SOURCE: PDG Environmental, Inc. (dba FlagshipPDG)

June 12, 2008 08:30 ET

FlagshipPDG Announces First Quarter Results

PITTSBURGH, PA--(Marketwire - June 12, 2008) - PDG Environmental, Inc. (dba FlagshipPDG) (OTCBB: PDGE), a leading provider of environmental remediation, disaster response and reconstruction services, today reported financial results for the fiscal first quarter ended April 30, 2008.

Revenue for the first quarter of fiscal 2009 was $17.7 million, down 18.4% from the $21.7 million reported in the first quarter of fiscal 2008. Field margin for the first quarter of fiscal 2009 was $4.7 million or approximately 27% of revenue as compared to field margin of $6.5 million or approximately 30% of revenue in the prior year fiscal quarter. The company reported a net after-tax loss of $(1.1) million, or $(0.05) per diluted share in the first quarter of fiscal 2009, compared with net income of $0.3 million, or $0.01 per diluted share in the first quarter of fiscal 2008. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(0.8) million for the current quarter versus a positive EBITDA of $1.3 million for the comparable period in fiscal 2008. Although other direct and SG&A costs were down $0.65 million sequentially from the fourth quarter of fiscal 2008, they did increase by $0.35 million as compared to the first quarter of fiscal 2008 due principally to marketing and re-branding costs, personnel costs for finance and sales professionals, non-cash stock option expense, and ongoing costs for Sarbanes-Oxley. In the first quarter of fiscal 2009 and first quarter of fiscal 2008, FlagshipPDG recorded non-cash accounting costs of $0.2 million related to its July 2005 private placement. Average shares outstanding for the quarter rose to 20.8 million for the first quarter of fiscal 2009 from 20.5 million for the first quarter of fiscal 2008.

"While the first quarter is historically very slow for FlagshipPDG, the revenues for the first quarter of fiscal 2009 were significantly less than anticipated. Two significant projects in New York that were expected to start early in the quarter did not begin to ramp up until April, a large contract with a school district in California did not produce expected revenues, and reconstruction revenues were down significantly from the fourth quarter. Fortunately the two contracts in New York are now going strong, the California contract is beginning to generate additional revenues and we have recently received a number of significant awards on the reconstruction side that will be starting this quarter. Backlog remains strong at about $57 million and we continue to trim overhead costs where appropriate with recent cuts projected to save nearly $700,000 annually. On the strength of the recent backlog additions and ramp-up of existing contracts, we look forward to much improved results for the second quarter," said John C. Regan, chairman and chief executive officer of FlagshipPDG.

Conference Call

FlagshipPDG will host a conference call on June 12, 2008 at 11:00 a.m. Eastern. During the call, John C. Regan, Chairman and Chief Executive Officer, and Nick Battaglia, Chief Financial Officer, will discuss the Company's quarterly performance and financial results.

Conference Call Details
Date: Thursday, June 12, 2008
Time: 11:00 a.m. (EDT)
Dial-in Number: 1-800-762-8779
International Dial-in Number: 1-480-248-5081

It is recommended that participants phone-in approximately 5 to 10 minutes prior to the start of the 11:00 a.m. call. A telephonic replay of the conference call may be accessed approximately two hours after the call through June 19, 2008, by dialing 1-800-406-7325 or 1-303-590-3030 for international callers and entering the replay access code 3884941.

The company makes use of EBITDA (earnings before interest, taxes, depreciation and amortization) as a financial measure which it believes is a useful performance indicator. EBITDA is not a recognized term under generally accepted accounting principles, or "GAAP," and should not be considered as an alternative to net income/(loss) or net cash provided by operating activities, which are GAAP measures. A reconciliation of EBITDA to net income/(loss) appears at the end of this release as actual results for the quarter.

About FlagshipPDG

FlagshipPDG, headquartered in Pittsburgh, PA, is a leading provider of specialty contracting services including asbestos abatement, mold remediation, emergency response, demolition and reconstruction to commercial, industrial and governmental clients nationwide. With over twenty years experience, FlagshipPDG has offices nationwide capable of responding to customer requirements coast to coast. For additional information, please visit http://www.FlagshipPDG.com.

Safe Harbor Statement under Private Securities Act of 1995: The statements contained in this release, which are not historical facts, may be deemed to contain forward-looking statements, including, but not limited to, deployment of new services, growth of customer base, and growth of service area, among other items. Actual results may differ materially from those anticipated in any forward-looking statement with regard to magnitude, timing or other factors. Deviation may result from risk and uncertainties, including, without limitation, the company's dependence on first parties, market conditions for the sale of services, availability of capital, operational risks on contracts, and other risks and uncertainties. The company disclaims any obligation to update information contained in any forward-looking statement.

- Tables to follow -

                  STATEMENTS OF CONSOLIDATED OPERATIONS
                                (UNAUDITED)

                                              For the Three Months Ended
                                                      April 30,
                                            ------------------------------
                                                 2008            2007
                                            --------------  --------------


Contract Revenues                           $   17,715,000  $   21,700,000

Job Costs                                       13,002,000      15,234,000
                                            --------------  --------------

Field Margin                                     4,713,000       6,466,000

Other Direct Costs                               2,480,000       2,773,000
                                            --------------  --------------

Gross Margin                                     2,233,000       3,693,000

Selling General & Administrative expenses        3,461,000       2,814,000
(Gain) loss on Sale of Fixed Assets                  3,000               -
                                            --------------  --------------

Income (Loss) From Operations                   (1,231,000)        879,000

Other Income (Expense):
   Interest Expense                               (203,000)       (271,000)
   Non-cash interest expense for preferred
    dividends and accretion of discount           (248,000)       (210,000)
   Interest and other income, net                   21,000           5,000
                                            --------------  --------------
                                                  (430,000)       (476,000)

(Loss) Before Income Taxes                      (1,661,000)        403,000

Income Tax (Benefit) Provision                    (517,000)         89,000
                                            --------------  --------------

Net Income (Loss)                           $   (1,144,000) $      314,000
                                            ==============  ==============

Per share of common stock:
   Basic                                    $        (0.05) $         0.02
                                            ==============  ==============

   Dilutive                                 $        (0.05) $         0.01
                                            ==============  ==============

Earnings per share calculation:
   Average common share equivalents
    outstanding                                 20,814,000      20,502,000

   Average dilutive common share
    equivalents outstanding                              -         495,000
                                            --------------  --------------

   Average common share and dilutive common
    equivalents outstanding                     20,814,000      20,997,000
                                            ==============  ==============



                PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
      RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION
                       AND AMORTIZATION ("EBITDA")
                              (UNAUDITED)

                                               For the Three Months Ended
                                                       April 30,
                                            ------------------------------
                                                  2008            2007
                                            --------------  --------------


Net Income (Loss)                           $   (1,144,000) $      314,000

Income Tax Provision (Benefit)                    (517,000)         89,000

Interest Expense                                   203,000         271,000

Non-cash interest expense for preferred
 dividends and accretion of discount               248,000         210,000

Depreciation and Amortization                      450,000         461,000
                                            --------------  --------------

EBITDA                                            (760,000)      1,345,000
                                            ==============  ==============




                 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS



                                                  April 30,   January 31,
                                                    2008          2008
                                                ------------  ------------
ASSETS                                          (Unaudited)

   Current Assets
       Cash and cash equivalents                $     87,000  $     90,000
       Contracts receivable, net                  19,348,000    22,154,000
       Costs and estimated earnings in excess
        of billings on
        uncompleted contracts                      3,266,000     3,325,000
       Inventories                                   601,000       689,000
       Prepaid income taxes                                -             -
       Deferred income tax asset                   1,181,000     1,111,000
       Other current assets                        1,037,000        94,000
                                                ------------  ------------

   Total Current Assets                           25,520,000    27,463,000

   Property, Plant and Equipment                  12,296,000    12,201,000
   Less: accumulated depreciation                 10,102,000     9,859,000
                                                ------------  ------------

                                                   2,194,000     2,342,000

   Goodwill                                        2,614,000     2,614,000
   Deferred Income Tax Asset                       3,251,000     2,804,000
   Contracts Receivable, Non Current                 677,000       677,000
   Costs in excess of billings, Non Current        3,327,000     3,327,000
   Intangible and Other Assets                     4,822,000     5,018,000
                                                ------------  ------------

   Total Assets                                 $ 42,405,000  $ 44,245,000
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

   Current Liabilities
       Accounts payable                         $  7,936,000  $  9,729,000
       Billings in excess of costs and
        estimated earnings on
        uncompleted contracts                      1,859,000     1,832,000
       Accrued income taxes                          187,000       255,000
       Current portion of long-term debt             394,000       412,000
       Accrued liabilities                         5,827,000     4,921,000
                                                ------------  ------------

   Total Current Liabilities                      16,203,000    17,149,000

   Long-Term Debt                                 10,552,000    10,679,000

   Series C Redeemable Convertible Preferred
    Stock                                          3,694,000     3,446,000


   Total Liabilities                              30,449,000    31,274,000

   Stockholders' Equity
       Common stock                                  418,000       418,000
       Common stock warrants                       1,628,000     1,628,000
       Additional paid-in capital                 19,857,000    19,728,000
       Retained Earnings (deficit)                (9,909,000)   (8,765,000)
       Less treasury stock, at cost                  (38,000)      (38,000)

   Total Stockholders' Equity                     11,956,000    12,971,000
                                                ------------  ------------

   Total Liabilities and Stockholders' Equity   $ 42,405,000  $ 44,245,000
                                                ============  ============



                 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                  STATEMENTS OF CONSOLIDATED CASH FLOWS
                                (UNAUDITED)

                                                For the Three Months Ended
                                                        April 30,
                                                --------------------------
                                                    2008          2007
                                                ------------  ------------

Cash Flows From Operating Activities:

   Net income (loss)                            $ (1,144,000) $    314,000
       Adjustments to Reconcile Net Income
        (Loss) to Cash:
         Depreciation and amortization               450,000       461,000
         (Benefit) Provision for deferred
          income taxes                              (517,000)       67,000
         Interest expense for Series C
          preferred stock accretion of discount      248,000       210,000
         Loss on sale of fixed assets                  3,000             -
         Stock based compensation                    129,000        53,000
         Provision for uncollectable accounts              -       (40,000)
                                                ------------  ------------
                                                    (831,000)    1,065,000
       Changes in Assets and Liabilities Other
        than Cash:
         Contracts receivable                      2,806,000    (1,905,000)
         Costs and Estimated Earnings in Excess
          of Billings on uncompleted contracts        59,000        58,000
         Inventories                                  88,000       (35,000)
         Prepaid/accrued income taxes                (68,000)      230,000
         Other current assets                        370,000       584,000
         Accounts payable                         (1,793,000)      541,000
         Billings in excess of costs and
          estimated earnings on uncompleted
          contracts                                   27,000      (506,000)
         Accrued liabilities                         (81,000)     (292,000)
                                                ------------  ------------
       Total Changes in Assets and Liabilities
        Other than Cash                            1,408,000    (1,325,000)
                                                ------------  ------------
         Net Cash Provided by (Used in) by
          Operating Activities                       577,000      (260,000)

Cash Flows From Investing Activities:
       Purchase of property, plant and
        equipment                                    (86,000)     (137,000)
       Proceeds from sale of fixed assets              1,000             -
       Change in other assets                          3,000       (25,000)
                                                ------------  ------------
         Net Cash Used in Investing Activities       (82,000)     (162,000)

Cash Flows From Financing Activities:
       Proceeds from debt                                  -       705,000
       Payment of premium financing liability       (326,000)     (289,000)
       Principal payments on debt                   (172,000)      (82,000)
                                                ------------  ------------
         Net Cash (Used in) Provided by
          Financing Activities                      (498,000)      334,000
                                                ------------  ------------
   Change in cash and cash equivalents                (3,000)      (88,000)
   Cash and cash equivalents, beginning of
    period                                            90,000       158,000
                                                ------------  ------------

   Cash and Cash Equivalents, end of period     $     87,000  $     70,000
                                                ============  ============

       Supplementary disclosure of non-cash
        Investing and Financing Activity:
         Change in goodwill and accrued
          liabilities for earnout liability                -       (32,000)
         Financing of annual insurance premium  $  1,313,000  $    983,000
         Non-Cash purchase of fixed assets
          financed through capital lease        $     27,000  $     38,000


Contact Information

  • Investor Contact:
    Alliance Advisors, LLC
    Mark McPartland / Chris Camarra
    212-398-3487
    Email Contact

    Company Contact:
    John C. Regan
    Chairman & CEO
    Nick Battaglia
    CFO
    412-243-3200