There's all kinds of 1Q numbers to talk about right now, and most of them reflect a 1Q that was difficult for the industry. Here's what Mace has to say. You'll note that they begin the release with "highlights" from the quarter, which is always a sign that the numbers don't look all that great. But they're not alone with that. Here are some thoughts:
Dennis Raefield, CEO and President of Mace, stated, "I am excited about the future of Mace. We are on track with our growth strategy. Even though our 2009 first quarter sales were soft due to the continuing global economic crisis, we have achieved our cost-cutting goals and have reduced Mace's quarter over quarter losses by improving our gross margin and reducing the Company's overhead.One "good" thing about the disastrous 1Q worldwide? It's an out for just about any CEO who has to report bad numbers (just as it's an out for any bad salesperson who doesn't hit a goal, etc. - it can make company and talent evaluation difficult for that reason. Is it the economy? Or is it the sales team/products?). Considering Mace is still in the process of a major reorganization, it's difficult to have grounds for disagreeing with the CEO's evaluation.
"We have also improved our Security Division's sales department, product offerings and customer service. We have completed a significant step in our security-oriented growth strategy by acquiring a first class wholesale central monitoring station, which is the platform to build our next generation of services. We plan to roll out new services during both the second and third quarters of 2009. I hope to see continued improvement as we start to see growth rebound in the security sector. I am also pleased to announce that we continue to make progress in selling our remaining car washes, and we are very pleased with the direction of our Digital Media Marketing segment," Mr. Raefield concluded.I've got some inside dope on what some of those inside services might be. For instance, what if the DVR you bought automatically called home to the Mace central station and self-configured for video monitoring? That would be kind of sweet, right? That will probably happen. A camera company owning a central station could make for some very interesting developments. So, here are the actual numbers:
Total revenues for the first quarter ended March 31, 2009 were $8.6 million, as compared to $12.3 million for the same period in 2008. The decrease in overall revenues during the first quarter of 2009 was primarily due to a decrease in revenues from Mace's Digital Media Marketing segment because of management's decision to discontinue the marketing efforts of its online marketing division, PromoPath, in June 2008. There was also a reduction in sales in Mace's Security and Car Wash segments.That's almost 30 percent down, year to year. Hard to spin that in a good light.
Loss from continuing operations for the first quarter of 2009 was approximately ($1.7) million, or ($0.10) per share, compared to a loss from continuing operations of ($2.2) million, or ($0.13) per share, for the first quarter of 2008. The reduction in loss from continuing operations was partially due to a reduction in selling, general and administrative ("SG&A") expenses from $5.0 million for the three months ended March 31, 2008 to $3.7 million in the same period in 2009, a decrease of approximately $1.3 million, or 26%. The SG&A expense savings were realized from a reduction in costs with the consolidation of our security division's Ft. Lauderdale, Florida surveillance equipment warehouse operations into our Farmers Branch, Texas facility, with an expense reduction of approximately $140,000, as well as overhead reductions within our Digital Media Marketing segment. SG&A expenses of our Digital Media Marketing segment decreased from $1.3 million in the three months ended March 31, 2008 to $708,000 in the three months ended March 31, 2009. In addition to these cost savings measures, we also noted a reduction in non-cash compensation expense from continuing operations from approximately $253,600 in the three months ended March 31, 2008 to $50,000 in the three months ended March 31, 2009.But there's the good spin right there. Despite bringing in way less revenue, they still lost less money. They've still got cash on hand, but at some point the red ink has to stop.
The Company's net book value was $41.6 million, or $2.55 per share, at March 31, 2009. In addition, Mace had $53.1 million in total assets, including $8.5 million of cash and short-term investments, at March 31, 2009.So, with a 1Q loss from continuing operations of $1.7 million, and $8.5 million on hand, the company would only have about a five quarters of cash if they burn at the current rate. I don't expect that to happen, but that shows you the impetus Raefield and company will be under to turn things around.