Pacific Safety Products Inc. Reports Profitable Third Quarter of Fiscal 2012


ARNPRIOR, ONTARIO, May 22, 2012 (MARKETWIRE via COMTEX) –
Pacific Safety Products Inc. (“PSP” or the “Company”) , today reported financial results for the three month period
ended March 31, 2012.

“Profitability is a significant milestone in the transformation of
the Company,” said Chief Executive Officer, Doug Lucky. “We’re
creating a business platform on the back of focus and alignment
decisions, a stable balance sheet, and a value-added operating cost
structure.”

Highlights:



        
        --  The Company reported net income for the third quarter of $0.1 million
            compared to a net loss of $1.4 million during the second quarter of
            fiscal 2012 and a net loss of $0.1 million during the third quarter of
            the prior year. The Company recorded an impairment charge with respect
            to intangible assets in the second quarter in the amount of $1.2
            million.
        --  Working capital remained strong despite a modest decline from $2.9
            million at June 30, 2011 to $2.6 million at March 31, 2012. The working
            capital ratio at March 31, 2012 was 1.66 compared to 1.69 at June 30,
            2011.
        --  Sales for the third quarter were $5.2 million, an increase of $1.5
            million or 41.6% from the second quarter of fiscal 2012, and
            approximately $3.1 million or 37.8% lower than the third quarter of the
            prior year which included revenue from the Company's former distribution
            business.
        --  The gross margin percentage for the third quarter was 29.2%, a continued
            improvement over the gross margins of 28.1% for the second quarter of
            fiscal 2012 and 21.0% for the third quarter of the prior year. The
            increase in gross margin percentage, offset by lower sales, represented
            a decrease of $0.2 million in gross margin dollars or 13.5% compared to
            the third quarter of the prior year.
        --  Operating expenses for the third quarter were $1.3 million,
            approximately 26.4% lower than the third quarter of the prior year of
            $1.8 million.
        --  Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
            ("EBITDA")(1) was $0.25 million for the third quarter compared to $0.26
            million in the third quarter of the prior year, despite the decrease in
            sales of 37.8% from the third quarter of the prior year.
        
        


Mr. Lucky commented further, “In order to ensure the Company’s
operating cost structure is adding value, significant cost has been
removed through cost reduction initiatives designed to align and size
operations to North American business opportunities entering fiscal
2013.”

About PSP:

The mission statement of Pacific Safety Products Inc. is …we bring
everyday heroes home safely(R). PSP is an established industry leader
in the production, distribution and sale of high-performance and
high-quality safety products for the defence and security market.
These products include body armour to protect against ballistic, stab
and fragmentation threats, ballistic blankets to reduce blast
effects, tactical clothing, and protective products against chemical
and biological hazards. PSP is the largest body armour manufacturer
in Canada, directly supplying the Canadian Department of National
Defence, Federal Government Agencies and major Canadian law
enforcement organizations. The Company, through its U.S. subsidiary
Sentry Armor Systems Inc., provides body armour products under the GH
Armor Systems(R) brand to U.S. based law enforcement and private
security firms. The Company also produces tactical clothing. Pacific
Safety Products is a reporting issuer in British Columbia, Alberta
and Ontario, Canada and publicly trades under the symbol PSP on the
TSX Venture Exchange.

Forward-Looking Information: This news release contains certain
statements which may constitute “forward-looking information” within
the meaning of applicable securities laws. These statements relate to
anticipated or assumed events or results including, without
limitation, with respect to the anticipated impact of the steps being
taken to align and size the Company’s operations to current North
American business opportunities. The forward-looking information
contained herein is expressly qualified in its entirety by this
cautionary statement. Although the Company believes that the
expectations conveyed by the forward-looking information are
reasonable based on information currently available to it, these
statements are based on management’s expectations, estimates and
projections and involve a number of risks, uncertainties and
assumptions, both known and unknown. As a result, the results or
events depicted in these forward-looking statements may differ
materially from actual results or events. Many factors could cause
results to differ materially from those stated including, but not
limited to the impact of price and product competition, changes in
general industry and market conditions, inability to successfully
plan and execute cost reduction and business improvement strategies,
ability to retain key staff, restrictions and covenants contained in
credit agreements, fluctuations in currency, exchange and interest
rates and commodity prices, ability to retain existing customer
contracts, reliance on key customers, as well as various other
factors which are discussed in the Company’s filings with applicable
securities regulatory authorities at
www.sedar.com . Any
forward-looking statement speaks only as of the date of this news
release and, except as may be required by applicable securities laws,
the Company disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information,
future events or results or otherwise.

For complete condensed consolidated interim financial statements with
notes and management discussion and analysis, refer to SEDAR
(
www.sedar.com ).

(1) Adjusted EBITDA consists of earnings before interest expense,
income taxes, stock based compensation, amortization, foreign
exchange, and other one-time charges and gains. PSP believes EBITDA
is a useful measure in the evaluation of performance. EBITDA is not a
measure recognized under Generally Accepted Accounting Principles
(“GAAP”) and does not have a standardized meaning as prescribed by
GAAP. Therefore, EBITDA may not be comparable to similar measures
presented by other entities. Investors are cautioned that EBITDA
should not be construed as an alternative to net loss determined in
accordance with GAAP.

Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.



        
        Contacts:
        Pacific Safety Products Inc.
        Douglas Lucky
        Chief Executive Officer
        (613) 623-6001
 
www.pacsafety.com            
        
        


SOURCE: Pacific Safety Products Inc.


http://www.pacsafety.com

Copyright 2012 Marketwire, Inc., All rights reserved.

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