NUCO Nuco2 (MM)

Operating Cash Flow and Free Cash Improve STUART, Fla., May 1 /PRNewswire-FirstCall/ -- NuCO2 Inc. (NASDAQ:NUCO), the largest supplier in the U.S. of bulk CO2 systems and services for carbonating fountain beverages, today reported operating results for the quarter ended March 31, 2007 -- the first quarter since the Company began transitioning to its new strategic growth plan focused on improving returns and cash generation. The Company noted that important progress is being achieved, particularly in the areas of customer quality, asset utilization, operating productivity and cost reductions. -- Gross installations during the quarter totaled approximately 2,100 as compared to approximately 2,600 in the immediately preceding second quarter, primarily reflecting the Company's more selective criteria for new business. -- Capital expenditures for the quarter totaled $3.5 million, as compared to $7.5 million in the immediately preceding quarter, the direct result of improved asset utilization and reduced tank purchases. -- Accounts receivable at quarter end stood at $12.0 million, an improvement of approximately $1.5 million during the quarter, the result of tighter credit practices and improved collection procedures. -- Free cash flow for the quarter, which the Company defines as cash flow from operations less capex, increased to $5.9 million from $1.7 million in the immediately preceding second quarter. -- In line with its previously announced $50 million share repurchase program, the Company during the quarter repurchased 513,318 common shares at a cost of approximately $12.5 million which was funded from free cash generated during the quarter and the balance from borrowings under the Company's revolving credit facility. "The quarter fully met our expectations in successful operational conversion to the new plan and we expect the full benefits of our cash generation and higher investment return model to be realized in the months ahead," said Michael E. DeDomenico, Chairman and CEO. "The third quarter's financial results reflect costs associated with transitioning to the new plan." -- Total revenues for the quarter amounted to $31.9 million, compared with $29.2 million in the corresponding year-ago period, an increase of 9.3%, and for the nine months ended March 31, 2007 advanced 12.1%, to $96.2 million from $85.8 million in the prior year period. -- EBITDA (earnings before interest, taxes, depreciation and amortization), which the Company regards as useful information as to its liquidity, excluding non-cash stock option expense, totaled $9.0 million in the third quarter, essentially even with the preceding December 2006 quarter. -- Operating cash flow for the quarter totaled $9.5 million, as compared to $7.1 million in the prior year period, an increase of 34%. -- Operating income for the quarter amounted to $2.6 million, compared with $4.2 million in the corresponding year-ago period, reflecting continuing expenses in connection with implementing the new strategic growth plan, including acceleration of tank repair and refurbishment expense that enabled the reduction in capital costs, as well as expenses associated with the reorganization of sales staff and marketing activities. Total transition costs incurred during the quarter were $1.5 million. -- Net income for the quarter amounted to $1.1 million, or $0.07 per diluted share, compared with $2.2 million, or $0.14 per diluted share a year ago, and for the nine months totaled $5.0 million, or $0.31 per diluted share, compared with $7.8 million, or $0.49 per diluted share, in the corresponding year-ago period. "Our new strategic plan that concentrates on growth in free cash and return on capital while expanding our customer base is proceeding as planned," added Mr. DeDomenico. "And we continue to invest in the business, including programs which are enhancing asset utilization, driving productivity and providing superior service to our customer base." About NuCO2 NuCO2 Inc. is the leading and only national provider of bulk CO2 products and services to the U.S. fountain beverage industry. With service locations within reach of virtually all of the fountain beverage users in the Continental U.S., NuCO2's experienced professionals comprise the largest network of sales and support specialists in the industry serving national restaurant chains, convenience stores, theme parks and sports and entertainment complexes, among others. NuCO2's revenues are largely derived from the installation, maintenance and rental of bulk CO2 systems and delivery of beverage grade CO2, which are increasingly replacing high pressure CO2, until now the traditional method for carbonating fountain beverages. The technology offers consistent quality, greater ease of operation, and heightened efficiency and safety utilizing permanently installed on-site cryogenic storage tanks. NuCO2 provides systems and services that allow its customers to spend more time serving their customers. Visit the Company's website athttp://www.nuco2.com/. Conference Call A conference call to report operating results for the fiscal 2007 third quarter will be held tomorrow, Wednesday, May 2, 2007, at 11:00 a.m. Eastern Time. It can be accessed over the Internet via NuCO2's website at http://www.nuco2.com/. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available on NuCO2's website shortly after the call. Statements contained in this press release concerning the Company's outlook, competitive position and other statements of management's beliefs, goals and expectations are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. With respect to such forward-looking statements, we claim protection under the Private Securities Litigation Reform Act of 1995. These risks and uncertainties include, but are not limited to, the ability of the Company to add new accounts, competition and future operating performance. The Company disclaims any obligation to update any forward-looking statement as a result of developments occurring after the date of this press release. NuCO2 Inc. CONDENSED BALANCE SHEETS (In thousands) ASSETS March 31, June 30, 2007 2006 Current assets: Cash and cash equivalents $240 $341 Trade accounts receivable, net of allowance for doubtful accounts of $2,481 and $2,538, respectively 12,002 12,955 Inventories 306 302 Prepaid insurance expense and deposits 4,134 5,846 Prepaid expenses and other current assets 1,178 1,465 Deferred tax assets - current portion 8,470 8,598 Total current assets 26,330 29,507 Property and equipment, net 123,593 119,603 Goodwill & other intangible assets, net 39,744 40,905 Deferred tax assets 6,150 8,807 Other 206 185 Total other assets 46,100 49,897 Total assets $196,023 $199,007 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $4,089 $6,883 Accrued expenses & other current liabilities 5,541 5,945 Total current liabilities 9,630 12,828 Long-term debt 36,300 35,450 Customer deposits 4,213 3,805 Total liabilities 50,143 52,083 Total shareholders' equity 145,880 146,924 Total liabilities & shareholders' equity $196,023 $199,007 NuCO2 Inc. STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended Nine Months Ended March 31, March 31, 2007 2006 2007 2006 Revenues: Product sales $20,995 $18,984 $63,865 $55,917 Equipment rentals 10,919 10,213 32,366 29,898 Total Revenues 31,914 29,197 96,231 85,815 Costs and expenses: Cost of products sold, excluding depreciation & amortization 13,728 12,725 41,648 36,786 Cost of equipment rentals, excluding depreciation & amortization 1,999 879 4,603 2,362 Selling, general and administrative expenses 7,952 6,341 22,343 17,596 Depreciation and amortization 5,158 4,667 14,900 13,527 Loss on asset disposal 522 396 1,506 1,601 29,359 25,008 85,000 71,872 Operating income 2,555 4,189 11,231 13,943 Gain on financial instrument - - - (177) Interest expense 509 555 1,635 1,463 Income before provision for income taxes 2,046 3,634 9,596 12,657 Provision for income tax 935 1,454 4,584 4,883 Net income $1,111 $2,180 $5,012 $7,774 Weighted average number of common and common equivalent shares outstanding Basic 15,680 15,462 15,711 15,378 Diluted 15,896 16,127 15,979 15,961 Net income per basic common share $0.07 $0.14 $0.32 $0.51 Net income per diluted common share $0.07 $0.14 $0.31 $0.49 RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES EBITDA AND EBITDA EXCLUDING STOCK OPTION EXPENSE Three Months Ended Nine Months Ended March 31, Dec 31, March 31, 2007 2006 2006 2007 2006 Net income $1,111 $2,180 $1,383 $5,012 $7,774 Interest expense 509 555 550 1,635 1,463 Depreciation & amortization 5,158 4,667 4,897 14,900 13,527 Gain on financial instrument - - - - (177) Provision for income taxes 935 1,454 1,009 4,584 4,883 EBITDA $7,713 $8,856 $7,839 $26,131 $27,470 Noncash option expense 1,301 1,407 1,245 3,245 2,492 EBITDA excluding stock option expense $9,014 $10,263 $9,084 $29,376 $29,962 Cash flows provided by (used in): Operating activities $9,495 $7,083 $9,105 $27,448 $24,266 Investing activities $(3,554) $(7,754) $(7,455) $(19,325) $(28,698) Financing activities $(5,888) $818 $(1,935) $(8,224) $3,794 Earnings before interest, taxes, depreciation and amortization ("EBITDA") is one of the principal financial measures by which the Company measures its financial performance. EBITDA is a widely accepted financial indicator used by many investors, lenders and analysts to analyze and compare companies on the basis of operating performance, and the Company believes that EBITDA provides useful information regarding the Company's ability to service its debt and other obligations. However, EBITDA does not represent cash flow from operations, nor has it been presented as a substitute to operating income or net income as indicators of the Company's operating performance. EBITDA excludes significant costs of doing business and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States of America. In addition, the Company's calculation of EBITDA may be different from the calculation used by its competitors, and therefore comparability may be affected. The Company's lender also uses EBITDA to assess the Company's compliance with debt covenants. These financial covenants are based on a measure that is not consistent with accounting principles generally accepted in the United States of America. Such measure is EBITDA (as defined) as modified by certain defined adjustments. DATASOURCE: NuCO2 Inc. CONTACT: Michael E. DeDomenico, Chairman and CEO, or Robert R. Galvin, CFO and Executive Vice President, +1-772-221-1754 Web site: http://www.nuco2.com/

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