Glacier Water Announces Second Quarter 2012 Results

VISTA, Calif.--(BUSINESS WIRE)--Glacier Water Services, Inc. (Pink Sheets:GWSV) announced results for the second quarter ended July 1, 2012.

Brian McInerney, Chief Executive Officer of Glacier Water, said, “Our second quarter revenues increased 6.4% versus the same quarter last year and our year-to-date July 1, 2012 revenues increased 6.1%. Same-store revenues have increased 4.6% year-to-date. We continued to aggressively expand our network of machines across the U.S. and Canada adding approximately 1,100 machines across multiple retail channels compared to one year ago. Our second quarter income from operations increased to $1,320,000 and was impacted by an investment in infrastructure to support our continued growth in both water and ice machine placements. These infrastructure costs are incurred in advance of the machine placements reaching maturity in revenue and profits. At the end of the second quarter, Glacier operated more than 21,000 machines located at retailers across the U.S. and Canada, providing high quality, great tasting drinking water and premium ice.”

Revenues for the second quarter ended July 1, 2012 increased 6.4% to $27,966,000 compared to $26,281,000 for the same quarter one year ago. For the six-month period ended July 1, 2012, revenues increased 6.1% to $52,965,000 compared to $49,930,000 for the same period last year. Sales growth was driven by both same store productivity and the increase in machines on location.

The Company’s income from operations for the second quarter ended July 1, 2012 was $1,320,000 compared to $1,283,000 for the same period last year. For the six-month period ended July 1, 2012, income from operations was $1,485,000 compared to $1,662,000 for the same period last year. Income from operations year-to-date was positively impacted by the margin generated from the increased revenues, but was offset by increased operating costs to support the growth in machines, and in particular, labor and benefits, refurbishment, and vehicle costs. Income from operations for the first six months of 2012 and 2011 included non-cash compensation expense of $43,000 and $241,000 respectively.

The Company’s net loss applicable to common stockholders for the quarter ended July 1, 2012 was $1,200,000 or $0.37 per basic and diluted share, compared to a net loss of $1,002,000, or $0.37 per basic share and diluted share, for the same period last year. For the six-month period ended July 1, 2012, the net loss applicable to common stockholders was $3,599,000, or $1.10 per basic and diluted share, compared to a net loss of $2,891,000 or $1.06 per basic share and diluted share, for the same period last year.

Subsequent to the quarter ending July 1, 2012, the Company converted its operating subsidiary, GW Services, organizational form from a corporation to a limited liability company (“GW Services, LLC”) and raised $10,000,000 in equity from a limited liability company whose members are existing Company shareholders. This capital will fund our ongoing expansion of water vending and premium ice machine placements. GW Services, LLC issued $10,000,000 of preferred membership interests and 83,333 common membership interests. The preferred interests pay a dividend at an annual rate equal to the one-year treasury rate plus 6%, payable quarterly to the extent GW Services, LLC has adequate cash flow. The preferred interests may be redeemed at a premium amount by GW Services, LLC under certain conditions, including certain interest rate increases and/or liquidation.

With more than 21,000 machines located in 46 States throughout the United States and Canada, Glacier is the leading provider of high quality, low-priced drinking water dispensed to consumers through self-service bottled water machines located at supermarkets and other retail locations.

Statements in this announcement that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A copy of the Company’s audited financial statements for the year ended January 1, 2012 are available on the Company’s website, www.glacierwater.com, or can be obtained by contacting Steve Stringer at [phone].

FINANCIAL RESULTS			GLACIER WATER SERVICES, INC.
GLACIER WATER SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
					Three Months Ended				Six Months Ended
					July 3,		July 1,		July 3,		July 1,
					2011		2012		2011		2012
Revenues				$	26,281		27,966		49,930		52,965
Cost of revenues:
	Operating expenses				17,575		18,742		33,738		35,933
	Depreciation and amortization				3,187		3,247		6,225		6,411
		Total cost of revenues			20,762		21,989		39,963		42,344
	Gross profit				5,519		5,977		9,967		10,621
Selling, general, and administrative expenses					4,236		4,657		8,305		9,136
	Income from operations				1,283		1,320		1,662		1,485
Interest expense					2,268		2,509		4,530		5,063
	Loss before income taxes				(985	)	(1,189	)	(2,868	)	(3,578	)
Income taxes expense					17		11		23		21
	Net loss			$	(1,002	)	(1,200	)	(2,891	)	(3,599	)
Basic and diluted net loss per share				$	0.37		0.37		1.06		1.10
Weighted average shares used in calculation					2,720,048		3,276,195		2,720,048		3,276,189

FINANCIAL RESULTS				GLACIER WATER SERVICES, INC.
GLACIER WATER SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
						January 1,		July 1,
Assets						2012		2012
Current assets:
	Cash and cash equivalents				$	3,425		4,177
	Accounts receivable, net of allowance for doubtful accounts
		of $64 as of January 1, 2012 and July 1, 2012				1,777		1,986
	Repair parts					3,934		3,920
	Prepaid expenses and other					7,201		2,075
			Total current assets			16,337		12,158
Property and equipment, net						53,896		57,832
Goodwill						7,080		7,515
Investment in Glacier Water Trust I Common Securities						2,629		2,629
Investment in Glacier Water Trust I Preferred Securities						3,648		3,648
Equity investment						1,000		1,000
Deferred financing costs, net						4,266		4,204
Other assets						872		898
			Total assets		$	89,728		89,884
Liabilities and Stockholders’ Deficit
Current liabilities:
	Accounts payable				$	2,715		2,322
	Accrued commissions					4,026		4,672
	Accrued liabilities					2,654		3,011
	Bank overdraft					1,027		2,157
			Total current liabilities			10,422		12,162
Junior subordinated debentures						87,629		87,629
Line of credit						32,056		34,538
Series B junior subordinated debentures						10,002		10,079
Long-term portion of deferred rent						121		164
			Total liabilities			140,230		144,572
Commitments and contingencies
Stockholders’ deficit:
	Preferred Stock, $0.01 par value; Authorized 100,000 shares;
		issued and outstanding, 0 shares at January 1, 2012 and July 1, 2012				-		-
	Common stock, $0.01 par value. Authorized 10,000,000 shares,
		issued and outstanding, 3,225,767 and 3,276,482 shares at
		January 1, 2012 and July 1, 2012, respectively				49		50
	Additional paid-in capital					24,153		23,557
	Accumulated deficit					(42,500	)	(46,099	)
	Treasury stock, at cost, 1,587,606 shares at January 1, 2012 and July 1, 2012					(32,562	)	(32,562	)
	Accumulated other comprehensive income					358		366
			Total stockholders’ deficit			(50,502	)	(54,688	)
			Total liabilities and stockholders’ deficit		$	89,728		89,884