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American TonerServ: American TonerServ Reports Record Revenue and EBITDA for Second Quarter

^{Published on 2009-08-13 05:07:24, Last Modified on 2009-08-13 05:07:37 - Market Wire}
 

SANTA ROSA, CA--(Marketwire - August 13, 2009) - American TonerServ Corp. (OTCBB: [ ASVP ]) ("ATS"), a strategic consolidator in the highly fragmented $6.0 billion printer supplies and services industry, today announced continued strong growth momentum for the second quarter ended June 30, 2009.

"We are very pleased to report record numbers this quarter, with revenues growing more than 166% over last year's second quarter," said Chuck Mache, who was named chief executive officer in February 2009. "As evidence of the company's momentum, second quarter revenues were 15% above those of the preceding first quarter."

Revenue for the three months ended June 30, 2009, advanced to $7.4 million from $2.8 million for the corresponding quarter a year ago and from $6.4 million for the preceding 2009 first quarter. The company's net loss for the 2009 second quarter decreased significantly to $568,452, or $.01 per share, from a net loss of $1,254,809, or $.01 per share, for the same quarter the previous year.

American TonerServ achieved earnings before interest, taxes, depreciation and amortization (EBITDA) of $87,984 for the 2009 second quarter compared with a loss of $803,893 in the second quarter of 2008. Adjusted EBITDA (EBITDA less stock-based compensation expense, other non-cash items and other one-time expenses) totaled $270,193 for the 2009 second quarter, versus a loss of $338,693 last year.

"The strong increase in revenues and EBITDA for the second quarter is attributable to the execution of our three 2009 strategic initiatives: our Sales Partner Program; a significant hospital contract; and continued execution of our acquisition strategy," Mache said. "Continuing to achieve positive EBITDA confirms that our formula is working, as we move forward in growing the company and moving closer to our goal of becoming a formidable national consolidator in our sector. Selective acquisitions will play a role in our strategic growth initiatives, as we also concentrate on organically growing our existing operations," Mache added.

Presentation of Non-GAAP Information

This press release contains non-GAAP financial measures, including EBITDA (earnings before interest, income taxes, depreciation and amortization) and Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization and other non-cash related expenditures). The Company believes these non-GAAP financial measures are useful to investors in evaluating its results. These measures are not a measurement of financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating, investing or financing activities as a measure of liquidity. In addition, because EBITDA and Adjusted EBITDA may not be calculated identically by all companies, this presentation may not be comparable to other similarly titled measures of other companies. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP equivalent, see the Non-GAAP Reconciliation - EBITDA and Adjusted EBITDA, along with related footnotes, below.

About American TonerServ

American TonerServ Corp., a leading marketer of compatible toner cartridges, is building a nationwide organization to efficiently serve the printing needs of small- and medium-sized businesses by consolidating best-in-class independent operators in the more than $6.0 billion recycled printer cartridge and printer services industry, offering top-quality, environmentally-friendly products and local service teams. Please see [ www.AmericanTonerServ.com ] for more information.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth above may be forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors such as the level of business and consumer spending, the amount of sales of the Company's products, the competitive environment within the industry, the ability of the Company to continue to expand its operations, the level of costs incurred in connection with the Company's expansion efforts, economic conditions in the industry and the financial strength of the Company's customers and suppliers. The Company does not undertake any obligation to update such forward-looking statements. Investors are also directed to consider all other risks and uncertainties.

 AMERICAN TONERSERV CORP. AND SUBSIDIARIES RESULTS OF OPERATIONS Three months ended Six months ended June 30, June 30, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- Revenues: Toner and supplies $ 6,352,395 $ 2,284,076 $11,717,620 $ 4,538,965 Service 1,003,981 478,471 2,014,871 913,261 ----------- ----------- ----------- ----------- Total revenues 7,356,376 2,762,547 13,732,491 5,452,226 ----------- ----------- ----------- ----------- Cost of sales: Toner 4,644,588 1,424,389 8,814,812 2,877,603 Service 477,971 275,193 702,457 616,569 ----------- ----------- ----------- ----------- Total cost of sales 5,122,559 1,699,582 9,517,269 3,494,172 Gross profit 2,233,817 1,062,965 4,215,222 1,958,054 Operating expenses: Salaries and wages 872,044 682,724 1,749,613 1,356,660 Professional fees and services 494,652 146,244 783,309 731,126 Sales and marketing 610,748 286,986 1,100,500 480,207 General and administrative 500,250 407,270 987,530 742,511 Amortization of intangible assets 181,310 154,229 353,491 306,206 ----------- ----------- ----------- ----------- Total operating expenses 2,659,004 1,677,453 4,974,443 3,616,710 ----------- ----------- ----------- ----------- Loss from operations (425,187) (614,488) (759,221) (1,658,656) Other (expense) income: Change in fair value of warrant liability 35,603 (1,053) 452,669 1,874 Gain on claims settlement - - - 66 Fair value of convertible debt 250,000 (375,000) 250,000 (362,500) Interest expense, net (430,019) (264,268) (793,419) (432,709) Other income 1,151 - 3,905 - ----------- ----------- ----------- ----------- Net loss $ (568,452) $(1,254,809) $ (846,066) $(2,451,925) =========== =========== =========== =========== Net loss per share: Basic and diluted $ (0.01) $ (0.02) $ (0.01) $ (0.04) =========== =========== =========== =========== Weighted average number of shares outstanding: Basic and diluted 78,154,691 64,542,512 77,873,619 62,233,698 =========== =========== =========== =========== BALANCE SHEET DATA June 30, 2009 December 31, (unaudited) 2008 ------------ ----------- ASSETS Current assets Cash and cash equivalents $ 25,836 $ 4,033 Accounts receivable, net 3,645,204 2,753,445 Inventory 1,156,766 774,747 Prepaid expenses and other current assets 178,816 75,716 Deferred compensation 27,382 73,275 ------------ ----------- Total current assets 5,034,004 3,681,216 ------------ ----------- Intangible assets, net 3,941,769 4,058,036 Goodwill 7,127,999 6,935,468 Property and equipment, net 598,892 644,477 Other assets 76,540 80,044 ----------- ----------- Total assets $16,779,204 $15,399,241 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Cash overdraft $ 46,384 $ 39,381 Accounts payable and accrued expenses 4,190,938 3,030,599 Shareholder advances 118,595 173,595 Revolving line of credit 1,668,179 1,346,722 Notes payable - current portion (net of unamortized discount of $121,451 and $194,937 at June 30, 2009 and December 31, 2008) 1,523,754 2,080,865 Convertible notes payable, current portion (net of unamortized discount of $140,461 and $147,566 at June 30, 2009 and December 31, 2008) 856,092 1,782,712 Convertible notes payable, related parties - current portion(net of unamortized discount of $0 and $1,466 at June 30, 2009 and December 31, 2008) - 123,534 Note payable, related parties 200,000 - Deferred revenue 276,079 77,245 ----------- ----------- Total current liabilities 8,880,021 8,654,653 ----------- ----------- Long-term liabilities Notes payable (net of unamortized discount of $218,789 and $244,016 at June 30, 2009 and December 31, 2008) 1,533,210 929,842 Convertible notes payable (net of unamortized discount of $549,371 and $669,042 at June 30, 2009 and December 31, 2008) 2,906,836 2,926,524 BALANCE SHEET DATA (continued) Warrant liabilities 193,329 639,193 ----------- ----------- Total long-term liabilities 4,633,375 4,495,559 ----------- ----------- Total liabilities 13,513,396 13,150,212 ----------- ----------- Commitments and contingencies Stockholders' equity: Preferred stock 4,700,000 and 0 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively 4,700 - Common stock 78,345,996 and 77,045,995 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively 78,346 77,046 Additional paid-in capital 26,248,664 24,391,819 Accumulated deficit (23,065,902) (22,219,836) ------------ ------------ Total stockholders' equity 3,265,808 2,249,029 ------------ ------------ Total liabilities and stockholders' equity $ 16,779,204 $ 15,399,241 ============ ============ The following is a reconciliation of cash flows provided by operating activities to EBIT, EBITDA, and net loss: Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- Cash flows from operating activities $ 69,489 $ (690,878) $ (266,891) $(1,326,103) Changes in operating assets and liabilities (73,064) 202,514 16,831 304,950 Non-cash (expenses) income, including depreciation and amortization (554,251) (766,445) (596,006) (1,430,772) Interest expense, net 430,019 264,268 793,419 432,709 ----------- ----------- ----------- ----------- EBIT (138,433) (990,541) (52,647) (2,019,216) Depreciation and amortization 226,417 186,648 444,568 370,823 ----------- ----------- ----------- ----------- EBITDA 87,984 (803,893) 391,921 (1,648,393) Interest expense (430,019) (264,268) (793,419) (432,709) Depreciation and amortization (226,417) (186,648) (444,568) (370,823) ----------- ----------- ----------- ----------- Net loss $ (568,452) $(1,254,809) $ (846,066) $(2,451,925) =========== =========== =========== =========== The following is a reconciliation of net loss to EBITDA: Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- Net loss $ (568,452) $(1,254,809) $ (846,066) $(2,451,925) Interest expense, net 430,019 264,268 793,419 432,709 ----------- ----------- ----------- ----------- EBIT (138,433) (990,541) (52,647) (2,019,216) Depreciation and amortization 226,417 186,648 444,568 370,823 ----------- ----------- ----------- ----------- EBITDA $ 87,984 $ (803,893) $ 391,921 $(1,648,393) =========== =========== =========== =========== The following is a reconciliation of net EBITDA to Adjusted EBITDA; which excludes all non-cash items; one time expenditures and stock related compensation: Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- EBITDA $ 87,984 $ (803,893) $ 391,921 $(1,648,393) Stock related compensation 434,785 88,926 547,238 493,909 Fair value of conversion feature of convertible debt (250,000) 375,000 (250,000) 362,500 Fair value of warrant liabilities (35,603) 1,053 (452,669) (1,874) Bad debt allowance for entities 2,500 3,856 2,500 36,356 Other costs 31,247 - 45,426 - ----------- ----------- ----------- ----------- ADJUSTED EBITDA $ 270,913 $ (338,693) $ 284,416 $ (761,137) =========== =========== =========== ===========