Investors: 2009 Press Releases
Industrial Safety Growth Drives HSE To Record Revenue in Fiscal Year Ended December 31, 2008
NEWS RELEASE - March 26, 2009
HSE Integrated Ltd. (“HSE”, “Our”, “We”, or the “Company”) today released its audited financial results for the fiscal year ended December 31, 2008.
Total revenue for the year rose to $113.8 million, up 16.9% from $97.3 million for the fiscal year ended December 31, 2007. Operating margin increased 27.7% to $21.1 million or 18.5% of revenue from $16.5 million or 17.0% of revenue in the prior year. While SG&A rose slightly to $10.7 million from $9.5 million in 2007, as a percentage of revenue it declined from 9.8% of revenue to 9.4%. Profit for the year was $0.3 million or $0.01 per basic and diluted share. This was a significant improvement from a loss of $27.3 million or $0.73 per basic and diluted share in the 2007 fiscal year (the prior year losses were largely due to goodwill and intangible asset impairment charges). EBITDA for the 2008 fiscal year was $10.4 million or 9.1% of revenue, 48.7% higher than $7.0 million or 7.2% of revenue in the prior year.
Sectorally, the Company’s revenue from Industrial health and safety services continued to grow at a high rate reaching $62.5 million or 54.9% of total revenues. This was a 43.8% increase from $43.5 million in 2007, and over 2.5 times the $24.5 million in Industrial health and safety services revenue the Company achieved in the 2006 fiscal year. This growth occurred in all markets across Canada with the most significant expansion taking place in central and Atlantic Canada.
Revenue from Oilfield health and safety services was $51.3 million, 45.1% of total revenues and a 4.9% decline from $53.9 million in the 2007 fiscal year. This was the second consecutive year of revenue declines after reaching record levels in 2006. This is due to declines in oil and gas prices and the continuing reduction of new well drilling activity in the Western Canadian Sedimentary Basin.
Industrial revenues were greater than Oilfield revenues for the first time in 2008, a trend that can be expected to continue in the future.
The improved financial performance of HSE in 2008 had a positive impact on the Company’s balance sheet. Total debt was reduced by $5.6 million to $13.1 million at December 31, 2008 compared to $18.7 million at December 31, 2007. Working capital for the same dates increased to $19.4 million from $17.2 million. At year-end, HSE was in compliance with all lending covenants.
David Yager, Chairman and CEO, offered the following comments for HSE’s 2008 financial performance:
“HSE is very pleased by the improved financial results in the 2008 fiscal year, particularly the continued growth in client demand for Industrial health and safety services across the country. The focus last year was on growing our business where we could, controlling costs, and improving our efficiency and operating margins. We also focused on paying down debt leaving the Company in a strong financial position at the end of the year.
Unfortunately, due to the collapse of commodity prices and the global financial crisis, the events of the last four months of 2008 have in many ways eclipsed all the progress we made last year. Demand for Oilfield health and safety services has declined sharply based on greatly reduced spending and activity. Demand for Industrial health and safety services is being pressured by the general economic decline of virtually every industry in every sector of the country.
HSE has made significant internal adjustments to maximize financial performance as demand for goods and services declines. These include layoffs, pay reductions, a switch to demandbased pay structures, minimal capital expenditures, travel reductions, and a freeze on all discretionary expenditures. The objective is to retain the highest possible level of future delivery capability and service quality while in the short-term adjusting costs to match revenues to the greatest degree possible.
There are, however, reasons for optimism. We continue to secure new Industrial clients in new markets, reminding us once again of the value of HSE’s services package and why we have achieved such high rates of growth in the past two years. Oil prices are up sharply from their lows in late 2008, and natural gas prices have quit falling. Both of these help point to improved activity on the Oilfield side in latter half of 2009.”
For further information and analysis please see the attached Management Discussion and Analysis and Financial Statements.
CONFERENCE CALL
HSE will be hosting a conference to discuss these results at 11 AM (Eastern Daylight Time), 9 AM (Mountain Daylight Time) on Friday March 27, 2009.
Dial-In Number: 1-800-733-7560 or 1- 416-644-3416
Conference Replay to April 27, 2009: 1-416-640-1917 or 1-877-289-8525 (Passcode: 21301289 followed by the pound (#) sign)
Webcast: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID= 2592040
ABOUT HSE INTEGRATED LTD.
HSE is an integrated, national supplier of industrial Health, Safety and Environmental services. From its head office in Calgary, Alberta, it serves its clients from field service locations in Alberta, British Columbia, Saskatchewan, Ontario, Nova Scotia, New Brunswick, Newfoundland-Labrador and Michigan. HSE also operates in Midland, Texas and Oklahoma City, Oklahoma through Boots & Coots HSE Services LLC.HSE trades on the TSX under the symbol “HSL”.
Forward-Looking Statements
This news release contains forward-looking information and statements (collectively “forward-looking statements”) within the meaning of applicable securities laws concerning, among other things, the Company’s prospects, expected revenues, expenses, profits, financial position, strategic direction, and growth initiatives, all of which are subject to risks, uncertainties and assumptions. These forward-looking statements are identified by their use of terms and phrases such as expect, anticipate, estimate, believe, may, will, would, could, might, intend, plan, continue, ongoing, project, objective and other similar terms and phrases. These forward-looking statements are based on certain assumptions and analyses made by the Company based on its experience and assessment of current conditions, known trends, expected future developments and other factors it believes are appropriate under the circumstances. Such forward-looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future results and events to differ materially from that expressed in the forward-looking statements. Accordingly this news release is subject to the disclaimer and qualified by the assumptions and risk factors referred to in the Management Discussion and Analysis in the 2008 first, second and third quarter reports, in the 2008 annual report, and in other filings with securities commissions in Canada as reported in the Company’s profile at www.sedar.com. Any forward-looking statements in this news release speak only as of the date of this news release. Except as required by law, the Company disclaims any intention to update or revise any forward-looking statements to reflect new events or circumstances.
Non GAAP Measures
This report makes reference to EBITDA, a measure that is not recognized under generally accepted accounting principles (GAAP). Management believes that, in addition to net earnings, EBITDA is a useful supplementary measure. EBITDA provides investors with an indication of earnings before provisions for interest, taxes, amortization, gains or losses on the disposal of property and equipment, foreign exchange gains or losses, and the non-cash effect of stock-based compensation expense. Investors should be cautioned that EBITDA should not be construed as an alternative to net earnings determined by GAAP as an indication of the Company’s performance. This method of calculating EBITDA may differ from that of other companies and accordingly may not be comparable to measures used by other companies.
HSE Integrated Ltd. trades on the TSX under the symbol “HSL”
For more information, please contact:
David Yager, Chairman & CEO
Telephone: (403) 266-1833
E-Mail:
Lori McLeod-Hill, CFO
Telephone: (403) 266-1833
E-Mail: lmcleod-hill@hseintegrated.com