Mace Security International Reports Increases in Revenues for the
First Half and Second Quarter of Fiscal Year 2003
MOUNT LAUREL, N.J.--(BUSINESS WIRE)--Aug. 12, 2003--Mace Security
International, Inc. ("Mace") (Nasdaq: MACE), a manufacturer and
marketer of security products and a leading provider of car care
services, today announced financial results and increases in revenues
of 5.5% and 3.8%, respectively, for the first half of 2003 and the
quarter ended June 30, 2003.
Financial Results
Revenues for the six months ended June 30, 2003 were $24.9 million
as compared to $23.6 million for the first half of 2002, an increase
of $1.3 million, or 5.5%. The increase in revenues over last year's
first six months was principally due to the operations of the Security
Products Segment. Revenues for the six months ended June 30, 2003 for
the Security Products Segment were $2.3 million compared to
approximately $400,000 in the same period of 2002 due to a
recommencing of operations in this segment in May of 2002. This
increase in revenues from the Security Products Segment was partially
offset by a decrease in car wash and detailing revenues in the first
six months of 2003 largely as a result of continued weather-related
volume declines in our Texas, Florida and Northeast regions.
Additionally, management was able to increase average wash and detail
revenue per car from $13.83 in the first half of 2002 to $14.39 in
2003, a 4.0% increase.
Gross profit as a percentage of revenues was 28.3% in the first
six months of 2003 as compared to 31.4% in the first six months of
2002. The 2003 gross profit percentage is comprised of 26.9% for the
car and truck wash segment (versus 31.0% in the first six months of
2002) and 42.4% for the Security Products Segment in 2003 as compared
to 43.3% in 2002. The primary reasons for the decrease in gross profit
percentage within the car and truck wash segment were increased
insurance premiums and related claim costs, and the Company's decrease
in car wash volume. These negative influences on gross profit margin
were partially offset by certain temporary and permanent cost saving
measures instituted in March of 2003 including reductions in payroll
and related benefits costs and certain other operating costs.
Operating income for the first six months of 2003 was $1.6 million
(exclusive of a non-cash asset impairment charge of $351,000 in the
second quarter) as compared to $2.6 million for the same period of
2002. The decrease in operating income is the result of the decrease
in car wash segment gross profit combined with an increase of $617,000
in selling, general and administrative ("SG&A") expenses including an
increase in SG&A expenses of $750,000 due directly to resuming
operations of the Security Products Segment. EBITDA for the six months
ended June 30, 2003 was $2.8 million, or 11.1% of revenues (exclusive
of a non-cash asset impairment charge), as compared to EBITDA in the
first six months of 2002 of $3.7 million, or 15.8% of revenues. Net
income for the first six months of 2003 was $254,000 or $.02 per share
($479,000 or $.04 per share exclusive of the asset impairment charge,
net of applicable income taxes) as compared to a net loss of $4.7
million or $.37 per share in the first six months of 2002. The net
loss in 2002 included a charge of $5.7 million, net of applicable
income taxes, as a cumulative effect of a change in accounting
principle relating to implementation of Financial Accounting Standard
142, Goodwill and Other Intangible Assets.
In the second quarter ended June 30, 2003, we fully wrote down, by
$351,000, assets determined to be impaired. The asset write-down
related to a full service car wash site in Arizona which we partially
wrote down at December 31, 2002. The additional write-down was the
result of the impending loss of a significant customer to this site
resulting in the future expected cash flows not being sufficient to
recover the site's carrying value.
Revenues for the three months ended June 30, 2003 were $12.3
million as compared to $11.9 million for the same period of 2002, an
increase of approximately $450,000. The increase in revenues over last
year's second quarter was due to the Security Products Segment
revenue, which increased by approximately $750,000 due to a
recommencing of operations in this segment in May of 2002. This
increase in revenues from the Security Products Segment was partially
offset by a decrease in car wash and detailing revenues in the second
quarter of 2003 as a result of continued weather-related volume
declines in our Texas, Florida and Northeast regions. The
volume-related decline in car wash revenues was partially offset by an
increase in average wash and detail revenue per car from $13.96 in the
second quarter of 2002 to $14.98 in 2003, a 7.3% increase.
Gross profit as a percentage of revenues was 27.4% in the second
quarter of 2003 as compared to 30.2% in the same period of 2002. The
2003 gross profit percentage is comprised of 25.8% for the car and
truck wash segment (versus 29.6% in the second quarter of 2002) and
43.4% for the Security Products Segment in 2003 as compared to 43.3%
in 2002. The primary reasons for the decrease in gross profit
percentage within the car and truck wash segment were increased
insurance premiums and related claim costs, and the Company's decrease
in car wash volume. These negative influences on gross profit margin
were partially offset by certain permanent cost saving measures
instituted in March of 2003.
Operating income for the quarter ended June 30, 2003 was $640,000
(exclusive of a non-cash asset impairment charge of $351,000 in the
second quarter) as compared to $1.0 million for the same period of
2002. The decrease is the result of the decrease in car wash segment
gross profit combined with an increase of $200,000 in SG&A expenses
including $280,000 due directly to resuming operations of the Security
Products Segment. EBITDA for the quarter ended June 30, 2003 was $1.2
million, or 9.9% of revenues (exclusive of the asset impairment
charge), as compared to 2002 EBITDA of $1.6 million, or 13.7% of
revenues. The second quarter of 2003 resulted in a net loss of $88,000
or $.01 per share (net income of $137,000 or $.01 per share exclusive
of the asset impairment charge, net of applicable income taxes) as
compared to net income of $357,000 or $.03 per share in the second
quarter of 2002.
The Company's net book value was $57.9 million or $4.67 per share
at June 30, 2003. In addition, Mace has $94.9 million in total assets
including approximately $62 million of real estate in high traffic
retail areas and $5.3 million in cash and cash equivalents at June 30,
2003, and an experienced senior management team with a high equity
stake in the Company. In light of Mace's book value per share and
solid business fundamentals, the Company believes that its shares are
undervalued.
In December 2002 the Company effected a one-for-two reverse stock
split. Accordingly, all shares and per share figures reflect the
effect of the reverse stock split.
Conference Call Notification
Mace will conduct a conference call today, August 12, 2003 at
10:00 AM EDT. The conference call number is (877) 286-5652. A live web
cast of the conference call will be available online at www.mace.com
or www.streetevents.com. There will be access to a recording of the
teleconference by calling (800) 642-1687 and entering the reservation
number 2183320. This will be available after the teleconference from
2:00 PM EDT, Tuesday, August 12, 2003 through midnight EDT, Tuesday,
August 19, 2003. A recording of the teleconference will also be
available on the Company's website at www.mace.com.
Mace Security International, Inc. is a manufacturer of
less-than-lethal defense sprays and electronic security products for
consumers, as well as a marketer of safety and security products
worldwide. Mace is also a leading provider of car care services.
Additional information about Mace is available at www.mace.com.
The Company included within this press release EBITDA, which is a
non-GAAP financial measure. EBITDA is calculated as net income adding
back interest expense, income taxes, depreciation and amortization
expense and certain non-cash charges. We believe that EBITDA, as
presented, represents a useful measure of assessing the performance of
our operating activities and resources available for strategic
opportunities, as it reflects our earnings trends, without the impact
of certain non-cash and unusual charges or income. EBITDA is also used
by our creditors in assessing debt covenant compliance. We understand
that, although securities analysts frequently use EBITDA in the
evaluation of companies, it is not necessarily comparable to other
similarly titled captions used by other companies due to potential
inconsistencies in the method of calculation. EBITDA is not intended
as an alternative to cash flow provided by operating activities as a
measure of liquidity, as an alternative to net income as an indicator
of our operating performance, nor as an alternative to any other
measure of performance in conformity with generally accepted
accounting principles.
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 effects 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,
Form 10-K for 2001, Form 10-K for 2002, Form 10-Q for the quarter
ended March 31, 2002, Form 10-Q for the quarter ended June 30, 2002,
Form 10-Q for the quarter ended September 30, 2002, Form 10-Q for the
quarter ended March 31, 2003, and Form 10-Q for the quarter ended June
30, 2003. This press release should be read in conjunction with the
financial statements and notes contained in the Company's annual
report on Form 10-K and the Company's quarterly reports on Form 10-Q.
TABLES FOLLOW
Mace Security International, Inc.
Consolidated Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended June 30,
-----------------------
2003 2002 (1)
----------- -----------
Revenues
Car wash and detailing services $9,259 $9,556
Lube and other automotive services 1,024 1,007
Fuel and merchandise sales 877 873
Security products sales 1,142 397
Operating agreement - 20
----------- -----------
12,302 11,853
Cost of revenues
Car wash and detailing services 6,706 6,460
Lube and other automotive services 810 833
Fuel and merchandise sales 768 754
Security products sales 646 225
----------- -----------
8,930 8,272
Selling, general and administrative expenses 2,243 2,042
Depreciation and amortization 489 510
Asset impairment charge 351 -
----------- -----------
Operating income 289 1,029
Interest expense, net (511) (553)
Other income 85 82
----------- -----------
(Loss) income before income taxes (137) 558
Income tax (benefit) expense (49) 201
----------- -----------
Net (loss) income $(88) $357
=========== ===========
Per share of common stock (basic and diluted):
Net (loss) income $(0.01) $0.03
=========== ===========
Weighted average shares outstanding
Basic 12,406,805 12,674,514
Diluted 12,406,805 12,711,573
EBITDA (2) $1,214 $1,621
EBITDA % 9.9% 13.7%
(1) The statement of operations for the quarter ended June 30,
2002 has been restated to reflect the effect on shares and per
share data of the one-for-two reverse stock split in December of
2002.
(2) EBITDA is calculated as net (loss) income adding back interest
expense, income taxes, depreciation and amortization expense and
certain non-cash charges. We believe that EBITDA, as presented,
represents a useful measure of assessing the performance of our
operating activities and resources available for strategic
opportunities, as it reflects our earnings trends, without the
impact of certain non-cash and unusual charges or income. EBITDA
is also used by our creditors in assessing debt covenant
compliance. We understand that, although securities analysts
frequently use EBITDA in the evaluation of companies, it is not
necessarily comparable to other similarly titled captions used by
other companies due to potential inconsistencies in the method of
calculation. EBITDA is not intended as an alternative to cash flow
provided by operating activities as a measure of liquidity, as an
alternative to net income as an indicator of our operating
performance, nor as an alternative to any other measure of
performance in conformity with generally accepted accounting
principles. The following is a reconciliation of EBITDA to net
income.
Three Months Ended June 30,
(In Thousands)
2003 2002
------- -------
EBITDA $1,214 $1,621
Depreciation and amortization (489) (510)
Interest expense, net (511) (553)
Income tax benefit (expense) 49 (201)
Asset impairment charge (351) -
------- -------
Net (loss) income $(88) $357
======= =======
Mace Security International, Inc.
Consolidated Statements of Operations
(dollars in thousands, except per share data)
(Unaudited)
Six Months Ended June 30,
-----------------------
2003 2002 (1)
----------- -----------
Revenues
Car wash and detailing services $18,804 $19,522
Lube and other automotive services 2,045 2,043
Fuel and merchandise sales 1,797 1,568
Security products sales 2,257 397
Operating agreement - 80
----------- -----------
24,903 23,610
Cost of revenues
Car wash and detailing services 13,411 12,986
Lube and other automotive services 1,587 1,622
Fuel and merchandise sales 1,563 1,355
Security products sales 1,300 225
----------- -----------
17,861 16,188
Selling, general and administrative expenses 4,452 3,835
Depreciation and amortization 975 982
Asset impairment charge 351 -
----------- -----------
Operating income 1,264 2,605
Interest expense, net (1,033) (1,116)
Other income 167 147
----------- -----------
Income before income taxes 398 1,636
Income tax expense 144 589
----------- -----------
Income before cumulative effect of a change in
accounting principle 254 1,047
Cumulative effect of a change in accounting
principle, net of tax benefit of $2,188 - (5,733)
----------- -----------
Net income (loss) $254 $(4,686)
=========== ===========
Per share of common stock (basic and diluted):
Income per share before cumulative effect
of a change in accounting principle $0.02 $0.08
Cumulative effect of a change in
accounting principle, net of tax - (0.45)
----------- -----------
Net income (loss) $0.02 $(0.37)
=========== ===========
Weighted average shares outstanding
Basic 12,408,513 12,683,893
Diluted 12,411,656 12,715,095
EBITDA (2) $2,757 $3,734
EBITDA % 11.1% 15.8%
(1) The statement of operations for the six months ended June 30,
2002 has been restated to reflect (i) the recording of the
cumulative effect of a change in accounting principle, in
accordance with SFAS No. 142, and (ii) the effect on shares and
per share data of the (1) one-for-two reverse stock split in
December of 2002.
(2) EBITDA is calculated as income before cumulative effect of a
change in accounting principle adding back interest expense,
income taxes, depreciation and amortization expense and certain
non-cash charges. We believe that EBITDA, as presented, represents
a useful measure of assessing the performance of our operating
activities and resources available for strategic opportunities, as
it reflects our earnings trends, without the impact of certain
non-cash and unusual charges or income. EBITDA is also used by our
creditors in assessing debt covenant compliance. We understand
that, although securities analysts frequently use EBITDA in the
evaluation of companies, it is not necessarily comparable to other
similarly titled captions used by other companies due to potential
inconsistencies in the method of calculation. EBITDA is not
intended as an alternative to cash flow provided by operating
activities as a measure of liquidity, as an alternative to net
income as an indicator of our operating performance, nor as an
alternative to any other measure of performance in conformity with
generally accepted accounting principles. The following is a
reconciliation of EBITDA to net income.
Six Months Ended June 30,
(In Thousands)
2003 2002
-------- --------
EBITDA $2,757 $3,734
Depreciation and amortization (975) (982)
Interest expense, net (1,033) (1,116)
Income tax expense (144) (589)
Asset impairment charge (351) -
Cumulative effect of a
change in accounting
principle, net of tax - (5,733)
-------- --------
Net income (loss) $254 $(4,686)
======== ========
CONTACT: Mace Security International, Inc.
Robert M. Kramer, 856-778-2300