EX-20 2 j2084601exv20.htm EX-20 EX-20
 

Exhibit 20
(PDGENVIRONMENTAL, INC. LOGO)
George Westinghouse Technology Center
Building 801 — 1386 Beulah Road
Churchill, Pennsylvania 15235
(800) 972-7341
     
Investor Contact:
  Company Contact:
Jody Burfening / Chris Witty
  John C. Regan, Chairman & CEO
Lippert/Heilshorn & Associates, Inc.
  412-243-3200
(212) 201-6609
   
cwitty@lhai.com
   
FOR IMMEDIATE RELEASE
PDG Environmental Announces First Quarter Results
PITTSBURGH, PA, June 14, 2006 PDG Environmental, Inc. (OTC BB: PDGE), a leading provider of environmental remediation and specialty contracting services, today reported financial results for the first quarter ended April 30, 2006.
Revenues for the three months ended April 30, 2006 were $16.7 million, a 20% increase over the $14.0 million recorded in the prior year quarter, reflecting the impact of PDG Environmental’s August 2005 acquisition of Flagship Services Group and an increase in hurricane-related mold and reconstruction work. Gross profit declined to $1.2 million from $2.3 million in last year’s fiscal first quarter, due primarily to the combined impact of lower margins on certain asbestos projects and a higher cost structure developed to support an increase in future revenues. Earnings before income taxes, interest, depreciation and amortization (“EBITDA”) declined to $(1.3) million from $0.8 million last year, due to the lower gross profit and an increase in SG&A related to the Flagship acquisition, combined with continued startup and expansion costs at the company’s new offices. The non-cash accounting cost of PDG Environmental’s July 2005 private placement of convertible preferred and common equity totaled $0.8 million, comprised of $0.1 million for preferred dividends and $0.7 million for accretion of the discount for the preferred stock.
Including the above non-cash costs and certain tax benefits, the company reported a net loss of $(1.9) million for the quarter, or $(0.11) per share, compared with net income of $0.3 million, or $0.02 per share, in the comparable period for fiscal 2006. Fully diluted shares outstanding rose to 18.3 million from 14.2 million last year, reflecting the equity raised in conjunction with the purchase of Flagship, the conversion of the related preferred stock to common stock, and the exercise of stock warrants issued as part of the transaction.
Stockholders’ equity declined slightly to $17.3 million compared to the end of fiscal 2006, while working capital increased to $19.1 million from $18.0 million.
“The first quarter continued to highlight our diversification strategy and growth initiatives,” commented John C. Regan, Chairman and CEO of PDG Environmental. “We posted solid top line results compared with last year due to the inclusion of Flagship and incremental hurricane-related business, offsetting a slight decline in asbestos-related revenue in what is traditionally a seasonally weak quarter. In addition, we recently announced a number of new contract awards which will drive growth for the remainder of this year. Our backlog now stands at a record level of $47.4 million.

 


 

“We have put the foundation in place for improved financial performance going forward, even as our cost structure has increased due to the inclusion of three new offices and the expanded Flagship operations. For the second quarter, we expect to see revenues grow significantly from the first quarter, with a corresponding rise in margins and earnings. PDG Environmental is rapidly becoming a leader in mold remediation and reconstruction. As we enter this year’s hurricane season, with numerous opportunities ahead, we view the outlook for the balance of fiscal 2007 very positively.”
Conference Call
PDG Environmental will host a conference call at 11:00 a.m. Eastern on Wednesday, June 14, 2006. During the call, John C. Regan, Chairman and CEO, and Todd Fortier, CFO, 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# 1092686. The encore recording will be available two hours after the conference call has concluded.
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 18 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 April 30,  
    2006     2005  
Contract revenues
  $ 16,744,000     $ 13,951,000  
Job costs
    12,575,000       9,808,000  
 
           
 
               
Field margin
    4,169,000       4,143,000  
Other Direct Costs
    2,981,000       1,843,000  
 
           
 
               
Gross margin
    1,188,000       2,300,000  
 
               
Selling, general and administrative expenses
    2,932,000       1,737,000  
 
           
 
               
Income (loss) from operations
    (1,744,000 )     563,000  
 
               
Other income (expense):
               
Interest expense
    (219,000 )     (100,000 )
Non-cash interest expense for preferred dividends and accretion of discount
    (784,000 )      
Gain on sale of equity investment
          48,000  
Equity in income of equity investment
          4,000  
Interest and other income
          14,000  
 
           
 
               
 
    (1,003,000 )     (34,000 )
 
           
 
               
Income (loss) before income taxes
    (2,747,000 )     529,000  
 
               
Income tax provision (benefit)
    (816,000 )     203,000  
 
           
 
               
Net income (loss)
  $ (1,931,000 )   $ 326,000  
 
           
 
               
Per share of common stock:
               
 
               
Basic
  $ (0.11 )   $ 0.03  
 
           
 
               
Dilutive
  $ (0.11 )   $ 0.02  
 
           
 
               
Average common share equivalents outstanding
    18,268,000       12,983,000  
 
               
Average dilutive common share equivalents outstanding
          1,198,000  
 
           
 
               
Average common shares and dilutive common equivalents outstanding for earnings per share calculation
    18,268,000       14,181,000  
 
           

 


 

PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
RECONCILIATION OF EARNINGS BEFORE INTEREST, DEPRECIATION AND AMORTIZATION (“EBITDA”)
(UNAUDITED)
                 
    For the Three Months  
    Ended April 30,  
    2006     2005  
Net Income (Loss)
    (1,931,000 )     326,000  
Income Taxes (Benefit)
    (816,000 )     203,000  
Interest expense
    219,000       100,000  
Non-cash interest expense for preferred dividends and accretion of discount
    784,000        
Depreciation and Amortization
    426,000       176,000  
 
           
 
               
EBITDA
  $ (1,318,000 )   $ 805,000  
 
           

 


 

PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    April 30,     January 31,  
    2006     2006  
    (unaudited)          
Assets
               
 
               
Current Assets
               
Cash and cash equivalents
  $ 421,000     $ 230,000  
Contracts receivable
    24,546,000       24,471,000  
Costs and estimated earnings in excess of billings on uncompleted contracts
    5,868,000       5,174,000  
Inventories
    683,000       669,000  
Prepaid income taxes
    662,000       560,000  
Deferred income tax asset
    457,000       373,000  
Other current assets
    1,074,000       131,000  
 
           
 
               
Total Current Assets
    33,711,000       31,608,000  
 
           
Property, Plant and Equipment
    10,281,000       10,137,000  
Less: accumulated depreciation
    (8,043,000 )     (7,838,000 )
 
           
 
    2,238,000       2,299,000  
 
           
 
               
Goodwill
    2,438,000       2,316,000  
Deferred Income Tax Asset
    449,000       216,000  
Intangible and Other Assets
    6,220,000       6,423,000  
 
           
 
               
Total Assets
  $ 45,056,000     $ 42,862,000  
 
           
 
               
Liabilities and Stockholders’ Equity
               
 
               
Current Liabilities
               
Accounts payable
  $ 6,715,000     $ 6,537,000  
Billings in excess of costs and estimated earnings on uncompleted contracts
    2,595,000       2,012,000  
Current portion of long-term debt
    515,000       513,000  
Accrued liabilities
    4,799,000       4,459,000  
 
           
 
               
Total Current Liabilities
    14,624,000       13,521,000  
 
               
Long-Term Debt
    10,521,000       9,059,000  
Series C Redeemable Convertible Preferred Stock
    2,618,000       2,803,000  
 
           
 
               
Total Liabilities
    27,796,000       25,383,000  
 
           
 
               
Stockholders’ Equity
               
Common stock
    378,000       345,000  
Common stock warrants
    1,628,000       1,881,000  
Additional paid-in capital
    17,547,000       15,582,000  
Retained earnings (deficit)
    (2,222,000 )     (291,000 )
Less treasury stock, at cost
    (38,000 )     (38,000 )
 
           
 
               
Total Stockholders’ Equity
    17,293,000       17,479,000  
 
           
 
               
Total Liabilities and Stockholders’ Equity
  $ 45,056,000     $ 42,862,000