BELIZE CITY, Belize, Dec. 8 /PRNewswire/ -- BHI Corporation
(Nasdaq: BHIKF), a leader in the outsourced facilities services sector in
North America, reported revenue of $192.4m and net income from continuing
operations of $8.1m for the three months ended October 31, 1998. Diluted
earnings per share for the quarter was $0.73 ($0.78 before the hurricane
charge). Revenue and net income from continuing operations for the six months
ended October 31, 1998, were $383.5m and $16.4m respectively. Diluted
earnings per share for the six months was $1.44 ($1.49 before the hurricane
charge).
Highlights of the second quarter included a 18.4% improvement in
Facilities Services operating income over 1997 driven mainly by streamlining
of the purchasing process; the initial impact of centralization in the
accounting, finance and IT functions; and a continued focus on eliminating or
renegotiating unprofitable accounts. The operating margin rose to 2.3% in the
second quarter compared to 2.0% in the first.
Commenting on the results, BHI's Chief Executive Officer, Michael A.
Ashcroft, said: "Efficiency programs put in place earlier this year are
beginning to have a positive impact on operating results. Plans to grow the
ISS business both organically and through strategic acquisitions are on track
and the integration program for acquisitions is also working well to protect
the revenue acquired and quickly take advantage of synergies. We have a
strong management team in place and believe ISS is well on its way to meeting
all operating goals for the current fiscal year."
Mr. Ashcroft added: "BHI narrowed its focus considerably during the first
half and the transaction to dispose of our non-core businesses and investments
in Central America is expected to close in the New Year. Financial services
continues to perform very well. Belize suffered minor damage as a result of
hurricane Mitch and the financial effect on BHI has reduced net income by
approximately $0.5m, or $0.05 per share, in the current quarter. A further
provision of $0.5m is expected to be made in the third quarter."
Facilities Services
ISS's Facilities Services division achieved revenue of $192.4m for the
three months ended October 31, 1998 (1997 - $196.2m), bringing revenue for the
first six months to $383.5m. The slight decline in sales compared to the
prior year reflects the ongoing discontinuance of unprofitable accounts.
Improvements in both the gross margin and the operating margin reflect
management's continued efforts to successfully renegotiate accounts and to
centralize the purchasing function to benefit from economies of scale in major
vendor relationships. As of November, the new centralized finance and
accounting department was operating in Atlanta and is expected to generate
additional cost savings in future quarters.
ISS continues to win new business as a result of its reputation for
high-quality service and competitive prices. Important new accounts during
the quarter included contracts to provide janitorial/cleaning services to
several major corporations including Union Carbide, Crestar Bank, Southwest
Airlines and the Federal Reserve Bank in Cleveland, Ohio.
The ISS call center is in full operation and is handling all after-hours
service calls from branches nationwide. This provides both a higher level of
customer service and more efficient record keeping. The call center is also
making customer satisfaction calls to all new customers of BHI Security
Services. BHI is currently offering security services in the northeast region
and will expand to the Mid-Atlantic region in the next 90 days.
In November, ISS completed the acquisition of six facilities services
companies that are expected to add approximately $48 million in revenue and
900 new customers. This brings the total number of acquisitions in the first
half to eleven, with a total expected revenue contribution in the next twelve
months of approximately $60 million. All acquisitions are expected to be
fully integrated into current operations by December 1998. Management
continues to seek out well-positioned companies that will help BHI capture
market share, provide cross-selling opportunities to existing customers and
improve margins.
Financial Services
Income from Financial Services increased 22% to $2.8m for the three months
ended October 31, 1998 (1997 - $2.3m).
Income from Financial Services for the six months ended October 31, 1998
increased 26% to $5.4m (1997 - $4.3m). The results for the six months reflect
a 13% increase in net interest income, driven by a 9% increase in the average
loan portfolio of the Belize Bank combined with an increase in the net
interest margin. Non-interest income continued to grow strongly and was up
31%, mainly reflecting growth in International Financial Services.
As part of the strong growth in International Financial Services, the
number of international business companies formed increased 328% in the first
half compared to the prior year. Belize International Services Limited
continued its strong performance. In the six months ended October 31, 1998,
1,468 companies and 473 ships were registered, representing increases of 97%
and 11%, respectively, over the prior year period. As of October 31, 1998,
there were 8,744 companies and 3,951 ships registered.
Equity Investments
BHI's principal equity investments are 26% of Belize Telecommunications
Limited and 23% of the NUMAR Group, which has interests in agro-processing and
distribution.
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 US GAAP.
There will be a conference call with management today, Tuesday,
December 8, at 11:30 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 (unaudited)
US dollars in millions except per share data
3 months to 6 months to
October 31, October 31,
1998 1998
Non-Financial Services:
Net sales 192.4 383.5
Cost of sales (167.6) (335.0)
Selling, general and
administrative expenses (20.3) (40.2)
Operating income
-- Non-Financial Services 4.5 8.3
Financial Services:
Interest income 6.1 11.8
Interest expense (2.3) (4.6)
Non interest income
less expenses (1.0) (1.8)
Operating income
-- Financial Services 2.8 5.4
Total operating income 7.3 13.7
Associates 2.5 5.4
Hurricane reserve (0.5) (0.5)
Interest income 0.5 1.0
Interest expense (0.9) (1.8)
Income before income taxes 8.9 17.8
Income taxes (0.6) (1.1)
Income after income taxes 8.3 16.7
Minority interests (0.2) (0.4)
Income from continuing
operations 8.1 16.3
Income from discontinued
operations -- 0.1
Net income 8.1 16.4
Diluted earnings from
continuing operations
per share $0.73 $1.44
BHI Corporation
Consolidated Balance Sheet (unaudited)
US Dollars in millions
October 31, April 30,
1998 1998
Assets
Non-Financial Services
Current assets:
Cash and cash equivalents 29.9 44.4
Trade accounts receivable 92.7 85.7
Inventories 2.2 2.2
Assets held for disposal 12.2 12.9
Other current assets 14.1 12.2
Total Non-Financial
Services current assets 151.1 157.4
Premises and equipment 13.4 16.4
Associates 60.6 57.6
Goodwill and other
intangibles 124.3 114.5
Other long-term assets 2.0 2.3
Total Non-Financial
Services assets 351.4 348.2
Financial Services
Cash, cash equivalents
and due from banks 16.2 14.1
Interest-bearing deposits
with correspondent banks 25.1 27.1
Loans (net of unearned
income and allowance
for loan losses) 127.0 116.4
Other assets 11.6 8.2
Total Financial
Services assets 179.9 165.8
Total assets 531.3 514.0
BHI Corporation
Consolidated Balance Sheet (unaudited)
US Dollars in millions
October 31, April 30,
1998 1998
Liabilities and
shareholders' equity
Non-Financial
Services
Current liabilities:
Short-term debt 20.3 15.8
Accounts payable 3.3 7.4
Accrued personnel costs 26.2 24.8
Insurance reserves
-- current portion 25.7 28.7
Other current liabilities 25.2 34.4
Total Non-Financial
Services current
liabilities 100.7 111.1
Insurance reserves
-- long-term portion 82.3 86.4
Other long-term liabilities 25.7 24.2
Total Non-Financial
Services liabilities 208.7 221.7
Financial Services
Deposits 157.7 145.2
Short-term debt 5.2 5.2
Other liabilities 2.6 2.1
Total Financial Services
liabilities 165.5 152.5
Total liabilities 374.2 374.2
Total shareholders' equity 157.1 139.8
Total liabilities and
shareholders' equity 531.3 514.0
SOURCE BHI Corporation
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