Exhibit 99.1
W. Phillip Marcum Philip Bourdillon/Eugene Heller
Chairman and CEO Silverman Heller Associates
303-785-8080 310-208-2550
METRETEK TECHNOLOGIES REPORTS
SECOND-QUARTER RESULTS
DENVER - AUGUST 16, 2004 - For the three months ended June 30, 2004, METRETEK
TECHNOLOGIES, INC. (OTCBB: MTEK) reported net income of $43,000 on revenues of
$10.1 million compared to net income of $765,000 on revenues of $11.2 million in
the comparable quarter of 2003. For the six months ended June 30, 2004, the
Company reported net income of $47,000 on revenues of $19.8 million compared to
net income of $121,000 on revenues of $18.5 million in the comparable period of
2003. Results in both the second quarter of 2003 and the six months ended June
30, 2003 were positively affected by $2 million in revenues from a major project
in the Company's Metretek Florida subsidiary, for which there were no similar
projects in the comparable periods of 2004.
After deductions for deemed distributions on the Company's Series B Preferred
Stock in the amounts of $711,000 and $221,000 in the second quarters of 2004 and
2003, respectively, the Company reported a net loss attributable to common
shareholders of $668,000, or $0.07 per share on 9,217,416 weighted average
common shares outstanding, compared to a net income attributable to common
shareholders of $367,000, or $0.06 per share on 6,043,469 weighted average
common shares outstanding, in the comparable quarter of 2003. Deemed
distributions on the Company's Series B Preferred Stock for the six month
periods ended June 30, 2004 and 2003 were $943,000 and $438,000, respectively.
Accordingly, the Company reported a net loss attributable to common shareholders
of $896,000, or $0.12 per share on 7,664,681 weighted average common shares
outstanding for the six months ended June 30, 2004, compared to a net loss
attributable to common shareholders of $317,000, or $0.05 per share on 6,043,469
weighted average common shares outstanding, in the first six months of 2003.
Included in the deemed distribution amounts for both periods in 2004 is a
non-cash inducement charge of $543,000 related to the estimated value of
warrants and other consideration transferred to certain Preferred Stockholders
who converted 2,500 shares of Series B Preferred Stock, including cumulative
earned but unpaid dividends, in conjunction with the private placement described
in the following paragraph. This non-cash charge increased the loss per common
share for the second quarter of 2004 and for the six month period ended June 30,
2004 by approximately $0.06 per share and $0.07 per share, respectively.
According to W. Phillip Marcum, president and CEO, "This additional deemed
distribution had no effect on the cash balances of the company or its
operations,
nor will it affect the Company's ability to produce future income for the
benefit of the common shareholders. The transactions that resulted in this
non-cash charge were critical to the completion of the private placement."
Marcum noted that without this charge, the Company's loss for the second quarter
of 2004 would have been approximately $0.01 per share.
The increase in weighted average common shares outstanding reflects the May 2004
private placement (the "PIPE") of approximately 3.5 million shares of common
stock (with warrants to purchase approximately 700,000 shares of common stock)
that generated net proceeds of approximately $9.9 million, as well as the
concurrent conversion of 2,500 shares of Series B Preferred Stock, including
accrued dividends, into approximately 1.2 million shares of common stock (and a
like number of warrants). Marcum noted that the proceeds from the PIPE will be
used in part to meet the Company's remaining mandatory redemption obligation on
its Series B Preferred Stock, and in part to fund the growth of PowerSecure's
company-owned initiative and Metretek Florida's DCM/InvisiConnect(TM) product
lines. As a result of the Preferred Stock conversions, the maximum mandatory
redemption obligation was reduced from $10.3 million to $6.6 million, and
relates to 4,500 shares of Series B Preferred Stock that remain outstanding and
will be either redeemed and/or converted on or before the December 9, 2004
mandatory redemption date.
Principally as a result of the PIPE, the Company's financial condition improved
substantially. At June 30, 2004, the Company had $9.7 million in cash and cash
equivalents, $13.7 million in working capital, long-term debt of $5.2 million,
and shareholders' equity of $14.5 million.
"We are very pleased with the overall performance of the Company during the
first half of 2004," said Marcum. "Southern Flow's revenues and segment profits
increased by 9% and 42%, respectively, reflecting a very robust natural gas
market. Likewise, PowerSecure's revenues and profitability were both up 15% and
its project pipeline is extremely gratifying." Marcum added that the main
continuing concern relates to losses being generated by the Company's Metretek
Florida operation which contributed $836,000 in losses during the first six
months. "We are very focused on improving performance in this operation both in
the traditional AMR business and in contract manufacturing," said Marcum. "We
are making progress, but the pace has been slower than we expected. Despite some
level of frustration with the pace, we believe that the ultimate payoff
associated with our new InvisiConnect(TM) suite of products could be
substantial. We have made a conscious decision to stay the course and fully
explore this very compelling opportunity."
Due in large part to the performance of its Metretek Florida subsidiary, and the
additional deemed distribution recorded on the Company's series B Preferred
Stock, the Company is revising its guidance for the year. For fiscal 2004, the
Company expects to report revenues of approximately $41-$42 million, with a loss
attributable to common shares of approximately $600,000, or $.06 per common
share. This estimate includes an estimated loss per common share of $.02 in the
third quarter and earnings per share of $.04 in the fourth quarter on sales of
approximately $10 million and $11 million, respectively.
The revised revenue forecast reflects principally a downward revision in the
Company's Contract Manufacturing operation at Metretek Florida. However, the
lowered revenue expectation also reflects the Company's concern that increased
lead times required to procure critical distributed generation components such
as generators may delay the recognition of revenues at its PowerSecure
subsidiary. Marcum noted that, because of a healthy distributed generation
market and general demand for related equipment, the Company is experiencing
equipment procurement delays of approximately double the lead times seen in the
first quarter. Marcum added that this could have the effect of delaying certain
projects by a full quarter.
In summarizing the current state of operations, Marcum commented that "the
Company is now about one quarter behind where we thought we would be at this
time. While this is frustrating for all of us, the business prospects for the
company and its operations are unchanged and remain very positive."
Adjusted EBITDA for the six months ended June 30, 2004 was $750,000, as compared
to $712,000 for the six months ended June 30, 2003, a $38,000 increase.
As computed by the Company, Adjusted EBITDA is a non-GAAP financial measure (as
such term is defined by the Securities and Exchange Commission) computed as net
income before interest and finance charges, income taxes, depreciation and
amortization, and minority interest.
By eliminating certain expenses not necessarily indicative of the results of the
Company's core operations, management believes that Adjusted EBITDA offers a
useful tool to measure and monitor the Company's operating performance, and
provides meaningful information to investors in terms of enhancing their
understanding of the Company's core operating performance and results. Adjusted
EBITDA is also used by management to assist in planning and forecasting future
operations. However, Adjusted EBITDA as defined by the Company may not be
directly comparable to similarly defined measures as reported by other
companies. Adjusted EBITDA should be considered only as a supplement to, and not
as a substitute for or in isolation from, other measures of financial
performance and liquidity reported in accordance with generally accepted
accounting principles ("GAAP"), such as net income.
Conference Call and Webcast:
- ----------------------------
At 2:30 p.m. MDT (4:30 EDT) on Monday, August 16, 2004, the Company will hold a
teleconference to discuss the financial results and future plans and prospects.
To participate in the teleconference, please call (toll free) 800-291-8929 (or
706-634-0478 for international callers) approximately 10 minutes prior to the
start time and indicate that you are dialing into the Metretek Technologies
conference call.
This call is being Webcast and can be accessed live via the Internet at the
Company's Website, www.metretek.com; to access the call, click on the "Investor
Info" button and then click on the icon for the "2004 second-quarter results
teleconference." The Webcast player will open following completion of a brief
registration process. The Webcast will also be available at
www.FullDisclosure.com. To access the call, type in Metretek's stock symbol,
MTEK, in the top
right corner of the FullDisclosure home page to be taken to the Company's
Webcast page. These Websites will host an archive of the teleconference.
Additionally, a playback of the call will be available for 48 hours beginning at
5:30 p.m. MDT on August 16. You may access the playback by calling 800-642-1687
(or for international callers 706-645-9291) and providing Conference ID number
9256802.
Metretek Technologies, Inc. through its subsidiaries -- Southern Flow Companies,
Inc.; PowerSecure, Inc.; and Metretek, Incorporated (Metretek Florida) -- is a
diversified provider of energy measurement products, services and data
management systems to industrial and commercial users and suppliers of natural
gas and electricity.
All forward-looking statements contained in this press release are made within
the meaning of and under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are all statements
other than statements of historical facts, including but not limited to
statements regarding the business prospects for the Company and its
subsidiaries, the progress of Metretek Florida's business, the anticipated
payoff of the Invisiconnect products and the outlook for consolidated revenues
and earnings in 2004, and all other statements concerning the plans, intentions,
expectations, projections, hopes, beliefs, objectives, goals and strategies of
management, such as statements about future earnings, revenues, and other future
financial and non-financial items, performance or events; statements about
proposed products, services, technologies or businesses; statements about
raising additional capital; and statements of assumptions underlying any of the
foregoing. Forward-looking statements are not guarantees of future performance
or events and are subject to a number of known and unknown risks, uncertainties
and other factors that could cause actual results to differ materially from
those expressed, projected or implied by such forward-looking statements.
Important risks, uncertainties and other factors include, but are not limited
to, the Company's ability to obtain sufficient capital and liquidity on
favorable terms to meet its operating, working capital and debt service
requirements and other capital commitments and contingencies and to fund the
growth of its business; the effects of pending and future litigation, claims and
disputes and the resolution thereof, the timely and successful development,
production and market acceptance of new and enhanced products, services and
technologies of the Company; the markets for the products and services of
Metretek Florida, including the contract manufacturing operations of MCM, and
management's expectations of any strengthening thereof; the effects of
competition in the Company's markets, including the introduction of competing
products, services and technologies; customer and industry demand and
preferences and purchasing patterns; the Company's ability to attract, retain
and motivate key personnel; the ability of the Company to secure and maintain
key contracts, relationships and alliances and to make successful acquisitions;
changes in the energy industry generally and in the natural gas and electricity
industries in particular; general economic, market and business conditions; the
effects of international conflicts and terrorism; and other factors identified
from time to time in the Company's reports and filings with the Securities and
Exchange Commission, including but not limited to the Company's Form 10-K for
the year ended December 31, 2003 and subsequently filed Forms 10-Q and 8-K.
Accordingly, there can be no assurance that the results expressed, projected or
implied by any forward looking statements will be achieved, and readers are
cautioned not to place undue reliance on any forward-looking statements. The
forward-looking statements in this press release speak only as of the date
hereof and are based on the current plans, goals, objectives, strategies,
intentions, expectations and assumptions of, and the information currently
available to, management. The Company assumes no duty or obligation to update or
revise any forward-looking statements for any reason, whether as the result of
changes in expectations, new information, future events, conditions or
circumstances or otherwise.
(financial tables follow)
METRETEK TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Total revenues $ 10,094,585 $ 11,150,947 $ 19,806,310 $ 18,533,816
Total costs and expenses 9,972,496 10,322,142 19,593,431 18,317,647
------------ ------------ ------------ ------------
Operating income 122,089 828,805 212,879 216,169
Minority interest (67,264) (51,441) (141,774) (62,461)
Income taxes (12,016) (12,016) (23,971) (32,948)
------------ ------------ ------------ ------------
Net income $ 42,809 $ 765,348 $ 47,134 $ 120,760
============ ============ ============ ============
NET INCOME (LOSS) PER COMMON SHARE,
ATTRIBUTABLE TO COMMON SHAREHOLDERS,
BASIC AND DILUTED $ (0.07) $ 0.06 $ (0.12) $ (0.05)
============ ============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING, BASIC
AND DILUTED 9,217,416 6,043,469 7,664,681 6,043,469
============ ============ ============ ============
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
June 30, December 31,
2004 2003
----------- -----------
Total current assets $22,326,729 $13,248,168
Property, plant and equipment, net 2,260,278 1,405,350
Total other assets 10,748,580 8,673,023
----------- -----------
Total assets $35,335,587 $23,326,541
=========== ===========
Total current liabilities $ 8,652,281 $ 7,284,539
Long-term notes payable and capital lease obligations 5,580,242 5,243,433
Minority interest in subsidiaries 316,979 207,280
Redeemable preferred stock-Series B 6,316,785 9,422,132
Total stockholders' equity 14,469,300 1,169,157
----------- -----------
Total liabilities and stockholders' equity $35,335,587 $23,326,541
=========== ===========
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME
In accordance with Regulation G, set forth below is a reconciliation of Adjusted
EBITDA, a non-GAAP financial measure, to net income (loss) applicable to common
shareholders, its most directly comparable financial measure computed in
accordance with GAAP.
Second Quarter Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
------------- ------------ ------------- --------------
Net income $ 42,809 $ 765,348 $ 47,134 $ 120,760
Add back:
Interest and finance charges 87,762 83,229 167,951 148,800
Income taxes 12,016 12,016 23,971 32,948
Depreciation and amortization 197,516 174,927 369,467 347,239
Minority interest 67,264 51,441 141,774 62,461
---------- ---------- ---------- -----------
Adjusted EBITDA $ 407,367 $ 1,086,961 $ 750,297 $ 712,208
=========== ========== ========== ==========
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