In a tough economic environment we are pleased that we were able to achieve a 17.9% increase in revenues over the same period last year, stated Tim Koziol, chairman and chief executive officer of GEM in announcing the first quarter financial results. However, while revenue grew we are not yet satisfied with our operating margins and have focused our efforts on two elements to meet the current realities of the marketplace. First, we have implemented significant cost cutting initiatives in response to the challenging economic environment, and second, we have aggressively pursued new customers to continue our organic growth and to expand our base business.
Koziol continued, To navigate and pursue our strategic plan in 2009, the company will continue with its commitment to focused execution. Commencing in the fourth quarter of 2008 the company initiated a plan to reduce fixed costs, trim down the workforce, and to amend compensation plans in a coordinated effort to improve operating margins and to accurately align our workforce for the current business levels.
Bill Mitzel, president of GEM, stated, We will continue to monitor the business climate, and be vigilant in taking further actions as needed to respond to business conditions while maintaining our stated commitment to providing superior technical service to our clients.
Highlights:
Revenues for First Quarter 2009 were $8.20 million, up 17.9% from $6.95 million for the same period in 2008.
The company’s Mobile Treatment Services business has seen substantial growth and we believe that niche, higher profit margin business units like mobile treatment will provide the opportunity for both top line growth and improved profitability moving forward.
We are highly confident that we will come through the current economic challenges a stronger and more efficient company, stated Koziol. However, to do so will require constant monitoring and management in this changing marketplace. Although gross revenues increased in the first quarter, we did not achieve the minimum EBITDA levels required by our lending partner’s covenants in our Revolving Credit and Term Loan Agreements, CVC California, LLC. Not achieving the required levels is an ‘Event of Default’ under the terms of the Agreement. However, as of May 15, 2009, the Company continues to be in discussions with our lender to obtain a waiver, we continue to operate in the normal course of business, we are servicing our debt obligations, and we are receiving uninterrupted advances from our lender under the Term Loan Agreements and continue to pursue our strategic plan.
