EDMONTON, April 29 /CNW/ - Seair Inc. (SDS:TSX Venture Exchange) today released its unaudited financial statements for the quarter ending February 28, 2009.
Revenue for the quarter ending February 28, 2009 was $1,448,349, or 34% lower than the corresponding quarter in fiscal 2008 and 99% higher than the first quarter of fiscal 2009. Rental revenue from Septic's fleet of portable wastewater treatment provided approximately 98% of total revenue. The 34% revenue decrease was a result of reduced fleet deployment. Although September 2008 started relatively strong (compared to prior Septembers) the dramatic economic downturn in autumn 2008 led to the deferral and/or reduction in oilfield activity. Reduced activity led to fewer active camps which, in turn, reduced the overall market size in the quarter for Septic's portable wastewater treatment units. The Company's second quarter is traditionally the peak for Septic's portable wastewater treatment business, which currently has a rental fleet of approximately 100 units. For fiscal 2009 the second quarter fleet deployment did not exceed 50% at any time and, although realized day rates were slightly better than in the prior year, fleet inactivity led to a significant revenue reduction. The combination of low oil and gas prices, depressed capital and credit markets and general economic uncertainty continues to depress oil patch activity.
Oil patch activity in the quarter ending and six months ending February 28, 2009 was even lower than the same periods the year before, when uncertainty over royalty revisions led to what was then considered low activity levels.
Septic has historically limited its portable wastewater treatment business to the rental model. However, in order to bolster short-term cash flows, Septic management is now prepared to sell portable wastewater treatment units, particularly to customers with long-term projects or operating outside of Septic's western Canadian service area. Seair closed its first portable wastewater treatment unit sale in April 2009.
Construction has begun on a turn-key end-to-end Seair wastewater treatment plant at the Village at Wolf Creek. This project is expected to be completed by summer 2009 and to-date approximately 10% of the project work has been completed and billed.
Gross profit for the quarter ending February 28, 2009 was $953,053 (66% of revenue) compared to $1,594,714 (73% of revenue) in the quarter ending February 29, 2008 and $491,700 for the quarter ending November 30, 2008 (67% of revenue). A certain portion of direct costs are essentially fixed in the short-term, so the decrease in year-over-year gross profit percentage is due to these fixed costs being spread over a slightly smaller revenue base.
In general, operating expenses have decreased on a year-over-year basis as a result of across the board cost reductions. Total operating expenses decreased by $1,480,496 to $1,176,838 from fiscal the second quarter in fiscal 2008 to the same quarter in fiscal 2009 (decrease of 56%). The largest contributors to this decrease were:
Stock-based compensation decrease $ 1,296,000 Salaries and benefits decrease 67,793 Compliance and investor relations decrease 44,672 Contract services decrease 33,130 Professional fees decrease 29,677 Amortization increase (66,573) ---------- Sub-total 1,404,699 Other net decreases 75,797 ---------- Total year-over-year decrease $ 1,480,496
No incentive stock options have been granted in fiscal 2009 and, accordingly, no stock-based compensation has been recorded. Management continues to believe that incentive stock options have considerable potential to motivate employees, but the non-cash expense that must be recorded upon granting of options continues to make such an incentive plan cost unviable as a result of the detrimental impact on the Company's income statement.
Salaries and wages decreased compared to the prior year and the prior quarter as a result of headcount reductions. The Company reduced the number of head office and field personnel in response to the general economic downturn. Seasonal staff were let go earlier than has typically been the case as a result of the significant portion of the Septic fleet remaining idle during the winter and spring months.
In the quarter ending November 30, 2008 compliance and investor relations included some environmental assessment and consulting costs incurred in connection with projects being done on behalf of customers. These costs were re-billed to customers in the quarter ending February 28, 2009, resulting in unusually low net compliance and investor relations costs in the quarter.
Professional fees and contract services are down as a result of scaling back and termination of projects that are do not have strong prospects for near-term revenues. Amortization expense increased as a result of the fleet size increase compared to fiscal 2008. Repairs and maintenance increased compared to the quarter ending November 30, 2008 as a result of repairs to Septic's service trucks.
Research and development work continues on municipal wastewater treatment and oilfield water treatment applications.
Net loss for the quarter ending February 28, 2009 was $222,059 compared to a loss of $1,077,352 in the quarter ending February 29, 2008 and $986,892 for the quarter ending November 30, 2008. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the quarter ending February 28, 2009 were $218,876.
The complete financial statements are available at www.sedar.com.
Seair is a leading developer of patent protected diffusion and sterilization technologies which allow for the efficient diffusion of gases into a liquid, thereby facilitating numerous applications in a wide variety of industries including wastewater treatment, pulp and paper, food processing, aquaculture, agriculture/horticulture, sterilization, food safety, golf course irrigation and pond treatment, animal enhancement and oil and gas. Seair's primary focus is developing and selling equipment that diffuses gases, such as oxygen, ozone or carbon dioxide, into a liquid, resulting in a supersaturate solution. The major difference between Seair and other diffusion technologies is Seair's ability to achieve extremely small bubble size, which in turn allows for the mass transfer of gas to fluid. The result is a stable condition where gases remain in solution for extended periods of time, leading to increased productivity and lower operating costs. Seair provides diffusion-enhanced portable wastewater treatment plants through its subsidiary, Seair Septic.
Parties interested in obtaining further information or receiving news releases and corporate documents from Seair may email such request to email@example.com or visit the Seair website at www.seair.ca.
This news release may contain certain forward-looking statements that reflect the current views and/or expectations of Seair Inc. with respect to its performance, business or future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary.
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