ProSep Reports 2012 Second Quarter Financial Results

MONTREAL, QUEBEC – August 9, 2012 – ProSep Inc. (TSX: PRP) (“ProSep” or the “Company”), dedicated to providing process solutions to the oil and gas industry, today announced its financial results for the three and six-month periods ended June 30, 2012. All amounts are reported in Canadian dollars unless otherwise stated.

Selected highlights of the quarter and important subsequent events:


  • Revenues were up 45% during the second quarter of 2012, reaching $13.9 million, compared to $9.6 million during the corresponding period of last year.
  • Gross margin stood at $3.0 million (or 22% of revenues) during the second quarter of 2012, compared to $2.2 million (or 23% of revenues) for the corresponding period of 2011.
  • EBITDA* improved to negative $0.7 million compared to negative $1.8 million recorded during the second quarter of 2011.
  • Net loss was $1.6 million for the second quarter of 2012, an improvement compared to a net loss of $2.4 million during the corresponding quarter of last year.
  • Backlog** stands at $27.2 million, up 15% since the start of the year and 106% year-over-year.


  • Concluded a total of $3.3 million in new contract awards, including $2 million awarded to ProSepKolon, equal in value to last year’s comparative period.
  • Increased the number of firm proposals outstanding for new technologies.
  • Concluded several field trials demonstrating significant economic and environmental benefits to customers. See section 7 of Management Discussion and Analysis for an in-depth update on recent commercial developments.


  • Received approved vendor status at Saudi Aramco, an important achievement that will strengthen commercial relationships with the world’s largest oil and gas producer.
  • Maintained exceptional Health, Safety and Environment (“HS&E”) track record and zero Total Recordable Incident Rate (“TRIR”) for over two years.
  • Continued to advance product development activities on three product lines and furthered the integration of the Company’s proprietary technologies into its conventional offering.
  • Hired Benoît Crowe, CPA, CA, as Vice-President of Finance, effective August 27th, 2012. Mr. Crowe was previously corporate controller at Richelieu Hardware and Senior Manager at KPMG. He brings over 15 years of experience in the fields of accounting, reporting, treasury management and acquisitions.

*EBITDA is a non-IFRS measure. EBITDA includes the share of loss in the ProSepKolon joint venture equivalent to $132,359 for Q2-2012.
**Backlog does not include ProSepKolon backlog.

“With second quarter revenues up almost 50% year-over-year, we are on track to deliver a record year. Since the introduction of our new strategy, our backlog has grown significantly along with interest for our proprietary technologies,” said Jacques L. Drouin, President and CEO.

“We are currently entertaining several promising commercial discussions with new and existing customers that could lead to significant orders for our proprietary technologies. With a growing population of systems in operation, we are now able to demonstrate significant cost savings and process improvements that are resulting in important benefits to our customers.”


Selected Financial Highlights (in $ millions except for amounts per share)

* Gross margin is a non-IFRS financial measure and the Company defines it as margin excluding amortization expense.
** EBITDA is a non-IFRS financial measure and the Company defines it as earnings or loss from operations excluding amortization, financial charges and income taxes.
*** Net Invested Working Capital is a non-IFRS financial measure and the Company defines it as follows: (Restricted cash + Trade and other receivables + Inventories + Prepaid expenses) – (Trade and other liabilities + Deferred revenue).


Financial Results

This announcement reports on consolidated results. For detailed segmented financial results please see Management Discussion and Analysis and Unaudited Interim Condensed Consolidated Financial Statements for the three and six-month periods ended June 30, 2012.


For the second quarter of 2012, ProSep reported consolidated revenues of $13.9 million, an increase of 45% over $9.6 million reported during the equivalent quarter of 2011. Significant revenue growth was achieved on the advancement of a large number of projects awarded since the second half of 2011. Year-to-date, ProSep reported consolidated revenues of $22.2 million, up 14% from $19.5 million generated during the equivalent period of 2011. Significant revenue growth at the Asia Pacific Operation offset declines at the Company’s US Operation.

As evidenced by the significant revenue growth achieved during the quarter, ProSep’s decision to invest in expanding its business development and engineering teams is starting to show results. ProSep’s bidding activity reached record levels in 2011 and into the second half of 2012. This led to significant growth in new bookings which amounted to $49.4 million in 2011, more than double the previous year’s bookings. During the first half of 2012, ProSep concluded over $32 million in new purchase orders including $6 million awarded to ProSepKolon.

During the second quarter, few contracts came to decision time and ProSep announced only a total of $3.3 million (including $2 million awarded to ProSepKolon), this is comparable to last year’s second quarter signings. The Company believes that contract awards will pick up in the third and fourth quarter of 2012.

At the end of the second quarter of 2012, the Company’s backlog stood at $27.2 million, up 15% from the start of the year ($23.6 million at December 31, 2011) and 106% year-over-year ($13.2 million at June 20, 2011).


Gross Margins

Overall gross margin for the second quarter of 2012 was $3.0 million (or 22% or revenues) compared to $2.2 million (or 23% of revenues) during the corresponding period of 2011. On a percentage basis, gross margins at all business units were equivalent to last year’s second quarter, with the exception of the European & Middle Eastern operations, due to a retroactive adjustment in connection with a joint industry partnership development program that was recorded.

Year-to-date, consolidated gross margin was $5.7 million (or 26% of revenues) compared to $4.4 million (or 23% of revenues) for the equivalent period of last year. On a percentage basis, gross margins at all business units improved. If key bids outstanding for proprietary technologies are awarded, future gross margins have the potential to be above historical levels.
EBITDA and Net Loss

For the second quarter ended June 30, 2012, EBITDA was negative $0.7 million, an improvement over negative $1.8 million reported during last year’s equivalent quarter. Year-to-date, EBITDA also improved to negative $2.9 million compared to negative $4.1 for the comparable period of 2011. Even with lower gross consolidated margins, higher revenues from the Asia Pacific Operations, improved contribution from proprietary equipment and better cost controls at all business units helped reduce losses. The Company’s objective is to continue controlling costs and leveraging its current cost structure to generate significant top line growth.

For the three-month period ended June 30, 2012, the Company reported a loss of $1.6 million ($0.00 per share) an improvement from a loss of $2.4 million ($0.01 per share) for the second quarter of 2011. Year-to-date, the Company recorded a loss of $3.1 million ($0.01 per share) compared to a loss of $5.4 million ($0.03 per share) in the corresponding period of 2011. Loss for both periods improved on higher revenue, gross margins (on a year-to-date basis) and lower total expense levels compared to last year, when significant investments in human resources and sales & marketing were made to position the Company for growth.

Basic and diluted loss per share was determined using the weighted average number of 419,574,388 Common Shares outstanding during the second quarter of 2012. AtJune 30, 2011, 192,154,776 Common Shareswereissued and outstanding.

At June 30, 2012, the Company had $2.0 million in cash and $0.6 of current restricted cash, compared to $4.1 million at December 31, 2011.


Covenant Waiver

At June 30 and March 31, 2012, as well as at March 31, June 30, September 30 and December 31, 2011, one of the Company’s wholly-owned subsidiaries was in breach of a covenant to maintain one of the financial ratios stipulated in the Senior Acquisition Term Loan Facility dated October 23, 2007 between DnB Bank as lender, and said subsidiary, as Borrower. A covenant waiver wherein the lender confirmed that the breached covenant is not deemed to constitute an event of default was obtained by the Company’s subsidiary for each of the above-noted quarter-ends.

Conference Call and WebcastDetails

ProSep will host a conference call and webcast on Thursday August 9, 2012 at 8:00 a.m. (EST) to review the financial results and highlights of the three and six-month period ended June 30, 2012. To access the conference call by telephone, dial 1-416-981-9000 or 1-800-732-8470.  A live audio webcast of the conference call will also be available through ProSep’s website under “Calendar of Events” in the “News and Investor Center” and on For audio replay, dial 1-416-626-4100 or 1-800-558-5253 with the reservation code # 21599148.

Regulatory Filings

ProSep filed its Unaudited Interim Condensed Consolidated Financial Statements for the second quarter ended June 30, 2012 and related Management Discussion and Analysis with securities regulatory authorities. The material will be available through SEDAR at and on the Company’s website at

About ProSep

ProSep is a technology-focused process solutions provider to the upstream oil and gas industry. ProSep designs, develops, manufactures and commercializes technologies to separate oil, water and gas generated by oil and gas production. For more information, please visit
Caution concerning forward-looking statements
This press release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of ProSep Inc. These statements are based, among others, on the Company’s current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic and industry environments in which the Company operates or which could affect its activities, the Company’s ability to attract new clients and consumers as well as its operating costs, raw materials and energy supplies which are subject to a number of risks and uncertainties. Forward-looking statements can generally be identified by the use of the conditional tense, the words “may”, “should”, “would”, “believe”, “plan”, “expect”, “intend”, “anticipate”, “estimate”, “foresee”, “objective” or “continue” or the negative of these terms or variations of them or words and expressions of similar nature. Actual results could differ materially from the conclusion, forecast or projection stated in such forward-looking information. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include but are not limited to the Company’s ability to develop, manufacture, and successfully commercialize value added equipments and services, the availability of funds and resources to continue its operations and pursue its projects, legislative or regulatory developments, competition, technological change, changes in government and economic policy, inflation and general economic conditions in geographic areas where ProSep Inc. operates. These and other factors should be considered carefully and undue reliance should not be placed on the forward-looking statements.



Contact Information

ProSep Inc.
Investor Relations and Media:
Danielle Ste-Marie
VP Marketing and Corporate Development
(514) 522-5550 ext. 238