ProSep Reports 2011 Third Quarter Financial Results
MONTREAL, QUEBEC - November 10, 2011 - ProSep Inc. (TSX: PRP), dedicated to providing process solutions to the oil and gas industry, today announced its financial results for the three and nine-month period ended September 30, 2011. All amounts are reported in Canadian dollars unless otherwise stated.
Selected highlights of the quarter and subsequent events:
* The Company adopted IFRS at January 1, 2011.
"ProSep achieved significant milestones during the quarter. We've completed our organizational changes, expanded our offering and strengthened our market reach. With the conclusion of an important equity financing, we now have all elements in place to deliver stronger results and achieve profitability", said Jacques L. Drouin, President & CEO. "In recent weeks, we've announced a number of significant awards. These are the first tangible results of our new strategy. As we focus on accelerating commercialization of our proprietary technologies and continue building strong references, we expect to see significant backlog growth in the current quarter and into 2012."
Selected Financial Highlights (in $ millions except for amounts per share)
* Gross margin is a non-IFRS financial measure and the Company defines it as margin excluding amortization expenses.
This Press Release reports consolidated results. For detailed segmented financial results please see the Management Discussion and Analysis and Unaudited Interim Condensed Consolidated Financial Statements for the period ended September 30, 2011.
ProSep reported consolidated revenues of $6.9 million for the quarter ended September 30, 2011, a decrease of 16% from $8.1 million generated during the same period in 2010. All business units reported lower revenues compared to the corresponding quarter in 2010. This situation reflects lower bookings during the last six months because of few opportunities reaching clients' decision point during that period. The level of bidding activity remains high and ProSep believes that projects' decision time has simply been deferred.
Overall gross margin for the quarter stood at $2.2 million, or 32% of revenues, compared to $2.0 million or 24% of revenues achieved during the same period last year. Margins as a percentage of revenues improved at the US and Asia Pacific Operations, however, the contribution of the European and Middle East Operations, where the Company's more profitable proprietary offering resides, was much lower during the third quarter this year.
Year-to-date, overall gross margin stood at $6.6 million, or 25% of revenues, compared to $7.1 million or 27% of revenues achieved during the same period last year. Margins as a percentage of revenues showed important progress at the US and, to a lesser extent, at the Asia Pacific Operations. Gross margin for the year-to-date benefited from ongoing solid project execution on a number of projects that were completed (or substantially completed) during the last few months. This allowed the reversal of certain project provisions and contingencies, or confirmed savings related to procurement and project execution.
EBITDA and Loss for the Period
Third quarter's EBITDA was negative $2.3 million in 2011 compared to negative $0.8 million for the same period last year. The current quarter's EBITDA benefited from a slightly improved gross margin, compared to 2010. To realize its new strategic plan and accelerate growth, the Company invested in its most productive asset, human resources, and hired close to twenty industry leading business development professionals, recognized process engineering experts and related resources. This will allow ProSep to be better positioned to benefit from industry growth and capture increased market share. Year-to-date, EBITDA was negative $6.4 million compared to negative $1.7 million during the same period last year. This results from a combination of lower overall gross margins achieved earlier in the year (from projects awarded in a very competitive environment during the industry downturn), as well as from the previously noted investments in human resources to favorably position ProSep in a competitive but promising growth market.
At March 31, as well as at June 30 and September 30, 2011, one of the Company's wholly-owned subsidiaries was in breach of one of the financial ratios stipulated in a banking facility. This situation stemmed largely from the Company's decision to accelerate its pace of growth in view of the opportunities offered in the marketplace, and more specifically to the up-front investments in hiring and related operating expenses that were approved as part of this strategy. The Company anticipates that its subsidiary will continue to be in breach of this covenant at the year-end date of December 31, 2011. 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 for the March 31 breach, as well as for the June 30 and the September 30, 2011 breach. A new waiver request will be presented with respect to the anticipated breach at the year-end date of December 31, 2011.
Conference Call and Webcast DetailsProSep will host a conference call and webcast on Thursday November 10, 2011 at 8:00 a.m. (EST) to review the financial results and highlights of the third quarter ended September 30, 2011. To access the conference call by telephone, dial 1-416-981-9000 or1-800-754-4430, 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 # 21542191.
ProSep filed its Unaudited Interim Condensed Consolidated Financial Statements for the three and nine-month periods ending September 30, 2011 and related Management Discussion and Analysis with securities regulatory authorities. The material will be available through SEDAR at www.sedar.com and on the Company's website, www.prosep.com.
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.
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 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.
Contact InformationProSep Inc.
Investor Relations and Media:
VP Marketing and Communications
(514) 522-5550 ext. 238