PRWT Services, Inc. (�PRWT� or the �Company�), a minority-owned
pharmaceutical services, facilities management and business
processing services company, today announced unaudited financial
results for the first quarter ended March 31, 2009.
On March 16, 2009, PRWT announced it had entered into a
definitive agreement with KBL Healthcare Acquisition Corp. III
(�KBL�) (NYSE AMEX: KHA, KHA.U, KHA.WS), providing for a business
combination in which PRWT will become the publicly traded company
upon closing. The business combination is expected to close in the
third quarter of 2009. PRWT will retain its status as a minority
business enterprise following the consummation of the business
combination.
PRWT�s consolidated revenues for the first quarter of 2009
increased approximately 120.5% to $64.5 million from $29.2 million
for the first quarter of 2008. Product revenues at Cherokee
Pharmaceuticals (�Cherokee�), PRWT�s pharmaceutical manufacturing
and distribution subsidiary, increased by more than 455% to $45.5
million for the first quarter of 2009 from $8.2 million for the
first quarter of 2008. Cherokee delivered five different products
to customers in the first quarter of 2009 compared to one product
in the first quarter of 2008, its first quarter of operation under
PRWT, during which it was primarily focused on building inventory
levels. Service revenues at U.S. Facilities, Inc. (�USF�), the
Company�s 51% owned facilities management and maintenance business,
and PRWT Services, Inc., the Company�s business processing services
(�BPS�) business, declined to $18.9 million for the first quarter
of 2009 from $21.0 million for the first quarter of 2008.
Consolidated gross profit for the first quarter of 2009 improved
to $17.6 million, or approximately 27.3% of revenues, from $0.9
million, or 3.1% of revenues, for the first quarter of 2008. Gross
profit from product revenue for the first quarter of 2009 was $15.6
million, or approximately 34.3% of revenues, as compared to a loss
of $1.8 million in the prior year�s quarter, driven by the
significant increase in revenues due to the ramp up of the Cherokee
facility as well as a favorable mix of higher margin products
delivered in the first quarter of 2009. Gross profit from service
revenue was $2.0 million (approximately 10.4% of revenue) for the
first quarter of 2009 versus $2.7 million (approximately 12.7% of
revenue) for the first quarter of 2008.
Consolidated selling, general and administrative (�SG&A�)
expenses for the first quarter of 2009 were $6.5 million, or
approximately 10.0% of revenues, as compared to $4.1 million, or
approximately 14.0% of revenues, in the prior year�s quarter. The
increase in SG&A expenses was primarily driven by an increase
of $0.8 million at Cherokee, which added resources to support
higher operating levels and increased sales and marketing activity,
and by an increase of $1.1 million at corporate, represented
largely by the addition of executive management and business
development personnel. SG&A declined as a percentage of revenue
due to the rapid sales growth, which enabled these expenses to be
spread across a larger base.
Earnings before interest expense, taxes, depreciation and
amortization (�EBITDA�) for the first quarter of 2009 was $12.3
million, or approximately 19.0% of revenue, compared to an EBITDA
loss of $2.4 million for the first quarter of 2008. Net income was
$8.9 million, or approximately 13.8% of revenue, for the first
quarter of 2009 compared to a net loss of $3.8 million for the
first quarter of 2008. A reconciliation from net income (loss) to
EBITDA (a Non-GAAP measure) is provided in the Condensed
Consolidated Statements of Operations below.
PRWT�s balance sheet at March 31, 2009 reflected cash, cash
equivalents and trading securities (excluding restricted cash) of
$5.8 million, which was a decrease of $29.8 million from December
31, 2008. Cash usage was primarily driven by an increase in
accounts receivable and a reduction in unearned revenue at Cherokee
associated with increased product deliveries during the first
quarter of 2009. The increase in accounts receivable was also the
result of the timing of payments from Cherokee�s largest customer.
Total debt (net of discounts) was $62.8 million at March 31, 2009
as compared to $61.5 million at December 31, 2008.
Harold T. Epps, President and CEO of PRWT, commented, �The
acquisition of Cherokee, combined with the investments we have made
in the plant, property, and people, have enabled us to achieve
significant increases in consolidated revenues, margins and profits
for the first quarter of 2009. We believe that Cherokee provides us
with a significant opportunity based on its existing pharmaceutical
platform, which includes state-of-the-art manufacturing and
distribution capabilities, significant under-utilized capacity and
operating leverage, and long-standing relationships with industry
leaders. Our service businesses � USF and BPS � remain stable,
steady producers of income and cash flows. We are endeavoring to
expand our operations and industry presence, with a focus on life
sciences and pharmaceutical services. In doing so, we believe that
we are positioning the company to address significant future market
opportunities.�
John Elliot, President of Cherokee, added, �We believe that the
results at Cherokee for the first quarter of 2009 validate PRWT�s
strategic vision, operational execution, and management abilities.
We delivered high product quantities and enjoyed a favorable
product mix in the quarter, which enhanced our performance. Results
for the balance of the year will be subject to the delivery
requirements of our customers and mix of products delivered in any
given quarter. We are actively pursuing opportunities to broaden
our customer relationships, enlarge our product portfolio, and
expand the suite of pharmaceutical-related services we can
provide.�
Marlene Krauss, M.D., Chief Executive Officer of KBL, commented,
�We are very pleased with the first quarter results, particularly
the strong performance of Cherokee, which we believe will be the
primary growth driver going forward. These results support the
earnings potential we envisioned when we entered into this
transaction. We are excited to be working with this world class,
performance driven management team and look forward to closing our
transaction in the early part of the third quarter of 2009.�
About KBL Healthcare
Acquisition Corp. III
KBL is a blank check company organized under the laws of the
State of Delaware on January 9, 2007. KBL was formed for the
purpose of effecting a merger, capital stock exchange, stock
purchase, asset acquisition or other similar business combination
with one or more operating businesses in the healthcare industry in
any geographic location. On July�25, 2007, KBL closed its initial
public offering (�IPO�) of 17.25 million units, including the
underwriters� full over-allotment option, generating $138.0 million
in gross proceeds. Each unit consisted of one share of common stock
and one warrant to purchase one share of common stock at an
exercise price of $6.00 per share. As of March 31, 2009, KBL held
approximately $135.4 million in a trust account maintained by an
independent trustee, which will be released to KBL upon the
consummation of the business combination. Additional information is
available at www.kblhealthcare.com.
The business combination with PRWT is subject to customary
closing conditions, including (a) approval by KBL stockholders, (b)
approval by KBL stockholders of certain amendments to the
certificate of incorporation of KBL and (c) fewer than 30% of the
shares of KBL Common Stock issued in its IPO voting against the
merger and demanding a cash conversion of their shares in
accordance with KBL�s amended and restated certificate of
incorporation.
The information on KBL�s website is not, and shall not be deemed
to be, a part of this notice or incorporated in filings KBL makes
with the SEC.
About PRWT Services,
Inc.
PRWT is a diversified enterprise of pharmaceutical manufacturing
and distribution, facilities management and maintenance, and
business process solutions services. As a nationally recognized
minority-business enterprise, PRWT is one of the largest
minority-owned businesses headquartered in the Greater Philadelphia
Region and has been ranked in the top 100 minority-owned service
industry businesses in the United States by Black Enterprise
magazine for the past nine years. For more information, visit
www.prwt.com.
The information on PRWT�s website is not, and shall not be
deemed to be, a part of this notice or incorporated in filings PRWT
makes with the SEC.
Unaudited Financial Information
All quarterly financial information presented in this release is
unaudited, may be subject to further adjustment and is not
necessarily indicative of PRWT�s financial performance for the
entire fiscal year.
Use of Non-GAAP Financial
Information
This release includes presentations of EBITDA, which is defined
herein as net income plus depreciation and amortization, interest
expense and income tax expense. The Company believes that the
presentation of EBITDA provides useful information to investors as
it indicates more clearly the ability of the Company�s assets to
generate cash sufficient to pay interest on its indebtedness, meet
capital expenditure and working capital requirements and otherwise
meet its obligations as they become due. EBITDA is commonly used as
a measure of leverage capacity, debt service ability and liquidity.
EBITDA is not considered a measure of financial performance under
U.S. generally accepted accounting principles (GAAP), and the items
excluded from EBITDA are significant components in understanding
and assessing our financial performance. EBITDA should not be
considered in isolation or as an alternative to such GAAP measures
as net income, cash flows provided by or used in operating,
investing or financing activities or other financial statement data
presented in our consolidated financial statements as an indicator
of financial performance or liquidity. Since EBITDA is not a
measure determined in accordance with GAAP and is susceptible to
varying calculations, EBITDA, as presented, may not be comparable
to other similarly titled measures of other companies.
Forward Looking
Statements
This press release contains forward-looking statements.
Forward-looking statements include, but are not limited to,
statements regarding our or our management�s expectations, hopes,
beliefs, intentions or strategies regarding the future. In
addition, any statements that refer to projections, forecasts or
other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements. The words �anticipate,� �believe,� �continue,� �could,�
�estimate,� �expect,� �intend,� �may,� �might,� �plan,� �possible,�
�potential,� �predict,� �should,� �would� and similar expressions
may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking.
Forward-looking statements may include, for example, statements
about our: ability to complete a combination with one or more
target businesses; success in retaining or recruiting, or changes
required in, our officers, key employees or directors following a
business combination; our management team�s allocation of their
time to other businesses and potentially having conflicts of
interest with our business or in approving a business combination,
as a result of which they would then receive expense
reimbursements; potential inability to obtain additional financing
to complete a business combination; limited pool of prospective
target businesses; potential change in control if we acquire one or
more target businesses for stock; public securities� limited
liquidity and trading; failure to list or delisting of our
securities from the NYSE Amex or an inability to have our
securities listed on the NASDAQ Stock Exchange following a business
combination; use of proceeds not in trust or available to us from
interest income on the trust account balance; or our financial
performance following this offering.
The forward-looking statements contained in this release are
based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no
assurance that future developments affecting us will be those that
we have anticipated. These forward-looking statements involve a
number of risks, including those described in the registration
statement on Form S-4 filed by KBL and PRWT with the SEC on April
22, 2009. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws and/or if and when management knows or
has a reasonable basis on which to conclude that previously
disclosed projections are no longer reasonably attainable.
The registration statement on Form S-4 filed by KBL and PRWT
contains a preliminary proxy statement/prospectus. Stockholders of
KBL and other interested persons are advised to read the
preliminary proxy statement/prospectus, and all amendments thereto,
and, when available, the definitive proxy statement/prospectus in
connection with KBL�s solicitation of proxies for the special
meeting to be held to approve the business combination with PRWT,
because these will contain important information about PRWT, KBL
and the proposed business combination. The definitive proxy
statement will be mailed to stockholders as of a record date to be
established for voting on the proposed business combination.
Stockholders will also be able to obtain a copy of the preliminary
proxy statement/prospectus and, when available, the definitive
proxy statement/prospectus, without charge, at the SEC�s internet
site at http://www.sec.gov or
by directing a request to: KBL Healthcare Acquisition Corp. III.,
380 Lexington Avenue, 31st Floor, New York, NY 10168.
KBL and�its�directors and executive officers,�and�PRWT and its
stockholders, directors and executive officers, and their
respective affiliates, may enter into additional arrangements to
purchase shares of common stock and/or�warrants of KBL in open
market or privately negotiated transactions.
KBL and its stockholders,�directors and executive
officers�and�PRWT and its stockholders, directors and executive
officers may be deemed to be participants in the solicitation of
proxies for the special meeting of KBL stockholders to be held to
approve the merger.
�
PRWT Services, Inc.
Condensed Consolidated
Statements of Operations
(in thousands of US
dollars)
(unaudited)
� Three Months Ended March 31, 2009 � 2008 � Product revenue $
45,513 $ 8,196 Service revenue �
18,947 � �
21,031 � Total revenue 64,460 29,227 Cost of product
revenue 29,911 9,948 Cost of service revenue �
16,973
� �
18,367 � Gross profit 17,576 912 Selling, general
and administrative expense �
6,455 � �
4,078 � Income/(loss) from operations 11,121 (3,166 )
Interest expense 1,395 643 Other income �
(306 ) �
(315 ) Income/(loss) before taxes and non-controlling
interest 10,032 (3,494 ) Income tax expense 1,125 162 Net income
attributable to non-controlling interest �
1 � �
124 � Net income/(loss) attributable to PRWT Services,
Inc.
$ 8,906 �
$
(3,780 ) �
Reconciliation of net income (loss) to
EBITDA:
Net income (loss) $ 8,906 $ (3,780 ) Depreciation &
amortization 833 548 Interest expense 1,395 643 Income tax expense
�
1,125 � �
162 � EBITDA
$
12,259 �
$ (2,427
) �
� �
PRWT Services, Inc.
Condensed Consolidated Balance
Sheets
(in thousands of US
dollars)
� As of As of March 31, 2009 December 31, 2008 (unaudited) � Cash,
cash equivalents and trading securities $ 5,781 $ 35,556 Restricted
cash 1,647 1,645 Accounts receivable 42,216 16,810 Inventory 42,338
43,971 Prepaids and other current assets �
4,194 � �
2,602 � Total current assets 96,176 100,584 Property
and equipment, net 19,320 18,435 Construction in process 5,379
4,406 Goodwill and intangibles, net 4,259 4,324 Other assets �
3,423 � �
3,391 � Total assets
$ 128,557 �
$
131,140 � � Line of credit $ 2,300 $ 2,300 Current
portion of long-term debt 16,187 253 Accounts payable 14,689 15,860
Accrued expenses and other current liabilities 15,852 17,005
Unearned revenue �
43,305 � �
53,202 �
Total current liabilities 92,333 88,620 Long-term debt, net of
current portion 44,299 58,972 Other long-term liabilities �
4,301 � �
4,837 � Total liabilities
140,933 152,429 Common stock and paid-in capital 28,296 28,290
Accumulated deficit (39,669 ) (48,575 ) Shareholder loans (745 )
(745 ) Treasury stock �
(2,355 ) �
(2,355 ) Total PRWT Services, Inc.
stockholders� deficit (14,473 ) (23,385 ) Non-controlling interest
�
2,097 � �
2,096 � Total stockholders�
deficit �
(12,376 ) �
(21,289 ) Total liabilities and
stockholders� deficit
$ 128,557 �
$ 131,140 � �
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