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Press release from CNW Group

Horizon North Logistics Inc. Announces Results For the Quarter and Year Ended December 31, 2012

Wednesday, February 20, 2013

Horizon North Logistics Inc. Announces Results For the Quarter and Year Ended December 31, 201219:44 EST Wednesday, February 20, 2013TSX Symbol: HNLCALGARY, Feb. 20, 2013 /CNW/ - Horizon North Logistics Inc. ("Horizon" or the "Corporation") reported its financial and operating results for the quarter and years ended December 31, 2012 and 2011.HighlightsHorizon continues to be significantly levered to oil sands activity with 63% of consolidated revenues derived from oil sands in 2012 as compared to 55% in 2011.Consolidated revenues increased 31% year over year:Revenues from the Camps & Catering segment increased by 30% as compared to the prior year with increases in camp rental and catering operations as well as strong camp sales and associated installation and transportation revenues;Revenues from the Matting segment increased by 34% as compared to the prior year driven by significant demand for mat sales throughout the year.Consolidated EBITDAS for the year improved significantly to $145.0 million or 28% of revenues as compared to $102.6 million or 25% of revenues in the prior year, an increase of 41% year over year:EBITDAS from the Camps and Catering segment was $134.2 million or 30% of revenues as compared to $93.5 million or 27% of revenues in the prior year, a year over year increase of 44%;EBITDAS from the Matting segment increased to $22.6 million or 25% of revenues as compared to $17.9 million or 26% of revenues in the prior year, a year over year increase of 26%.Annual Financial Summary  Years ended December 31(000's except per share amounts)   2012% change             2011% change             2010Revenue $     526,61631%$     402,99368%$      239,258EBITDAS(1)    145,02741%    102,63696%        52,483EBITDAS as a % of revenue 28%   25%        22%Operating earnings before impairment loss(1)  102,75845%      70,794174%     25,855Operating earnings before impairment loss as a % of revenue  20%     18%        11%Impairment loss             --  8,071-             -Operating earnings after impairment loss   102,75864%       62,723143%     25,855Total profit before impairment loss$     72,88338%$52,893222%  $ 16,430Total profit after impairment loss  72,88363%        44,822173%     16,430Total comprehensive income   72,93362%       44,980174%     16,430Earnings per share before impairment loss  - basic$0.6731%$0.51213%$0.16 - diluted 0.6633% 0.49206%  0.16Earnings per share after impairment loss - basic$     0.6760%$    0.42163%$ 0.16 - diluted 0.6661% 0.41156% 0.16Total assets $   495,99339%$ 357,13729%$   277,837Long-term loans and borrowings     116,872112%     55,23482%      30,363Funds from operations(1)   113,06238%      82,124103%     40,419Capital spending    139,34638%    101,034143%     41,561Debt to total capitalization ratio(1)            0.3043%     0.2111%     0.19Dividends declared $  21,662 $12,770   $ -Dividends declared per share$0.20 $0.12  $-(1)     See financial measures definitions on the last page of the press release for details. Overview2012 proved to be another successful year for Horizon on virtually all fronts. Revenue, EBITDAS and Earnings per Share increased by 31%, 41% and 33%, respectively, over the results achieved in 2011.  At the same time, the Company executed the most ambitious capital spending program in its 6 year history, deploying $139 million to increase and maintain its operating asset base. Most notably, our rentable bed count increased by 2,000 to exit 2012 at 8,500.  Horizon's continued growth also resulted in improved bottom line performance as measured by return on invested capital which was 20.4% for the 2012 fiscal year compared to 19.6% in 2011.OutlookHorizon's customer base expanded in 2012 with new customers engaged in SAGD oil sands projects, natural gas development in northeast British Columbia and northwestern Alberta, as well as infrastructure projects throughout western Canada.  Oil sands development activities, driven primarily by SAGD projects, continue to be the main driver of Horizon's growth and are expected to remain robust over the next few years. Oil sands activity accounted for 63% of Horizon's consolidated revenues for 2012.Coming into 2013, Horizon saw a reduction in bed requirements for a specific project from a major customer.  While reduced utilization and visibility on the revenue from these assets is likely in the near term, activity in the region from other operators remains robust and Horizon continues to see opportunities to remarket or reposition these beds as we move through the second half of 2013.Capital spending for 2013 is expected to be $80 million, focused primarily on adding 1,000 beds to the camp and catering operations throughout the year.  Of the expected 1,000 beds, 36% are under contract to be deployed in the second quarter, primarily in the oil sands region of Alberta on a SAGD project. Capital spending in 2013 is expected to be less than the $140 million 2012 program so as to match the continued growth of our operating and service delivery capabilities and maintaining a conservative balance sheet.Dividend paymentHorizon North Logistic Inc. announced today that its Board of Directors has declared a dividend for the first quarter of 2013 at $0.0625 per share, an increase of 25% from the previous quarterly dividend of $0.05 per share in 2012. The dividend is payable to shareholders of record at the close of business on March 31, 2013 to be paid on April 12, 2013. The dividends are eligible dividends for Canadian tax purposes.Segment realignmentDuring the quarter ended December 31, 2012, the Corporation realigned the business segments to include the Marine services operations within the Camps & Catering segment. This was done to better represent the nature of Horizon's northern operations where revenue is generated mainly from accommodation barge rental and equipment rental. All comparatives have been revised to reflect the change.Fourth Quarter Financial Summary Three months ended December 31(000's except per share amounts) 2012 2011% ChangeRevenue$ 138,558$ 110,92925%EBITDAS(1)  36,039 29,369      23%EBITDAS as a % of revenue       26% 26% Operating earnings before impairment loss(1) 23,390 19,936      17%Operating earnings before impairment loss as a % of revenue    17% 18%      (6%)Impairment loss  -  8,071      -Operating earnings  23,390 11,865      97%Total profit before impairment loss$ 15,991$ 16,680      (4%)Total profit after impairment loss    15,991 8,609      86%Total comprehensive income 15,959 8,537      87%Earnings per share before impairment loss - basic$ 0.15$ 0.16      (6%) - diluted  0.15 0.15      -%Earnings per share after impairment loss  - basic  0.15 0.08      88% - diluted   0.15 0.08      88%Total assets$ 495,993$ 357,137      39%Long-term loans and borrowings 116,872 55,234      112%Funds from operations(2) 28,323 17,202      65%Capital spending 23,378 21,926      7%Debt to total capitalization ratio(3)  0.30 0.21      43%Dividends declared$ 5,439$ 4,270      27%Dividends declared per share$ 0.05$ 0.04      25%(1)     See financial measures definitions on the last page of the press release for details.  Fourth Quarter Financial Results Three months ended December 31, 2012(000's) Camps &Catering Matting Corporate Inter-segmentEliminations TotalRevenue$ 117,214$ 24,151$ -$ (2,807)$ 138,558Expenses            Direct costs 81,691 18,752 34  (2,688)   97,789  Selling & administrative 1,728   196  2,806      -  4,730EBITDAS 33,795 5,203  (2,840)  (119)  36,039EBITDAS as a % of revenue 29% 22%     26%Share based payments 379    55 291    -   725Depreciation & amortization  9,867  2,122 122  (56)  12,055Gain on disposal of property, plant and equipment (38)  (80)   (13)    -  (131)Operating earnings (loss)$ 23,587$ 3,106$ (3,240)$ (63)$ 23,390Finance costs                971Share of equity accounted investees         504Income tax expense         5,924Other comprehensive loss         32Total comprehensive income        $ 15,959Earnings per share - basic         $ 0.15 - diluted            $ 0.15            Three months ended December 31, 2011(000's) Camps &Catering Matting Corporate Inter-segmentEliminations TotalRevenue $ 94,674$ 20,797$ -$ (4,542)$ 110,929Expenses            Direct costs 66,750 15,970 1 (4,597) 78,124  Selling & administrative 960 146 2,330  - 3,436EBITDAS 26,964 4,681 (2,331)  55 29,369EBITDAS as a % of revenue 28% 23% - - 26%Share based payments 79 16 51  - 146Depreciation & amortization 5,999 1,863 85 (24) 7,923Loss on disposal of property, plant and equipment 1,364  - -  - 1,364Operating earnings before impairment loss$ 19,522$ 2,802$ (2,467)$ 79$ 19,936Impairment loss 8,071 - - -  8,071Operating earnings (loss)$ 11,451$ 2,802$ (2,467)$ 79$ 11,865Finance costs         637Share of equity accounted investees         (12)Income tax expense          2,631Other comprehensive loss         72Total comprehensive income        $ 8,537Earnings per share before impairment loss - basic        $ 0.16 - diluted        $ 0.15Earnings per share after impairment loss     - basic        $ 0.08 - diluted        $ 0.08Camps & CateringCamps & Catering revenue is comprised of camp rental and catering operations revenue, manufacturing and space unit sales revenue and space rental and service revenue.Effective October 1, 2012, presentation of Camps & Catering segment has been realigned to include Marine services to better represent the businesses within the Camps & Catering segment. Marine services revenue is now reported as Camp rental and catering operations revenue and includes the following components: barge camp rental, equipment rental and other ancillary revenue. 2011 comparatives have been similarly revised to ensure meaningful comparatives.   Three months ended December 31(000's except bed rental days and catering only days) 2012 2011 % changeCamp rental and catering operations revenue$ 76,668 $ 55,383 38%Manufacturing sales 38,019 37,029 3%Space rental and service revenue 2,527 2,262 12%Total revenue$ 117,214$ 94,674 24%EBITDAS$ 33,795$ 26,964 25%EBITDAS as % of revenue 29% 28%  Operating earnings$ 23,587$ 11,451 106%Bed rental days(1) 433,832 220,678 97%Catering only days(2) 58,794 78,958 (26%)(1)     One bed rental day represents;the provision of one bed for one day under a combined rental and catering manday rate; or the provision of one bed for one day under an equipment rental rate for dedicated camp equipment.(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 $117.2 million for the three months ended December 31, 2012 as compared to $94.7 million for the three months ended December 31, 2011, an increase of $22.5 million or 24%. EBITDAS for the three months ended December 31, 2012 were $33.8 million or 29% of revenue compared to $27.0 million or 28% of revenue for the three months ended December 31, 2011, an increase of $6.8 million or 25%.Horizon's growth in the Camps & Catering segment for the comparative quarters was led by camp rental and catering operations with revenue growth of $21.3 million or 38%. These operations are highly levered to activity levels in the Alberta oil sands area and Horizon operated an additional 2,277 beds for the three months ended December 31, 2012 as compared to the same period of 2011 with the majority of the additional beds being deployed in the Alberta oil sands area to take advantage of the high levels of activity.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 projects. Revenues from camp and catering operations were $76.7 million for the three months ended December 31, 2012 compared to $55.4 million for the three months ended December 31, 2011, an increase of $21.3 million or 38%.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 December 31(000's for revenue only)2012 2011  Largecamp Drillcamp Total  Largecamp Drillcamp TotalRevenue$59,718$3,925$63,643 $37,525$3,389$40,914Bed rental days(1) 410,456 23,376 433,832  200,421 20,257 220,678Revenue per bed rental day$145$168$147 $187$167$185Rentable beds at period end 6,905 871 7,776  4,850 950 5,800Average rentable beds available(2) 6,897 836 7,733  4,506 950 5,456Utilization(3) 65% 30% 61%  48% 23% 44%(1)    One bed rental day represents; the provision of one bed for one day under a combined rental and catering manday rate; or the provision of one bed for one day under an equipment rental rate for dedicated camp equipment.(2)  Average 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 December 31, 2012 increased by $22.2 million or 59% compared to the same period in 2011, primarily as a result of a larger fleet mainly deployed in the oil sands area.Within the large camp operations revenue is derived from two styles of camp offerings, open camps and dedicated single customer camps. In 2012 an increased focus on securing longer term contracts for dedicated single customers camps resulted in a higher proportion of large camp revenue being generated from these dedicated camps as compared to 2011. Generally the contracted revenue for open camps has a short contract duration typically priced with a single rate on bed rental day basis. The dedicated single customer camps usually are longer term contracts and priced using an equipment rental charge and a room occupancy charge. The contracts with the two charge structure have a significant impact on both utilization and on the revenue per bed rental day. With the two charge pricing structure the beds are considered to be 100% utilized since the customer is paying an equipment rental charge, in comparison, the single rate bed rental day pricing is based on occupancy. The changing mix of the two contract types was a contributing factor to the 35% increase in utilization for fourth quarter of 2012 as compared to the fourth quarter of 2011. An additional effect of the contract mix is to decrease in the revenue per bed rental day as a result of the increased number of beds considered rented, the bed rental day rate in 2012 was $145, a decrease of $42, or 22%.Of note, a large portion of the dedicated camps have been contracted with customers new to Horizon, particularly on SAGD oil sands projects, resulting in a more diverse customer base in 2012 as compared to 2011.Revenues from drill camp operations for the three months ended December 31, 2012 increased by $0.5 million or 16% compared to the same period of 2011. The increase was a result of higher volumes as compared to the comparative quarter in 2011.The tables below outline the key performance metrics used by management to measure performance in the catering only and equipment rental operations.      Three months ended December 31(000's for revenue only)  2012 2011Catering only revenue$ 6,119$ 7,400Catering only days(1)   58,794 78,958Revenue per catering only day $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, decreased $1.3 million or 17% for the three months ended December 31, 2012 as compared to same period of 2011. The lower volumes were mainly a result of the close out of a significant catering only job at a mining operation in the Northwest Territories. The higher rate was mainly the result of change in customer mix due to close out of the large catering job.The table below outlines the service revenue generated from the camp and catering operations:      Three months ended December 31(000's) 2012  2011Camp and catering operations service related revenue$ 6,906$ 7,069Service 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 the nature of the specific service projects undertaken in the comparative quarters.Manufacturing sales Manufacturing sales revenues include the manufacture of camps sold to third parties and the transportation and installation associated with those sales. Revenues for the three months ended December 31, 2012 were $38.0 million as compared to $37.0 million for the same period in 2011, an increase of $1.0 million or 3%. Manufacturing production capacity is regularly reviewed by management to determine the allocation of production required to meet external third party sales contracts and internal fleet requirements. The increase in revenue was a result of the allocation of production capacity between sales and fleet build in the comparative quarters. Actual direct manufacturing hours were 188,234 hours for the three months ended December 31, 2012 as compared to 138,507 in the comparative period, an increase of 49,727 hours or 36%. The increase was a result of additional production staff for the three months ended December 31, 2012 compared to the same period of 2011. In the fourth quarter of 2012 57% of direct hours were allocated to external sales contracts compared to 64% in the same period of 2011. Service revenue, which includes the transportation and installation components of the sale, for the three months ended December 31, 2012, was focused primarily on close out of a significant oil sands related camp project and ramping up for the next significant project which is currently in the manufacturing phase.Space rental revenuesSpace rental revenues for the three months ended December 31, 2012 were $2.5 million as compared to $2.3 million for the same period in 2011, an increase of $0.2 million or 12%. The increase came from slightly higher volumes with fleet utilization of 87% for the three months ended December 31, 2012 compared to 85% for the same period in 2011.Direct costsDirect costs for the three months ended December 31, 2012 were $81.7 million or 70% of revenue as compared to $66.8 million or 71% of revenue for the same period of 2011. Direct costs are closely related to business volumes and the increased direct costs are primarily a result of the higher activity levels in the comparative periods. As a percentage of revenue, direct costs decreased by 1% in the comparative periods, the decrease is reflecting fixed costs in relation to the levels of activity, as activity levels increase fixed costs become a smaller proportion of revenue.MattingMatting revenue is comprised of mat rental revenue, mat sales revenue, installation, transportation, service, and other revenue as follows:   Three months ended December 31(000's except mat rental days and numbers of mats) 2012 2011 % changeAccess mat rental revenue(1)$ 2,919$  1,842 58%Other mat and rental equipment revenue(2) 888 465 91%Mat sales revenue 10,893 10,694 2%Installation, transportation, service, and other revenue  9,451 7,796 21%Total revenue$ 24,151$  20,797 16%       EBITDAS$ 5,203$  4,681 11%EBITDAS as a % of revenue 22% 23% (4%)Operating earnings$ 3,106$  2,802 11%Access mat rental days - owned mats(3) 777,350  619,727 25%Access mat rental days - third party mats(4) 263,808 - 100%Total access mat rental days 1,041,158 619,727 68%       Average owned access mats in rental fleet(5) 14,190 9,863 44%Average sub rental access mats in rental fleet(6) 2,866  - 100%Access mats in rental fleet at quarter end(7) 13,714 9,739 41%Mats sold:            New mats 13,910 13,557 3%      Used Mats 992 437 127%Total mats sold 14,902 13,994 6%(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 owned access mat for one day.(4)    One mat rental day equals the rental of one third party sub rented access mat for one day.(5)     Average access mat rental fleet numbers reflect only owned access mats.(6)    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.(7)    Access mats in rental fleet at quarter end represents the number of owned access mats in the Matting fleet on December 31, 2012.Revenues from the Matting segment for the three months ended December 31, 2012 were $24.2 million as compared to $20.8 million for the same period of 2011, an increase of $3.4 million or 16%. EBITDAS for the three months ended December 31, 2012 were $5.2 million or 22% of revenue as compared to $4.7 million or 23% of revenue for the same period of 2011, an increase of $0.5 million or 11%.Mat and equipment rental revenueTotal mat and equipment rental revenues for the three months ended December 31, 2012 were $3.8 million as compared to $2.3 million for the same period of 2011, an increase of $1.5 million or 65%. The growth in rental revenue was mainly driven by the increase in mat rental days partially offset by slightly lower revenues per mat rental day. Volumes increased in the fourth quarter of 2012 as compared to the same period in 2011 by 421,431 days. The owned access mat fleet was 60% utilized compared to 68% in the comparative quarter of 2011. The revenue per mat rental day decreased slightly to $2.80 per day in the fourth quarter of 2012 from $2.97 in the same period of 2011, this decrease was mainly due to the duration of contracts in the comparative periods.Mat sales revenueRevenues from mat sales for the three months ended December 31, 2012 were relatively consistent in the comparative quarters with 2012, higher by $0.2 million. The mix of new and used access mat sales changed with used mats sales being a higher proportion of total mat sales in the three months ended December 31, 2012 as compared to the same period of 2011. As a result of the sales mix, revenue per mat decreased by $33 per mat as used mats have a lower selling price.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 December 31, 2012 were $9.5 million as compared to $ 7.8 million the same period in 2011, an increase of $1.7 million or 21%. The increase is mainly reflective of the higher volume of rentals in the three months ended December 31, 2012, as compared to the same period of 2011.Direct costsDirect costs for the three months ended December 31, 2012 were $18.8 million or 78% of revenue as compared to $16.0 million or 77% of revenue for the same period of 2011. Direct costs are driven by the level of business activity, with the increase in revenue, as compared to the same period of 2011, direct costs have increased accordingly. Direct costs as a percentage of revenue increased by 1% for the three months ended December 31, 2012 as compared the same period of 2011. The increase is primarily a result of costs in the rental operation as a result of sub renting mats as compared to 2011 when there was no mat sub rental.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 December 31, 2012 were $2.8 million as compared to $2.3 million in the same period in 2011. This increase of $0.5 million reflects the increased cost to support the higher level of business activity. Corporate costs, as a percentage of total revenue, remained consistent for the comparative periods at 2.0%.Other ItemsDepreciation and amortization Three months ended December 31,(000's)            2012            2011 % changeDepreciation$ 10,004$ 5,842 71%Amortization 2,051 2,081 (1%)Total depreciation and amortization$ 12,055$ 7,923 52%Depreciation and amortization costs for the three months ended December 31, 2012 were $12.1 million as compared to $7.9 million in the same period of 2011. The increase was a result of depreciation which increased by $4.2 million or 71%. The increased depreciation was a result of camp asset additions which include camp setup and installation costs that are depreciated over the term of the contract. Depreciation for the camp setup and installation was $2.0 million higher in the fourth quarter of 2012 as compared to the same period of 2011.Financing costsFinancing costs include interest on loans and borrowings and accretion on notes payable. For the three months ended December 31, 2012 financing costs were $1.0 million as compared to $0.6 million in the same period of 2011, an increase of $0.4 million as a result of a higher interest expense on loans and borrowings. The increased interest expense was due to higher weighted average debt of $105.1 million for the three months ended December 31, 2012 compared to $49.6 million in the same period of 2011.The interest rate decreased in the comparative quarters as a result of lower rates in the renewed credit facility and a higher proportion of debt being converted to bankers acceptance in the fourth quarter of 2012 as compared to the same period of 2011.Income taxesIncome tax expense was $5.9 million, an effective tax rate of 27%, for the three months ended December 31, 2012 as compared to a tax expense of $2.6 million, an effective rate of 24% for the same period of 2011. The effective tax rate in the fourth quarter of 2011 was low due to the timing of the realization of tax losses in the four quarter of 2011.Selling and administrativeSelling and administrative expense was $4.7 million for the three months ended December 31, 2012 as compared to $3.4 million in the same period of 2011. The increase is reflective of the higher levels of business activity in 2012 as compared to 2011. As a percentage of revenue, selling and administrative expense increased to 3.4% in 2012 as compared to 3.1% in 2011.Consolidated statement of financial position(000's) December 31,            2012 December 31,2011Assets    Current assets:          Trade and other receivables 133,195 83,484      Inventories 13,321  15,334      Prepayments 2,506 3,981      Income taxes receivable 146  -  149,168 102,799Non-current assets:          Property, plant and equipment 330,205  228,793      Intangible assets 10,028 18,232      Goodwill 2,136 2,136      Investments in equity accounted investees - 529      Deferred tax assets 1,772 1,837      Other assets 2,684  2,811  346,825 254,338 $ 495,993 $ 357,137     Liabilities and Shareholders' Equity    Current liabilities:          Trade and other payables 59,511 41,833      Deferred revenue 588 13,601      Income taxes payable 12,661 4,380     Current portion of loans and borrowings 1,416 1,281  74,176 61,095Non-current liabilities:          Asset retirement obligations 1,364 1,283      Loans and borrowings 116,872 55,234      Deferred tax liabilities 29,318 23,456  221,730 141,068Shareholders' equity:          Share capital 179,999  173,438      Contributed surplus 10,783 10,421      Accumulated other comprehensive income 208 158      Retained earnings 83,273 32,052  274,263 216,069 $ 495,993$ 357,137Consolidated statement of comprehensive incomeTwelve months ended December 31, 2012 and 2011(000's except per share amounts) December 31,            2012 December 31,2011Revenue$ 526,616$ 402,993Operating expenses:          Direct costs 364,361 285,837      Depreciation 32,007 21,420     Amortization of intangible assets 44  163      Share based compensation 1,268 377      Impairment loss - 8,071      (Gain) loss on disposal of property, plant and equipment (93) 1,521Direct operating expenses 397,587 317,389Gross profit 129,029 85,604      Selling & administrative expenses:          Selling & administrative expenses 17,228 14,520     Amortization of intangible assets 8,160 8,140      Share based compensation 883 221Selling & administrative expenses 26,271 22,881Operating earnings 102,758 62,723      Finance costs 3,557 2,467Share of equity accounted investees 529 27Profit before tax 98,672 60,229      Current tax expense 19,862 8,248      Deferred tax expense 5,927 7,159Income tax expense 25,789 15,407Total profit 72,883 44,822      Other comprehensive income:          Translation of foreign operations (50) (158)Other comprehensive income, net of income tax (50) (158)Total comprehensive income$ 72,933$ 44,980     Earnings per share:         Basic$ 0.67$ 0.42     Diluted$ 0.66$ 0.41Consolidated statement of changes in equity(000's)      Share            Capital ContributedSurplus AccumulatedOtherComprehensiveIncome       Retained            Earnings            (Deficit)       TotalBalance at December 31, 2010$ 245,353$ 11,446$ -$ (78,000)$ 178,799Reduction of capital (78,000)  - - 78,000 -Total profit -  - - 44,822 44,822Share based compensation - 598 - - 598Share options exercised 6,085 (1,623) - - 4,462Translation of foreign operations - - 158 - 158Dividends declared and paid ($0.08 per share)       (8,500) (8,500)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 - - - 72,883 72,883Share based compensation - 2,151 - - 2,151Share options exercised 6,561 (1,789) - - 4,772Translation of foreign operations - - 50 - 50Dividends declared and paid ($0.15 per share) - - - (16,223)  (16,223)Dividends declared ($0.05 per share) - - - (5,439) (5,439)Balance at December 31, 2012$ 179,999$ 10,783$ 208$ 83,273$ 274,263Consolidated statement of cash flowsTwelve months ended December 31, 2012 and 2011  December 31, December 31,(000's) 2012 2011Cash provided by (used in):    Operating activities:    Profit for the period$ 72,883$ 44,822Adjustments for:          Depreciation 32,007 21,420      Amortization of intangible assets 8,204 8,303      Impairment loss - 8,071      Share based compensation 2,151 598      Amortization of other assets 127 123      Share of equity accounted investees 529 27      Gain on sale of property, plant and equipment (2,924) (1,267)      Unrealized foreign exchange 85 27      Finance costs 3,557 2,467      Income tax expense 25,789 15,407  142,408 99,998Income taxes paid (11,727) (5,211)Interest paid (2,904) (1,708)Changes in non-cash working capital items (41,572) (5,368)  86,205 87,711Investing activities:    Purchase of property, plant and equipment (139,346) (101,034)Proceeds on sale of property, plant and equipment 8,831 8,683  (130,515) (92,351)Financing activities:    Shares issued on exercise of options 4,772 4,462Net proceeds from loans and borrowings 61,200 12,893Payment of dividends (20,493) (8,500)  45,479 8,855Change in non-cash working capital items (1,169) (4,215)  44,310 4,640Change in cash position - -      Cash, beginning of period - -Cash, end of period$ -$ -Financial Measures DefinitionsEBITDASEBITDAS (Earnings before interest, taxes, depreciation, amortization, impairment, gain/loss on equity investments, gain/loss on disposal of property, plant and equipment, 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 Statements Certain statements contained in this Management Discussion and Analysis ("MD&A") constitute 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 "Outlook" the statements that "Oil sands development activities, driven primarily by SAGD projects, continue to be the main driver of Horizon's growth and are expected to remain robust over the next few years.", "While reduced utilization and visibility on the revenue from these assets is likely in the near term, activity in the region from other operators remains strong and Horizon continues to see opportunities to remarket or reposition these beds as we move through the second half of 2013", "Capital spending for 2013 is expected to be $80 million, focused primarily on adding 1,000 beds to the camp and catering operations throughout the year.  Of the expected 1,000 beds, 36% are under contract to be deployed in the second quarter, primarily in the oil sands region of Alberta on a SAGD project. Capital spending in 2013 is expected to be less than the $140 million 2012 program so as to match the continued growth of our operating and service delivery capabilities and maintaining a conservative balance sheet."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.com. 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