Bennett Environmental Inc.
TSX : BEV
AMEX : BEL

Bennett Environmental Inc.

November 07, 2006 18:15 ET

Bennett Restructures Company and Cuts Costs; Announces Q3 Results

OAKVILLE, ONTARIO--(CCNMatthews - Nov. 7, 2006) -

Highlights:

- $3.2 million cash at end of Q3

- SG&A costs have been reduced by 22% since beginning of 2006

- Indirect operating costs at the plants have been reduced by 18% since beginning of 2006

- Business model has been redesigned to reduce overall breakeven point and to reduce cash burn

- Recruitment of President and CEO on track and a search for a new VP of Sales Commenced

- Net Sales of $1.5 million/Net Earnings ($4.5 million)

Bennett Environmental Inc. (TSX:BEV) (AMEX:BEL) today announced that it has completed a strategic planning process, which involved senior management and the new board of directors, resulting in a restructuring plan for the Company that is intended to decrease sharply the amount of revenue required for the company to breakeven or generate cash. The plan further aims to rebuild and refocus the company's sales and marketing efforts, improving prospects for future revenue growth.

In addition, the Company announced its financial and operating results for the three and nine months ended September 30, 2006. The Company's revenues have declined over the past several years and this pattern continued through to the third quarter of 2006.

In response to these declining operating results, the Company implemented plans to significantly reduce operating and administrative costs, conserve cash and increase sales performance. Among other cost reduction steps, management cut the equivalent of 12 salaried positions from the Company during Q3. Acting Co/CEO Andy Boulanger commented that "many of the cost reductions the Company has made over this quarter are expected to be seen on the bottom line early next year. The Company is committed to making additional reductions and short lead time margin enhancements that are intended to show results on the income statement in 2007."

The Company also plans to pursue revenue growth by expanding its product offering, improving relationships with third party environmental firms, and rebuilding and refocusing its sales and marketing teams. The Company announced that it has initiated a search for a new Vice President of Sales with broad experience in sales and marketing.

David Williams, Chairman of the Board and Co/CEO commented that "Bennett's focus has been completely redirected and the Board and Management see a clear future for the Company. We are entirely focused on cost reduction, margin improvement, and cash flow. Even as we implement our plan in these areas, we are laying the groundwork for what we expect to be a resumption of revenue growth. We believe this is the path to profitability and positive cash flow."

The following table discloses certain unaudited financial data for the eight most recently completed quarters, expressed in Canadian dollars (millions) (except per share data - basic and diluted):



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2006 2005 2004
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Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
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Net Sales 1.3 2.7 4.5 8.8 10.4 6.2 3.9 4.9
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Net (Loss)
Earnings (4.5) (1.80) (2.10) (20.20) 0.2 (1.40) (3.60) (5.60)
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(Loss) Earnings
per share
- basic (0.21) (0.08) (0.10) (0.94) 0.01 (0.07) (0.17) (0.32)
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(Loss) Earnings
per share
- diluted (0.21) (0.08) (0.10) (0.94) 0.01 (0.07) (0.17) (0.32)
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(i) 1. The Company restated its consolidated financial statements for the
years ended December 31, 2004 and 2003. Please refer to note 3 to
the restated consolidated financial statements as at and for the
years ended December 31, 2004 and 2003 for further explanation.
(i) 2. The Company adopted the fair value based method of accounting for
stock-based compensation effective January 1, 2004 retroactive with
restatement of prior years to January 1, 2002. Refer to note 2(a)
(i) of the restated consolidated financial statements for the years
ended December 31, 2004 and 2003 for further explanation.


Bennett will hold its conference call on Wednesday, November 8, 2005 at 10:00 a.m. EST.

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. For information, please visit the Bennett Environmental website at: www.bennettenv.com.



BENNETT ENVIRONMENTAL INC.
Interim Consolidated Balance Sheets
(Expressed in Canadian dollars)

--------------------------------------------------------------------------
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September 30, December 31,
2006 2005
--------------------------------------------------------------------------
(Unaudited)
Assets

Current assets:
Cash and cash equivalents $ 3,240,225 $ 7,844,521
Restricted cash 53,052 1,349,316
Amounts receivable 3,792,554 16,817,042
Income taxes receivable 2,225,386 959,417
Current portion of long-term receivables 266,655 -
Deferred transportation costs 335,801 625,506
Prepaid expenses and other 992,897 860,991
Inventory 227,779 -
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11,134,349 28,456,793

Future income tax asset - 595,091

Long-term receivables 5,163,611 173,250

Property, plant and equipment 33,443,329 33,166,627

Other assets 4,732,996 2,486,673

Goodwill 646,638 646,638

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$ 55,120,923 $ 65,525,072
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Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities $ 3,790,163 $ 5,820,376
Deferred revenue 628,585 1,416,286
Current portion of long-term liabilities 611,546 1,117,747
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5,030,294 8,354,409

Future income tax liability 124,861 -

Long-term liabilities 669,156 808,996

Deferred gain 210,415 -

Shareholders' equity:
Share capital 68,081,496 67,997,683
Contributed surplus 3,724,825 2,645,303
Deficit (22,720,124) (14,281,319)
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49,086,197 56,361,667

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$ 55,120,923 $ 65,525,072
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BENNETT ENVIRONMENTAL INC.
Interim Consolidated Statements of Operations and Retained Earnings (Deficit)
(Expressed in Canadian dollars)



---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
---------------------------------------------------------------------------
(Unaudited) (Unaudited)
Sales $ 1,299,510 $ 10,396,117 $ 8,532,397 $ 20,473,224

Expenses:
Operating
costs 1,605,197 5,279,858 7,031,402 14,129,501
Administr-
ation and
business
development 3,065,448 3,800,983 8,152,347 10,418,936
Amortization 897,828 1,087,864 2,139,137 3,515,055
Foreign
exchange
loss (gain) (10,835) 226,482 422,022 357,263
Interest 73,264 50,178 100,059 128,551
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5,630,902 10,445,365 17,844,967 28,549,306
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Loss before
the
undernoted (4,331,392) (49,248) (9,312,570) (8,076,082)

Other income,
including
interest 190,650 78,438 417,363 467,882
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Income (loss)
before
income
taxes (4,140,742) 29,190 (8,895,207) (7,608,200)

Income taxes
(recovery):
Current (408,519) (291,389) (1,176,355) (520,680)
Future 781,023 138,091 719,953 (2,242,786)
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372,504 (153,298) (456,402) (2,763,466)
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Net income
(loss) (4,513,246) 182,488 (8,438,805) (4,844,734)

Retained
earnings
(deficit),
beginning
of period (18,206,878) 5,736,282 (14,281,319) 10,763,504

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Retained
earnings
(deficit),
end of
period $ (22,720,124) $ 5,918,770 $ (22,720,124) $ 5,918,770
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---------------------------------------------------------------------------

Income
(loss)
per
share:
Basic $ (0.21) $ 0.01 $ (0.39) $ (0.22)
Diluted (0.21) 0.01 (0.39) (0.22)

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Weighted
average
number
of shares
outstanding:
Basic 21,603,440 21,545,940 21,600,033 21,545,940
Diluted 21,603,440 21,545,940 21,600,033 21,545,940

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BENNETT ENVIRONMENTAL INC.
Interim Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)

---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
---------------------------------------------------------------------------
(Unaudited) (Unaudited)

Cash provided by
(used in):

Operations:
Net income (loss) $ (4,513,246) $ 182,488 $ (8,438,805) $ (4,844,734)
Items not
involving cash:
Amortization 897,828 1,087,864 2,139,137 3,515,055
Stock-based
compensation 595,840 99,079 1,079,522 410,484
Loss from asset
impairment - 4,684 - 4,017
Gain on sale of
investments - - - (175,000)
Gain on sale of
property, plant
and equipment (51,000) - (51,000) -
Future income
taxes (recovery) 781,023 138,091 719,953 (2,242,786)
Decrease in cash
surrender
value of life
insurance (72,579) (53,794) (94,548) (79,242)
Accretion expense (269) 87,160 6,865 176,685
Accrued interest
on long-term
receivables (5,075) - (12,367) -
Change in
non-cash
operating
working capital:
Amounts
receivable 1,431,921 1,173,997 8,928,917 (530,050)
Deferred
transportation
costs (193,111) (711,767) 289,705 (726,039)
Prepaid expenses
and other 187,800 697,111 41,498 26,683
Inventory (227,779) - (227,779) -
Accounts payable
and accrued
liabilities (1,171,768) 859,677 (3,085,987) (1,654,838)
Income taxes
receivable/
payable (330,813) (141,114) (1,265,969) (592,030)
Deferred revenue 129,119 (757,774) (787,701) 64,966
Severance payable 442,967 (294,550) 442,967 (715,311)
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(2,099,142) 2,371,152 (315,592) (7,362,140)

Financing:
Increase in
(repayments of)
long-term
liabilities (178,669) 60,984 (1,095,873) 82,303
Issuance of share
capital,
net of share
issue costs - 360,675 83,813 353,002
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(178,669) 421,659 (1,012,060) 435,305

Investments:
Change in
restricted cash (1,341) 2,178 1,296,264 174
Note receivable 44,962 150,000 114,962 150,000
Proceeds on
disposal of
investment - - - 175,000
Proceeds on
disposal of
property,
plant and
equipment 9,000 43,355 9,000 108,355
Purchase of
property, plant
and equipment (62,717) (133,958) (251,048) (1,418,658)
Decrease
(increase) in
other assets 770,615 1,703 (2,181,785) (84,680)
Acquisition of
Trans-Cycle
Industries, Inc. (32,887) - (2,264,037) -
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727,632 63,278 (3,276,644) (1,069,809)
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Increase
(decrease) in
cash and
cash equivalents (1,550,179) 2,856,089 (4,604,296) (7,996,644)

Cash and cash
equivalents,
beginning of
period 4,790,404 2,977,837 7,844,521 13,830,570
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Cash and cash
equivalents, end
of period $ 3,240,225 $ 5,833,926 $ 3,240,225 $ 5,833,926
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Supplemental cash
flow information:
Interest paid $ 61,191 $ 44,080 $ 69,697 $ 110,645
Income taxes paid - - - 6,247
Income taxes
received 77,518 - 313,679 -
Reclassification
from amounts
receivable to
long-term
receivables 5,037,611 - 5,037,611 -
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Contact Information

  • Bennett Environmental Inc.
    Michael McSweeney or Andrew Boulanger
    (905) 339-1540
    Website: www.bennettenv.com