Steeplejack Industrial Group Inc.
TSX : SID

Steeplejack Industrial Group Inc.

November 03, 2005 16:27 ET

Steeplejack Industrial Group Inc. Announces Fiscal 2006 First Quarter Results

EDMONTON, ALBERTA--(CCNMatthews - Nov. 3, 2005) - Steeplejack Industrial Group Inc. (TSX:SID) -



Summary of financial results
(000's, except EPS amounts)
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Three months ended
September 30
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2005 2004
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Revenues $ 14,188 $ 11,592

Net Loss $ (299) $ (180)

Basic Loss Per Share $ (0.03) $ (0.02)

Diluted Loss Per Share $ (0.03) $ (0.02)

Common Shares Outstanding 10,192 8,192
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Highlights

Revenues from maintenance activity in the first quarter of fiscal 2006 were $9.4 million compared to $7.0 million for the first quarter of fiscal 2005. Earnings from maintenance activity were negatively affected by development and mobilization costs on a new major, long-term account that has yet to be contractually finalized.

Revenues from new construction activity in the first quarter of fiscal 2006 were $4.8 million, compared to $4.6 million for the first quarter of fiscal 2005. We have incurred mobilization costs on the Long Lake Oil Sands Project site but due to weather related constraints at the site the Company has recorded minimal revenue.

Imperial Oil recognized Steeplejack with a national award for achieving one of the best safety records in its Products and Chemicals Division, awarding the Company the Senior Vice-President "Contractor Safety Excellence" award. In 2004 Steeplejack registered over 70,000 exposure hours at Imperial Oil's Strathcona Refinery in Edmonton without a single recordable injury during the year, which helped the site reach new milestones in safety performance.

First quarter results

Revenues in the first quarter of fiscal 2006 were $14.2 million compared to $11.6 million in the first quarter last year. The increase in revenue came from our growing base of maintenance activity and from our insulation business.

The Company's gross profit percentage for the first quarter of fiscal 2006 was 13.9% compared to 17.4% in the first quarter of fiscal 2005. This decline was primarily due to development and mobilization costs incurred at a power generation facility where the Company expects to sign a long-term contract increasing the Company's base of long-term maintenance revenue.

Due to the projected purchases and intended change in use of equipment held for rental, the Company has expanded the categories and revised the estimated useful life and residual value of equipment held for rental. This change, plus the purchase of new scaffold equipment and capital assets, has resulted in an increase in depreciation for the quarter to $0.5 million from $0.3 million in fiscal 2005.

Net loss for the quarter was $0.3 million ($0.03 per share) compared to a net loss of $0.2 million ($0.02 per share) in the first quarter last year.

The Company has cash and term deposits of $4.5 million at September 30, 2005, compared to $3.8 million at September 30, 2004. Working capital was $13.1 million at September 30, 2005 compared to $8.1 million one year ago. The Company has a $10.0 million operating line, of which $0.5 million was used at September 30, 2005. Long-term debt was $4.2 million at September 30, 2005 compared to $6.1 million at September 30, 2004.

Outlook

The Company entered into a number of low margin projects last year in order to keep our core people employed and available for deployment to new projects. We are seeing the last of these projects finish and expect margins to improve over the next number of quarters. In addition, mobilization costs at two of our major sites have been completed and we expect to see improved performance from these sites. We are expecting to mobilize to the Horizon Oil Sands site in the third quarter of this fiscal year.

The Company estimates it may need to invest up to $70.0 million in the next two years in scaffold equipment in order to service these two projects. The amount of this investment will depend on actual orders received.

Steeplejack is a multi-service company providing comprehensive project management, manpower and equipment supply for industrial scaffolding and insulation. The Company's 9 branches serve a diverse group of large industrial and commercial organizations in Western Canada.

You may find our complete interim unaudited consolidated financial statements on SEDAR at www.sedar.com or on our web-site at www.steeplejack.ca.

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