Neff Corp. Announces 2002 Second Quarter Operating Results
MIAMI--July 31, 2002--Neff Corp. (OTC:NFFCA) (the "Company"), announced today its revenues and results from operations for the second quarter ended June 30, 2002.The Company reported a net loss of $(2.7) million for the second quarter of 2002 compared with a net loss of $(1.8) million for the second quarter of 2001. The net loss of $(2.7) million included an extraordinary gain on the extinguishment of debt of $5.3 million or $0.25 per diluted share related to the Company's repurchase of $19.0 million aggregate principal amount of its Senior Subordinated Notes (the "Notes") during the second quarter of 2002 for a purchase price of $13.1 million. The net loss for the second quarter of 2002 also included a charge of $(3.9) million or $(0.19) per share for settlement of litigation related to the sale of Neff Machinery, Inc. in December of 1999.
The Company reported second quarter revenues of $48.6 million, compared to revenues of $57.7 million for the second quarter of 2001. Same store rental revenues decreased by 10.3%. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the quarter decreased by 28.0% to $14.5 million, compared to EBITDA of $20.1 million for the quarter ended June 30, 2001.
Consolidated debt at June 30, 2002 was approximately $292.7 million, including approximately $137.3 million of debt outstanding under the Company's revolving credit facility. For the six months ended June 30, 2002, the Company has reduced total outstanding debt by $24.4 million through the repurchase of Notes and applying free cash flow to repay amounts outstanding under the Company's revolving credit facility.
The Company reported revenues of $92.0 million for the six months ended June 30, 2002, a decrease of 21.3% from revenues of $116.9 million for the six months ended June 30, 2001. EBITDA for the six months ended June 30, 2002 decreased by 28.6% to $26.3 million, compared to EBITDA of $36.8 million for the six months ended June 30, 2001. The Company reported a net loss of $(1.2) million or $(0.06) per diluted share for the six months ended June 30, 2002, compared to a net loss of $(16.5) million or $(0.78) per diluted share for the same period last year. The reported net loss for the six months ended June 30, 2002 includes an extraordinary gain on the extinguishment of debt of $12.3 million, or $0.58 per diluted share, related to the Company's repurchase of $24.7 million in an aggregate principal amount of Notes. The reported net loss for the six months ended June 30, 2001 includes a charge of $(9.1) million or $(0.43) per diluted share recorded in the first quarter for branch closure and other related costs.
The Company adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142") effective January 1, 2002. SFAS 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. As part of the adoption of SFAS 142, the Company changed its accounting for goodwill and other indefinite-lived intangible assets from an amortization methodology to an impairment-only methodology. SFAS 142 provided for a six month transitional period from the effective date of adoption to June 30, 2002, for the Company to perform an initial assessment of whether there was an indication that the carrying value of its goodwill was impaired. The Company has completed the initial assessment by comparing its fair value, as determined in accordance with SFAS 142, to its carrying value and has concluded that its goodwill was impaired at January 1, 2002.
The Company is now performing the second step of the impairment testing, which will be completed no later than December 31, 2002. In accordance with the transitional implementation guidance of SFAS 142, once the charge is determined it will be recorded as a cumulative effect of change in accounting principle, retroactive to January 1, 2002. The transitional impairment charge is a one time non- cash charge and will not have an effect on the Company's existing bank covenants. In future periods, the assessment must be performed annually, and any such impairment must be recorded as a charge to operating earnings.
Juan Carlos Mas, President and Chief Executive Officer, stated: "We continue to operate in a challenging business environment. We continue to experience reduced demand for our rental equipment and have seen a further decline of 4-5% in rental rates compared to the same quarter last year. Our operations continue to generate free cash flow and our strategy remains to preserve cash flow and reduce debt. During 2002 we have reduced our total debt outstanding by more than 7% or $24.4 million."
Neff Corp. is one of the largest equipment rental companies in the United States, with 74 locations in 16 states at June 30, 2002.
The Company will conduct an investor conference call on August 1, 2002 at 11:00 A.M. (EDT) that will be broadcast live on the internet at www.vcall.com. A replay of the call will be available for 7 days at http://www.vcall.com after the end of the conference call.
Note: This press release contains forward-looking information within the meaning of the Private Securities Litigation Reform Act. These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or comparable terminology, or by discussions of strategy. Actual results may differ materially from those projected in the forward-looking statements. Risks that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the Company's dependence on additional capital for future growth; and the degree to which the Company is leveraged. Additional information concerning these and other risks and uncertainties is contained from time-to-time in the Company's SEC filings. In light of these risks and uncertainties, there can be no assurance that the results referred to in forward-looking statements made in this press release will in fact occur.
Neff Corp.
Results of Operations
(unaudited, in thousands)
For the Three Months Ended
June 30,
---------------------------
2002 2001
---------- ----------
Revenues
Rental revenue $ 42,511 $ 47,704
Equipment sales 3,147 6,196
Parts and service 2,958 3,762
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Total revenues 48,616 57,662
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Cost of revenues
Cost of equipment sold 2,764 5,233
Depreciation of rental equipment 10,285 11,004
Maintenance of rental equipment 15,314 16,377
Cost of parts and service 2,046 2,494
---------- ----------
Total cost of revenues 30,409 35,108
---------- ----------
Gross profit 18,207 22,554
---------- ----------
Other operating expenses
Selling, general and
administrative expenses 13,997 13,428
Other depreciation and
amortization 1,707 2,624
---------- ----------
Total other operating
expenses 15,704 16,052
---------- ----------
Income from operations 2,503 6,502
---------- ----------
Other expenses
Interest expense 6,042 7,849
Litigation settlement 3,944 -
Amortization of debt issue costs 475 446
---------- ----------
Total other expenses 10,461 8,295
---------- ----------
Loss before extraordinary item (7,958) (1,793)
Extraordinary gain on
debt extinguishment 5,271 -
---------- ----------
Net loss $ (2,687) $ (1,793)
========== ==========
EBITDA $ 14,495 $ 20,130
========== ==========
Certain amounts for the prior period have been reclassified to
conform with the current presentation.
Neff Corp.
Results of Operations
(unaudited, in thousands)
For the Six Months Ended
June 30,
------------------------
2002 2001
---------- ----------
Revenues
Rental revenue $ 79,457 $ 91,323
Equipment sales 6,828 18,172
Parts and service 5,733 7,362
---------- ----------
Total revenues 92,018 116,857
---------- ----------
Cost of revenues
Cost of equipment sold 5,911 15,116
Depreciation of rental equipment 20,597 21,922
Maintenance of rental equipment 29,674 31,786
Cost of parts and service 3,674 4,926
---------- ----------
Total cost of revenues 59,856 73,750
---------- ----------
Gross profit 32,162 43,107
---------- ----------
Other operating expenses
Selling, general and administrative
expenses 26,499 28,231
Other depreciation and amortization 3,446 5,309
Recovery of costs incurred to sell the
company (1,752) -
Branch closure and other related costs - 9,128
---------- ----------
Total other operating expenses 28,193 42,668
---------- ----------
Income from operations 3,969 439
---------- ----------
Other expenses
Interest expense 12,543 16,117
Litigation settlement 3,944 -
Amortization of debt issue costs 955 852
---------- ----------
Total other expenses 17,442 16,969
---------- ----------
Loss before extraordinary item (13,473) (16,530)
Extraordinary gain on debt extinguishment 12,296 -
---------- ----------
Net loss $ (1,177) $ (16,530)
========== ==========
EBITDA $ 26,260 $ 36,798
========== ==========
Certain amounts for the prior period have been reclassified to
conform with the current presentation.
Neff Corp.
Earnings per Share
(unaudited)
(in thousands, except per share data)
For the Three Months Ended
June 30,
--------------------------
2002 2001
---------- ----------
Earnings per share computation:
Net loss - (basic and diluted) $ (2,687) $ (1,793)
========== ==========
Number of shares:
Weighted average common shares
outstanding - basic and diluted (1) 21,165 21,165
========== ==========
Basic and diluted loss per common share $ (0.13) $ (0.08)
========== ==========
For the Six Months Ended
June 30,
------------------------
2002 2001
---------- ----------
Earnings per share computation:
Net loss - (basic and diluted) $ (1,177) $ (16,530)
========== ==========
Number of shares:
Weighted average common shares
outstanding - basic and diluted (1) 21,165 21,165
========== ==========
Basic and diluted loss per common share $ (0.06) $ (0.78)
========== ==========
(1) Effects of employee stock options for the three and six months
ended June 30, 2002 and 2001 were not included as they were
anti-dilutive due to losses from continuing operations.