MONTREAL, QUEBEC — (Marketwire) — 03/09/12 — ProSep Inc. (TSX: PRP) (“ProSep” or the “Company”) dedicated to providing process solutions to the oil and gas industry, today announced its financial results for the three and twelve-month periods ended December 31, 2011. All amounts are reported in Canadian dollars unless otherwise stated.
“Year 2011 marked a period of important investments for ProSep. We expanded our process engineering and business development teams and built one of the industry–s leading-edge portfolio of solutions. We entered into promising partnerships with Flint Energy Services Ltd. in Canada, and with Kolon Group Inc. and its Chairman in South Korea. We also concluded two equity financings with important strategic financial partners,” said Jacques L. Drouin, President and C.E.O.
As expected, the Company–s reorganization activities negatively affected our financial results in 2011. With significant achievements realized in the last two quarters, we believe that 2012 will be a turnaround year for ProSep. Our pipeline of opportunities and backlog are growing at a fast pace, which should lead to record revenues in 2012. Finally, our proprietary technologies are being deployed at an accelerated rate, with promising results achieved in Mexico, Saudi Arabia, and Norway.”
Selected highlights of the year and subsequent events:
Financial
Commercial
Contract Awards:
Promising Field Trials:
Commercial Agreements:
Operations
Selected Financial Highlights (in $ millions except for loss per share)
Financial Results
This announcement reports on consolidated results. For detailed segmented financial results please see Management Discussion and Analysis and Annual Consolidated Audited Financial Statements for the year ended December 31, 2011.
Revenues
ProSep reported consolidated revenues of $33.7 million during the year ended December 31, 2011, a decrease of 3% from $34.7million generated in 2010. Growth of 28% and 6%, respectively, at the Asia Pacific and US Operations was offset by a decrease in revenues at the European & Middle East Operations on account of restructuring activities that occurred at the Norwegian-based business unit. Because of a low backlog level entering 2011 and lengthy sales cycle, recent expansion in backlog will only start translating into revenue growth in the first quarter of 2012. The Company–s backlog stood at $7.8 million entering 2011 and at $38.8 million at February 29, 2012.
During the last quarter of 2011, ProSep reported consolidated revenues of $7.3 million, representing a decrease of 13% from $8.5 million reported during the corresponding period of 2010. Strong revenue growth of 35% at the Asia Pacific Operations did not offset declines at the US and European & Middle East Operations.
Gross Margin
Gross margin for 2011 stood at $8.1 million, or 24% of revenues, compared to $10.3 million, or 30% of revenues in 2010. Margins at the US and Asia Pacific Operations were stable year-over-year. However, important changes implemented during the year at the Norwegian-based operation temporarily affected its ability to promote new technologies. Changes were required to better align this business unit–s activities with the Company–s commercial and product development activities. Fast growth experienced in Asia Pacific led to certain project execution matters such as cost overruns. A provision was also taken at the US Operation in view of a potential performance issue related to an oil treating contract in the Middle East. Procedures and controls have been implemented and resources have been allocated to ensure seamless execution across all business units.
Fourth quarter consolidated gross margin stood at $1.5 million or 21% of revenues compared to $3.2 million or 38% of revenues for the same period in 2010. Lower gross margin in the fourth quarter of 2011 mostly relates to the above mentioned issues. Gross margin for the comparable period in the previous year was higher due to cost savings on project completion and contract mix.
EBITDA and Loss for the Year
EBITDA was negative $7.9 million for the year ended December 31, 2011 compared to negative $1.9 million in 2010. Lower overall order intake, gross margin and mostly one-time costs related to the implementation of various strategic initiatives explain this variance. These initiatives were introduced to expand the Company–s offering, accelerate commercialization of its most promising technologies and achieve its growth targets. This strategy has started showing promising results in the second half of 2011. Most notably, the pipeline and quality of opportunities has risen significantly, leading to growth in contract awards and stronger backlog. The Company is also more efficient at promoting new technologies, as demonstrated with the two recent contract awards totalling approximately $16 million for its newly introduced seawater treatment and water injection offering.
Loss for the year ended December 31, 2011 was $15.1 million ($0.07) per share, compared to a loss of $4.3 million ($0.02 per share) during the previous year. In addition to the elements affecting EBITDA, as noted above, impairments on goodwill and other intangible assets amounting to $3.7 million, explain most of the remaining variance.
Basic and diluted loss per share was determined using the weighted average number of 229,721,582 Common Shares outstanding during the twelve month period of 2011. At December 31, 2011, 418,104,388 Common Shares were issued and outstanding compared to 191,798,008 at the corresponding date of 2010. At December 31, 2011, ProSep held cash of $4.1 million compared with $3.7 million at December 31, 2010.
Conference Call and Webcast Details
ProSep will host a conference call and webcast on Friday, March 9, 2012 at 8:00 a.m. (EST) to review the financial results and highlights of the quarter and year ended December 31, 2011. To access the conference call by telephone, dial 1-416-981-9000 or 1-800-381-7839. A live audio webcast of the conference call will also be available through ProSep–s website under “Calendar of Events” in the “News and Investor Center” and on . For audio replay, dial 1-416-626-4100 or 1-800-558-5253 with the reservation code # 21580615.
Regulatory Filings
ProSep filed its Annual Audited Consolidated Financial Statements for the year ended December 31, 2011 and related Management Discussion and Analysis with securities regulatory authorities. The material will be available through SEDAR at and on the Company–s website at .
About ProSep
ProSep is a technology-focused process solutions provider to the upstream oil and gas industry. ProSep designs, develops, manufactures and commercializes technologies to separate oil, water and gas generated by oil and gas production. For more information, please visit .
Caution concerning forward-looking statements
This press release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of ProSep Inc. These statements are based, among others, on the Company–s current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic and industry environments in which the Company operates or which could affect its activities, the Company–s ability to attract new clients and consumers as well as its operating costs, raw materials and energy supplies which are subject to a number of risks and uncertainties. Forward-looking statements can generally be identified by the use of the conditional tense, the words “may”, “should”, “would”, “believe”, “plan”, “expect”, “intend”, “anticipate”, “estimate”, “foresee”, “objective” or “continue” or the negative of these terms or variations of them or words and expressions of similar nature. Actual results could differ materially from the conclusion, forecast or projection stated in such forward-looking information. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include but are not limited to the Company–s ability to develop, manufacture, and successfully commercialize value added equipments and services, the availability of funds and resources to continue its operations and pursue its projects, legislative or regulatory developments, competition, technological change, changes in government and economic policy, inflation and general political and economic conditions in geographic areas where ProSep Inc. operates. These and other factors should be considered carefully and undue reliance should not be placed on the forward-looking statements.
Contacts:
ProSep Inc.
Investor relations and media:
Danielle Ste-Marie
VP Marketing and Communications
(514) 522-5550 ext. 238