Exhibit 99.1
Mace Security International Reports Financial Results for the Fourth
Quarter and Fiscal Year of 2006
MOUNT LAUREL, N.J.--(BUSINESS WIRE)--July 2, 2007--Mace Security
International, Inc. ("Mace" or the "Company") (Nasdaq Global: 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 the fourth quarter and fiscal year ended
December 31, 2006.
Financial Results - Fiscal Year 2006 compared to 2005
Total revenues from continuing operations for 2006 were $49.2
million, compared to $52.8 million for 2005. The decrease in revenues
was primarily due to a decrease in revenues from the Car and Truck
Wash Segment of approximately $2.0 million, or 7%, in 2006 as compared
to 2005. Wash and detailing revenues decreased from $20.5 million in
2005 to $19.1 million in 2006, a decrease of $1.4 million, or 7%. This
decrease in wash and detailing revenues was primarily the result of
the sale of car wash sites and reduced car wash volumes, principally
in our Dallas, Texas market. On a consolidated level, car wash volumes
declined 112,000 cars, or 8.5%, in 2006 as compared 2005, 79,000 of
which was attributable to the closing and divestiture of three car
wash sites since November 2005. Partially offsetting the decline in
volume, the Company experienced an increase in average wash and
detailing revenue per car to $15.87 in 2006 from $15.54 in 2005.
Security Segment revenues for 2006 decreased by $1.5 million, or
6.6% as compared to 2005. The decrease in revenues from the Security
Segment was principally due to a decrease in cameras and professional
imaging components sales, our consumer direct electronic surveillance
sales and our retail sales in our Texas security operations. This
decrease was partially offset by the Securetek, Inc. operations, which
we acquired in November of 2005 and provided revenues of $1.5 million
during 2006 as compared to $179,000 in 2005.
Gross profit as a percentage of revenues was approximately 23.0%
for 2006 and 27.3% for 2005. Gross profit percentage for 2006 was
comprised of 25.4% for the Security Segment and 20.7% for the Car and
Truck Wash Segment, while for 2005 this percentage was comprised of
29.1% for the Security Segment and 25.7% for the Car and Truck Wash
Segment. The decrease in the Car and Truck Wash gross profit
percentage was a result of reduced revenues and increases in workers'
compensation claims, car damage claims and other certain operating
costs. The decrease in the Security Segment gross profit percentage
was primarily the result of a change in customer and product mix and
increased costs of additional technical and warehouse staff to address
customer needs as we continue to grow in this segment.
Selling, general and administrative ("SG&A") expenses for 2006
increased by $3.8 million over 2005. The increase in SG&A costs is
primarily the result of $1.4 million in non-cash compensation expense
charges for share-based compensation under Statement of Financial
Accounting Standards ("SFAS") 123R and $1.5 million of legal,
consulting and accounting fees relating to the ongoing immigration
investigation. The $1.5 million of fees consisted of $433,000 of fees
associated with an Audit Committee investigation, $796,000 of fees
relating to production of documents and defense costs and $271,000 of
additional audit fees. The SG&A expenses were also impacted by growth
in infrastructure and an increase in marketing and advertising costs
within the Security Segment, which added $732,000 of SG&A costs in
2006 over 2005.
In the fourth quarter of 2006, as a result of the Company's annual
impairment test of goodwill, the Company recorded a non-cash
impairment charge of approximately $111,000 related to our Security
Products operation in Texas. During the third quarter of 2006, the
Company recorded non-cash asset impairment charges totaling $80,000
related to two car wash sites, $40,000 of which was classified as
discontinued operations.
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. During the third quarter of 2005, the Company recorded an
asset impairment charge in the amount of $966,000 related to our truck
wash operation which is classified as discontinued operations at
December 31, 2006.
Operating loss for 2006 was $7.3 million compared to $1.8 million
in 2005. The 2006 operating loss increase as compared to 2005 was
principally the result of the decrease in the Car and Truck Wash
Segment and Security Segment gross profit of $3.1 million, a $3.8
million increase in SG&A costs as noted above, and the impact of the
impairment charges noted above.
In the fourth quarter of 2005, the Company recorded a valuation
allowance of $3.2 million against its deferred tax assets.
Discontinued operations includes the Company's Arizona car wash
region, the truck washes, and certain car wash sites in the Northeast
region. The results of operations for these regions are shown as
discontinued operations for financial reporting purposes. These
operations generated income of $580,000 in 2006 and a loss of $523,000
in 2005.
The net loss for 2006 was $6.8 million, or $(0.44) per share, as
compared to a loss of $5.0 million, or $(0.33) per share, for 2005.
Financial Results - Fourth Quarter of 2006 compared to Fourth
Quarter of 2005
Total revenues for the fourth quarter of 2006 were $11.3 million
compared to $12.6 million for the same period in 2005. The decrease in
revenues in the fourth quarter of 2006 compared to the fourth quarter
of 2005 was primarily due to a decrease in revenues from the Car and
Truck Wash Segment of approximately $0.9 million, or 13%. Wash and
detailing revenues decreased from $5.15 million in the fourth quarter
of 2005 to $4.57 million in the fourth quarter of 2006, a decrease of
$580,000, or 11%. This decrease in car wash and detailing revenues was
primarily the result of a decrease in car wash volumes, most notably
in our Texas region. On a consolidated level, car wash volumes
declined 44,000 cars, or 13.4%, in the fourth quarter of 2006 as
compared to the same period in 2005, 19,000 of which was attributable
to the closure and divestiture of three of our car washes since
November of 2005. The Company experienced an increase in average wash
and detailing revenue per car to $16.10 in the fourth quarter of 2006
from $15.70 in the fourth quarter of 2005.
Within the Security Segment, revenues for the fourth quarter of
2006 decreased by $364,000 or 7.0%, as compared to 2005. The decrease
in revenues from the Security Segment was principally due to a
decrease in high-end digital and machine vision cameras and
professional imaging components sales and our consumer direct
electronic surveillance sales in our Texas security operations. This
was partially offset by an increase in sales from personal defense and
law enforcement aerosol operations.
Gross profit as a percentage of revenues was approximately 19.0%
for the fourth quarter of 2006 and 27.1% for the fourth quarter of
2005. Gross profit percentage for the fourth quarter of 2006 was
comprised of 14.7% for the Security Segment and 22.6% for the Car and
Truck Wash Segment, while the fourth quarter of 2005 was comprised of
28.2% for the Security Segment and 26.2% for the Car and Truck Wash
Segment. The decrease in the Car and Truck Wash gross profit
percentage was a result of reduced revenues and an increase in certain
operating expenses. The decrease in the Security Segment gross profit
percentage was the result of a change in mix of customers and products
sold, increased costs of additional technical and warehouse staff to
address customer needs as we continue to grow in this segment, and the
impact of the embezzlement which was recorded in the fourth quarter of
2006.
SG&A expenses for the fourth quarter of 2006 increased by $341,000
over the same period in 2005. The increase in SG&A costs is primarily
the result of $216,000 in non-cash compensation expense charges for
share-based compensation under SFAS 123R and $153,000 of legal,
consulting and accounting fees relating to the ongoing immigration
investigation.
In the fourth quarter of 2006, as a result of the Company's annual
impairment test of goodwill, the Company recorded a non-cash
impairment charge of approximately $111,000 related to our Security
Products operation in Texas. In the fourth quarter of 2005, 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.
Operating loss for the fourth quarter of 2006 was $2.3 million as
compared to $2.1 million in the fourth quarter of 2005. The operating
loss was principally the result of the decreases in Car and Truck Wash
Segment and Security Segment gross profit, the increase in SG&A costs,
and the impact of the impairment charges noted above.
In the fourth quarter of 2005, the Company recorded a valuation
allowance of $3.2 million against its deferred tax assets in 2005.
Discontinued operations include the Company's Arizona car wash
region, the truck washes, and certain car wash sites in the Northeast
region. The results of operations for these regions are shown as
discontinued operations for financial reporting purposes. These
operations generated income of $795,000 in the fourth quarter of 2006
and a loss of $71,000 in the fourth quarter of 2005.
The net loss for the fourth quarter of 2006 was $1.7 million, or
$(0.11) per share, as compared to $4.3 million, or $(0.28) per share,
for the fourth quarter of 2005.
The Company's net book value was $56.5 million, or $3.70 per
share, at December 31, 2006. In addition, Mace had $87.6 million in
total assets, including $7.6 million of cash and short-term
investments at December 31, 2006. The Company's current cash and
short-term investments are approximately $20 million.
As previously disclosed, the Company determined that the former
divisional controller of the Florida Security division embezzled funds
from the Company. As a result of an internal investigation, the
Company identified that the amount embezzled by the employee was
approximately $240,000 during fiscal 2006, which was charged to SG&A
expenses. Additionally, the investigation uncovered an unexplained
inventory shortage in 2006 in the Florida Security division of
approximately $350,000, which may be due to theft. The impact of the
embezzlement on cost of revenues and SG&A expenses was recorded in the
fourth quarter of 2006.
The Company plans to have an investor conference call to discuss
the year end 2006 financial results and the first quarter 2007
financial results after it files its first quarter 2007 10-Q. Mace
does not have a definitive filing date for its first quarter 2007
10-Q. A press release with a conference call date, time and dial-in
phone number will be distributed by the Company three business days
prior to the investor conference call.
Mace Security International, Inc. is a manufacturer of electronic
surveillance, security and personal defense products, and an owner and
operator of car and truck wash facilities. Additional information
about Mace is available at www.mace.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.
Mace Security International, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share information)
(Audited)
Twelve Months Ended
December 31,
------------------------
2006 2005
Revenues
Car wash and detailing services $ 19,063 $ 20,460
Lube and other automotive services 3,445 3,232
Fuel and merchandise sales 3,341 4,162
Security sales 23,366 24,909
------------ -----------
49,215 52,763
Cost of revenues
Car wash and detailing services 14,733 14,523
Lube and other automotive services 2,727 2,441
Fuel and merchandise sales 3,026 3,733
Security sales 17,427 17,658
------------ -----------
37,913 38,355
Selling, general and administrative expenses 16,868 13,116
Depreciation and amortization 1,621 1,539
Goodwill and asset impairment charges 151 1,563
------------ -----------
Operating loss (7,338) (1,810)
Interest expense, net (961) (869)
Other income 1,093 630
------------ -----------
Loss from continuing operations before income
taxes (7,206) (2,049)
Income tax expense 156 2,448
------------ -----------
Loss from continuing operations (7,362) (4,497)
Income (loss) from discontinued operations,
net of tax 580 (523)
------------ -----------
Net loss $ (6,782) $ (5,020)
============ ===========
Per share of common stock (basic and
diluted):
Loss from continuing operations $ (0.48) $ (0.30)
Income (loss) from discontinued operations,
net of tax 0.04 (0.03)
------------ -----------
Net loss $ (0.44) $ (0.33)
============ ===========
Weighted average shares outstanding
Basic 15,274,498 15,271,637
Diluted 15,274,498 15,271,637
Mace Security International, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share information)
(Unaudited)
Three Months Ended
December 31,
-----------------------
2006 2005
Revenues
Car wash and detailing services $ 4,572 $ 5,150
Lube and other automotive services 863 864
Fuel and merchandise sales 691 1,026
Security sales 5,196 5,560
----------- -----------
11,322 12,600
Cost of revenues
Car wash and detailing services 3,440 3,612
Lube and other automotive services 676 635
Fuel and merchandise sales 626 947
Security sales 4,430 3,991
----------- -----------
9,172 9,185
Selling, general and administrative expenses 3,914 3,573
Depreciation and amortization 401 382
Goodwill and asset impairment charges 111 1,563
----------- -----------
Operating loss (2,276) (2,103)
Interest expense, net (271) (234)
Other income 123 356
----------- -----------
Loss from continuing operations before income
taxes (2,424) (1,981)
Income tax expense 39 2,290
----------- -----------
Loss from continuing operations (2,463) (4,271)
Income (loss) from discontinued operations,
net of tax 795 (71)
----------- -----------
Net loss $ (1,668) $ (4,342)
=========== ===========
Per share of common stock (basic and
diluted):
Loss from continuing operations $ (0.16) $ (0.28)
Income (loss) from discontinued operations,
net of tax 0.05 (0.00)
----------- -----------
Net loss $ (0.11) $ (0.28)
=========== ===========
Weighted average shares outstanding
Basic 15,275,382 15,272,817
Diluted 15,275,382 15,272,817
CONTACT: Mace Security International, Inc.
Investor Relations:
Eduardo Nieves, Jr., 954-449-1313
www.mace.com