Pacific Safety Products Inc.
TSX VENTURE : PSP

Pacific Safety Products Inc.

May 26, 2009 06:00 ET

Pacific Safety Products Inc. Announces FY2009 Third Quarter Results

KANATA, ONTARIO--(Marketwire - May 26, 2009) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company") today announced its consolidated financial results for the three-month period ended March 31, 2009.

QUARTER HIGHLIGHTS:

- The Company increased net income during the quarter by almost 40% as compared to the same period of the prior year.

- U.S. sales during the quarter more than doubled as compared the same period of the prior year.

- The Company generated almost $1.0 million of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") during the quarter, an increase of 11% as compared to the same period of the prior year.

- Operational improvements have increased gross margins by more than 1% on a year to date basis as compared to the same period of the prior year.

- Selling, general and administrative expenses decreased by more than 25% during the quarter as compared to the same period of the prior year.

- The Company entered into a contract with the National Research Council Canada with a Contribution Agreement valued at up to $0.5 million to begin development of a next generation Integrated Helmet for soldier modernization.

Mr. David Scott, Chief Executive Officer commented, "I am extremely pleased with our progress to date. With three quarters of the year complete, sales are up more than 13% and gross margins are up more than 1% over last year. In addition operating expenses decreased by more than 25% during the quarter as compared to the comparable period last year. These results are a function of the operational improvements made over the last 12 months, specifically, the establishment of our manufacturing facility in Arnprior, the re-location of our head office to the Ottawa area, and the integration of the APS acquisition. The Company also generated net income of more than $0.4 million during the quarter, an increase of almost 40% as compared to the comparable period of the prior year. The Company continues to be well within its operating line and bank covenants. Cash flow continues to strengthen as the Company generated almost $1.0 million of EBITDA during the quarter. In addition to our positive financial results, we are excited about the market opportunity related to integrated soldier systems and to that end have secured up to $500,000 in financing through the National Research Council Canada with a Contribution Agreement to begin development of a next generation Integrated Helmet for soldier modernization."

For complete consolidated financial statements with notes and management discussion and analysis please refer to PSP's annual report to shareholders. This report is posted on SEDAR (www.sedar.com) and on our web site.

Summary consolidated financial results for the quarter ended March 31, 2009, are as follows:



SUMMARY CONSOLIDATED BALANCE SHEETS (unaudited)
$Thousands

AS AT MARCH 31, 2009 JUNE 30, 2008
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ASSETS
CURRENT ASSETS $12,199 $11,893
PROPERTY, PLANT AND EQUIPMENT 1,763 1,683
OTHER ASSETS 1,721 1,137
INTANGIBLE ASSETS 3,174 3,462
GOODWILL 8,454 8,454
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TOTAL ASSETS $27,311 $26,629
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LIABILITIES
CURRENT LIABILITIES $ 8,797 $ 9,038
LONG-TERM DEBT 1,213 875
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TOTAL LIABILITIES 10,010 9,913
SHAREHOLDERS' EQUITY 17,301 16,716
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $27,311 $26,629
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SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
$Thousands

THREE THREE NINE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2009 2008 2009 2008
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SALES $10,549 $10,639 $27,848 $24,587
COST OF SALES 7,934 7,679 20,950 18,792
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GROSS MARGIN 2,615 2,960 6,898 5,795
24.8% 27.8% 24.8% 23.6%

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,725 2,260 5,505 5,884
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OPERATING INCOME/(LOSS) 890 700 1,393 (89)
AMORTIZATION 224 195 602 652
FOREIGN EXCHANGE (GAIN)/LOSS (19) 128 131 160
INTEREST 51 109 166 187
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INCOME/(LOSS) BEFORE OTHER
ITEMS 634 268 494 (1,088)
RESTRUCTURING/RELOCATION COSTS - - 152 980
GAIN ON SALE OF BUILDING - (239) - (714)
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LOSS BEFORE INCOME TAX RECOVERY 634 507 342 (1,354)
INCOME TAX EXPENSE/(RECOVERY) 217 207 (125) (408)
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NET INCOME/(LOSS) $ 417 $ 300 $ 467 $ (946)
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SUPPLEMENTARY DISCLOSURE (unaudited)
$Thousands

The following is a reconciliation of net income to Earnings Before Interest,
Taxes, Depreciation and Amortization (EBITDA)

THREE THREE NINE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2009 2008 2009 2008
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NET INCOME/(LOSS) $ 417 $ 300 $ 467 $ (946)
INTEREST 51 109 166 187
INCOME TAX EXPENSE/(RECOVERY) 217 207 (125) (408)
STOCK BASED COMPENSATION 10 20 102 133
AMORTIZATION 287 247 769 806
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EBITDA $ 982 $ 883 $1,379 $ (228)
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About PSP

The mission statement of Pacific Safety Products Inc. is ...we bring everyday heroes home safely™. PSP is an established industry leader in the production, distribution and sale of high-performance and high-quality safety products for the defence and security market. These products include body armour to protect against ballistic, stab and fragmentation threats, ballistic blankets to reduce blast effects, and protective products against chemical and biological hazards. PSP is the largest armour manufacturer in Canada, directly supplying the Canadian Department of Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company also provides specialized law enforcement and safety products through APS Distributors, a division of PSP that services law enforcement and public safety agencies across the country. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armour products to U.S. based law enforcement and private security firms. The Company also produces tactical clothing and emergency medical kits. Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Forward Looking Statements: This news release may contain forward looking statements based on management's expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, expected expenditures, results of cost reduction initiatives and financial results are forward looking statements. Some of the forward looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "projects", "indicates", and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission, the TSX Venture Exchange, as well as others, could cause results to differ materially from those anticipated. These factors include, but are not limited to the potential impact of the current economic downturn on the Company's business, the unpredictability of purchasing patterns by governmental agencies, the possibility of a deterioration in the Company's working capital position, the impact on the Company's liquidity if it were to go offside of the covenants in its debt facilities, the impact that changes in supplier payment terms or slow payment of accounts receivable could have on the Company's liquidity, the unavailability of or increase in price of external capital to finance the Company's research, development and growth initiatives, changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates fluctuations of countries in which the Company does business; competitive pressures; successful integration of structural changes or downsizing initiatives, including restructuring plans, acquisitions, divestitures and alliances; cost of raw material, the uncertainty associated with the outcome of research and development of new products, including regulatory approval and market acceptance; and seasonality of sales in some products.

Contact Information

  • Pacific Safety Products Inc.
    David Scott
    Chief Executive Officer
    (613) 254-9488 ext. 322
    www.pacsafety.com