PDGE .61 - looks like a combination of both tax selling and disappointment with the Q, but the Q might not look so bad if you look further. I decided to do some buying here.
Shares stable, Revenues good and they claim to be eliminating asbestos problems that led to $1 million big write-downs on margin, which would have made big difference in the quarter.
Backlog $50 million.
CC says that $800,000 loss was implosion of the Frontier in Las Vegas and they have reviewed their procedures to make sure this "mistake" is not made again.
Is it just a case of too many mistakes or can they finally put it all together? That's why the share price is being punished, along with year end tax selling.
They are running at $100 million rate. That should be over $3 a share fully diluted. With the leverage, the bottom line could surprise significantly to the upside.
As usual, high risk, high return. Do your own DD and look at the filings.
PDG Environmental Announces Third Quarter Results
Friday December 14, 10:17 am ET
PITTSBURGH, PA--(MARKET WIRE)--Dec 14, 2007 -- PDG Environmental, Inc. (OTC BB:PDGE.OB - News), a leading provider of environmental remediation and specialty contracting services, today reported financial results for the fiscal third quarter and nine months ended October 31, 2007.
Revenue for the quarter was $26.6 million, up 34.5% from the $19.8 million reported in the third quarter of fiscal 2007. The company reported a net after-tax loss of $(1.0) million, or $(0.05) per diluted share in the third quarter of fiscal 2008, compared with a net loss of $(2.0) million, or $(0.10) per diluted share, in the third quarter of fiscal 2007. The loss for the current quarter was due to negative margin adjustments of approximately $1.8 million, including a $0.8 million loss on an asbestos contract performed in the third quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(0.2) million for the current quarter versus a negative $(0.6) million for the comparable period in fiscal 2007. SG&A and other direct costs as a percent of revenue decreased to 23.5% for the current quarter as compared to 29.9% for the comparable quarter last year although the costs increased $0.35 million largely related to increased selling costs, initial implementation costs for Sarbanes Oxley and higher legal costs.
In the third quarter of fiscal 2008 and third quarter of fiscal 2007, PDG Environmental recorded non-cash accounting costs of $0.2 million related to its July 2005 private placement. The third quarter of fiscal 2007 also included $0.15 million in one-time charges related to employee fraud and $0.1 million for a non-cash impairment charge for goodwill, while the current quarter included other income of $0.2 million largely related to the partial insurance recovery from the fraud claim. Fully diluted shares outstanding rose to 20.7 million from 20.4 million.
For the nine months ended October 31, 2007, revenue rose to $74.9 million, up 28.0% versus the $58.6 million recorded during the same period in the prior fiscal year. PDG Environmental reported net after-tax loss of $0.18 million for the nine month period, or $(0.01) per diluted share, compared with a net loss of $(5.4) million, or $(0.28) per share, last year. EBITDA improved to $2.8 million from a negative $(2.2) million last year due to the increased level of revenues. SG&A and other direct costs decreased by $0.65 million in spite of being adversely impacted by the increased costs in the third quarter noted above. The non-cash accounting cost of the July 2005 private placement totaled $0.7 million in fiscal 2008 versus $1.9 million in fiscal 2007. Fiscal 2007 also included $0.7 million in one-time charges related to employee fraud, while fiscal 2008 included other income of $0.3 million largely related to the insurance recovery from the fraud claim.
Fully diluted shares outstanding rose to 20.6 million from 19.5 million in fiscal 2007.
"While we are very pleased with the top line growth we have experienced this fiscal year, we are obviously very disappointed with our bottom line results which were adversely impacted by losses on a single project performed this quarter. Prospectively we have put in place new policies and procedures to mitigate the level of contract adjustments noted above. With backlog remaining at $50 million, over half of which is reconstruction related, and with additional controls in place we look forward to improved results going forward," said John C. Regan, chairman and chief executive officer of PDG Environmental.
- Tables to follow -
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
For the Three Months Ended
October 31,
--------------------------
2007 2006
------------ ------------
Contract Revenues $ 26,616,000 $ 19,783,000
Job Costs 21,200,000 14,790,000
------------ ------------
Field Margin 5,416,000 4,993,000
Other Direct Costs 2,674,000 2,982,000
------------ ------------
Gross Margin 2,742,000 2,011,000
Selling General & Administrative expenses 3,594,000 2,932,000
(Gain) loss on Sale of Fixed Assets - 12,000
------------ ------------
Income (Loss) From Operations (852,000) (933,000)
Other Income (Expense):
Interest Expense (303,000) (246,000)
Non-cash interest expense for preferred
dividends and accretion of discount (229,000) (195,000)
Non-recurring charge employee fraud - (150,000)
Non-cash impairment charge for goodwill - (111,000)
Interest and other income, net 163,000 3,000
------------ ------------
(369,000) (699,000)
Income (Loss) Before Income Taxes (1,221,000) (1,632,000)
Income Tax (Benefit) Provision (221,000) 365,000
Net Income (Loss) $ (1,000,000) $ (1,997,000)
============ ============
Per share of common stock:
Basic $ (0.05) $ (0.10)
============ ============
Dilutive $ (0.05) $ (0.10)
============ ============
Earnings per share calculation:
Average common share equivalents
outstanding 20,749,000 20,445,000
Average dilutive common share
equivalents outstanding - -
------------ ------------
Average common share and dilutive
common equivalents outstanding 20,749,000 20,445,000
============ ============
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA")
(UNAUDITED)
For the Three Months Ended
October 31,
--------------------------
2007 2006
------------ ------------
Net Income (Loss) $ (1,000,000) $ (1,997,000)
Income Tax Provision (Benefit) (221,000) 365,000
Interest Expense 303,000 246,000
Non-cash interest expense for preferred
dividends and accretion of discount 229,000 195,000
Depreciation and Amortization 469,000 541,000
------------ ------------
EBITDA (220,000) (650,000)
============ ============
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
For the Nine Months Ended
October 31,
--------------------------
2007 2006
------------ ------------
Contract Revenues $ 74,954,000 $ 58,579,000
Job Costs 56,249,000 43,046,000
------------ ------------
Field Margin 18,705,000 15,533,000
Other Direct Costs 8,229,000 9,082,000
------------ ------------
Gross Margin 10,476,000 6,451,000
Selling General & Administrative expenses 9,399,000 9,188,000
(Gain) loss on Sale of Fixed Assets - 17,000
------------ ------------
Income (Loss) From Operations 1,077,000 (2,754,000)
Other Income (Expense):
Interest Expense (883,000) (716,000)
Non-cash interest expense for preferred
dividends and accretion of discount (658,000) (1,870,000)
Non-recurring charge employee fraud - (748,000)
Non-cash impairment charge for goodwill - (111,000)
Interest and other income, net 315,000 16,000
------------ ------------
(1,226,000) (3,429,000)
Income (Loss) Before Income Taxes (149,000) (6,183,000)
Income Tax (Benefit) Provision 32,000 (793,000)
------------ ------------
Net Income (Loss) $ (181,000) $ (5,390,000)
============ ============
Per share of common stock:
Basic $ (0.01) $ (0.28)
============ ============
Dilutive $ (0.01) $ (0.28)
============ ============
Earnings per share calculation:
Average common share equivalents outstanding 20,614,000 19,543,000
Average dilutive common share equivalents
outstanding - -
------------ ------------
Average common share and dilutive common
equivalents outstanding 20,614,000 19,543,000
============ ============
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA")
(UNAUDITED)
For the Nine Months Ended
October 31,
--------------------------
2007 2006
------------ ------------
Net Income (Loss) $ (181,000) $ (5,390,000)
Income Tax Provision (Benefit) 32,000 (793,000)
Interest Expense 883,000 716,000
Non-cash interest expense for preferred
dividends and accretion of discount 658,000 1,870,000
Depreciation and Amortization 1,403,000 1,395,000
------------ ------------
EBITDA 2,795,000 (2,202,000)
============ ============
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, January 31,
2007 2007
------------ ------------
ASSETS (unaudited)
Current Assets
Cash and cash equivalents $ 143,000 $ 158,000
Contracts receivable, net 25,250,000 21,257,000
Costs and estimated earnings in excess
of billings on uncompleted contracts 6,753,000 5,607,000
Inventories 660,000 553,000
Prepaid income taxes 21,000 271,000
Deferred income tax asset 1,109,000 915,000
Other current assets 404,000 534,000
------------ ------------
Total Current Assets 34,340,000 29,295,000
Property, Plant and Equipment 12,066,000 11,352,000
Less: accumulated depreciation 9,614,000 8,795,000
------------ ------------
2,452,000 2,557,000
Goodwill 2,619,000 2,651,000
Deferred Income Tax Asset 2,548,000 2,565,000
Contracts Receivable, Non Current 500,000 500,000
Intangible and Other Assets 5,174,000 5,686,000
------------ ------------
Total Assets $ 47,633,000 $ 43,254,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 10,079,000 $ 7,403,000
Billings in excess of costs and
estimated earnings on uncompleted
contracts 1,835,000 3,421,000
Accrued income taxes 123,000 -
Current portion of long-term debt 414,000 322,000
Accrued liabilities 5,688,000 4,007,000
------------ ------------
Total Current Liabilities 18,139,000 15,153,000
Long-Term Debt 12,709,000 12,161,000
Series C Redeemable Convertible Preferred
Stock 3,207,000 2,550,000
Total Liabilities 34,055,000 29,864,000
Stockholders' Equity
Common stock 416,000 411,000
Common stock warrants 1,628,000 1,628,000
Additional paid-in capital 19,609,000 19,245,000
Retained Earnings (deficit) (8,037,000) (7,856,000)
Less treasury stock, at cost (38,000) (38,000)
Total Stockholders' Equity 13,578,000 13,390,000
------------ ------------
Total Liabilities and Stockholders' Equity $ 47,633,000 $ 43,254,000
============ ============
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
For the Nine Months Ended
October 31,
--------------------------
2007 2006
------------ ------------
Cash Flows From Operating Activities:
Net income $ (181,000) $ (5,390,000)
Adjustments to Reconcile Net Income to
Cash:
Depreciation and amortization 1,403,000 1,284,000
Provision for deferred income taxes (177,000) (895,000)
Interest expense for Series C
preferred stock accretion of discount 657,000 1,870,000
Impairment charge for goodwill - 111,000
Loss on sale of fixed asses and equity
investment - 17,000
Stock based compensation 224,000 209,000
Provision for uncollectable accounts 11,000 140,000
Changes in Assets and Liabilities Other
than Cash:
Contracts receivable (4,004,000) 382,000
Costs and Estimated Earnings in Excess
of Billings on uncompleted contracts (1,146,000) (372,000)
Inventories (107,000) (35,000)
Prepaid/accrued income taxes 373,000 509,000
Other current assets 1,113,000 869,000
Accounts payable 2,676,000 534,000
Billings in excess of costs and
estimated earnings on uncompleted
contracts (1,586,000) (63,000)
Accrued liabilities 1,612,000 (458,000)
------------ ------------
Total Changes in Assets and Liabilities
Other than Cash (1,069,000) 1,366,000
------------ ------------
Net Cash Provided by (Used in) by
Operating Activities 868,000 (1,288,000)
Cash Flows From Investing Activities:
Purchase of property, plant and
equipment (528,000) (775,000)
Proceeds from sale of equity investment
and fixed assets 24,000
Increase in other assets (66,000) (57,000)
------------ ------------
Net Cash Used in Investing Activities (594,000) (808,000)
Cash Flows From Financing Activities:
Proceeds from debt 730,000 2,664,000
Proceeds from exercise of stock options
and warrants 145,000 861,000
Payment of premium financing liability (882,000) (1,039,000)
Principal payments on debt (282,000) (485,000)
------------ ------------
Net Cash (Used in) Provided by
Financing Activities (289,000) 2,001,000
------------ ------------
Change in cash and cash equivalents (15,000) (95,000)
Cash and cash equivalents, beginning of
period 158,000 230,000
------------ ------------
Cash and Cash Equivalents, end of period $ 143,000 $ 135,000
============ ============
Supplementary disclosure of non-cash
Investing and Financing Activity:
Increase in goodwill and accrued
liabilities for contingent liability (32,000) 561,000
Financing of annual insurance premium $ 983,000 $ 1,157,000
Non-Cash purchase of fixed assets
financed through capital lease $ (197,000) $ -
Contact:
Investor Contact:
Alliance Advisors, LLC.
Mark McPartland / Chris Camarra
212-398-3487
Email Contact
Company Contact:
John C. Regan
Chairman & CEO
Nick Battaglia
CFO
412-243-3200
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