STREICHER MOBILE FUELING, INC. (NASDAQ: FUEL and FUELW) (the
"Company"), a leading provider of petroleum product distribution
services, transportation logistics and emergency response services
to the trucking, construction, utility, energy, chemical,
manufacturing and government service industries today announced
results for the fourth quarter and fiscal year ended June 30, 2005.
FOURTH QUARTER RESULTS For the quarter, revenues and gallons
delivered increased 64% and 41%, respectively, to $43,527,000 on
20.1 million gallons of fuel delivered, compared to $26,539,000 on
14.3 million gallons of fuel delivered in the comparable period in
2004. Revenues and gallons increased in the quarter primarily due
to the growth of our business, the acquisition of Shank Services on
February 18, 2005 and higher prices for fuel. Gross profit for the
fourth quarter was $2,302,000, a $1,260,000 or 121% increase over
the prior quarter and a $876,000, or 61% increase, over the
comparable quarter in 2004, and is the highest quarterly gross
profit since the Company became a public company in 1996. In
addition, during the fourth quarter from April through June 2005,
gross profit increased an average of 14% each month. Gross profit
was positively impacted by a continuing focus on improving the
profitability of existing business, the mix of higher margin
services delivered to our customers and the recent Shank Services
acquisition. Operating income of $384,000 was a $1,214,000
improvement over the prior quarter, in which the Company
experienced expenses related to the Shank Services acquisition, and
22% better than the comparable period in 2004. Net margin of 13.1
cents per gallon was a 30% improvement over the prior quarter and
10% higher than the comparable quarter in 2004. The net margin
increase for the quarter was primarily due to the increase in gross
profit which, in part, relates to improved pricing from the
services delivered. EBITDA (earnings before interest, taxes,
depreciation and amortization- a non-GAAP financial measure) was
$766,000 a $768,000 improvement over the prior quarter and a
$131,000 or 21% improvement over the comparable quarter in 2004. In
addition, EBITDA continuously improved an average of 76% per month
during each of the months from April through June 2005. For the
quarter, the Company incurred a net loss of $225,000, or $0.03 per
basic and diluted share, vs. a net loss of $57,000, or $0.01 per
basic and diluted share, in the comparable quarter in 2004. The
higher net loss was due to increases in selling, general and
administrative expenses of $792,000; interest expense of $239,000;
and depreciation of $60,000 over the prior year quarter offset by
an $876,000 increase in gross profit. The $792,000 increase in the
selling, general and administrative costs over the comparable
quarter in the prior year resulted from: (1) the inclusion of
$453,000 of expenses related to the operation of Shank Services;
(2) $93,000 of additional costs relating to public company
reporting requirements; (3) $148,000 of higher credit card fees;
and (4) $123,000 of higher administrative payroll costs related to
personnel additions required to support our acquisition and
diversification strategy. The net loss incurred in the fourth
quarter ended June 2005 was a $1,124,000 improvement over the prior
quarter. In addition, the current quarter net loss reflected
month-to-month reductions in the net loss in April and May 2005 and
net income of $57,000 in the month of June 2005. FULL YEAR RESULTS
For the year ended June 30, 2005, revenues were $135,166,000 on
66.4 million gallons of fuel delivered, compared to $89,997,000 on
54.6 million gallons of fuel delivered in the prior year. The 50%
increase in revenues in the current year relates primarily to an
increase in volumes delivered and higher fuel prices as well as
revenues from the Shank Services acquisition. Because the Shank
Services acquisition was not effective until late February 2005,
the full extent of its continuing impact on the Company's total
revenues is not reflected in the current year revenues. Gross
profit of $6,588,000 for the current year increased by $2,290,000,
a 53% improvement compared to the prior year. Of the increase in
gross profit, $1,787,000 resulted from higher margins generated
from the services provided, including the emergency response
services related to the four hurricanes impacting parts of Florida
and the southeastern United States in 2004. Another $800,000 can be
attributed to the Shank Services acquisition in February of 2005.
The increase in gross profit was partially offset by $297,000 in
accelerated depreciation expense related to the write-down for
excess equipment abandoned after reevaluating fleet utilization
requirements following the Shank Services acquisition. Operating
income for the current year decreased by $218,000 compared to the
prior year primarily due to increased expenses, including: (1)
Shank Services operating expenses since the acquisition of
$703,000; (2) increased credit card fees of $367,000; (3) higher
accounting and legal fees associated with public company reporting
requirements of $220,000; (4) the write down of certain computer
software of $164,000; and (5) depreciation of $351,000. These
increased expenses were partially offset by an increase in net
margin of $2,627,000. When eliminating the $757,000 gain from the
extinguishment of debt in the prior year, the current year
operating income would have been $539,000 higher than the prior
year. Net margin per gallon improved to 12.1 cents per gallon from
9.9 cents per gallon, or a 22% increase compared to the prior year.
This increase resulted from the continued acceptance in the
marketplace of higher prices for the services provided by the
Company and the increase in the total gallons sold during the
current year which decreased the net operating expenses on a per
gallon basis. For the current year, EBITDA improved by $295,000 to
$2,278,000 from $1,983,000, or a 15% increase, compared to the
prior year. The prior year EBITDA also included the $757,000 gain
on the extinguishment of debt and, when excluding this gain, EBITDA
for the current year improved by $1,052,000 or 86%. The net loss
for the current year was $1,460,000, or $0.19 per basic and diluted
share, compared to a $698,000 net loss, or $0.10 per basic and
diluted share, in the prior year, including the $757,000 gain on
the extinguishment of debt, or an increase of $762,000. The current
year net loss included: (1) $297,000 in accelerated depreciation
for the abandonment write-down of 12 units of excess equipment
related to the reevaluation of the fleet routing schedules
following the Shank Services acquisition; (2) higher sales and
marketing expenses of $773,000, including a $367,000 increase in
credit card fees; (3) $125,000 in general and administrative
expenses and $40,000 in initial integration costs incurred in
connection with the Shank Services acquisition; (4) overall higher
public company reporting expenses of $220,000; (5) accelerated
depreciation and write-down of accounting and information software
of $164,000 related to the write-off of software costs for
replacing, redesigning and upgrading accounting and information
tools and acceleration of depreciation for the shortened useful
lives; and (6) interest expense of $1,911,000, of which $372,000
related to the issuance of the Company's January 2005 Notes, the
proceeds of which were partially used to acquire Shank Services.
These increases in expenses were partially offset by an increase in
net margin of $2,627,000. RICHARD E. GATHRIGHT, CHAIRMAN, PRESIDENT
AND CEO COMMENTED: "We are pleased with our recent acquisitions of
Shank Services and H & W and in the growth of our core
commercial mobile and bulk fueling business. We are also pleased
that the fundamentals of our business continue to improve. While
the Company incurred a net loss of $1.46 million for the year ended
June 30, 2005, $1.35 million of this loss was incurred during the
third quarter and principally related to costs incurred in
connection with our Shank Services acquisition in February 2005,
and our corporate infrastructure initiatives to support the
Company's growth and diversification strategy. As we grow our
operations there may be a difference in the timing of expenditures
and the bottom line financial performance resulting from these
investments in our future." "We experienced overall higher volumes
and margins along with material increases in our working capital
and improvements in our balance sheet. Cash and cash availability
grew to over $9.0 million from $3.8 million this past year. EBITDA
increased by over $1.0 million in this fiscal year when adjusted
for the $757,000 gain on extinguishment of debt posted last year.
We expect that our corporate infrastructure initiatives commenced
in the third quarter will contribute to improved internal
operational performance, as well as reduce the fixed cost of
conducting our business." "The Shank Services and H & W
acquisitions provide the Company with an opportunity to make an
immediate and meaningful penetration into petroleum lubricants
marketing and distribution as well as specialized heavy and
ultra-haul transportation services. H & W has established a
major presence in the branded lubricants business and has numerous
mature long-term business relationships with high volume customers
who rely on its specialized and reliable service. We intend to
emphasize the growth of our lubricants business in both Texas and
other national markets. We also plan to expand the Shank Services
heavy and ultra-heavy haul transportation operations through
internal growth and the acquisition of additional equipment and
customers from existing service providers who will benefit from
integrating their business operations with ours." "With the
addition of Shank Services and H & W, the combined Company
could generate annualized revenues in excess of $225 million on
volumes over 100 million gallons. We anticipate that our financial
performance will improve in the year ending June 30, 2006 with both
Shank Services and H & W contributing to growing volumes,
revenues, margins, cashflow and profitability. Coupled with the
steady expansion of our existing business and absent unanticipated
market or economic developments, the Company's combined operations
should begin to report net income." "Our strategic plan to build
the Company's business through selective acquisitions, as well as
expansion of existing service components, continues to progress.
Integral to this plan is a reduction of cash and non-cash interest
expenses burdening our bottom line financial performance. Reduction
of our debt will also help us to generate additional capacity for
funding future acquisitions with a more flexible balance of debt
and equity. Alternatives presently under consideration to eliminate
as much of the $1.9 million of interest expense incurred this past
year are a secondary offering of common stock, a conversion of a
portion of long term notes to common stock or a combination of
both. We will pursue these initiatives in the coming months, with
the actual timing of any transactions naturally dependent upon our
financial performance as well as general market conditions." "We
have confidence in energy products distribution and related
services business sectors and believe that the Company will play an
important role in its future growth. Our optimism is grounded in
the ability of our management team to achieve the objectives of our
success driven business plan and our understanding of the
opportunities before us." The financial impact of the expenses for
the Shank Services acquisition and the corporate infrastructure
initiatives on the Company's results for the year ended June 30,
2005 are summarized in the following table for clarification: -0-
*T Non-GAAP Measure Reconciliation - Shank Services Acquisition and
Corporate Infrastructure Expenses Amount Percentage ----------
---------- Loss, not including expenses directly related to the
Shank Services acquisition and write-off of accounting and
information software $ 462,000 31.7% Expenses related to the Shank
Services acquisition and integration: Accelerated depreciation
expense related to excess equipment abandonment for acquisition
re-routing integration 297,000 General and administrative expenses
125,000 Integration administrative costs 40,000 ------- Sub-total
462,000 Interest expense and amortization for January 2005 Notes
372,000 834,000 57.1% ------- Accelerated depreciation expense and
write-off of accounting and information software for changes in
technology infrastructure 164,000 11.2% ---------- ---------- Net
loss $1,460,000 100% ========== ========== Additional selected
information covering the Company's financial position and
performance is set forth in the following tables: CONDENSED
CONSOLIDATED BALANCE SHEET ------------------------------------
(All amounts in thousands of dollars) June 30, June 30, 2005 2004
-------- -------- ASSETS Current assets $ 19,392 $ 11,584 Property,
plant and equipment, net 9,555 7,602 Other assets, net 1,178 832
-------- -------- $ 30,125 $ 20,018 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities $ 13,531 $ 9,112 Long-term debt, net
9,756 5,558 Stockholders' equity 6,838 5,348 -------- -------- $
30,125 $ 20,108 WORKING CAPITAL $ 5,861 $ 2,472 SELECTED INCOME
STATEMENT AND FINANCIAL DATA (All amounts in thousands of dollars,
except share and volume data) Three-Month Periods Twelve-Month
Periods Ended Ended (Unaudited) (Unaudited) 6/30/2005 6/30/2004
6/30/2005 6/30/2004 --------- --------- --------- ---------- Total
revenues 43,527 26,539 135,166 89,997 Gross profit 2,302 1,426
6,588 4,298 Operating income (1) 384 314 443 661 Net loss (225)
(57) (1,460) (698) EBITDA (1, 2, 5) 766 635 2,278 1,983 Basic and
diluted net loss per share (0.03) (0.01) (0.19) (0.10) Basic and
diluted weighted average shares outstanding 8,859,375 7,300,548
7,857,434 7,261,372 Depreciation and amortization (3) 382 322 1,835
1,320 Gallons sold in thousands 20,077 14,261 66,427 54,594 Average
net margin per gallon (in cents) (4) 13.1 11.9 12.1 9.9
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(1) Includes in the twelve-month period ended 6/30/2004, a $757,000
gain on extinguishment of debt during the first quarter ended
9/30/2003 (2) Earnings before interest, taxes, depreciation and
amortization (3) Depreciation and amortization included in cost of
sales was $323,000, $277,000, $1,467,000 and $1,130,000 for the
respective periods (4) Net margin per gallon equals gross profit
plus cost of sales depreciation and amortization divided by number
of gallons sold (5) See non-GAAP measure EBITDA Reconciliation
Table as follows: Non-GAAP Measure Reconciliation - EBITDA
Reconciliation Table 3 Months Ended
--------------------------------------- Increase Increase ---------
--------- 6/30/2005 6/30/2004 (Decrease)(Decrease)
--------------------------------------- Net loss (225) (57) (168)
(295)% Add back: Interest, net 609 370 239 65 % Depreciation and
amortization: Cost of sales 323 277 46 17 % Sales, general, and
administrative 59 45 14 31 % ----------------------------- EBITDA
766 635 131 21 % 12 Months Ended
--------------------------------------- Increase Increase 6/30/2005
6/30/2004 (Decrease)(Decrease)
--------------------------------------- Net loss (1,460) (698)
(762) (109)% Add back: Interest, net 1,903 1,361 542 40 %
Depreciation and amortization: Cost of sales 1,467 1,130 337 30 %
Sales, general, and administrative 368 190 178 94 %
----------------------------- EBITDA 2,278 1,983 295 15 % QUARTERLY
SELECTED FINANCIAL DATA FOR FISCAL YEARS 2005 AND 2004
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(in thousands, except net margin per gallon and per share data)
June 30, 2005 YTD Selected Income Statement Data: Q1 Q2 Q3 Q4 2005
---------------------------------------------------------------------
Total revenue 28,909 29,647 33,083 43,527 135,166 Gross profit
1,800 1,444 1,042 2,302 6,588 Operating income (loss) 677 212 (830)
384 443 Net income (loss) 295 (181)(1,349) (225) (1,460)
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Per Share Data:
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Basic net income (loss) per share 0.04 (0.02) (0.17) (0.03) (0.19)
Diluted net income (loss) per share 0.04 (0.02) (0.17) (0.03)
(0.19) Basic weighted average common shares outstanding ('000)
7,332 7,436 7,813 8,859 7,857 Diluted weighted average common
shares outstanding ('000) 7,870 7,436 7,813 8,859 7,857
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Selected Balance Sheets Data:
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Cash and cash equivalents 3,213 4,463 3,759 4,108 4,108 Accounts
receivable, net 10,654 8,290 12,705 14,129 14,129 Bank line of
credit payable 6,278 5,316 3,707 4,801 4,801 Long-term debt
(including current portion) 5,639 5,726 11,057 11,141 11,141
Shareholders' equity 5,738 5,620 6,887 6,838 6,838 Total Assets
22,459 21,537 28,278 30,125 30,125
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Financial and Statistical Information:
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EBITDA (1) 992 522 (2) 766 2,278 Working Capital (Deficit) (4)
2,563 2,792 5,830 5,861 5,861 Net Margin (2) 2,071 1,706 1,653
2,625 8,055 Net Margin per gallon (in dollars) (3) 0.137 0.115
0.101 0.131 0.121 Total Gallons (000's) 15,153 14,795 16,402 20,077
66,427
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Non-GAAP Measure Reconciliation EBITDA Calculation:
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Net income/(loss) 295 (181)(1,349) (225) (1,460) Add back: Interest
expense, net of interest income 382 393 519 609 1,903 Depreciation
and amortization: Cost of sales 271 262 611 323 1,467 Sales,
general, and administrative 44 48 217 59 368
----------------------------------- EBITDA 992 522 (2) 766 2,278
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June 30, 2004 YTD Selected Income Statement Q1 (5) Q2 Q3 Q4 2004
Data:
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Total revenue 19,417 21,136 22,906 26,539 89,997 Gross profit 822
1,074 976 1,426 4,298 Operating income (loss) 487 (20) (120) 314
661 Net income (loss) 206 (382) (465) (57) (698)
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Per Share Data:
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Basic net income (loss) per share 0.03 (0.05) (0.06) (0.01) (0.10)
Diluted net income (loss) per share 0.03 (0.05) (0.06) (0.01)
(0.10) Basic weighted average common shares outstanding ('000)
7,248 7,248 7,248 7,301 7,261 Diluted weighted average common
shares outstanding ('000) 7,505 7,248 7,248 7,301 7,261
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Selected Balance Sheets Data:
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Cash and cash equivalents 2,086 2,037 2,454 2,708 2,708 Accounts
receivable, net 6,119 6,997 7,657 8,280 8,280 Bank line of credit
payable 3,541 4,412 4,855 4,919 4,919 Long-term debt (including
current portion) 5,344 5,424 5,481 5,558 5,558 Shareholders' equity
6,200 5,815 5,336 5,348 5,348 Total Assets 17,932 18,796 19,725
20,018 20,018
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Financial and Statistical Information:
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EBITDA (1) 824 313 211 635 1,983 Working Capital (Deficit) (4)
2,155 2,157 2,053 2,472 2,472 Net Margin (2) 1,107 1,359 1,259
1,703 5,428 Net Margin per gallon (in dollars) (3) 0.083 0.099
0.095 0.119 0.099 Total Gallons (000's) 13,273 13,746 13,314 14,261
54,594
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Non-GAAP Measure Reconciliation EBITDA Calculation:
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Net income/(loss) 206 (382) (465) (57) (698) Add back: Interest
expense, net of interest income 284 362 345 370 1,361 Depreciation
and amortization: Cost of sales 285 285 283 277 1,130 Sales,
general, and administrative 49 48 48 45 190
----------------------------------- EBITDA 824 313 211 635 1,983
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(1) EBITDA = Earnings before interest, taxes, depreciation and
amortization. (2) Net Margin = Gross profit plus cost of sales
depreciation (3) Net margin per gallon = Net Margin / Total Gallons
(4) Working Capital (deficit)= current assets - current liabilities
(5) June 30, 2004, first quarter operating profit, net income and
EBITDA includes a $757,000 gain on extinguishment of debt *T RECENT
DEVELOPMENTS Shank Services Acquisition and Related Financing On
February 18, 2005, the Company acquired substantially all of the
assets and related business of Shank C&E Investments, L.L.C.
("Shank Services") a Houston, Texas based provider of commercial
fueling and heavy and ultra-heavy haul transportation services for
$8.3 million, including a $1.9 million performance based
contingency and $0.6 million in acquisition costs. We acquired a
fleet of 24 commercial fueling vehicles, including specialized fuel
delivery, transport, oil and lubricant flatbed and tanker trucks
and related support equipment; over 600 portable fuel and lubricant
tanks with more than 500,000 gallons of capacity used by customers
to store products provided by Shank Services; 15 heavy and
ultra-heavy haul tractor-trailer units designed to transport heavy
construction equipment and other over-sized and/or over weight
loads weighing up to 250,000 pounds; a limited quantity of fuel and
lubricant inventories; office and computer equipment and related
specialized software technology; customer lists and agreements;
certain other intangible assets; and outstanding customer accounts
receivable. We did not assume any material Shank Services'
liabilities or debt. Shank Services employs approximately 80
personnel. We continue to operate the acquired assets and business
under the trade name Shank Services; and we are integrating the
existing Houston and Dallas/Fort Worth commercial mobile and bulk
fueling operations of the Company with those of Shank Services. Of
the $8.3 million purchase price for the acquired assets and related
business, $5.8 million was paid in cash, $1.9 million was paid with
a contingent two-year deferred payment promissory note, and $0.6
million was incurred in acquisition costs. The payment of the
promissory note is dependent on Shank Services meeting a specific
target performance objective. Some or all of the $1.9 million
principal amount and accrued interest due under the note will not
be payable if the performance target which covers an operating
period commencing prior to the acquisition date is not achieved. We
believe that Shank Services should provide significant cost
reductions as a result of more effective bulk fuel purchasing;
lower insurance premiums; improved delivery scheduling; decreased
equipment rentals; better utilization of operations personnel and
equipment; and reduced administrative expenses. These savings,
together with increasing sales volumes and improved margins from a
consolidation of our Texas based commercial fueling operations and
Shank Services concentrated marketing and sales program, are
expected to provide a positive impact on future cash flows and
earnings. On January 25, 2005, in anticipation of the February
closing of the Shank Services acquisition, we completed a $6.1
million private placement with a small group of institutions and
other accredited investors to fund the acquisition, to develop its
operations and for other general corporate purposes. We issued $6.1
million in 10%, five-year Senior Secured Notes (the "January 2005
Notes") that require six semi-annual principal payments commencing
January 24, 2007 and a 40% balloon payment on January 24, 2010. The
investors also received four year warrants to purchase 866,200
shares of our common stock at an exercise price of $1.60 per share,
including customary redemption and registration rights. In
addition, 140,300 warrants with substantially similar terms were
issued to Philadelphia Brokerage Corporation, the financing
placement agent. Results of Shank Services' operations have been
included in our consolidated financial statements since the
February 18, 2005 acquisition date. The January 2005 Notes are
secured by a first priority security interest in the tangible
assets acquired from Shank Services. In connection with the
issuance of the January 2005 Notes and related security agreement,
the Company entered into an indenture with a third party trustee
for payment of the January 2005 Notes. The Shank Services' assets
and related operations, when fully integrated with our present
Texas based business in Houston and Dallas/Fort Worth, will
materially extend the SMF Group's footprint in major Texas markets
and should provide a solid platform for further growth in the
Southwest. We expect to offer commercial mobile fueling services to
over 400 active Shank customers, particularly those in the
construction, agriculture, energy, manufacturing and marine
industries with large local and regional fleets. The acquisition
will also expand our business into related bulk commercial fueling
operations, generator services and the marketing and distribution
of lubricants and related petroleum products. The Shank Services
heavy and ultra-heavy haul transportation operations offer a new
and growing opportunity to provide this specialized logistical
service to numerous businesses that regularly transport heavy
construction, refinery and chemical equipment, and other unusually
large payloads, locally, regionally and nationally. It also
provides us the opportunity to offer our other products and
services to these new customers, including commercial mobile and
bulk fueling, fuel management and the sale and distribution of
lubricants. While the Shank Services operating, marketing, sales
and administrative functions have not yet been fully integrated
into the Company's pre-existing operations and our present
organizational structure, when this integration is complete, it
will create efficiencies and cost-reductions from cross-utilization
of personnel in multiple geographic operating locations as well as
from combining other commercial fueling functions and
responsibilities. Because Shank Services is experienced in
delivering emergency response fueling services in disaster relief
situations, the acquisition has also increased our capability to
provide this vital support, regionally and nationally. By
establishing a greater operating presence in the Texas market,
together with continued growth in the Southeast and Mid-Atlantic
states, the Shank Services acquisition should facilitate further
acquisitions by the Company of businesses in petroleum product
distribution and sales, out-sourced fuel management services and
transportation logistics. H & W Acquisition and Related
Financing On October 1, 2005, the Company acquired all of the
outstanding shares of Houston-based H & W Petroleum Company,
Inc. ("H & W") which is engaged in the marketing and
distribution of lubricants, fuels and other petroleum products in
Texas. Immediately prior to the acquisition by the Company, H &
W purchased the operating assets and limited inventory of Harkrider
Distributing Company, Incorporated ("Harkrider"), also based in
Houston, which is related to H & W through some common
shareholder ownership and is engaged in the marketing and
distribution of dry cleaning solvents, chemicals and petroleum
products. In addition to providing service to the greater Houston
metropolitan area, H & W and Harkrider also service the
Dallas/Fort Worth, Freeport, Longview, Lufkin, San Antonio and Waco
markets. H&W provides lubricants and fueling services to over
3,800 customers, with its primary emphasis on those companies
requiring large volumes of specialty industrial oils, motor and
gear lubricants and greases subject to rigid technical and
performance specifications. Harkrider has distributed solvents and
specialty petroleum products to dry cleaners and industrial
customers in the Houston, Beaumont and San Antonio areas since
1946. Today, it is one of the largest dry cleaning solvents
distributors in those Texas markets with over 800 customers.
Together, H&W and Harkrider operate a combined fleet of 52
specialized lubricant, fuel and chemical delivery "bobtail" trucks;
oil and lubricant flatbed and box trucks; tanker transports; and
related support equipment, including approximately 200 storage
tanks with over 1,200,000 gallons of capacity. The H & W and
Harkrider operations currently employ approximately 75 personnel.
The purchase price of approximately $6.3 million, which was based
on a multiple of 4.5 times a projected annualized EBITDA (earnings
before interest, taxes, depreciation and amortization - a non-GAAP
financial measure) of approximately $1.4 million, was adjusted to
$5.964 million at closing by working capital and other closing
adjustments. The purchase price was paid with a combination of
cash, the assumption of specified liabilities and the issuance of
two year 10% promissory notes totaling $2.463 million, which are
subject to an earn out provision based on the performance of H
& W and Harkrider after the acquisition. On September 1, 2005,
in contemplation of the then pending H & W acquisition , the
Company issued $3.0 million in five-year 10% redeemable promissory
notes (the "September 2005 Notes") to a small group of institutions
and other accredited lenders. Installment payments of six (6) equal
semi-annual principal payments of ten percent (10%) of the
principal amount of the September 2005 Notes will commence on
August 31, 2007 and continue on February 28 and August 31 of each
year thereafter, with the remaining balance of forty percent (40%),
a $1.2 million balloon payment, due at maturity on August 31, 2010.
The amounts due under the September 2005 Notes will become due and
payable immediately upon the occurrence of customary events of
default. The September 2005 Notes are redeemable by the Company, in
whole or in part, by payment of a percentage of the principal
amount of the note, together with accrued but unpaid interest, if
any, as follows: September 1, 2005 - August 31, 2006, 102%;
September 1, 2006 - August 31, 2007, 101%; and September 1, 2007 -
August 31, 2010, 100%. A portion of the proceeds of the September
2005 Notes were used by the Company to fund the approximately $1.5
million of the H & W Acquisition purchase price that was paid
in cash at closing. The balance of the proceeds will be used to
develop the combined operations of H & W and Harkrider,
including the integration of the lubricant distribution operations
of Shank Services and H & W, and for other general working
capital purposes. In connection with the issuance of the September
2005 Notes and related security agreement, the Company entered into
an indenture with a third party trustee for the payment of the
September 2005 Notes. The September 2005 Notes are secured by a
first priority security interest in the vehicles, equipment and
other physical assets, other than inventory, of H & W. The H
& W inventory is subject to the first priority security
interest on the Company's assets held by its primary lender. In
connection with the September 2005 Notes, the Company also issued
360,000 four-year warrants to purchase shares of common stock at
$2.28 per share to the purchasers of the Notes and to the Company's
placement agent for the financing transaction. Amendment of Credit
Facility Concurrently with the October 1, 2005 of H & W, in
order to finance the acquired accounts receivable and inventory,
the Company and its primary lender amended the credit facility.
Among other changes, the amendment (1) added H & W as a
borrower; (2) increased the facility to $20 million; (3) provided
financing for the newly acquired and ongoing accounts receivable
and inventory resulting from the H & W Acquisition; (4)
extended the term of the original loan and security agreement to
September 26, 2007; (5) reduced the interest rate to prime plus
0.75% per annum; (6) replaced the effective net worth covenant with
a maximum capital expenditures covenant; and (7) lowered the fixed
charge coverage ratio covenant to 1.0 to 1.0 and made such covenant
effective only when there is less than $3 million available on the
facility. CONFERENCE CALL Management will host a conference call on
Tuesday, October 11, 2005 at 10:00 A.M. ET, to further discuss the
results of the Company's fourth quarter and fiscal year ended June
30, 2005. The conference call will be available via teleconference
by dialing 866.202.3048 (domestic) or 617.213.8843 (international),
using Pass Code 74430557. There will also be a web-cast over the
Internet at www.mobilefueling.com. An audio digital replay of the
call will be available from October 11, 2005, at 12:00 P.M. ET
until Midnight ET on October 18, 2005, by dialing 888.286.8010
(domestic) or 617.801.6888 (international), using Pass Code
73630634. A web archive will be available for 30 days at
www.mobilefueling.com. ABOUT STREICHER MOBILE FUELING, INC. The
Company provides commercial mobile and bulk fueling; the packaging,
distribution and sale of lubricants; integrated out-sourced fuel
management; transportation logistics and emergency response
services. Our fleet of custom specialized tank wagons,
tractor-trailer transports, box trucks and customized flatbed
vehicles deliver diesel fuel and gasoline to customers' locations
on a regularly scheduled or as needed basis, refueling vehicles and
equipment, re-supplying fixed-site and temporary bulk storage
tanks, and emergency power generation systems; and distribute a
wide variety of specialized petroleum products, lubricants and
chemicals to refineries, manufacturers and other industrial
customers. In addition, our fleet of special duty tractor-trailer
units provides heavy and ultra-heavy haul transportation services
over short and long distances to customers requiring the movement
of over-sized or over-weight equipment and manufactured products.
The Company conducts operations from 27 locations serving
metropolitan markets in California, Florida, Georgia, Maryland,
North Carolina, Pennsylvania, Tennessee, Texas, Virginia and
Washington, D.C. More information on the Company is available at
www.mobilefueling.com. FORWARD LOOKING STATEMENTS This press
release includes "forward-looking statements" within the meaning of
the safe harbor provision of the Private Securities Litigation
Reform Act of 1995. For example, predictions or statements of
belief or expectation concerning the future performance of the
acquired businesses, the planned diversification or expansion plans
of the Company, the anticipated cost savings or operating
efficiencies from integration of the acquired businesses and the
potential for further growth of the Company, by acquisition or
otherwise, are all "forward looking statements" which should not be
relied upon. Such forward-looking statements are based on the
current beliefs of the Company and its management based on
information known to them at this time. Because these statements
depend on various assumptions as to future events, they should not
be relied on by shareholders or other persons in evaluating the
Company. Although management believes that the assumptions
reflected in such forward-looking statements are reasonable, actual
results could differ materially from those projected. There are
numerous risks and uncertainties which could cause actual results
to differ from those anticipated by the Company, including those
cited in the "Certain Factors Affecting Future Operating Results"
section of the Company's Form 10-K for the year ended June 30,
2005.
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