Bennett Environmental Inc.
TSX : BEV

Bennett Environmental Inc.

April 02, 2007 14:16 ET

Bennett Environmental Inc. ("BEI") Reports Fourth Quarter and 2006 Year End Results

OAKVILLE, ONTARIO--(CCNMatthews - April 2, 2007) - Bennett Environmental Inc. (TSX:BEV) -

Highlights

- Quarterly Business Development and Administration costs are down 47% compared to 2005

- Annual Business Development and Administration costs are down over 24% compared to 2005

- BEI records a non cash asset impairment of $12.6 million at its facility in Belledune, New Brunswick. This impairment contributes to the cumulative loss of $18.6 million in the fourth quarter of 2006, or $0.86 per share on revenues of $2.4 million

Bennett Environmental Inc. (the "Company") (TSX:BEV) today announced its financial results for the year ended December 31, 2006 and operating results for the fourth quarter and full year 2006 and reported on other developments.

Financial results

Fourth Quarter 2006

The Company announced an after tax loss of $18.6 million or $(0.86 per common share) on revenues of $2.4 million in the fourth quarter of 2006. This compares to a net loss of $20.2 million ($0.94 per common share) on revenues of $8.8 million in the same quarter of 2005. The most significant items affecting the loss were a writedown of the assets relating to the Belledune facility of $12.6 million, a charge of $1.1 million to dispose of untreated soil in New Brunswick, a $0.6 million charge related to a negotiated settlement for the non-eligible portion of input tax credits for Quebec Sales Tax and a $0.6 million charge to write off the goodwill amount.

In the fourth quarter of 2006, the Company processed negligible volume at its Quebec facility, approximately 277,000 kilograms in its Cornwall facility and 444,000 kilograms from its newly acquired Kirkland Lake facility. This compares to approximately 15.2 tonnes being processed at the Company's Quebec facility and 333,000 kilograms at the Company's Cornwall facility in the fourth quarter of 2005. The Quebec facility ran for approximately one month during the fourth quarter of 2006, a direct result of low soil inventories. This compares to the same quarter of 2005 when the facility ran for the majority of the quarter.

Year ended December 31, 2006

For the year ended December 31, 2006, the Company recorded a loss of $27.0 million ($1.25 per common share) on revenues of $11.0 million, compared to a loss of $25.0 million ($1.16 per common share) on revenues of $29.3 million on December 31, 2005.
The primary reasons for the loss was due to the following:

1. $12.6 million asset impairment at the facility in Belledune;

2. $0.6 million goodwill impairment;

3. $0.6 million accrual for the negotiated settlement with the Minister of Quebec ("MRQ") for disallowed input tax credits on utilities; and

4. A charge of $1.1 million related to the disposal of 5,700 tonnes of untreated soil in New Brunswick.

In 2006, administrative and business development costs fell by 24.2% from $14.0 million in 2005 to $10.6 million for the fiscal year ended December 31, 2006 as a direct result of strategic cost cuts aimed at reducing the Company's breakeven point. These cost reductions included a downsizing of the work force and reduced legal and insurance costs related to various litigation and regulatory matters, many of which were settled in 2006.

BEI recorded a further asset impairment of $12.6 million relating to its facility in Belledune, New Brunswick. The Belledune facility was constructed in 2003 and 2004. During 2005 and 2006 the plant was idle and did not process any material commercially. The permit negotiated in 2003 was focused mainly on creosote-contaminated soils. The Company is considering its options, but has not yet made any final decisions respecting the outcome of this facility.

Amortization in 2006 was $3.4 million, compared to $4.3 million a year earlier. The higher amortization in 2005 was a result of accelerated amortization of certain equipment and licenses the Company purchased in 2003.

At December 31, 2006 the Company's cash position was $2.9 million (September 30, 2006-$3.2 million), a decrease of approximately $0.4 million since the end of September 2006. The majority of this cash was used to fund capital asset additions ($0.3 million) in the fourth quarter including the addition of a bag house at the Cornwall facility for environmental compliance reasons.

Update

The Company is pleased to announce that Fred Cranston has joined BEI as CFO. Mr. Cranston holds a CA designation and has an MBA from McMaster University. Mr. Cranston has worked in various financial and operating roles for more than twenty years and has experience in the environmental sector, having worked as CFO of the Philip Services Corp Metals Group, where he led its restructuring efforts. Finally, Mr. Cranston has been a lecturer in the Faculty of Business at Brock University.

Forward Looking Statements

Certain statements contained in this press release and in certain documents incorporated by reference into this press release constitute forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and "confident" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. BEI believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in, or incorporated by reference into, this press release should not be unduly relied upon. These statements speak only as of the date of this press release. BEI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Bennett Environmental Inc.

Bennett Environmental Inc. is a North American leader in high temperature treatment services for the remediation of contaminated soil and has provided thermal solutions to contamination problems throughout Quebec and the US. Bennett Environmental's technology provides for the safe, economical and permanent solution to contaminated soil. Independent testing has consistently proven that the technology operates well within the most stringent criteria in North America.



BENNETT ENVIRONMENTAL INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)
As at December 31, 2006
(with comparative figures as at December 31, 2005)
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December 31, December 31,
2006 2005
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Assets
Current assets:
Cash and cash equivalents $ 2,870,358 $ 7,844,521
Restricted cash 55,742 1,349,316
Amounts receivable 1,591,164 16,817,042
Income taxes recoverable 2,401,077 959,417
Current portion of long-term receivables 271,731 -
Inventory 222,737 -
Deferred transportation costs 20,006 625,506
Prepaid expenses and other 963,095 860,991
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8,395,910 28,456,793

Future income tax asset - 595,091

Long-term note receivable 5,163,611 173,250

Property, plant and equipment 20,825,768 33,166,627

Intangible and other assets 3,907,009 2,486,673

Goodwill - 646,638
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$ 38,292,298 $ 65,525,072
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 5,395,998 $ 5,820,376
Deferred revenue 753,771 1,416,286
Current portion of long-term liabilities 638,805 1,117,747
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6,788,574 8,354,409

Future income tax liability 32,708 -

Long-term liabilities 634,553 808,996

Deferred gain 210,415 -

Shareholders' equity:
Share capital 68,081,496 67,997,683
Contributed surplus 3,857,427 2,645,303
Deficit (41,312,875) (14,281,319)
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30,626,048 56,361,667
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$ 38,292,298 $ 65,525,072
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BENNETT ENVIRONMENTAL INC.
Consolidated Statements of Operations and Retained Earnings (Deficit)
(Expressed in Canadian dollars, except per share amounts)
For the three and twelve month periods ended December 31, 2006
(with comparative figures for December 31, 2005)

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Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
---------------------------------------------------------------------------
(Unaudited)
Sales $ 2,443,610 $ 8,777,025 $ 10,976,006 $ 29,250,249

Expenses:
Operating costs 4,356,182 5,327,110 11,387,602 19,456,611
Administration and
business development 2,487,495 4,723,494 10,639,834 13,994,234
Amortization 1,227,202 792,513 3,366,339 4,307,568
Foreign exchange (76,184) (31,652) 345,838 325,611
Settlement of
litigation - - - 878,025
Impairment of
goodwill and
long-lived assets 13,262,233 15,376,475 13,262,233 15,376,475
Interest 295,278 (77,876) 395,338 145,846
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21,552,206 26,110,064 39,397,184 54,484,370
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Loss before the
undernoted (19,108,596) (17,333,039) (28,421,178) (25,234,121)

Other income,
including interest 37,075 88,870 454,438 381,752
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Loss before income
taxes (19,071,521) (17,244,169) (27,966,740) (24,852,369)

Income taxes
(recovery):
Current (386,616) 416,399 (1,562,983) (104,281)
Future (92,154) 2,539,521 627,799 296,735
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(478,770) 2,955,920 (935,184) 192,454
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Loss for the period (18,592,751) (20,200,089) (27,031,556) (25,044,823)

Retained earnings
(deficit),
beginning
of period (22,720,124) 5,918,770 (14,281,319) 10,763,504
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Deficit, end of
period $(41,312,875) $(14,281,319) $(41,312,875) $(14,281,319)
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Loss per share:
Basic $ (0.86) $ (0.94) $ (1.25) $ (1.16)
Diluted $ (0.86) $ (0.94) $ (1.25) $ (1.16)
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BENNETT ENVIRONMENTAL INC.
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
For the three and twelve month periods ended December 31, 2006
(with comparative figures for December 31, 2005)
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Three months ended Twelve months ended
December 31, December 31,
2006 2005 2006 2005
---------------------------------------------------------------------------
(Unaudited)
Cash provided by
(used in):
Operations:
Net loss $(18,592,751) $(20,200,089) $(27,031,556) $(25,044,823)
Items not
involving cash:
Amortization 1,227,202 792,513 3,366,339 4,307,568
Stock-based
compensation 132,602 639,614 1,212,124 1,050,098
Loss from asset
impairment 13,262,233 15,376,475 13,262,233 15,376,475
Gain on investments - - - (175,000)
Loss (gain) on
disposal of
property, plant
and equipment - 363 (51,000) 4,330
Future income taxes
(recovery) (92,153) 2,539,071 627,799 296,735
Decrease in cash
surrender value
of life insurance
policy - - (94,548) (79,242)
Accretion charge 118,230 176,685 160,476 95,171
Accrued interest
on long-term
receivables (5,076) - (17,443) -
Change in non-cash
operating working
capital:
Amounts receivable 2,201,388 (1,970,344) 11,205,302 (2,500,394)
Deferred
transportation
costs 315,795 432,242 605,500 (293,797)
Prepaid expenses
and other 29,802 312,197 (34,910) 338,880
Inventory 5,042 - (222,737) -
Accounts payable
and accrued
liabilities 1,605,835 829,209 (1,448,937) (825,629)
Income taxes
receivable/
payable (175,691) 3,049,817 (1,441,660) 2,457,787
Deferred revenue 125,186 689,763 (662,515) 754,729
Severance payable (119,783) (407,094) (455,944) (800,378)
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37,861 2,260,422 (1,021,477) (5,037,490)
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Financing:
Repayments of
long-term
liabilities (5,791) (87,974) (357,917) (69,500)
Issuance of share
capital net of
share issue costs - - 83,813 353,002
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(5,791) (87,974) (274,104) 283,502
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Investments:
Change in restricted
cash (2,926) - 1,293,574 174
Note receivable - (8,250) 114,962 141,750
Proceeds on disposal
of investment - - - 175,000
Proceeds on disposal
of property, plant
and equipment - 2,055 9,000 108,170
Purchase of property,
plant and equipment (296,840) (155,658) (548,293) (1,572,465)
Decrease (increase)
in other assets - - (2,181,785) (84,690)
Acquisition of
Trans-Cycle
Industries, Inc. (102,407) - (2,366,040) -
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(402,173) (161,853) (3,678,582) (1,232,061)
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(Decrease) increase
in cash and cash
equivalents (370,103) 2,010,595 (4,974,163) (5,986,049)
Cash and cash
equivalents,
beginning of
period 3,240,461 5,833,926 7,844,521 13,830,570
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Cash and cash
equivalents,
end of period $ 2,870,358 $ 7,844,521 $ 2,870,358 $ 7,844,521
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Supplemental cash
flow information:
Interest paid $ 30,251 $ - $ 122,346 $ 42,538
Income taxes paid - - - 7,865
Income tax refund - 2,572,259 382,340 2,829,007
Reclassification
from amounts
receivable to
long-term
receivable - - 5,037,611 -


Contact Information

  • Bennett Environmental Inc.
    Jack Shaw
    President and CEO
    (905) 339-1540