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, 2000
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)
Indicate by check mark whether the registrant has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
As of June 14, 2000, 2,712,600 shares of the registrant's common stock were
outstanding.
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STREICHER MOBILE FUELING, INC.
FORM 10-Q
INDEX
Form 10-Q Part and Item No.
Part I-Financial Information
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets as of
April 30, 2000 and January 31, 2000 ................... 3
Consolidated Statements of Operations for
the three months ended April 30, 2000 and 1999 ........ 5
Consolidated Statements of Cash Flows for the three
months ended April 30, 2000 and 1999 .................. 6
Notes to Consolidated Financial Statements ............ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................... 8
Item 3. Quantitative and Qualitative Disclosures
About Market Risk .................................... 10
Part II - Other Information
Items 1 - 6 ................................................... 11
Signature Page ................................................ 12
2
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STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, January 31,
ASSETS 2000 2000
------------ ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 136,234 $ 874,972
Accounts receivable, net of allowance for doubtful
accounts of $133,665 and $111,600 respectively 8,969,165 9,587,686
Inventories 244,826 434,871
Prepaid expenses and other current assets 362,121 476,581
------------ ------------
Total current assets 9,712,346 11,374,110
Property and Equipment:
Land 249,302 249,302
Leasehold improvements 189,684 189,684
Fuel trucks and automobiles 13,097,744 12,280,350
Machinery and equipment 977,648 956,980
Furniture and fixtures 81,000 79,157
Construction in process 1,239,745 1,328,113
------------ ------------
15,835,123 15,083,586
Less accumulated depreciation and amortization (3,412,634) (3,098,177)
------------ ------------
12,422,489 11,985,409
Account receivable from related party 512,424 500,952
Other assets 67,546 70,453
------------ ------------
Total assets $ 22,714,805 $ 23,930,924
============ ============
</TABLE>
(Continued)
3
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STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, January 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 2000 2000
------------------------------------ ------------ ------------
<S> <C> <C>
Current Liabilities:
Bank line of credit payable $ 7,337,876 $ 7,679,219
Current portion of long-term debt 1,669,408 1,560,893
Accounts payable 3,223,198 3,058,460
Accrued expenses 406,880 753,114
Customer deposits 119,895 119,895
------------ ------------
Total current liabilities 12,757,257 13,171,581
Long-term Liabilities:
Long-term debt, excluding current portion 6,475,935 6,470,171
------------ ------------
Total liabilities 19,233,192 19,641,752
------------ ------------
Shareholders' Equity:
Preferred stock -- --
Common stock 27,126 27,104
Additional paid-in capital 5,541,460 5,651,500
Accumulated deficit (2,086,973) (1,389,432)
------------ ------------
Total shareholders' equity 3,481,613 4,289,172
------------ ------------
Total liabilities and shareholders' equity $ 22,714,805 $ 23,930,924
============ ============
</TABLE>
4
<PAGE>
STREICHER MOBILE FUELING, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2000 AND 1999
2000 1999
------------ ------------
Fuel sales and service revenues $ 16,437,508 $ 9,994,360
Fuel taxes 5,849,338 5,523,271
------------ ------------
Total revenues 22,286,846 15,517,631
Cost of fuel sales and service 15,960,078 8,625,941
Fuel taxes 5,849,338 5,523,271
------------ ------------
Total cost of sales 21,809,416 14,149,212
Gross profit 477,430 1,368,419
Operating expenses 797,670 881,679
------------ ------------
Operating income (loss) (320,240) 486,740
Loss on asset disposal -- (2,591)
Interest expense (393,417) (243,549)
Interest and other income 16,116 10,939
------------ ------------
Income (loss) before
income taxes (697,541) 251,539
Income tax expense -- (1,418)
------------ ------------
Net income (loss) $ (697,541) $ 250,121
============ ============
Basic income (loss) per share $ (.26) $ 0.10
============ ============
Diluted income (loss) per share $ (.26) $ 0.10
============ ============
Basic weighted average
common shares outstanding 2,712,600 2,575,000
============ ============
Diluted weighted average
common shares outstanding 2,712,600 2,579,545
============ ============
5
<PAGE>
STREICHER MOBILE FUELING, INC, AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(697,541) $ 250,121
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on disposal of equipment -- 2,591
Depreciation and amortization 314,457 235,088
Provision for doubtful accounts 22,500 15,000
Changes in operating assets and liabilities:
(Increase) Decrease in accounts receivable 596,021 (504,887)
(Increase) Decrease in inventories 190,045 (13,716)
(Increase) Decrease in prepaid expenses and
other current assets 114,460 (34,272)
Decrease in other assets 2,908 7,940
(Decrease) Increase in accounts payable and
accrued expenses (181,496) 176,358
--------- ---------
Net cash provided by operating activities 361,354 134,223
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (751,536) (402,427)
Proceeds from disposal of equipment -- 1,300
Account receivable due from related party (11,473) 13,662
--------- ---------
Net cash used in investing activities (763,009) (387,465)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line of credit (341,343) 584,237
Borrowings under long-term debt 587,908 316,040
Principal payments on long-term debt (473,630) (373,040)
Additional common stock issuance expenses (110,018) --
--------- ---------
Net cash provided by (used in) financing
activities (337,083) 527,237
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (738,738) 273,995
CASH AND CASH EQUIVALENTS, beginning of period 874,972 122,961
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 136,234 $ 396,956
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for-
Interest $ 394,987 $ 244,040
========= =========
Income taxes $ -- $ 1,418
========= =========
</TABLE>
6
<PAGE>
STREICHER MOBILE FUELING, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2000 AND 1999
(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, 2000, the Company had operations in Florida, Georgia, Tennessee, California
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, 2000. 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 (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings (loss) per share is 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 $9.49 per share, were outstanding for the quarters ended April 30, 2000
and 1999, respectively. For the three months ended April 30, 2000, no options
were included in the computation of diluted earnings per share because the
Company incurred a loss for the quarter. For the three months ended April 30,
1999, 4,545 options were included in the computation of diluted earnings per
share because the average market price of the common stock for the quarter was
greater than the exercise price of the options.
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, 2000. 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, 2000 increased 43.6% to
$22.3 million compared to $15.5 million for the same quarter a year ago. This
increase was due primarily to an increase in volume of fuel delivered and
increases in the average wholesale price per gallon of gasoline and diesel fuel.
For the three months ended April 30, 2000, the Company delivered 15.0 million
gallons of fuel compared to 13.7 million gallons for the same quarter of the
prior year, an increase of 9.2%. 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 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, 2000 decreased 65.1%
to $477,000 compared to $1,368,000 for the same quarter a year ago. This
decrease is primarily due to increases in payroll costs, increases in the cost
of fuel purchased, which were not passed on to customers, decreases in the
average fuel price markup, changes in the mix of customers from higher margin
mobile fueling business to lower margin bulk fuel deliveries, and costs
associated with the Company's expansion, primarily increases in equipment
ownership costs.
Operating Expenses
Operating expenses for the three months ended April 30, 2000 decreased
9.5% to $798,000 compared to $882,000 for the same quarter a year ago. This
decrease is primarily attributable to decreases in sales payroll and related
marketing costs, insurance costs, financial consulting fees, professional fees
and accounting fees.
Interest Expense
Interest expense for the three months ended April 30, 2000 increased
61.5% to $393,000 compared to $244,000 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 and increases in borrowings under the
Company's working capital line of credit.
Interest Income
Interest income for the three months ended April 30, 2000 increased to
$16,000 compared to $11,000 for the same quarter a year ago. This increase is
primarily due to increases in interest bearing cash equivalents held by the
Company.
8
<PAGE>
Net Income (Loss)
Net loss for the three months ended April 30, 2000 was $698,000 or $.26
per share, compared to net income of $250,000 or $.10 per share for the three
months ended April 30, 1999. The decline 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, 2000 totaled 37 days as compared to 35 days sales
outstanding at April 30, 1999.
While the Company operated at a profit for fiscal year 2000, the
Company incurred a net operating loss of $363,000 in the fourth quarter of
fiscal 2000 and continued to incur operating losses in the first quarter of
fiscal 2001. Higher fuel costs, costs associated with the Company's expansion of
its vehicle fleet, increases in interest rates, marketing and promotion expenses
and decreases in higher margin mobile fueling business have continued to affect
operating results since year end.
In response to the losses incurred, the Company has taken a number of
steps to improve its operating results by reducing operating costs. The steps
taken include:
/bullet/ Evaluations of individual customer profitability, with price
and service frequency adjustments implemented for unprofitable
accounts.
/bullet/ Significant reductions in driver overtime wages as a result of
route restructurings and combinations.
/bullet/ Significant reduction in the sales and marketing staffs, along
with related expenses and promotion costs.
/bullet/ Implementing a program to institute a 10% reduction in ongoing
repair and maintenance costs.
/bullet/ Selling certain high maintenance cost equipment and replacing
it with new equipment.
/bullet/ Other cost reductions, primarily in the general and
administrative cost area.
The Company believes that these measures, if successfully implemented,
will allow the Company to return to profitability.
The Company has outstanding borrowings of $7.3 million as of April 30,
2000 under its $10.0 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, 2000, the line was fully drawn as
of that date. Interest is payable monthly at 1.0% over the prime rate (8.75% as
of April 30, 2000). The line of credit matures on April 30, 2001 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 tangible net worth. As of and for the period ended April 30, 2000, the
Company was in compliance with the debt to equity requirement and had obtained a
waiver of its violation of the minimum tangible net worth covenant.
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, 2000, the Company had purchase commitments, to be
executed over the next six months, for 4 custom fuel delivery vehicles with an
aggregate cost of approximately $600,000. 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.
9
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's exposure to market risk is limited primarily to the
fluctuating interest rates associated with variable rate debt outstanding to
finance working capital needs and a portion of the Company's fleet of delivery
vehicles. These debts bear interest at the United States prime interest rate
plus a fixed markup and are subject to change based upon interest rate changes
in the United States. The Company does not currently use and has not
historically used derivative instruments to hedge against such market interest
rate risk. Increases or decreases in market interest rates could have a material
impact on the financial condition results of operations and cash flows of the
Company.
10
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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: None
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the company during the three
months ended April 30, 2000.
11
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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 14, 2000 By: /s/ Walter B. Barrett
------------------------------------
Walter B. Barrett
Vice President, Finance and Chief
Financial Officer
12
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
27.1 Financial Data Schedule
