Pacific Safety Products Inc.
TSX VENTURE : PSP

Pacific Safety Products Inc.

November 26, 2008 17:20 ET

Pacific Safety Products Inc. Announces 2009 First Quarter Results

KANATA, ONTARIO--(Marketwire - Nov. 26, 2008) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company") today announced consolidated financial results for the three month period ended September 30, 2008. Sales for the quarter increased 15% to $7.7 million up from $6.7 million in the same period of the prior year. Gross margin, as a percentage of sales, increased to 24.3% up from 22.6% in the same period of the prior year. Net earnings were $0.001 million as compared to net earnings of $0.1 million inclusive of a one-time gain of $0.2 million, in the same period of the prior year.

Quarter Highlights:

- The Company announced $10 million in new contract awards and expects to deliver approximately $7 million against these new contracts in the current fiscal year.

- Gross margin improved by almost 2 percentage points to 24% as compared to the same period of the prior year.

- The US body armour business generated over $2 million of sales during the quarter, an increase of over 60% as compared to the same period of the prior year.

- The Company's next generation helmet liner was submitted for test and evaluation by the U.S. Army and also the National Tactical Officers Association, a US based organization that provides a comprehensive product review data base to US law enforcement.

Mr. David Scott, Chief Executive Officer, commented, "I am pleased with our progress during the quarter. Historically the first quarter is the weakest with respect to revenue. In the current economic environment reporting a 15% revenue increase is rather unique. Management believes that the revenue growth in the current quarter over the previous year's quarter is indicative of the full year potential. New business announced over the last few months from both Canadian and US customers combined with the continued strong flow of recurring revenues support this positive view. The improvement in gross margins this quarter over the same period last year results from the consolidation of Canadian operations in the Ottawa area and the continued improvement in efficiencies in the US operation. General and Administrative expenses are consistent with management's expectations and reflects investments in key growth markets. Our new helmet liner technology investment in Q1 is focused on the US military market with initial business opportunities in the second half of this fiscal year. The recently announced expense reductions will contribute to improved operating results. The Company is well within its operating line and bank covenants and plans to begin repayment of its $1.5M long term debt this fiscal year.

Management believes that the Company is in a good position to weather the markets' current economic challenges with products that are essential to our customers' operations in security, law enforcement and defence. I look forward to providing continuing updates on our progress."

For complete consolidated financial statements with notes and management discussion and analysis please refer to PSP's annual report to shareholders. This report is posted on SEDAR (www.sedar.com) and on our web site. Summary consolidated financial results for the quarter ended September 30, 2008 and September 30, 2007, are as follows:



SUMMARY CONSOLIDATED BALANCE SHEETS

AS AT SEPTEMBER 30, JUNE 30,
2008 2008
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ASSETS
CURRENT ASSETS $11,158,166 $11,235,643
PROPERTY, PLANT AND EQUIPMENT 1,703,295 1,682,758
OTHER ASSETS 1,500,212 1,137,785
INTANGIBLE ASSETS 3,369,851 3,462,068
GOODWILL 8,454,221 8,454,221
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TOTAL ASSETS $26,185,745 $25,972,475
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LIABILITIES
CURRENT LIABILITIES $ 8,069,130 $ 8,380,551
LONG-TERM DEBT 1,322,000 875,580
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TOTAL LIABILITIES 9,391,130 9,256,131
SHAREHOLDERS' EQUITY 16,794,615 16,716,344
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $26,185,745 $25,972,475
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SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH PERIOD ENDED
SEPTEMBER 30TH 2008 2007
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SALES $ 7,706,366 $ 6,665,160
COST OF SALES 5,833,344 5,158,830
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GROSS MARGIN 1,873,022 1,506,330
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OPERATING EXPENSES 1,791,255 1,499,467
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OPERATING MARGIN 81,767 6,863
INTEREST 70,060 25,164
AMORTIZATION 181,961 183,944
FOREIGN EXCHANGE LOSSES 15,560 14,711
GAIN ON SALE OF BUILDING - (239,371)
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INCOME (LOSS) BEFORE TAXES (185,814) 22,415
INCOME TAX RECOVERY (193,571) (96,541)
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NET INCOME 7,757 118,956
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BASIC EARNINGS (LOSS) PER SHARE $ - $ 0.005
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WEIGHTED AVERAGE COMMON SHARES
ISSUED AND OUTSTANDING BASIC AND
FULLY DILUTED 25,467,694 24,262,970
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About PSP

The mission statement of Pacific Safety Products Inc. is ...we bring everyday heroes home safely™. PSP is an established industry leader in the production, distribution and sale of high-performance and high-quality safety products for the defence and security market. These products include body armour to protect against ballistic, stab and fragmentation threats, ballistic blankets to reduce blast effects, and protective products against chemical and biological hazards. PSP is the largest armour manufacturer in Canada, directly supplying the Canadian Department of Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company also provides specialized law enforcement and safety products through APS Distributors, a division of PSP that services law enforcement and public safety agencies across the country. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armour products to U.S. based law enforcement and private security firms. The Company also produces tactical clothing and emergency medical kits. Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange.

Forward Looking Statements: This news release may contain forward looking statements based on management's expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, expected expenditures, results of cost reduction initiatives and financial results are forward looking statements. Some of the forward looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "projects", "indicates", and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission, the TSX Venture Exchange, as well as others, could cause results to differ materially from those anticipated. These factors include, but are not limited to the potential impact of the current economic downturn on the Company's business, the unpredictability of purchasing patterns by governmental agencies, the possibility of a deterioration in the Company's working capital position, the impact on the Company's liquidity if it were to go offside of the covenants in its debt facilities, the impact that changes in supplier payment terms or slow payment of accounts receivable could have on the Company's liquidity, the unavailability of or increase in price of external capital to finance the Company's research, development and growth initiatives, changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates fluctuations of countries in which the Company does business; competitive pressures; successful integration of structural changes or downsizing initiatives, including restructuring plans, acquisitions, divestitures and alliances; cost of raw material, the uncertainty associated with the outcome of research and development of new products, including regulatory approval and market acceptance; and seasonality of sales in some products.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Pacific Safety Products Inc.
    David Scott
    Chief Executive Officer
    (613) 254-9488 ext. 322
    Website: www.pacsafety.com