Epic Energy Resources Announces Fourth Quarter Results

HOUSTON, March 31 /PRNewswire-FirstCall/ -- Epic Energy Resources, Inc. (OTC Bulletin Board: EPCC) ("Epic") a provider of engineering, management consulting, training and data management services to the energy industry, today announced its financial and operating results for the three and twelve months ended December 31, 2009.

• Epic's net loss for 2009 was $17.5 million, or $0.40 per weighted average common share, compared to a net loss of $26.6 million, or $0.62 per share in 2008. Net loss for the year was negatively impacted by the following non-cash items: impairment charges to long-lived assets, stock compensation expense, bad debt expense, derivative loss and depreciation and amortization expense. Excluding total non-cash expenses and a one-time expense of $23.8 million, the 2009 net income would have been $6.3 million or $0.14 per share.
• Improvement in 2009 earnings is due primarily to higher gross margins and a significant reduction in salary and operating expenses.

"The weak economy continued to put downward pressure on our revenue throughout 2009. The Company responded by reducing and controlling costs very aggressively without compromising safety or service quality," said John Ippolito, President and CEO of Epic Energy. "The success of our efforts is evidenced by a reduction in operating costs of over 44% from 2008 to 2009."

To improve its brand identity, Epic recently rebranded its engineering, field services, training/documentation and consulting services under the name 'Epic Integrated Services.' Sub-brands that included Pearl Development Corporation, Pearl Field Services, The Carnrite Group and Epic Integrated Solutions will be phased out during the rest of  the year.

"Epic management is committed to differentiate itself from its competitors and will not accept a 'business-as-usual approach.'  Our clients will benefit from Epic's integrated approach as we bring the technical and business acumen of each business unit to each project in a flexible and scalable manner," said John Ippolito, President and Chief Executive Officer of Epic. "Our  goal is to align ourselves with our clients' organizational and business goals and objectives."

Fourth Quarter 2009 Financial Results:

• Revenues were $14.7 million for the fourth quarter of 2009, a 12.5% decrease compared to the $16.8 million for the fourth quarter of 2008.
  • Consulting fee revenue was $6.0 million for the fourth quarter of 2009 a 28.6% decrease as compared to $8.4 million for the fourth quarter of 2008.
  • Reimbursed materials revenue was $8.7 million for the fourth quarter of 2009 a 3.4% increase as compared to $8.4 million for the fourth quarter of 2008.
• Loss from operations was $12.1 million for the fourth quarter of 2009, a 13.4% increase compared to a $14.0 million loss for the fourth quarter of 2008.
• EBITDA was $1.5 million for the fourth quarter of 2009, a 127.7% increase compared to a $5.5 million loss for the fourth quarter of 2008.  EBITDA is a non-GAAP measure and is defined and reconciled to net income later in this press release.  
• During the fourth quarter of 2009, Epic had a net loss of $13.8 million, or ($0.31) per weighted average common shares outstanding, a 24.3% increase compared to a net loss of $18.2 million, or ($0.42) per share in the fourth quarter of 2008. Net loss in the quarter was negatively impacted by the following non-cash items: impairment charges to long-lived assets, stock compensation expense, derivative loss and depreciation and amortization expense.  Excluding total non-cash expenses of $15.4 million, the fourth quarter 2009 net income would have been $1.6 million or $0.04 per share.

Full Year 2009 Financial Results:

• Revenues were $47.5 million for 2009, a 34.2% decrease compared to the $72.2 million for 2008.
  • Consulting fee revenue was $27.1 million for 2009 a 31.5% decrease as compared to $39.6 million for 2008.
  • Reimbursed materials revenue was $20.4 million for 2009 a 37.4% decrease as compared to $32.6 million for 2008.
• Loss from operations was $12.0 million for 2009, a 21.6% increase compared to loss from operations of $15.3 million for 2008.
• EBITDA was $5.0 million for 2009, a 208% increase compared to a $4.6 million loss for 2008.  EBITDA is a non-GAAP measure and is defined and reconciled to net income later in this press release.  
• During 2009, Epic had a net loss of $17.5 million, or $0.40 per weighted average common shares outstanding, a 34.2% increase compared to a net loss of $26.6 million, or $0.62 per share in 2008. Net loss for the year was negatively impacted by the following non-cash items: impairment charges to long-lived assets, stock compensation expense, bad debt expense, derivative loss and depreciation and amortization expense. Excluding total non-cash expenses and a one-time expense of $23.8 million, the 2009 net income would have been $6.3 million or $0.14 per share.
• Net cash flows from operations for the twelve months ended December 31, 2009, was $718,000. Net cash flow used in investing activities for the twelve months ended December 31, 2009 was $215,000, largely related to the purchase of property and equipment. Finally, net cash used in financing activities was $5,126 million primarily the result of debt payments.

As of March 29, 2010, Epic's potential backlog for consulting services to be performed in the future was approximately $12.6 million. This compares with a combined backlog of approximately $43.5 million as of February 25, 2009.

Conference Call

Epic will host a conference call to discuss its fourth quarter 2009 results on March 31st, at 10:00 a.m. Eastern Time (9:00 a.m. Central). To access the call, please dial (800) 684-6343 at least 10 minutes prior to the start time. A telephonic replay of the conference call will be available on our website at www.1Epic.com as well. For more information, please contact Mike Kinney at (281)863-9635 or email at [email protected].

About Epic

Epic Energy Resources, Inc. is a Houston based integrated energy services company.  Epic provides business and operations consulting; engineering, procurement, and construction management; production operations & maintenance; specialized training, operating manuals, data management and data integration focused primarily on the upstream, midstream and downstream energy infrastructure.  Epic is headquartered at 1450 Lake Robbins Drive, Suite 160, The Woodlands, Texas 77380. Office - 281-863-9635, www.1Epic.com.

Forward Looking Statements

Certain statements included in this release constitute forward-looking statements.  These forward-looking statements are based on management's belief and assumptions derived from currently available information.  Although Epic Energy Resources ("Epic") believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Actual results could differ materially from forward-looking statements expressed or implied herein as a result of a variety of factors including, but not limited to: a decline in the price of, or demand for, oil and gas, demand for Epic's services, loss or unavailability of key personnel, inability to recruit or retain personnel, competition for customers and contracts, various potential losses associated with fixed-price contracts, general economic conditions; and other financial, operational and legal risks and uncertainties detailed from time to time in Epic's SEC filings.  Epic does not undertake any obligation to publicly update forward looking statements contained herein to reflect subsequent events or circumstances.

(1) This earnings release contains references to the non-GAAP financial measure of earnings (net income) before interest, taxes, depreciation and amortization, or "EBITDA."  EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.  However, Epic believes EBITDA is a useful supplemental financial measure used by its management and directors and by external users of its financial statements, such as investors, to assess:

• The financial performance of its assets without regard to financing methods, capital structure or historical cost basis;
• The ability of its assets to generate cash sufficient to pay interest on our indebtedness; and
• Its operating performance and return on invested capital as compared to those of other companies in the well servicing industry, without regard to financing methods and capital structure.

EBITDA has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income and operating income, and these measures may vary among other companies. Limitations to using EBITDA as an analytical tool include:

• EBITDA does not reflect its current or future requirements for capital expenditures or capital commitments;
• EBITDA does not reflect changes in, or cash requirements necessary to service interest or principal payments on, its debt;
• EBITDA does not reflect income taxes;
• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
• Other companies in its industry may calculate EBITDA differently than Epic does, limiting its usefulness as a comparative measure.

The following table presents a reconciliation of net income to EBITDA, which is the most comparable GAAP performance measure, for each of the periods indicated:

SOURCE Epic Energy Resources, Inc.