DEVC Devcon Intl Corp (MM)

BOCA RATON, Fla., April 17 /PRNewswire-FirstCall/ -- Devcon International Corp. (NASDAQ:DEVC) today reported a net loss from continuing operations for the year ended December 31, 2006 of $29.0 million or ($4.81) per fully diluted share, compared to a net loss from continuing operations of $15.4 million, or ($2.60) per fully diluted share for the year ended December 31, 2005. Revenue from continuing operations for the year ended December 31, 2006 increased $33.8 million to $105.6 million, a 47.1 percent increase when compared to 2005 revenue of $71.8 million. The Company's operating loss from continuing operations for full year 2006 increased $8.2 million to $23.2 million for 2006 compared to $15.0 million in 2005. This loss included non- cash charges amounting to $29.3 million and $12.3 million for 2006 and 2005, respectively. As part of Devcon's continued expansion into the electronic security services industry, on September 30, 2005, March 2, 2006 and May 2, 2006, the Company disposed of the operations of its Materials Division in the U.S. Virgin Islands, Antigua and Puerto Rico, respectively, and, as a result, the financial results of these operations are reported separately as discontinued operations for all periods presented. The Company's income and gain on sale from discontinued operations was $0.3 million for full year 2006, or $0.05 per fully diluted share, net of tax, compared to income of $1.1 million, or $0.18 per fully diluted share, for the comparable period in 2005. Included in the $1.1 million income for 2005 was a $2.3 million gain on the sale of the Company's U.S. Virgin Island material operations which operated as V.I. Cement & Building Products, Inc. During 2006, the Electronic Security Services Division reported an increase in revenue of $35.4 million to $54.0 million, from $18.5 million in 2005, resulting in an operating loss of $7.3 million, including non-cash depreciation and amortization charges related to acquired recurring revenue customer service contracts of $18.8 million. The increased revenue resulted from the completed acquisitions of the electronic security services businesses of Starpoint Limited in February 2005, Coastal Security Company in November 2005 and Guardian International in March 2006, less the revenue associated with the sale of the third-party monitoring business in June 2006. During the year ended December 31, 2006, our construction division reported an operating loss of $7.6 million compared to a $2.9 million operating loss for the corresponding period of 2005. This additional loss was partially attributable to significant decreases, from 2005 to 2006, in comparative gross profit recognized on specific projects. There was a $2.6 million comparative decrease in gross profit recognized on a project in the Bahamas due primarily to delays and costs associated with a non-performing subcontractor and costs associated with securing final acceptance of our underground utility work. Additionally, in 2005 we recognized $1.6 million of gross profit on dredging projects in Sint Maarten. In 2006, the dredge utilized on these projects was idle. Lastly, there was a $1.1 million comparative decrease in gross profit recognized on another project in the Bahamas due to it being substantially complete in 2005. The Materials Division reported an operating loss of $0.5 million for the full year of 2006 compared to an operating loss of $5.6 million during the comparable period in 2005. The operating loss in 2005 included an impairment charge of $1.8 million. The reduction in the operating loss for 2006 is attributable to increased efficiency in our Sint Maarten/St. Martin operations achieved through tightly managing expenses, improved supply of cement and the effect of several increases to the selling prices of ready-mix concrete. Conference Call The Company's year-end 2006 conference call is scheduled for 10:30 a.m. ET, Friday, April 20, 2007. To participate in the call, dial 800-218-0204 for domestic callers and 303-262-2131 for international callers. The call may also be accessed through a live webcast link on the Company's Internet home page, http://www.devc.com/. The webcast will be archived for one month following the call. About Devcon Devcon has two operating divisions. The Security Division provides electronic security services to commercial and residential customers in selected markets. The Materials Division produces and distributes crushed stone, ready-mix concrete and concrete block on St. Maarten in the Netherlands Antilles and on St. Martin in the French West Indies. 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. Devcon International Corp. Consolidated Statement of Operations (Amounts shown in thousands, except share and per share data) 2006 2005 2004 Statement of Operations Data: Security revenue $53,987 $18,515 $943 Construction revenue 35,189 39,334 25,052 Materials revenue 15,815 13,232 15,356 Other revenue 632 701 183 Total revenue 105,623 71,782 41,534 Cost of construction 35,949 36,909 17,547 Cost of materials 14,442 12,558 12,841 Cost of security 24,627 8,044 648 Cost of other 151 407 157 Total cost of sales 75,169 57,918 31,193 Gross profit 30,454 13,864 10,341 Operating expenses 53,613 28,820 13,320 Operating (loss) income (23,159) (14,956) (2,979) Other (expense) income (14,706) (14,706) (1,744) 832 Gain on Antigua Note 1,230 804 10,970 (Loss) income from continuing operations before income taxes (36,635) (15,896) 8,823 Income tax (benefit) expense (7,627) (504) 1,286 Net (loss) income from continuing operations (29,008) (15,392) 7,537 Income (loss) from discontinued operations 294 1,076 3,100 Net (loss) income $(28,714) $(14,316) $10,637 (Loss) income per share from continuing operations: Basic (4.81) (2.60) 1.73 Diluted (4.81) (2.60) 1.48 (Loss) income per share from discontinued operations: Basic 0.05 0.18 0.71 Diluted 0.05 0.18 0.61 Weighted average number of shares outstanding: Basic 6,026 5,904 4,363 Diluted 6,026 5,904 5,097 Devcon International Corp. Condensed Balance Sheet (in thousands) 2006 2005 2004 Balance Sheet Data: Working capital $3,807 $2,560 $42,060 Total assets $212,897 $165,467 $101,665 Long-term debt, excluding current portion $89,202 $55,521 $564 Stockholders' equity $36,126 $63,657 $76,983 DATASOURCE: Devcon International Corp. CONTACT: Devcon, +1-561-208-7200 Web site: http://www.devc.com/

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