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, 1999
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 May 24, 1999, 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, 1999 and January 31, 1999 .........................3
Consolidated Statements of Operations for
the three months ended April 30, 1999 and 1998...............5
Consolidated Statements of Cash Flows for the three
months ended April 30, 1999 and 1998.........................6
Notes to Financial Statements................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................8
Part II - Other Information
Items 1 - 6..........................................................10
Signatures...........................................................11
2
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30 JANUARY 31
ASSETS 1999 1999
------------ ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 396,956 $ 122,961
Accounts receivable, net of allowance for doubtful
accounts of $91,127 and $79,900 respectively 6,264,799 5,774,912
Inventories 95,052 81,336
Prepaid expenses and other current assets 280,810 246,538
------------ ------------
Total current assets 7,037,617 6,225,747
Property and Equipment:
Land 245,236 233,803
Leasehold improvements 189,684 189,684
Fuel trucks and automobiles 10,425,799 10,150,453
Machinery and equipment 902,681 894,146
Furniture and fixtures 69,779 69,779
Construction in process 187,597 138,910
------------ ------------
12,020,776 11,676,775
Less accumulated depreciation and amortization (2,367,068) (2,186,515)
------------ ------------
9,653,708 9,490,260
Note receivable from related party 432,294 445,956
Other assets 24,246 32,186
------------ ------------
Total assets $ 17,147,865 $ 16,194,149
============ ============
</TABLE>
(Continued)
3
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30 JANUARY 31
LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1999
------------ ------------
<S> <C> <C>
Current Liabilities:
Bank line of credit payable $ 5,155,026 $ 4,570,789
Current portion of long-term debt 1,461,115 1,411,984
Accounts payable 2,116,488 1,970,099
Accrued expenses 507,444 477,475
Customer deposits 119,895 119,895
------------ ------------
Total current liabilities 9,359,968 8,550,242
Long-term Liabilities:
Long-term debt, excluding current portion 4,178,140 4,284,271
------------ ------------
Total liabilities 13,538,108 12,834,513
------------ ------------
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 (1,611,751) (1,861,872)
------------ ------------
Total shareholders' equity 3,609,577 3,359,636
------------ ------------
Total liabilities and shareholders' equity $ 17,147,865 $ 16,194,149
============ ============
</TABLE>
4
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED APRIL 30, 1999 AND 1998
1999 1998
------------ ------------
Fuel sales and service revenues $ 9,994,360 $ 7,443,993
Fuel taxes 5,523,271 3,939,795
------------ ------------
Total revenues 15,517,631 11,383,788
Cost of fuel sales and service 8,625,941 6,582,539
Fuel taxes 5,523,271 3,939,795
------------ ------------
Total cost of sales 14,149,212 10,522,334
Gross profit 1,368,419 861,454
Operating expenses 881,679 840,763
------------ ------------
Operating income 486,740 20,691
Loss on asset disposal (2,591) --
Interest expense (243,549) (159,428)
Interest and other income 10,939 25,531
------------ ------------
Income (loss) before
income taxes 251,539 (113,206)
Income tax expense (1,418) --
------------ ------------
Net income (loss) $ 250,121 $ (113,206)
============ ============
Basic income (loss) per share $ 0.10 $ (0.04)
============ ============
Diluted income (loss) per share $ 0.10 $ (0.04)
============ ============
Basic weighted average
common shares outstanding 2,575,000 2,575,000
============ ============
Diluted weighted average
common shares outstanding 2,579,545 2,575,000
============ ============
5
<PAGE>
STREICHER MOBILE FUELING, INC, AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED APRIL 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 250,121 $ (113,206)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on disposal of equipment 2,591 --
Depreciation and amortization 235,088 173,432
Provision for doubtful accounts 15,000 20,000
Changes in operating assets and liabilities:
(Increase) Decrease in accounts receivable (504,887) 184,372
(Increase) Decrease in inventories (13,716) 29,072
(Increase) Decrease in prepaid expenses and other current assets (34,272) 38,619
Increase in deferred income tax asset -- (4,544)
Decrease in other assets 7,940 11,209
(Decrease) Increase in accounts payable and accrued expenses 176,358 (536,311)
----------- -----------
Net cash provided by (used in) operating activities 134,223 (197,357)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment -- (281)
Purchases of property and equipment (402,427) (1,236,831)
Proceeds from disposal of equipment 1,300 --
Note receivable due from related party 13,662 48,651
----------- -----------
Net cash used in investing activities (387,465) (1,188,461)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit 584,237 98,015
Borrowings under long-term debt 316,040 985,201
Principal payments on long-term debt (373,040) (235,545)
----------- -----------
Net cash provided by financing activities 527,237 847,671
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 273,995 (538,147)
CASH AND CASH EQUIVALENTS, beginning of period 122,961 1,411,134
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 396,956 $ 872,987
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for-
Interest $ 244,040 $ 158,893
=========== ===========
Income taxes $ 1,418 $ 4,544
=========== ===========
</TABLE>
6
<PAGE>
STREICHER MOBILE FUELING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1999 AND 1998
(UNAUDITED)
(1) NATURE OF OPERATIONS
Streicher Mobile Fueling, Inc. (the "Company") was incorporated in October 1996
and the Company's registration statement became effective for its initial public
offering on December 11, 1996. 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, 1999, the Company had operations in Florida, Georgia, Tennessee, California,
Louisiana 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 included in the
Company's Annual Report on Form 10-K for the year ended January 31, 1999. The
results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the entire year.
(3) EARNINGS PER SHARE
Basic earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share are computed by dividing income available
to common shareholders by the weighted-average number of common shares
outstanding during the period increased to include the number of additional
common shares that would have been outstanding if the dilutive potential common
shares had been issued. The dilutive effect of outstanding options is reflected
in diluted earnings per share by application of the treasury stock method. For
loss periods, weighted average common share equivalents are excluded from the
calculation as their effect would be antidilutive.
Options to purchase shares of common stock, at prices ranging from $3.00 to
$4.13 per share, were outstanding for the quarters ended April 30, 1999 and
1998, respectively. For the three months ended April 30, 1999, 4,545 options
were included in the computation of diluted earnings per share because the
average price of the common stock for the quarter was greater than the exercise
price of the options. For the three months ended April 30, 1998, the options
were not included in the computation of diluted earnings per share because the
options' exercise prices were greater than the average market prices of the
common shares.
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, 1999. 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, 1999 increased 36.3% to $15.5
million, compared to $11.4 million for the same quarter a year ago. This
increase was due primarily to an increase in volume of fuel delivered and by
increases in the average wholesale price per gallon of gasoline and diesel fuel.
For the three months ended April 30, 1999, the Company delivered 13.7 million
gallons of fuel compared to 9.5 million gallons for the same quarter of the
prior year, an increase of 44.2%. 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, 1999 increased 58.9%, to
$1,368,000, compared to $861,100 for the same quarter a year ago. This increase
is primarily due to the higher volume of fuel delivered, greater efficiency in
the purchasing of fuel, modest increases in the fuel price markup and changes in
the mix of customers, offset by 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, 1999 increased
4.9%, to $882,000, compared to $841,000 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, offset by reductions in professional fees,
accounting fees and certain marketing costs.
INTEREST EXPENSE
Interest expense for the three months ended April 30, 1999 increased 52.8%,
to $244,000, compared to $159,000 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, 1999 decreased to
$11,000, compared to $26,000 for the same quarter a year ago. This decrease is
primarily due to decreases in interest bearing cash equivalents held by the
Company. The invested funds represent the remaining portion of the net proceeds
of the Company's initial public offering in December 1996.
8
<PAGE>
INCOME TAXES
The Company recorded an income tax charge of $1,400 for the three months
ended April 30, 1999 compared to no income tax charge for the three months ended
April 30, 1998. The Company has sufficient net operating loss carry forwards to
offset any other tax liabilities resulting from the current quarter's earnings.
NET INCOME (LOSS)
Net income for the three months ended April 30, 1999 was $250,000 or $.10
per share, compared to a net loss of $113,000 or $.04 per share for the three
months ended April 30, 1998. The improvement in operating results 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 the majority of its accounts within 35 to 40 days. Days sales
outstanding at April 30, 1999 totaled 35 days compared to 36 days sales
outstanding at April 30, 1998.
During the past two years, the Company has relied on bank borrowings and the
proceeds of its December 1996 initial public offering to fund increases in
accounts receivable, provide the funds necessary to acquire additional custom
fuel delivery trucks and fund its ongoing operating losses. The Company has
operated profitably since January 1999 and anticipates that its cash reserves of
approximately $750,000 (at May 14, 1999) and line of credit availability will
provide sufficient working capital to operate for at least the next twelve
months.
The Company has outstanding borrowings of $5.2 million as of April 30, 1999
under its $5.3 million line of credit. This line permits the Company to borrow
up to 85% of the total amount of eligible accounts receivable. Based on eligible
receivables outstanding at April 30, 1999 the line has been fully drawn as of
that date. Interest is payable monthly at .75% over the prime rate (8.5% as of
April 30, 1999). 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, 1999, the
Company was not in compliance with the minimum net worth and debt to equity
requirements. The Company has received waivers of these violations from the
lender. In May 1999, the Company closed on a new working capital credit facility
from its current lender that increased its working capital line of credit to
$7.5 million, extended the due date of the facility to April 30, 2001, and
modified existing debt covenants to allow the Company to be in compliance with
such covenants.
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, 1999, the Company had purchase commitments for 1 custom
fuel delivery vehicle costing approximately $160,000. 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.
YEAR 2000 ISSUE
Historically, certain computer programs, as well as certain hardware were
designed to utilize a two-digit date field and consequently, they may not be
able to properly recognize dates in the Year 2000. This could result in
significant system failures. The Company relies on its computer-based equipment
in conducting its normal business activities. Certain of these computer-based
programs and equipment may not have been designed to function properly with
respect to the application of dating systems relating to the Year 2000.
In response, the Company has developed a "Year 2000" Plan and established
an internal group to identify and assess potential areas of risk and to make any
required modifications to its computer systems and equipment used in its product
supply and distribution activities. The Year 2000 Plan is comprised of various
phases, including assessment, remediation, testing and contingency plan
development. After the assessment phase has been completed and evaluated, the
remediation, testing and certification phases will be implemented to ensure that
9
<PAGE>
business activities will continue to operate safely, reliably, and without
interruption after 1999. Based upon the results of these assessments contingency
plans will be developed to the extent deemed necessary.
The Company is also monitoring the compliance efforts of significant
suppliers and other third parties with whom it does business to ensure that
operations will not be adversely affected by the Year 2000 compliance problems
of others. There is no assurance that there will not be an adverse effect on the
Company if vendors, suppliers, customers, state and federal governmental
authorities and other third parties do not convert their respective systems in a
timely manner and in a way that is compatible with the Company's information
systems. However, management believes that ongoing communication with and
assessment of the compliance efforts and status of these third parties will
minimize these risks.
The Company believes that it can provide the resources necessary to ensure
Year 2000 compliance and expects to complete its Year 2000 Plan within a time
frame that will enable its computer-based programs and equipment to function
without significant disruption in the Year 2000. The Company believes that the
assessment phase of its Year 2000 Plan is now complete. It is anticipated that
the remediation phase will be completed by June 1, 1999 and the testing phase by
June 30, 1999. Thereafter, contingency plans, if necessary and appropriate, will
be developed as needed.
At April 30, 1999, the Company has incurred third party costs of
approximately $5,500 related to Year 2000 compliance matters and estimates that
the total future third party software and equipment costs related to Year 2000
compliance activities, based upon information developed to date, will be
approximately $12,500, which will be expensed as incurred. These costs have been
and will continue to be funded through operating cash flows and are not deemed
material to the operations of the Company. The cost of the remediation
activities and the completion dates are based on management's best estimates.
Although the Company anticipates minimal business disruption will occur as
a result of Year 2000, in the event the computer based programs and equipment of
the Company, or that owned and operated by third parties, should fail to
function properly, possible consequences include but are not limited to, loss of
communications link with field offices; loss of electric power; an inability to
timely process commercial transactions or engage in normal automated or
computerized business activities.
To date, the Company has not established a contingency plan for possible
Year 2000 issues. As noted above, in the event the Company, after completion of
the assessment, remediation and testing phases of the Year 2000 Plan and review
of the results of monitoring the compliance efforts and status of third parties,
determines that contingency plans are necessary, the Company will establish
contingency plans based on its assessment of outside risks. The Company
anticipates that contingency plans, if determined to be necessary, will be in
place by July 31, 1999.
The discussion of the Company's efforts, and management's expectations,
relating to Year 2000 compliance contains forward-looking statements. Presently,
the Company does not anticipate that the Year 2000 issues will have a material
adverse effect on the operations or financial performance of the Company.
However, there can be no assurance that the Year 2000 will not adversely affect
the Company and its business.
10
<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 (for SEC use only).
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the company during the three months
ended April 30, 1999.
11
<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.
May 24, 1999 By: /s/ STANLEY H. STREICHER
---------------------------------
Stanley H. Streicher
Chief Executive Officer
May 24, 1999 By: /s/ WALTER B. BARRETT
---------------------------------
Walter B. Barrett
Vice President, Finance and Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-1-1999
<PERIOD-END> APR-30-1999
<CASH> 396,596
<SECURITIES> 0
<RECEIVABLES> 6,355,926
<ALLOWANCES> (91,127)
<INVENTORY> 95,052
<CURRENT-ASSETS> 7,037,617
<PP&E> 12,020,776
<DEPRECIATION> (2,367,068)
<TOTAL-ASSETS> 17,147,865
<CURRENT-LIABILITIES> 9,359,968
<BONDS> 0
0
0
<COMMON> 25,750
<OTHER-SE> 3,609,577
<TOTAL-LIABILITY-AND-EQUITY> 17,147,865
<SALES> 15,517,631
<TOTAL-REVENUES> 15,517,631
<CGS> 14,149,212
<TOTAL-COSTS> 14,149,212
<OTHER-EXPENSES> 881,679
<LOSS-PROVISION> 2,591
<INTEREST-EXPENSE> 243,549
<INCOME-PRETAX> 251,593
<INCOME-TAX> 1,418
<INCOME-CONTINUING> 250,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250,121
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.10
</TABLE>
