GEM Press Release
General Environmental Management, Inc. Announces First Quarter 2009 Financial Results
05/15/09
General Environmental Management, Inc. ("GEM") (OTC BB:GEVI.OB - News), a leading environmental and waste remediation company, announced today the financial results for the quarter ended March 31, 2009.
"In a tough economic environment we are pleased that we were able to achieve a 17.9% increase in revenues over the same period last year," stated Tim Koziol, Chairman and CEO of GEM in announcing the first quarter financial results. "However, while revenue grew we are not yet satisfied with our operating margins and have focused our efforts on two elements to meet the current realities of the marketplace. First, we have implemented significant cost cutting initiatives in response to the challenging economic environment, and second, we have aggressively pursued new customers to continue our organic growth and to expand our base business."
Mr. Koziol continued, "To navigate and pursue our strategic plan in 2009, the company will continue with its commitment to focused execution. Commencing in the fourth quarter of 2008 the company initiated a plan to reduce fixed costs, trim down the workforce, and to amend compensation plans in a coordinated effort to improve operating margins and to accurately align our workforce for the current business levels."
Bill Mitzel, President of GEM, stated, "We will continue to monitor the business climate, and be vigilant in taking further actions as needed to respond to business conditions while maintaining our stated commitment to providing superior technical service to our clients."
HIGHLIGHTS:
-- Revenues for First Quarter 2009 were $8.20 million, up 17.9% from
$6.95 million for the same period in 2008.
-- The Company's Mobile Treatment Services business has seen substantial
growth and we believe that niche, higher profit margin business units like
mobile treatment will provide the opportunity for both top line growth and
improved profitability moving forward.
"We are highly confident that we will come through the current economic challenges a stronger and more efficient company," stated Koziol. "However, to do so will require constant monitoring and management in this changing marketplace. Although gross revenues increased in the first quarter, we did not achieve the minimum EBITDA levels required by our lending partner's covenants in our Revolving Credit and Term Loan Agreements, CVC California, LLC. Not achieving the required levels is an 'Event of Default' under the terms of the Agreement. However, as of May 15, 2009, the Company continues to be in discussions with our lender to obtain a waiver, we continue to operate in the normal course of business, we are servicing our debt obligations, and we are receiving uninterrupted advances from our lender under the Term Loan Agreements and continue to pursue our strategic plan."
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
March 31, December 31,
2009 2008
------------ ------------
(unaudited)
CURRENT ASSETS:
Cash $ 356,467 $ 375,983
Accounts receivable, net of allowance for
doubtful accounts of $172,896 and $174,834
respectively 5,354,596 6,729,743
Prepaid expenses and current other assets 411,520 537,289
------------ ------------
Total Current Assets 6,122,583 7,643,015
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Property and Equipment - Net of accumulated
depreciation of $3,288,015 and $2,917,056
respectively 7,663,405 7,783,208
Restricted cash 1,200,019 1,199,784
Intangible assets, Net 823,976 864,781
Deferred financing Fees 465,280 513,412
Deposits 439,132 291,224
Goodwill 946,119 946,119
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TOTAL ASSETS $ 17,660,514 $ 19,241,543
============ ============
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES:
Accounts payable $ 4,194,477 $ 3,499,178
Accrued expenses 2,734,696 2,620,224
Accrued disposal costs 529,267 743,474
Payable to related party 827,842 706,868
Deferred Rent 44,185 41,202
Derivative Liabilities 1,574,078 -
Current portion of financing agreement 8,621,253 10,366,544
Current portion of long term obligations 792,514 794,278
Current portion of capital lease obligations 606,788 623,007
------------ ------------
Total Current Liabilities 19,925,100 19,394,775
LONG-TERM LIABILITIES:
Financing agreements, net of current portion $ - $ -
Long term obligations, net of current portion 526,767 535,689
Capital lease obligations, net of current
portion 1,620,710 1,751,854
Convertible Notes Payable, net of current
portion 467,651 489,605
------------ ------------
Total Long-Term Liabilities 2,615,128 2,777,148
STOCKHOLDERS’ DEFICIENCY
Common stock, $.001 par value, 1,000,000,000
shares authorized, 12,691,659 and 12,691,409
shares issued and outstanding, respectively 12,692 12,692
Additional paid in capital 52,210,663 53,585,035
Accumulated deficit (57,103,069) (56,528,107)
------------ ------------
Total Stockholders' Deficiency (4,879,714) (2,930,380)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY $ 17,660,514 $ 19,241,543
============ ============
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
--------------------------
March 31, March 31,
2009 2008
------------ ------------
REVENUES $ 8,201,870 $ 6,951,653
COST OF REVENUES 7,196,715 5,645,344
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GROSS PROFIT 1,005,155 1,306,309
OPERATING EXPENSES 2,103,598 1,849,614
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OPERATING LOSS (1,098,443) (543,305)
OTHER INCOME (EXPENSE):
Interest income 467 7,017
Interest and financing costs (994,188) (816,608)
Gain on Derivative Financial Instruments 552,512 -
Other non-operating income 8,417 7,663
------------ ------------
Net Loss (1,531,235) (1,345,233)
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Net Loss applicable to common share holders $ (1,531,235) $ (1,345,233)
============ ============
NET LOSS PER COMMON SHARE, BASIC AND DILUTED $ (0.12) $ (0.11)
============ ============
Weighted average shares of common stock
outstanding, basic and diluted 12,691,420 12,473,885
============ ============
For the periods presented, "Adjusted EBITDA" consists of net loss plus depreciation and amortization, net interest expense, non-recurring employment charges, stock based compensation 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
March 31,
2009 2008
NET LOSS $ (1,531,235) $ (1,345,233)
Depreciation and amortization 411,764 226,795
Interest expense, net 994,188 816,608
Gain on derivative financial instruments (552,512) -
Stock based compensation charges 299,477 216,716
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ADJUSTED EBITDA $ (378,318) $ (85,114)
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