GreenMan Technologies Reports December 2005 Quarterly Results
LYNNFIELD, Mass.--May 11 2006--GreenMan Technologies, Inc. (AMEX: GRN), a leading recycler of approximately 20 million scrap tires per year in the United States, today announced results for its first quarter ended December 31, 2005.Chuck Coppa, GreenMan's Chief Financial Officer stated, "The net loss for the quarter ended December 31, 2005 decreased approximately $400,000 to $1.4 million (including approximately $746,000 associated with our discontinued Georgia operations and approximately $656,000 of non-cash deferred financing charges) as compared to a net loss of approximately $1.8 million for the quarter ended December 2004 (including approximately $1.1 million associated with our discontinued operations in Georgia and Tennessee and approximately $360,000 associated with non-cash deferred financing charges and the write-off of a deferred tax asset)". Please see below for a more detailed explanation of the quarterly results.
Three Months ended December 31, 2005 Compared to the Three Months ended December 31, 2004
In September 2005, due to the magnitude of continued operating losses, our Board of Directors approved separate plans to divest the operations of our Georgia and Tennessee subsidiaries and dispose of their respective assets. Accordingly, we have classified their respective results of operations as discontinued operations for all periods presented in the accompanying consolidated financial statements.
Net sales from continuing operations for the three months ended December 31, 2005 were $5,112,000, a 1 percent decrease, compared to last year's net sales from continuing operations of $5,168,000. Our continuing operations processed approximately 4.0 million passenger tire equivalents during the three months ended December 31, 2005, compared to approximately 4.6 million passenger tire equivalents during the three months ended December 31, 2004. The slight decrease in revenue was attributable to a 13 percent decrease in inbound scrap tires volume and a 1 percent decrease in overall product revenue which was offset by a 13 percent increase in overall tipping fees per passenger tire. During fiscal 2005, we completed an evaluation of our corporate-wide inbound collection infrastructure and determined we would no longer provide certain levels of service and products at existing rates in certain markets and therefore implemented price increases where warranted and terminated service in situations where price increases were not an alternative. While these initiatives have reduced our overall inbound tire volume growth rate, they have positively impacted our overall tipping fee revenue and will continue to improve our performance through lower labor, parts and maintenance costs.
Gross profit for the three months ended December 31, 2005 was $1,319,000 or 26 percent of net sales, compared to $736,000 or 14 percent of net sales for three months ended December 31, 2004. Our cost of sales decreased $639,000 or 14 percent primarily due to decreased collection and processing costs associated with lower inbound volume and our ongoing efforts to reduce operating costs were available.
Three Months ended December 31, 2005 Compared to the Three Months ended December 31, 2004
Selling, general and administrative expenses for the three months ended December 31, 2005 increased $149,000 to $1,005,000 or 20 percent of net sales, compared to $855,000 or 17 percent of net sales for the three months ended December 31, 2004. The increase was primarily attributable to increased outside professional expenses and insurance.
As a result of the foregoing, we had operating income of $314,000 for the three months ended December 31, 2005 as compared to an operating loss of $119,000 for the three months ended December 31, 2004.
Interest and financing costs for the three months ended December 31, 2005 increased $608,000 to $951,000 (including $656,000 of non-cash deferred financing costs), compared to $344,000 (including $92,000 of non-cash deferred financing costs) during the three months ended December 31, 2004. The increase is primarily attributable to increased non-cash deferred financing associated with the Laurus credit facility and an increase in borrowing rates.
Based on the magnitude of our fiscal 2005 losses, we determined the near-term realizability of a $270,000 non-cash deferred tax asset to be uncertain and therefore have provided a valuation allowance on the entire amount during the three months ended December 31, 2004.
As a result of the foregoing, our net loss from continuing operations for the three months ended December 31, 2005 decreased $55,000 to $660,000 or $.03 per basic share, compared to a net loss of $715,000 or $.04 per basic share for the three months ended December 31, 2004. The $746,000 loss from discontinued operations for the three months ended December 31, 2005 relates primarily to the costs of exit activities associated with our Georgia operations. The loss from discontinued operations for the three months ended December 31, 2004 includes $736,000 associated with our Georgia operations and $353,000 associated with our Tennessee operations.
Our net loss for the three months ended December 31, 2005 decreased $399,000 to $1,406,000 as compared to a net loss of $1,805,000 for the three months ended December 31, 2004.
Condensed Consolidated Statements of Operations
Three Months Ended
December 31, December 31,
2005 2004
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Net sales $5,112,000 $5,168,000
Cost of sales 3,793,000 4,432,000
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Gross profit 1,319,000 736,000
Selling, general and administrative 1,005,000 855,000
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Operating income (loss) from continuing
operations 314,000 (119,000)
Other (expenses) income, net (974,000) (326,000)
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Loss from continuing operations before income
taxes (660,000) (445,000)
Provision for income taxes -- (270,000)
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Loss from continuing operations (660,000) (715,000)
Discontinued operations
Loss on disposal of discontinued operations (9,000) --
Loss from discontinued operations (737,000) (1,090,000)
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(746,000) (1,090,000)
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Net loss $(1,406,000)$(1,805,000)
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Loss from continuing operations per share -
basic $(0.03) $(0.04)
Loss on disposal of discontinued operations
per share - basic -- --
Loss from discontinued operations per share -
basic (0.04) (0.05)
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Net loss per share $(0.07) $(0.09)
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Weighted average shares outstanding 19,225,000 19,106,000
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Condensed Consolidated Balance Sheet Data
December 31, September 30,
2005 2005
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Assets
Current assets $3,226,000 $4,041,000
Property, plant and equipment (net) 5,883,000 6,342,000
Other assets 621,000 699,000
Assets related to discontinued operations 1,097,000 2,038,000
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$10,827,000 $13,120,000
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Liabilities and Stockholders' (Deficit)
Current liabilities $9,625,000 $10,065,000
Notes payable, non-current 4,325,000 4,739,000
Capital lease obligations, non-current 1,354,000 1,369,000
Deferred gain on sale leaseback 370,000 380,000
Liabilities related to discontinued
operations 5,243,000 5,253,000
Stockholders' equity (10,092,000) (8,686,000)
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$10,827,000 $13,120,000
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