PSP.V Pacific Safety Products Inc. Announces Improved 2009 Second Quarter Results
Tuesday February 24, 9:28 am ET
KANATA, ONTARIO--(Marketwire - Feb. 24, 2009) - Pacific Safety Products Inc. (TSX VENTURE:PSP - News; "PSP" or "the Company") today announced consolidated financial results for the three-month period ended December 31, 2008.
Mr. David Scott, Chief Executive Officer commented, "PSP had a very strong quarter. Sales during the quarter were up 32% as compared to the prior year. Gross Margins have significantly improved over last year as a result of consolidating manufacturing into one Canadian location, investing in production equipment and improvements in our quality management processes. I would also note that Sentry Armor Systems, our U.S. operations has doubled sales over last year. This reinforces the Company's decision to enter this large market, and our ability to compete and win market share against existing competitors. The decline in our operating expenses is a reflection of the integration and restructuring activities that occurred during the quarter, and management expects these actions will contribute to improved operating results in the future. The Company continues to be well within its operating line and bank covenants and has commenced repayment of its $1.5 million long-term debt. Cash flow continues to strengthen as the Company has generated almost $0.5 million of EBITDA after 6 months of operations. Overall we have had solid operational performance. The volatility of Canadian/U.S. exchange rates in this quarter had an impact on results. In the month of October alone the Canadian dollar weakened by as much as 20%. The company has taken action to buffer future volatility through improved risk management activities."
QUARTER HIGHLIGHTS:
- Sales increased by 32% or $2.3 million to $9.6 million as compared to the same period of the prior year.
- Gross margin improved by almost 7 percentage points to 25% as compared to the same period of the prior year.
- The Company announced a multi-year contract, with a potential value of up to $14 million with the Canada Border Services Agency.
- U.S. sales during the quarter more than doubled as compared the same period of the prior year.
- The Company's next generation military helmet liner was tested and recommended by the members of the US National Tactical Officers Association as disclosed in the Company's media release of November 24, 2008.
- Operating expenses decreased 6% during the quarter as compared to the same period of the prior year.
For complete consolidated financial statements with notes and management discussion and analysis please refer to PSP's annual report to shareholders. This report is posted on SEDAR (www.sedar.com) and on our web site. Summary consolidated financial results for the quarter ended December 31, 2008 and December 31, 2007, are as follows:
SUMMARY CONSOLIDATED BALANCE SHEETS (unaudited)
$Thousand
AS AT DECEMBER 31, 2008 JUNE 30, 2008
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ASSETS
CURRENT ASSETS $12,009 $11,236
PROPERTY, PLANT AND EQUIPMENT 1,844 1,683
OTHER ASSETS 1,754 1,137
INTANGIBLE ASSETS 3,272 3,462
GOODWILL 8,454 8,454
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TOTAL ASSETS $27,333 $25,972
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LIABILITIES
CURRENT LIABILITIES $ 9,192 $ 8,381
LONG-TERM DEBT 1,268 875
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TOTAL LIABILITIES 10,460 9,256
SHAREHOLDERS' EQUITY 16,873 16,716
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $27,333 $25,972
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SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
$Thousands
THREE THREE SIX SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
DECEMBER DECEMBER DECEMBER DECEMBER
31, 2008 31, 2007 31, 2008 31, 2007
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SALES 9,593 7,283 17,299 13,948
COST OF SALES 7,183 5,955 13,016 11,114
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GROSS MARGIN 2,410 1,328 4,283 2,834
25.1% 18.2% 24.8% 20.3%
OPERATING EXPENSES 1,989 2,124 3,781 3,623
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OPERATING INCOME/(LOSS) 421 (796) 502 (789)
AMORTIZATION 196 273 377 457
FOREIGN EXCHANGE 134 17 150 31
INTEREST 45 53 115 78
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INCOME /(LOSS) BEFORE
OTHER COSTS 46 (1,139) (140) (1,355)
RESTRUCTURING /
RELOCATION COSTS 152 744 152 505
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LOSS BEFORE INCOME
TAX RECOVERY (106) (1,883) (292) (1,860)
INCOME TAX RECOVERY (148) (519) (342) (615)
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NET INCOME / (LOSS) 42 (1,364) 50 (1,245)
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SUPPLEMENTARY DISCLOSURE (unaudited)
$Thousands
The following is a reconciliation of net income to Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA)
THREE THREE SIX SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
DECEMBER DECEMBER DECEMBER DECEMBER
31, 2008 31, 2007 31, 2008 31, 2007
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NET INCOME /(LOSS) 42 (1,364) 50 (1,245)
INTEREST 45 53 115 78
INCOME TAX RECOVERY (148) (519) (342) (615)
STOCK BASED
COMPENSATION 47 40 139 80
AMORTIZATION 251 326 482 551
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EBITDA 237 (1,464) 444 (1,151
