Semcan Inc.
TSX VENTURE : STT

Semcan Inc.

March 29, 2011 17:46 ET

Semcan Inc. Reports Fiscal Year and Quarter Ended December 31, 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - March 29, 2011) - Semcan Inc. (TSX VENTURE:STT) ("Semcan" or the "Company") today reported financial results for its financial year and for the quarter ended December 31, 2010.

David Deacon, CEO commented, "We previously released our estimated financial results for the year and quarter ended December 31, 2010 in order to provide disclosure prior to the special shareholders' meeting set to approve the convertible loan financing and related shares for debt transactions, which are expected to close in early April. The results we are releasing today are in line with our previous announcement."

Continuing Operations

Revenues for the fiscal year 2010 were $13.2 million, compared with $31.3 million in the fiscal year 2009. The net loss from continuing operations for fiscal 2010 was $8.7 million (including non-cash impairment charge of $7.5 million), compared to a net loss of $0.2 million for the fiscal year 2009. The Non-GAAP adjusted EBITDA loss for fiscal year 2010 was $1.5 million, compared to an adjusted EBITDA profit of $1.81 million for fiscal year 2009. Adjusted gross margins were 19.2% compared to 24.2% in fiscal 2009.

Revenues for the quarter ended December 31, 2010 were $3.2 million, compared to revenues of $5.2 million in the quarter ended December 31, 2009. The net loss from continuing operations for the quarter ended December 31, 2010 was $7.1 million (including non-cash impairment charge of $7.5 million), compared to net income of $0.7 million for the quarter ended December 31, 2009.

Non-GAAP adjusted EBITDA loss for the quarter ended December 31, 2010 was $0.5 million, compared to an adjusted EBITDA profit of $0.5 million for the quarter ended December 31, 2009. Adjusted gross margins for the quarter ended December 31, 2010 were 16.9% compared to 22% for the quarter ended December 31, 2009.

For fiscal year 2010 the Company incurred $0.6 million in interest and financing charges compared to $1.2 million in the fiscal year 2009.

At December 31, 2010, the Company's order backlog was approximately $17.6 million (December 31, 2009 - $7.5 million). Since that date, the backlog has increased to $23.4 million as at March 22, 2011.

Discontinued Operations

The discontinued operations are comprised of Naston Ltd. ("Naston"), Enviro-Pro-Tech, Inc. ("Enviro"), and Nucleus Distribution Inc. ("Nucleus"). The sale of Nucleus and Enviro closed during 2009, while the sale of Naston closed on July 15, 2010. Comparatives to 2009 are not meaningful as the only discontinued operation in 2010 is Naston Limited.

Revenues for the fiscal year 2010 were $0.2 million. The net loss before gain on sale of discontinued operations was $0.2 million. The Company recorded a gain on the sale of discontinued operations of $4.1 million. Total net income from discontinued operations for fiscal year 2010 was $3.9 million.

Since Naston was sold on July 15, 2010, there were no results from discontinued operations for the quarter ended December 31, 2010.

About Semcan Inc.

Semcan is a supplier of industrial processes and environmental solutions with specific emphasis on water remediation and emission control systems to the North American markets.

Caution Regarding Forward-Looking Information and Non-GAAP Measures Forward-Looking Information

This news release contains certain forward-looking statements. These statements relate to future events or future performance and reflect management's current expectations and assumptions regarding the growth, results of operations, performance, and business prospects and opportunities. Such forward-looking statements reflect management's current beliefs and expectations and are based on information currently available to management of Semcan. In particular, statements regarding the future operating results and economic performance are forward-looking statements. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements, including risks outlined under "Risk Factors" in our Annual Information Form, which is posted at www.sedar.com. In evaluating these statements, investors should specifically consider various factors, including such risks as Investment Risk; Business Valuations; Condition of Capital Markets; Dependence on Key Personnel; General Economic Factors; Interest Rate Risk; Competition; and Reliance on Key Suppliers. One or more of these "Risk Factors" could cause actual events or results to differ materially from any forward-looking statement. These factors should not be considered exhaustive. Although the forward-looking statements contained in this press release are based on what management of Semcan considers to be reasonable assumptions based on information currently available to them, there can be no assurance that actual events or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release, and none of Semcan nor its directors assume any obligation to update or revise them to reflect new events or circumstances. Undue reliance should not be placed on forward-looking statements.

Non-GAAP Measures

The term "Adjusted EBITDA" is a financial measure used in this document which is not a standard measure under Canadian generally accepted accounting principles. Semcan's method of calculating Adjusted EBITDA may differ from the methods used by other issuers. Therefore, Semcan's measure of Adjusted EBITDA, as presented in this press release, may not be comparable to similar measures presented by other issuers. Adjusted EBITDA refers to net earnings determined in accordance with generally accepted accounting principles, before depreciation and amortization (including amortization of acquired order backlog), interest expense, special charges, impairment expense and income tax expense. Management believes that Adjusted EBITDA is a useful supplemental measure of cash available for debt service, working capital, capital expenditures, income taxes, and distribution. Investors are cautioned that Adjusted EBITDA, as a non-GAAP measure, is not an alternative to measures under GAAP and should not, on its own, be construed as an indicator of performance or cash flows, a measure of liquidity or as a measure of actual return.

The term "backlog" is a financial measure used in this document which is not a standard measure under GAAP. Semcan's method of calculating backlog may differ from the methods used by other issuers. Therefore, Semcan's measure of backlog, as presented in this press release, may not be comparable to similar measures presented by other issuers.

Backlog is the value of revenue remaining to be earned from purchase orders received from customers. The projects represented in backlog are executed according to a schedule agreed with each customer which could range in duration from one month to eighteen months. Revenues are earned on a percentage of completion basis. Management uses this measure to i) monitor the Company's success in securing new orders, and ii) gauge the likelihood of meeting revenue objectives in future periods.

Investors are cautioned that backlog, as a non-GAAP measure, is not an alternative to measures under GAAP and should not, on its own, be construed as an indicator of performance or cash flows, a measure of liquidity or as a measure of actual return.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Semcan Inc.
    David Deacon
    CEO
    (905) 875-5577