ACR Group Reports Record First Quarter Results
10 Juillet 2006 - 2:30PM
PR Newswire (US)
Broad-Based Demand In Core Markets Drives 30 Percent Sales Growth
HOUSTON, July 10 /PRNewswire-FirstCall/ -- ACR Group, Inc.
(AMEX:BRR), a leading national wholesale distributor of heating,
ventilation and air conditioning ("HVAC") equipment and supplies,
today announced record results for the first quarter ended May 31,
2006, highlighted by significant growth in revenue and
profitability from year-ago levels. The quarter was also marked by
ACR Group's move to the American Stock Exchange (AMEX) from the OTC
Bulletin Board on March 20, 2006. ACR Group reported total revenues
of $61.9 million in the first quarter of fiscal 2007, a 30.3
percent increase from the year-ago period. Net income for the
quarter grew ten-fold to $1.7 million, or $0.15 per diluted share,
compared with net income of $160,000, or $0.01 per diluted share,
in the first quarter of fiscal 2006. Gross margins increased 125
basis points to 24.6 percent in the quarter, compared to 23.4
percent in the year-ago period. Disciplined point-of-sale pricing
in an environment of rising prices on commodity-based products
contributed to significant margin expansion in the first quarter.
Operating margins grew 348 basis points to 4.8 percent in the
quarter, compared with 1.3 percent in the year-ago period. The
Company has continued to benefit from careful cost management
during a period of sustained market demand in key regional markets,
resulting in significant operating leverage and increased
profitability. "Through established partnerships with trusted
manufacturers such as International Comfort Products (ICP) and
Haier USA, we have become increasingly well-positioned to supply
customers with full-featured products at competitive prices," said
Alex Trevino, Jr., president and CEO of ACR Group. "Demand trends
remained healthy in the first quarter and into the seasonally
strong second quarter in most of our key Sunbelt markets." "There
was strong demand in the first quarter for high efficiency 13 SEER
HVAC equipment that meets the new DOE minimum efficiency standards,
while steady demand for 10 and 12 SEER units also contributed to
growth during the period," continued Trevino. "As one of largest
independent wholesale distributors in the market today, we remain
focused on providing a breadth of quality products to fit the needs
and budgets of our customers." On June 19, 2006, ACR Group
announced that the Company had increased its revolving credit
facility from $35 million to $40 million and extended the term an
additional year to August 31, 2008. As of May 31, 2006, ACR Group's
collateral base was sufficient for the entire $40 million to be
available to the Company. "With 51 branch operations located
throughout the country and three additional branch locations
scheduled to open in the Arizona market in the second and third
quarters of fiscal 2007, we are committed to becoming the
distributor of choice in targeted, high-opportunity locations. With
our additional borrowing capacity and potential access to capital
through our AMEX listing, we are well-positioned to quickly react
to business growth opportunities," said Tony Maresca, CFO of ACR
Group. Fiscal First Quarter 2007: Key Highlights * Total revenues
increased 30.3 percent to $61.9 million in the first quarter of
2007, up from $47.5 million in the year-ago period. * Same-store
sales, which exclude four branches opened since the beginning of
fiscal 2006, increased 25 percent in the first quarter of 2007 over
the first quarter of 2006. * Gross profit increased 37.2 percent to
$15.3 million in the first quarter of 2007, up from $11.1 million
in the year-ago period. * Operating income increased nearly
five-fold in the first quarter of 2007 to $3.0 million, up from
$612,000 in the year-ago period. * Net income increased to $1.7
million in the first quarter of 2007, up from $160,000 in the
year-ago period. "With a sizeable distribution presence throughout
the Sunbelt, we benefit from economies of scale and volume
purchasing relationships," continued Trevino. "Given the highly
fragmented nature of the HVAC distribution industry, we believe ACR
Group's network of branch locations provides our customers with a
higher level of service, expertise and brand continuity than they
find elsewhere." About ACR Group, Inc. With more than $200 million
in revenue during fiscal 2006, ACR Group, Inc. (AMEX:BRR) is one of
the largest independent distributors of heating, ventilation and
air conditioning (HVAC) equipment and supplies in North America.
The Company is one of the leading distributors of HVAC products to
both residential and commercial contractors at 51 branch locations
throughout nine states. As of fiscal year-end 2006, ACR Group's
revenue mix was approximately 30% new construction and 70% for the
service/replacement aftermarket. The Company is committed to
building a regional presence throughout the Sunbelt states and in
other geographies with the potential for sustained economic growth.
Forward-Looking Statements Statements in this release that relate
to management's expectations or beliefs concerning future plans,
expectations, events, and performance are "forward-looking" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Actual results or events could differ materially from
those anticipated in the forward-looking statements due to a
variety of factors including, without limitation, weather
conditions, the effects of competitive pricing, general economic
conditions, and availability of capital. For more detailed
information on the risks and uncertainties associated with these
forward-looking statements and the Company's other activities, see
the periodic reports filed by the Company with the Securities and
Exchange Commission such as Form 10-K, Form 10-Q and Form 8-K. ACR
GROUP, INC. CONSOLIDATED RESULTS OF OPERATIONS (in thousands,
except per share amounts) Quarter Ended May 31, 2006 2005 Sales
$61,924 $47,538 Cost of sales 46,669 36,423 Gross profit 15,255
11,115 Selling, general and administrative expenses 12,305 10,503
Operating income 2,950 612 Interest expense 543 299 Interest
derivative loss (gain) (218) 205 Other non-operating income (114)
(152) Income before taxes 2,739 260 Provision for income taxes
1,055 100 Net income $1,684 $160 Earnings per share: Basic $.15 $
.01 Diluted $.15 $ .01 Weighted average and equivalent shares:
Basic 11,215 10,940 Diluted 11,478 11,343 DATASOURCE: ACR Group,
Inc. CONTACT: Noel Ryan, or Jeff Lambert, both of Lambert, Edwards
& Associates, Inc. for ACR Group, Inc., +1-616-233-0500; Tony
Maresca of ACR Group, Inc., +1-713-780-8532
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