UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OR THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 000-21825
STREICHER MOBILE FUELING, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0707824
(State of Incorporation) (IRS Employer Identification Number)
2720 NW 55TH COURT, FORT LAUDERDALE, FLORIDA, 33309
(Address of principal executive offices) (Zip Code)
(954) 739-3880
(Issuer's telephone number, including area code)
Check whether the issuer filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required requirements for the past 90
days. Yes [X] No [ ]
As of April 30, 1998, 2,575,000 shares of the issuer's common stock were
outstanding.
<PAGE>
STREICHER MOBILE FUELING, INC.
FORM 10-Q
INDEX
FORM 10-Q PART AND ITEM NO.
Part I-Financial Information
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of
April 30, 1998 and January 31, 1998.....................3
Consolidated Statements of Operations for
the three months ended April 30, 1998 and 1997..........4
Consolidated Statements of Cash Flows for the three
months ended April 30, 1998 and 1997....................5
Notes to Financial Statements...........................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................7
Part II - Other Information
Items 1 - 6.....................................................10
Signatures......................................................11
2
<PAGE>
<TABLE>
<CAPTION>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
APRIL 30 JANUARY 31
ASSETS 1998 1998
----------- -----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 872,987 $ 1,411,134
Investments 69,508 69,227
Accounts receivable, net of allowance for doubtful
accounts of $164,000 and $148,000 respectively 4,861,065 5,065,437
Inventories 104,852 133,924
Prepaid expenses and other current assets 312,912 351,531
----------- -----------
Total current assets 6,221,324 7,031,253
Property and Equipment:
Land 83,570 59,996
Leasehold improvements 155,009 152,664
Fuel trucks and automobiles 7,226,633 6,305,637
Machinery and equipment 803,733 799,858
Furniture and fixtures 66,139 66,139
Construction in process 459,838 173,797
----------- -----------
8,794,922 7,558,091
Less accumulated depreciation and amortization (1,530,800) (1,357,368)
----------- -----------
7,264,122 6,200,723
Deferred income tax assets 259,392 254,848
Note receivable from related party 403,155 451,806
Other assets 45,701 56,910
----------- -----------
Total assets $14,193,694 $13,995,540
----------- -----------
</TABLE>
(Continued)
3
<PAGE>
<TABLE>
<CAPTION>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
APRIL 30 JANUARY 31
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1998
----------- -----------
<S> <C> <C>
Current Liabilities:
Bank line of credit payable $ 3,367,728 --
Current portion of long-term debt 954,992 $ 790,101
Accounts payable 1,655,688 2,313,581
Accrued expenses 537,246 415,664
Customer deposits 119,895 119,895
----------- -----------
Total current liabilities 6,635,549 3,639,241
Long-term Liabilities:
Bank line of credit payable -- 3,269,713
Long-term debt, excluding current portion 3,230,101 2,645,336
----------- -----------
Total liabilities 9,865,650 9,554,290
----------- -----------
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued and outstanding -- --
Common stock, $.01 par value, 20,000,000 shares
authorized, 2,575,000 shares issued and outstanding 25,750 25,750
Additional paid-in capital 5,195,758 5,195,758
Accumulated deficit (893,464) (780,258)
----------- -----------
Total shareholders' equity 4,328,044 4,441,250
----------- -----------
Total liabilities and shareholders' equity $14,193,694 $13,995,540
=========== ===========
</TABLE>
4
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED APRIL 30, 1998 AND 1997
1998 1997
------------ ------------
Fuel sales revenues $ 5,147,145 $ 4,918,064
Mobile fueling service revenues 2,296,848 1,967,185
Fuel taxes 3,939,795 3,103,828
------------ ------------
Total revenues 11,383,788 9,989,077
Cost of fuel sales 4,662,920 4,759,715
Cost of mobile fueling service sales 1,919,619 1,598,857
Fuel taxes 3,939,795 3,103,828
------------ ------------
Total cost of sales 10,522,334 9,462,400
Gross profit 861,454 526,677
Operating expenses 840,763 797,183
------------ ------------
Operating income (loss) 20,691 (270,506)
Interest expense (159,428) (86,322)
Interest and other income 25,531 36,033
------------ ------------
Loss before benefit
for income taxes (113,206) (320,795)
Income tax benefit -- 112,000
Net loss (113,206) (208,795)
------------ ------------
Basic loss per share $ (0.04) $ (0.08)
------------ ------------
Basic and diluted weighted average
common shares outstanding 2,575,000 2,575,000
------------ ------------
5
<PAGE>
<TABLE>
<CAPTION>
STREICHER MOBILE FUELING, INC, AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED APRIL 30, 1998 AND 1997
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (113,206) $ (208,795)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 173,432 104,183
Deferred income tax benefit -- (112,000)
Provision for doubtful accounts 20,000 9,000
Changes in operating assets and liabilities:
Accounts receivable 184,372 189,841
Inventories 29,072 (1,820)
Prepaid expenses and other current assets 38,619 11,020
Deferred income tax asset (4,544) --
Other assets 11,209 (77,537)
Accounts payable and accrued expenses (536,311) (345,403)
Customer deposits -- (1,000)
----------- -----------
Net cash used in operating activities (197,357) (432,511)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment (281) (773)
Purchases of property and equipment (1,236,831) (263,891)
Note receivable due from related party 48,651 (9,201)
----------- -----------
Net cash used in investing activities (1,188,461) (273,865)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 98,015 249,486
Borrowings under long-term debt 985,201 217,852
Principal payments on long-term debt (235,545) (160,235)
----------- -----------
Net cash provided by financing activities 847,671 307,103
----------- -----------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (538,147) (399,273)
CASH AND CASH EQUIVALENTS, beginning of period 1,411,134 2,848,000
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 872,987 $ 2,448,727
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for-
Interest $ 158,893 $ 82,490
=========== ===========
Income taxes $ 4,544 $ 10,000
=========== ===========
</TABLE>
6
<PAGE>
STREICHER MOBILE FUELING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1998 AND 1997
(UNAUDITED)
(1) NATURE OF OPERATIONS
Streicher Mobile Fueling, Inc. (the "Company") was incorporated in October 1996.
Prior to the effective date of the Company's registration statement for its
initial public offering on December 11, 1996, the Company's business was
conducted through the Mobile Fueling Division of Streicher Enterprises, Inc.
which began mobile fueling operations in 1983. Streicher Enterprises, Inc.
("Enterprises") completed a corporate reorganization as of such effective date
pursuant to which the Mobile Fueling Division of Enterprises transferred its
assets, liabilities and operations to the Company. Accordingly, the accumulated
deficit includes the cumulative results of the former Mobile Fueling Division.
The Company delivers mechanized mobile fleet fueling and electronic fuel
management primarily to customers that operate large fleets of vehicles (such as
governmental agencies, utilities, major trucking lines, hauling and delivery
services, and national courier services). At April 30, 1998, the Company had
operations in Florida, Georgia, Tennessee, California, Louisiania and Texas.
(2) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Streicher
Mobile Fueling, Inc. and its wholly owned subsidiaries, Streicher West, Inc.,
Streicher Realty, Inc. and Mobile Computer Systems, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.
The unaudited consolidated financial statements included herein have
been prepared in accordance with the instructions to Form 10-Q and do not
include all the information and footnotes required by generally accepted
accounting principles; however, they do include all adjustments of a normal
recurring nature which, in the opinion of management, are necessary to present
fairly the results of operations of the Company for the interim periods
presented. Certain amounts have been reclassified to conform with current
quarter presentation. These interim financial statements should be read in
conjunction with the Company's audited financial statements and related notes
for the year ended January 31, 1998 included in the Company's Annual Report on
Form 10-K for the year ended January 31, 1998. The results of operations for the
interim periods presented are not necessarily indicative of the results to be
expected for the entire year.
(3) COMMITMENTS AND CONTINGENCIES
At April 30, 1998, the Company had purchase commitments, to be exercised
over the next twelve months, for 29 custom fuel delivery vehicles costing
approximately $2.9 million.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains "forward-looking statements" which involve
risks and uncertainties. The Company's actual results could differ materially
from those in the forward-looking statements as a result of certain factors,
including those set forth under the caption "Certain Factors Affecting Future
Operating Results" in Item 7 of the Company's Annual Report in Form 10-K for the
fiscal year ended January 31, 1998. The following Management's Discussion and
Analysis of Financial Condition and Results of Operations should be read in
conjunction with the Company's financial statements and notes thereto included
elsewhere in this Form 10-Q and the above described factors set forth in the
Company's Form 10-K.
GENERAL
The Company derives all of its revenue from providing mobile fueling
services. Revenue is comprised principally of sales of gasoline and diesel fuel
and related service charges. Cost of sales is comprised principally of the cost
of fuel and delivery costs (primarily payroll and equipment costs). Included in
both revenue and cost of sales are Federal and state fuel taxes, which are
generally paid by the Company when it pays for its fuel and are billed by the
Company to its customers upon billing for the related fuel and service charges.
RESULTS OF OPERATIONS
REVENUES
Revenues for the three months ended April 30, 1998 increased 14.0% to
$11.4 million, compared to $10.0million for the same quarter a year ago. This
increase was due primarily to an increase in volume of fuel delivered, offset by
decreases in the average wholesale price per gallon of gasoline and diesel fuel.
For the three months ended April 30, 1998, the Company delivered 9.5 million
gallons of fuel compared to 7.3 million gallons for the same quarter of the
prior year, an increase of 29.7%. The increase in volume was attributable to an
increase in services to existing customers, acquisition of new customers in
existing locations and the introduction of mobile fueling operations into
additional metropolitan areas. The Company's revenue levels will fluctuate based
on the cost of fuel in a given period. The Company's sales price to its
customers is adjusted upward or downward for increases or decreases in fuel
costs each week. Significant changes in revenue levels between periods are
possible even if the volume of fuel delivered remains relatively stable.
GROSS PROFIT
Gross profit for the three months ended April 30, 1998 increased 63.6%,
to $861,000, compared to $527,000 for the same quarter a year ago. This increase
is primarily due to the higher volume of fuel delivered. The gross profit per
gallon on fuel sold in the three months ended April 30, 1998 was 5.1 cents
compared to a gross profit per gallon of 2.2 cents for the same period a year
ago. This improvement was due to greater efficiency in the purchasing of fuel,
modest increases in the fuel price markup and certain changes in the mix of
customers. The Company achieved a gross profit on mobile refueling operations of
16.4% in the three months ended April 30, 1998 compared to a gross profit on
mobile refueling operations of 18.7% for the same period a year ago. This
decline was due primarily to costs associated with the Company's continued
expansion, primarily increases in payroll and equipment ownership costs.
OPERATING EXPENSES
Operating expenses for the three months ended April 30, 1998 increased
5.5%, to $841,000, compared to $797,000 for the same quarter a year ago. This
increase is primarily attributable to increases in payroll and related
administrative costs associated with additional personnel and facilities to
support the Company's expansion, increases in insurance costs, financial
consulting fees and other costs.
INTEREST EXPENSE
Interest expense for the three months ended April 30, 1998 increased
84.7%, to $159,000, compared to $86,000 for the same quarter a year ago. This
increase is a result of increases in the Company's outstanding borrowings due to
the purchase of additional equipment to support its expansion.
INTEREST INCOME
Interest income for the three months ended April 30, 1998 decreased to
$26,000, compared to $36,000 for the same quarter a year ago. This decrease is
primarily due to decreases in cash equivalents held by the Company. The
8
<PAGE>
invested funds represent the remaining portion of the net proceeds of the
Company's initial public offering in December 1996.
INCOME TAXES
The Company recognized no income tax benefit or expense for the three
months ended April 30, 1998, compared to a benefit of $112,000, representing an
effective tax benefit rate of 40.9%, for the same quarter a year ago. The
elimination of the tax benefit in the current quarter resulted from the
Company's fully reserving any potential income tax benefit.
NET LOSS
Net loss for the three months ended April 30, 1998 was $113,000 or $.04
per share, compared to a net loss of $208,795 or $.08 per share for the three
months ended April 30, 1997. The decrease in loss incurred is due to the
combination of factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business requires it to expend considerable amounts of
funds for fuel, labor and equipment costs before any payments are received from
the Company's customers. The fuel purchased by the Company for resale to its
customers must generally be paid for within 10 to 15 days of purchase, labor
costs and related taxes are funded bi-weekly and equipment related costs are
generally satisfied within 30 days. The Company bills its customers weekly and
generally collects its accounts within 35 to 40 days. Days sales outstanding at
April 30, 1998 totaled 36 days as compared to 38 days sales outstanding at
January 31, 1998.
Continued revenue growth for the Company is dependent on its ability to
obtain necessary working capital from bank borrowings, equity transactions and
retained earnings in order to fund increases in accounts receivable and provide
the funds necessary to acquire additional custom fuel delivery trucks. To date,
the Company has relied on bank borrowings and sales of equity securities to
finance its growth. At April 30, 1998, the Company had $1.6 million of
availability under its $5.0 million line of credit and $900,000 of cash and cash
equivalents. The Company intends to seek the additional working capital it needs
to finance its growth by a combination of vendor financing, continued expansion
of its existing credit facility, and the use of its cash and cash equivalents on
hand. While the Company believes it can successfully obtain additional vendor
and bank financing to finance its growth, there is no assurance that any such
financing can be obtained or will be obtained on terms acceptable to the
Company. The Company anticipates, based on its current revenue levels, that its
existing cash and cash equivalents as well as existing lines of credit will be
adequate to meet its needs for working capital and capital expenditures for at
least the next twelve months.
The Company has outstanding borrowings of $3.4 million as of April 30,
1998 under its $5.0 million line of credit. This line permits the Company to
borrow up to 85% of the total amount of eligible accounts receivable. Interest
is payable monthly at .75% over the prime rate (8.5% as of April 30, 1998). The
line of credit matures on October 31, 1999 and is secured by substantially all
of the Company's assets. The credit agreement contains customary covenants such
as the maintenance of certain financial ratios and minimum net worth and working
capital requirements. As of April 30, 1998, the Company was in compliance with
these financial covenants and restrictions.
Custom fuel trucks are ordered in advance of need and require a minimal
down payment with the balance due upon delivery. It is expected that this
balance will be funded through a combination of available cash and financing. In
the past, the Company has financed approximately 85% to 95% of the purchase
price of fuel trucks. The Company is unable to estimate the amount of cash
required for the acquisition of fuel trucks as such amount is dependent upon the
terms and conditions of financing available, if any, to the Company at the time
of delivery. At April 30, 1998, the Company had purchase commitments, to be
exercised over the next twelve months, for 29 custom fuel delivery vehicles
costing approximately $2.9 million.
A significant portion of the Company's outstanding debt bears interest
at variable interest rates. The Company's financial results will be impacted by
significant increases or decreases in interest rates.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1
LEGAL PROCEEDINGS
None.
ITEM 2
CHANGES IN SECURITIES
None.
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5
OTHER INFORMATION
None.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the company during the three
months ended April 30, 1998.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STREICHER MOBILE FUELING, INC.
June 15, 1998 By: /S/ STANLEY H. STREICHER
---------------------------------------------------
Stanley H. Streicher
Chief Executive Officer
June 15, 1998 By: /S/ WALTER B. BARRETT
---------------------------------------------------
Walter B. Barrett
Vice President, Finance and Chief Financial Officer
11
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 942,495
<SECURITIES> 0
<RECEIVABLES> 4,861,065
<ALLOWANCES> (164,000)
<INVENTORY> 104,852
<CURRENT-ASSETS> 6,221,324
<PP&E> 8,794,922
<DEPRECIATION> (1,530,800)
<TOTAL-ASSETS> 14,193,694
<CURRENT-LIABILITIES> 3,267,821
<BONDS> 0
0
0
<COMMON> 25,750
<OTHER-SE> 4,302,294
<TOTAL-LIABILITY-AND-EQUITY> 4,328,044
<SALES> 11,383,788
<TOTAL-REVENUES> 11,383,788
<CGS> 10,522,334
<TOTAL-COSTS> 10,522,334
<OTHER-EXPENSES> 815,232
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 159,428
<INCOME-PRETAX> (113,206)
<INCOME-TAX> 0
<INCOME-CONTINUING> (113,206)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (113,206)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
