Mace Security International Announces Financial Results for Third Quarter 2000
10 November 2000
Mace Security International Announces Financial Results for Third Quarter 2000
MOUNT LAUREL, N.J., Nov. 10 Mace Security International,
Inc. (Mace) today announced financial results for the third
quarter ended September 30, 2000. Earnings per share for the third quarter of
2000 was $.00 per share on a fully diluted basis compared to $.03 per share
for the third quarter of 1999. The Company reported a loss for the third
quarter of $84,000 compared to net income of $534,000 for the prior year
period. Earnings per share and net income for the third quarter ended
September 30, 1999 excluded one time merger charges of $1,875,000, as well as
all merger charge related taxes and included net income from discontinued
operations of $170,000.
"The third quarter has traditionally been our slowest quarter for car
washing, because of the seasonality effects in our markets that influence wash
volume," said Louis D. Paolino, Jr., Chairman and Chief Executive Officer of
Mace. "Fortunately, we were able to offset some of this negative impact on
revenues by increasing our revenues in detailing and lube services, and
improving our average wash revenue per car for the second consecutive
quarter." Mr. Paolino added, "During the second and third quarters of 2000,
senior management focused heavily on closing the previously announced
acquisition of Wash Depot. Management decided to terminate this transaction
because certain conditions precedent to closing were not satisfied by
September 30, 2000. We feel that the significant time invested by management
into trying to close this deal, certain turnover in regional management,
coupled with the seasonal decline in car wash volume during this quarter,
resulted in an increase in our labor as a percent of revenues."
Mr. Paolino also added, "The fundamentals of the business continue to be
strong. We have a solid balance sheet having a 35% debt-to-total
capitalization ratio, positive cash flow and an experienced senior management
team with a high equity stake in the Company. We continue to be very
optimistic about the future of Mace."
Reported revenues for the third quarter of 2000 were $12.7 million, a $5.2
million or 69% increase over the $7.5 million generated in the third quarter
of 1999. Operating income for the quarter was $549,000 compared to $717,000
in the third quarter of 1999. EBITDA for the quarter was $1.3 million or
10.3% of revenues compared to $1.2 million for the same quarter of 1999.
Operating income and EBITDA for the three months ended September 30, 2000 and
1999 are from continuing operations. Additionally, 1999 results exclude one
time merger charges of $1,875,000, as well as all related taxes.
Reported revenues for the nine months ended September 30, 2000 were $36.6
million, a $22.4 million or 158% increase over the $14.2 million generated in
the same period of 1999. The Company reports revenues from operating
agreements net of all applicable expenses. Gross revenues for the nine months
ended September 30, 2000 were $37.4 million compared to $22.6 million for the
prior year period of 1999, an increase of $14.8 million or 65%. Operating
income for the nine months ended September 30, 2000 was $2.7 million or 7.4%
of reported revenues compared to $1.4 million for the same period of 1999.
Earnings per share on a fully diluted basis for the nine months ended
September 30, 2000 was $.04 per share. EBITDA for the nine months ended
September 30, 2000 was $4.8 million or 13.2% of revenues compared to $2.1
million for the same period of 1999. Operating income, earnings per share and
EBITDA for the nine months ended September 30, 2000 are from continuing
operations and on a pro forma basis excluding the one time charge of $580,000
relating to costs of terminated acquisitions in the second quarter of 2000.
Also, operating income and EBITDA for the same period in 1999 excluded merger
charges of $1,875,000, and one time restructuring, asset abandonment costs and
change in control charges totaling $1,519,000, as well as all related taxes.
On a quarter-to-quarter basis, Mace continues to increase its detailing
revenue as well as improve its average wash revenue per car. During the
September 2000 quarter, the Company generated $2.2 million in detailing
revenue, a 15% increase over the $1.9 million generated in the June 2000
quarter. In addition, Mace increased its average wash revenue per car from
$10.19 in the June 2000 quarter to $10.48 in the September 2000 quarter
through added emphasis on marketing various on-line and off-line car wash
services. These increases in detailing revenue and average wash revenue per
car were offset by seasonal volume declines in the most recent quarter within
the Arizona, Florida and New Jersey/Pennsylvania markets. While the Company
continues to believe that the geographic diversity of its car wash locations
minimizes weather-related influence on its car wash volume, it cannot
completely eliminate short-term negative weather-related effects.
Additionally, Mace has received a commitment from Bank One, Texas, N.A.
for an approximate $6.7 million term loan. The commitment provides for the
refinancing of several term loans currently maturing, the purchase of a
currently leased property, and approximately $1.7 million of additional
funding for capital improvements and working capital. The commitment is
subject to customary closing conditions. Although the Company believes the
conditions will be satisfied, no assurance can be given that the loan will
close.
In commenting on the future of Mace, Mr. Paolino said, "Our top priority
continues to be increasing shareholder value. We believe that this is
attainable by exploring new opportunities." Mr. Paolino added, "We are
currently exploring potential acquisitions, mergers and strategic alliances
with several companies, including companies not in the car wash business. We
believe that such strategies will result in better shareholder value."
Mace will conduct a conference call on Monday, November 13, 2000 at 11:00
AM EST to review the Company's third quarter 2000 operating results and other
company news. The conference call number is (800) 633-8704. In addition, a
live webcast of the conference call will be available online at http://www.mace.com
or http://www.streetevents.com, and will be available through January 1, 2001.
Mace Security International, Inc. is a provider of car care services,
which owns and operates numerous car washes nationwide. The Company is also a
leading producer of less lethal defense sprays for the consumer market and a
marketer of consumer safety and security products.
Certain statements and information included in this press release
constitute "forward-looking statements" within the meaning of the Federal
Private Securities Litigation Reform Act of 1995. When used in this press
release, the words or phrases "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "projected", "intends to" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks, known and unknown, and uncertainties,
including but not limited to economic conditions, dependence on management,
dilution to shareholders, lack of capital, the effects of weather on the
demand for car care services, the affects of rapid growth upon the Company and
the ability of management to effectively respond to the growth, its ability to
achieve operating synergies, its ability to compete, regulatory matters, the
effects of competition, its ability to maintain the control of the Company's
cash business, and the ability of the Company to obtain additional financing.
Such factors could materially adversely affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from any opinions or statements expressed within this press
release. Additional discussion of factors that could cause actual results to
differ materially from management's projections, forecasts, estimates and
expectations are contained in the Company's SEC filings, including its S-3
registration statements and 10-KSB for 1999.
Mace Security International, Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended September 30,
2000 1999 1999
Restated
Restated Pro Forma (1)
Revenues
Car wash and detailing
services $9,874 $ 5,134 $5,134
Lube and other automotive
services 1,295 1,024 1,024
Fuel and merchandise sales 1,455 642 642
Security Product Sales - 693 693
Operating agreements 60 46 46
12,684 7,539 7,539
Cost of revenues
Car wash and detailing
services 7,385 3,416 3,416
Lube and other automotive
services 990 694 694
Fuel and merchandise sales 1,285 530 530
Security Product Sales - 345 345
9,660 4,985 4,985
Selling, general and
administrative expenses 1,835 1,529 1,529
Depreciation and amortization 640 308 308
Merger costs - 1,875 -
Operating income (loss) 549 (1,158) 717
Interest expense, net (789) (335) (335)
Other income 116 132 132
(Loss) income from continuing
operations before income taxes (124) (1,361) 514
Income tax (benefit) expense (40) (362) 150
(Loss) income from continuing
operations (84) (999) 364
Discontinued Operations
Income from discontinued
operations, net of income
tax expense of $27,000 - 170 170
Net (loss) income $(84) $(829) $534
Basic (loss) earnings per share
From continuing operations $- $(0.06) $0.02
From discontinued operations - 0.01 0.01
Total $- $(0.05) $0.03
Weighted average shares
outstanding 24,997,957 17,245,702 17,245,702
Diluted (loss) earnings per share
From continuing operations $- $(0.06) $0.02
From discontinued operations - 0.01 0.01
Total $- $(0.05) $0.03
Weighted average shares
outstanding 24,997,957 17,245,702 20,252,340
EBITDA (2) $1,305 $(718) $1,157
EBITDA % 10.3% n/a 15.3%
(1) Excludes merger costs, net of related income taxes.
(2) EBITDA is calculated as income (loss) from continuing operations
adding back interest, income taxes, depreciation and amortization
expense.
Mace Security International, Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)
Nine Months Ended September 30,
2000 2000 1999 1999
Restated
Pro Forma (1) Restated Pro Forma (1)
Revenues
Car wash and
detailing services $ 28,677 $ 28,677 $8,923 $8,923
Lube and other
automotive services 3,719 3,719 1,567 1,567
Fuel and merchandise
sales 4,018 4,018 972 972
Security Product Sales - - 2,298 2,298
Operating agreements 201 201 481 481
36,615 36,615 14,241 14,241
Cost of revenues
Car wash and
detailing services 20,368 20,368 5,623 5,623
Lube and other
automotive services 2,832 2,832 1,151 1,151
Fuel and merchandise
sales 3,501 3,501 781 781
Security Product Sales - - 1,190 1,190
26,701 26,701 8,745 8,745
Selling, general and
administrative expenses 5,395 5,395 3,508 3,508
Depreciation and
amortization 1,808 1,808 610 610
Costs of terminated
acquisitions 580 - - -
Merger costs - - 1,875 -
Restructuring, asset
abandonment costs and
change in control charges - - 1,519 -
Operating income (loss) 2,131 2,711 (2,016) 1,378
Interest expense, net (2,260) (2,260) (510) (510)
Other income 324 324 161 161
Income (loss) from
continuing operations
before income taxes 195 775 (2,365) 1,029
Income tax expense
(benefit) 63 249 (746) 114
Income (loss) from
continuing operations 132 526 (1,619) 915
Discontinued Operations
(Loss) gain from
discontinued operations,
net of applicable
income tax expense of
$130,000 in 2000 and
$61,000 in 1999 (265) (265) 152 152
Gain on disposal of ICS,
net of $107,000
of applicable income
tax expense 724 724 - -
Net income (loss) $591 $985 $(1,467) $1,067
Basic earnings (loss) per share
From continuing
operations $0.01 $0.02 $(0.14) $0.08
From discontinued
operations 0.02 0.02 0.01 0.01
Total $0.03 $0.04 $(0.13) $0.09
Weighted average
shares
outstanding 23,922,676 23,922,676 11,652,009 11,652,009
Diluted earnings (loss) per share
From continuing
operations $- $0.02 $(0.14) $0.07
From discontinued
operations 0.02 0.02 0.01 0.01
Total $0.02 $0.04 $(0.13) $0.08
Weighted average shares
outstanding 24,764,687 24,764,687 11,652,009 13,111,976
EBITDA (2) $4,263 $4,843 $(1,245) $2,149
EBITDA % 11.6% 13.2% n/a 15.1%
(1) Excludes costs of terminated acquisitions, merger costs, restructuring
and change in control charges, net of related income taxes.
(2) EBITDA is calculated as income (loss) from continuing operations
adding back interest, income taxes, depreciation
and amortization expense.