ProSep Sees 16% Decrease in 2010 Revenues
ProSep announced its financial results for the three and twelve-month periods ended December 31, 2010. All amounts are reported in Canadian dollars unless otherwise stated.
Selected highlights of the quarter and subsequent events:
- Revenues of $34.7 million, a decrease of 16% when compared to $41.4 million for 2009.
- Gross margin of $10.3 million (30% of revenues) compared to $13.3 million (32%) for 2009.
- EBITDA was negative $1.9 million compared to $0.140 million for the year ended December 31, 2009.
- Net loss of $4.4 million compared with a net loss of $13.9 million for the year ended December 31, 2009. Included in the 2009 loss was a $6.5 million goodwill impairment, as well as debt conversion and settlement costs amounting to $2.1 million.
- Concluded a $3.7 million equity financing to support working capital requirements with existing and new shareholders.
- Concluded a $1.0 million subordinated convertible debenture to fund the ProSep Kolon venture.
- Announced approximately $23 million in new contracts during the year. Current backlog stands at $19.4 million up from $7.8 million at year-end.
- Concluded a joint venture agreement with the chairman and controlling shareholder of Kolon Group, a large integrated commercial group and Korea's largest water treatment company. This partnership should allow ProSep to leverage Kolon Group's vast network and strong reputation to promote ProSep's offering to the growing Floating Production Storage and Offloading (FPSO) shipbuilding industry and Oil & Gas Engineering Procurement and Construction (O&G EPC) firms.
- Signed a collaboration agreement with Bandariyah International Group, a leading supplier to the Saudi Arabian oil & gas and petrochemical industries, to accelerate commercialization of ProSep's offering in the Kingdom.
- Successfully introduced the Company's produced water treatment offering in the Gulf of Mexico and in South East Asia. The later represents a key growth market for ProSep.
- Concluded a significant agreement to supply a proprietary CTour® produced water treatment system to a super major operating in the North Sea for an important redevelopment project. This contract is for an amount of $3.6 million.
- Concluded ProSep's first significant sale in the Canadian oil sands, to provide process engineering and internals for a crude treatment system. This contract is for an amount of $2 million.
- Successfully completed the ProDry's third development phase with industry partners Total, Statoil and ConocoPhillips. Results showed high performance and robustness.
- Announced its proprietary technology will be used at an important large-scale carbon capture testing facility owned by Statoil, Norske Shell and Gassnova.
- Achieved promising results from field trials of the Sorbloc, a revolutionary biodegradable flocculant to treat produced water, capable of removing a full spectrum of harmful components including heavy metals.
- Appointed two highly regarded directors to the Company's Board:
- Mr. Claude Fontaine Q.C.,F.ICD, a retired senior partner at Ogilvy Renault LLP.
- Mr. Joseph Wilson, recently retired after serving as Senior Vice President - Global Ventures for NATCO Group until its acquisition by Cameron International Corporation, a leading equipment supplier with over $5 billion in sales.
- Initiated a global integration plan to improve reach and ensure best practices across all business units. Appointed to the executive committee and to lead this initiative are two industry veterans:
- Douglas A. Campbell, P. Eng., M.B.A. was appointed Executive Vice President of Sales and Business Development. Mr. Campbell was previously Vice President Marketing and Business Development at NATCO where he was intimately involved in the group's international success. Mr. Campbell brings over 33 years of experience in the engineering and construction fields for the upstream oil & gas industry.
- Parag P. Jhonsa was promoted to Executive Vice President Operations. Mr Jhonsa previously led the American business unit's engineering and operations teams.
- Ranked for a second consecutive year among the Deloitte Technology Fast 50TM, received a third Green Fifteen award and ranked fourteenth fastest growing company in Deloitte's North American Fast 500 edition based on percentage of revenue growth over the last 5 years.
"With the global recovery and growth in energy demand, ProSep's backlog is back to growth. Since the start of the year, we've announced $17 million in new contracts, compared to $23 million during the entire previous twelve months," said Jacques L. Drouin, President & CEO. "With strong industry fundamentals and growing production challenges, we expect order intake to continue increasing into the year and generate strong revenue growth."
"We believe that this year ProSep will benefit from strong market conditions and a favorable competitive landscape. In order to achieve above industry performance, deliver strong profitability and shareholder value, we have set forth a very aggressive growth plan. We've hired industry experts to join our sales and engineering teams to leverage our customer base, improve our global reach, expand our expertise and ensure the highest level of execution across all business units. We believe we can become the next leading independent technology-focused process solutions provider," added Mr. Drouin.
Selected Financial Highlights (in $millions except for loss per share)
ProSep reported consolidated revenues of $34.7 million during the year ended December 31, 2010, a decrease of 16% from $41.4 million generated during 2009. Growth of close to 18% at the European and Middle-East operations was offset by decreased revenue at the US and Asia Pacific operations. Overall, lower order intake related to residual weakness in upstream capital expenditure spending, increased competition, delays in contract completion at the Asian operations and unfavorable USD/CAD exchange rates explain most of the variance.
During the fourth quarter of 2010, ProSep reported consolidated revenues of $8.5 million, representing a decrease of 12% from $9.7 million reported during the corresponding period of 2009. Revenues at all business units continued to be affected by lower order intake, however contract announcements during the first quarter of 2011 are showing a significant recovery at the US and South East Asian operations.