Synagro Technologies, Inc. (Nasdaq:SYGR): Key Second Quarter
Highlights and Other Events -- Payment of initial cash dividend on
August 2, 2005 of $0.10 per common share to all of its shareholders
of record as of July 18, 2005 -- New $305 million senior secured
credit facility closed in connection with repurchase of $150
million of 9 1/2 % subordinated notes, the conversion of preferred
stock, and $160 million common stock offering (the
"Recapitalization") -- Revenue during the quarter increased 1.7% to
$83.5 million from the second quarter in 2004 -- Net loss before
preferred stock dividends for the quarter totaled $13.9 million
after charges for $1.5 million of transaction costs and expenses,
$6.8 million of stock option redemptions and transaction bonuses,
and $19.5 million of debt extinguishment costs related to the
Recapitalization -- Earnings before interest, taxes, depreciation,
and amortization, adjusted to exclude transaction costs and
expenses, stock option redemptions and transaction bonuses, and
debt extinguishment costs for the quarter totaled $17.1 million
Synagro Technologies, Inc. (Nasdaq SmallCap and ArcaEx
Markets:SYGR), ("the Company") announced today its results of
operations for the three and six months ended June 30, 2005.
Commenting on the results for the quarter, the Company's Chief
Executive Officer, Robert C. Boucher, Jr. stated, "We are pleased
to report that yesterday we paid our initial quarterly dividend of
$0.10 per share. During the quarter we recapitalized the Company's
balance sheet including refinancing our debt, converting all
outstanding preferred stock into common stock, and completing a
primary and secondary common stock offering. Our new senior credit
agreement allows us to pay dividends and should result in cash
interest savings of over $4 million per year. The Recapitalization
resulted in $27.8 million of expected write-offs for transaction
costs and expenses, stock option redemptions and transaction
bonuses, and debt extinguishment costs, which makes our second
quarter operating results more difficult to analyze, but they are
in-line with our expectations going into the quarter." For the
quarter our top line revenue increased 1.7% to $83.5 million,
including a $4.4 million increase in design build revenues offset
by reductions in event and contract revenues. The reductions in
event and contract revenues were anticipated when we established
our revenue and earnings guidance for 2005 as our in process and
pre-sold event work was higher at the beginning of 2004 than 2005
and we generated $6.7 million of revenue in 2004 on a long-term
cleanout contract that will not have significant activity in 2005.
This contract did not generate revenue this quarter, but did
generate $2.2 million of revenue in the second quarter of 2004.
Operating income for the quarter, adjusted to exclude $1.5 million
of transaction costs expenses and $6.8 million of stock option
redemptions and transaction bonuses related to the Recapitalization
totaled $11.7 million compared to $13.9 million reported last year.
Our earnings before interest, taxes, depreciation and amortization
(EBITDA) for the quarter, adjusted to exclude $27.8 million of
write-offs related to the Recapitalization, totaled $17.1 million
compared to $18.8 million reported last year. The decreases in
adjusted operating income and EBITDA are primarily due to the $3.8
million increase in low margin construction revenue, the $2.2
million decrease in revenue on a cleanout contract that had higher
than normal margins, a $0.6 million increase in facility natural
gas costs, and a $0.6 million decrease in gains from asset sales.
We are expecting higher natural gas costs for the remainder of the
year but also expect a significant gain from an asset sale in the
third quarter. During the quarter we continued to make progress on
the five facility development projects that are expected to be
completed over the next year. We expect these projects will
generate approximately $26.0 million of annual revenue and $9.0
million of EBITDA once completed. Our revenue and EBITDA guidance
remains unchanged at $320 to $330 million, and $66 to $70 million,
respectively; while our guidance for net income (loss) before
preferred stock dividends has been revised to a range of a loss of
$3.0 million to a loss of $0.2 million as a result of the $27.8
million of write-offs related to the Recapitalization. See Note C
to the attached year to date financial statements for a
reconciliation of EBITDA to net loss before preferred stock
dividends. June 30, 2005 -- Second Quarter Financial Results
Revenue for the quarter ended June 30, 2005, increased $1.4 million
or 1.7 percent to $83.5 million from $82.2 million in the
comparable period last year. Design build construction revenues
increased $4.4 million, primarily due to a $3.9 million increase in
construction revenue on the Honolulu dryer facility project which
is expected to be completed and commence operations by year end.
Contract revenues decreased $1.5 million due primarily to an
expected $2.2 million decrease in revenue on a long-term cleanout
job partially offset by an increase in revenues from the Sacramento
dryer facility that commenced operations in December 2004, and
other contract changes. Event revenues decreased $1.0 million due
to timing of larger projects between years and are expected to
significantly increase in the second half of 2005. During the
quarter, the Company entered into a new $305 million senior credit
agreement, repaid $190 million of debt under its previously
outstanding senior and subordinated debt agreements, converted all
outstanding shares of preferred stock into 41,885,597 shares of
common stock, and completed a $160 million offering of 9,302,326
primary and 27,847,674 secondary shares of common stock (the
"Recapitalization"). Accordingly, the Company incurred certain
costs and write-offs relating to the Recapitalization, including
$1.5 million of transaction costs and expenses, $6.8 million of
stock option redemptions and transaction bonuses, and $19.5 million
of debt extinguishment costs. The Company also recognized as
dividends $4.6 million of previously unrecognized accretion on
preferred stock. These costs and write-offs have been included in
the Company's second quarter consolidated statement of operations.
Operating income for the quarter totaled $3.4 million compared to
$13.9 million in the comparable quarter last year. Operating
income, adjusted to exclude transaction costs, and expenses
totaling $1.5 million, stock option redemptions and transaction
bonuses of $6.8 million, decreased by approximately $2.2 million to
$11.7 million compared to $13.9 million reported in the second
quarter of 2004. This decrease in operating income is a result of
revenue mix changes on gross profit associated with the increase in
low margin construction revenue, the decrease in higher margin
contract and event revenues, a $0.6 million increase in the cost of
natural gas of certain facilities, and a $0.6 million decrease in
gains from asset sales. Operating income was positively impacted by
a $0.3 million decrease on general and administrative expenses
which decreased due to $0.8 million of net credits related to
reserve adjustments. Pre-tax income (loss) for the quarter
decreased to a loss of $22.2 million from income of $8.4 million
reported in the second quarter of 2004. Pre-tax income, adjusted to
exclude the transaction costs and expenses, stock option
redemptions and transaction bonuses, and debt extinguishment costs
related to the Recapitalization totaling $27.8 million, totaled
$5.6 million and decreased $2.8 million from the prior year,
including the $2.2 million decrease in operating income, and a $0.6
million increase in interest expense, which relates to increases in
market interest rates and interest on a facility financed with tax
exempt debt that commenced operations in December 2004. Net loss
before preferred stock dividends totaled $13.9 million, while net
loss applicable to common stock totaled $20.4 million, or $0.81 per
diluted share for the three months ended June 30, 2005, compared to
net income of $3.0 million or $0.09 per diluted share for the same
period in 2004. Supplemental proforma diluted earnings per share
totaled $0.06 for the three months ended June 30, 2005.
Supplemental proforma diluted earnings per share is intended to
show the proforma effects assuming the Recapitalization had
occurred at the beginning of 2005 (See Note B to the attached
financial statements for the detailed calculation of supplemental
EPS.) Earnings before interest, taxes, depreciation and
amortization expense (EBITDA) for the quarter, adjusted to exclude
the transaction costs and expenses, stock option redemptions and
transaction bonuses, and debt extinguishment costs related to the
Recapitalization totaling $27.8 million, decreased to $17.7 million
from $18.8 million in the comparable quarter last year. See Note C
to the attached financial statements for the reasons why management
believes that EBITDA is a useful financial measure and for a
reconciliation of EBITDA to net income (loss) before preferred
stock dividends. June 30, 2005 -- Year-to-Date Financial Results
Revenue for the six months ended June 30, 2005, increased $4.9
million or 3.2 percent to $159.7 million from $154.8 million in the
comparable six months last year. Design build construction revenues
increased $12.9 million primarily due to a $11.8 million increase
in construction revenue on the Honolulu dryer facility project
which is expected to be completed and start up by year end.
Contract revenues decreased $3.0 million due primarily to an
expected $3.2 million decrease in revenue on a long-term cleanout
job partially offset by an increase in revenues from the Sacramento
dryer facility that commenced operations in December 2004, and
other contract changes. Event revenues decreased $3.3 million due
to several large event projects in 2004. Event revenues are
expected to significantly increase in the second half of 2005.
Operating income for the six months totaled $9.3 million compared
to $20.6 million in the comparable six months last year. Operating
income, adjusted to exclude transaction costs and expenses totaling
$1.5 million, and stock option redemptions and transaction bonuses
of $6.8 million decreased by approximately $2.9 million to $17.6
million compared to $20.6 million reported in the first six months
of 2004. This decrease in operating income is a result of revenue
mix changes associated with the increase in low margin construction
revenue, a decrease in higher margin contract and event revenues, a
$1.5 million increase in the cost of natural gas and kerosene at
certain facilities, and a $0.6 million decrease in gains from asset
sales, partially offset by a decrease in repair costs.
Approximately $0.4 million of the fuel increase related to an
unexpected supply interruption at a dryer facility in January 2005.
Pre-tax income (loss) for the six months decreased to a loss of
$22.8 million from income of $9.8 million reported in the first six
months of 2004. Pre-tax income, adjusted to exclude transaction
costs and expenses, stock option redemptions and transaction
bonuses, and debt extinguishment costs related to the
Recapitalization totaling $27.8 million, totaled $5.0 million and
decreased $4.8 million from the prior year, including the $2.9
million decrease in operating income, and a $1.8 million increase
in interest expense, which relates to increases in market interest
rates and interest on a facility financed with tax exempt debt that
commenced operations in December 2004. Net loss before preferred
stock dividends totaled $14.2 million, while net loss applicable to
common stock totaled $23.1 million, or $1.02 per diluted share for
the six months ended June 30, 2005, compared to net income of $1.7
million or $0.09 per diluted share for the same period in 2004.
Supplemental proforma diluted earnings per share totaled $0.07 for
the six months ended June 30, 2005. Supplemental proforma diluted
earnings per share is intended to show the proforma effects
assuming the Recapitalization had occurred at the beginning of 2005
(See Note B to the attached financial statements for the detailed
calculation of supplemental EPS.) EBITDA for the first six months
of 2005, adjusted to exclude the transaction costs and expenses,
stock option redemptions and transaction bonuses, and debt
extinguishment costs related to the Recapitalization totaling $27.8
million, decreased to approximately $28.3 million from
approximately $30.1 million in the comparable period last year. See
Note C to the attached financial statements for the reasons why
management believes that EBITDA is a useful financial measure and
for a reconciliation of EBITDA to net income before preferred stock
dividends. Consistent with historical operating trends, the Company
expects to report lower profits during the first and fourth
calendar quarters than the second and third quarters as seasonal
weather conditions prevent the Company from handling and processing
customer materials in several geographic markets. Unseasonable or
unusual weather conditions may materially impact the Company's
results of operations and cash flow during the affected period. A
reconciliation of all non-Generally Accepted Accounting Principles
financial information disclosed herein is included in the notes to
the attached financial statements. Synagro Technologies, Inc.
believes that it is the largest recycler of biosolids and other
organic residuals in the United States and it believes that it is
the only national company focused exclusively on the estimated $8
billion organic residuals industry, which includes water and
wastewater residuals. The Company serves approximately 600
municipal and industrial water and wastewater treatment accounts
with operations in 37 states and the District of Columbia. The
Company offers a broad range of water and wastewater residuals
management services focusing on the beneficial reuse of organic,
nonhazardous residuals resulting from the wastewater treatment
process, including drying and pelletization, composting, product
marketing, incineration, alkaline stabilization, land application,
collection and transportation, regulatory compliance, dewatering,
and facility cleanout services. Safe Harbor Statement This press
release contains certain forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995,
which involve known and unknown risks, uncertainties or other
factors not under Synagro's control which may cause the actual
results, performance or achievement of Synagro to be materially
different from the results, performance or other expectations
implied by these forward-looking statements. These factors include,
but are not limited to: the risk that our stockholders may not
receive the level of dividends provided for in the dividend policy
adopted by our board or any dividends at all; unseasonable weather;
changes in government regulations; the ability to find, timely
close, and integrate acquisitions; changes in federal wastewater
treatment and biosolid regulation; our ability to comply with
federal, state and local environmental regulations or to maintain
and obtain necessary permits; competition in the wastewater
residuals management business; the risk of early termination of
customer contracts; loss of significant customer; our ability to
complete new facilities as scheduled; our level of debt; our
ability to obtain additional financing; our ability to maintain
sufficient insurance; the effect of the restrictions in our senior
secured credit facility on our operations; and our ability to
service our debt. Other factors are discussed in Synagro's periodic
filings with the Securities and Exchange Commission. -0- *T Synagro
Technologies, Inc. Consolidated Statement of Operations For the
Three Months Ended June 30 (dollars in thousands, except per share
data) (unaudited) 2005 2004 ---------------- -------------- Revenue
$ 83,532 100.0% $82,164 100.0% Cost of operations 66,561 79.7%
63,253 77.0% -------- ------- ------- ------ Gross profit 16,971
20.3% 18,911 23.0% Transaction costs and expenses 1,517 1.9% --
0.0% Stock option redemptions and transaction bonuses 6,805 8.1% --
0.0% General and administrative expenses 5,390 6.4% 5,699 6.9% Gain
on sale of assets (129) (0.2)% (734) (0.9)% -------- -------
------- ------ Income from operations 3,388 4.1% 13,946 17.0% Debt
extinguishment costs 19,487 23.3% -- 0.0% Interest expense, net
6,086 7.3% 5,582 6.8% Other expense (income), net 62 0.1% (40)
(0.0)% -------- ------- ------- ------ Other expense, net 25,635
30.7% 5,542 6.8% -------- ------- ------- ------ Income (loss)
before provision for income taxes (22,247) (26.6)% 8,404 10.2%
Provision (benefit) for income taxes (8,348) (10.0)% 3,278 4.0%
-------- ------- ------- ------ Net income (loss) before preferred
stock dividends (13,899) (16.6)% 5,126 6.2% ======= ======
Preferred stock dividends (Note A) 6,551 2,176 -------- ------- Net
income (loss) applicable to common stock $(20,450) $ 2,950 ========
======= Earnings (loss) per share (Note B): Basic $ (0.81) $ 0.15
======== ======= Diluted $ (0.81) $ 0.09 ======== =======
Depreciation and amortization $ 5,437 6.5% $ 4,861 5.9% Earnings
(loss) before interest, taxes, depreciation and amortization
("EBITDA") (Note C) $(10,724) (12.8)%$18,847 22.9% Adjusted EBITDA
(Note C) $ 17,085 20.5% $18,847 22.9% Note A: The Company's
preferred stock accrued at an eight percent dividend per annum
through June 21, 2005. On June 21, 2005 the Company's preferred
stock was converted to common stock and dividends were no longer
accrued. Dividends totaled $6,551,000 and $2,176,000 during the
three months ended June 30, 2005 and 2004 respectively, of which
$1,865,000 and $1,912,000, respectively, represent the eight
percent dividend (noncash), $4,648,000 and $222,000, respectively,
represents accretion of preferred stock, and the remainder
represents amortization of issuance costs. Note B: The following
summarizes reported basic and diluted earnings per share (dollars
in thousands, except share data): Three Months Ended
------------------------ 2005 2004 Basic earnings (loss) per share:
---- ---- -------------------------------- Net income (loss) before
preferred stock dividends $ (13,899) $ 5,126 Preferred stock
dividends 6,551 2,176 ----------- ----------- Net earnings (loss)
applicable to common stock $ (20,450) $ 2,950 ===========
=========== Net earnings (loss) per share -- basic $ (0.81) $ 0.15
=========== =========== Weighted average shares outstanding
25,334,290 19,775,821 =========== =========== Diluted earnings
(loss) per share: ---------------------------------- Net income
(loss) before preferred stock dividends $ (13,899) $ 5,126 Less
antidilutive effect of dividends and common stock equivalents 6,551
-- ----------- ----------- $ (20,450) $ 5,126 ===========
=========== Diluted earnings (loss) per share, as reported $ (0.81)
$ 0.09 =========== =========== Diluted shares outstanding
64,263,900 58,432,471 =========== =========== Less: Antidilutive
effect of common stock equivalents 38,929,610 -----------
25,334,290 =========== Basic earnings per share ("EPS") is computed
by dividing net income applicable to common stock by the weighted
average number of common shares outstanding for the period. Diluted
EPS is computed by dividing net income before preferred stock
dividends by the total of the weighted average number of common
shares outstanding for the period, the weighted average number of
shares of common stock that would be issued assuming conversion of
the Company's preferred stock, and other common stock equivalents
for options and warrants outstanding determined using the treasury
stock method ("Diluted shares outstanding"). Diluted EPS for the
three months ended June 30, 2005, have been adjusted to exclude
preferred stock dividends and to exclude shares assuming conversion
of the Company's preferred stock and certain other common stock
equivalents for options and warrants outstanding determined using
the treasury stock method because diluted earnings per share was
less dilutive than basic earnings per share ("antidilutive").
Supplemental proforma diluted EPS is intended to show the proforma
effects assuming the Recapitalization had occurred at January 1,
2005 and also excludes the transaction costs and expenses, stock
option redemptions and transaction bonuses, and debt extinguishment
costs related to the Recapitalization. The following table
summarizes the calculation of supplemental proforma diluted EPS
(dollars in thousands, except share data): Three Months Ended 2005
------------------- Income (loss) before taxes $ (22,247) Addback:
Transaction costs and expenses (a) 1,517 Stock option redemptions
and transaction bonuses (a) 6,805 Debt extinguishment costs (a)
19,487 Interest (b) 6,086 Deduct: Proforma Interest (c) (4,312)
--------------- Adjusted pre-tax income 7,336 Tax provision (d)
2,935 --------------- $ 4,401 =============== Diluted shares
outstanding (e) Options 1,447,000 Shares outstanding 71,460,000
--------------- 72,907,000 =============== Supplemental proforma
diluted EPS $ 0.06 =============== The following adjustments were
made in calculating supplemental proforma diluted earnings per
share: (a) To remove transaction costs and expenses, stock option
redemptions and transaction bonuses, and debt extinguishment costs
incurred in connection with the Recapitalization. (b) To remove
historical interest expense. (c) To estimate interest expense on
the new senior secured credit agreement based on $180 million of
term loans and $9.9 million of revolver borrowings outstanding at
closing at an assumed interest rate of LIBOR plus 2.25% and 2.75%
respectively, along with an estimate of fees for $37.5 million of
letters of credit outstanding at 2.75% and estimated non-use fees
and expenses, plus actual interest expense on other debt and
capital leases outstanding during the period. (d) Taxes were
assumed at 40 percent of pretax income. (e) Shares outstanding for
the period were calculated using the actual weighted shares
outstanding for the period adjusted to assume 41,885,597 shares
issued from conversion of the preferred stock and 9,302,326 shares
issued in the primary equity offering were outstanding at the
beginning of the period presented. Note C: "EBITDA" is defined as
earnings before interest, taxes, depreciation and amortization.
Earnings are "net income before preferred stock dividends." EBITDA
and Adjusted EBITDA are presented because we use these measurements
in evaluating our performance and we believe it is frequently used
by securities analysts, investors and other interested parties in
the evaluation of companies in the water and wastewater business
and because it is a measure used by our debt holders to determine
compliance with financial ratios included in our Senior Secured
Credit Agreement. However, other companies in our industry may
calculate EBITDA and Adjusted EBITDA differently than we do. EBITDA
and Adjusted EBITDA are not a measure of performance under
generally accepted accounting principles and should not be
considered as an alternative to net income as an indicator of our
operating performance or any other measure of performance or
liquidity derived in accordance with generally accepted accounting
principles. The following table reconciles net income before
preferred stock dividends to EBITDA and Adjusted EBITDA (dollars in
thousands): Three Months Ended ------------------ 2005 2004
-------- ------- Net income (loss) before preferred stock dividends
$(13,899) $ 5,126 Interest expense, net 6,086 5,582 Provision
(benefit) for income taxes (8,348) 3,278 Depreciation and
amortization 5,437 4,861 -------- ------- EBITDA (10,724) 18,847
Debt extinguishment costs 19,487 -- Transaction costs and expenses
1,517 -- Stock option redemptions and transaction bonuses 6,805 --
-------- ------- Adjusted EBITDA $ 17,085 $18,847 ======== =======
Synagro Technologies, Inc. Consolidated Statement of Operations For
the Six Months Ended June 30 (dollars in thousands, except per
share data) (unaudited) 2005 2004 ---------------- ---------------
Revenue $159,746 100.0% $154,825 100.0% Cost of operations 130,737
81.8% 123,597 79.8% -------- ------- -------- ------ Gross profit
29,009 18.2% 31,228 20.2% Transaction costs and expenses 1,517 1.0%
-- 0.0% Stock option redemptions and transaction bonuses 6,805 4.3%
-- 0.0% General and administrative expenses 11,559 7.2% 11,521 7.4%
Gain on sale of assets (205) (0.1)% (892) (0.5)% -------- -------
-------- ------ Income from operations 9,333 5.8% 20,599 13.3% Debt
extinguishment costs 19,487 12.2% -- 0.0% Interest expense, net
12,601 7.9% 10,751 6.9% Other expense, net 59 0.0% -- 0.0% --------
------- -------- ------ Other expense, net 32,147 20.1% 10,751 6.9%
-------- ------- -------- ------ Income (loss) before provision for
income taxes (22,814) (14.3)% 9,848 6.4% Provision (benefit) for
income taxes (8,575) (5.4)% 3,841 2.5% -------- ------- --------
------ Net income (loss) before preferred stock dividends (14,239)
(8.9)% 6,007 3.9% ======= ====== Preferred stock dividends (Note A)
8,823 4,314 -------- -------- Net income (loss) applicable to
common stock $(23,062) $ 1,693 ======== ======== Earnings (loss)
per share (Note B): Basic $ (1.02) $ 0.09 ======== ======== Diluted
$ (1.02) $ 0.09 ======== ======== Depreciation and amortization $
10,665 6.7% $ 9,492 6.1% Earnings (loss) before interest, taxes,
depreciation and amortization ("EBITDA") (Note C) $ 452 0.3% $
30,091 19.4% Adjusted EBITDA (Note C) $ 28,261 17.7% $ 30,091 19.4%
Note A: The Company's preferred stock accrued at an eight percent
dividend per annum through June 21, 2005. On June 21, 2005 the
Company's preferred stock was converted to common stock and
dividends were no longer accrued. Dividends totaled $8,823,000 and
$4,314,000 during the six months ended June 30, 2005 and 2004
respectively, of which $3,874,000 and $3,787,000, respectively,
represent the eight percent dividend (noncash), $4,871,000 and
$444,000, respectively, represents accretion of preferred stock,
and the remainder represents amortization of issuance costs. Note
B: The following summarizes reported basic and diluted earnings per
share (dollars in thousands, except share data): Six Months Ended
------------------------- 2005 2004 ----------- ------------ Basic
earnings (loss) per share:
------------------------------------------- Net income (loss)
before preferred stock dividends $ (14,239) $ 6,007 Preferred stock
dividends 8,823 4,314 ----------- ----------- Net earnings (loss)
applicable to common stock $ (23,062) $ 1,693 ===========
=========== Net earnings (loss) per share -- basic $ (1.02) $ 0.09
=========== =========== Weighted average shares outstanding
22,691,916 19,775,821 =========== =========== Diluted earnings
(loss) per share: ------------------------------------------- Net
income (loss) before preferred stock dividends $ (14,239) $ 6,007
Less antidilutive effect of dividends and common stock equivalents
8,823 4,314 ----------- ----------- $ (23,062) $ 1,693 ===========
=========== Diluted earnings (loss) per share, as reported $ (1.02)
$ 0.09 =========== =========== Diluted shares outstanding
62,664,085 57,834,468 Less: Antidilutive effect of common stock
equivalents 39,972,169 38,058,647 ----------- -----------
22,691,916 19,775,821 =========== =========== Basic earnings per
share ("EPS") is computed by dividing net income applicable to
common stock by the weighted average number of common shares
outstanding for the period. Diluted EPS is computed by dividing net
income before preferred stock dividends by the total of the
weighted average number of common shares outstanding for the
period, the weighted average number of shares of common stock that
would be issued assuming conversion of the Company's preferred
stock, and other common stock equivalents for options and warrants
outstanding determined using the treasury stock method ("Diluted
shares outstanding"). Reported diluted EPS for the six months ended
June 30, 2005 and 2004, have been adjusted to include preferred
stock dividends and to exclude shares assuming conversion of the
Company's preferred stock and certain other common stock
equivalents for options and warrants outstanding determined using
the treasury stock method because diluted earnings per share was
less dilutive than basic earnings per share ("antidilutive").
Supplemental proforma diluted EPS is intended to show the proforma
effects assuming the Recapitalization had occurred at January 1,
2005 and also excludes the transaction costs and expenses and debt
extinguishment costs related to the Recapitalization. The following
table summarizes the calculation of supplemental proforma diluted
EPS (dollars in thousands, except share data): Six Months Ended
------------------ 2005 ------------------ Income (loss) before
taxes $ (22,814) Addback: Transaction costs and expenses (a) 1,517
Stock option redemptions and transaction bonuses (a) 6,805 Debt
extinguishment costs (a) 19,487 Interest (b) 12,601 Deduct:
Proforma Interest (c) (8,894) ------------ Adjusted pre-tax income
8,702 Tax provision (d) 3,481 ------------ $ 5,221 ============
Diluted shares outstanding (e) Options 1,278,000 Shares outstanding
71,335,000 ------------ 72,613,000 ============ Supplemental
proforma diluted EPS $ 0.07 ============ The following adjustments
were made in calculating supplemental proforma diluted earnings per
share: (a) Remove transaction costs and expenses, stock option
redemptions and transaction bonuses, and debt extinguishment costs
incurred in connection with the Recapitalization. (b) To remove
historical interest expense. (c) To estimate interest expense on
the new senior secured credit agreement based on $180 million of
term loans and $9.9 million of revolver borrowings outstanding at
closing at an assumed interest rate of LIBOR plus 2.25% and 2.75%
respectively, along with an estimate of fees for $37.5 million of
letters of credit outstanding at 2.75% and estimated non-use fees
and expenses, plus actual interest expense on other debt and
capital leases outstanding during the period. (d) Taxes were
assumed at 40 percent of pretax income. (e) Shares outstanding for
the period were calculated using the actual weighted shares
outstanding for the period adjusted to assume that the 41,885,597
shares issued from conversion of the preferred stock and 9,302,326
shares issued in the primary equity offering were outstanding at
the beginning of the period presented. Note C: "EBITDA" is defined
as earnings before interest, taxes, depreciation and amortization.
Earnings are "net income before preferred stock dividends." EBITDA
and Adjusted EBITDA are presented because we use these measurements
in evaluating our performance and we believe it is frequently used
by securities analysts, investors and other interested parties in
the evaluation of companies in the water and wastewater business
and because it is a measure used by our debt holders to determine
compliance with financial ratios included in our Senior Secured
Credit Agreement. However, other companies in our industry may
calculate EBITDA and Adjusted EBITDA differently than we do. EBITDA
and Adjusted EBITDA are not a measure of performance under
generally accepted accounting principles and should not be
considered as an alternative to net income as an indicator of our
operating performance or any other measure of performance or
liquidity derived in accordance with generally accepted accounting
principles. The following table reconciles net income before
cumulative effect of change in accounting for asset retirement
obligations and preferred stock dividends to EBITDA and Adjusted
EBITDA (dollars in thousands): Six Months Ended 2005 Full Year
Guidance ------------------- -------------------- 2005 2004 Low
High -------- -------- -------- -------- Revenue $159,746 $154,825
$320,000 $330,000 ======== ======== ======== ======== Net income
(loss) before preferred stock dividends $(14,239) $ 6,007 $ (3,000)
$ (200) Interest expense, net 12,601 10,751 22,000 22,000 Provision
(benefit) for income taxes (8,575) 3,841 (1,300) (100) Depreciation
and amortization 10,665 9,492 20,500 20,500 -------- --------
-------- -------- EBITDA 452 30,091 38,200 42,200 Debt
extinguishment costs 19,487 -- 19,500 19,500 Transaction costs and
expenses 1,517 -- 1,500 1,500 Stock option redemptions and
transaction bonuses 6,805 --- 6,800 6,800 -------- --------
-------- -------- Adjusted EBITDA $ 28,261 $ 30,091 $ 66,000 $
70,000 ======== ======== ======== ======== *T
Synagro (NASDAQ:SYGR)
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From Apr 2024 to May 2024
Synagro (NASDAQ:SYGR)
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From May 2023 to May 2024