SOURCE: PDG Environmental, Inc.

PDG Environmental, Inc.

September 11, 2009 15:59 ET

FlagshipPDG Announces Second Quarter Results for Period Ended July 31, 2009

PITTSBURGH, PA--(Marketwire - September 11, 2009) - PDG Environmental, Inc. (dba FlagshipPDG) (OTCBB: PDGE), a leading provider of environmental remediation, disaster response and reconstruction services, today reported financial results for the second fiscal quarter and six months ended July 31, 2009.

Revenues for the second quarter of fiscal 2010 were $12.8 million, down 45.0% from the $23.2 million reported in the second quarter of fiscal 2009. During the current quarter, an outstanding contract claim from a project completed in a prior year was settled for $900,000 resulting in a cash generating event of $900,000 but a negative adjustment to revenue of $800,000. Field margin, which is defined as the difference between contract revenues and direct field costs, increased to 25.7% of revenue for the current quarter, from 23.7% in the prior year fiscal quarter. Adjusting for the negative impact of the claim settlement on revenue, the field margin for the current quarter would have been 30.1%. Other direct and SG&A costs decreased $1.9 million from the second quarter of fiscal 2009 largely as a result of ongoing cost cutting measures initiated in the third quarter of fiscal 2009. The Company reported a net loss of $(1.3) million, or $(0.06) per diluted share in the second quarter of fiscal 2010, compared with a net loss of $(0.7) million, or $(0.04) per diluted share in the second quarter of fiscal 2009. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(465,000) for the current quarter versus a negative EBITDA of $(104,000) for the comparable period in fiscal 2009. Adjusting for the claim settlement, the net loss for the current quarter would have been ($0.7) million and EBITDA would have been a positive $135,000. In the second quarter of fiscal 2010, FlagshipPDG recorded non-cash accounting costs of $187,000 related to its July 2005 private placement as compared to $260,000 for the comparable period last year.

For the six months ended July 31, 2009 revenues were $25.4 million, a decrease of $15.5 million or 38.0% from the $40.9 million reported for the six months ended July 31, 2008. Field margins were $7.0 million or 27.4% of revenues in fiscal 2010 as compared to $10.2 million or 24.9% in fiscal 2009. Adjusting for the negative impact of the claim settlement on revenue, the field margin for the current six month period would have been 29.7%. Other direct and SG&A costs decreased $3.1 million from the first six months of fiscal 2009 due to lower personnel & related costs and lower marketing and bad debt expense. The company reported a net after-tax loss of $(2.7) million, or $(0.13) per diluted share for the six months ended July 31, 2009, compared with a net after-tax loss of $(1.9) million, or $(0.09) per diluted share for the six months ended July 31, 2008. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(1.0) million for the first six months of fiscal 2010 versus a negative EBITDA of $(0.9) million for the comparable period in fiscal 2009. Adjusting for the claim settlement, the net loss for the current six month period would have been ($2.1) million and EBITDA would have been a negative ($0.4) million. For the six months ended July 31, 2009 and 2008, FlagshipPDG recorded non-cash accounting costs of $0.5 million related to its July 2005 private placement.

"Our results continue to be greatly impacted by the overall national economic conditions. In addition, settlement of one of our outstanding contract claims adversely impacted second quarter results but generated nearly $1 million of cash. In the last half of fiscal 2009, we took necessary steps to begin rationalizing our fixed costs to achievable revenue levels resulting in a decrease to our overhead cost of approximately $1.9 million for the second quarter and over $3 million for the first six months of the current fiscal year. In addition, we have improved our field margins from previous years and are performing projects in a very efficient manner. We will continue to right size our cost infrastructure to realistic revenue levels for future quarters," said John C. Regan, chairman and chief executive officer of FlagshipPDG.

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.

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

                                                   For the Three Months
                                                       Ended July 31,
                                                --------------------------
                                                    2009          2008
                                                ------------  ------------

Contract Revenues                               $ 12,757,000  $ 23,207,000

Direct Job Costs                                   9,473,000    17,710,000
                                                ------------  ------------

Field Margin                                       3,284,000     5,497,000

Other Direct Costs                                 1,855,000     2,443,000
                                                ------------  ------------

Gross Margin                                       1,429,000     3,054,000

Gain (Loss) on Sale of Fixed Assets                   18,000        (4,000)
Selling, General and Administrative Expenses       2,349,000     3,614,000
                                                ------------  ------------

(Loss) from Operations                              (902,000)     (564,000)

Other Income (Expense):
  Interest Expense                                  (215,000)     (202,000)
  Non-Cash Interest Expense for Preferred
   Dividends and Accretion of Discount              (187,000)     (260,000)
  Interest and Other Income                           29,000        16,000
                                                ------------  ------------
                                                    (373,000)     (446,000)
                                                ------------  ------------

(Loss) Before Income Taxes                        (1,275,000)   (1,010,000)
                                                ------------  ------------

Income Tax (Benefit)                                       -      (278,000)
                                                ------------  ------------

Net (Loss)                                      $ (1,275,000) $   (732,000)
                                                ============  ============

(Loss) Per Common Share - Basic:                $      (0.06) $      (0.04)
                                                ============  ============

(Loss) Per Common Share - Diluted:              $      (0.06) $      (0.04)
                                                ============  ============

Average Common Shares Outstanding                 20,875,000    20,823,000

Average Dilutive Common Stock Equivalents
 Outstanding                                               -             -
                                                ------------  ------------

Average Common Shares and Dilutive Common Stock
 Equivalents Outstanding                          20,875,000    20,823,000
                                                ============  ============


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

                                                   For the Three Months
                                                       Ended July 31,
                                                --------------------------
                                                    2009          2008
                                                ------------  ------------

Net (Loss)                                        (1,275,000)     (732,000)

Interest Expense                                     215,000       202,000
Non-Cash Interest Expense for Preferred
 Dividends and Accretion of Discount                 187,000       260,000
Income Tax (Benefit)                                       -      (278,000)
Depreciation and Amortization                        408,000       444,000
                                                ------------  ------------

EBITDA                                          $   (465,000) $   (104,000)
                                                ============  ============




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

                                                    For the Six Months
                                                      Ended July 31,
                                                --------------------------
                                                    2009          2008
                                                ------------  ------------

Contract Revenues                               $ 25,387,000  $ 40,922,000

Direct Job Costs                                  18,420,000    30,712,000
                                                ------------  ------------

Field Margin                                       6,967,000    10,210,000

Other Direct Costs                                 3,685,000     4,923,000
                                                ------------  ------------

Gross Margin                                       3,282,000     5,287,000

(Loss) on Sale of Fixed Assets                             -        (6,000)
Selling, General and Administrative Expenses       5,174,000     7,075,000
                                                ------------  ------------

(Loss) from Operations                            (1,892,000)   (1,794,000)

Other Income (Expense):
  Interest Expense                                  (409,000)     (405,000)
  Non-Cash Interest Expense for Preferred
   Dividends and Accretion of Discount              (484,000)     (508,000)
  Interest and Other Income                           49,000        37,000
                                                ------------  ------------
                                                    (844,000)     (876,000)
                                                ------------  ------------

(Loss) Before Income Taxes                        (2,736,000)   (2,670,000)
                                                ------------  ------------

Income Tax (Benefit)                                       -      (795,000)
                                                ------------  ------------

Net (Loss)                                      $ (2,736,000) $ (1,875,000)
                                                ============  ============

(Loss) Per Common Share - Basic:                $      (0.13) $      (0.09)
                                                ============  ============

(Loss) Per Common Share - Diluted:              $      (0.13) $      (0.09)
                                                ============  ============

Average Common Shares Outstanding                 20,875,000    20,819,000

Average Dilutive Common Stock Equivalents
 Outstanding                                               -             -
                                                ------------  ------------

Average Common Shares and Dilutive Common Stock
 Equivalents Outstanding                          20,875,000    20,819,000
                                                ============  ============


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

                                                    For the Six Months
                                                      Ended July 31,
                                                --------------------------
                                                    2009          2008
                                                ------------  ------------

Net (Loss)                                        (2,736,000)   (1,875,000)

Interest Expense                                     409,000       405,000
Non-Cash Interest Expense for Preferred
 Dividends and Accretion of Discount                 484,000       508,000
Income Tax (Benefit)                                       -      (795,000)
Depreciation and Amortization                        824,000       894,000
                                                ------------  ------------

EBITDA                                          $ (1,019,000) $   (863,000)
                                                ============  ============




                 PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                                  July 31,    January 31,
                                                    2009          2009
                                                ------------  ------------
ASSETS                                          (unaudited)

  Current Assets
    Cash and Cash Equivalents                   $    875,000  $    314,000
    Contracts Receivable, Net                     13,420,000    20,677,000
    Costs and Estimated Earnings in Excess of
     Billings on Uncompleted Contracts             2,352,000     3,180,000
    Inventories                                      594,000       616,000
    Income Taxes Receivable                           90,000       355,000
    Deferred Income Tax Asset                        983,000       983,000
    Other Current Assets                           1,420,000       344,000
                                                ------------  ------------

  Total Current Assets                            19,734,000    26,469,000

  Property, Plant and Equipment                   11,888,000    12,431,000
  Less: Accumulated Depreciation                 (10,567,000)  (10,786,000)
                                                ------------  ------------
                                                   1,321,000     1,645,000

  Intangible Assets, Net                           3,772,000     4,026,000
  Goodwill                                         2,489,000     2,489,000
  Deferred Income Tax Asset                        2,948,000     2,948,000
  Contracts Receivable, Non Current                1,200,000     1,820,000
  Costs in Excess of Billings on Uncompleted
   Contracts, Non Current                            750,000     1,630,000
  Other Assets                                       327,000       345,000
                                                ------------  ------------

  Total Assets                                  $ 32,541,000  $ 41,372,000
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts Payable                            $  8,045,000  $  9,411,000
    Billings in Excess of Costs and Estimated
     Earnings on Uncompleted Contracts             1,244,000     1,125,000
    Accrued Income Taxes                                   -        44,000
    Accrued Liabilities                            3,845,000     2,742,000
    Current Portion of Long-Term Debt                405,000       303,000
    Mandatorily Redeemable Cumulative
     Convertible Series C Preferred Stock                  -       137,000
                                                ------------  ------------

  Total Current Liabilities                       13,539,000    13,762,000

  Long-Term Debt                                  13,432,000    15,045,000

  Mandatorily Redeemable Cumulative
   Convertible Series C Preferred Stock                    -     4,372,000
                                                ------------  ------------

  Total Liabilities                               26,971,000    33,179,000

  Stockholders' Equity
    Common Stock                                     418,000       418,000
    Common Stock Warrants                          1,628,000     1,628,000
    Paid-In Capital                               20,224,000    20,111,000
    Accumulated Deficit                          (16,662,000)  (13,926,000)
    Less Treasury Stock, at Cost                     (38,000)      (38,000)
                                                ------------  ------------

  Total Stockholders' Equity                       5,570,000     8,193,000
                                                ------------  ------------

  Total Liabilities and Stockholders' Equity    $ 32,541,000  $ 41,372,000
                                                ============  ============




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

                                                    For the Six Months
                                                      Ended July 31,
                                                --------------------------
                                                    2009          2008
                                                ------------  ------------
Cash Flows From Operating Activities:
Net (Loss)                                      $ (2,736,000) $ (1,875,000)
Adjustments to Reconcile Net Income (Loss) to
 Cash Provided by (Used in)
  Operating Activities:
  Depreciation and Amortization                      825,000       894,000
  Deferred Income Taxes                                    -      (840,000)
  Interest Expense for Series C Preferred Stock
   Dividends and Accretion of Discount               484,000       508,000
  Stock Based Compensation                           113,000       229,000
  Loss on Sale of Fixed Assets                             -         6,000
  Provision for Receivable Allowance                 (87,000)      450,000
                                                ------------  ------------
                                                  (1,401,000)     (628,000)
Changes in Operating Assets and Liabilities:
  Contracts Receivable                             7,964,000    (1,398,000)
  Costs and Estimated Earnings in Excess of
   Billings on Uncompleted Contracts               1,708,000    (1,079,000)
  Inventories                                         22,000        39,000
  Accrued Income Taxes                              (134,000)      (37,000)
  Other Current Assets                             2,009,000       740,000
  Accounts Payable                                (1,366,000)    1,512,000
  Billings in Excess of Costs and Estimated
   Earnings on Uncompleted Contracts                 119,000       242,000
  Accrued Liabilities                                 99,000       629,000
                                                ------------  ------------
Total Changes                                     10,421,000       648,000
                                                ------------  ------------
Net Cash Provided by Operating Activities          9,020,000        20,000

Cash Flows From Investing Activities:
  Purchase of Property, Plant and Equipment         (115,000)     (153,000)
  Proceeds from Sale of Fixed Assets                  18,000         4,000
  Changes in Other Assets                           (132,000)        3,000
                                                ------------  ------------
Net Cash (Used in) Investing Activities             (229,000)     (146,000)

Cash Flows From Financing Activities:
  Proceeds from Debt                                       -     1,005,000
  Proceeds from exercise of stock options                  -         2,000
  Payment of Premium Financing Liability          (1,726,000)     (759,000)
  Principal Payments on Debt                      (6,504,000)     (198,000)
                                                ------------  ------------
Net Cash Provided by (Used in) Financing
 Activities                                       (8,230,000)       50,000
                                                ------------  ------------

Net Increase (Decrease) in Cash and Cash
 Equivalents                                         561,000       (76,000)
Cash and Cash Equivalents, Beginning of Year         314,000        90,000
                                                ------------  ------------
Cash and Cash Equivalents, End of Period        $    875,000  $     14,000
                                                ============  ============

Supplementary Disclosure of Non-Cash Investing
 and Financing Activity:
  Financing of Annual Insurance Premium         $  2,730,000  $  1,313,000
                                                ============  ============
  Non-Cash Purchase of Fixed Assets Financed
   Through Capital Leases                       $          -  $     27,000
                                                ============  ============

Contact Information

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

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