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Article Excerpt
Third Quarter 2008 Adjusted Pro Forma Financial Highlights vs. Third Quarter 2007
- Revenues increased by 13% to $31.7 million.
- Gross profit declined by 27% to $4.7 million.
- $16.9 million Goodwill Impairment Charge.
- EBITDA at ($18.1) million inclusive of $16.9 million Goodwill Impairment Charge.
- Diluted EPS of ($3.01) inclusive of $16.9 million Goodwill Impairment Charge compared to $0.33 in 2007.
Business Highlights
- ISI Detention Received over $22 million in New Contracts or Letters of Intent during October 2008.
- Closes $25 million Senior Secured Debt Financing in October 2008.
SAN ANTONIO, Nov. 14 /PRNewswire-FirstCall/ -- Argyle Security, Inc. (OTC Bulletin Board: ARGL), ("Argyle") a service and solutions provider in the physical electronic security industry, today announced financial results for the three and nine months ended September 30, 2008.
Revenues and gross profit for the third quarter of 2008 were $31.7 million and $3.5 million, respectively, compared to $17.1 million of revenues and $3.7 million of gross profit in the third quarter of 2007, which reflected two months of operations. The operating loss was ($20.3) million for the three months ended September 30, 2008 (including the $16.9 million non-cash goodwill impairment charge), compared to an operating income of $46,000 for the three months ended September 30, 2007. Argyle's net loss for the three months ended September 30, 2008 was ($18.4) million, or ($3.19) per share (basic and diluted) (including the $16.9 million non-cash goodwill impairment charge), compared to a net loss of ($116,000), or ($0.02) per share (basic and diluted), in the third quarter of 2007.
Revenues and gross profit for the nine months ended September 30, 2008 were $105.8 million and $16.0 million, respectively, compared to $17.1 million of revenues and $3.7 million of gross profit in the third quarter of 2007, which reflected two months of operations. The operating loss was ($21.4) million for the nine months ended September 30, 2008, compared to an operating loss of ($0.5) million for the nine months ended September 30, 2007. Argyle's net loss for the nine months ended September 30, 2008 was ($20.1) million, or ($3.51) per share (basic and diluted), compared to a net loss of ($15,000), or ($0.00) per share, for the nine months ended September 30, 2007.
Adjusted Pro Forma Results
For the three months ended September 30, 2008, Argyle's adjusted pro forma revenues increased by 13%, to $31.7 million, compared to $28.0 million for the same period last year. Adjusted pro forma revenues in Argyle Corrections Group rose by 14.3% to $22.6 million, driven largely by favorable industry trends, retention and expansion of business with existing customers, as well as new customers. Adjusted pro forma revenues in Argyle Commercial Security increased by 10.2% to $9.1 million. Argyle Commercial Security has continued to make investments in its sales force, which are expected to drive both contract and service revenues.
Adjusted pro forma gross profit decreased by 27% to $4.7 million, or 15% of sales, compared to $6.5 million, or 23% of sales, in the comparable period of 2007. The gross margin percentage in the third quarter of 2008 was adversely impacted by higher than expected project cost overruns and an increase in the price of raw materials within the Corrections segment. Commercial margins were unaffected and were up slightly quarter over quarter.
Third-quarter gross margins in Argyle Corrections were negatively impacted by significant cost overruns on several very large correctional jobs within its detention contracting and security electronics businesses, as well as material cost increases at its prison furniture business. The cost overruns are primarily attributable to the Company's failure to adequately scale its project management infrastructure and management, as necessary, due to the significant revenue growth in 2008. The additional costs were primarily incurred because of our need to provide unanticipated additional training to a large number of new employees, as well as training to expand the skills of our existing employees, and the unexpected...
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