GEM Press Release
General Environmental Management, Inc. Announces Fourth Quarter Fiscal and 2007 Year End Results
03/31/08
General Environmental Management, Inc. ("GEM") (OTCBB: GEVI), a leading environmental and waste remediation company, announced financial results for its fiscal fourth quarter and year ended December 2007 as set forth in the company's 10KSB Annual Report filed with the SEC March 28, 2008.
Tim Koziol, chairman and CEO of GEM, stated, "Our results for the fourth quarter of 2007 mark a key milestone for our Company as we achieved positive quarterly EBITDA for the first time in the company's history. These expected results for the fourth quarter have set a solid foundation for continued growth and financial stability in the current and future years."
He further stated, "The Company's success in the fourth quarter came as a result of an increase in our customer base, combined with effective implementation of systems and controls for efficient business management. Our efforts to diversify the company's customer mix have proven successful with an increase in our revenue combined with a lowering of customer acquisition costs. Our gain in gross profit can be attributed to the process improvement program implemented during the second half of the year."
Fiscal Fourth Quarter 2007 compared to the same quarter in 2006
During the three months ended December 31, 2007, the company achieved positive adjusted EBITDA due to a broadened customer base, the enactment of cost cutting measures, and specific systems efficiencies implemented throughout the year that were realized in the fourth quarter.
HIGHLIGHTS
-- Revenues for the fourth quarter of fiscal 2007 were $9.03 million, up
34% from $6.74 million for the fourth quarter of fiscal 2006.
-- Adjusted EBITDA (see description below) was $404,000 for the fourth
quarter of 2007 compared to a loss of $1,660,000 for the same period in
2006.
-- Total operating expenses were $2.84 million for the quarter, compared
to $3.05 million for the same quarter last year. This decrease on higher
revenue reflects the effects of the expense reductions and systems
efficiencies achieved by our operating units.
-- Gross profit improved 32% for the three months ended December 31, 2007
to 25.4%. This compares to a gross profit of 19.2% for the same quarter in
2006
Revenues for the year ended December 31, 2007 were $30.45 million compared to $21.76 million for the same period last year for an increase of 40%.
"The company recognized an increase in demand for services from certain divisions we invested significant resources in throughout the year, such as mobile water treatment, vapor control services, and EnviroConstruction. We were able to effectively capitalize on these opportunities with these divisions by allocating our specialized resources and expertise to these projects," Koziol commented.
Outlook
"We believe we will continue to identify additional financial efficiencies throughout the new fiscal year and expect to achieve our goal of positive EBITDA for the year ending 2008. There continues to be strong demand for a customer-oriented service provider in North America, particularly in the western United States. We intend to continue to extend our internal formula of strong operating efficiencies combined with a philosophy of exceeding customer expectations. Additionally, we will continue to build out and emphasize our fastest growing divisions. New customers of GEM will be able to simplify their hazardous waste endeavors with our diversified platform and regional partnerships," concluded Koziol.
About General Environmental Management, Inc.
General Environmental Management, Inc. (www.go-gem.com) is a full-service hazardous waste management and environmental services firm providing integrated environmental solutions managed through its proprietary web-based enterprise software, GEMWare, including the following service offerings: management and transportation of waste; design and management of on-site waste treatment systems; management of large remediation projects; response to environmental incidents and spills; and environmental, health and safety compliance. Headquartered in Pomona, California, GEM operates seven field service locations and one Treatment, Storage, Disposal facility (TSDF), servicing all markets in the Western U.S.
Statements made in this press release that are not historical in nature constitute forward-looking statements within the meaning of the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on the current expectations and beliefs of the management of GEM. No forward-looking statement can be guaranteed. GEM undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect GEM's business.
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2007 2006
------------ ------------
CURRENT ASSETS:
Cash $ 954,581 $ 618,654
Accounts receivable, net of allowance for
doubtful accounts of $236,021 and $285,000
respectively 6,495,736 5,540,069
Prepaid expenses and current other assets 156,340 428,018
------------ ------------
Total Current Assets 7,606,657 6,586,741
------------ ------------
Property and Equipment - Net of accumulated
depreciation $1,854,141 and $1,248,088
respectively 3,950,253 2,918,690
Restricted cash 1,184,835 911,168
Intangibles, Net 1,028,044 1,191,217
Deferred financing fees 394,082 291,529
Deposits 282,070 147,742
Goodwill 946,119 946,119
------------ ------------
TOTAL ASSETS $ 15,392,060 $ 12,993,206
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,314,515 $ 3,755,264
Accrued expenses 1,689,843 2,149,178
Accrued disposal costs 1,052,509 593,575
Payable to related party 31,871 824,783
Deferred rent 37,769 25,150
Current portion of financing agreement 662,719 1,017,048
Current portion of long term obligations 1,274,464 82,470
Current portion of capital lease obligations 187,015 42,962
------------ ------------
Total Current Liabilities 9,250,705 8,490,430
LONG-TERM LIABILITIES:
Financing agreements, net of current portion $ 3,708,694 $ 2,050,588
Long term obligations, net of current portion 79,842 1,472,014
Capital lease obligations, net of current
portion 1,046,920 232,878
Convertible Notes payable 520,208 601,161
------------ ------------
Total Long-Term Liabilities 5,355,664 4,356,641
STOCKHOLDERS' EQUITY
Series B convertible preferred stock,
liquidation preference $1 per share, $.001 par
value, 100,000,000 shares authorized, none and
2,480,500 shares issued and outstanding - 2,481
Common stock, $.001 par value, 1,000,000,000
shares authorized, 12,473,885 and 5,920,408
shares issued and outstanding 12,474 5,920
Additional paid in capital 50,151,615 33,430,095
Accumulated deficit (49,378,398) (33,292,361)
------------ ------------
Total Stockholders' Equity 785,691 146,135
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,392,060 $ 12,993,206
============ ============
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended For the year ended
December 31, December 31,
2007 2006 2007 2006
REVENUES 9,030,565 6,741,021 30,445,608 21,760,569
COST OF REVENUES 6,733,430 5,444,498 23,756,677 16,761,057
----------- ----------- ----------- -----------
GROSS PROFIT 2,297,135 1,296,523 6,688,931 4,999,512
OPERATING EXPENSES 2,835,196 3,046,106 13,617,277 9,578,895
----------- ----------- ----------- -----------
OPERATING LOSS (538,061) (1,749,583) (6,928,346) (4,579,383)
OTHER INCOME (EXPENSE):
Interest income 9,611 10,768 39,667 26,378
Interest and financing
costs (733,478) (5,687,467) (2,548,609) (8,861,700)
Gain/Loss on Disposal of
Fixed Assets - (3,308) - (3,308)
Other non-operating
income 55,322 26,138 148,890 105,968
Non-operating costs
expired acquisition - (4,653,029) - (4,653,029)
Costs to induce
conversion of debt (60,226) - (6,797,639) -
----------- ----------- ----------- -----------
NET LOSS (1,266,832) (12,056,481) (16,086,037) (17,965,074)
Dividend on Series A
Preferred Stock on
conversion term - - - (522,500)
Issuance of additional
shares based on amended
conversion price-
Series A Preferred - (50,000) - (50,000)
Beneficial Conversion
feature on the series B
convertible preferred
stock - - - (955,040)
Dividend on Series B
Preferred Stock on
modification of
conversion term - (491,100) - (491,100)
Preferred stock dividend - - - (21,871)
----------- ----------- ----------- -----------
Net loss applicable to
common stockholders (1,266,832) (12,597,581) (16,086,037) (20,005,585)
=========== =========== =========== ===========
CALCULATIONS OF NET
LOSS PER COMMON SHARE,
BASIC AND DILUTED:
Net loss applicable to
common stockholders (0.10) (11.87) (1.55) (10.83)
=========== =========== =========== ===========
Weighted average shares
of common stock
outstanding 12,434,482 1,060,815 10,360,712 1,845,873
=========== =========== =========== ===========
For the periods presented, "Adjusted EBITDA" consists of net loss plus depreciation and amortization, net interest expense, non-recurring employment charges, and other non-recurring financing-related expenses. We also exclude gain/loss on sale of fixed assets, non-operating costs expired acquisition, and costs to induce conversion of debt as these amounts are not considered part of usual business operations. Such definition of "Adjusted EBITDA" is the same as the definition of "EBITDA" used in our incentive plans for management. Our management considers Adjusted EBITDA to be a measurement of performance which provides useful information to both management and investors. Adjusted EBITDA should not be considered an alternative to net income or loss or other measurements under GAAP. Because Adjusted EBITDA is not calculated identically by all companies, this measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
For the three months ended For the year ended
December 31, December 31,
------------------------- --------------------------
2007 2006 2007 2006
----------- ------------ ------------ ------------
NET LOSS $(1,266,832) $(12,056,481) $(16,086,037) $(17,965,074)
Depreciation and
amortization 209,702 53,019 769,227 524,187
Interest expense, net 733,478 5,687,467 2,548,609 8,861,700
Non-recurring
employment charges 200,000 - 307,740 -
Stock based
compensation charges 441,011 - 1,199,301 -
Non-recurring
financing related
expenses 26,722 - 26,722 -
Gain/Loss on disposal
of fixed assets - 3,308 - 3,308
Non-operating costs
expired acquisition - 4,653,029 - 4,653,029
Costs to induce
conversion of debt 60,226 - 6,797,639 -
----------- ------------ ------------ ------------
ADJUSTED EBITDA $ 404,307 $ (1,659,658) $ (4,436,799) $ (3,922,850)
=========== ============ ============ ============
Company Contact:
General Environmental Management (GEM)
Tim Koziol
909-444-9500
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