CALGARY, Nov. 5 /CNW/ -- TSX Symbol: HNL - Horizon North Logistics Inc. ("Horizon" or the "Corporation") reported its financial and operating results for the three and nine months ended September 30, 2009 and 2008.

Highlights
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Three      Three         Nine        Nine
months     months       months      months
ended      ended        ended       ended
(000's except per          September   September   September   September
share amounts)              30, 2009    30, 2008    30, 2009    30, 2008
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Revenue                     $ 32,048    $ 53,692    $112,812    $124,044
EBITDAS (1)                    5,035      14,273      32,434      31,252
Operating (loss)
earnings (1)                   (571)      7,453      13,696      13,160
Net (loss) earnings             (105)      5,004       9,480       8,389
Net earnings per share
- diluted                  $   0.00    $   0.05    $   0.09    $   0.08
Total assets                 222,285     368,934     222,285     368,934
Total long-term financial
liabilities (2)              21,717      54,542      21,717      54,542
Funds from operations (3)      4,383       9,770      29,281      22,929
Capital spending               1,605      10,161       9,675      48,796
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(1) EBITDAS (Earnings before interest, taxes, depreciation, amortization,
gain/loss on disposal of property, plant and equipment and stock
based compensation) and operating earnings (loss) are not recognized
measures under Canadian generally accepted accounting principles
(GAAP). Management believes that in addition to net earnings, EBITDAS
is a useful supplemental measure as it provides an indication of the
Corporation's ability to generate cash flow in order to fund working
capital, service debt, pay current income taxes and fund capital
programs. Management believes that in addition to net earnings,
operating earnings (loss) is a useful supplemental measure as it
provides an indication of the results generated by the Corporation's
principal business activities prior to consideration of how those
activities are financed or taxed. Investors should be cautioned,
however, that EBITDAS and operating earnings (loss) should not be
construed as alternatives to net earnings determined in accordance
with GAAP as an indicator of the Corporation's performance. Horizon's
method of calculating EBITDAS and operating earnings (loss) may
differ from other entities and accordingly, EBITDAS and operating
earnings (loss) may not be comparable to measures used by other
entities.
(2) Long-term financial liabilities include operating lines of credit,
the current and long-term portions of long-term debt, the current and
long-term portions of capital lease obligations.
(3) Funds from operations is not a recognized measure under GAAP.
Management believes that in addition to cash flow from operations,
funds from operations is a useful supplemental measure as it provides
an indication of the cash flow generated by the Corporation's
principal business activities prior to consideration of changes in
working capital. Investors should be cautioned, however, that funds
from operations should not be construed as an alternative to cash
flow from operations determined in accordance with GAAP as an
indicator of the Corporation's performance. Horizon's method of
calculating funds from operations may differ from other entities and
accordingly, funds from operations may not be comparable to measures
used by other entities. Funds from operations is equal to cash flow
from operations before changes in non-cash working capital items
related to operations.
Key Points
-  Strong financial position with continued debt reduction in the
quarter; available borrowing capacity of $58.8 million under credit
facilities of $80.5 million;
-  4.8 million shares repurchased and cancelled under Normal Course
Issuer Bid for $5.8 million.
-  Substantial reduction in revenues, EBITDAS and earnings as a result
of reduced activity and margin contraction;
-  Results include remediation costs at the BlackSand Executive Lodge
of $539,000 and costs of starting the blast resistant structures
business of $179,000;

Overview

Revenues for the three months ended September 30, 2009 decreased $21.6 million as compared to the same period in the prior year. Reduced activity levels were seen in all of Horizon's segments as a result of the global economic and financial downturn.

Camp & Catering revenues decreased $11.6 million as demand for accommodation and support services declined significantly with lowered exploration and drilling activity and reduction of activity on many oil sands projects. Demand also declined significantly for the sales of new and used camps and for camp rental and catering services.

Matting revenues decreased $7.8 million primarily due to a decrease in the number of mats sold as customers shifted from purchases to rentals, while the majority of mats purchased were lower priced used mats rather than new mats. Mat rental activity was up significantly, but reduced rental rates and bundling of transportation and installation services to remain competitive resulted in lower service revenues.

Marine Service revenues decreased $2.9 million due to reduced tug and barge revenue, reflecting reduced activity in the Northwest Territories.

EBITDAS and operating earnings decreased by $9.2 million and $8.0 million respectively as compared to the same period in the prior year. The global economic and financial downturn has led to a decrease in demand for oilfield service and support activities and has led to increased customer focus on costs resulting in narrower margins on many of Horizon's products and services.

Outlook

Horizon's businesses are continuing to experience the impact of the global recession through reduced activity levels and margin contraction as competitors vie for fewer jobs. Horizon's customers in the conventional oil and gas exploration and production business have seen their cash flows reduced dramatically by lower commodity prices, which has led to 2009 drilling activity declining to levels not seen in over a decade. Relief from this situation is unlikely to occur until general economic activity improvements spur increased industrial demand for commodities, in particular for natural gas.

Crude oil prices have improved from their recent low in the $35 US per barrel range to the high $70's US per barrel. The combination of this price improvement and labour and materials cost deflation has helped restart a number of northern Alberta oil sands projects. As a result, the number of new camp projects that have been put out to bid has increased over the last few months. Horizon's investments in camp and catering facilities in the region should benefit from this increase in activity and help offset the continued depressed conventional oil and gas market.

The mining industry has seen an improvement in commodity prices and access to capital markets. Horizon has done substantial business with mining industry participants in the past and anticipates that a number of delayed projects will be coming back on-stream in the near future. Development of shale gas resources in remote regions of north-eastern British Columbia are in their early stages and the Corporation is exploring opportunities to enter this market.

Horizon's strong and improving financial position should ensure that the Corporation sees its way through these difficult economic times and allow it to take advantage of opportunities that might be available near the bottom of the economic cycle.

During the third quarter of 2009, the Corporation repaid $1.8 million of bank borrowings and exited the quarter with $58.8 million of borrowing capacity under its $80.5 million bank credit facility. Also during the third quarter, the Corporation repurchased and cancelled 4,766,600 common shares for total cash consideration of $5.8 million.