Pacific Safety Products Inc.
TSX VENTURE : PSP

Pacific Safety Products Inc.

February 27, 2015 16:05 ET

Pacific Safety Products Inc. Reports Second Quarter of Fiscal 2015 and Update on Lease Arbitration

ARNPRIOR, ONTARIO--(Marketwired - Feb. 27, 2015) - Pacific Safety Products Inc. ("PSP" or the "Company") (TSX VENTURE:PSP), a leading North American manufacturer of advanced armour and personal protection solutions, today reported financial results for the three month period ended December 31, 2014.

Highlights:

  • Revenues for the second quarter were $3.5 million, an increase of 17.8% compared to revenues of $3.0 million during the second quarter of fiscal 2014.

  • Gross margin as a percentage of revenues for the second quarter was 27.5% compared to 24.0% for the second quarter of the prior year.

  • Working capital in the quarter was strong at $ 1.6 million, further improving by $0.9 million with the maturing and issuing of debentures. Future working capital should again improve with anticipated lease arbitration awards.

  • Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")1 was $0.003 million compared to the Adjusted EBITDA loss of $0.15 million during the second quarter of the prior year.

  • The Company reported net loss for the second quarter of $0.09 million compared to a net loss of $0.5 million during the second quarter of the prior year.

  • Expenses for the second quarter were $1.0 million a decrease of $0.1 compared to the second quarter of the prior year.

Update on Lease Arbitration

The Company is pleased to provide an update on the arbitration proceedings commenced against the Company's landlord, initially announced on May 3, 2013.

On February 13, 2015, PSP received its first partial lease arbitration award of $ 0.2 million net of any interest or legal expenses PSP will make claim for. This partial award was for years 2011-2012. The arbitrator has now provided a timetable that will see the majority of the remaining lease issues being ruled on over the next 90-120 days.

"PSP is beginning to take advantage of its sales backlog and recent contract wins. We are seeing early indications that revenue is firming up", says CEO, Terry Vaudry. "Our expenses are in line with expectations and we have substantially completed a major year long product re-fresh. As our lease arbitration concludes, we anticipate the recovery of legal expenses as well as a lower operational run-rate related to our facilities in Arnprior."

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, tactical clothing, and protective products against chemical and biological hazards. PSP is the largest body armour manufacturer in Canada, directly supplying the Canadian Department of National Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armour products under the GH Armor Systems® brand to U.S. based law enforcement and private security firms. The Company also produces tactical clothing. 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.

Forward-Looking Information: This news release contains certain statements which may constitute "forward-looking information" within the meaning of applicable securities laws. These statements relate to anticipated or assumed events or results and, in some cases, can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms. The forward-looking events and circumstances discussed in this news release, including when the Company expects to commence delivery under the above noted contracts, may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the Company. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Any forward-looking statement speaks only as of the date of this news release and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise.

1 Note on Adjusted EBITDA: Adjusted EBITDA consists of earnings before interest expense, income taxes, share-based compensation, depreciation and amortization, foreign exchange, and other one-time charges and gains. PSP believes Adjusted EBITDA is a useful measure in the evaluation of performance. Adjusted EBITDA is not a recognized performance measure under International Financial Reporting Standards ("IFRS") and does not have a standardized meaning as prescribed by IFRS. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other entities.

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