Pacific Safety Products Inc.
TSX VENTURE : PSP

Pacific Safety Products Inc.

November 26, 2009 16:05 ET

Pacific Safety Products Inc. Announces Fiscal Year 2010 First Quarter Results

KANATA, ONTARIO--(Marketwire - Nov. 26, 2009) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company") today announced consolidated financial results for the three month period ended September 30, 2009.

Recent Developments:

  • Recognized first multi-million dollar sale to the U.S. federal government.
  • Increased sales from U.S. operations by almost 80% as compared to the prior year.
  • Decreased Operating expenses by $0.3 million or 14% as compared to the prior year.
  • Received U.S. National Institute of Justice standard 06 certification of U.S. law enforcement products.
  • Commenced delivery of protective products to the Canadian Department of National Defence against a Contract with a potential value of up to $19M.
  • Experienced a significant decline in Canadian core sales as compared to the same period of the prior year.

Mr. David Scott, Chief Executive Officer, commented, "It has been a challenging quarter and results were disappointing. Market demand during the quarter was substantially less than anticipated for core product sales and competition for existing sales opportunities was strong, resulting in lower gross margins. Subsequent to quarter end the Company adjusted its workforce and expense structure to scale its operations to reflect the current market conditions. The Company expects that its existing contracts will provide a revenue stream that will carry it through this subdued market. The Company also continues to make progress on its research and development initiatives, both for Head Mounted Systems as well as NIJ 06 product certifications."

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 the Company's web site. Summary consolidated financial results for the quarter ended September 30, 2009 and September 30, 2008, are as follows:

 

SUMMARY CONSOLIDATED BALANCE SHEETS
$Thousands

AS AT SEPTEMBER 30, 2009  JUNE 30, 2009 
ASSETS  
CURRENT ASSETS$11,068$8,799
PROPERTY AND EQUIPMENT1,8031,711
OTHER ASSETS2,2181,912
INTANGIBLE ASSETS2,9943,078
TOTAL ASSETS$18,083$15,500
LIABILITIES  
CURRENT LIABILITIES$ 9,671$ 6,628
FUTURE INCOME TAX LIABILITY-59
LONG-TERM DEBT1,1071,161
TOTAL LIABILITIES10,7787,848
SHAREHOLDERS' EQUITY7,3057,652
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$18,083$15,500

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)
$Thousands 
 

FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30TH 2009  2008 
SALES$ 7,629$ 7,706
COST OF SALES6,4815,833
GROSS MARGIN1,1481,873
OPERATING EXPENSES 1,5431,791

OPERATING INCOME/(LOSS)
INTEREST
DEPRECIATION AND AMORTIZATION
FOREIGN EXCHANGE (GAIN) / LOSS

(395)
67
180
(27)

82
70
182
16
LOSS BEFORE INCOME TAX RECOVEY
INCOME TAX RECOVERY
(615)
(251)
(186)
(194)
NET AND COMPREHENSIVE INCOME / (LOSS)(364)8
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE$    (0.01)  $  -
WEIGHTED AVERAGE COMMON SHARES  
OUTSTANDING BASIC AND DILUTED25,654,60525,467,694

SUPPLEMENTARY DISCLOSURE
$Thousands

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
Adjusted EBITDA is not a recognized performance measure under GAAP and does not have a standardized meaning prescribed by GAAP. The term EBITDA consists of net and comprehensive income (loss) and excludes interest, income tax recovery, depreciation and amortization. Adjusted EBITDA excludes stock based compensation. Adjusted EBITDA is included as a supplemental disclosure because management believes that such measurement provides a better assessment of the Company's operations on a continuing basis by eliminating certain non-cash charges and charges that are nonrecurring. The most directly comparable measure to Adjusted EBITDA calculated in accordance with GAAP is net and comprehensive income (loss). The following is a reconciliation of the Company's Adjusted EBITDA to net and comprehensive income (loss).

THREE MONTHS ENDED SEPTEMBER 30 2009 2008

NET AND COMPREHENSIVE INCOME /(LOSS)
INTEREST EXPENSE
INCOME TAX RECOVERY
STOCK BASED COMPENSATION
DEPRECIATION AND AMORTIZATION

($364)
67
 (251)
7
243

$8
70
(194)
92
231

ADJUSTED EBITDA

($298)

$207

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
    www.pacsafety.com