Neff Corp. Announces 2002 Third Quarter Operating Results
MIAMI--Oct. 31, 2002--Neff Corp. (OTC:NFFCA) (the "Company"), announced today its revenues and results from operations for the third quarter ended September 30, 2002.The Company reported a net loss of $(3.5) million or $(0.17) per diluted share for the third quarter of 2002 compared with a net loss of $(2.4) million or $(0.11) per diluted share for the third quarter of 2001. The Company reported third quarter revenues of $50.9 million, compared to revenues of $56.6 million for the third quarter of 2001. Same store rental revenues decreased by 7.6%. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the quarter decreased by 24.4% to $14.5 million, compared to EBITDA of $19.1 million for the quarter ended September 30, 2001.
Consolidated debt at September 30, 2002 was approximately $281.7 million, including approximately $126.3 million of debt outstanding under the Company's revolving credit facility. For the quarter ended September 30, 2002, the Company has reduced total outstanding debt by $11.0 million through applying free cash flow to repay amounts outstanding under the Company's revolving credit facility.
The Company reported revenues of $142.9 million for the nine months ended September 30, 2002, a decrease of 17.6% from revenues of $173.5 million for the nine months ended September 30, 2001. EBITDA for the nine months ended September 30, 2002 decreased by 27.2% to $40.7 million, compared to EBITDA of $55.9 million for the nine months ended September 30, 2001. The Company reported a net loss of $(4.7) million or $(0.22) per diluted share for the nine months ended September 30, 2002, compared to a net loss of $(19.0) million or $(0.90) per diluted share for the same period last year. The reported net loss for the nine months ended September 30, 2002 includes a gain on the extinguishment of debt of $12.3 million, or $0.58 per diluted share, related to the Company's repurchase of $43.7 million in an aggregate principal amount of its Senior Subordinated Notes. The reported net loss for the nine months ended September 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 experienced an increase in rental demand during the third quarter with time utilization increasing by 1.5% year-over-year. Unfortunately a decline in rental rates of approximately 6% year-over-year offset the improvement in rental demand and led to a decrease in rental revenues. In this challenging business environment, we remain focused on generating free cash flow to reduce debt. During the third quarter we reduced debt by over $11.0 million."
Neff Corp. is one of the largest equipment rental companies in the United States, with 73 locations in 16 states at September 30, 2002.
The Company will conduct an investor conference call on Friday, November 1, 2002 at 11:00 A.M. (EST) that will be broadcast live on the internet at http://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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except per share data)
Sept. 30, Dec. 31,
2002 2001
---------- ---------
ASSETS
Cash and cash equivalents $88 $4,305
Accounts receivable, net of allowance for
doubtful accounts of $2,808 in 2002 and $2,947
in 2001 31,935 31,458
Inventories 2,045 2,415
Rental equipment, net 232,724 258,391
Property and equipment, net 17,755 21,790
Goodwill, net 82,296 82,296
Prepaid expenses and other assets 11,627 13,802
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Total assets $378,470 $414,457
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable $7,314 $10,067
Accrued expenses 29,955 22,997
Credit facility 126,262 118,217
Senior subordinated notes 155,463 198,967
Capitalized lease obligations - 38
---------- ---------
Total liabilities 318,994 350,286
---------- ---------
Commitments and contingencies
Stockholders' equity
Class A Common Stock; $.01 par value; 100,000
shares authorized; 16,065 shares issued and
outstanding 161 161
Class B Special Common Stock; $.01 par value,
liquidation preference $11.67; 20,000 shares
authorized; 5,100 shares issued and
outstanding 51 51
Additional paid-in capital 127,759 127,759
Accumulated deficit (68,495) (63,800)
---------- ---------
Total stockholders' equity 59,476 64,171
---------- ---------
Total liabilities and stockholders' equity $378,470 $414,457
========== =========
Neff Corp.
Results of Operations
(unaudited, in thousands)
For the Three Months
Ended
September 30,
---------------------
2002 2001
---------- ----------
Revenues
Rental revenue $44,679 $48,276
Equipment sales 3,289 4,715
Parts and service 2,919 3,657
---------- ----------
Total revenues 50,887 56,648
---------- ----------
Cost of revenues
Cost of equipment sold 2,979 4,055
Depreciation of rental equipment 10,272 10,993
Maintenance of rental equipment 17,338 17,176
Cost of parts and service 1,949 2,358
---------- ----------
Total cost of revenues 32,538 34,582
---------- ----------
Gross profit 18,349 22,066
---------- ----------
Other operating expenses
Selling, general and administrative
expenses 14,160 13,928
Other depreciation and amortization 1,654 2,461
---------- ----------
Total other operating expenses 15,814 16,389
---------- ----------
Income from operations 2,535 5,677
---------- ----------
Other expenses
Interest expense 5,932 7,612
Amortization of debt issue costs 491 486
---------- ----------
Total other expenses 6,423 8,098
---------- ----------
Loss before income taxes (3,888) (2,421)
Income taxes 370 -
---------- ----------
Net loss $(3,518) $(2,421)
========== ==========
EBITDA $14,461 $19,131
========== ==========
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 Nine Months
Ended
September 30,
----------------------
2002 2001
----------- ---------
Revenues
Rental revenue $124,136 $139,599
Equipment sales 10,117 22,887
Parts and service 8,652 11,019
----------- ---------
Total revenues 142,905 173,505
----------- ---------
Cost of revenues
Cost of equipment sold 8,890 19,171
Depreciation of rental equipment 30,869 32,915
Maintenance of rental equipment 47,012 48,962
Cost of parts and service 5,623 7,284
----------- ---------
Total cost of revenues 92,394 108,332
----------- ---------
Gross profit 50,511 65,173
----------- ---------
Other operating expenses
Selling, general and administrative
expenses 40,659 42,159
Other depreciation and amortization 5,100 7,770
Recovery of costs incurred to sell the
company (1,752) -
Branch closure and other related costs - 9,128
Gain on debt extinguishment (12,296) -
----------- ---------
Total other operating expenses 31,711 59,057
----------- ---------
Income from operations 18,800 6,116
----------- ---------
Other expenses
Interest expense 18,475 23,729
Litigation settlement 3,944 -
Amortization of debt issue costs 1,446 1,338
----------- ---------
Total other expenses 23,865 25,067
----------- ---------
Loss before income taxes (5,065) (18,951)
Income taxes 370 -
----------- ---------
Net loss $(4,695) $(18,951)
=========== =========
EBITDA $40,721 $55,929
=========== =========
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
September 30,
---------------------
2002 2001
---------- ----------
Earnings per share computation:
Net loss - (basic and diluted) $ (3,518) $ (2,421)
========== ===========
Number of shares:
Weighted average common shares
outstanding - basic and diluted (1) 21,165 21,165
========== ===========
Basic and diluted loss per common share $ (0.17) $ (0.11)
========== ===========
For the Nine Months
Ended
September 30,
---------------------
2002 2001
----------- ---------
Earnings per share computation:
Net loss - (basic and diluted) $ (4,695) $ (18,951)
========== ===========
Number of shares:
Weighted average common shares
outstanding - basic and diluted (1) 21,165 21,165
========== ===========
Basic and diluted loss per common share $ (0.22) $ (0.90)
========== ===========
(1) Effects of employee stock options for the three and nine months
ended September 30, 2002 and 2001 were not included as they were
anti-dilutive due to losses from continuing operations.