Pacific Safety Products Inc. Announces Fourth Quarter and Fiscal 2009 Results
6:01 AM ET, October 19, 2009
KANATA, ONTARIO, Oct 19, 2009 (MARKETWIRE via COMTEX) -- Pacific Safety Products Inc. (PSP) ("PSP" or "the Company") today announced its consolidated financial results for the three and twelve month period ended June 30, 2009.
FISCAL 2009 SIGNIFICANT EVENTS:
- Announced almost $35 million in new multi-year contract awards.
- Increased sales from U.S. operations by almost 50% as compared to the prior year.
- Generated more than $1.2 million of Normalized Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"); an almost threefold increase as compared to the prior year.
- Increased gross margins by almost 1% as compared to the prior year.
- Decreased selling, general and administrative expenses by $0.5 million or almost 7% as compared to the prior year.
- Established a $1.4 million USD operating line of credit to fund working capital of growing U.S. operations.
- Entered into a contract with the National Research Council Canada with a Contribution Agreement valued at up to $0.5 million to begin development of a next generation Integrated Helmet for soldier modernization.
- A significant and sustained decrease in the market capitalization of the Company led to an $8.5 million non-cash Goodwill impairment charge.
Mr. David Scott, Chief Executive Officer commented, "I am extremely pleased with our progress this year. In spite of the current economic environment and the completion of two significant multi-year military contracts during the year, we were able to achieve a modest sales increase. In addition, operational improvements precipitated an almost 1% improvement in gross margins in spite of increased costs related to the weakness of the Canadian dollar. Management also expects that the restructuring activities during the year will yield an almost $1.0 million reduction in operating costs on an annualized basis."
Mr. Scott also commented, "Notwithstanding the improved operational results, the Company recorded a non-cash Goodwill impairment charge of approximately $8.5 million during the fourth quarter. This action is primarily as a result of a sustained decrease in the market capitalization of the Company. In previous periods, with less favourable operating results, there was no impairment to Goodwill as our market capitalization met the implied value. Unfortunately the new normal for valuation of micro cap stock in the market is significantly less than in earlier times. The non-cash impairment charge does not reflect the current operating performance or potential of the Company. The Company is well within its operating lines of credit and bank covenants, operational improvements continue to yield positive results and cash flow continues to strengthen."
For complete consolidated financial statements with notes and management discussion and analysis please refer to PSP's annual report to shareholders. This report is posted on SEDAR (www.sedar.com) and on our web site.
Summary consolidated financial results for the three and twelve monthperiod ended June 30, 2009, are as follows:SUMMARY CONSOLIDATED BALANCE SHEETS$Thousands JUNE 30, JUNE 30,AS AT 2009 2008---------------------------------------------------------------------------ASSETSCURRENT ASSETS $ 8,799 $ 11,893PROPERTY AND EQUIPMENT 1,711 1,683OTHER ASSETS 1,912 1,138INTANGIBLE ASSETS 3,078 3,462GOODWILL - 8,454---------------------------------------------------------------------------TOTAL ASSETS $ 15,500 $ 26,630------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIESCURRENT LIABILITIES $ 6,628 $ 9,038OTHER LIABILITIES 59 -LONG-TERM DEBT 1,161 876---------------------------------------------------------------------------TOTAL LIABILITIES 7,848 9,914SHAREHOLDERS' EQUITY 7,652 16,716---------------------------------------------------------------------------TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,500 $ 26,630------------------------------------------------------------------------------------------------------------------------------------------------------SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS$Thousands THREE THREE TWELVE TWELVE MONTHS MONTHS MONTHS MONTHS ENDED ENDED ENDED ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2009 2008 2009 2008---------------------------------------------------------------------------SALES $ 7,188 $ 10,210 $ 35,035 $ 34,798COST OF SALES 5,631 7,941 26,580 26,734---------------------------------------------------------------------------GROSS MARGIN 1,557 2,269 8,455 8,064 21.7% 22.2% 24.1% 23.2%SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,814 1,955 7,318 7,842---------------------------------------------------------------------------OPERATING INCOME / (LOSS) (257) 314 1,137 222AMORTIZATION 195 201 797 852FOREIGN EXCHANGE (GAIN) / LOSS 160 (8) 291 151INTEREST 41 86 207 273---------------------------------------------------------------------------INCOME / (LOSS) BEFORE OTHER ITEMS (653) 35 (158) (1,054)RESTRUCTURING / RELOCATION COSTS 265 160 418 1,140GAIN ON SALE OF BUILDING - (718) - (1,432)GOODWILL IMPAIRMENT CHARGE 8,454 - 8,454 ----------------------------------------------------------------------------INCOME / (LOSS) BEFORE INCOME TAX (9,372) 593 (9,030) (762)INCOME TAX EXPENSE / (RECOVERY) 306 (132) 181 (541)---------------------------------------------------------------------------NET AND COMPREHENSIVE INCOME / (LOSS) ($9,678) $ 725 ($9,211) ($221)------------------------------------------------------------------------------------------------------------------------------------------------------SUPPLEMENTARY DISCLOSURE$ThousandsThe following is a reconciliation of Net and Comprehensive Income (Loss) toNormalized Earnings Before Interest, Taxes, Depreciation and Amortization(EBITDA) THREE THREE TWELVE TWELVE MONTHS MONTHS MONTHS MONTHS ENDED ENDED ENDED ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2009 2008 2009 2008---------------------------------------------------------------------------NET INCOME / (LOSS) ($9,678) $ 725 ($9,211) ($221)INTEREST EXPENSE 41 86 207 273INCOME TAX EXPENSE / (RECOVERY) 306 (132) 181 (541)STOCK BASED COMPENSATION 66 26 168 159AMORTIZATION 251 247 1,019 1,050ONE-TIME GAIN ON SALE OF BUILDING - (718) - (1,432)ONE-TIME RESTRUCTURING COSTS 265 160 418 1,140GOODWILL IMPAIRMENT CHARGE 8,454 - 8,454 ----------------------------------------------------------------------------Normalized EBITDA ($295) $ 394 $ 1,236 $ 428------------------------------------------------------------------------------------------------------------------------------------------------------
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