Date: August 14, 2006
Source: GreenMan Technologies
GreenMan Technologies Reports Results For Three and Nine Months Ended June 30, 2006
GreenMan Technologies, Inc. (OTCBB: GMTI), a leading recycler of approximately 14 million scrap tires per year in the United States, today announced results for the three and nine months ended June 30, 2006.
Lyle Jensen, GreenMan's President and Chief Executive Officer stated: "We are pleased to report that our previously discussed 5-step turnaround plan is ahead of schedule. Positive accomplishments realized during the recent June quarter include the successful restructuring of our Laurus credit facility (See our July 10, 2006 Release), the initiation and subsequent completion of our California divestiture (See our July 19, 2006 Release) and improved performance of our "core" Midwest operations during the quarter. During the quarter ended June 30, 2006 we realized a 50 percent improvement in our gross profit percentage as well as a 46 percent decrease in our net loss as compared to last year despite the inclusion of approximately $932,000 of one-time charges/gains associated with the Laurus refinancing, severance related costs and certain debt restructuring".
Mr. Jensen added, "The successful restructuring of our Laurus credit facility, which we completed on June 30, not only provides us with greater financial flexibility going forward but provides us with the opportunity to focus on accelerating our ongoing efforts to identify accretive strategic opportunities including joint-venture or similar relationships to leverage the resources and expertise of our core business. We are making progress on all of these fronts."
Please join us on Tuesday, August 15, 2006 at 12:00 PM EST for a conference call in which we will discuss the results for the quarter ended June 30, 2006 and provide more details about actions which have been taken and are in the process of being taken to accelerate GreenMan's financial turnaround. To participate, please call 1-800-662-5508 and ask for the GreenMan call."
GreenMan was founded in 1992 and today operates facilities in Iowa and Minnesota which collect, process and market over 14 million scrap tires in whole, shredded or granular form. Our products are used as an efficient alternative fuel by pulp and paper producers and electric utilities; as a substitute for crushed stone in civil engineering applications, such as road beds, landfill and septic field construction; or as crumb rubber which is used for playground and athletic surfaces, running tracks and landscaping/groundcover applications.
Three Months ended June 30, 2006 Compared to the Three Months ended June 30, 2005
Net sales from continuing operations for the three months ended June 30, 2006 decreased approximately $314,000 or 5 percent to $5,463,000 as compared to last year's net sales from continuing operations of $5,777,000. Our continuing operations processed approximately 3.9 million passenger tire equivalents during the three months ended June 30, 2006, compared to approximately 4.1 million passenger tire equivalents during the same period last year. The decrease was attributable to lower inbound volume and revenue in California and the completion of an Iowa scrap tire cleanup project during fiscal 2005 which accounted for approximately $110,000 of revenue and 115,000 passenger tire equivalents during the three months ended June 30, 2005. This decrease was partially offset by a 1 percent increase in the overall fee we are paid to collect and dispose of a scrap tire ("tipping fee") (a 3 percent increase when the prior year Iowa scrap tire cleanup revenue is removed) during the three monthsended June 30, 2006 and consistent end-product revenue during this period. During fiscal 2005, we completed an evaluation of our corporate-wide inbound collection infrastructure and determined that 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 reduced our overall inbound tire volume and may negatively impact our overall gross tipping fee revenue, we believe these efforts will continue to improve our performance through lower labor, parts and maintenance costs.
Gross profit for the three months ended June 30, 2006 was $1,416,000 or 26 percent of net sales, compared to $982,000 or 17 percent of net sales for three months ended June 30, 2005. Our cost of sales decreased $748,000 or 16 percent primarily due to decreased collection and processing costs associated with lower inbound volume and our ongoing efforts to reduce operating costs where available.
Selling, general and administrative expenses for the three months ended June 30, 2006 increased $565,000 to $1,383,000 or 25 percent of net sales, compared to $818,000 or 14 percent of net sales for the three months ended June 30, 2005. The increase was primarily attributable to the inclusion of approximately $397,000 of one-time severance costs related to our former Chief Executive Officer and sale of our California subsidiary on July 17, 2006 in addition to increased professional expenses.
As a result of the foregoing, we had an operating profit of $33,000 (including $397,000 of one-time severance costs) for the three months ended June 30, 2006 as compared to an operating profit of $107,000 for the three months ended June 30, 2005.
Cash interest and financing expense for the three months ended June 30, 2006 increased $1,006,000 to $1,262,000, compared to $256,000 during the three months ended June 30, 2005 as a result of increased rates and borrowings and the inclusion of approximately $888,000 of non-recurring fees and expenses associated with the June 30, 2006 restructuring of our corporate credit facility. Financing fees and non-cash interest decreased $239,000 to $311,000 for the three months ended June 30, 2006 as compared to $550,000 for the same period last year due to lower Laurus related amortization expense. During the three months ended June 30, 2006 we recognized approximately $353,000 of gain on debt restructuring associated with the June 30, 2006 restructuring of certain debt obligations.
As a result of the foregoing, our net loss from continuing operations for the three months ended June 30, 2006 increased $561,000 to $1,167,000 (including $932,000 of one-time charges/gains noted above) or $.06 per basic share, compared to a net loss of $606,000 or $.03 per basic share for the three months ended June 30, 2005. During the quarter ended June 30, 2006 we reached agreement with several vendors regarding remaining past due amounts and reduced certain plant closure accruals for both Georgia and Tennessee resulting in approximately $185,000 of income from discontinued operations ($.01 per basic share) as compared to a loss from discontinued operations of $1,201,000 ($.06 per basic share) for the same period last year.
Our net loss for the three months ended June 30, 2006 decreased $825,000 or 46 percent to $982,000 (including $932,000 of one-time charges/gains noted above) or $.05 per basic share as compared to a net loss of $1,806,000 or $.09 per basic share for the three months ended June 30, 2005.
Nine Months ended June 30, 2006 Compared to the Nine Months ended June 30, 2005
Net sales from continuing operations for the nine months ended June 30, 2006 decreased $1,174,000 or 7 percent to $14,486,000 as compared to last year's net sales from continuing operations of $15,660,000. Our continuing operations processed approximately 11 million passenger tire equivalents during the nine months ended June 30, 2006, compared to approximately 12.5 million passenger tire equivalents during the same period last year. The decrease was primarily attributable to the completion of an Iowa scrap tire cleanup project during fiscal 2005 which accounted for approximately $1,188,000 of revenue and 1.25 million passenger tire equivalents during the nine months ended June 30, 2005 and lower inbound volume and revenue in California.
The negative impact on overall revenue resulting from lower inbound tire volumes was partially offset by a 3 percent increase (a 10 percent increase when the prior year Iowa scrap tire cleanup revenue is removed) in the overall fee we are paid to collect and dispose of a scrap tire and a 1 percent increase in end product revenue during the nine months ended June 30, 2006. During fiscal 2005, we completed an evaluation of our corporate-wide inbound collection infrastructure and determined that 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 reduced our overall inbound tire volume growth rate and may negatively impact our overall gross tipping fee revenue, we believe these efforts will continue to improve our performance through lower labor, parts and maintenance costs.
Gross profit for the nine months ended June 30, 2006 was $3,242,000 or 22 percent of net sales, compared to $2,180,000 or 14 percent of net sales for nine months ended June 30, 2005. Our cost of sales decreased $2,236,000 or 17 percent primarily due to decreased collection and processing costs associated with lower inbound volume and our ongoing efforts to reduce operating costs where available.
Selling, general and administrative expenses for the nine months ended June 30, 2006 increased $858,000 to $3,417,000 or 24 percent of net sales, compared to $2,559,000 or 16 percent of net sales for the nine months ended June 30, 2005. The increase was primarily attributable to the inclusion of approximately $397,000 of one-time severance costs related to our former Chief Executive Officer and sale of our California subsidiary on July 17, 2006 in addition to increased professional expenses.
As a result of the foregoing, our operating loss decreased $225,000 to $211,000 (including $397,000 of one-time severance costs) for the nine months ended June 30, 2006 as compared to an operating loss of $436,000 for the nine months ended June 30, 2005.
Cash interest and financing expense for the nine months ended June 30, 2006 increased $1,178,000 to $1,878,000, compared to $700,000 during the nine months ended June 30, 2005 as a result of increased rates and borrowings and the inclusion of approximately $888,000 of non-recurring fees and expenses associated with the restructuring of our corporate credit facility. Financing fees and non-cash interest and increased $352,000 to $1,273,000 for the nine months ended June 30, 2006 as compared to $921,000 for the same period last year as a result of increased Laurus related amortization expense. During the nine months ended June 30, 2006 we recognized approximately $353,000 of gain on debt restructuring associated with the June 30, 2006 restructuring of certain debt obligations.
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 nine months ended June 30, 2005.
As a result of the foregoing, our net loss from continuing operations for the nine months ended June 30, 2006 increased $761,000 to $3,095,000 (including $932,000 of one-time charges/gains noted above) or $.16 per basic share as compared to a net loss of $2,334,000 or $.12 per basic share for the nine months ended June 30, 2005. The $574,000 net loss ($.03 per basic share) from discontinued operations for the nine months ended June 30, 2006 relates primarily to the costs of exit activities associated with our Georgia operations. The $3,165,000 net loss ($.17 per basic share) from discontinued operations for the nine months ended June 30, 2005 includes approximately $1,963,000 associated with our Georgia operations and approximately $1,202,000 associated with our Tennessee operations.
Our net loss for the nine months ended June 30, 2006 decreased $1,830,000 or 33 percent to $3,669,000 (including $932,000 of one-time charges/gains noted above) or $.19 per basic share as compared to a net loss of $5,499,000 or $.29 per basic share for the nine months ended June 30, 2005.
For more information, contact GreenMan Technologies (www.greenman.biz)
Chuck Coppa, CFO: 800-957-9575 or Lyle Jensen, CEO: 800-957-9575.
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