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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MAY 10, 1999
(DATE OF EARLIEST EVENT REPORTED: MAY 5, 1999)
GROUP MAINTENANCE AMERICA CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 1-13565 76-0535259
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
8 GREENWAY PLAZA, SUITE 1500
HOUSTON, TEXAS 77046
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 860-0100
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ITEM 5. OTHER EVENTS
On May 5, 1999, Group Maintenance America Corp. issued a press release
announcing operating results for the quarter ended March 31, 1999. A copy of
such press release has been filed as an exhibit to this Current Report on Form
8-K and is incorporated herein by reference.
On May 6, 1999, Group Maintenance America Corp. issued a letter to
stockholders discussing operating results for the quarter ended March 31, 1999.
A copy of such letter has been filed as an exhibit to this Current Report on
Form 8-K and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following exhibits are filed with this report:
99.1 Press Release issued May 5, 1999 by Group Maintenance America Corp. with
respect to the operating results for the quarter ended March 31, 1999.
99.2 Letter to Stockholders discussing operating results for the quarter
ended March 31, 1999.
2
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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.
GROUP MAINTENANCE AMERICA CORP.
By: /s/ Randolph W. Bryant
----------------------------
Randolph W. Bryant
Senior Vice President
and General Counsel
Date: May 10, 1999
3
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INDEX OF EXHIBITS
99.1 Press Release issued May 5, 1999 by Group Maintenance America Corp.
with respect to the operating results for the quarter ended March 31,
1999.
99.2 Letter to Stockholders discussing operating results for the quarter
ended March 31, 1999.
4
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EXHIBIT 99.1
GroupMAC(TM)
8 Greenway Plaza, Suite 1500
Houston, Texas 77046
(888) 626-4984
FOR FURTHER INFORMATION MAK-9909
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<S> <C> <C> <C>
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
DARREN MILLER, CFO NORHA LEE JACK COTTO BOB SCHWALLER
RUSSELL K. BAY, VICE PRESIDENT GENERAL INQUIRIES ANALYST INQUIRIES MEDIA INQUIRIES
(888) 626-4984 (312) 640-6689 (312) 640-6755 (972) 830-2295
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FOR IMMEDIATE RELEASE
WEDNESDAY, MAY 5, 1999
GROUPMAC POSTS 150% INCREASE IN NET EARNINGS
HIGHLIGHTS:
. SAME STORE REVENUES INCREASED 26%
. FIRST-QUARTER REVENUE ROSE 183% TO $302.8 MILLION
. FIRST-QUARTER OPERATING INCOME INCREASED 255% TO $16.2 MILLION
. OPERATING MARGIN IMPROVEMENT OF 110 BASIS POINTS
. DILUTED EPS INCREASED 60% TO $0.16 PER SHARE
HOUSTON, MAY 5, 1999 -- GROUP MAINTENANCE AMERICA CORP. (NYSE: MAK), a leading
national provider of mechanical and electrical services, today announced that
strong internal growth, continued improvement in operating margins, and the
effect of acquisitions drove revenues and net income for the quarter ended March
31, 1999 to record levels.
SOLID FIRST QUARTER RESULTS
Revenue for the first quarter of 1999 jumped 183 percent to $302.8 million from
$107.1 million for the first quarter of 1998. Operating income for the quarter
rose 255 percent to $16.2 million from $4.6 million for the same quarter a year
ago. Operating margins improved by 110 basis points due to improvements at the
field operations level, cost savings related to supplier agreements and leverage
of corporate overhead. On a same-store basis, revenues and operating income for
the quarter were up 26 percent and 33 percent, respectively. Net income
increased by 150 percent to $5.7 million or $0.16 per diluted share, compared
with net income of $2.3 million, or $0.10 per diluted share, for the same period
a year ago.
FOCUS ON INCREASING MARKET SHARE AND SHAREHOLDER VALUE CONTINUES
Commenting on the results for the first quarter J. Patrick Millinor, Jr., chief
executive officer, stated, "During the quarter we made significant progress by
adding $150 million of annual
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revenue through the acquisition of three platform companies, most of which comes
from the strategic California market. In addition, our companies continue to
post significant internal growth rates, with same-store revenues up 26 percent,
making this the fourth consecutive quarter of double-digit internal growth. Our
operating strategy continues to attract successful companies to GroupMAC, our
pipeline of acquisition candidates is full, and we are confident that this trend
will continue as acquisition prices remain attractive.
"We are pleased to note that, in addition to our 183 percent revenue growth, our
operating margin improved more than one percentage point over the first quarter
of 1998. As we continue to focus more on maintenance, repair and replacement
work, we expect that operating margins will improve further. The ongoing effort
to focus our business mix to higher margin work is a key element of our
strategic plan.
"Additionally, in order to enhance top line growth and drive internal growth, we
are focused on targeting and developing strategic relationships with national
accounts and utilities, strengthening our ability to offer our customers bundled
services under one roof, while enhancing shareholder value. In closing, we are
delighted to report these exceptional financial results, which continue to build
on growth rates established throughout 1998. We look forward to giving our
shareholders additional exciting announcements as the year unfolds," concluded
Millinor.
Group Maintenance America Corp. is a leader in the $120+ billion market of
providing mechanical and electrical services to commercial/industrial and
residential customers nationwide. Headquartered in Houston, Texas, the company
currently has operations in 58 cities in 26 states throughout the United States
and has annual revenues of approximately $1.3 billion.
This press release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
based on the company's current expectations and involve risks and uncertainties
that could cause the company's actual results to differ materially from those
set forth in the statements. Factors that could cause the company's results to
differ materially from current expectations are listed under Item 7 of the
company's Form 10-K/A for the year ended December 31, 1998.
ADDITIONAL GROUPMAC INFORMATION AND PRESS RELEASES ARE AVAILABLE ON GROUPMAC'S
WEBSITE AT http://www.groupmac.com.
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GROUP MAINTENANCE AMERICA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------------------
1999 % 1998 %
-------- ------- ------- --------
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Revenues $302,765 100.0% $107,092 100.0%
Cost of Services 244,018 80.6% 82,706 77.2%
-------- --------
Gross Profit 58,747 19.4% 24,386 22.8%
SG&A 39,707 13.1% 18,994 17.7%
Goodwill Amortization 2,806 0.9% 821 0.8%
-------- --------
Income from operations 16,234 5.4% 4,571 4.3%
Other Income (Expense):
Interest expense, net (5,714) -1.9% (229) -0.2%
Other 155 0.1% (5) 0.0%
-------- --------
Income Before Taxes 10,675 3.5% 4,337 4.0%
Income Taxes 4,996 1.7% 2,065 1.9%
-------- --------
Net Income $ 5,679 1.9% $ 2,272 2.1%
======== ========
Earnings Per Share
- --Basic $ 0.16 $ 0.10
- --Diluted $ 0.16 $ 0.10
Weighted Average Shares
- --Basic 34,914 23,141
- --Diluted 35,265 23,495
EBITDA $ 22,095 7.3% $ 6,616 6.2%
SELECTED BALANCE SHEET DATA:
Working Capital $130,278 $ 32,723
Goodwill 449,071 139,789
Total Assets 813,741 267,143
Long-term Debt 287,650 22,133
Shareholders' Equity 348,471 168,560
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EXHIBIT 99.2
May 6, 1999
Dear Fellow Stockholder:
The attached announcement of our first quarter results shows clearly that our
company continues to perform extremely well. This is our sixth quarterly
earnings announcement since the IPO, and in each quarter we have met or exceeded
every earnings target set by every research analyst covering our stock. The
tremendous increase in our year-over-year earnings per share has been driven by
both impressive internal growth and by excellent results in our acquisition
program. We believe that we have successfully put together the best operating
company in our sector, one that is positioned very well for continued growth for
years to come. Unfortunately, investors have been paying little attention
lately to companies like ours. During the first quarter of 1999 alone, over $5
billion flowed out of small cap institutional funds and into the large cap and
internet sectors, taking away a lot of the buy-side support the small caps have
historically relied upon. What has resulted is perhaps the largest valuation
gap ever between small and large cap stocks.
There are some encouraging signs that this trend is beginning to reverse itself,
but market trends come and go, and are not under our control anyway, so we
aren't letting the current trend deter us from moving our company forward. We
are continuing to build value for our shareholders in several important ways.
. Our operating focus is paying dividends as shown by our strong internal growth
rate.
. Working together, our companies are obtaining new work they likely would not
have gotten alone. Recent successful collaborations have involved Trinity and
Atlantic, Commercial Air and Romanoff, and Air Systems, Pacific Rim and
Linford. These are just a few real-life, early-stage examples of the benefits
in having a cohesive national network.
. Our national account program continues to gain momentum as evidenced by our
recent agreements with AutoZone, Blockbuster, and IBM.
. Our utility alliance efforts also are building up steam. We have closed on
initial projects with Pacific Gas & Electric Energy Services and Duke
Solutions, and we have over $60 million in other projects currently under
proposal.
. Our acquisition program continues to post impressive results. By continually
adjusting our acquisition prices to reflect the trading multiple being applied
to our own stock, and by increasing the percentage of cash given in selected
transactions, we are adding quality companies to our team at prices that are
accretive to our earnings per share. We have a strong acquisition pipeline in
place, which indicates our momentum will continue.
If the stock market isn't giving us much credit at the moment for the value we
are creating, some savvy corporate players are taking notice. In recent weeks
we have seen several large companies validate the soundness of creating a
national company in our industry.
. ServiceMaster recently acquired ARS.
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. Lennox announced its own initial public offering and is attempting to build
its own contractor network.
. Apollo Capital is backing a recapitalization of Building One Services.
These are not insignificant events...very large amounts of money are being
invested in the growth of our industry. As the value of having a cohesive
national company becomes more apparent, our attractiveness to investors should
be enhanced, both in the sense of having the best coverage in the major markets
we serve and in having the strongest infrastructure for managing a multi-billion
dollar enterprise. We have now demonstrated that we can successfully do what we
set out to do, and we think that the upside in our company today is becoming
clearer to the investment community.
We believe that our business plan has never made more sense than it does today.
We believe that our industry is strong and vital. We believe that our operating
companies and our people are clearly a cut above the industry norm. We believe
we will have few competitors for the 15-20% of our $120 billion industry that we
estimate is represented by national account and utility alliance opportunities.
Our track record is excellent, our potential is great, and we are continually
adding value to our company. We'll keep taking advantage of every opportunity
we have to improve our position, and one of these days we'll see our stock price
more accurately reflect our strong fundamentals.
Thanks for your continued support.
Best regards,
J. Patrick Millinor, Jr.
Chief Executive Officer
