Coinmach Service Corp. Announces Fiscal First Quarter 2007 Financial Results.PLAINVIEW Plainview. 1 Uninc. city (1990 pop. 26,207), Nassau co., SE N.Y., on Long Island. It is chiefly residential. 2 City (1990 pop. 21,700), seat of Hale co., NW Tex., on the Llano Estacado; inc. 1907. , N.Y. -- Coinmach Service Corp. (the "Company") (Amex: "DRY", "DRA DRA Delta Regional Authority DRA Developmental Reading Assessment (educational test) DRA Division of Ratepayer Advocates (California) DRA Data Research Associates DRA Directory and Resource Administrator "), a leading supplier of outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, laundry Laundry can be:
Before industrialization equipment services for multi-family housing properties in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , today reported its quarterly financial results for the quarter ended June June: see month. 30, 2006. "I am pleased to announce our first quarter results for Coinmach Service Corp.'s 2007 fiscal year. This quarter, our revenue improved by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4.1% and our EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become improved by approximately 3.7% over the corresponding prior year period. More importantly, Net Cash Flow before IDS distributions and common stock dividends improved this quarter by approximately 23.4% over the same quarter last year, and Net Cash Flow available to pay future IDS distributions and common stock dividends improved over the prior year as well," said Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and Kerrigan There are a number of famous people named Kerrigan:
Mr. Kerrigan continued, "Several factors contributed to the improvement in our cash flow. Same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of continue to improve due to signs of recovery in occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) and to our pricing strategy in the route business. Additionally in April 2006, we acquired substantially all of the assets of American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Sales, Inc. (ASI ASI, n See Anxiety Sensitivity Index. ), a leading laundry service provider to colleges and universities in the mid-west with 40 years of senior management experience and more than 45 partner schools. Finally, our Appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. Warehouse division continues to grow, generating record high quarterly revenue and EBITDA. Based on the results from the quarter ended June 30, 2006, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that Coinmach is poised for another strong fiscal year. Contributing factors are the recent acquisition of ASI, efficiencies we expect to result from our new consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: service and dispatch A dispatch or dispatches can refer to:
In April 2006, the Company repurchased approximately $5.6 million principal amount of our 11% senior secured notes. This open market purchase, together with the purchase of approximately $48 million aggregate principal amount of 11% senior secured notes due 2024 through our tender offer in February February: see month. 2006, is consistent with our objective to reduce our overall cost of capital. As of June 30, 2006, the Company had outstanding (i) approximately 13.0 million IDS units, each unit consisting of one share of the Company's Class A common stock and an 11% senior secured note due 2024 with a principal amount of $6.14 and (ii) approximately 29.1 million shares of Class A common stock, of which approximately 16.1 million shares were held separate and apart from our IDSs. A holder of an IDS unit (symbol "DRY") is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to quarterly interest payments on the underlying note at an annual rate of 11%, or approximately $0.6754 per unit per year, and may receive quarterly dividend payments on the underlying share of Class A common stock to the extent such dividends are declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. by our board of directors. Payments on our IDSs and Class A common stock are scheduled for March 1, June 1, September September: see month. 1 and December December: see month. 1 of each year to holders of record as of the applicable record dates. The Company's board of directors has approved a dividend on shares of our Class A common stock of approximately $0.206 per share of Class A common stock payable on September 1, 2006 to holders of record on August 25, 2006. The Company will also make cash payments aggregating $0.375 per IDS to the holders of record on August 25, 2006, which will consist of a dividend of approximately $0.206 per share on the underlying Class A common stock and an interest payment of approximately $0.169 on the underlying 11% senior secured note. The Class A common stock dividend represents the Company's seventh consecutive quarterly dividend payment, consistent with the dividend policy adopted by the Company.
Results for the Three Months Ended June 30, 2006 and 2005
Net Cash Flow before IDS distributions and dividends was $13.2
million for the quarter ended June 30, 2006 as compared to $10.7
million for the quarter ended June 30, 2005.
The following table reflects the computation of Net Cash Flow* (in
millions):
Quarter ended
June 30,
-----------------------
2006 2005(2)
-----------------------
Consolidated EBITDA: $41.9 * $40.4 *
Less:
Interest Expense from Third party notes
and other 11.1 12.1
Capital Expenditures (1) 16.4 16.1
Capital Expenditures relating to
technology upgrades 1.2 1.5
-----------------------
Net Cash Flow before IDS distributions and
dividends 13.2 10.7
-----------------------
IDS interest distributions 2.3 3.2
Dividends-Class A Common Stock 6.0 3.9
-----------------------
Net Cash Flow $4.9 $3.6
=======================
* Consolidated EBITDA for the 2007 period excludes transaction
costs related to the Company's purchase of a portion of its 11% senior
secured notes in April 2006. For information regarding the Company's
use of Net Cash Flow and EBITDA and for reconciliations of such
non-GAAP measures to net loss and cash flow from operating activities,
refer to "Presentation of Non-GAAP Financial Information" below,
including the tables attached hereto.
(1) Represents cash used in investing activities excluding
acquisition of net assets for the periods presented.
(2) The quarters ended June 30, 2005 and June 30, 2006 are not
comparable due to the timing of the Class A offering and the tender
offer which occurred in the fourth quarter of the 2006 Fiscal Year.
The following discussion of operating results focuses on revenue
and EBITDA for each of the Company's operating segments. For
information regarding the Company's use of EBITDA and for
reconciliations to net income (loss) and cash flow from operating
activities, refer to "Presentation of Non-GAAP Financial Information"
below, including the tables attached hereto.
Quarter ended
June 30,
--------------------
2006 2005
Revenue: --------------------
--------- Route business $124.0 $119.8
Rental business 9.5 8.6
Distribution business 5.8 5.4
--------------------
Total 139.3 133.8
--------------------
EBITDA:
--------
Route business $40.5 $39.4
Rental business 4.1 3.5
Distribution business 0.3 -
Corporate (3.0) (2.5)
--------------------
Total 41.9(1) 40.4
--------------------
(1) Excludes transaction costs relating to the repurchase in April
2006 of approximately $5.6 million principal amount of the
Company's 11% senior secured notes.
Capital
Expenditures:(2)
-----------------
Route business $16.0 $15.1
Rental business 0.4 0.9
Distribution business - 0.1
Corporate(3) 1.2 1.5
--------------------
Total 17.6 17.6
--------------------
(2) Represents cash used in investing activities excluding
acquisition of net assets for the periods presented.
(3) Includes capital expenditures attributable to current
technology upgrades relating primarily to upgrading programs for
the Company's field service management and collection systems for
the periods presented.
Management's Commentary "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in very proud of Coinmach's continued stable and improving cash flow generation. As of June 30, 2006, after taking into account the cash used to acquire ASI, we had a cash balance in excess of $34 million, along with availability under our revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to of approximately $68 million. To date, we have returned in excess of $50 million of interest and dividends to our investors since the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. in November November: see month. 2004, while continuing to reduce indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. . As such, we continue to be pleased with our financial performance, balancing consistent returns to our stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. with appropriate reinvestments in our business through technology upgrades and targeted acquisitions", stated Mr. Stephen Kerrigan. Mr. Kerrigan continued, "Our route business remained steady, increasing revenue by approximately $4.2 million for the quarter, increasing EBITDA by approximately $1.1 million for the quarter as well as increasing cash flow by approximately $0.2 million for the quarter over the same period of the prior year. The rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. business, Appliance Warehouse, generated growth in revenue of approximately 10.5% for the quarter. EBITDA grew by approximately 17.1% for the quarter as compared to the same quarter last year. Corporate expenses increased by approximately $0.5 million quarter over quarter as a result of the timing of additional expenses associated with being a public company. In addition, our results have been affected by costs associated with the continued procedures required by Sarbanes Oxley Oxley refers to several things: People
Earnings Conference Call The Company has scheduled a conference call for Thursday Thursday: see week. August 3, at 10:00 a.m. Eastern Standard Time to discuss its fiscal first quarter 2007 financial results. Hosting the call will be Stephen R. Kerrigan, the Company's Chairman and Chief Executive Officer, and Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. M. Doyle Doyle , Sir Arthur Conan 1859-1930. British writer known chiefly for a series of stories featuring the brilliant detective Sherlock Holmes, including The Hound of the Baskervilles (1902). , the Company's Chief Financial Officer. Interested parties may participate by accessing the teleconference via a webcast on the Company's Investor Relations Investor relations The process by which the corporation communicates with its investors. page, www.coinmachservicecorp.com, or by dialing 1-800-818-5264 (1-913-981-4910) for international callers) and using the pass code 1040818 approximately 5 minutes before the start of the call. The call will be open to the public with a question and answer session at the end of the call. A replay of the conference call will be available for 7 days on the Company's Investor Relations page or by dialing 1- 888-203-1112 (1-719-457-0820) for international callers) and using the pass code 1040818. About Coinmach Service Corp. Coinmach Service Corp., through its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , is a leading supplier of outsourced laundry equipment services for multi-family housing properties in North America. The Company's core business involves leasing laundry rooms A laundry room (also called a utility room) is a room where clothes are washed. In a modern home, a laundry room would be equipped with an automatic washing machine and clothes dryer,and often a large basin, called a laundry tub, for hand-washing delicate articles of clothing such from building owners and property management companies, installing and servicing laundry equipment and collecting revenues generated from laundry machines. Presentation of Non-GAAP Financial Information Certain disclosures in this press release include "non-GAAP financial measures." A non-GAAP financial measure is a numerical numerical expressed in numbers, i.e. Arabic numerals of 0 to 9 inclusive. numerical nomenclature a numerical code is used to indicate the words, or other alphabetical signals, intended. measure of financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). (U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ). Net Cash Flow is defined as consolidated EBITDA less capital expenditures (including property, plant and equipment) and interest expense. Management believes Net Cash Flow (after capital and interest) is a useful measure of the Company's ability, subject to restrictions contained in its debt agreements and those of its subsidiaries and applicable law, to pay dividends on its common stock. EBITDA represents earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before deductions for interest, income taxes and depreciation and amortization. Management believes that EBITDA is useful as a means to evaluate its ability to service existing debt, to sustain potential future increases in debt and to satisfy capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . EBITDA is also used by the Company as a measure of evaluating the performance of its three operating segments. Management further believes that EBITDA is useful to investors as a measure of comparative operating performance as it is less susceptible susceptible /sus·cep·ti·ble/ (su-sep´ti-b'l) 1. readily affected or acted upon. 2. lacking immunity or resistance and thus at risk of infection. sus·cep·ti·ble adj. to variances in actual performance resulting from depreciation, amortization and other non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. and more reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of changes in pricing decisions, cost controls and other factors that affect operating performance. The Company uses EBITDA to develop compensation plans, to measure sales force performance and to allocate To reserve a resource such as memory or disk. See memory allocation. capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) . Additionally, because the Company has historically provided EBITDA to investors, management believes that presenting this non-GAAP financial measure provides consistency Consistency can refer to:
The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (as determined by GAAP) as an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of operating performance or (b) cash flows from operating, investing and financing activities (as determined by GAAP) as a measure of liquidity. Given that Net Cash Flow and EBITDA are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, such measures may not be comparable to other similarly titled measures of other companies. Reconciliations of EBITDA to Net Cash Flow and EBITDA to net income (loss) and cash flow provided from operating activities are included in the attached tables. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements in this press release that are not statements of historical or current fact constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. In addition to statements which explicitly ex·plic·it adj. 1. a. Fully and clearly expressed; leaving nothing implied. b. Fully and clearly defined or formulated: "generalizations that are powerful, precise, and explicit" describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates", "plans" or similar terms to be uncertain and forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with the Securities and Exchange Commission.
COINMACH SERVICE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Quarter ended
June 30,
----------------------
2006 2005
----------------------
Revenues $139,285 $133,830
Operating, general and administrative expense 97,433 93,438
Depreciation and amortization 18,624 18,932
Amortization of advance location payments 4,900 4,135
Amortization of intangibles 3,560 3,485
----------------------
124,517 119,990
Operating income 14,768 13,840
Interest expense 13,430 15,331
Transaction costs 845 -
----------------------
Income (loss) before income taxes 493 (1,491)
Provision (benefit) for income taxes 301 (516)
----------------------
Net income (loss) $ 192 $ (975)
======================
COINMACH SERVICE CORP.
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA
(in thousands)
Quarter ended
June 30,
---------------------------
2006 2005
---------------------------
Net income (loss) $ 192 $ (975)
Depreciation and amortization 27,084 26,552
Provision (benefit) for income taxes 301 (516)
Interest expense 13,430 15,331
---------------------------
EBITDA(1) 41,007 40,392
Add back transaction costs: 845 -
---------------------------
EBITDA (excluding transaction costs) $41,852 $40,392
===========================
RECONCILIATION OF CASH FLOW PROVIDED BY
OPERATING ACTIVITIES TO EBITDA
(in thousands)
Quarter ended
June 30,
------------------------
2006 2005
------------------------
Cash flow provided by operating activities $30,588 $33,520
Provision (benefit) for income taxes 301 (516)
Interest expense 13,430 15,331
Loss on redemption of 11% senior notes (831) -
Gain on sale of equipment 77 112
Stock based compensation (38) (12)
Deferred income taxes (133) 516
Amortization of deferred issue costs (200) (531)
Changes in assets and liabilities,
net of effects of business combination (2,187) (8,028)
------------------------
EBITDA(1) 41,007 40,392
Add back transaction costs: 845 -
------------------------
EBITDA (excluding transaction costs) $41,852 $40,392
========================
(1) EBITDA represents earnings from continuing operations before
deductions for interest, income taxes and depreciation and
amortization. Management believes that EBITDA is useful as a means
to evaluate the Company's ability to service existing debt, to
sustain potential future increases in debt and to satisfy capital
requirements. EBITDA is also used by management as a measure of
evaluating the performance of the Company's three operating
segments. Management further believes that EBITDA is useful to
investors as a measure of comparative operating performance as it
is less susceptible to variances in actual performance resulting
from depreciation, amortization and other non-cash charges and
more reflective of changes in pricing decisions, cost controls and
other factors that affect operating performance. Management uses
EBITDA to develop compensation plans, to measure sales force
performance and to allocate capital assets. Additionally, because
the Company has historically provided EBITDA to investors,
management believes that presenting this non-GAAP financial
measure provides consistency in our financial reporting.
Management's use of EBITDA, however, is not intended to represent
cash flows for the period, nor has it been presented as an
alternative to either (a) operating income (as determined by U.S.
generally accepted accounting principles) as an indicator of
operating performance or (b) cash flows from operating, investing
and financing activities (as determined by U.S. generally accepted
accounting principles) as a measure of liquidity. Given that
EBITDA is not a measurement determined in accordance with U.S.
generally accepted accounting principles and is thus susceptible
to varying calculations, EBITDA may not be comparable to other
similarly titled measures of other companies.
COINMACH SERVICE CORP.
SELECTED CONSOLIDATED CASH FLOW DATA
(in thousands)
Three months ended
June 30,
--------------------
2006 2005
--------------------
OPERATING ACTIVITIES:
Net income (loss) $ 192 $ (975)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 18,624 18,932
Amortization of advance location payments 4,900 4,135
Amortization of intangibles 3,560 3,485
Amortization of deferred issue costs 200 531
Deferred income taxes 133 (516)
Premium on redemption of 11% senior secured notes
due 2024 417 -
Write-off of deferred issue costs 414 -
Stock based compensation 38 12
Gain on sale of equipment (77) (112)
Change in operating assets and liabilities 2,187 8,028
--------------------
Net cash provided by operating activities 30,588 33,520
--------------------
INVESTING ACTIVITIES:
Additions to property, equipment and leasehold
improvements (14,534) (15,008)
Advance location payments to location owners (3,346) (2,904)
Acquisition of net assets related to acquisition
of businesses (14,541) -
Proceeds from sale of property and equipment 293 299
--------------------
Net cash used in investing activities (32,128) (17,613)
--------------------
FINANCING ACTIVITIES:
Cash dividends paid (18,502) (3,898)
Repayments under credit facility (575) (1,240)
Redemption of 11% senior secured notes due 2024 (5,649) -
Payment of premium on 11% senior secured notes
due 2024 (417) -
Debt issuance costs (9) -
Principal payments on capitalized lease
obligations (945) (1,438)
Repayments to bank and other borrowings (70) (60)
--------------------
Net cash used in financing activities (26,167) (6,636)
--------------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (27,707) 9,271
CASH AND CASH EQUIVALENTS:
Beginning of period 62,008 57,271
--------------------
End of period $34,301 $66,542
====================
COINMACH SERVICE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
June 30, March 31,
2006 2006
------------------
ASSETS:
Current assets:
Cash and cash equivalents $34,301 $62,008
Receivables, net 6,557 5,635
Inventories 13,630 11,458
Prepaid expenses 4,807 4,375
Interest rate swap asset 5,598 2,615
Other current assets 2,093 1,796
------------------
Total current assets 66,986 87,887
Advance location payments 66,574 67,242
Property, equipment and leasehold improvements, net 251,188 252,398
Contract rights, net 303,367 296,912
Goodwill 207,997 206,196
Other assets 9,822 11,531
------------------
TOTAL ASSETS $905,934 $922,166
==================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses $36,247 $32,656
Accrued rental payments 31,782 33,044
Accrued interest 6,732 3,563
Current portion of long-term debt 4,770 11,151
------------------
Total current liabilities 79,531 80,414
Deferred income taxes 51,337 49,984
Long-term debt, less current portion 652,918 653,102
------------------
Total liabilities 783,786 783,500
Stockholders' Equity:
Class A common stock, par value $0.01, authorized
100,000,000 shares; 29,113,641 shares issued and
outstanding 291 291
Class B common stock, par value $0.01, authorized
100,000,000 shares; 23,374,450 shares issued and
outstanding 234 234
Additional paid-in capital 389,644 389,616
Carryover basis adjustment (7,988) (7,988)
Accumulated other comprehensive income, net of tax 3,311 1,547
Accumulated deficit (263,344)(245,034)
------------------
Total stockholders' equity 122,148 138,666
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $905,934 $922,166
==================
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