EX-20 2 l27984aexv20.htm EX-20 EX-20
 

Exhibit 20
(PDG ENVIRONMENTAL, INC. LOGO)
George Westinghouse Technology Center
Building 801 — 1386 Beulah Road
Pittsburgh, Pennsylvania 15235
(800) 972-7341
     
 
  Company Contact:
Chris Witty
  John C. Regan, Chairman & CEO
Lippert/Heilshorn & Associates, Inc.
  412-243-3200
212-838-3777
   
cwitty@lhai.com
   
FOR IMMEDIATE RELEASE
PDG Environmental Announces Second Quarter Results
Reports Income of $0.02 per Share on Revenue Growth of 18.8%
PITTSBURGH, PA, September 14, 2007 PDG Environmental, Inc. (OTC BB: PDGE), a leading provider of environmental remediation and specialty contracting services, today reported financial results for the fiscal second quarter and six months ended July 31, 2007.
Revenue for the quarter was $26.6 million, up 18.8% from the $22.4 million reported in the second quarter of fiscal 2007 and an increase of 22.8% from the $21.7 million in the first fiscal quarter of 2008. In tandem with the rise in revenue, PDGE’s field margin improved to $6.8 million from $6.4 million last year and $6.5 million in the fiscal 2008 first quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $1.7 million in the second quarter of fiscal 2008 versus $0.2 million for the comparable period in fiscal 2007. SG&A and other direct costs totaled $5.8 million, or 21.7% of revenue, down from $6.4 million, or 28.7% of revenue, last year. The company reported net after-tax income of $0.5 million, or $0.02 per diluted share, compared with a net loss of $(1.2) million, or $(0.06) per diluted share, in the second quarter of fiscal 2007. In the second quarter of fiscal 2008, PDG Environmental recorded non-cash accounting costs of $0.15 million related to its July 2005 private placement versus $0.9 million last year. The second quarter of fiscal 2007 also included $0.3 million in one-time charges related to employee fraud, 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 21.3 million from 19.9 million in fiscal 2007 due to the conversion of preferred stock to common and the exercise of stock options and warrants.
For the six months ended July 31, 2007, revenue rose to $48.3 million, up 24.6% versus the $38.8 million recorded during the same period in the prior fiscal year. The company’s field margin increased to $13.3 million from $10.5 million in fiscal 2007. EBITDA improved to $3.0 million from a negative $(1.6) million last year. PDG Environmental reported net after-tax income of $0.8 million for the six month period, or $0.04 per diluted share, compared with a net loss of $(3.4) million, or $(0.18) per share, last year. The non-cash accounting cost of the July 2005 private placement totaled $0.4 million versus $1.7 million in fiscal 2007. Fiscal 2007 also included $0.6 million in one-time charges related to employee fraud, while fiscal 2008 included other income of $0.15 million largely related to the partial insurance recovery from the fraud claim. Fully diluted shares outstanding rose to 21.1 million from 19.1 million in fiscal 2007.
“PDG Environmental again performed well this quarter, marking solid progress in our operations and recording our highest revenue ever in a three month period,” said John C. Regan, chairman and chief executive officer of PDG Environmental. “The Company’s backlog remains above $50 million — testimony to our increased sales and marketing efforts — and, even with a thus far light hurricane season, our reconstruction business is back on track — with the backlog in that segment at record levels. Our streamlined infrastructure remains right-sized to meet the


 

Company’s revenue targets in the second half, and we will closely monitor our operations to make additional modifications as necessary to optimize margins.”
Conference Call
PDG Environmental will host a conference call on September 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 (888) 804-7108.
Investors will be able to access an encore recording of the conference call for one week by calling (800) 642-1687, conference ID# 14677150. 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 July 31  
    2007     2006  
            Restated  
 
               
Contract Revenues
  $ 26,638,000     $ 22,428,000  
 
               
Job Costs
    19,815,000       16,032,000  
 
           
 
               
Field Margin
    6,823,000       6,396,000  
 
               
Other Direct Costs
    2,782,000       3,102,000  
 
           
 
               
Gross Margin
    4,041,000       3,294,000  
 
               
Selling General & Administrative expenses
    2,991,000       3,324,000  
 
               
Income (Loss) From Operations
    1,050,000       (30,000 )
 
               
Other Income (Expense):
               
Interest Expense
    (309,000 )     (251,000 )
Non-cash interest expense for preferred dividends and accretion of discount
    (219,000 )     (891,000 )
Non-recurring charge employee fraud
            (251,000 )
Interest and other income
    147,000       8,000  
 
           
 
    (381,000 )     (1,385,000 )
 
               
Income (Loss) Before Income Taxes
    669,000       (1,415,000 )
 
               
Income Tax (Benefit) Provision
    164,000       (182,000 )
 
               
Net Income (Loss)
  $ 505,000     $ (1,233,000 )
 
           
 
               
Per share of common stock:
               
Basic
  $ 0.02     $ (0.06 )
 
           
 
               
Dilutive
  $ 0.02     $ (0.06 )
 
           
 
               
Earnings per share calculation:
               
Average common share equivalents outstanding
    20,588,000       19,875,000  
 
               
Average dilutive common share equivalents outstanding
    759,000        
 
           
 
               
Average common share and dilutive common equivalents outstanding
    21,347,000       19,875,000  
 
           

 


 

PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”)
(UNAUDITED)
                 
    For the Three Months Ended July 31  
    2007     2006  
            Restated  
 
               
Net Income (Loss)
  $ 505,000     $ (1,233,000 )
 
               
Income Tax Provision (Benefit)
    164,000       (182,000 )
 
               
Interest Expense
    309,000       251,000  
 
               
Non-cash interest expense for preferred dividends and accretion of discount
    219,000       891,000  
 
               
Depreciation and Amortization
    473,000       428,000  
 
           
 
               
EBITDA
    1,670,000       155,000  
 
           

 


 

PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
                 
    For the Six Months Ended July 31  
    2007     2006  
            Restated  
 
               
Contract Revenues
  $ 48,338,000     $ 38,796,000  
 
               
Job Costs
    35,049,000       28,256,000  
 
           
 
               
Field Margin
    13,289,000       10,540,000  
 
               
Other Direct Costs
    5,555,000       6,100,000  
 
           
 
               
Gross Margin
    7,734,000       4,440,000  
 
               
Selling General & Administrative expenses
    5,805,000       6,256,000  
 
           
 
               
Income (Loss) From Operations
    1,929,000       (1,816,000 )
 
               
Other Income (Expense):
               
Interest Expense
    (580,000 )     (470,000 )
Non-cash interest expense for preferred dividends and accretion of discount
    (429,000 )     (1,675,000 )
Non-recurring charge employee fraud
            (598,000 )
Interest and other income
    152,000       8,000  
 
           
 
    (857,000 )     (2,735,000 )
 
               
Income (Loss) Before Income Taxes
    1,072,000       (4,551,000 )
 
               
Income Tax (Benefit) Provision
    253,000       (1,158,000 )
 
           
 
               
Net Income (Loss)
  $ 819,000     $ (3,393,000 )
 
           
 
               
Per share of common stock:
               
Basic
  $ 0.04     $ (0.18 )
 
           
 
               
Dilutive
  $ 0.04     $ (0.18 )
 
           
 
               
Earnings per share calculation:
               
Average common share equivalents outstanding
    20,546,000       19,085,000  
 
               
Average dilutive common share equivalents outstanding
    585,000        
 
           
 
               
Average common share and dilutive common equivalents outstanding
    21,131,000       19,085,000  
 
           

 


 

PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
RECONCILIATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”)
(UNAUDITED)
                 
    For the Six Months Ended July 31  
    2007     2006  
            Restated  
 
               
Net Income (Loss)
  $ 819,000     $ (3,393,000 )
 
               
Income Tax Provision (Benefit)
    253,000       (1,158,000 )
 
               
Interest Expense
    580,000       470,000  
 
               
Non-cash interest expense for preferred dividends and accretion of discount
    429,000       1,675,000  
 
               
Depreciation and Amortization
    934,000       854,000  
 
           
 
               
EBITDA
    3,015,000       (1,552,000 )
 
           

 


 

PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    July 31,     January 31,  
    2007     2007  
    (unaudited)          
ASSETS
               
 
               
Current Assets
               
Cash and cash equivalents
  $ 267,000     $ 158,000  
Contracts receivable, net
    28,108,000       21,257,000  
Costs and estimated earnings in excess of billings on uncompleted contracts
    5,462,000       5,607,000  
Inventories
    669,000       553,000  
Prepaid income taxes
          271,000  
Deferred income tax asset
    915,000       915,000  
Other current assets
    639,000       534,000  
 
           
 
               
Total Current Assets
    36,060,000       29,295,000  
 
               
Property, Plant and Equipment
    11,883,000       11,352,000  
Less: accumulated depreciation
    9,340,000       8,795,000  
 
           
 
    2,543,000       2,557,000  
 
               
Goodwill
    2,619,000       2,651,000  
Deferred Income Tax Asset
    2,454,000       2,565,000  
Contracts Receivable, Non Current
    500,000       500,000  
Intangible and Other Assets
    5,360,000       5,686,000  
 
           
 
               
Total Assets
  $ 49,536,000     $ 43,254,000  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current Liabilities
               
Accounts payable
  $ 9,092,000     $ 7,403,000  
Billings in excess of costs and estimated earnings on uncompleted contracts
    4,393,000       3,421,000  
Accrued income taxes
    35,000        
Current portion of long-term debt
    385,000       322,000  
Accrued liabilities
    5,181,000       4,007,000  
 
           
 
               
Total Current Liabilities
    19,086,000       15,153,000  
 
               
Long-Term Debt
    13,044,000       12,161,000  
 
               
Series C Redeemable Convertible Preferred Stock
    2,979,000       2,550,000  
 
               
Total Liabilities
    35,109,000       29,864,000  
 
               
Stockholders’ Equity
               
Common stock
    414,000       411,000  
Common stock warrants
    1,628,000       1,628,000  
Additional paid-in capital
    19,460,000       19,245,000  
Retained Earnings (deficit)
    (7,037,000 )     (7,856,000 )
Less treasury stock, at cost
    (38,000 )     (38,000 )
 
               
Total Stockholders’ Equity
    14,427,000       13,390,000  
 
           
 
               
Total Liabilities and S$ockholders’ Equity
  $ 49,536,000     $ 43,254,000  
 
           

 


 

PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
                 
    For the Six Months Ended July 31,  
    2007     2006  
            Restated  
 
               
Cash Flows From Operating Activities:
               
 
               
Net income
  $ 819,000     $ (3,393,000 )
Adjustments to Reconcile Net Income to Cash:
               
Depreciation and Amortization
    934,000       854,000  
Deferred Income Taxes
    111,000       (532,000 )
Interest expense for Series C preferred stock accretion of discount
    429,000       1,675,000  
Loss on sale of fixed asses and equity investment
          5,000  
Stock based compensation
    149,000       163,000  
Provision for uncollectable accounts
    (39,000 )     40,000  
 
               
Changes in Assets and Liabilities Other than Cash:
               
Contracts receivable
    (6,812,000 )     (55,000 )
Costs and Estimated Earnings in Excess of Billings on uncompleted contracts
    145,000       (1,910,000 )
Inventories
    (116,000 )     (29,000 )
Prepaid/accrued income taxes
    306,000       (231,000 )
Other current assets
    878,000       160,000  
Accounts payable
    1,689,000       460,000  
Billings in excess of costs and estimated earnings on uncompleted contracts
    972,000       634,000  
Accrued liabilities
    795,000       749,000  
 
           
Total Changes in Assets and Liabilities Other than Cash
    (2,143,000 )     (222,000 )
 
           
Net Cash Provided by (Used in) by Operating Activities
    260,000       (1,410,000 )
 
               
Cash Flows From Investing Activities:
               
Purchase of property, plant and equipment
    (365,000 )     (403,000 )
Proceeds from sale of equity investment and fixed assets
            34,000  
Increase in other assets
    (58,000 )     (50,000 )
 
           
Net Cash Used by Investing Activities
    (423,000 )     (419,000 )
 
               
Cash Flows From Financing Activities:
               
Proceeds from deb3134000
    960,000       2,514,000  
Proceeds from exercise of stock options and warrants
    69,000       792,000  
Payment of premium financing liability
    (572,000 )     (687,000 )
Principal payments on debt
    (185,000 )     (73,000 )
 
           
Net Cash Provided by Financing Activities
    272,000       2,546,000  
 
           
Change in cash and cash equivalents
    109,000       717,000  
Cash and cash equivalents, beginning of period
    158,000       230,000  
 
           
 
               
Cash and Cash Equivalents, end of period
  $ 267,000     $ 947,000  
 
           
 
               
Supplementary disclosure of non-cash Investing and Financing Activity:
               
Increase in goodwill and accrued liabilities for contingent liability
    (32,000 )     301,000  
Financing of annual insurance premium
  $ 983,000     $ 1,157,000  
Non-Cash purchase of fixed assets financed through capital lease
  $ 176,000     $