NUCO Nuco2 (MM)

Operating Cash Flow Increases Significantly STUART, Fla., Nov. 5 /PRNewswire-FirstCall/ -- NuCO2 Inc. (NASDAQ:NUCO), the largest supplier in the U.S. of bulk CO2 systems and services for carbonating fountain beverages, today reported operating results for the fiscal first quarter ended September 30, 2007, in line with the Company's fiscal 2008 strategic growth plan. -- Total revenues for the quarter amounted to $34.9 million, compared with $32.4 million in the corresponding year-ago period, an increase of 8.0%. -- Gross profit increased to $18.3 million from $17.6 million in the prior year's first quarter and, as a percentage of total revenues was 52.3% as compared to 54.3% in the year-ago same period. The percentage change represents increased expenses for accelerated equipment upgrades offset by productivity gains in delivery costs during the first quarter. -- Selling, general and administrative expenses (SG&A) amounted to $6.4 million, compared with $6.6 million in the prior year period, and as a percentage of total revenues improved to 18.2% from 20.3% reflecting increased efficiencies, particularly in selling and marketing expenses. -- EBITDA (earnings before interest, taxes, depreciation and amortization), which the Company regards as useful information as to liquidity, excluding non-cash stock option expense, totaled $11.7 million in the quarter, compared with $11.3 million a year ago. -- Fully diluted net income per share for the fiscal 2008 first quarter rose 25% to $0.20, from $0.16 a year ago. -- Operating cash flow for the quarter amounted to $13.0 million, up from $8.8 million in the corresponding year-ago period, an increase of 47%, reflecting gains in income and working capital, particularly reductions in accounts receivable. -- Free cash flow, defined as cash flow from operations less capital expenditures, amounted to $8.1 million for the quarter, compared to $0.5 million in the year ago period. -- Capital expenditures for the quarter amounted to $4.8 million, compared to $8.3 million a year ago, a reduction of 41.6%. The reduction in capex is in line with the Company's program to improve asset utilization and reduce tank purchases, in part by accelerated tank recoveries and tank refurbishing. -- A total of 274,195 common shares were repurchased by the Company at a cost of $7.1 million during the quarter as part of the Company's previously announced $50 million share repurchase plan. To date, a total of 1,180,304 common shares have been repurchased at a cost of approximately $29.6 million. The share repurchases were financed from free cash flow. "The quarter's results were solidly on track with our plan and reflect gains in operational productivity, asset management and providing the highest quality customer service, while strengthening operating and free cash flow," said Michael E. DeDomenico, Chairman and CEO. "During the quarter, we continued to achieve targeted gains in adding to our customer roster while refining and strengthening our customer base in line with our strategic focus on higher quality accounts." About NuCO2 NuCO2 Inc. is the leading and only national provider of bulk CO2 products and services to the U.S. fountain beverage industry. With service locations within reach of virtually all of the fountain beverage users in the Continental U.S., NuCO2's experienced professionals comprise the largest network of sales and support specialists in the industry serving national restaurant chains, convenience stores, theme parks and sports and entertainment complexes, among others. NuCO2's revenues are largely derived from the installation, maintenance and rental of bulk CO2 systems and delivery of beverage grade CO2, which are increasingly replacing high pressure CO2, until now the traditional method for carbonating fountain beverages. The technology offers consistent quality, greater ease of operation, and heightened efficiency and safety utilizing permanently installed on-site cryogenic storage tanks. NuCO2 provides systems and services that allow its customers to spend more time serving their customers. Visit the Company's website at http://www.nuco2.com/. Conference Call A conference call to report operating results for the fiscal 2008 first quarter will be held tomorrow, Tuesday, November 6, 2007, at 11:00 a.m. Eastern Time. It can be accessed over the Internet via NuCO2's website at http://www.nuco2.com/. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available on NuCO2's website shortly after the call. Statements contained in this press release concerning the Company's outlook, competitive position and other statements of management's beliefs, goals and expectations are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. With respect to such forward-looking statements, we claim protection under the Private Securities Litigation Reform Act of 1995. These risks and uncertainties include, but are not limited to, the ability of the Company to add new accounts, competition and future operating performance. The Company disclaims any obligation to update any forward-looking statement as a result of developments occurring after the date of this press release. NuCO2 Inc. CONDENSED BALANCE SHEETS (In thousands) ASSETS September 30, 2007 June 30, 2007 Current assets: Cash and cash equivalents $246 $343 Trade accounts receivable, net of allowance for doubtful accounts of $735 and $1,004, respectively 12,130 11,823 Inventories 320 297 Prepaid insurance expense and deposits 3,416 3,121 Prepaid expenses and other current assets 1,095 1,412 Deferred tax assets - current portion 8,262 8,264 Total current assets 25,469 25,260 Property and equipment, net 121,764 122,364 Goodwill & other intangible assets, net 38,648 39,180 Deferred tax assets 1,970 3,813 Other 225 221 Total other assets 40,843 43,214 Total assets $188,076 $190,838 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $8,225 $6,061 Accrued expenses & other current liabilities 5,524 5,889 Total current liabilities 13,749 11,950 Long-term debt 33,000 34,750 Customer deposits 4,270 4,246 Total liabilities 51,019 50,946 Total shareholders' equity 137,057 139,892 Total liabilities & shareholders' equity $188,076 $190,838 NuCO2 Inc. STATEMENTS OF INCOME (In thousands, except per share amounts) Three Months Ended September 30, 2007 2006 Revenues: Product sales $23,393 $21,551 Equipment rentals 11,540 10,805 Total revenues 34,933 32,356 Costs and expenses: Cost of products sold, excluding depreciation & amortization 14,532 13,986 Cost of equipment rentals, excluding depreciation & amortization 2,132 791 Selling, general and administrative expenses 6,370 6,557 Depreciation and amortization 5,023 4,845 Loss on asset disposal 946 442 29,003 26,621 Operating income 5,930 5,735 Interest expense 580 576 Income before provision for income taxes 5,350 5,159 Provision for income tax 2,360 2,640 Net income $2,990 $2,519 Weighted average number of common and common equivalent shares outstanding Basic 14,843 15,675 Diluted 15,172 16,042 Net income per basic common share $0.20 $0.16 Net income per diluted common share $0.20 $0.16 RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES EBITDA AND EBITDA EXCLUDING STOCK OPTION EXPENSE September 30, 2007 2006 Net income $2,990 $2,519 Interest expense 580 576 Depreciation & amortization 5,023 4,845 Provision for income taxes 2,360 2,640 EBITDA $10,953 $10,580 Noncash option expense 756 699 EBITDA excluding stock option expense $11,709 $11,279 Cash flows provided by (used in): Operating activities $12,979 $8,835 Investing activities $(4,849) $(8,302) Financing activities $(8,227) $(402) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is one of the principal financial measures by which the Company measures its financial performance. EBITDA is a widely accepted financial indicator used by many investors, lenders and analysts to analyze and compare companies on the basis of operating performance, and the Company believes that EBITDA provides useful information regarding the Company's ability to service its debt and other obligations. However, EBITDA does not represent cash flow from operations, nor has it been presented as a substitute to operating income or net income as indicators of the Company's operating performance. EBITDA excludes significant costs of doing business and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States of America. In addition, the Company's calculation of EBITDA may be different from the calculation used by its competitors, and therefore comparability may be affected. The Company's lender also uses EBITDA to assess the Company's compliance with debt covenants. These financial covenants are based on a measure that is not consistent with accounting principles generally accepted in the United States of America. Such measure is EBITDA (as defined) as modified by certain defined adjustments. DATASOURCE: NuCO2 Inc. CONTACT: Michael E. DeDomenico, Chairman and CEO, or Robert R. Galvin, CFO and Executive Vice President, +1-772-221-1754, or Web site: http://www.nuco2.com/

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