APG Dual Fuel Gaining International and Domestic Traction; Favorable New EPA Compliance Options Announced for Alternative Fuel Engine Conversions; GreenTech Products Prepares for Seasonally Stronger Second Half
CARLISLE, IA--(Marketwire - May 18, 2010) - GreenMan Technologies, Inc. (
Lyle Jensen, GreenMan's President and Chief Executive Officer stated, "During the quarter, our American Power Group ('APG') subsidiary invested significantly in product development and marketing to debut our APG V-3000 Vehicular Diesel Dual Fuel Upgrade System in late March. We have received strong interest both internationally and domestically on the V-3000 as a differentiating technology which supports both the compressed natural gas ('CNG') and liquid natural gas ('LNG') alternative fuel diesel engine aftermarket. From APG's vehicular design footprint, we have also launched a family of revolutionary stationary dual fuel systems to address the Wellhead Gas/Oil Patch diesel generator industry as well as the smaller gensets (below 750KW) which we can now competitively address.
"Our bid pipeline has grown significantly from $11 million to near $60 million and we expect to see measurable conversion of the bid pipeline to backlog and reported revenue in the ensuing quarters. On the international front, our sales and marketing efforts have been vigorous and we are in various stages of putting test vehicles on the road and entering agreements with in-country dealers and customers. Overall, I remain very enthusiastic about our ability to convert opportunities in the pipeline and drive revenue given the economic and environmental benefits of our technology.
"On May 5, 2010, the U.S. Environmental Protection Agency ('EPA') released proposed new compliance options for alternative fuel engine conversions that would simplify and streamline the compliance process for manufacturers of clean alternative fuel conversions related to vehicle and engine requirements. The EPA has established 'Intermediate Age' and 'Outside Useful Life' determinations by which older engines (APG's primary market) will be evaluated for compliance. We are working with the EPA to become one of the first aftermarket conversion companies to comply with the new standards so we can begin fulfilling the robust domestic demand for our system."
Mr. Jensen added, "Our Green Tech Products subsidiary is beginning to see strengthening in its business as the economy improves, as 'green and recycled' grants are made available and as we move into the seasonally stronger second half of the year. Furthermore, our recently announced relationship with Disability Access Consultants, Inc. is expected to open new revenue markets and opportunities for us in the coming months."
Please join us today, May 18, 2010 at 11:00 AM EST for a conference call in which we will discuss the results for the quarter ended March 31, 2010. To participate, please call 1-888-713-3587 and ask for the GreenMan call using pass code 3284185. A replay of the conference call can be accessed until 11:50 PM on May 31, 2010 by calling 1-888-203-1112 and entering pass code 3284185.
Our business changed substantially in November 2008, when we sold substantially all of the assets of our tire recycling operations. Since we operated our tire recycling assets during only a portion of the fiscal year ended September 30, 2009 we have included relevant information on this business segment but have classified its assets, liabilities and results of operations as discontinued operations for all periods presented in the accompanying consolidated financial statements. On July 27, 2009 we purchased substantially all the dual fuel conversion operating assets of American Power Group (excluding its dual fuel patent). The results described below include the operations of American Power Group since July 27, 2009.
Results of Operations
Three Months ended March 31, 2010 Compared to the Three Months ended March 31, 2009
Net sales from continuing operations for the three months ended March 31, 2010 increased $150,000 or 154 percent to $248,000 as compared to net sales of $98,000 for the three months ended March 31, 2009. The increase is primarily attributable to higher playground tile and equipment sales in the Midwestern region of the United States. A majority of our revenue is derived from specific one-time installations with minimal follow-on revenue from the installed project, thus making quarterly revenue comparison particularly difficult. We anticipate increased revenue during our seasonally stronger second half of the fiscal year due to warmer weather conditions and school vacation closures, which allow for easier installation conditions. In addition, our new American Power Group dual fuel subsidiary recorded revenue of $96,000 during the three months ended March 31, 2010.
During the three months ended March 31, 2010 we incurred a negative gross profit of $83,000, primarily due to the inclusion of $123,000 of unabsorbed costs in excess of revenues associated with our dual fuel subsidiary. Due to higher product revenue and increased production during the quarter, our recycled rubber products operation had a gross profit of $40,000 or 26 percent of net sales. During the three months ended March 31, 2009, we incurred a negative gross profit of $111,000, primarily due to management's decision to produce a minimal amount of playground tiles due to anticipated seasonally slower tile sales and adequate existing product inventory levels. As a result, we were unable to fully absorb all manufacturing overhead costs which contributed to the negative gross profit during the quarter.
Selling, general and administrative expenses for the three months ended March 31, 2010 increased $611,000 to $1,336,000 as compared to $725,000 for the three months ended March 31, 2009. The increase was primarily attributable to the inclusion of $549,000 in costs associated with increased sales and marketing initiatives for our American Power Group subsidiary as well as increased professional expenses relating to business development initiatives which offset decreased performance based incentives.
Expenses for internal research and development projects relating to the introduction of new dual fuel products, enhancements made to the current family of duel fuel products, and research and development overhead was $213,000 for the three months ended March 31, 2010.
As a result of the foregoing, our loss from continuing operations after income taxes increased $905,000 to $1,721,000 for the three months ended March 31, 2010 as compared to $816,000 for the three months ended March 31, 2009.
During the quarter ended March 31, 2009, we recognized a loss from Georgia discontinued operations of $100,000 associated with settlement agreement with a former Georgia vendor.
Our net loss for the three months ended March 31, 2010 was $1,721,000 or $.05 per basic share as compared to a net loss of $916,000 or $.03 per basic share for the three months ended March 31, 2009.
Six Months ended March 31, 2010 Compared to the Six Months ended March 31, 2009
Net sales from continuing operations for the six months ended March 31, 2010 decreased $72,000 or 9 percent to $688,000 as compared to net sales of $760,000 for the six months ended March 31, 2009. The decrease is attributable to lower playground tile and equipment sales in the Midwestern region of the United States. A majority of our revenue is derived from specific one-time installations with minimal follow on revenue from the installed project, thus making quarterly revenue comparison particularly difficult. We anticipate increased revenue during our seasonally stronger second half of the fiscal year due to warmer weather conditions and school vacation closures which allow for easier installation conditions. In addition, our new American Power Group dual fuel subsidiary recorded $161,000 of revenue during the six months ended March 31, 2010.
During the six months ended March 31, 2010 we incurred a negative gross profit of $338,000 primarily due to the inclusion of $446,000 of unabsorbed costs in excess of revenues associated with our dual fuel subsidiary. Due to higher product revenue and increased production during the quarter, our recycled rubber products operation had a gross profit of $109,000 or 21 percent of net sales. During the six months ended March 31, 2009, we had a gross profit of $57,000 or 8 percent of net revenue. The gross profit was low due to management's decision to produce a minimal amount of playground tiles during the first half of fiscal 2009 based on seasonally slower tile sales and adequate existing product inventory levels. As a result, we unable to fully absorb all manufacturing overhead costs which contributed to the lower gross profit during the quarter.
Selling, general and administrative expenses for the six months ended March 31, 2010 increased $626,000 to $2,528,000 as compared to $1,902,000 for the six months ended March 31, 2009. The increase was primarily attributable to the inclusion of $909,000 in costs associated with increased sales and marketing initiatives for our American Power Group subsidiary as well as increased professional expenses relating to business development initiatives, which offset decreased performance based incentives.
Expenses for internal research and development projects relating to the introduction of new dual fuel products, enhancements made to the current family of duel fuel products, and research and development overhead were $291,000 for the six months ended March 31, 2010.
As a result of the foregoing, our loss from continuing operations after income taxes increased $1,421,000 to $3,315,000 for the six months ended March 31, 2010 as compared to $1,894,000 for the six months ended March 31, 2009.
During the six months ended March 31, 2009 we recognized a gain on sale of discontinued operations net of income taxes ($5.5 million), of $14,347,000 associated with the sale of our tire recycling business in November 2008. The income from discontinued operations for the six months ended March 31, 2009 relates primarily to the net results of our tire recycling operations including approximately $391,000 of one-time gains associated with the termination of a long-term land and building lease agreement in Minnesota. In addition, during the six months ended March 31, 2009, we recognized income from Georgia discontinued operations of approximately $44,000 relating to the net effects of two settlement agreements with two former Georgia vendors.
Our net loss for the six months ended March 31, 2010 was $3,315,000 or $.10 per basic share as compared to net income of $12,771,000 or $.41 per basic share for the six months ended March 31, 2009.
Condensed Consolidated Statements of Operations
| Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||
| Net sales | $ | 248,000 | $ | 98,000 | $ | 688,000 | $ | 760,000 | ||||||
| Cost of sales | 331,000 | 209,000 | 1,026,000 | 703,000 | ||||||||||
| Gross profit | (83,000 | ) | (111,000 | ) | (338,000 | ) | 57,000 | |||||||
| Selling, general and administrative | 1,336,000 | 725,000 | 2,528,000 | 1,902,000 | ||||||||||
| Research and development | 214,000 | -- | 291,000 | -- | ||||||||||
| 1,550,000 | 725,000 | 2,819,000 | 1,902,000 | |||||||||||
| Operating (loss) income from continuing operations | (1,633,000 | ) | (836,000 | ) | (3,157,000 | ) | (1,845,000 | ) | ||||||
| Other income (expense): | ||||||||||||||
| Interest and financing expense | (18,000 | ) | (13,000 | ) | (5,000 | ) | (72,000 | ) | ||||||
| Other, net | (70,000 | ) | 33,000 | (153,000 | ) | 23,000 | ||||||||
| Other (expense), net | (88,000 | ) | 20,000 | (158,000 | ) | (49,000 | ) | |||||||
| Loss from continuing operations | (1,721,000 | ) | (816,000 | ) | (3,315,000 | ) | (1,894,000 | ) | ||||||
| Provision for income taxes | -- | -- | -- | -- | ||||||||||
| Loss after income taxes | (1,721,000 | ) | (816,000 | ) | (3,315,000 | ) | (1,894,000 | ) | ||||||
| Discontinued operations: | ||||||||||||||
| Gain on sale of discontinued operations | -- | -- | -- | 14,347,000 | ||||||||||
| (Loss) income from discontinued operations | -- | (100,000 | ) | -- | 318,000 | |||||||||
| -- | (100,000 | ) | -- | 14,665,000 | ||||||||||
| Net loss | $ | (1,721,000 | ) | $ | (916,000 | ) | $ | (3,315,000 | ) | $ | 12,771,000 | |||
| Loss from continuing operations per share - basic | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.06 | ) | ||
| Loss from discontinued operations per share - basic | -- | -- | -- | 0.47 | ||||||||||
| Net loss per share | $ | (0.05 | ) | $ | (0.03 | ) | $ | 0.41 | $ | 0.41 | ||||
| Weighted average shares outstanding | 33,100,000 | 30,880,000 | 33,100,000 | 30,880,000 | ||||||||||
Condensed Consolidated Balance Sheet Data
| March 31, 2010 | September 30, 2009 | ||||
| Assets | |||||
| Current assets | $ | 4,759,000 | $ | 9,218,000 | |
| Property, plant and equipment, net | 1,006,000 | 872,000 | |||
| Other assets | 2,427,000 | 2,552,000 | |||
| $ | 8,192,000 | $ | 12,642,000 | ||
| Liabilities and Stockholders' Equity | |||||
| Current liabilities | $ | 2,456,000 | $ | 3,720,000 | |
| Notes payable, non-current | 551,000 | 530,000 | |||
| Obligations due under lease settlement | 505,000 | 505,000 | |||
| Stockholders' equity | 4,680,000 | 7,887,000 | |||
| $ | 8,192,000 | $ | 12,642,000 | ||
About GreenMan Technologies
GreenMan Technologies, through its subsidiaries, provides technological processes and unique marketing programs for alternative energy, renewable fuels and innovative recycled products. The Company's alternative energy subsidiary, American Power Group, Inc. (APG) provides a cost-effective patented dual fuel technology for diesel engines. APG's dual fuel alternative energy system is a unique external fuel delivery enhancement system that converts existing diesel engines into more efficient and environmentally friendly engines that have the flexibility to run on: 1) diesel fuel and compressed natural gas ("CNG"); 2) diesel fuel and bio-methane, or 3) 100% diesel fuel depending on the circumstances. The proprietary technology seamlessly displaces up to 70% of the normal diesel fuel consumption with CNG or bio-methane and the energized fuel balance between the two fuels is maintained with a patented control system ensuring the engines operate to Original Equipment Manufacturers' ("OEM") specified temperatures and pressures with no loss of horsepower. Installation requires no engine modification unlike the more expensive high-pressure alternative fuel systems in the market. Our Green Tech Products, Inc. subsidiary, the company develops and markets branded products and services that provide schools and other political subdivisions viable solutions for safety, compliance, and accessibility including recycled surfacing. See additional information at: www.americanpowergroupinc.com and www.playgroundcompliance.com
"Safe Harbor" Statement: Under the Private Securities Litigation Reform Act
With the exception of the historical information contained in this news release, the matters described herein contain "forward-looking" statements that involve risks and uncertainties that may individually or collectively impact the matters herein described, including but not limited to the fact that we have sold the tire recycling operations which have historically generated substantially all our revenue and that we will be prohibited from competing in that business on a regional basis until 2013; the risk that we may not be able to increase the revenue or improve the operating results of our Green Tech Products or American Power Group divisions; the risk that we may not be able to return to sustained profitability; the risk that we may not be able to secure additional funding necessary to grow our business, on acceptable terms or at all; the risk that if we have to sell securities in order to obtain financing, the rights of our current stockholders may be adversely affected; the risk that we may not be able to increase the demand for our products and services; the risk that we may not be able to adequately protect our intellectual property; and risks of possible adverse effects of economic, governmental, seasonal and/or other factors outside the control of the Company, which are detailed from time to time in the Company's SEC reports, including the Annual Report on Form 10-K for the fiscal year ended September 30, 2009. The Company disclaims any intent or obligation to update these "forward-looking" statements.
Contact Information:
Contacts:
Chuck Coppa
CFO
or
Lyle Jensen
CEO
GreenMan Technologies
781-224-2411
John Nesbett
or
Jennifer Belodeau
Institutional Marketing Services
203-972-9200