SOURCE: PDG Environmental, Inc.

December 14, 2007 10:17 ET

PDG Environmental Announces Third Quarter Results

PITTSBURGH, PA--(Marketwire - December 14, 2007) - PDG Environmental, Inc. (OTCBB: PDGE), a leading provider of environmental remediation and specialty contracting services, today reported financial results for the fiscal third quarter and nine months ended October 31, 2007.

Revenue for the quarter was $26.6 million, up 34.5% from the $19.8 million reported in the third quarter of fiscal 2007. The company reported a net after-tax loss of $(1.0) million, or $(0.05) per diluted share in the third quarter of fiscal 2008, compared with a net loss of $(2.0) million, or $(0.10) per diluted share, in the third quarter of fiscal 2007. The loss for the current quarter was due to negative margin adjustments of approximately $1.8 million, including a $0.8 million loss on an asbestos contract performed in the third quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) was a negative $(0.2) million for the current quarter versus a negative $(0.6) million for the comparable period in fiscal 2007. SG&A and other direct costs as a percent of revenue decreased to 23.5% for the current quarter as compared to 29.9% for the comparable quarter last year although the costs increased $0.35 million largely related to increased selling costs, initial implementation costs for Sarbanes Oxley and higher legal costs. In the third quarter of fiscal 2008 and third quarter of fiscal 2007, PDG Environmental recorded non-cash accounting costs of $0.2 million related to its July 2005 private placement. The third quarter of fiscal 2007 also included $0.15 million in one-time charges related to employee fraud and $0.1 million for a non-cash impairment charge for goodwill, while the current quarter included other income of $0.2 million largely related to the partial insurance recovery from the fraud claim. Fully diluted shares outstanding rose to 20.7 million from 20.4 million.

For the nine months ended October 31, 2007, revenue rose to $74.9 million, up 28.0% versus the $58.6 million recorded during the same period in the prior fiscal year. PDG Environmental reported net after-tax loss of $0.18 million for the nine month period, or $(0.01) per diluted share, compared with a net loss of $(5.4) million, or $(0.28) per share, last year. EBITDA improved to $2.8 million from a negative $(2.2) million last year due to the increased level of revenues. SG&A and other direct costs decreased by $0.65 million in spite of being adversely impacted by the increased costs in the third quarter noted above. The non-cash accounting cost of the July 2005 private placement totaled $0.7 million in fiscal 2008 versus $1.9 million in fiscal 2007. Fiscal 2007 also included $0.7 million in one-time charges related to employee fraud, while fiscal 2008 included other income of $0.3 million largely related to the insurance recovery from the fraud claim. Fully diluted shares outstanding rose to 20.6 million from 19.5 million in fiscal 2007.

"While we are very pleased with the top line growth we have experienced this fiscal year, we are obviously very disappointed with our bottom line results which were adversely impacted by losses on a single project performed this quarter. Prospectively we have put in place new policies and procedures to mitigate the level of contract adjustments noted above. With backlog remaining at $50 million, over half of which is reconstruction related, and with additional controls in place we look forward to improved results going forward," said John C. Regan, chairman and chief executive officer of PDG Environmental.

Conference Call

PDG Environmental will host a conference call on December 14, 2007 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. The telephone number for the conference call is 1-888 339-9446.

Investors will be able to access an encore recording of the conference call for one week by calling 1-800-406-7325, conference ID# 3814622. The encore recording will be available two hours after the conference call has concluded.

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 PDG Environmental

PDG Environmental, Inc., 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, PDG Environmental has 13 offices capable of responding to customer requirements coast to coast. For additional information, please visit www.pdge.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 third 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 -

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

                                                For the Three Months Ended
                                                        October 31,
                                                --------------------------
                                                    2007          2006
                                                ------------  ------------

Contract Revenues                               $ 26,616,000  $ 19,783,000

Job Costs                                         21,200,000    14,790,000
                                                ------------  ------------

Field Margin                                       5,416,000     4,993,000

Other Direct Costs                                 2,674,000     2,982,000
                                                ------------  ------------

Gross Margin                                       2,742,000     2,011,000

Selling General & Administrative expenses          3,594,000     2,932,000
(Gain) loss on Sale of Fixed Assets                        -        12,000
                                                ------------  ------------

Income (Loss) From Operations                       (852,000)     (933,000)

Other Income (Expense):
        Interest Expense                            (303,000)     (246,000)
        Non-cash interest expense for preferred
         dividends and accretion of discount        (229,000)     (195,000)
        Non-recurring charge employee fraud                -      (150,000)
        Non-cash impairment charge for goodwill            -      (111,000)
        Interest and other income, net               163,000         3,000
                                                ------------  ------------
                                                    (369,000)     (699,000)

Income (Loss) Before Income Taxes                 (1,221,000)   (1,632,000)

Income Tax (Benefit) Provision                      (221,000)      365,000

Net Income (Loss)                               $ (1,000,000) $ (1,997,000)
                                                ============  ============

Per share of common stock:
        Basic                                   $      (0.05) $      (0.10)
                                                ============  ============

        Dilutive                                $      (0.05) $      (0.10)
                                                ============  ============

Earnings per share calculation:
        Average common share equivalents
         outstanding                              20,749,000    20,445,000

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

        Average common share and dilutive
         common equivalents outstanding           20,749,000    20,445,000
                                                ============  ============


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

                                                For the Three Months Ended
                                                        October 31,
                                                --------------------------
                                                    2007          2006
                                                ------------  ------------


Net Income (Loss)                               $ (1,000,000) $ (1,997,000)

Income Tax Provision (Benefit)                      (221,000)      365,000
Interest Expense                                     303,000       246,000

Non-cash interest expense for preferred
 dividends and accretion of discount                 229,000       195,000

Depreciation and Amortization                        469,000       541,000
                                                ------------  ------------

EBITDA                                              (220,000)     (650,000)
                                                ============  ============


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

                                                For the Nine Months Ended
                                                        October 31,
                                                --------------------------
                                                    2007          2006
                                                ------------  ------------


Contract Revenues                               $ 74,954,000  $ 58,579,000

Job Costs                                         56,249,000    43,046,000
                                                ------------  ------------

Field Margin                                      18,705,000    15,533,000

Other Direct Costs                                 8,229,000     9,082,000
                                                ------------  ------------

Gross Margin                                      10,476,000     6,451,000

Selling General & Administrative expenses          9,399,000     9,188,000
(Gain) loss on Sale of Fixed Assets                        -        17,000
                                                ------------  ------------

Income (Loss) From Operations                      1,077,000    (2,754,000)

Other Income (Expense):
   Interest Expense                                 (883,000)     (716,000)
   Non-cash interest expense for preferred
    dividends and accretion of discount             (658,000)   (1,870,000)
   Non-recurring charge employee fraud                     -      (748,000)
   Non-cash impairment charge for goodwill                 -      (111,000)
   Interest and other income, net                    315,000        16,000
                                                ------------  ------------
                                                  (1,226,000)   (3,429,000)

Income (Loss) Before Income Taxes                   (149,000)   (6,183,000)

Income Tax (Benefit) Provision                        32,000      (793,000)
                                                ------------  ------------

Net Income (Loss)                               $   (181,000) $ (5,390,000)
                                                ============  ============

Per share of common stock:
   Basic                                        $      (0.01) $      (0.28)
                                                ============  ============

   Dilutive                                     $      (0.01) $      (0.28)
                                                ============  ============

Earnings per share calculation:
   Average common share equivalents outstanding   20,614,000    19,543,000

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

   Average common share and dilutive common
    equivalents outstanding                       20,614,000    19,543,000
                                                ============  ============


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

                                                For the Nine Months Ended
                                                        October 31,
                                                --------------------------
                                                    2007          2006
                                                ------------  ------------


Net Income (Loss)                               $   (181,000) $ (5,390,000)

Income Tax Provision (Benefit)                        32,000      (793,000)

Interest Expense                                     883,000       716,000

Non-cash interest expense for preferred
 dividends and accretion of discount                 658,000     1,870,000

Depreciation and Amortization                      1,403,000     1,395,000
                                                ------------  ------------

EBITDA                                             2,795,000    (2,202,000)
                                                ============  ============


                PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS



                                                October 31,   January 31,
                                                    2007          2007
                                                ------------  ------------
ASSETS                                          (unaudited)

   Current Assets
       Cash and cash equivalents                $    143,000  $    158,000
       Contracts receivable, net                  25,250,000    21,257,000
       Costs and estimated earnings in excess
        of billings on uncompleted contracts       6,753,000     5,607,000
       Inventories                                   660,000       553,000
       Prepaid income taxes                           21,000       271,000
       Deferred income tax asset                   1,109,000       915,000
       Other current assets                          404,000       534,000
                                                ------------  ------------

   Total Current Assets                           34,340,000    29,295,000

   Property, Plant and Equipment                  12,066,000    11,352,000
   Less: accumulated depreciation                  9,614,000     8,795,000
                                                ------------  ------------

                                                   2,452,000     2,557,000

   Goodwill                                        2,619,000     2,651,000
   Deferred Income Tax Asset                       2,548,000     2,565,000
   Contracts Receivable, Non Current                 500,000       500,000
   Intangible and Other Assets                     5,174,000     5,686,000
                                                ------------  ------------

   Total Assets                                 $ 47,633,000  $ 43,254,000
                                                ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

   Current Liabilities
       Accounts payable                         $ 10,079,000  $  7,403,000
       Billings in excess of costs and
        estimated earnings on uncompleted
        contracts                                  1,835,000     3,421,000
       Accrued income taxes                          123,000             -
       Current portion of long-term debt             414,000       322,000
       Accrued liabilities                         5,688,000     4,007,000
                                                ------------  ------------

   Total Current Liabilities                      18,139,000    15,153,000

   Long-Term Debt                                 12,709,000    12,161,000

   Series C Redeemable Convertible Preferred
    Stock                                          3,207,000     2,550,000


   Total Liabilities                              34,055,000    29,864,000

   Stockholders' Equity
       Common stock                                  416,000       411,000
       Common stock warrants                       1,628,000     1,628,000
       Additional paid-in capital                 19,609,000    19,245,000
       Retained Earnings (deficit)                (8,037,000)   (7,856,000)
       Less treasury stock, at cost                  (38,000)      (38,000)

   Total Stockholders' Equity                     13,578,000    13,390,000
                                                ------------  ------------

   Total Liabilities and Stockholders' Equity   $ 47,633,000  $ 43,254,000
                                                ============  ============


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

                                                For the Nine Months Ended
                                                        October 31,
                                                --------------------------
                                                    2007          2006
                                                ------------  ------------

Cash Flows From Operating Activities:

   Net income                                   $   (181,000) $ (5,390,000)
       Adjustments to Reconcile Net Income to
        Cash:
         Depreciation  and amortization            1,403,000     1,284,000
         Provision for deferred income taxes        (177,000)     (895,000)
         Interest expense for Series C
          preferred stock accretion of discount      657,000     1,870,000
         Impairment charge for goodwill                    -       111,000
         Loss on sale of fixed asses and equity
          investment                                       -        17,000
         Stock based compensation                    224,000       209,000
         Provision for uncollectable accounts         11,000       140,000

       Changes in Assets and Liabilities Other
        than Cash:
         Contracts receivable                     (4,004,000)      382,000
         Costs and Estimated Earnings in Excess
          of Billings on uncompleted contracts    (1,146,000)     (372,000)
          Inventories                               (107,000)      (35,000)
         Prepaid/accrued income taxes                373,000       509,000
         Other current assets                      1,113,000       869,000
         Accounts payable                          2,676,000       534,000
         Billings in excess of costs and
          estimated earnings on uncompleted
          contracts                               (1,586,000)      (63,000)
         Accrued liabilities                       1,612,000      (458,000)
                                                ------------  ------------
       Total Changes in Assets and Liabilities
        Other than Cash                           (1,069,000)    1,366,000
                                                ------------  ------------
         Net Cash Provided by (Used in) by
          Operating Activities                       868,000    (1,288,000)

Cash Flows From Investing Activities:
       Purchase of property, plant and
        equipment                                   (528,000)     (775,000)
       Proceeds from sale of equity investment
        and fixed assets                                            24,000
       Increase in other assets                      (66,000)      (57,000)
                                                ------------  ------------
         Net Cash Used in Investing Activities      (594,000)     (808,000)

Cash Flows From Financing Activities:
       Proceeds from debt                            730,000     2,664,000
       Proceeds from exercise of stock options
        and warrants                                 145,000       861,000
       Payment of premium financing liability       (882,000)   (1,039,000)
       Principal payments on debt                   (282,000)     (485,000)
                                                ------------  ------------
         Net Cash (Used in) Provided by
          Financing Activities                      (289,000)    2,001,000
                                                ------------  ------------
   Change in cash and cash equivalents               (15,000)      (95,000)
   Cash and cash equivalents, beginning of
    period                                           158,000       230,000
                                                ------------  ------------

   Cash and Cash Equivalents, end of period     $    143,000  $    135,000
                                                ============  ============

       Supplementary disclosure of non-cash
        Investing and Financing Activity:
         Increase in goodwill and accrued
          liabilities for contingent liability       (32,000)      561,000
         Financing of annual insurance premium  $    983,000  $  1,157,000
         Non-Cash purchase of fixed assets
          financed through capital lease        $   (197,000) $          -

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