Disposal Of Discontinued Businesses Agreed
BELIZE CITY, Belize, Sept. 9 /PRNewswire/ -- BHI Corporation
(Nasdaq: BHIKF), a leader in the outsourced facilities services sector in
North America, reported revenues of $191.1m and net income from continuing
operations of $8.2m for the three months ended July 31,1998. Diluted earnings
per share for the quarter was $0.71 which is slightly ahead of analysts'
expectations and to date on track for the current fiscal year market
expectations. At today's closing price of $26-1/2 BHI is trading at a PE of
8.3 times current fiscal year EPS market expectations.
BHI also announced that it has agreed to sell all of its discontinued
operations for $15.6m, which represents net asset value, to an investor group
led by Allan Forrest who has been managing BHI's non-financial businesses in
Central America. Businesses that are included in the sale are Johnston
International Limited, Hadsphaltic International Limited, Leeward Limited,
Bearwood Corporate Services Limited, Belize Aggregates Limited and Belize
Leisure Limited (owner of the Radisson Fort George Hotel in Belize City).
Other discontinued assets being sold include Belize Food Holdings Limited
(26.7%), Great Belize Productions Limited (36.2%) and Energia Global
International, Ltd. (19.5%). This transaction is expected to be marginally
accretive to earnings per share.
During the quarter, the Company entered into an agreement with ADT
Security Services to become an authorized dealer for ADT, added several small
lock-on acquisitions to its building maintenance business and also acquired a
fully staffed customer call center.
Commenting on the results, BHI's Chief Executive Officer, Michael A.
Ashcroft, said,
"BHI took several steps during the first full quarter of its ownership of
the facilities services division to improve the efficiency of the operations.
This included creating a flatter organization, with support services
centralized in Atlanta, to reduce overheads and the acquisition of a customer
call center to make BHI the first commercial cleaning company to introduce
technology to the industry to improve customer service. This kind of
competitive advantage will help make our ISS division the facilities services
provider of choice."
Mr. Ashcroft added,
"We have agreed to sell our non-core businesses and continue to actively
evaluate acquisition possibilities in the facilities services industry. BHI's
financial services business had a strong first quarter and BHI's remaining
equity investments continue to meet performance targets."
Facilities Services
BHI's Facilities Services division achieved revenues of $191.1m for the
three months ended July 31, 1998. There was a slight decline in sales
compared to the prior year reflecting the sale of some small non-core
businesses and the discontinuance of unprofitable accounts. Operating margin
reflects the early-stage benefits of a back office rationalization program,
including an initiative to standardize and centralize purchasing operations.
The improvement in operating margin is expected to continue over the next
several quarters as management implements further efficiency improvements and
focuses on marketing higher margin services.
Acquisitions to date include: (i) Commercial Maintenance Organization;
(ii) Key Services; (iii) Southwestern Building Maintenance; (iv) Sunshine
Building Maintenance; and (v) Systematic Way. These companies, in aggregate,
are expected to add approximately $10m to facilities services revenues. The
acquisitions are in areas where ISS has existing facilities services
operations and are expected to be accretive to earnings per share in the
second quarter. ISS has established an integration program designed to
preserve revenues of companies acquired during the transition phase, as well
as to realize cost savings as quickly as possible.
One of the companies acquired is a call center operation in Florida that
currently provides one-stop, 24-hour facilities services support to such
clients as Republic Security Bank of Florida, Southeast Centers malls, and
selected locations for Tandy and RadioShack in the U.S. The call center is
the first stage of a program to use technology to improve efficiency and
customer service, using state-of-the-art software to receive calls, dispatch
service through ISS branches and provide effective follow-up. After an
initial period serving existing and new Florida customers, it is expected that
ISS will offer call center services nationwide by mid-1999.
As part of the strategy of offering a variety of facilities services to
existing and potential customers, BHI added security services to the mix
during the first quarter. In June, BHI signed an agreement with ADT Security
Services to sell and install security services while ADT will provide the
monitoring service. "BHI Security Services" began marketing to residential
and small commercial customers in the Northeast in late July, with sales teams
operating from existing ISS office locations. The goal for 1999 is to have
security services sales teams in place to cover the entire East Coast, which
has the heaviest concentration of ISS customers.
To further streamline operations, ISS field operations have been
organized into two major regions: the Northeast and the Southern/Western
regions, which have been combined. All finance, accounting and information
services are now being managed from ISS headquarters in Atlanta. These
realignments will both eliminate duplication of back office functions and let
field office managers focus on customer retention and new business.
ISS continues to win new business and signed up several multi-year
contracts for janitorial/cleaning services during the quarter. New accounts
include Crestar Bank's headquarters and 80 branches in Washington D.C.,
Champion International's offices in Stamford, CT: Federal Reserve Bank
buildings in Cincinnati, Cleveland and Pittsburgh: nine Macy's stores on Long
Island, NY; and twenty eight Saks Fifth Avenue stores.
Financial Services
Income from Financial Services increased 30% to $2.6m (1997 -- $2.0m) for
the three months ended July 31, 1998. This reflects an 8% increase in the
average loan portfolio at The Belize Bank, combined with an increased net
interest margin, resulting in a 12% increase in net interest income.
Non-interest income enjoyed strong growth and was up 38% compared to the prior
year, reflecting continued growth at The Bank as well as an excellent quarter
in International Financial Services.
Successes in International Financial Services included the incorporation
of over 400 international business companies, an increase of 526% over the
prior year. Belize International Services Limited continued its strong growth
with 751 companies and over 300 ships registered during the first quarter,
representing increases of 126% and 36%, respectively, over the same period
last year.
Equity Investments
BHI's principal equity investments are 23% of the NUMAR Group, which has
interests in agro-processing and distribution, and 26% of Belize
Telecommunications Limited. These two investments continue to perform up to
expectations.
BHI Corporation is a leader in the outsourced facilities services sector
in North America and owns and operates a financial services business in
Central America. BHI prepares its financial statements in US dollars and
according to U.S. GAAP.
There will be a conference call with management tomorrow, Thursday,
September 10, at 10 am Eastern Standard time. To participate, please call
800-370-0898 and ask for the BHI Corporation conference call.
Forward-Looking Statement
Certain statements in this press release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. In particular, statements contained herein regarding expectations
with respect to future revenue and business expansion, are subject to known
and unknown risks, uncertainties and contingencies, many of which are beyond
the control of BHI, which may cause actual results, performance or
achievements to differ materially from anticipated results, including, among
others, overall economic and business conditions, the demand for BHI's
services, competitive factors, regulatory approvals and the uncertainty of
consummation of future acquisitions. Additional factors which may affect
BHI's business and performance are set forth in BHI's filings with the
Securities and Exchange Commission.
BHI Corporation
Consolidated Statement of Income
US dollars in millions
Quarter ended July 31 1998
Non-Financial
Services operations:
Net sales 191.1
Cost of sales (168.0)
Selling, general and
administrative expenses (19.3)
Operating income --
Non-Financial Services 3.8
Financial Services:
Interest income 5.7
Interest expense (2.3)
Non interest income less expenses (0.8)
Operating income --
Financial Services 2.6
Total operating income 6.4
Interest income 0.5
Interest expense (0.9)
Associates 2.9
Income before income taxes 8.9
Income taxes (0.5)
Income after income taxes 8.4
Minority interests (0.2)
Income from continuing operations 8.2
Income from discontinued operations 0.1
Net income 8.3
Diluted earnings from
continuing operations per share $0.71
BHI Corporation
Consolidated Balance Sheet
US Dollars in millions
July 31, April 30,
1998 1998
Assets
Non-Financial Services operations
Current assets:
Cash and cash equivalents 43.9 44.4
Trade accounts receivable 84.3 85.7
Inventories 2.2 2.2
Assets held for disposal 13.0 12.9
Other current assets 11.4 12.2
Total Non-Financial Services
current assets 154.8 157.4
Premises and equipment 16.4 16.4
Associates 59.0 57.6
Goodwill and other intangibles 113.9 114.5
Other long-term assets 2.3 2.3
Total Non-Financial
Services assets 346.4 348.2
Financial Services
Cash, cash equivalents
and due from banks 14.2 14.1
Interest-bearing deposits
with correspondent banks 27.5 27.1
Loans (net of unearned income
and allowance for loan losses)118.8 116.4
Other assets 10.4 8.2
Total Financial Services assets 170.9 165.8
Total assets 517.3 514.0
BHI Corporation
Consolidated Balance Sheet
US Dollars in millions
July 31, April 30,
1998 1998
Liabilities and shareholders' equity
Non-Financial Services operations
Current liabilities:
Short-term debt 11.3 15.8
Accounts payable 7.8 7.4
Accrued personnel costs 26.0 24.8
Insurance reserves --
current portion 23.6 28.7
Other current liabilities 27.7 34.4
Total Non-Financial Services
current liabilities 96.4 111.1
Insurance reserves --
long-term portion 86.4 86.4
Other long-term liabilities 24.4 24.2
Total Non-Financial
Services liabilities 207.2 221.7
Financial Services
Deposits 152.7 145.2
Short-term debt 5.4 5.2
Other liabilities 2.4 2.1
Total Financial
Services liabilities 160.5 152.5
Total liabilities 367.7 374.2
Total shareholders' equity 149.6 139.8
Total liabilities and
shareholders' equity 517.3 514.0
SOURCE BHI Corporation
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CONTACT:
Angela E. Entwistle of BHI Corporation,
561-368 3899, or Eileen M. Halsch of Broadgate Consultants, Inc.,
212-232 2222, for BHI Corporation
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