ProSep Reports 2012 Third Quarter Financial Results
November 06 2012 - 5:00AM
Marketwired Canada
ProSep Inc. (TSX:PRP) ("ProSep" or the "Company") dedicated to providing process
solutions to the oil and gas industry, today announced its financial results for
the three and nine-month periods ended September 30, 2012. All amounts are
reported in Canadian dollars unless otherwise stated.
Selected highlights of the quarter and subsequent events:
Financial
-- Revenues were up 51% during the third quarter of 2012, reaching $10.3
million, compared to $6.9 million during the corresponding period of
last year.
-- Gross margin stood at $1.6 million (or 15% of revenues) during the third
quarter of 2012, compared to $2.2 million (or 32% of revenues) for the
corresponding period of 2011.
-- EBITDA(i) improved to negative $1.1 million compared to negative $2.3
million recorded during the corresponding quarter of 2011.
-- Net loss was $1.6 million during the third quarter of 2012, an
improvement compared to a net loss of $2.5 million during the
corresponding quarter of last year.
-- At quarter end, ProSep's backlog(i)(i) stood at $17.8 million and ProSep
Kolon's backlog stood at $4.3 million. Including contracts awarded
subsequent to quarter end, the entire group's(i)(i) backlog stands at
approximately $38.4 million on November 5, 2012, up more than 60% since
the start of the year.
-- Concluded a twenty-for-one share consolidation of ProSep's Common
Shares.
Commercial
-- Subsequent to quarter end, ProSep announced $8 million in contract
awards, all of which are for proprietary oil treatment solutions. During
the same period, ProSep Kolon concluded $12 million in contract awards.
-- Proprietary mixing technologies represent a third of the Company's
current backlog, a record for this technology and the result of the
recent push to accelerate the commercialization of this higher margin
offering.
-- Pursuant to the successful results obtained in field demonstrations in
Saudi Arabia and in Latin America, initiated discussions with new
potential customers to demonstrate the efficiency and resulting cost
savings of ProSep's proprietary mixing technology.
Operations
-- Nominated Yee Phak Chuin as General Manager of the Asia Pacific
Operations, replacing Matthew Rummer who is becoming ProSep Kolon's CEO.
Mr. Chuin has been with ProSep since 2009 as Projects Manager.
-- Maintained exceptional Health, Safety and Environment ("HS&E") track
record and zero Lost Time Incidents ("LTI") for over two years.
-- Experienced cost overruns and project delays at the Asia Pacific
Operation, explaining lower gross margins.
(i)EBITDA is a non-IFRS measure. EBITDA includes the share of loss in the ProSep
Kolon joint venture equivalent to $43,370 for Q3-2012.
(ii)Unless specified, backlog does not include ProSep Kolon backlog. The "entire
group" refers to ProSep and ProSep Kolon combined.
"For the second consecutive quarter, our revenues are up 50% year-over-year and
proprietary technologies now make up over a third of our current backlog. Our
strategy to accelerate commercialization of our proprietary technologies is
starting to show promising results and profitability should improve accordingly
as we deliver these higher margin projects," said Jacques L. Drouin, President
and C.E.O.
Selected Financial Highlights (in $ millions except for amounts per share)
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Quarter ended September 30 Nine-months ended September 30
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2012 2011 2012 2011
----------------------------------------------------------------------------
Revenue $10.3 6.9 $32.5 $26.4
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Gross margin(i) $1.6 $2.2 $7.2 $6.6
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Gross margin as
a percentage of
revenues 15% 32% 22% 25%
----------------------------------------------------------------------------
EBITDA(ii)
(loss) ($1.1) ($2.3) ($4.0) ($6.4)
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Loss for the
period ($1.6) ($2.5) ($4.6) ($7.9)
----------------------------------------------------------------------------
Post-
consolidation
basic and
diluted loss
per share ($0.08) ($0.26) ($0.22) ($0.82)
----------------------------------------------------------------------------
Weighted average
number of
shares (basic
and diluted) 20,980,785 9,641,830 20,958,408 9,619,037
----------------------------------------------------------------------------
As at: September 30, 2012 December 31, 2011
----------------------------------------------------------------------------
Net Invested Working Capital(iii) $3.5 $2.8
----------------------------------------------------------------------------
Total Assets $43.6 $41.4
----------------------------------------------------------------------------
Borrowings $9.2 $9.1
----------------------------------------------------------------------------
Equity $15.8 $20.4
----------------------------------------------------------------------------
(i) Gross margin is a non-IFRS financial measure and the Company defines it as
margin excluding amortization expense.
(ii) EBITDA is a non-IFRS financial measure and the Company defines it as
earnings or loss from operations excluding amortization, financial charges and
income taxes.
(iii) Net Invested Working Capital is a non-IFRS financial measure and the
Company defines it as follows: (Restricted cash + Trade and other receivables +
Inventories + Prepaid expenses) - (Trade and other liabilities + Deferred
revenue).
Financial Results
This announcement reports on consolidated results. For detailed segmented
financial results please see Management Discussion and Analysis and Unaudited
Interim Condensed Consolidated Financial Statements for the three and nine-month
periods ended September 30, 2012.
Revenues
Since the start of 2012 and up to the date of this press release, ProSep
announced $49 million in new contracts including $18 million awarded to ProSep
Kolon. At quarter end, ProSep's backlog stood at $17.8 million, up 87%
year-over-year. Including the contracts announced subsequent to quarter end, the
entire group's backlog stands at $38.4 million on November 5, 2012.
During the third quarter of 2012, ProSep reported consolidated revenues of $10.3
million, an increase of 51% over $6.9 million reported during the equivalent
quarter of 2011. Strong revenue growth at the Asia Pacific Operations (up 168%)
is responsible for most of this growth. Revenues increased on the advancement of
a large number of projects, mostly for gas and water treatment, awarded since
the second half of 2012. Year-to-date, ProSep reported consolidated revenues of
$32.5 million, up 23% from $26.4 million generated during the equivalent period
of 2011.
Gross Margin
Overall gross margin for the third quarter of 2012 stood at $1.6 million (or 15%
or revenues) compared to $2.2 million (or 32% of revenues) during the
corresponding period of 2011. Third quarter margin levels are lower than
targeted and reflect execution issues at the Asia Pacific Operations where two
large projects experienced cost overruns and delays, as well as lower nominal
contribution from proprietary technologies. Year-to-date, consolidated gross
margin stood at $7.2 million (or 22% of revenues) compared to $6.6 million (or
25% of revenues) for the equivalent period of last year.
EBITDA and Loss for the Year
During the third quarter of 2012, EBITDA was negative $1.1 million, an
improvement over the negative EBITDA of $2.3 million reported during last year's
equivalent quarter. Year-to-date, EBITDA also improved to negative $4.0 million
compared to negative $6.4 for the comparable period of 2011. Higher revenues
from the Asia Pacific Operations and close control of expenses throughout the
Company contributed to reduce negative EBITDA. The Company's objective is to
continue controlling its cost structure and accelerate the commercialization of
its proprietary technologies to improve overall profitability. Recent contract
announcements indicate that this strategy has started demonstrating results.
For the three-month period ended September 30, 2012, the Company reported a loss
of $1.6 million ($0.08 per share on a post consolidation basis), an improvement
from a loss of $2.5 million ($0.26 per post-consolidated share) for the second
quarter of 2011. Year-to-date, the Company recorded a loss of $4.6 million
($0.22 per post-consolidated share) compared to a loss of $7.9 million ($0.82
per post-consolidated share) in the corresponding period of 2011. Loss for both
periods improved on higher revenue and lower total expense levels compared to
last year.
Basic and diluted loss per share was determined using the weighted average
number of 20,980,785 Common Shares outstanding during the second quarter of 2012
compared to 9,641,830 during the equivalent period of 2011.
At September 30, 2012, the Company had $1.6 million in cash compared to $4.1
million at December 31, 2011.
Covenant Waiver
At September 30, 2012, one of the Company's wholly-owned subsidiaries was in
breach of a covenant under borrowing facilities between DnB Bank as lender, and
said subsidiary as Borrower. A covenant waiver wherein the lender confirmed that
the breached covenant is not deemed to constitute an event of default was
obtained by the Company's subsidiary.
Conference Call and Webcast Details
Exceptionally, ProSep will host its conference call and webcast tomorrow,
Wednesday November 7, 2012 at 8:00 a.m. (EST) to review the financial results
and highlights of the period ended September 30, 2012. To access the conference
call by telephone, dial 1-416-981-9035 or 1-800-732-8470. A live audio webcast
of the conference call will also be available through ProSep's website under
"Calendar of Events" in the "News and Investor Center" and on
www.marketwire.com. For audio replay, dial 1-416-626-4100 or 1-800-558-5253 with
the reservation code # 21607033.
Regulatory Filings
ProSep filed its Unaudited Interim Condensed Consolidated Financial Statements
for the third quarter ended September 30, 2012 and related Management Discussion
and Analysis with securities regulatory authorities. After a review of the
Company's recent translated continuous disclosure material, non-material
translation errors were found. Subsequently, the Company corrected the French
versions of its March 8, 2012 Annual Information Form and Proxy Circular and
filed amended versions. The material will be available through SEDAR at
www.sedar.com and on the Company's website at www.prosep.com.
About ProSep
ProSep is a technology-focused process solutions provider to the upstream oil
and gas industry. ProSep designs, develops, manufactures and commercializes
technologies to separate oil, water and gas generated by oil and gas production.
For more information, please visit www.prosep.com.
Caution concerning forward-looking statements
This press release may contain forward-looking statements, including statements
regarding the business and anticipated financial performance of ProSep Inc.
These statements are based, among others, on the Company's current assumptions,
expectations, estimates, objectives, plans and intentions regarding projected
revenues and expenses, the economic and industry environments in which the
Company operates or which could affect its activities, the Company's ability to
attract new clients and consumers as well as its operating costs, raw materials
and energy supplies which are subject to a number of risks and uncertainties.
Forward-looking statements can generally be identified by the use of the
conditional tense, the words "may", "should", "would", "believe", "plan",
"expect", "intend", "anticipate", "estimate", "foresee", "objective" or
"continue" or the negative of these terms or variations of them or words and
expressions of similar nature. Actual results could differ materially from the
conclusion, forecast or projection stated in such forward-looking information.
These statements are subject to a number of risks and uncertainties that may
cause actual results to differ materially from those contemplated by the
forward-looking statements. Some of the factors that could cause such
differences include but are not limited to the Company's ability to develop,
manufacture, and successfully commercialize value added equipments and services,
the availability of funds and resources to continue its operations and pursue
its projects, legislative or regulatory developments, competition, technological
change, changes in government and economic policy, inflation and general
political and economic conditions in geographic areas where ProSep Inc.
operates. These and other factors should be considered carefully and undue
reliance should not be placed on the forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
ProSep Inc.
Investor relations and media
Danielle Ste-Marie
VP Marketing and Corporate Development
(514) 522-5550 ext. 238
dste-marie@prosep.com
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