)    Available rentable beds available is equal to total average beds in the fleet over the period less beds required for staff. (3)    Utilization equals the total number of bed rental days divided by average rentable beds available times days in the quarter. Revenues from large camp operations for the three months ended June 30, 2012, excluding the $5.1 million payment, increased by $9.3 million or 27% as compared to the same period in 2011. The revenue growth was driven by Horizon's ability to leverage the continued strong demand from Alberta oil sands operators for turnkey camp solutions. The majority of Horizon's 2011 and 2012 capital plan is focused on growing the rental fleet in the oil sands region. As at June 30, 2012, total rentable beds in the Alberta oil sands region were 5,116 as compared to 3,861 in the same period of 2011.Utilization of the expanded large camp fleet dipped slightly in the second quarter as compared to the same period in the prior year, primarily due to timing of completed contracts. There is typically several months between contracts as equipment is de-mobilized from completed contracts and redeployed onto new projects. The quarter ended June 30, 2012, saw a higher number of beds in transition as compared to the same period of 2011.Revenue per bed rental day, excluding the payment of $5.1 million, increased over the comparative quarters to $180, as compared to $174 in the same period of 2011. The increase of $6 is more reflective of revenue mix and the nature of current contracts, rather than increasing rates.Revenues from drill camp operations for the three months ended June 30, 2012 decreased slightly as compared to the same period of 2011. The decrease was driven by lower industry activity with The Canadian Association of Oilwell Drilling Contractors (CAODC) reporting rig utilization down by 2% in the comparative periods. Offsetting the lower volumes, revenue per bed rental day increased by $30 per day due to a combination of additional equipment and services requested by the customer once the camp is operational.The tables below outline the key performance metrics used by management to measure performance in the catering only and equipment rental operations.                           Three months ended June 30    Six months ended June 30(000's for revenue only)      2012   2011    2012   2011Catering only revenue     $5,577  $4,035   $13,121  $9,796Catering only days(1)      53,697   45,618    126,216   104,563Revenue per catering only day     $104  $88   $104  $94(1)    One catering only day equals the provision of catering and housekeeping services with no related bed rental for one day.  Revenues from the provision of catering and housekeeping only services, with no associated bed rentals, increased $1.5 million or 38% for the three months ended June 30, 2012 as compared to same period of 2011. The increased volumes came from an expanded customer base as compared to the same period of 2011. The remainder of the revenue increase came from a higher revenue per catering day, a result of additional services requested by the customer and the mix of contracts as compared to the same period of 2011.The table below outlines the service revenue generated from the camp and catering operation.                           Three months ended June 30   Six months ended June 30(000's)      2012   2011    2012   2011Camp and catering operations service related revenue     $4,361  $4,161   $10,884  $8,379                     Service revenues in the camp & catering operations is related to the transportation, setup and de-mobilization of camps. Revenue was relatively consistent in the comparative quarters mainly due to similar levels of activity in the set up and demobilization of both large camps and drill camps.Manufacturing sales and service revenueManufacturing sales and service revenue includes new manufacturing operations and the transportation and installation associated with new manufacturing. Revenues for the three months ended June 30, 2012 were $54.0 million as compared to $28.5 million for the same period in 2011, an increase of $25.5 million or 89%. The increase was a result of higher levels of activity in both manufacturing and installation operations.Manufacturing capacity increased by 10% through the addition of production staff for the three months ended June 30, 2012 as compared to the same period of 2011. Total production capacity is constantly reviewed by management and allocated as required to meet external third party contracts and internal fleet requirements. In the second quarter of 2012 a significantly higher proportion of production was allocated to meet external orders as compared to the same period of 2011. For the six months ended June 30, 2012, 77% of total production was allocated to external third party contacts as compared to 57% in the same period of 2011. The service revenue, which includes the transportation and installation components of the sale, typically follows the manufacturing activity and for the three months ended June 30, 2012 service was focused primarily on two significant oil sands related camp projects, compared to one significant project in the same period of 2011.Space rental and service revenueSpace rental and service revenue for the three months ended June 30, 2012 was $2.8 million as compared to $2.2 million for the same period in 2011. The rental fleet performance was consistent in the comparative periods with utilization at 88% and rental rates up slightly due to the location and mix of rental contracts.Direct costsDirect costs for the three months ended June 30, 2012 were $78.3 million or 70% of the revenue normalized for the payment of $5.1M, compared to $53.3 million or 71% of revenue for the same period of 2011. Direct costs are closely related to business volumes and the increase in overall direct costs was primarily a result of the higher activity levels in the comparative periods. As a percentage of revenue, direct costs remained relatively static in the comparative periods indicating cost escalation has not been a significant factor.MattingMatting revenue is comprised of mat and equipment rental revenue, mat sales revenue, installation, transportation, service, and other revenue as follows:                            Three months ended June 30  Six months ended June 30(000's except mat rental days and numbers of mats)   2012               2011   %change   2012   2011   %changeAccess mat rental revenue(1)  $6,311  $1,904   231%  $8,439  $2,109   300%Other mat and rental equipment revenue(2)  $422  $163   159%  $1,103  $589   87%Total mat and equipment rental revenue  $6,733  $2,067   226%  $9,542  $2,698   254%Mat sales revenue   8,440   4,993   69%   15,009   15,580   (4%)Installation, transportation, service, and other revenue   10,059   5,195   94%   19,019   11,818   61%Total revenue  $25,232  $12,255   106%  $43,570  $30,096   45%EBITDAS  $6,161  $3,449   79%  $10,533  $7,723   36%EBITDAS as a % of revenue   24%   28%   (14%)   24%   26%   (8%)Operating earnings  $3,985  $1,963   103%  $6,589  $4,789   38%Access mat rental days(3)   2,164,495   787,029   175%   2,908,839   1,057,616   175%Average owned access mats in rental fleet(4)   15,377   9,109   69%   13,172   8,181   61%Average sub rental access mats in rental fleet(5)   11,375   -   100%   5,688   -   100%Access mats in rental fleet at quarter end(4)   15,287   10,302   48%   15,287   10,302   48%Mat sold:                              New mats   10,135   6,219   63%   17,542   18,604   (6%)      Used Mats   1,647   111   1384%   3,546   2,493   42%Total mats sold   11,782   6,330   86%   21,088   21,097   0%(1)    Access mat rental revenue includes revenues generated from the rental of traditional oak and oak edged mats.(2)    Other mat rental equipment revenue includes the rental of rig mats, quad mats, other ancillary equipment such as well site accommodation units and light towers.(3)    One mat rental day equals the rental of one access mat for one day.(4)    Average access mat rental fleet numbers reflect only owned access mats.(5)    Average sub rental access mats is the average number of non-owned access mats in the rental fleet. These mats are rented from third parties on a short term basis.  Revenues from the Matting segment were $25.2 million for the three months ended June 30, 2012 compared to $12.3 million in the same period of 2011, an increase of $12.9 million or 105%. EBITDAS for the three months ended June 30, 2012 were $6.2 million or 24% of revenue as compared to $3.4 million or 28% of revenue for the same period of 2011, an increase of $2.8 million or 82%.The revenue and EBITDAS growth was driven by an unusually wet spring and by continued strong demand to purchase mats for oil sands and pipeline construction projects.Mat and equipment rental revenueTotal mat and equipment rental revenues increased by $4.7 million or 226% in the comparative periods, driven by both increased volume of mat rental days and higher revenues per mat rental day. The increased level of rental activity in the comparative quarters was a combination of a wet spring and the mix of projects and customers. Higher rental day volumes were achieved by a larger owned rental fleet for the three months ended June 30, 2012 as compared to the same period of 2011, and by sub renting mats from a third party. Sub renting mats was an effective method to temporarily increase the fleet size to meet peak customer demand. Sub renting was not done in the comparative period of 2011. Stronger market conditions also helped boost access mat rental rates with revenue per rental day of $2.92 in the three months ended June 30, 2012 as compared to $2.42 in the same period of 2011.Mat sales revenueRevenues from mat sales for the three months ended June 30, 2012 increased by $3.4 million or 69% as compared to the same period of 2011. The higher revenue was a result of 3,916 more new mats sold in the three months ended June 30, 2012 as compared to the same period of 2011. The higher sales volume was partially offset by lower revenue per mat with revenue per mat sold for three months ended June 30, 2012 of $716, down from $789 in the same period of 2011. The decrease is a result of the mix of mats sold with fewer new mats and more used mats sold in the three months ended June 30, 2012 as compared to the same period of 2011. Used mat sales have a significantly lower selling price than new mats.Installation, transportation, service, and other revenueInstallation, transportation, service, and other revenues are driven primarily from the level of activity in the mat rental and mat sale businesses and are charged for separately from rentals and sales. Revenues for the three months ended March 31, 2012 were higher by $4.9 million or 94% as compared to the same period in 2011. The increase is mainly due to the higher volume of both rentals and mat sales throughout the quarter.Direct costsDirect costs for the three months ended June 30, 2012 were $18.9 million or 75% of revenue as compared to $8.7 million or 71% of revenue for the same period of 2011. Direct costs are driven by the level of business activity, with the significant increase in activity for the comparative quarters, directs costs have increased accordingly. Costs in the rental operations increased in the three months ended June 30, 2012 as a result of costs related to the sub rental of access mats. Direct costs, as a percentage of revenue, increased by 4% due to the increased rental costs.Marine ServicesMarine Services revenue is comprised of barge camp revenue and rental and other revenue as follows:                                           Three months ended June 30   Six months ended June 30(000's)        2012     2011   % Change      2012     2011   % ChangeBarge camp revenue     $  664  $  642   3%   $  1,391  $  1,308   6%Rental and other revenue        15     333   (95%)      29     499   (94%)Total revenue     $  679  $  975   (30%)   $  1,420  $  1,807   (21%)EBITDAS     $  175  $  222   (21%)   $  522  $  595   (12%)Operating earnings     $  69  $  106   (35%)   $  304  $  371   (18%)                                     Revenues from the Marine Services segment for the three months ended June 30, 2012 were $0.7 million as compared to $1.0 million in the same period of 2011, a decrease of $0.3 million or 30%. The decrease was primarily due to lower levels of activity in the three months ended June 30, 2012 as compared to the same period of 2011.EBITDAS remained relatively consistent in the comparative quarters. EBITDAS as a percentage of revenue was 26% in the three months ended June 30, 2012 as compared to 23% in the same period of 2011.CorporateCorporate costs are the costs of the head office which include the President and Chief Executive Officer, Chief Financial Officer, Vice President of Health, Safety, and Environment, Vice President of Aboriginal Relations, Corporate Secretary, corporate accounting staff, and associated costs of supporting a public company. Corporate costs for the three months ended June 30, 2012 were $2.7 million as compared to $2.1 million in the same period in 2011. This increase of $0.6 million is driven by the increased cost to support the higher level of business activity. Corporate costs, as a percentage of total revenue, were 2.0% for the three months ended June 30, 2012 compared to 2.5% in same period of 2011.Other ItemsDepreciation and amortizationDepreciation and amortization costs for the three months ended June 30, 2012 were $9.6 million as compared to $7.2 million in the same period of 2011. The increase was mainly from depreciation which increased from $5.2 million to $7.6 million or 47%, as a result of net capital additions of $101.3 million in depreciable assets from June 30, 2011 to June 30, 2012 primarily in camp facilities. Amortization of intangibles remained relatively unchanged in the comparative periods at $2.0 million.Financing costsFinancing costs on loans and borrowings for the three months ended June 30, 2012 were $0.8 million as compared to $0.6 million in the same period of 2011. The increase of $0.2 million was a result of a higher weighted average level of debt held. For the three months ended June 30, 2012 the weighted average debt was $69.9 million compared to $31.8 million in the same period of 2011.Income taxesIncome tax expense was $7.4 million, an effective tax rate of 25.4%, for the three months ended June 30, 2012 as compared to a tax expense of $3.8 million, an effective rate of 27.2%, for the same period of 2011. The effective tax rate decreased due to a 1.0% decrease in federal tax rates from 2011 to 2012 as well as the change in estimated timing of realization of temporary differences.Selling and administrativeSelling and administrative expense was $4.5 million for the three months ended June 30, 2012 as compared to $3.1 million in the same period of 2011. The increase is reflective of the higher levels of business activity in 2012 as compared to 2011. However, as a percentage of revenue, selling and administrative expense declined to 3.2% of revenue in 2012 as compared to 3.6% in 2011.Condensed consolidated statement of financial position (Unaudited)     (000's) June 30,2012   December 31,2011Assets             Current assets:       Trade and other receivables$105,030  $83,484 Inventories             15,025               15,334 Prepayments             5,126               3,981 Income taxes receivable 345   -              125,526               102,799Non-current assets:       Property, plant and equipment             281,615               228,793 Intangible assets             14,130               18,232 Goodwill             2,136               2,136 Investments in equity accounted investees             556               529 Deferred tax assets             1,784               1,837 Other assets             2,747               2,811              302,968               254,338 $428,494  $357,137       Liabilities and Shareholders' Equity             Current liabilities:       Trade and other payables$52,848  $41,833 Deferred revenue             2,256               13,601 Income taxes payable             8,279               4,380 Current portion of loans and borrowings             1,149               1,281              64,532               61,095Non-current liabilities:       Asset retirement provisions             1,334               1,283 Loans and borrowings             86,161               55,234 Deferred tax liabilities             26,329               23,456              178,356               141,068Shareholders' equity:       Share capital             178,211               173,438 Contributed surplus             9,870               10,421 Accumulated other comprehensive income             174               158 Retained earnings             61,883               32,052              250,138               216,069 $428,494  $357,137              Condensed consolidated statement of comprehensive income (Unaudited)Three and Six months ended June 30, 2012 and 2011    Three months endedJune 30  Six months endedJune 30(000's)                2012               2011               2012               2011Revenue   $139,551  $86,607  $268,148  $189,766                  Operating expenses:                    Direct costs                94,592               61,492               184,602               138,553   Depreciation                7,589               5,164               13,818               10,000   Amortization of intangible assets                44               41               88               82   Share based compensation                391               99               436               194   Loss (gain) on disposal of property, plant and equipment                114               (31)               109               181Direct operating expenses                102,730               66,765               199,053               149,010Gross profit                36,821               19,842               69,095               40,756                  Selling & administrative expenses:                    Selling & administrative expenses                4,496               3,096               8,638               6,389   Amortization of intangible assets                2,007               2,040               4,014               4,059   Share based compensation                262               54               307               115Selling & administrative expenses                6,765               5,190               12,959               10,563Operating earnings                30,056               14,652               56,136               30,193                  Finance costs                849               576               1,543               1,189Share of loss (gain) of equity accounted investees                19               20               (27)               41Profit before tax                29,188               14,056               54,620               28,963                     Current tax expense                6,304               2,731               11,064               7,419   Deferred tax expense                1,115               1,092               2,926               399Income tax expense                7,419               3,823               13,990               7,818Total profit                21,769               10,233               40,630               21,145                  Other comprehensive income:                    Translation of foreign operations                (85)               -               (16)               -Other comprehensive income, net of income tax                (85)               -               (16)               -Total comprehensive income   $21,854  $10,233  $40,646  $21,145                  Earnings per share:                    Basic   $0.20  $0.10  $0.38  $0.20   Diluted   $0.20  $0.10  $0.37  $0.20                                      Condensed consolidated statement of changes in equity (Unaudited)(000's)     ShareCapital    ContributedSurplus   AccumulatedOtherComprehensiveIncome    RetainedEarnings(Deficit)    TotalBalance at December 31, 2010   $ 245,353  $ 11,446  $-  $ (78,000)  $ 178,799                          Reduction of capital     (78,000)    -   -    78,000    -Total profit     -    -   -    21,145    21,145Share based compensation     -    309   -    -    309Share options exercised     2,674    (736)   -    -    1,938Dividends declared ($0.04 per share)     -    -   -    (4,215)    (4,215)Balance at June 30, 2011     170,027    11,019   -    16,930    197,976                          Total profit     -    -   -    23,677    23,677Share based compensation     -    289   -    -    289Share options exercised     3,411    (887)   -    -    2,524Translation of foreign operations     -    -   158    -    158Dividends paid ($0.04 per share)     -    -   -    (4,285)    (4,285)Dividends declared ($0.04 per share)     -    -   -    (4,270)    (4,270)Balance at December 31, 2011     173,438    10,421   158    32,052    216,069                          Total profit     -    -   -    40,630    40,630Share based compensation     -    743   -    -    743Share options exercised     4,773    (1,294)   -    -    3,479Translation of foreign operations     -    -   16    -    16Dividends paid ($0.05 per share)     -    -   -    (5,392)    (5,392)Dividends declared ($0.05 per share)     -    -   -    (5,407)    (5,407)Balance at June 30, 2012   $ 178,211  $ 9,870  $174  $ 61,883  $ 250,138                                                   Condensed consolidated statement of cash flows (Unaudited)Six months ended June 30, 2012 and 2011              June 30,   June 30,(000's)             2012   2011Cash provided by (used in):             Operating activities:      Profit for the period$40,630  $21,145Adjustments for:            Depreciation             13,818               10,000      Amortization of intangible assets             4,102               4,141      Share based compensation             743               309      Amortization of other assets             64               60      Loss on equity investments             (27)               41      Gain on sale of property, plant and equipment             (1,508)               (1,297)      Unrealized foreign exchange             23               -      Finance costs             1,543               1,189      Income tax expense             13,990               7,818              73,378               43,406       Income taxes paid             (7,510)               (3,515)Interest paid             (1,140)               (811)Changes in non-cash working capital items             (22,793)               15,584              41,935               54,664Investing activities:      Purchase of property, plant and equipment             (69,523)               (56,247)Proceeds on sale of property, plant and equipment             4,400               2,955              (65,123)               (53,292)Financing activities:      Proceeds from loans and borrowings             30,508               905Shares issued             3,479               1,938Payment of dividends             (9,662)               -              24,325               2,843       Changes in non-cash working capital items (1,137)   (4,215)  23,188   (1,372)Increase in cash position             -               -       Cash, beginning of period             -               -Cash, end of period$-  $-       Financial Measures DefinitionsEBITDASEBITDAS (Earnings before interest, taxes, depreciation, amortization, gain/loss on equity investments, gain/loss on disposal of property, plant and equipment, share of income/loss from equity accounted investees and share based compensation) is not a recognized measure under IFRS.  Management believes that in addition to total profit and total comprehensive income, 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, and it is regularly provided to and reviewed by the Chief Operating Decision Maker and operating earnings 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.  Horizon's method of calculating EBITDAS may differ from other entities and accordingly, may not be comparable to measures used by other entities. EBITDAS should not be construed as alternatives to total profit and comprehensive income determined in accordance with IFRS as an indicator of the Corporation's performance.Funds from operationsFunds from operations is not a recognized measure under IFRS.  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 IFRS 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, interest and income taxes paid, financing costs, and income tax expense.Debt to total capitalizationDebt to total capitalization is calculated as the ratio of debt to total capitalization. Debt is defined as the sum of current and long-term portions of loans and borrowings. Total capitalization is calculated as the sum of debt and shareholders' equity.Caution Regarding Forward-Looking Information and StatementsCertain statements contained in this Management Discussion and Analysis ("MD&A") constitutes forward-looking statements or information.  These statements relate to future events or future performance of Horizon. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan" "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "should", "believe" and similar expressions are intended to identify forward-looking statements.In particular, such forward looking statements include: under the heading "Overview and Outlook" the statements that "Revenue and EBITDAS are expected to maintain at or near current levels for the remaining two quarters of 2012 with increases coming early in 2013 as new assets are deployed and with winter projects getting underway", "With robust oil sands development expected to continue, Horizon will focus the majority of its capital deployment in support of oil sands development", "allocation of production for the remainder of 2012 will continue to be heavily weighted to third party sales" and "The remainder of 2012 will see rentals and sales continue to be driven by; oil sand, natural gas, and pipeline development projects." and Under the heading "Quarterly Summary of Results" the statements that "Horizon's strong performance is expected to continue in 2012 based on increasing customer demand driven by levels of project investment and Horizon's continuing capital investment in expanding its fleet. With the high levels of investment being made by the energy sector and continued robust activity in the oil sands, strengthening demand and improving utilization is significantly reducing the seasonal nature of Horizon's business."The foregoing statements are based on the assumption that the demand for Horizon's products and services will remain strong through 2012 and that Horizon will continue to experience significant year round revenues from its oil sands and other energy customers.There are a number of risks which could impact these generally high levels of activity which could negatively impact the Corporation's business.  As such, many factors could cause the performance or achievements of the Corporation to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.Corporate InformationAdditional information related to the Corporation, including the Corporation's annual information form, financial statements, and MD&A is available on SEDAR at www.sedar.ca. Unless otherwise indicated, the consolidated financial statements have been prepared in accordance with IFRS and the reporting currency is in Canadian dollars.   SOURCE: Horizon North Logistics Inc.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