SOURCE: GreenMan Technologies, Inc.

February 07, 2007 16:19 ET

GreenMan Technologies Reports First Quarter Results

Revenue Increases 14 Percent; Net Loss Reduced $1.4 Million to $9,000

SAVAGE, MN -- (MARKET WIRE) -- February 7, 2007 -- GreenMan Technologies, Inc. (OTCBB: GMTI), a leading recycler of over 12 million scrap tires per year in the United States, today announced results for the three months ended December 31, 2006.

Lyle Jensen, GreenMan's President and Chief Executive Officer, stated: "I am very pleased with the continued positive trend in operating results across the board. Overall revenue was up 14 percent from the same period last year with inbound tire volume up over half a million tires during the December 2006 quarter as a result of ongoing efforts to increase market share and the commencement of several Iowa based tire cleanup projects (November 1, 2006 press release). Included in this increase, crumb rubber revenue was up 43 percent during the December 2006 quarter primarily due to strong demand for product produced by our new Des Moines powderizer equipment (September 26, 2006 press release). Gross margins for the quarter remained above 30 percent despite higher repairs and maintenance costs during the December 2006 quarter. Earnings before interest, tax, depreciation and amortization ('EBITDA') exceeded $900,000 for the quarter and, at 18.5 percent of revenue, reflects another positive milestone in our progress towards sustained profitability."

Mr. Jensen added, "I am very proud that our team accomplished these goals without drawing down on our line of credit through the December quarter marking six consecutive months of internal cash flow subsistence. For the first time in many years, we enter our seasonally and historically slower March quarter, focused on increasing market share, cost control and building our crumb rubber inventory to meet the strong demand we've created for our products during the seasonally stronger second half of our fiscal year."

Please join us tomorrow, Thursday, February 8, 2007 at 12:00 PM EST for a conference call in which we will discuss the results for the quarter ended December 31, 2006. To participate, please call 1-800-946-0719 and ask for the GreenMan call. A replay of the conference call can be accessed until 11:50 PM on February 10, 2007 by calling 1-888-203-1112 and entering pass code 8672419.

GreenMan collects and recycles over 12 million tires annually into alternative fuel, alternative energy and innovative products. Today, our products are used as an efficient alternative fuel in large industrial boilers, as a substitute for crushed stone in civil engineering applications and as crumb rubber in playground and sport surfaces, rubberized asphalt and landscaping applications. We pursue technological processes and unique marketing programs intended to maximize the value of each tire we manage. To learn more, please visit our website at www.greenman.biz

In September 2005, due to the magnitude of continued operating losses, our Board of Directors approved separate plans to divest the operations of our Georgia and Tennessee subsidiaries and dispose of their respective assets. In addition, due to continuing operating losses, in July 2006 we sold our California subsidiary. Accordingly, we have classified all three respective entity's results of operations as discontinued operations for all periods presented in the consolidated financial statements.

Three Months Ended December 31, 2006 Compared To The Three Months Ended December 31, 2005

Net sales from continuing operations for the three months ended December 31, 2006 increased $611,000 or 14 percent to $4,887,000 as compared to the first quarter of last year's net sales from continuing operations of $4,276,000. Our continuing operations processed approximately 3.65 million passenger tire equivalents during the quarter ended December 31, 2006, compared to approximately 3.10 million passenger tire equivalents during the same period last year. In addition to the 18 percent increase in overall inbound tire volume, the overall fee we are paid to collect and dispose of a scrap tire ("tipping fee") increased 2 percent compared to last year.

Gross profit for the three months ended December 31, 2006 was $1,483,000 or 30.4 percent of net sales, compared to $1,305,000 or 30.5 percent of net sales for the three months ended December 31, 2005. Our cost of sales increased $433,000 or 15 percent primarily due to increased collection and processing costs associated with higher inbound volume and higher repair and maintenance expense. In addition, due to the completion of several large civil engineering projects (which use more of the scrap tire including waste wire) during fiscal 2006, our processing residual waste costs increased approximately $58,000 during the three months ended December 31, 2006 as compared to the prior year.

Selling, general and administrative expenses for the three months ended December 31, 2006 increased $192,000 to $968,000 or 20 percent of net sales, compared to $776,000 or 18 percent of net sales for the three months ended December 31, 2005. The increase was primarily attributable to an increase of approximately $116,000 in salaries and wage related expenses, sales commissions and the re-allocation of approximately $52,000 of net corporate operating expenses which were absorbed by discontinued operations during the three months ended December 31, 2005.

As a result of the foregoing, we had operating income from continuing operations of $515,000 during the three months ended December 31, 2006 as compared to an operating income of $529,000 for the three months ended December 31, 2005.

Interest and financing expense for the three months ended December 31, 2006 increased $244,000 to $523,000, compared to $279,000 during the three months ended December 31, 2005. The increase is attributable to the inclusion of approximately $138,000 of deferred interest associated with the June 2006 Laurus credit facility restructuring, increased rates and the allocation of all Laurus related interest to continuing operations during the fiscal year ended September 30, 2006 (approximately $25,000 was allocated to discontinued operations during the three months ended December 31, 2005). Non-cash financing fees and interest were zero during the three months ended December 31, 2006 and as compared to $656,000 for the same period last year from the amortization of deferred financing fees in conjunction with the June 2006 Laurus refinancing.

As a result of the foregoing, our net loss from continuing operations for the three months ended December 31, 2006 decreased $409,000 or 96 percent to $19,000 or $.00 per basic share, compared to a net loss of $428,000 or $.02 per basic share for the three months ended December 31, 2005.

During the three months ended December 31, 2006, several vendors issued credits relating to past due amounts, we recovered some bad debts and reduced certain accrued expenses which offset a $19,000 increase in our Georgia lease settlement reserve resulting in $10,000 ($.00 per basic share) of income from discontinued operations. The $978,000 net loss ($.05 per basic share) from discontinued operations for the three months ended December 31, 2005 includes approximately $746,000 associated with our Georgia operations and approximately $232,000 associated with our California operations.

Our net loss for the three months ended December 31, 2006 decreased $1,397,000 or 99 percent to $9,000 or $.00 per basic share as compared to a net loss of $1,406,000 or $.07 per basic share for the three months ended December 31, 2005.


Condensed Consolidated Statements of Operations

                                                    Three Months Ended
                                                       December 31,
                                                    2006          2005
                                                ------------  ------------

Net sales                                       $  4,887,000  $  4,276,000
Cost of sales                                      3,404,000     2,971,000
                                                ------------  ------------
  Gross profit                                     1,483,000     1,305,000
Selling, general and administrative                  968,000       776,000
                                                ------------  ------------
  Operating income from continuing operations        515,000       529,000
                                                ------------  ------------
Other income (expense):
  Interest and financing expense                    (523,000)     (279,000)
  Non-cash interest and financing fees                    --      (656,000)
  Other, net                                         (11,000)      (22,000)
                                                ------------  ------------
         Other (expense), net                       (534,000)     (957,000)
Loss from continuing operations                      (19,000)     (428,000)
Discontinued operations:
  Gain (loss) from discontinued operations            10,000      (978,000)
                                                ------------  ------------
Net loss                                        $     (9,000) $ (1,406,000)
                                                ============  ============

Loss from continuing operations per share -
 basic                                          $         --  $      (0.02)
Loss from discontinued operations per share -
 basic                                                    --         (0.05)
                                                ------------  ------------
Net loss per share                              $         --  $      (0.07)
                                                ============  ============

Weighted average shares outstanding               21,467,000    19,225,000
                                                ============  ============


Condensed Consolidated Balance Sheet Data

                                            December 31,    September 30,
                                                2006             2006
                                           --------------  ---------------
               Assets
Current assets                             $    3,324,000  $     3,463,000
Property, plant and equipment,net               5,701,000        5,807,000
Other assets                                      277,000          232,000
Assets related to discontinued operations              --            7,000
                                           --------------  ---------------
                                           $    9,302,000  $     9,509,000
                                           ==============  ===============

    Liabilities and Stockholders' (Deficit)

Current liabilities                        $    3,994,000  $     4,045,000
Liabilities related to discontinued
 operations                                     3,350,000        3,415,000
Notes payable, non-current                     10,798,000       10,874,000
Capital lease obligations, non-current          1,630,000        1,615,000
Deferred gain on sale leaseback                   334,000          343,000
Obligations due under lease settlement,
 non-current                                      562,000          630,000
Stockholders' deficit                         (11,366,000)     (11,413,000)
                                           --------------  ---------------
                                           $    9,302,000  $     9,509,000
                                           ==============  ===============

"Safe Harbor" Statement: Under the Private Securities Litigation Reform Act

With the exception of the historical information contained in this news release, the matters described herein contain "forward-looking" statements that involve risk and uncertainties that may individually or collectively impact the matters herein described, including but not limited to the possibility that we may not be able to secure the financing necessary to return to profitability, the possibility that the delisting of our stock by the American Stock Exchange could substantially limit our stock's future liquidity and our ability to raise capital, the possibility that we may not realize the benefits of product acceptance, economic, competitive, governmental, seasonal, management, technological and/or other factors outside the control of the Company, which are detailed from time to time in the Company's SEC reports, including the annual report on Form 10-KSB for the fiscal period ended September 30,2006. The Company disclaims any intent or obligation to update these "forward-looking" statements.

Contact Information

  • Contacts:
    Chuck Coppa
    CFO

    Lyle Jensen
    CEO

    GreenMan Technologies
    800-957-9575