Date: December 13, 2006
Source: GreenMan Technologies, Inc.
GreenMan Technologies Reports Fourth Quarter and Year Ending September 30, 2006 Results Turnaround Plan Generates Improved Fourth Quarter Results Auditor's Going Concern Opinion Is Eliminated GreenMan Technologies, Inc. (OTCBB: GMTI), a leading recycler of over 12 million scrap tires per year in the United States, today announced results for the three and twelve months ended September 30, 2006. Lyle Jensen, GreenMan's President and Chief Executive Officer stated: "I believe today's announcement validates the decisions and direction taken over the past eight months and is the result of a great deal of dedicated commitment and work by our employees. By remaining focused and implementing our Five Step Turnaround Plan intelligently and methodically, we find ourselves almost six months ahead of the original timeline set back in May. In addition, we believe that the elimination of the historical "going concern" opinion from our independent public accountants, for the first time in four years, is additional evidence the turnaround plan is working". Mr. Jensen added, "Our relationship with our secured lender remains strong and we are extremely proud of the fact we have self funded our operations over the past six months without drawing down a single dollar from our working capital line of credit. We remain committed to making correct decisions for the long-term benefit of GreenMan and our shareholders". Please join us tomorrow, Thursday, December 14, 2006 at 2:00 PM EST for a conference call in which we will discuss the results for the quarter and fiscal year ended December 31, 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 1-800-967-7137 and ask for the GreenMan call. A replay of the conference call can be accessed until 11:30 PM on December 16, 2006 by calling 888-203-1112 and entering pass code 1106477. GreenMan was founded in 1992 and today operates facilities in Iowa and Minnesota which collect, process and market over 12 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. To learn more, please visit our website at www.greenman.biz "Safe Harbor" Statement: Under the Private Securities Litigation Reform Act With the exception of the historical information contained in this news release, the matters described herein contain 'forward-looking' statements that involve risk and uncertainties that may individually or collectively impact the matters herein described, including but not limited to the possibility that we may not be able to secure the financing necessary to return to profitability, the possibility that the delisting of our stock by the American Stock Exchange could substantially limit our stock's future liquidity and our ability to raise capital, the possibility that we may not realize the benefits of product acceptance, economic, competitive, governmental, seasonal, management, technological and/or other factors outside the control of the Company, which are detailed from time to time in the Company's SEC reports, including the quarterly report on Form 10-QSB for the fiscal period ended June 30, 2006. The Company disclaims any intent or obligation to update these "forward-looking" statements. 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. In addition, due to continuing operation losses, in July 2006 we sold our California subsidiary. Accordingly, we have classified all three respective entity's results of operations as discontinued operations for all periods presented in the accompanying consolidated financial statements. Three Months Ended September 30, 2006 Compared To The Three Months Ended September 30, 2005 Net sales from continuing operations for the three months ended September 30, 2006 increased approximately $168,000 or 3 percent to $5,462,000 as compared to last year's net sales from continuing operations of $5,294,000. Our continuing operations processed approximately 3.3 million passenger tire equivalents during the three months ended September 30, 2006, compared to approximately 3.9 million passenger tire equivalents during the same period last year. The decrease in inbound tire volume during the quarter ended September 30, 2006 was attributable to a corporate-wide effort initiated during fiscal 2005 to evaluate our inbound collection infrastructure and implement price increases where warranted and terminate service in situations where price increases were not an alternative. While these initiatives reduced our overall inbound tire volume, the overall fee we are paid to collect and dispose of a scrap tire ("tipping fee") increased an average of 10 percent as compared to the same period last year. Gross profit from continuing operations for the three months ended September 30, 2006 was $1,321,000 or 24 percent of net sales, compared to $1,325,000 or 25 percent of net sales for three months ended September 30, 2005. Our cost of sales increased $172,000 or 4 percent primarily due to increased parts, repairs and maintenance and fuel costs. Selling, general and administrative expenses for the three months ended September 30, 2006 increased $125,000 to $788,000 or 14 percent of net sales, compared to $663,000 or 13 percent of net sales for the three months ended September 30, 2005. The increase is primarily attributable to the re-allocation of approximately $172,000 of net corporate operating expenses to continuing operations, previously allocated to discontinued operations during the three months ended September 30, 2005. Due to the magnitude of the fiscal 2005 losses, management determined that the carrying value of corporate-wide goodwill was impaired and accordingly wrote-off all remaining goodwill associated with continuing operations. This decision resulted in a non-cash impairment loss of $783,000 during the three months ended September 30, 2005. As a result of the foregoing, we had an operating profit of $533,000 for the three months ended September 30, 2006 as compared to an operating loss of $121,000 for the three months ended September 30, 2005. Cash interest and financing expense for the three months ended September 30, 2006 increased $367,000 to $518,000, compared to $151,000 during the three months ended September 30, 2005. The increase is attributable to increased rates and borrowings, the inclusion of approximately $131,000 of deferred interest associated with the restructured corporate wide credit facility and the allocation of all Laurus related cash interest expense to continuing operations during the three months ended September 30, 2006 (approximately $44,000 was allocated to discontinued operations during the quarter ended September 30, 2005). As a result of the June 2006 Laurus restructuring, all remaining non cash financing fees were netted against the carrying value of the new term debt eliminating future non-cash amortization. Non-cash interest and financing fees for the three months ended September 30, 2005 were $626,000. During the three months ended September 30, 2006, we recorded a state income tax provision of $65,000 relating to certain subsidiary state income tax obligations. Our net loss after income taxes from continuing operations for the three months ended September 30, 2006 decreased $803,000 to $102,000 compared to a net loss of $905,000 for the three months ended September 30, 2005. During the quarter ended September 30, 2006 we reached agreement with several vendors regarding remaining past due amounts and reduced certain plant closure accruals for our Georgia and Tennessee subsidiaries which was partially offset by a California net loss prior to divestiture resulting in approximately $64,000 of income from discontinued operations as compared to a loss from discontinued operations of $2,802,000 for the same period last year. In addition, we recorded a loss on disposal of discontinued operations of $5,966,000 relating to our Tennessee and Georgia operations due primarily to the write-off of property, equipment, goodwill, an acquisition deposit and costs of exit activities. As a result of the foregoing, we had a net loss of $38,000 for the three months ended September 30, 2006 as compared to a net loss of $9,673,000 or $.50 per basic share for the three months ended September 30, 2005. Fiscal Year Ended September 30, 2006 Compared To The Fiscal Year Ended September 30, 2005 Net sales from continuing operations for the fiscal year ended September 30, 2006 decreased $703,000 or 4 percent to $17,608,000 as compared to last year's net sales from continuing operations of $18,311,000. Our continuing operations processed approximately 12.1 million passenger tire equivalents during the fiscal year ended September 30, 2006, compared to approximately 14.1 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 fiscal 2005. In addition to the impact of the completion of the Iowa cleanup project in 2005, the remaining decrease in overall inbound tire volume during fiscal 2006 was attributable to a corporate-wide effort initiated during fiscal 2005 to evaluate our inbound collection infrastructure and implement price increases where warranted and terminate service in situations where price increases were not an alternative. While these initiatives reduced our overall inbound tire volume the overall fee we are paid to collect and dispose of a scrap tire ("tipping fee") increased 5 percent (a 6 percent increase when the prior year Iowa scrap tire cleanup revenue is removed) as compared to last year. Gross profit for the fiscal year ended September 30, 2006 was $4,654,000 or 26 percent of net sales, compared to $3,509,000 or 19 percent of net sales for fiscal year ended September 30, 2005. Our cost of sales decreased $1,849,000 or 13 percent due to decreased collection and processing costs associated with lower inbound volume, reduced residual disposal costs associated with several large civil engineering projects (which use more of the scrap tire including waste wire) and our ongoing efforts to reduce operating costs where available. Selling, general and administrative expenses for the fiscal year ended September 30, 2006 increased $856,000 to $3,550,000 or 20 percent of net sales, compared to $2,694,000 or 15 percent of net sales for the fiscal year ended September 30, 2005. The increase is primarily attributable to an increase of $343,000 (including approximately $397,000 of one-time severance costs related to our former Chief Executive Officer and our California divestiture) associated with continuing operations and the re-allocation of approximately $571,000 of net corporate operating expenses to continuing operations, previously allocated to discontinued operations during the fiscal year ended September 30, 2005. Due to the magnitude of the fiscal 2005 losses, management determined the carrying value of corporate-wide goodwill was impaired and accordingly wrote-off all remaining goodwill associated with continuing operations, recording an non-cash impairment loss of $783,000 in addition to a $57,000 non-cash impairment loss associated with Wisconsin equipment. As a result of the foregoing, we had an operating profit of $1,104,000 (including $397,000 of one-time severance costs) for the fiscal year ended September 30, 2006 as compared to an operating loss of $26,000 for the fiscal year ended September 30, 2005. Cash interest and financing expense for the fiscal year ended September 30, 2006 increased $1,483,000 to $2,312,000, compared to $829,000 during the fiscal year ended September 30, 2005. The increase is attributable to the inclusion of approximately $888,000 of non-recurring fees and expenses and approximately $131,000 of deferred interest associated with the restructured corporate credit facility, increased rates and borrowings and the allocation of all Laurus related cash interest expense to continuing operations during the fiscal year ended September 30, 2006 (approximately $127,000 was allocated to discontinued operations during the fiscal year ended September 30, 2005). As a result of the June 2006 Laurus restructuring, all remaining non cash financing fees were netted against the carrying value of the new term debt eliminating future non-cash amortization. Non-cash interest and financing fees were $1,273,000 and $1,547,000 for the fiscal years ended September 30, 2006 and 2005, respectively. In addition, during the fiscal year ended September 30, 2006 we recognized approximately $353,000 of gain on debt restructuring associated with the June 30, 2006 restructuring of certain debt obligations. During the fiscal year ended September 30, 2006, we recorded a state income tax provision of $65,000 relating to certain subsidiary state income tax 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 provided a valuation allowance on the entire amount during the fiscal year ended September 30, 2005. Our net loss after income taxes from continuing operations for the fiscal year ended September 30, 2006 decreased $444,000 to $2,245,000 (including approximately $932,000 of one-time charges/gains noted above) or $.11 per basic share as compared to a net loss of $2,688,000 or $.14 per basic share for the same period last year. The $1,461,000 net loss ($.08 per basic share) from discontinued operations for the fiscal year ended September 30, 2006 includes approximately $1 million of losses incurred by our former California subsidiary with the balance relating primarily to the costs of exit activities associated with our Georgia operations. The $6,519,000 net loss ($.34 per basic share) from discontinued operations for the fiscal year ended September 30, 2005 includes approximately $3.4 million associated with our Georgia operations, approximately $1.8 million associated with our Tennessee operations and $1.3 million associated with our California operations. The estimated loss on disposal of discontinued operations for the fiscal year ended September 30, 2005 includes approximately $1.3 million relating to our Tennessee operations and approximately $4.6 million in connection with our Georgia facility. Our net loss for the fiscal year ended September 30, 2006 decreased $11,467,000 or 76 percent to $3,706,000 (including $932,000 of one-time charges/gains noted above) or $.19 per basic share as compared to a net loss of $15,173,000 or $.79 per basic share for the fiscal year ended September 30, 2005 For more information, contact: Chuck Coppa, CFO or Lyle Jensen, CEO GreenMan Technologies, 800-957-9575. www.greenman.biz.Sign up to receive our free Weekly News Bulletin