SOURCE: FlagshipPDG

April 25, 2008 08:30 ET

FlagshipPDG Announces Fourth Quarter and Annual Results

PITTSBURGH, PA--(Marketwire - April 25, 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 fourth quarter and twelve months ended January 31, 2008.

Revenue for the quarter was $22.1 million, up 35.0% from the $16.4 million reported in the fourth quarter of fiscal 2007. Field margin for the fourth quarter of fiscal 2008 was $6.4 million or 28.8% of revenue as compared to field margin of $3.6 million or 22% of revenue in the prior year fiscal quarter. The company reported a net after-tax loss of $(0.7) million, or $(0.04) per diluted share in the fourth quarter of fiscal 2008, compared with a net loss of $(1.8) million, or $(0.08) per diluted share, in the fourth quarter of fiscal 2007. The loss for the current quarter was largely due to a contract claim adjustment of $500,000 impacting the revenue and ultimately the pre-tax income of the Company for this quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) was a positive $0.2 million for the current quarter versus a negative $(2.6) million for the comparable period in fiscal 2007. SG&A and other direct costs as a percent of revenue decreased to 29.8% for the current quarter as compared to 39.8% for the comparable quarter last year. SG&A costs in the fourth quarter of fiscal 2008 were $0.3 million higher than the prior year due to higher variable sales costs driven by the higher revenue for the current quarter. In the fourth quarter of fiscal 2008 and fourth quarter of fiscal 2007, FlagshipPDG recorded non-cash accounting costs of $0.2 million related to its July 2005 private placement. The fourth quarter of fiscal 2007 also included $0.2 million in one-time charges related to employee fraud. Average shares outstanding for the quarter rose to 20.8 million for the fourth quarter of fiscal 2008 from 19.7 million for the fourth quarter of fiscal 2007.

For the twelve months ended January 31, 2008, revenue rose to $97.1 million, up 29.5% versus the $75.0 million recorded during the same period in the prior fiscal year. FlagshipPDG reported net after-tax loss of $(0.9) million for the twelve month period, or $(0.04) per diluted share, compared with a net loss of $(7.2) million, or $(0.36) per share, last year. EBITDA improved to $3.0 million from a negative $(4.9) million last year. SG&A and other direct costs as a percent of revenue decreased to 25.0% for the current twelve month period as compared to 33.1% for the comparable period last year. SG&A costs increased $0.5 million from prior year due to higher variable selling and incentive costs, higher legal costs, and initial SOX implementation costs. The non-cash accounting cost of the July 2005 private placement totaled $0.9 million in fiscal 2008 versus $2.1 million in fiscal 2007, the decrease was a result of no conversions of preferred stock in fiscal 2008. Fiscal 2007 included $0.9 million in one-time charges related to employee fraud. Average shares outstanding rose to 20.7 million from 19.8 million in fiscal 2007.

"We are very pleased with the top line growth and the level of field margin we were able to attain this quarter, which is typically a slow time of year for FlagshipPDG. We are disappointed with our bottom line results for this fiscal year which were adversely impacted by a loss on a single project performed in the third quarter and a negative claim adjustment this quarter. Our backlog continues to be strong, exceeding $56 million, and we are focused on improving our bottom line results going forward. The rebranding initiative announced in mid-March has been extremely well received and we look forward to the benefits that a consistent message will have on our business development efforts," said John C. Regan, chairman and chief executive officer of FlagshipPDG.

Conference Call

FlagshipPDG will host a conference call on April 25, 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: Friday, April 25, 2008
Time: 11:00 a.m. (EDT)
Dial-in Number: 1-800-762-9439
International Dial-in Number: 1-480-629-9041

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 May 15, 2008, by dialing 1-800-406-7325 or 1-303-590-3030 for international callers and entering the replay access code 3869065.

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 do both actual results for the quarter and year-to-date periods.

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 fourth 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.


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

                                                For the Three Months Ended
                                                        January 31,
                                                --------------------------
                                                    2008          2007
                                                ------------  ------------

Contract Revenues                               $ 22,130,000  $ 16,398,000

Job Costs                                         15,749,000    12,774,000
                                                ------------  ------------

Field Margin                                       6,381,000     3,624,000

Other Direct Costs                                 2,769,000     2,969,000
                                                ------------  ------------

Gross Margin                                       3,612,000       655,000

Selling General & Administrative Expenses          3,831,000     3,562,000
Non-recurring Charge for Employee Fraud                    -       171,000
Non-cash Impairment Charge for Goodwill and
 Operating Lease                                      52,000       105,000
(Gain) on Sale of Fixed Assets                        (9,000)            -
                                                ------------  ------------

(Loss) From Operations                              (262,000)   (3,183,000)

Other Income (Expense):
  Interest Expense                                  (269,000)     (286,000)
  Non-cash interest expense for preferred
   dividends and accretion of discount              (238,000)     (202,000)
  Interest and other income, net                      15,000         1,000
                                                ------------  ------------
                                                    (492,000)     (487,000)

(Loss) Before Income Taxes                          (754,000)   (3,670,000)

Income Tax (Benefit)                                 (26,000)   (1,883,000)

Net (Loss)                                      $   (728,000) $ (1,787,000)
                                                ============  ============

Per share of common stock:
  Basic                                         $      (0.04) $      (0.08)
                                                ============  ============

  Dilutive                                      $      (0.04) $      (0.08)
                                                ============  ============

Earnings per share calculation:
  Average common share equivalents outstanding    20,814,000    19,664,000

  Average dilutive common share equivalents
   outstanding                                             -             -
                                                ------------  ------------

  Average common share and dilutive common
   equivalents outstanding                        20,814,000    19,664,000
                                                ============  ============


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

                                                For the Three Months Ended
                                                        January 31,
                                                --------------------------
                                                    2008          2007
                                                ------------  ------------

Net (Loss)                                      $   (728,000) $ (1,787,000)

Income Tax (Benefit)                                 (26,000)   (1,883,000)

Interest Expense                                     269,000       286,000

Non-cash interest expense for preferred
 dividends and accretion of discount                 238,000       202,000

Depreciation and Amortization                        455,000       551,000
                                                ------------  ------------

EBITDA                                               208,000    (2,631,000)
                                                ============  ============




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

                                                  For the Twelve Months
                                                     Ended January 31,
                                                --------------------------
                                                    2008          2007
                                                ------------  ------------


Contract Revenues                               $ 97,084,000  $ 74,977,000

Job Costs                                         71,998,000    55,820,000
                                                ------------  ------------

Field Margin                                      25,086,000    19,157,000

Other Direct Costs                                10,998,000    12,051,000
                                                ------------  ------------

Gross Margin                                      14,088,000     7,106,000

Selling General & Administrative expenses         13,230,000    12,750,000
Non-recurring Charge for Employee Fraud                    -       919,000
Non-cash Impairment Charge for Goodwill and
 Operating Lease                                      52,000       216,000
(Gain) loss on Sale of Fixed Assets                   (9,000)       17,000
                                                ------------  ------------

Income (Loss) From Operations                        815,000    (6,796,000)

Other Income (Expense):
  Interest Expense                                (1,152,000)   (1,002,000)
  Non-cash interest expense for preferred
   dividends and accretion of discount              (896,000)   (2,072,000)
  Interest and other income, net                     330,000        17,000
                                                ------------  ------------
                                                  (1,718,000)   (3,057,000)

(Loss) Before Income Taxes                          (903,000)   (9,853,000)

Income Tax (Benefit) Provision                         6,000    (2,676,000)
                                                ------------  ------------

Net (Loss)                                      $   (909,000) $ (7,177,000)
                                                ============  ============

Per share of common stock:
  Basic                                         $      (0.04) $      (0.36)
                                                ============  ============

  Dilutive                                      $      (0.04) $      (0.36)
                                                ============  ============

Earnings per share calculation:
  Average common share equivalents outstanding    20,664,000    19,785,000

  Average dilutive common share equivalents
   outstanding                                             -             -
                                                ------------  ------------

  Average common share and dilutive common
   equivalents outstanding                        20,664,000    19,785,000
                                                ============  ============


                 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
   RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
                          AMORTIZATION ("EBITDA")
                               (UNAUDITED)
                                                  For the Twelve Months
                                                     Ended January 31,
                                                --------------------------
                                                    2008          2007
                                                ------------  ------------

Net (Loss)                                      $   (909,000) $ (7,177,000)

Income Tax Provision (Benefit)                         6,000    (2,676,000)

Interest Expense                                   1,152,000     1,002,000

Non-cash interest expense for preferred
 dividends and accretion of discount                 896,000     2,072,000

Depreciation and Amortization                      1,858,000     1,835,000
                                                ------------  ------------

EBITDA                                             3,003,000    (4,944,000)
                                                ============  ============




                 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS



                                                January 31,   January 31,
                                                    2008          2007
                                                ------------  ------------
ASSETS                                          (Unaudited)

  Current Assets
    Cash and cash equivalents                   $     90,000  $    158,000
    Contracts receivable, net                     22,154,000    21,257,000
    Costs and estimated earnings in excess of
     billings on uncompleted contracts             3,325,000     4,407,000
    Inventories                                      689,000       553,000
    Prepaid income taxes                                   -       271,000
    Deferred income tax asset                      1,111,000       915,000
    Other current assets                              94,000       534,000
                                                ------------  ------------

  Total Current Assets                            27,463,000    28,095,000

  Property, Plant and Equipment                   12,201,000    11,352,000
  Less: accumulated depreciation                   9,859,000     8,795,000
                                                ------------  ------------

                                                   2,342,000     2,557,000

  Goodwill                                         2,614,000     2,651,000
  Deferred Income Tax Asset                        2,804,000     2,565,000
  Contracts Receivable, Non Current                  677,000       500,000
  Costs in excess of billings, Non Current         3,327,000     1,200,000
  Intangible and Other Assets                      5,018,000     5,686,000
                                                ------------  ------------

  Total Assets                                  $ 44,245,000  $ 43,254,000
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable                            $  9,729,000  $  7,403,000
    Billings in excess of costs and estimated
     earnings on uncompleted contracts             1,832,000     3,421,000
    Accrued income taxes                             255,000             -
    Current portion of long-term debt                412,000       322,000
    Accrued liabilities                            4,921,000     4,007,000
                                                ------------  ------------

  Total Current Liabilities                       17,149,000    15,153,000

  Long-Term Debt                                  10,679,000    12,161,000

  Series C Redeemable Convertible Preferred
   Stock                                           3,446,000     2,550,000


  Total Liabilities                               31,274,000    29,864,000

  Stockholders' Equity
    Common stock                                     418,000       411,000
    Common stock warrants                          1,628,000     1,628,000
    Additional paid-in capital                    19,728,000    19,245,000
    Retained Earnings (deficit)                   (8,765,000)   (7,856,000)
    Less treasury stock, at cost                     (38,000)      (38,000)

  Total Stockholders' Equity                      12,971,000    13,390,000
                                                ------------  ------------

  Total Liabilities and Stockholders' Equity    $ 44,245,000  $ 43,254,000
                                                ============  ============




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

                                                  For the Twelve Months
                                                    Ended October 31,
                                                --------------------------
                                                    2008          2007
                                                ------------  ------------

Cash Flows From Operating Activities:

  Net (loss)                                    $   (909,000) $ (7,177,000)
    Adjustments to Reconcile Net Income (Loss)
     to Cash:
      Depreciation  and amortization               1,858,000     1,835,000
      Provision for deferred income taxes           (435,000)   (2,794,000)
      Interest expense for Series C preferred
       stock accretion of discount                   896,000     2,072,000
      Impairment charge for goodwill and
       operating lease                                52,000       216,000
      Loss (gain) on sale of fixed assets and
       equity investment                              (9,000)       17,000
      Stock based compensation                       345,000       296,000
      Provision for uncollectable accounts             4,000       850,000

    Changes in Assets and Liabilities Other than
     Cash:
      Contracts receivable                        (1,078,000)    1,296,000
      Costs and Estimated Earnings in Excess of
       Billings on uncompleted contracts          (1,045,000)     (433,000)
      Inventories                                   (136,000)       43,000
      Prepaid/accrued income taxes                   526,000       463,000
      Other current assets                         1,423,000       754,000
      Accounts payable                             2,326,000       915,000
      Billings in excess of costs and estimated
       earnings on uncompleted contracts          (1,589,000)    1,377,000
      Accrued liabilities                            899,000      (193,000)
                                                ------------  ------------
    Total Changes in Assets and Liabilities
     Other than Cash                               1,326,000     4,222,000
                                                ------------  ------------
      Net Cash Provided by (Used in) by
       Operating Activities                        3,128,000      (463,000)

Cash Flows From Investing Activities:
    Purchase of property, plant and equipment       (674,000)     (812,000)
    Proceeds from sale of equity investment and
     fixed assets                                     27,000        49,000
    Increase in other assets                        (105,000)      (49,000)
                                                ------------  ------------
      Net Cash Used in Investing Activities         (752,000)     (812,000)

Cash Flows From Financing Activities:
    Proceeds from debt                                     -     2,868,000
    Proceeds from exercise of stock options and
     warrants                                        145,000       861,000
    Payment of premium financing liability          (983,000)   (1,157,000)
    Principal payments on debt                    (1,606,000)   (1,369,000)
                                                ------------  ------------
      Net Cash (Used in) Provided by Financing
       Activities                                 (2,444,000)    1,203,000
                                                ------------  ------------
  Change in cash and cash equivalents                (68,000)      (72,000)
  Cash and cash equivalents, beginning of period     158,000       230,000
                                                ------------  ------------

  Cash and Cash Equivalents, end of period      $     90,000  $    158,000
                                                ============  ============

    Supplementary disclosure of non-cash
     Investing and Financing Activity:
      Change in goodwill and accrued liabilities
       for earnout liability                         (37,000)      442,000
      Financing of annual insurance premium     $    983,000  $  1,157,000
      Non-Cash purchase of fixed assets financed
       through capital lease                    $    214,000  $    561,000


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