Envirotest Earnings Momentum Continuing
17 December 1997
Envirotest Earnings Momentum Continuing
Company Profitable for Second Consecutive Quarter
as a Result of Turnaround Effort
SUNNYVALE, Calif., Dec. 17 -- Envirotest Systems Corp.
(Amex: ENR) announced continued earnings momentum consistent with its
operational turnaround, achieving its second consecutive quarter of
profitability.
For the fourth fiscal quarter ended September 30, 1997, Envirotest had
earnings of $468,000, or $0.03 per share before an extraordinary charge of
$1.3 million related to the company's successful senior note tender offer this
past September. Inclusive of the extraordinary charge, Envirotest had a net
loss for the September 30, 1997 quarter of $856,000, or $0.05 per share,
sharply reduced from $7.9 million, or $0.46 per share, in the corresponding
period in the prior year. Revenues for the 1997 fiscal fourth quarter
increased to $38.9 million compared to $33.7 million in the 1996 fiscal fourth
quarter.
For the 1997 fiscal year, Envirotest reduced its loss to $7.3 million, or
$0.44 per share, before extraordinary items, while its revenues increased 13%
to $140.7 million. After extraordinary items, the fiscal 1997 net loss was
$8.6 million, or $0.52 per share. For fiscal 1996, Envirotest had incurred a
net loss of $25.1 million, or $1.51 per share, and its revenues were
$124.5 million.
Chester Davenport, Chairman, stated, "Envirotest's return to profitability
and its momentum reflect the strategic turnaround the Company undertook over
the past year. We have restructured Envirotest in terms of its operations,
its management and financial position. In so doing, we have established a
profitable foundation to capitalize on attractive growth opportunities in
vehicle emissions testing both domestically and internationally. Our
development of overseas markets and new testing technologies has the
potential of opening up important new avenues of growth for the company.
"In pursing these opportunities, Envirotest is being led by an experienced
management team poised to take advantage of Envirotest's market leadership
position and financial strength to build value for our shareholders," he said.
Bob Miller, President and Chief Executive Officer, stated, "The
effectiveness of the turnaround is clearly demonstrated by Envirotest's return
to profitable operations over the past two quarters. We anticipate continued
revenue and earnings momentum in fiscal 1998 driven by our increased base of
long-term profitable contracts in our core business. Revenues are anticipated
to increase by 10 to 15 percent.
"We are also moving to take advantage of increasingly attractive
opportunities in our traditional centralized emissions testing business and in
related market segments, including international testing programs and domestic
decentralized testing programs," Mr. Miller said.
Envirotest Systems Corp. is the largest provider of vehicle inspection
services in the country and the only domestic company that provides vehicle
inspection services outside the United States.
This press release contains statements that are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934,
which represent the Company's expectations or beliefs concerning future
events. The Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements. A number of such factors are set
forth in the Company's filings with the Securities and Exchange Commission,
including the Company's Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q.
ENVIROTEST SYSTEMS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Years Ended Three Months Ended
September 30, September 30,
1997 1996 1997 1996
(Unaudited)
Contract revenue $140,664 $124,472 $38,861 $33,708
Costs of revenue 98,859 102,149 24,811 26,905
Gross profit 41,805 22,323 14,050 6,803
Operating costs
and expenses:
Selling, general
and administrative 19,046 21,782 5,079 6,161
Non-recurring corporate
relocation -- 1,850 -- --
Amortization 2,432 3,427 571 671
Gain on Pennsylvania
settlement (3,950) (15,307) -- --
Income (loss)
from operations 24,277 10,571 8,400 (29)
Other expense (income):
Interest expense 40,220 38,940 10,116 10,366
Interest income (7,636) (3,259) (2,009) (2,631)
Interest income
from Pennsylvania
settlement (1,109) (5,684) (165) --
Other expense
(income) 103 -- (10) (12)
Loss before income taxes(7,301) (19,426) 468 (7,752)
Income tax expense -- 5,638 -- 148
Income (loss) before
extraordinary item (7,301) (25,064) 468 (7,900)
Extraordinary loss 1,324 -- 1,324 --
Net Loss ($8,625) ($25,064) $(856) $(7,900)
Earnings (loss)
per common and common
equivalent share:
Earnings (loss) before
extraordinary item ($0.44) ($1.51) $0.03 $(0.46)
Extraordinary loss ($0.08) -- $(0.08) $--
Net Loss ($0.52) ($1.51) $(0.05) $(0.46)
Weighted average
number of common
shares outstanding 16,439 16,553 15,896 16,553
SOURCE Envirotest Systems Corp.