Exhibit 99.1
Mace Security International Reports Financial Results for the Third Quarter and
First Nine Months of 2007 & Announces Several Car Wash Transactions
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Nov. 14, 2007--Mace Security
International, Inc. ("Mace" or the "Company") (Nasdaq:MACE) today announced
results for the third quarter and nine months ended September 30, 2007. Mace
also announced that it signed an agreement to sell four car washes in Florida
and closed two separate transactions to sell two car washes in San Antonio,
Texas.
Car Wash Transactions
Mace has signed a definitive agreement to sell four car washes on the west
coast of Florida to Wash Depot, Inc. for approximately $10.9 million in cash.
The assets of these car washes are being sold at a price of approximately $7.1
million above the recorded net book value of approximately $3.8 million. Mace
owned all four of these locations. This transaction is scheduled to close on
January 8, 2008. The total debt owed on these four car washes is approximately
$3.0 million. This transaction is subject to customary closing conditions,
including environmental due diligence.
In addition, Mace completed two separate transactions in November to sell
two car washes in San Antonio, Texas for a total of $2.96 million, with a total
gain of $38,000. Mace owned these two car washes, and there was no debt owed on
these locations. Mace has now completed the sale of two of its four car washes
in San Antonio, Texas.
Financial Results
Mace is very excited with the new direction of the Company, as it exits the
car wash business, enters the online and digital media marketing industry, and
continues its growth in the security industry. During the third quarter of 2007,
total sales increased 20% as compared to the third quarter of 2006, including a
sales increase in Mace's professional surveillance and personal defense
operations. Mace also completed the sale of all of its northeast region car
washes by selling two exterior-only facilities in New Jersey for a total of
$1.38 million, and added $2.8 million in new revenue from the recently acquired
digital media marketing business, Linkstar. The Company has spent a lot of time
implementing the Linkstar business into the Mace operation, and is excited about
this segment's future growth potential.
Mace is positioned for continued internal growth and future growth through
acquisition. The Company has a strong cash position, low debt, experienced
management and business segments with solid fundamentals. The Company is
optimistic about its future.
Financial Results - Third Quarter of 2007 compared to Third Quarter of 2006
Total revenues for the third quarter of 2007 increased to $14 million from
$11.6 million for the same period in 2006. The sales increase was due to the
addition of $2.8 million in revenue from the Digital Media Marketing Segment
(related to the acquisition of Linkstar during the third quarter of 2007), and
an increase in sales in Mace's professional surveillance and personal defense
operations.
Gross profit as a percentage of revenues was approximately 20.8% for the
third quarter of 2007 and 22.4% for the third quarter of 2006. Gross profit
percentage for 2007 was comprised of 30.4% for the Security Segment, 17.8% for
the Car and Truck Wash Segment and 7.2% for the Digital Media Marketing Segment;
and, in the same period in 2006, this percentage was comprised of 29.0% for the
Security Segment and 16.0% for the Car and Truck Wash Segment. The increase in
the Security Segment gross profit was due to a change in customer and product
mix. The increase in the Car and Truck Wash gross profit percentage was
principally a result of improved margins on lube and other automotive services,
and fuel and merchandise sales.
Selling, general and administrative ("SG&A") expenses for the three months
ended September 30, 2007 were $5.7 million compared to $4.5 million for the same
period in 2006. Mace's SG&A expenses for the third quarter of 2007 were impacted
by several notable cash and non-cash charges. The increase in SG&A costs is
primarily the result of the acquisition of Linkstar which added SG&A costs of
$684,000 in the third quarter of 2007, an increase in the legal, consulting and
accounting fees related to the ongoing immigration investigation from $217,000
in the third quarter of 2006 to $355,000 in the third quarter of 2007 and a
$310,000 transaction cost related to the Linkstar acquisition. SG&A costs also
include non-cash compensation (employee stock options) expense of approximately
$767,000 and $778,000 in the three months ended September 30, 2007 and 2006,
respectively.
Operating loss for the third quarter of 2007 was $3.3 million compared to
an operating loss of $2.4 million in the third quarter of 2006. The increase in
the operating loss was principally the result of the above-mentioned increase in
SG&A costs.
Discontinued operations generated income of approximately $119,000 in the
third quarter of 2007, which included gains on the sales of car wash sites of
approximately $179,000.
Net loss for the third quarter of 2007 was $3.2 million, or $(0.20) per
share, compared to a net loss of $2.3 million, or $(0.15) per share, in 2006.
Financial Results - First Nine Months of 2007 compared to First Nine Months
of 2006
Total revenues for the first nine months of 2007 were $36.7 million
compared to $37.3 million for the same period in 2006. Revenues in the Security
Segment decreased by approximately $1.4 million (primarily during the first six
months of 2007), and car wash and detailing revenues decreased by approximately
$2.0 million. The Security Segment decrease was principally a result of the
inability of some of Mace's vendors to supply high volume products in a timely
manner, increased sales of discontinued and refurbished products at lower
prices, and the impact on operations and management of the Florida embezzlement
investigation. This decrease in sales was partially offset by growth in revenues
in our personal defense operation, as well as the addition of approximately $2.8
million from the Digital Media Marketing Segment (related to the acquisition of
Linkstar during the third quarter of 2007). The decrease in our car wash and
detailing revenues was primarily the result of the sale of car washes and
reduced volumes due to an increase in inclement weather.
Gross profit as a percentage of revenues was approximately 22.2% for the
first nine months of 2007 and 24.4% for the first nine months of 2006. Gross
profit percentage for 2007 was comprised of 27.2% for the Security Segment,
19.8% for the Car and Truck Wash Segment and 7.2% for the Digital Media
Marketing Segment; and in 2006 this percentage was comprised of 28.5% for the
Security Segment and 20.5% for the Car and Truck Wash Segment. The decrease in
the Security Segment gross profit was due to the decrease in revenues noted
above, a change in customer and product mix, and an increase in sales of
discontinued and refurbished products at reduced margins. The decrease in the
Car and Truck Wash gross profit percentage was principally a result of reduced
volumes.
SG&A expenses for the nine months ended September 30, 2007 were $14.0
million compared to $12.9 million for the same period in 2006. The increase in
SG&A costs is primarily the result of the acquisition of Linkstar, which added
SG&A costs of $684,000 in 2007, and a transaction cost related to the Linkstar
acquisition of $310,000 in 2007. Mace's SG&A expenses for the first nine months
of 2007 were also impacted by several notable cash and non-cash charges. SG&A
expenses include $603,000 of legal, consulting and accounting fees in the first
nine months of 2007 relating to the ongoing immigration investigation, compared
to $1.35 million of such expenses in the first nine months of 2006. As
previously disclosed, the Company determined that our former divisional
controller of the Florida Security division embezzled funds from the Company.
Included in 2007 SG&A expenses is a charge of $99,000 representing the amounts
of funds embezzled in the first quarter ended March 31, 2007 and approximately
$310,000 of legal, consulting and accounting fees related to the Florida
embezzlement investigation. SG&A expenses also include non-cash charges to
compensation expenses for share-based compensation (employee stock options) of
$1.1 million and $1.2 million for the first nine months of 2007 and 2006,
respectively.
Operating loss for the first nine months of 2007 was $7.1 million compared
to an operating loss of $5.0 million in the same period of 2006. The increase in
operating loss was principally the result of the above-mentioned decrease in
sales and gross profit, and the increase in SG&A expense.
Discontinued operations for the first nine months of 2007 include the
Company's Arizona car wash region, our Northeast car wash region, and the
Company's truck washes. The results of operations for these regions are shown as
discontinued operations for financial reporting purposes. These operations
generated income of approximately $2.0 million in the first nine months of 2007,
the majority of which was from gains on the sales of car wash sites.
Net loss during the first nine months of 2007 was $5.2 million, or $(0.33)
per share, as compared to $5.1 million, or $(0.33) per share in 2006.
The Company's net book value was $55.5 million, or $3.37 per share, at
September 30, 2007. In addition, Mace had $78.6 million in total assets,
including $12.1 million of cash and short-term investments at September 30,
2007.
Mace will conduct a conference call on Friday, November 16, 2007 at 3:00 PM
EST. The conference call number is (888) 751-6352 and the international
conference call in number is (706) 902-1438, conference ID: 24536078. There will
be access to a tape recording of the teleconference by calling (800) 642-1687
and entering the conference ID: 24536078. This will be available after the
teleconference from 6:00 PM EST, Friday, November 16, 2007 through 6:00 PM EST,
Friday, November 30, 2007. In addition, a live web cast of the conference call
will be available online at www.mace.com. A recording of the teleconference will
also be available on the Company's website through November 30, 2007.
About Mace
Mace Security International, Inc. owns and operates car and truck washes,
and had previously announced that it is exiting this segment of its business.
Mace's remaining car washes for sale are located in Florida and Texas. The
Company is a manufacturer of personal defense and electronic surveillance
products marketed under the famous brand name, Mace(R). The Company recently
entered the online and digital media e-commerce business with the purchase of
Linkstar Interactive. Mace's web site is 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)
(Unaudited)
Three Months Ended
September 30,
-------------------------
2007 2006
------------ ------------
Revenues:
Car and truck wash and detailing services $ 3,980 $ 4,185
Lube and other automotive services 818 907
Fuel and merchandise 664 801
Security 5,697 5,724
Digital media marketing 2,802 -
------------ ------------
13,961 11,617
Cost of revenues:
Car and truck wash and detailing services 3,269 3,420
Lube and other automotive services 632 778
Fuel and merchandise 588 754
Security 3,965 4,064
Digital media marketing 2,599 -
------------ ------------
11,053 9,016
Selling, general and administrative expenses 5,730 4,544
Depreciation and amortization 481 396
Asset impairment charge - 40
------------ ------------
Operating loss (3,303) (2,379)
Interest expense, net (120) (194)
Other income 98 612
------------ ------------
Loss from continuing operations before
income taxes (3,325) (1,961)
Income tax expense 23 39
------------ ------------
Loss from continuing operations (3,348) (2,000)
Income (loss) from discontinued operations,
net of tax 119 (269)
------------ ------------
Net loss $ (3,229) $ (2,269)
============ ============
Per share of common stock (basic and
diluted):
Loss from continuing operations $ (0.21) $ (0.13)
Income (loss) from discontinued operations 0.01 (0.02)
------------ ------------
Net loss $ (0.20) $ (0.15)
============ ============
Weighted average shares outstanding:
Basic 16,213,726 15,275,382
Diluted 16,213,726 15,275,382
Mace Security International, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share information)
(Unaudited)
Nine Months Ended
September 30,
-------------------------
2007 2006
------------ ------------
Revenues:
Car and truck wash and detailing services $ 12,667 $ 13,882
Lube and other automotive services 2,373 2,582
Fuel and merchandise 2,070 2,642
Security 16,756 18,170
Digital media marketing 2,802 -
------------ ------------
36,668 37,276
Cost of revenues:
Car and truck wash and detailing services 10,001 10,745
Lube and other automotive services 1,887 2,051
Fuel and merchandise 1,830 2,389
Security 12,204 12,997
Digital media marketing 2,599 -
------------ ------------
28,521 28,182
Selling, general and administrative expenses 13,981 12,910
Depreciation and amortization 1,272 1,193
Asset impairment charge - 40
------------ ------------
Operating loss (7,106) (5,049)
Interest expense, net (523) (691)
Other income 542 770
------------ ------------
Loss from continuing operations before
income taxes (7,087) (4,970)
Income tax expense 73 117
------------ ------------
Loss from continuing operations (7,160) (5,087)
Income (loss) from discontinued operations,
net of tax 2,009 (28)
------------ ------------
Net loss $ (5,151) $ (5,115)
============ ============
Per share of common stock (basic and
diluted):
Loss from continuing operations $ (0.46) $ (0.33)
Income (loss) from discontinued operations 0.13 -
------------ ------------
Net loss $ (0.33) $ (0.33)
============ ============
Weighted average shares outstanding:
Basic 15,589,313 15,274,201
Diluted 15,589,313 15,274,201
CONTACT: Mace Security International, Inc., Fort Lauderdale
Eduardo Nieves, Jr.
Vice President, Marketing & Investor Relations
954-449-1313
www.mace.com