SOURCE: Budget Waste Inc.

August 08, 2008 18:45 ET

Budget Waste Reports Results for Year Ended March 31, 2008

CALGARY, AB--(Marketwire - August 8, 2008) - Budget Waste Inc. ("BWI") (PINKSHEETS: BDGW) announces the results for its year ended March 31, 2008, and provides reconciliation of the previous results announced on April 25, 2008. For the year BWI realized revenues of approximately $16,154,000, a gross margin of roughly $4,512,000, and a net overall operating loss of $1,908,000, an improvement of nearly $2,800,000 from the prior year.

The following table contains selected highlights from BWI's audited consolidated income statements and consolidated balance sheets for the years ended March 31, 2008 and 2007:

                                            March 31, 2008  March 31, 2007
                                            --------------  --------------
                                                USD $           USD $

Revenues                                        16,154,523      10,441,008
Cost of sales                                   11,642,000       8,642,748
Gross profit                                     4,512,523       1,798,260
General and administrative expenses              6,547,997       5,250,593
Loss for the year                                1,908,598       4,202,576
Basic loss per share                                ($0.03)         ($0.10)
Total assets                                    13,312,000      12,316,537

Internal growth spurred by the growing Alberta construction and oil industry accompanied with significant strategic acquisitions during the year resulted in a 35% overall increase in revenues from the previous year. Gross margins also increased from 17.2% in 2007 to 27.9% in 2008 on account of the acquisitions during the year and a concerted effort to stabilize costs and implement strong processing systems during the year. The overall loss for the year also decreased from $4,202,576 in 2007 to $1,908,698 in 2008. Again, mainly as a result of improved operating margins and tighter controls over expenditures and expansion.

In a previous press release on April 25, 2008, the company announced roughly the same revenues and costs of sales with an estimated net loss of approximately $677,000. The preliminary press release contained unaudited results. In connection with the audit process, during management's analysis and review of the operating results of the companies acquired in 2006 and 2007, it noted that certain of the acquired accounts receivable balances had not been fully provided for. The companies acquired by BWI in 2007 and 2006 were small, owner-managed operations where the attention to systems implementation, integration and financial reporting was not a priority. BWI's main philosophy and strategic direction was to acquire these relatively inexperienced operations, implement strong controls and operating systems and build upon the synergies realized by combining all of these entities. During the audit process, management determined that it should write off a greater amount of the acquired accounts receivable than originally contemplated. As a result, an additional bad debt provision of approximately $250,000 was recorded for the fiscal year ended March 31, 2008.

It was also determined that certain subsidiaries had incorrectly recorded revenue and cost of sales. Therefore, the adjustment to revenue and cost of sales resulted in a net decrease of roughly $450,000 to the gross margin from previously reported in April 2008.

As a result of the errors discovered in the revenue and expenses of the newly acquired subsidiaries, management requested our auditors to spend additional time to ensure that our records and financial statements were accurate and reliable. As a consequence, the audit fees for the 2008 fiscal year were approximately $160,000, almost 50% greater than what we would normally have expected. These additional fees were recorded as expenses for the 2008 fiscal year and also explain the difference between the results previously announced and the audited financial results.

Partly as a consequence of the reduced operating margins and income for the year because of the increase in the provision for doubtful accounts and the reduction of gross margins as a result of incorrectly reporting revenues and cost of sales, management is attempting to renegotiate the consideration paid for the acquisitions consummated in 2007 and 2006. As a consequence of the renegotiations with the former owners and the threat of litigation, the company has accrued an additional $385,000 for potential settlement and legal costs.

Overall, the loss for the year ended March 31, 2008, increased from $677,000 previously announced on April 25, 2008 to $1,909,000 on the audited consolidated financial statements for the same period. Management is concentrating its efforts to maintain or improve the company's gross margins at 28%, strive to build and maintain better and more efficient operating and reporting systems, and to grow internally and through acquisitions.

Budget Waste Inc. is a waste solutions company in Western Canada providing complete waste and recycling services to commercial, industrial, construction, homebuilding, oilfield and residential clients. With our broad range of innovative services we offer our customers more value for their dollar and reduce accounting costs by providing streamlined billing. BWI is currently following its growth through acquisition strategy with exceptional success. With regulations throughout North America pressing companies and individuals to be more vigilant in the way they handle their waste products we see vast opportunity for expansion of our distinctive services. We are confident that Extraordinary growth and focus on customer needs will bring our stockholders outstanding value for the confidence they have placed in BWI.

Safe Harbor Act Notice: This release may contain forward-looking statements that involve risks and uncertainties, including without limitation, acceptance of the company's products, increased levels of competition, product and technological changes, the company's dependence upon financing and third-party suppliers, and other risks detailed from time to time in the company's federal filings, annual report, offering memorandum, or prospectus. Specifications are subject to change without notice.

Contact Information

  • For more information on Budget Waste Inc., please visit our web site at
    www.budgetwaste.com or contact our investor relations department at:

    Budget Waste Inc.
    Investor Relations

    3915 - 61st Ave. SE.
    Calgary, AB T2C 1V5
    Ph. 403-255-2900
    Toll Free: 1-888-255-2990
    Fax: 403-255-3237
    Email: Email Contact