DEVC Devcon Intl Corp (MM)

BOCA RATON, Fla., Nov. 12 /PRNewswire-FirstCall/ -- Devcon International Corp. (NASDAQ:DEVC) today announced its third quarter results for the period ended September 30, 2007. Revenues from continuing operations for the three months ended September 30, 2007 were $14.3 million, compared to revenues of $13.8 million for the three months ended September 30, 2006. The increase in revenue resulted primarily from increased service and installation revenue. The Company reported an operating loss from continuing operations of $(2.1) million for the third quarter of 2007 compared to an operating loss of $(4.4) million for the three months ended September 30, 2006. The decreased operating loss resulted primarily from a reduction of general and administrative costs through the consolidation of staffs and offices, and a decrease in amortization costs of customer lists. Net loss from continuing operations for the three months ended September 30, 2007 was $(3.4) million or $(0.55) per fully diluted share, compared to a net loss from continuing operations of $(8.1) million, or $(1.34) per fully diluted share for the three months ended September 30, 2006. Devcon reported a loss from discontinued operations, net of tax of $(1.2) million for the three months ended September, 2007, compared to a loss from discontinued operations, net of tax of $(3.1) for the same period last year. The decreased operating loss primarily resulted from the winding down of construction operations. Net loss available for common shareholders for the three months ended September 30, 2007 was $(6.4) million or $(1.04) per fully diluted share, compared to a net loss of $(11.2) million, or ($1.86) per fully diluted share for the comparable period last year. Nine Months Results Revenues from continuing operations for the nine months ended September 30, 2007 increased $2.8 million to $42.2 million, compared to revenues of $39.5 million for the nine months ended September 30, 2006. The increase in revenues for the first nine months of 2007 resulted from two additional months of Guardian revenues versus 2006, as well as organic increases in services and installation revenue, partially offset by a decrease in revenue in 2007 resulting from the sale of Coastal in June 2006. The Company reported an operating loss from continuing operations of $(8.6) million after the effect of amortization and depreciation expenses of $13.1 million for the nine months ended September 30, 2007 compared to an operating loss of $(11.1) million after the effect of amortization and depreciation expenses of $14.1 million for the nine months ended September 30, 2006. This reduction resulted primarily from the increase in revenue and the reduction in amortization expenses of customer lists. Net loss from continuing operations for the nine months ended September 30, 2007 was $(12.2) million or $(1.96) per fully diluted share, compared to a net loss from continuing operations of $(17.9) million, or ($2.98) per fully diluted share for the nine months ended September 30, 2006. The decrease in the net loss resulted primarily from a reduction in interest expense partially offset by a reduction in the increase in the change of derivative value of the preferred stock. The Company reported a loss from discontinued operations, net of tax of $(4.6) million for the first nine months of 2007, compared to net loss from discontinued operations, net of tax of $(3.5) million for the first nine months of 2006. The increase in loss resulted primarily from the cessation of one of the materials operations and the sale of 2 other materials operations in 2006, partially offset by savings from the winding down of the construction operations. The Company reported a net loss available for common shareholders for the nine months ended September 30, 2007 of $(21.6) million or $(3.47) per fully diluted share, compared to a net loss of $(20.4) million, or ($3.39) per fully diluted share for the nine months ended September 30, 2006. Robert C. Farenhem, the Company's President, stated, "We made significant progress during the third quarter. We have successfully integrated our back office platform in Florida and have started to see performance improvement in our electronic security services business. We have also stabilized our capital structure, having restructured our preferred stock and settled our dispute with one of our preferred investors." Conference Call The Company's third quarter 2007 conference call is scheduled for 11:00 a.m. ET, Monday, November 12, 2007. To participate in the call, dial 800-240-6709 for domestic callers and 303-262-2130 for international callers. The call may also be accessed through a live webcast link on the Company's Internet home page, http://www.devcon-security.com/. The webcast will be archived for one month following the call. About Devcon Devcon International's wholly-owned subsidiary, Devcon Security (http://www.devcon-security.com/), is a leading provider of installation, monitoring and related electronic security services, currently serving more than 140,000 commercial and residential customers in Florida, New York City and Staten Island. Since February, 2005, Devcon has made 3 significant acquisitions of full-service electronic security services companies with significant concentrations throughout Florida and the New York Metropolitan region. Currently, Devcon Security Services Corp. is the second largest security monitoring and alarm company in Florida and the eleventh largest in the U.S. Forward-Looking Statements This press release may contain statements, which are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of Devcon's future results of operations, financial position or state other forward-looking information. In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. You should not rely on forward-looking statements because Devcon's actual results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. These factors include, but are not limited to: general economic and business conditions; our business strategy for expanding our presence in our industry; anticipated trends in our financial condition and results of operation; the impact of competition and technology change; existing and future regulations effecting our business, and other risks and uncertainties discussed under the heading "Item 1A - Risk Factors" in Devcon's Annual Report on Form 10-K for the period ended December 31, 2006 as filed with the Securities and Exchange Commission, and other reports Devcon files from time to time with the Securities and Exchange Commission. Devcon does not intend to and undertakes no duty to update the information contained in this press release. -Financial Tables Follow- Devcon International Corp. Consolidated Statement of Operations (Amounts in thousands, except share and per share data) For The Three Months Ended September 30, 2007 September 30, 2006 Revenue $14,263 $13,845 Cost of Sales (exclusive of depreciation and amortization shown below): 6,143 6,236 Gross profit 8,120 7,609 Operating expenses Selling 1,086 1,261 General and administrative 4,914 5,711 Depreciation and amortization 4,252 5,010 Operating loss (2,132) (4,373) Other income (expense) Interest expense (2,619) (5,983) Interest income 39 49 Change in fair value of derivative instrument 364 496 Other 6 - Loss from continuing operations before income taxes (4,342) (9,811) Income tax (benefit) (901) (1,711) Net loss from continuing operations (3,441) (8,100) Loss from discontinued operations, net of income tax (benefit) expense of $(678) and $375 for the three months ended September 30, 2007 and 2006, respectively (1,243) (3,142) (Loss) gain on disposal of discontinued operations, net of income tax expense of $ 0 and $ 0 for the three months ended September 30, 2007 and 2006, respectively - - Net loss $(4,684) $(11,242) Preferred Dividends $(1,048) $- Accretion of Preferred Stock $(710) $- Net loss available for common stockholders $(6,442) $(11,242) Basic (loss) per share: Continuing operations $(0.55) $(1.34) Discontinued operations $(0.20) $(0.52) Net loss $(0.76) $(1.86) Net loss available for common stockholders $(1.04) $(1.86) Diluted (loss) per share: Continuing operations $(0.55) $(1.34) Discontinued operations $(0.20) (0.52) Net loss $(0.76) $(1.86) Net loss available for common stockholders $(1.04) $(1.86) Weighted average number of shares outstanding: Basic 6,202,769 6,033,879 Diluted 6,202,769 6,033,879 Devcon International Corp. Consolidated Statement of Operations (Amounts in thousands, except share and per share data) For The Nine Months Ended September 30, 2007 September 30, 2006 Revenue $42,245 $39,451 Cost of Sales (exclusive of depreciation and amortization shown below): 18,237 17,490 Gross profit 24,008 21,961 Operating expenses Selling 3,568 3,575 General & administrative 15,855 15,415 Depreciation and amortization 13,137 14,061 Operating loss (8,552) (11,090) Other income (expense) Interest expense (7,918) (17,512) Interest income 115 175 Change in fair value of derivative instrument 2,308 7,315 Other 16 (35) Loss from continuing operations before income taxes (14,031) (21,147) Income tax (benefit) (1,855) (3,228) Net loss from continuing operations (12,176) (17,919) Loss income from discontinued operations, net of income tax (benefit) expense of $(726) and $395 for the nine months ended September 30, 2007 and 2006, respectively (4,600) (3,524) (Loss) gain on disposal of discontinued operations, net of income tax expense of $ 0 and $ 0 for the nine months ended September 30, 2007 and 2006, respectively (331) 1,013 Net loss $(17,107) $(20,430) Preferred Dividends $(3,319) $- Accretion of Preferred Stock $(1,130) $- Net loss available for common stockholders $(21,556) $(20,430) Basic (loss) per share: Continuing operations $(1.96) $(2.98) Discontinued operations $(0.79) $(0.42) Net loss $(2.75) $(3.39) Net loss available for common stockholders $(3.47) $(3.39) Diluted (loss) per share: Continuing operations $(1.96) $(2.98) Discontinued operations $(0.79) $(0.42) Net loss $(2.75) $(3.39) Net loss available for common stockholders $(3.47) $(3.39) Weighted average number of shares outstanding: Basic 6,210,180 6,023,075 Diluted 6,210,180 6,023,075 Devcon International Corp. Condensed Balance Sheet (in 000s) September 30, 2007 December 31, 2006 (as restated) Cash & Cash Equivalents $3,849 $5,015 Total Assets $185,519 $212,897 Long Term Debt, excluding current portion $94,449 $89,202 Stockholders' Equity $13,317 $34,423 DATASOURCE: Devcon International CONTACT: Marilynn Meek, Financial Relations Board, +1-212-827-3773, , for Devcon International Web site: http://www.devcon-security.com/

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