Bennett Environmental Inc.

Bennett Environmental Inc.

March 03, 2005 08:30 ET

Bennett Reports Fourth Quarter and Full Year Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: BENNETT ENVIRONMENTAL INC.

TSX SYMBOL: BEV
AMEX SYMBOL: BEL

MARCH 3, 2005 - 08:30 ET

Bennett Reports Fourth Quarter and Full Year Results

OAKVILLE, ONTARIO--(CCNMatthews - March 3, 2005) - Bennett Environmental
Inc. (TSX:BEV)(AMEX:BEL) today announced its financial and operating
results (unaudited) for the fourth quarter and full year 2004 and
reported on other developments.

Highlights

- Loss of $8.3 million or $0.45 cents per share on revenues of $4.5
million for the three months ended December 31, 2004. For the full year,
the net loss was $18.5 million ($1.01 per common share)

- Closing of a $12 million financing and the issue of 3 million common
shares at $4.00 per share in a bought underwriting

- Retirement, as an employee, of Company founder, John Bennett.

Financial results

Fourth Quarter

The Company announced an after tax loss in the fourth quarter of $8.3
million or $0.45 cents per share on revenues of $4.5 million. Reduced
soil processing volumes at the Saint Ambroise facility and additional
costs related to the Company's now completed Saglek project
significantly contributed to the loss.

In the fourth quarter, on a pre-tax basis, additional severance and
pension costs related to the Vancouver office closure costs added $0.8
million to administration and business development expenses. Legal costs
associated with class action litigation were approximately $1.3 million.
Foreign exchange and investment losses totalled approximately $1.1
million.

In the three months ended December 31, 2003, Bennett reported a net
income of $6.3 million ($0.38 per common share) on sales of $22.0
million.

12 months ended 12/31/2004

For the year ended December 31, 2004, the Company recorded a loss of
$18.5 million ($1.01 per common share) on revenues of $25.3 million,
compared to a profit of $18.2 million ($1.08 per common share) on
revenues of $69.8 million.

The impact of the completion of Saglek Contract and lower volumes of
processed material negatively impacted margin contributions for the year
and were the key factors in the 2004 loss.

In 2004, contribution (gross) margins were negative $1.4 million
compared to $37.4 million in the prior year.

Saglek Contract

Gross margins were negatively impacted by approximately $15.6 million by
the Saglek contract, a fixed rate contract originally awarded in 2002 to
remediate contaminated soil at the site of a former US DEW line radar
installation in northern Labrador. For this contract, revenue and
expenses were accounted for under the "percentage of completion" method,
since Bennett was prime contractor.

At the end of 2003, the Company had estimated that total revenue
remaining on the Saglek Contract in 2004 would be approximately $10.2
million. During the year the Company received lower than anticipated
volumes of soil and actual revenue recorded was approximately $2.4
million. This is a result of lower volumes and reduced expectations for
the recovery of a $9.1 million claim against the client for extra
expenses. A net amount of $4.9 million was included in accounts
receivable in respect of this claim.

At the end of 2003, Bennett had estimated remaining costs to complete
the project to be approximately $6.8 million based on the anticipated
additional work discussed with the customer. Actual expenses were $18.1
million because of significantly higher than estimated processing costs
($6.8 million), and higher site, fuel and transportation costs ($4.5
million).

In 2004, administration and business development costs were $15.8
million compared to $8.5 million the prior year. The increase is
attributable to $2.9 million in severance and other costs related to the
closure of the Vancouver office, and $3.2 million in higher legal and
professional fees related to the class action suits filed against the
Company in 2004. In addition, as a result of the changes to management,
the Company incurred additional one time costs of approximately $0.8
million for salary and recruiting costs.

The Company also recorded a charge to its passive investments of $0.8
million ($0.1 million in 2003) and a loss from asset impairment of $4.3
million related to the Kirkland Lake project. Amortization in 2004 was
$3.7 million compared to $1.8 million as a result of accelerated
amortization of Saglek equipment and higher amortization of licences the
Company purchased in 2003.

Balance sheet

In December, the Company completed an equity financing with net proceeds
of $11.1 million, and at year end had cash and equivalents on hand of
$15.2 million. Working capital stood at $28.7 million at December 31,
2004.

Operating results

During the quarter, the Company processed approximately 8,900 tonnes of
soil at its Saint Ambroise facility compared to 22,200 tonnes in the
comparable quarter. In 2004, Saint Ambroise processed approximately
52,900 tonnes compared to 73,900 the prior year.

The plant will resume full operations on March 7th. Bennett expects to
process about 5,500 tonnes of soil in March and to have approximately
6,000 tonnes of soil inventory at the end of the quarter.

The Company will begin compliance testing at its recently completed
Belledune facility and expects to complete testing and anticipates
receiving its operating permit from the Province of New Brunswick, by
the third quarter.

Other Business

John Bennett, who founded the Company in 1993, has retired as an
employee. The Company has expressed its thanks and appreciation to Mr.
Bennett for his dedication to the growth of the Company and for his
pioneering contributions to the environmental sector in North America.

The Company has accepted the resignation of Zul Tejpar as Vice President
of Business Development. Danny Ponn has been re-assigned to the role of
Vice President Engineering and Business Development. Danny, who has been
with Bennett since 1993, is a graduate of the University of British
Columbia, a Professional Engineer, and a recognized expert in the field
of thermal oxidization. Al Bulckaert has assumed direct responsibility
for plant operations.

In January 2005, Wendy Ford joined the Company as Corporate Controller
and has assumed all responsibility related to the transition of the
accounting function from Vancouver to Oakville and the day-to-day
accounting and treasury function. Ms. Ford is a Chartered Accountant
with 17 years of experience and has a Bachelor of Commerce from the
University of Toronto.

On September 17, 2004, RSI received a Preliminary Notice to the issuance
of an Order from the Ministry of Sustainable Development and Parks
(formerly the Quebec Ministry of the Environment) concerning the RSI
plant in Saint-Ambroise. The Preliminary Notice alleges that increases
in levels of dioxins and furans measured in soils near the RSI plant are
attributable to RSI. If issued, the Order seeks to require RSI to limit
its emissions of dioxins and furans, to install equipment to further
monitor the emissions and to transmit the collected data to the Ministry.

On November 1, 2004, RSI filed its observations with respect to the
allegations contained in the Preliminary Notice. The Company disputes
allegations contained the Preliminary Notice. In support of its
position, the Company commissioned several qualified third-party experts
to review the allegations contained in the Preliminary Notice. The
experts retained, support the Company's position that other sources may
have contributed to increases in levels of dioxins and furans in the
soil around the RSI plant.

Since the filing of its observations, RSI has exchanged correspondence
and has had several discussions with the Ministry. Recently, at a
meeting held on February 9, 2005, the Company met with Ministry
officials where they asked the Company to develop an action plan to
address the concerns raised in the Preliminary Notice. The Company
developed an action plan that it believes addresses the Ministry's
concerns, while at the same time allow it to remain commercially
competitive. The action plan was submitted to the Ministry on February
21, 2005 and the Company anticipates further discussion with the
Ministry.

Several improvements to the plant have been already put it in place as
part of the internationally recognized ISO 14001 Certification that RSI
was granted in 2004.

The Company and certain of the current officers, former officers and
former directors have received a letter dated February 11, 2005 from the
Ontario Securities Commission (OSC) giving such officers and directors
the opportunity to provide written submissions to the OSC before the OSC
determines it is going to commence enforcement proceedings. The OSC's
view is that the company failed to disclose the change in status of the
Federal Creosote contract together with allegations of insider trading.
Submissions, if any, are to be submitted to the OSC by March 17, 2005.
The company continues to cooperate with all regulatory agencies
regarding this issue.

Comment

"Bennett's overall results and performance were clearly unacceptable in
2004," said Al Bulckaert, President and CEO. "Our priority in 2005 is to
return Bennett to profit and build a good foundation for growth beyond
2005."

"While much remains to be accomplished, there are some early but
encouraging signs. The Saglek contract is behind us, and we've absorbed
the necessary costs of closing the Vancouver office. With the new
management team in place, we continue to enhance our business processes.
We expect administration and business development levels to return to a
more normalized level of $9 - $11 million in 2005, compared to $16
million in 2004. Our activities are supported by a strong balance sheet
as a result of confidence the equity markets demonstrated by the recent
financing the Company obtained in December 2004."

Mr. Bulckaert added, "After an extensive recruitment process, our new
management team is in place and is making rapid strides towards
improving all aspects of the business. We have implemented new financial
controls, accountability, and forecasting tools and we continue to
strengthen our relationships with government agencies and regulatory
bodies."

"The Company's sales cycle is lengthy and can range anywhere from 6
months to 3 years. We took a series of important steps in 2004 to
rebuild our sales organization and continue to forge new business
relationships, particularly in the larger US market. We are beginning to
see the results of these efforts and have secured new contracts for
approximately 6,000 tonnes this quarter".

"The Company currently has purchase orders, subject to cancellation
under certain circumstances, for approximately 30,000 tonnes of soil for
remediation in 2005. Of this amount, approximately 10,000 tonnes is from
new business. We continue to work aggressively with the hope to secure,
receive and process an additional 30,000 tonnes from new and existing
customers for this year. 2005 is a year of rebuilding the Company, and
we look forward to reporting on our progress as the year unfolds,"
concluded Mr. Bulckaert.

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
Canada 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 is listed on the Toronto Stock Exchange (Trading
Symbol "BEV") and the American Stock Exchange (Trading Symbol "BEL").

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 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. The Company 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. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.



BENNETT ENVIRONMENTAL INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)
December 31, 2004 and 2003

2004 2003
---------------------------------------------------------------------
(Restated)
Assets
Current assets
Cash and cash equivalents $ 15,180,060 $ 12,586,353
Accounts receivable 14,316,648 28,839,675
Income tax receivable 5,342,370 -
Note receivable 315,000 172,500
Prepaid expenses and other 1,531,580 2,306,876
----------------------------
36,685,658 43,905,404

Investment - 568,193
Property, plant and equipment 48,920,377 23,779,384
Other assets 4,793,069 6,777,953
Goodwill 646,638 646,638
----------------------------

$ 91,045,742 $ 75,677,572
----------------------------
----------------------------

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued
liabilities $ 6,646,005 $ 9,964,937
Income taxes payable - 2,961,632
Deferred revenue 661,557 814,409
Current portion of long-term debt 727,132 4,601
----------------------------
8,034,694 13,745,579

Future income tax liability 1,033,340 2,616,861

Long-term debt 1,974,318 417,143

Shareholders' equity
Share capital 67,644,681 28,397,470
(Common shares outstanding
21,415,940 (2003 - 17,145,789)
Contributed surplus 1,595,205 1,201,776
Retained Earnings (Deficit) 10,763,504 29,298,743
----------------------------
80,003,390 58,897,989
----------------------------

$ 91,045,742 $ 75,677,572
----------------------------
----------------------------


BENNETT ENVIRONMENTAL INC.
Consolidated Statement of Operations and Retained Earnings
(Expressed in Canadian dollars)
Years ended December 31, 2004 and 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
12 months 12 months 3 months 3 months
31-Dec-04 31-Dec-03 31-Dec-04 31-Dec-03
---------------------------------------------------------------------
(Restated) (Restated)

Sales $ 25,323,203 $ 69,806,526 4,518,393 21,984,054

Expenses
Operating costs 26,736,521 32,419,935 7,807,06 10,775,516
Administration
and business
development 15,780,332 8,542,452 4,528,906 2,291,307
Amortization 3,729,728 1,800,326 1,812,793 287,287
Foreign exchange 273,626 544,337 236,449 120,777
Loss from asset
impairment 4,343,979 - - -
Interest expense 305,313 156,675 233,335 70,390
--------------------------------------------------

51,169,499 43,463,725 14,618,549 13,545,277
--------------------------------------------------

(Loss) earnings
before undernoted (25,846,296) 26,342,801 (10,100,156) 8,438,777

Gain on debt
settlement - 1,316,936 0 1,316,936

Loss on investment (818,193) (133,202) (818,193) (133,202)

Interest and other
income 580,280 1,280,629 141,812 737,283
--------------------------------------------------

(Loss) earnings
before income
taxes (26,084,209) 28,807,164 (10,776,537) 10,359,794

Income tax
(recoverable)
expense
Current (6,727,600) 8,912,582 (3,158,225) 2,622,019
Future (821,370) 1,721,123 633,982 1,416,123
--------------------------------------------------
(7,548,970) 10,633,705 (2,524,243) 4,038,142
--------------------------------------------------

Net (Loss) earnings (18,535,239) 18,173,459 (8,252,294) 6,321,652

Retained Earnings,
beginning of
period 29,298,743 11,125,284 19,015,798 22,977,091
--------------------------------------------------

Retained Earnings,
end of period $ 10,763,504 $ 29,298,743 $10,763,504 $29,298,743
--------------------------------------------------
--------------------------------------------------

Basic earnings
per share $ (1.01) $ 1.08 $ (0.45) $ 0.38
--------------------------------------------------
--------------------------------------------------

Fully diluted
earnings per
share $ (1.01) $ 1.04 $ (0.45) $ 0.36
--------------------------------------------------
--------------------------------------------------


BENNETT ENVIRONMENTAL INC.
Consolidated Statement of Cash Flows
(Expressed in Canadian dollars)
Years ended December 31, 2004 and 2003

---------------------------------------------------------------------
---------------------------------------------------------------------
12 months 12 months 3 months 3 months
31-Dec-04 31-Dec-03 31-Dec-04 31-Dec-03
---------------------------------------------------------------------
(Restated) (Restated)
CASH PROVIDED BY
(USED IN):
Operations
Net (Loss)
earnings $(18,535,239) $18,173,459 $(8,252,294) $6,321,652

Items not involving
cash
Debt settlement - (1,316,936) - (1,316,936)
Amortization 3,729,728 1,800,326 1,812,793 287,287
Stock -based
compensation 675,176 1,198,802 185,228
Partial
(cancellation)
redemption of
equity investment (150,000) 150,000 (150,000) 150,000
Loss from asset
impairment 4,343,979 - - 133,202
Future income
taxes (1,583,521) 1,721,123 341,146 1,416,123
Tax benefits of
share issue costs 762,753 293,438
Cash surrender value
of life insurance (606,825) (606,825)
Loss on guarantee
of investee line
of credit (100,000) (100,000)
Fair value of
options granted
and vested 436,461 - 436,461 -

Change in non-cash
operating working
capital
Deferred revenue (152,852) 718,981 661,557 -
Accounts
receivable 14,523,027 (16,506,230) 7,298,271 (2,519,562)
Note receivable
issued to investee
(including
interest) (315,000) - (15,000) 400,000
Cancellation of
note receivable
to investee 172,500 - -
Prepaid expenses
and other 775,296 (718,611) 1,606,141 (406,173)
Accounts payable
and accrued
liabilities (3,318,932) 2,082,269 (920,567) 3,813,660
Income taxes
payable (8,304,002) (2,900,891) (1,772,995) (1,245,460)
---------------------------------------------------
(7,647,451) 4,402,292 817,354 7,033,793

Investing Activities
Loss on Investments 818,193 133,202 737,380 -
Purchase of
property, plant
and equipment (28,553,047) (11,316,302) (4,570,995) (7,063,195)
Increase in
license, permits
and other assets (2,069,944) (3,516,569) (926,489) (2,067,106)
---------------------------------------------------
(29,804,798) (14,699,669) (4,760,104) (9,130,301)

Financing Activities
Repayments of
long-term debt 2,279,706 (405,777) 2,391,616 (174,246)
Share capital
issued for cash
net of costs 37,838,129 4,021,868 11,124,070 2,384,663
Repurchase of
share capital (71,879) - - -
---------------------------------------------------
40,045,956 3,616,091 13,515,686 2,210,417
---------------------------------------------------

Increase (Decrease)
in cash and cash
equivalents 2,593,707 (6,681,286) 9,572,936 113,909

Cash and cash
equivalents,
beginning of
period 12,586,353 19,267,639 5,607,124 12,472,444
---------------------------------------------------

Cash and cash
equivalents, end
of period $ 15,180,060 $12,586,353 $15,180,060 $12,586,353
---------------------------------------------------
---------------------------------------------------

Supplementary
disclosure of
cash flow
information:
Cash paid for:
Interest paid $ 20,800 $ 16,354 20,800 10,493
Income taxes paid 385,212 11,813,473 (688,242) 11,813,473


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Bennett Environmental Inc.
    Al Bulckaert
    Oakville office
    (905) 339-1540
    or
    Bennett Environmental Inc.
    Andy Boulanger
    Oakville office
    (905) 339-1540
    www.bennettenv.com