BOCA RATON, Fla., Aug. 14 /PRNewswire-FirstCall/ — Sunair Services Corporation (NYSE Amex: SNR) announced financial results for its third fiscal quarter ended June 30, 2009.
Revenues from continuing operations for the third quarter ended June 30, 2009 were $13.1 million, compared to revenues of $14.7 million for the third quarter of the prior year. The Company had income from continuing operations of $116,324 for the third fiscal quarter ended June 30, 2009, or $0.01 per basic and diluted share, compared to a loss of $(860,438) for the same quarter last year, or $(0.06) per basic and diluted share.
Sunair had no income from discontinued operations for the third quarter of 2009, compared to tax affected income of $569,918 from discontinued operations for the comparable period last year, or $0.04 per basic and diluted share.
The Company reported a net income of $116,324 for the third quarter ended June 30, 2009, or $0.01 per basic and diluted share, compared to a net loss of $(290,520) for the same quarter last year, or $(0.02) per basic and diluted share.
Comments from Management
Jack I. Ruff, Chief Executive Officer and President of Sunair Services stated, “Since becoming CEO, this is our fourth consecutive quarter of improved operating results over last year. The Company had positive earnings per share from continuing operations for the first time since June 2005. We are continuing to improve Sunair’s operational efficiencies resulting in increased profitability and improved financial performance. We are seeing improvement in all aspects of our financial performance; our gross profit increased 3.6% from 61.2% to 64.8% while our operating expenses decreased 1.9% from 64.6% of revenue to 62.7%. While both national and local competitors are having issues with customer retention, we are increasing our customer count on a monthly basis. We continue to focus on various initiatives aimed at organic revenue growth and expanding margins which continue to increase shareholder value, help our Company in the current challenging business environment, as well as strengthen Sunair’s long-term growth prospects. Our focus remains on revenue growth, increasing profitability and deleveraging.”
ABOUT SUNAIR
Sunair Services Corporation, a Florida corporation, through its wholly owned subsidiary, Middleton Pest Control, Inc., with headquarters located in Orlando, Florida, provides pest control and lawn care services to both residential and commercial customers. Middleton provides essential pest control services and protection against termites and insects to homes and businesses. In addition, Middleton supplies lawn care services to homes and businesses, which includes fertilization treatments and protection against disease, weeds and insects for lawns and shrubs. For more information about Sunair, please visit http://www.sunairservices.com.
Information Regarding Forward Looking Statements
Some of the statements in this press release, including those that contain the words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “should,” “intend” and other similar expressions, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or those of our industry to be materially different from any future results, performance or achievements expressed or implied by those forward-looking statements. Among the factors that could cause actual results, performance or achievement to differ materially from those described or implied in the forward-looking statements include the success of the Company’s growth initiatives, demand for the Company’s lawn care and pest control services, general economic conditions, competition, potential technology changes, the risks inherent in new product and service introductions, the risks inherent in the entry into new geographic markets, and other factors included in Sunair’s filings with the SEC, including but not limited to the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2009. Copies of Sunair’s SEC filings are available from the SEC or may be obtained upon request from Sunair. Sunair does not undertake any obligation to update the information contained herein, which speaks only as of this date.
SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009 AND SEPTEMBER 30, 2008
(UNAUDITED)
June 30, September 30,
2009 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,615,681 $2,974,382
Accounts receivable, net 2,102,393 2,597,447
Inventories, net 1,036,135 1,403,832
Prepaid and other current assets 589,085 2,829,535
Total Current Assets 5,343,294 9,805,196
PROPERTY, PLANT, AND EQUIPMENT, net 1,447,217 1,907,213
OTHER ASSETS:
Software costs 539,830 246,979
Customer list, net 4,663,401 7,456,704
Goodwill 62,112,528 62,112,528
Other assets 234,919 254,790
Total Other Assets 67,550,678 70,071,001
TOTAL ASSETS $74,341,189 $81,783,410
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
June 30, September 30,
2009 2008
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,341,138 $1,787,406
Accrued expenses 3,138,754 3,256,342
Unearned revenues 597,217 863,770
Customer deposits 2,902,711 3,149,715
Revolving line of credit, current
portion - 4,100,000
Notes payable and capital leases,
current portion 4,007,998 2,306,189
Total Current Liabilities 11,987,818 15,463,422
LONG TERM LIABILITIES:
Notes payable and capital leases, net
of current portion 1,580,214 3,682,184
Note payable -related party 5,000,000 5,000,000
Revolving line of credit, net of current
portion 5,000,000 5,500,000
Total Long Term Liabilities 11,580,214 14,182,184
TOTAL LIABILITIES 23,568,032 29,645,606
COMMITMENTS & CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, 8,000,000 - -
shares authorized, none issued and
outstanding
Common stock, $.10 par value, 100,000,000
shares authorized, 13,091,088 shares
issued and outstanding at June 30, 2009
and September 30, 2008, respectively 1,309,110 1,309,110
Additional paid-in capital 52,946,498 52,756,311
Accumulated deficit (3,482,451) (1,927,617)
Total Stockholders' Equity 50,773,157 52,137,804
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $74,341,189 $81,783,410
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED)
2009 2008
SALES $38,450,322 $42,479,822
COST OF SALES 14,222,619 16,548,557
GROSS PROFIT 24,227,703 25,931,265
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 25,375,918 29,294,668
LOSS FROM OPERATIONS (1,148,215) (3,363,403)
OTHER INCOME (EXPENSES):
Interest expense (675,310) (1,115,079)
Interest income 1,852 127,513
Gain on disposal of assets 145 5,069
Gain on extinguishment of debt 55,000 -
Total Other Expenses (618,313) (982,497)
LOSS FROM OPERATIONS BEFORE
INCOME TAXES (1,766,528) (4,345,900)
INCOME TAX PROVISION - -
LOSS FROM CONTINUING OPERATIONS (1,766,528) (4,345,900)
INCOME FROM DISCONTINUED
OPERATIONS, NET OF
INCOME TAX BENEFIT OF $0 and $0
IN 2009 and 2008, RESPECTIVELY 211,694 874,368
NET LOSS $(1,554,834) $(3,471,532)
BASIC AND DILUTED (LOSS) INCOME
PER SHARE:
CONTINUING OPERATIONS $(0.13) $(0.33)
DISCONTINUED OPERATIONS $0.01 $0.07
NET LOSS $(0.12) $(0.26)
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC and DILUTED 13,091,088 13,091,088
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED)
2009 2008
SALES $13,126,088 $14,664,435
COST OF SALES 4,618,617 5,692,928
GROSS PROFIT 8,507,471 8,971,507
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 8,232,894 9,472,816
INCOME (LOSS) FROM OPERATIONS 274,577 (501,309)
OTHER INCOME (EXPENSES):
Interest income - 18,787
Interest expense (198,751) (389,142)
Gain on disposal of assets 10,498 11,226
Gain on extinguishment of debt 30,000 -
Total Other Income (Expenses) (158,253) (359,129)
INCOME (LOSS) FROM OPERATIONS BEFORE
INCOME TAXES 116,324 (860,438)
INCOME TAX PROVISION - -
INCOME (LOSS) FROM CONTINUING OPERATIONS 116,324 (860,438)
INCOME FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAX BENEFIT OF $0 and $0
IN 2009 and 2008, RESPECTIVELY - 569,918
NET INCOME (LOSS) $116,324 $(290,520)
BASIC AND DILUTED INCOME (LOSS) PER SHARE:
CONTINUING OPERATIONS $ 0.01 $ (0.06)
DISCONTINUED OPERATIONS $ - $ 0.04
NET INCOME (LOSS) $ 0.01 $ (0.02)
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 13,091,088 13,091,088
DILUTED 13,099,143 13,091,088
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED)
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,554,834) $(3,471,532)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation 620,988 669,212
Amortization 2,793,303 2,927,177
Bad debt reserve 142,296 266,008
Inventory reserve - (380,858)
Gain on sale of assets - (5,069)
Gain on extinguishment of debt (55,000) -
Stock-based compensation expense 190,187 385,239
(Increase) decrease in assets:
Accounts receivable 352,758 (2,525,786)
Inventories 367,697 (68,803)
Prepaid and other current assets 2,240,450 (71,495)
Other assets 19,871 (10,317)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (563,856) 234,501
Unearned revenue (266,553) 62,622
Customer deposits (247,004) 371,571
Net Cash Provided By (Used In) Operating
Activities 4,040,303 (1,617,530)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and
equipment (206,274) (550,093)
Software development costs (292,851) -
Cash paid for business acquisitions - (1,000,000)
Net proceeds from sale of assets 45,282 52,684
Net Cash (Used In) Investing Activities (453,843) (1,497,409)
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
SUNAIR SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2009 AND 2008
(UNAUDITED)
2009 2008
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit (net) (4,600,000) (932,797)
Proceeds from line of credit - 3,800,000
Repayment of notes payable and capital
leases (345,161) (360,618)
Net Cash (Used In) Provided By Financing
Activities (4,945,161) 2,506,585
Effect of exchange rate fluctuations on
cash - (50,631)
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,358,701) (658,985)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 2,974,382 2,781,838
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,615,681 $2,122,853
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $765,754 $1,139,933
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Debt incurred in acquisitions $ - $600,000
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.