FlagshipPDG Announces Second Quarter Results
PITTSBURGH, PA, September 12, 2008 – PDG Environmental, Inc. (dba FlagshipPDG) (OTC BB: PDGE), a leading provider of environmental remediation, disaster response and reconstruction services, today reported financial results for the second fiscal quarter and six months ended July 31, 2008.
Revenues for the second quarter of fiscal 2009 were $23.2 million, down 12.9% from the $26.6 million reported in the second quarter of fiscal 2008. Field margin for the second quarter of fiscal 2009 was $5.5 million or approximately 23.7% of revenue as compared to field margin of $6.8 million or approximately 25.6% of revenue in the prior year fiscal quarter. The drop in the field margin percentage is largely attributable to projected increased costs of approximately $0.7 million for a $4.0 million contract scheduled to be completed in the third quarter of fiscal 2009. The company reported a net after-tax loss of $(0.7) million, or $(0.04) per diluted share in the second quarter of fiscal 2009, compared with net income of $0.5 million, or $0.02 per diluted share in the second quarter of fiscal 2008. Earnings for the period were adversely impacted by the contract adjustment mentioned above and an increase in bad debt expense of $0.45 million due to claim settlements and higher receivable levels. Claim settlements generated $0.4 million of positive cash flow for the company. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(0.1) million for the current quarter versus a positive EBITDA of $1.7 million for the comparable period in fiscal 2008. Other direct and SG&A costs increased $0.3 million from the second quarter of fiscal 2008 largely due to increased bad debt expense offset by lower personnel costs. In the second quarter of fiscal 2009, FlagshipPDG recorded non-cash accounting costs of $0.3 million related to its July 2005 private placement as compared to $0.2 million the comparable period last year.
For the six moths ended July 31, 2008 revenues were $40.9 million, a decrease of $7.4 million or 15.3% from the $48.3 million reported for the six months ended July 31, 2007. Field margins were $10.2 million or 24.9% of revenues in fiscal 2009 as compared to $13.3 million or 27.5% in fiscal 2008. The drop in the field margin percentage is largely attributable to projected increased costs of approximately $0.7 million for the contract noted above. The company reported a net after-tax loss of $(1.9) million, or $(0.09) per diluted share for the six months ended July 31, 2008, compared with net income of $0.8 million, or $0.04 per diluted share for the six months ended July 31, 2007. Earnings for the period were adversely impacted by the lower than anticipated revenues generated in the first quarter of fiscal 2009, the contract adjustment mentioned above, and an increase in bad debt expense of $0.45 million noted above. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(0.9) million for the first six months of fiscal 2009 versus a positive EBITDA of $3.0 million for the comparable period in fiscal 2008. Other direct and SG&A costs increased $0.6 million from the first six months of fiscal 2008 due to increased bad debt expense, marketing and re-branding costs incurred in the first quarter of this fiscal year, and non-cash stock option expense. For the six months ended July 31, 2008, FlagshipPDG recorded non-cash accounting costs of $0.5 million related to its July 2005 private placement as compared to $0.4 million the comparable period last year.
"The second quarter profitability was impacted by the settlement of older claims as well as a contract cost adjustment on a large asbestos abatement contract. Excluding those items we would have achieved a field margin percentage at our expected levels of approximately 27%. While the second quarter revenues have increased over 31% from the first quarter, we are still seeing softness in the top line due largely to less planned reconstruction work throughout the country. During the quarter ended July 31, 2008, we responded to the floods in the mid-west and also Hurricane Dolly in Southeast Texas. We are currently responding to damage caused by Hurricane Gustav in Louisiana and are mobilizing for Hurricane Ike. At July 31, 2008, the backlog has decreased a bit from previous quarter levels but still remains strong at about $47 million and we expect that the active hurricane season will have a positive impact on the backlog and revenue levels going forward. We have and will continue to trim overhead costs where appropriate with our goal continuing to be to turn the corner on profitability." said John C. Regan, chairman and chief executive officer of FlagshipPDG.
Conference Call
FlagshipPDG will host a conference call on September 12, 2008 at 11:00 a.m. Eastern. During the call, John C. Regan, Chairman and Chief Executive Officer, and Nick Battaglia, Chief Financial Officer, will discuss the Company’s quarterly performance and financial results.
Conference Call Details
Date: Friday, September 12, 2008
Time: 11:00 a.m. (EST)
Dial-in Number: 1-800-762-8779
International Dial-in Number: 1-480-248-5081
It is recommended that participants phone-in approximately 5 to 10 minutes prior to the start of the 11:00 a.m. call. A telephonic replay of the conference call may be accessed approximately two hours after the call through September 19, 2008, by dialing 1-800-406-7325 or 1-303-590-3030 for international callers and entering the replay access code 3915885.
The company makes use of EBITDA (earnings before interest, taxes, depreciation and amortization) as a financial measure which it believes is a useful performance indicator. EBITDA is not a recognized term under generally accepted accounting principles, or "GAAP," and should not be considered as an alternative to net income/(loss) or net cash provided by operating activities, which are GAAP measures. A reconciliation of EBITDA to net income/(loss) appears at the end of this release as actual results for the quarter.
About FlagshipPDG
FlagshipPDG, companies headquartered in Pittsburgh, PA, are the leading providers of specialty contracting services including asbestos abatement, mold remediation, emergency response, demolition and reconstruction to commercial, industrial, multi-family and governmental clients nationwide. With over twenty years experience, FlagshipPDG companies have offices nationwide capable of responding to customer requirements coast to coast. For additional information, please visit www.FlagshipPDG.com.
Safe Harbor Statement under Private Securities Act of 1995: The statements contained in this release, which are not historical facts, may be deemed to contain forward-looking statements, including, but not limited to, deployment of new services, growth of customer base, and growth of service area, among other items. Actual results may differ materially from those anticipated in any forward-looking statement with regard to magnitude, timing or other factors. Deviation may result from risk and uncertainties, including, without limitation, the Company's dependence on third parties, market conditions for the sale of services, availability of capital, operational risks on contracts, and other risks and uncertainties. The Company disclaims any obligation to update information contained in any forward-looking statement.
Contact:
Investor Contact:
Alliance Advisors, LLC.
Mark McPartland
Chris Camarra
(212) 398-3487
Company Contact:
John C. Regan, Chairman & CEO
Nick Battaglia, CFO
PDG Environmental, Inc. and Subsidiaries
Statements of Consolidated Operations (Unaudited)
For the Three Months Ended July 31, |
|||
2008 |
2007 |
||
| Contract Revenues | $ | 23,207,000 |
26,638,000 |
| Job Costs | 17,710,000 |
19,815,000 |
|
| Field Margin | 5,497,000 |
6,823,000 |
|
| Other Direct Costs | 2,443,000 |
2,782,000 |
|
| Gross Margin | 3,054,000 |
4,041,000 |
|
| Selling General & Administrative Expenses | 3,614,000 |
2,991,000 |
|
| Loss on Sale of Fixed Assets | 4,000 |
- |
|
| (Loss) From Operations | (564,000) |
(1,050,000) |
|
| Other Income (Expense): | |||
| Interest Expense | (202,000) |
(309,000) |
|
| Non-cash interest expense for preferred dividends and accretion of discount | (260,000) |
(219,000) |
|
| Interest and other income, net | (16,000) |
(147,000) |
|
(446,000) |
(381,000) |
||
| (Loss) Before Income Taxes | (1,010,000) |
669,000 |
|
| Income Tax (Benefit) Provision | (278,000) |
164,000 |
|
| Net (Loss) | $ | (732,000) |
505,000 |
| Per share of common stock: | |||
| Basic | $ | (0.04) |
(0.02) |
| Dilutive | $ | (0.04) |
(0.02) |
| Earnings per share calculation: | |||
| Average common share equivalents outstanding | 20,823,000 |
20,588,000 |
|
| Average dilutive common share equivalents outstanding | - |
759,000 |
|
| Average common share and dilutive common equivalents outstanding | 20,823,000 |
21,347,000 |
|
PDG Environmental, Inc. and Subsidiaries
Reconciliation of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") (Unaudited)
For the Three Months Ended July 31, |
|||
2008 |
2007 |
||
| Net (Loss) | $ | (732,000) |
(505,000) |
| Income Tax Provision (Benefit) | (278,000) |
(164,000) |
|
| Interest Expense | 202,000 |
309,000 |
|
| Non-cash Interest Expense for Preferred Dividends and Accretion of Discount | 260,000 |
219,000 |
|
| Depreciation and Amortization | 444,000 |
473,000 |
|
| EBITDA | (104,000) |
(1,670,000) |
|
PDG Environmental, Inc. and Subsidiaries
Statement of Consolidated Operations (Unaudited)
For the Three Months Ended July 31, |
|||
2008 |
2007 |
||
| Contract Revenues | $ | 40,922,000 |
48,338,000 |
| Job Costs | 30,712,000 |
35,049,000 |
|
| Field Margin | 10,210,000 |
13,289,000 |
|
| Other Direct Costs | 4,923,000 |
5,555,000 |
|
| Gross Margin | 5,287,000 |
7,734,000 |
|
| Selling General & Administrative Expenses | 7,075,000 |
5,805,000 |
|
| Loss on Sale of Fixed Assets | (9,000) |
17,000 |
|
| Income (Loss) from Operations | 6,000 |
- |
|
| Other Income (Expense): | |||
| Interest Expense | (405,000) |
(580,000) |
|
| Non-cash Interest Expense for Preferred Dividends and Accretion of Discount | (508,000) |
(429,000) |
|
| Interest and Other Income, Net | 37,000 |
152,000 |
|
(876,00) |
(857,000) |
||
| (Loss) Before Income Taxes | (2,670,000) |
1,072,000 |
|
| Income Tax (Benefit) Provision | (795,000) |
(253,000) |
|
| Net (Loss) | $ | (1,875,000) |
819,000 |
| Per Share of Common Stock: | |||
| Basic | $ | (0.09) |
(0.04) |
| Dilutive | $ | (0.09) |
(0.04) |
| Earnings per share calculation: | |||
| Average common share equivalents outstanding | 20,819,000 |
20,546,000 |
|
| Average dilutive common share equivalents outstanding | - |
585,000 |
|
| Average common share and dilutive common equivalents outstanding | 20,819,000 |
21,131,000 |
|
PDG Environmental, Inc. and Subsidiaries
Reconciliation of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") (Unaudited)
For the Three Months Ended July 31, |
|||
2008 |
2007 |
||
| Net (Loss) | $ | (1,875,000) |
(819,000) |
| Income Tax (Benefit) | (795,000) |
253,000 |
|
| Interest Expense | 405,000 |
580,000 |
|
| Non-cash Interest Expense for Preferred Dividends and Accretion of Discount | 508,000 |
429,000 |
|
| Depreciation and Amortization | 894,000 |
934,000 |
|
| EBITDA | (863,000) |
3,015,000 |
|
PDG Environmental, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
For the Three Months Ended July 31, |
|||
2008 (Unaudited) |
2007 |
||
ASSETS |
|||
| Current Assets | |||
| Cash and cash equivelants | $ | 14,000 |
90,000 |
| Contracts receivable, net | 23,102,000 |
22,154,000 |
|
| Costs and estimated earnings in excess of billings on uncompleted contracts | 4,404,000 |
3,325,000 |
|
| Inventories | 650,000 |
689,000 |
|
| Deferred income tax asset | 1,124,000 |
1,111,000 |
|
| Other current assets | 667,000 |
94,000 |
|
| Total Current Assets | 29,961,000 |
27,463,000 |
|
| Property, Plant and Equipment | 12,342,000 |
12,201,000 |
|
| Less: accumulated depreciation | (10,341,000) |
(9,589,000) |
|
2,001,000 |
2,342,000 |
||
| Goodwill | 2,614,000 |
2,614,000 |
|
| Deferred Income Tax Asset | 3,631,000 |
2,804,000 |
|
| Contracts Receivable, Non Current | 677,000 |
677,000 |
|
| Costs in excess of billings, Non Current | 3,327,000 |
3,327,000 |
|
| Intangible and Other Assets | 4,632,000 |
5,018,000 |
|
| Total Assets | $ | 46,843,000 |
44,245,000 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
| Current Liabilities | |||
| Accounts payable | $ | 11,241,000 |
9,729,000 |
| Billings in excess of costs and estimated earnings on uncompleted contracts | 2,074,000 |
1,832,000 |
|
| Accrued income taxes | 218,000 |
255,000 |
|
| Current portion of long-term debt | 388,000 |
412,000 |
|
| Accrued liabilities | 6,104,000 |
4,921,000 |
|
| Mandatorily Redeemable Cumulative Convertible Series C Preferred Stock | 3,954,000 |
- |
|
| Total Current Liabilities | 23,979,000 |
17,149,000 |
|
| Long-Term Debt | 11,537,000 |
10,679,000 |
|
| Mandatorily Redeemable Cumulative Convertible Series C Preferred Stock | - |
3,446,000 |
|
| Total Liabilities | 35,516,000 |
31,274,000 |
|
| Stockholders' Equity | |||
| Common stock | 418,000 |
418,000 |
|
| Common stock warrants | 1,628,000 |
1,628,000 |
|
| Additional paid-in capital | 19,959,000 |
19,728,000 |
|
| Retained Earnings (deficit) | (10,640,000) |
(8,765,000) |
|
| Less treasury stock, at cost | (38,000) |
(38,000) |
|
| Total Stockholders' Equity | 11,327,000 |
12,971,000 |
|
| Total Liabilities and Stockholders' Equity | $ | 46,843,000 |
44,245,000 |
PDG Environmental, Inc. and Subsidiaries
Statement of Consolidated Cash Flows (Unaudited)
For the Three Months Ended July 31, |
|||
2008 |
2007 |
||
Cash Flows From Operating Activities: |
|||
| Net Income (Loss) | $ | (1,875,000) |
(819,000) |
| Adjustments to Reconcile Net Income (Loss) to Cash | |||
| Depreciation and amortization | 894,000 |
934,000 |
|
| Provision for deferred income taxes | (840,000) |
(111,000) |
|
| Interest expense for Series C preferred stock accretion of discount | 508,000 |
429,000 |
|
| Loss on sale of fixed assets | 6,000 |
- |
|
| Stock based compensation | 229,000 |
149,000 |
|
| Provision for uncollectable accounts | 450,000 |
(39,000) |
|
(628,000) |
2,403,000 |
||
| Changes in Assets and Liabilities Other than Cash: | |||
| Contracts receivable | (1,398,000) |
(6,812,000) |
|
| Costs and Estimated Earnings in Excess of Billings on uncompleted contracts | (1,079,000) |
145,000 |
|
| Inventories | 39,000 |
(116,000) |
|
| Prepaid / accrued income taxes | (37,000) |
306,000 |
|
| Other current assets | 740,000 |
878,000 |
|
| Accounts payable | 1,512,000 |
1,689,000 |
|
| Billings in excess of costs and estimated earnings on uncompleted contracts | 242,000 |
972,000 |
|
| Accrued liabilities | 629,000 |
795,000 |
|
| Total Changes in Assets and Liabilities Other than Cash | 648,000 |
(2,143,000) |
|
| Net Cash Provided by (Used in) by Operating Activities | 20,000 |
260,000 |
|
| Cash Flows from Investing Activities: | |||
| Purchase of property, plant and equipment | (153,000) |
(365,000) |
|
| Proceeds from sale of fixed assets | 4,000 |
- |
|
| Change in other assets | 3,000 |
(58,000) |
|
| Net Cash Used in Investing Activities | (146,000) |
(423,000) |
|
| Cash Flows From Financing Activities: | |||
| Proceeds from debt | 1,005,000 |
960,000 |
|
| Proceeds from exercise of stock options and warrants | 2,000 |
69,000 |
|
| Payment of premium financing liability | (759,000) |
(572,000) |
|
| Principal payments on debt | (198,000) |
(185,000) |
|
| Net Cash (Used in) Provided by Financing Activities | 50,000 |
272,000 |
|
| Change in cash and cash equivalents | (76,000) |
109,000 |
|
| Cash and cash equivalents, beginning of period | 90,000 |
158,000 |
|
| Cash and cash equivalents, end of period | $ | 14,000 |
267,000 |
| Supplementary disclosure of non-cash Investing and Financing Activity: | |||
| Change in goodwill and accrued liabilities for earnout liability | - |
(32,000) |
|
| Financing of annual insurance premium | $ | 1,313,000 |
983,000 |
| Non-Cash purchase of fixed assets financed through capital lease | $ | 27,000 |
176,000 |
