Exhibit 99.1
Mace Reports Financial Results for the Fiscal Year and Fourth Quarter
of 2005, Including a 50% Increase in Security Segment Revenues
in Fiscal 2005
MOUNT LAUREL, N.J.--(BUSINESS WIRE)--July 14, 2006--Mace Security
International, Inc. ("Mace" or the "Company") (Nasdaq:MACE), a
manufacturer of electronic surveillance, security and personal defense
products, and an owner and operator of car and truck wash facilities,
today announced results for fiscal year and fourth quarter ended
December 31, 2005, including a 50% revenue increase in the Security
Segment over the previous year, from approximately $16.6 million in
the fiscal year ended December 31, 2004 to approximately $24.9 million
in fiscal 2005.
The Company is pleased with the continued revenue growth within
its Security Segment. For the fiscal year ended December 31, 2005, the
Security Segment represented approximately 37% of the Company's
revenue, which is a substantial increase from approximately 29% for
fiscal 2004. Mace continues to explore the sale of its car washes with
the goal of using the proceeds to fund further expansion of its
Security Segment. As previously announced, the Company has entered
into agreements to lease, and ultimately sell, its truck wash
facilities, and to sell its Arizona car wash facilities. The Arizona
car wash sale is expected to close on or before July 31, 2006.
Financial Results - 2005 compared to 2004
Total revenues for 2005 were $68.2 million compared to $57.6
million for 2004. The increase in revenues over last year was
primarily due to revenues from the Security Segment, which increased
from $16.6 million in 2004 to approximately $24.9 million in 2005, an
increase of approximately $8.3 million, or 50%. This increase in 2005
revenues was primarily due to internal growth of approximately $2.5
million within the Company's professional electronic surveillance
operation, $5.2 million of increased revenues from the Company's
advanced imaging components, video equipment and consumer direct
surveillance operations, which the Company acquired in July 2004, and
$0.8 million of increased revenues from the Company's personal defense
products operation.
Revenues from the Car and Truck Wash Segment increased by
approximately $2.3 million, or 5.7%, in 2005 compared to 2004,
primarily as a result of improvements in weather trends in our Arizona
and East regions, partially offset by the divestiture of two car wash
facilities during the first half of 2004 and reduced volume and
revenue in the Florida region as a result of several hurricanes and
storm warnings. This increase was partially offset by a $474,000
decrease in revenues from the truck washes.
Gross profit as a percentage of revenues was approximately 27% for
both 2005 and 2004. Gross profit percentage for 2005 was comprised of
29% for the Security Segment and 26% for the Car and Truck Wash
Segment, while this percentage in 2004 was comprised of 28% for the
Security Segment and 27% for the Car and Truck Wash Segment.
Selling, general and administrative ("SG&A") expenses for 2005
increased by $2.4 million over 2004, primarily due to the expansion of
the Security Segment. The increases were in the areas of advertising
costs and marketing, and selling and administrative personnel costs as
staff was added to handle planned growth of the Security Segment.
In the fourth quarter of 2005, as a result of the Company's annual
impairment test of goodwill, the Company recorded a non-cash goodwill
impairment charge in its Car and Truck Wash Segment of approximately
$1.56 million in the Texas region, principally due to reductions in
the projected cash flows resulting from the decline in car wash
volumes. Additionally, in the third quarter of 2005, the Company
recorded a non-cash asset impairment charge in the amount of $966,000
related to its truck wash operation.
In the fourth quarter of 2004, the Company recorded a non-cash
impairment charge in its Car and Truck Wash Segment of $7.7 million,
comprised of $6.7 million of goodwill impairment in the Texas region
and $1.0 million of goodwill impairment in our Northeast region,
principally due to reductions in the projected cash flows resulting
from a decline in car wash volumes. Additionally, the Company wrote
down the carrying value of its truck wash assets by $500,000 to
reflect the effect on projected future cash flows of 2004 volume
reductions.
Operating loss for 2005 was approximately $1.5 million, as
compared to $7.8 million in 2004. The decrease in the loss in 2005 was
principally the result of the aforementioned asset impairment charges
in 2004, partially offset by increased revenues and operating income
from both the Security Segment and Car and Truck Wash Segments in
2005. In addition to a tax benefit of $805,000, the Company recorded a
valuation allowance of $3.2 million against its deferred tax assets in
2005. The Company has recorded a valuation allowance against its net
deferred tax assets as a result of management being unable to conclude
that realization of the net deferred income tax asset was more likely
than not. The net loss was $5.0 million, or $(0.33) per share for 2005
as compared to a loss of $6.4 million, or $(0.47) per share for 2004.
Financial Results - Fourth Quarter of 2005 compared to Fourth
Quarter of 2004
Total revenues for the three months ended December 31, 2005 were
$16.5 million compared to $15.7 million for the same period in 2004.
The increase in revenues over last year was primarily due to revenues
from the Car and Truck Wash Segment, which increased from
approximately $9.8 million in the fourth quarter of 2004 to $11.0
million in fourth quarter of 2005, an increase of approximately $1.2
million, or 12%. Partially offsetting the increase was a $334,000
decrease in revenues from the Security Segment.
The increase in revenues from the Car and Truck Wash Segment was
primarily the result of an improvement in weather trends. This
increase was partially offset by a decrease in truck wash revenues of
$121,000 from the fourth quarter of 2004 to the same quarter of 2005.
The decrease in revenues from the Security Segment was principally due
to a decrease in electronic surveillance equipment sales to retail
distributors and sales within our consumer-based call center.
Gross profit as a percentage of revenues was 27% for the fourth
quarters of both 2005 and 2004. The gross profit percentage for 2005
was comprised of 28% for the Security Segment and 27% for the Car and
Truck Wash Segment, while this percentage in 2004 was comprised of 26%
for the Security Segment and 28% for the Car and Truck Wash Segment.
The increase in gross profit percentage in the Security Segment was
primarily the result of improved margins in both the Company's
professional electronic surveillance operation and its personal
defense products operation.
SG&A expenses were approximately $4.1 million and $4.0 million for
the fourth quarters of 2005 and 2004, respectively.
In the fourth quarter of 2005, as a result of its annual
impairment test of goodwill, the Company recorded a non-cash goodwill
impairment charge in our Car and Truck Wash Segment of approximately
$1.56 million in the Texas region, principally due to reductions in
the projected cash flows resulting from the decline in car wash
volumes. In the fourth quarter of 2004, the Company recorded a
non-cash impairment charge in our Car and Truck Wash Segment of $7.7
million comprised of $6.7 million of goodwill impairment in the Texas
region and $1.0 million of goodwill impairment in our Northeast region
and the Company wrote down the carrying value of our truck wash assets
by $500,000 as discussed above.
Operating loss for the fourth quarter of 2005 was $1.7 million,
compared to a loss of $9.0 million in the fourth quarter of 2004. The
decrease in the loss was principally the result of the above-mentioned
asset impairment charges in 2004 and the increase in revenues in the
Car and Truck Wash Segment in 2005. In addition to a tax benefit of
$709,000, the Company recorded a valuation allowance of $3.2 million
against its deferred tax assets. Net loss was $4.3 million, or $(0.28)
per share, in the fourth quarter of 2005 compared to a loss of $6.4
million, or $(0.44) per share, in the same period of 2004.
The Company's net book value was $61.7 million, or $4.04 per
share, at December 31, 2005. In addition, Mace had $96.1 million in
total assets, including $11.4 million of cash and short-term
investments at December 31, 2005.
As previously disclosed, the Company learned on March 13, 2006
that the United States Attorney for the Eastern District of
Pennsylvania is investigating the Company for the alleged hiring of
undocumented workers at the Company's car washes. The Company was
served with a federal grand jury subpoena seeking certain employment
related documents. The Company is in the process of responding to the
subpoena. The Company has been informed by the government that it is a
subject of the government's investigation. The Company intends to
fully cooperate with the United States government investigation.
Mace Security International, Inc. is a manufacturer of electronic
surveillance and personal defense products, and an owner and operator
of car and truck wash facilities. Information about Mace and becoming
a Mace Authorized Dealer is available at www.mace.com. The Company's
consumer e-commerce web site is www.macecatalog.com.
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," "intend 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, limited capital resources, the
effects of weather on the demand for car care services, the effects of
rapid growth on Mace and the ability of management to effectively
respond to that growth, our ability to achieve operating synergies,
our ability to compete against established competitors, regulatory
matters, the effects of competition, and our ability to obtain
additional financing. Such factors could materially adversely affect
Mace's financial performance and could cause Mace'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 under
the heading "Risk Factors" in Mace's SEC filings, including its
registration statements and its periodic reports on Form 10-K and Form
10-Q. This press release should be read in conjunction with the
financial statements and notes contained in Mace's annual reports on
Form 10-K and quarterly reports on Form 10-Q.
TABLES FOLLOW
Mace Security International, Inc.
Consolidated Statements of Operations
(In thousands, except share and per share information)
(Audited)
Twelve Months Ended
December 31,
-----------------------
2005 2004
----------- -----------
Revenues
Car wash and detailing services $ 35,081 $ 33,381
Lube and other automotive services 3,437 3,504
Fuel and merchandise sales 4,815 4,130
Security sales 24,909 16,632
----------- -----------
68,242 57,647
Cost of revenues
Car wash and detailing services 25,274 23,754
Lube and other automotive services 2,627 2,729
Fuel and merchandise sales 4,220 3,577
Security sales 17,658 11,989
----------- -----------
49,779 42,049
Selling, general and administrative expenses 15,054 12,642
Depreciation and amortization 2,353 2,509
Costs of terminated acquisitions - 53
Asset impairment charges 2,529 8,225
----------- -----------
Operating loss (1,473) (7,831)
Interest expense, net (1,794) (1,890)
Other income 686 267
----------- -----------
Loss before income taxes (2,581) (9,454)
Income tax expense (benefit) 2,439 (3,044)
----------- -----------
Net loss $ (5,020) $ (6,410)
=========== ===========
Per share of common stock (basic and diluted):
Net loss $ (0.33) $ (0.47)
=========== ===========
Weighted average shares outstanding
Basic 15,271,637 13,679,604
Diluted 15,271,637 13,679,604
Mace Security International, Inc.
Consolidated Statements of Operations
(In thousands, except share and per share information)
(Unaudited)
Three Months Ended
December 31,
-----------------------
2005 2004
----------- -----------
Revenues
Car wash and detailing services $ 8,843 $ 8,007
Lube and other automotive services 920 785
Fuel and merchandise sales 1,209 1,032
Security sales 5,561 5,895
----------- -----------
16,533 15,719
Cost of revenues
Car wash and detailing services 6,274 5,555
Lube and other automotive services 684 645
Fuel and merchandise sales 1,083 876
Security sales 3,991 4,339
----------- -----------
12,032 11,415
Selling, general and administrative expenses 4,083 4,014
Depreciation and amortization 574 976
Costs of terminated acquisitions - 53
Asset impairment charges 1,563 8,225
----------- -----------
Operating loss (1,719) (8,964)
Interest expense, net (459) (514)
Other income 371 65
----------- -----------
Loss before income taxes (1,807) (9,413)
Income tax expense (benefit) 2,535 (3,029)
----------- -----------
Net loss $ (4,342) $ (6,384)
=========== ===========
Per share of common stock (basic and diluted):
Net loss $ (0.28) $ (0.44)
=========== ===========
Weighted average shares outstanding
Basic 15,272,817 14,532,599
Diluted 15,272,817 14,532,599
CONTACT: Mace Security International, Inc.
Eduardo Nieves, Jr., 954-449-1313
www.mace.com