SOURCE: Western Power & Equipment Corp.

October 30, 2006 08:00 ET

Western Power & Equipment Reports Results for Fiscal Year

VANCOUVER, WA -- (MARKET WIRE) -- October 30, 2006 -- Western Power & Equipment Corp. (OTCBB: WPEC), a vertically integrated provider of construction and industrial equipment and building materials, today reported a loss of $3.97 million for its fiscal year ended July 31, 2006. Total revenues from continuing operations were $123.0 million, a 20.6 percent increase from the $102.0 million for the prior fiscal year. For fiscal 2006, the Company had net loss per share from continuing operations of $0.43 per share (basic and diluted) compared to net income per share of $0.10 per basic share ($0.04 per diluted share) in the prior fiscal year.

Revenues from continuing operations were $32.0 million for its fourth fiscal quarter ended July 31, 2006, a 21 percent increase from the $26.4 million in revenues from continuing operations for the prior year's fourth quarter. For the fourth fiscal quarter, the Company reported a net loss of $1.8 million ($0.16 per basic and diluted share) compared with net income of $1.3 million ($0.12 per basic and $0.06 per diluted share) in the prior year's last quarter.

"This past year's results reflected a steep increase in interest expense due to rising interest rates and higher debt levels as well as continued ramp-up costs for the mining operation. We are pleased that sales continue to grow and operating profits increase in the equipment business. Also, were able to pay down our convertible debt by nearly $9 million out of our cash flow," said C. Dean McLain, President and Chief Executive Officer of the Company. "The construction and industrial equipment business has continued its strength into the fourth quarter and surpassed last year's results." McLain added, "Although the construction economy has shown some weakness in recent months, we believe Western's construction and industrial equipment business will continue to show positive trends in both sales and operating profits. As we continue to aggressively pay down debt, we expect net income levels to improve."

"The mining operation continues to grow and we were able to increase our production capacity during the year by over 100%," stated McLain. "Vulcan Materials Company's asphalt plant is operating on our Queen Creek mine site and we are starting to supply significant quantities of materials for Vulcan's plant. During the next fiscal year, we expect the mining operation to show marked improvement in volumes and profitability."

Western returned to profitability in its fiscal year ending July 31, 2003 and had three consecutive years of net income growth prior to its most recent fiscal year.

About Western Power & Equipment Corp.

Western Power & Equipment Corp. sells, leases, rents, and services construction and industrial equipment for Case Corporation and over 30 other manufacturers. The Company currently operates 11 construction and industrial equipment distribution facilities in Washington, Oregon, Nevada, California, and Alaska. In addition, the Company, through a wholly-owned subsidiary, operates two mines in Arizona producing cinder and basalt aggregate. Western is publicly traded on the NASDAQ Over The Counter Bulletin Board (OTCBB). For more information, please contact the company at 6407-B N.E. 117th Avenue, Vancouver, WA 98662; telephone, (360) 253-2346; fax, (360) 253-4830; email: webmaster@westernpower.com; or visit the company's web site http://www.wpec.com.

Cautionary Note Regarding Forward-Looking Statements

Information contained herein relating to projected revenues, growth, income, potential costs savings, and future results and events constitute forward-looking statements. Actual results may differ materially from the forward-looking statements because of a number of risks and uncertainties, including but not limited to fluctuation in the construction and industrial sectors and general economic cycles; the success of the Company's entry into new markets; the success of the Company's operation of the acquired business; industry conditions and competitors; competitive pricing; the Company's relationship with suppliers; relations with the Company's employees; the Company's ability to manage its operating costs and to integrate the acquired businesses in an effective manner; the continued availability of financing; governmental regulations and environmental matters; and risks associated with regional, national, and world economies. Any forward-looking statements should be considered in light of these factors.

                         Selected Financial Data

                     WESTERN POWER & EQUIPMENT CORP.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
              (Dollars in thousands, except per share data)


                                                  Years Ended July 31,
                                              ----------------------------
                                                2006      2005      2004
                                              --------  --------  --------
Net revenues                                   123,007   101,979   100,487

Cost of goods sold                             109,670    89,750    88,195
                                              --------  --------  --------

Gross profit                                    13,337    12,229    12,292

Selling, general and administrative expenses    12,100     9,402     8,297
                                              --------  --------  --------

Income from operations                           1,237     2,827     3,995

Other income (expense):
      Interest expense                          (5,633)   (3,146)   (2,766)
      Other income (expense)                      (125)      (82)      152
                                              --------  --------  --------
   Total other income (expense)                 (5,758)   (3,228)   (2,614)
                                              --------  --------  --------
Income (loss) before income tax provision       (4,521)     (401)    1,381

Provision (benefit) for income taxes                56    (1,452)       48
                                              --------  --------  --------

Income (loss) from continuing operations        (4,577)    1,051     1,333
                                              --------  --------  --------

Income from discontinued operations                359     1,162       580
Gain on disposal of discontinued operations        251       277        --
                                              --------  --------  --------
Income from discontinued operations                610     1,439       580

Net income (loss)                             $ (3,967) $  2,490  $  1,913
                                              ========  ========  ========

Basic earnings (loss) per common share
      Earnings (loss) per share of continuing
       operations                             $  (0.43) $   0.10  $   0.13
                                              --------  --------  --------

      Discontinued operations                     0.03      0.12      0.05
      Gain on disposal of discontinued
       operations                                 0.03      0.03      0.00
                                              --------  --------  --------
      Earnings per share discontinued
       operations                                 0.06      0.15      0.05
                                              --------  --------  --------

   Income (loss) per common share - basic     $  (0.37) $   0.25  $   0.18
                                              ========  ========  ========

Diluted earnings (loss) per common share
      Earnings (loss) per share of continuing
       operations                             $  (0.43) $   0.04  $   0.13
                                              --------  --------  --------

      Discontinued operations                     0.03      0.05      0.05
      Gain on disposal of discontinued
       operations                                 0.03      0.01      0.00
                                              --------  --------  --------
      Earnings per share discontinued
       operations                                 0.06      0.06      0.05
                                              --------  --------  --------

   Income (loss) per common share - diluted   $  (0.37) $   0.10  $   0.18
                                              ========  ========  ========

Weighted average outstanding common shares
 for basic earnings per common share            10,632    10,141    10,130
                                              ========  ========  ========

Weighted average outstanding common shares
 for diluted earnings per common share          10,632    26,269    10,130
                                              ========  ========  ========





                     WESTERN POWER & EQUIPMENT CORP.
                       CONSOLIDATED BALANCE SHEETS
                          (Dollars in thousands)


                                                        July 31,  July 31,
                                                          2006      2005
                                                        --------  --------
ASSETS
Current assets:
   Cash and cash equivalents                            $  1,072  $    855
   Accounts receivable, less allowance for doubtful
    accounts of $864 and $906                              9,078    10,449
   Inventories (net)                                      42,483    42,937
   Deferred taxes                                            669       664
   Prepaid expenses                                          141       564
                                                        --------  --------
      Total current assets                                53,443    55,469
                                                        --------  --------
Fixed assets (net):
   Property, plant and equipment                           5,230     3,775
   Rental equipment fleet                                  3,423     5,707
                                                        --------  --------
      Total fixed assets                                   8,653     9,482
                                                        --------  --------

Assets of discontinued operations                             --     3,871

Other Assets
   Security deposits                                         379       318
   Deferred taxes                                            831       836
   Deferred debt issuance costs                            1,297     1,661
                                                        --------  --------
      Total other assets                                   2,507     2,815
                                                        --------  --------

Total assets                                            $ 64,603  $ 71,637
                                                        ========  ========

LIABILITIES & STOCKHOLDERS'  EQUITY
Current liabilities:
   Borrowings under floor plan financing                  22,627  $ 24,558
   Bridge loan, net of discount of $0 and $79                 --     1,254
   Convertible debt, net of discount of $1,046 and $836    6,176     3,052
   Notes payable-related parties, net of discount of
    $28 and $82                                              472       418
   Notes payable                                             629       205
   Accounts payable                                        9,937     7,925
   Accrued payroll and vacation                            1,404       932
   Other accrued liabilities                               1,567     1,313
   Capital lease obligations                                  56        43
                                                        --------  --------
      Total current liabilities                           42,868    39,700
                                                        --------  --------

Non current liabilities:
   Capital lease obligations                                 755       810
   Convertible debt, net of discount of $1,951
    and $2,404                                            14,047    23,708
   Deferred lease income                                     236       264
   Notes payable                                           1,573       655
                                                        --------  --------
      Total non current liabilities                       16,611    25,437

      Total liabilities                                   59,479    65,137
                                                        --------  --------

Commitments and contingencies

Stockholders' equity:
   Preferred stock-10,000,000 shares authorized; none
    outstanding                                               --        --
   Common stock, $.001 par value - 50,000,000 shares
    authorized and 11,730,000 shares and 10,180,000
    shares issued, as of July 31, 2006 and 2005
    respectively                                              12        10
   Additional paid-in capital                             24,072    20,859
   Deferred compensation                                    (642)      (18)
   Accumulated deficit                                   (17,474)  (13,507)
   Less common stock in treasury, at cost (130,300
    shares)                                                 (844)     (844)
                                                        --------  --------
      Total stockholders' equity                           5,124     6,500
                                                        --------  --------
Total liabilities and stockholders' equity              $ 64,603  $ 71,637
                                                        ========  ========

Contact Information

  • Press and Investor inquiries:
    Mark J. Wright
    Vice President & Chief Financial Officer
    Western Power & Equipment Corp.
    (360) 253-2346
    E-mail: Email Contact