Glacier Water Reports Increased Revenue In Second Quarter

Glacier Water Services, Inc. announced results for the second quarter ended July 1, 2012.

Brian McInerney, chief executive officer of Glacier Water, said, in a prepared statement, “Our second quarter revenues increased 6.4 percent versus the same quarter last year and our year-to-date July 1, 2012 revenues increased 6.1 percent. Same-store revenues have increased 4.6 percent year-to-date. We continued to aggressively expand our network of machines across the U.S. and Canada adding approximately 1,100 machines across multiple retail channels compared to one year ago. Our second quarter income from operations increased to $1,320,000 and was impacted by an investment in infrastructure to support our continued growth in both water and ice machine placements. These infrastructure costs are incurred in advance of the machine placements reaching maturity in revenue and profits. At the end of the second quarter, Glacier operated more than 21,000 machines located at retailers across the U.S. and Canada, providing high quality, great tasting drinking water and premium ice.”

Revenues for the second quarter ended July 1, 2012 increased 6.4 percent to $27,966,000 compared to $26,281,000 for the same quarter one year ago. For the six-month period ended July 1, 2012, revenues increased 6.1 percent to $52,965,000 compared to $49,930,000 for the same period last year. Sales growth was driven by both same store productivity and the increase in machines on location.

The company’s income from operations for the second quarter ended July 1, 2012 was $1,320,000 compared to $1,283,000 for the same period last year. For the six-month period ended July 1, 2012, income from operations was $1,485,000 compared to $1,662,000 for the same period last year. Income from operations year-to-date was positively impacted by the margin generated from the increased revenues, but was offset by increased operating costs to support the growth in machines, and in particular, labor and benefits, refurbishment, and vehicle costs. Income from operations for the first six months of 2012 and 2011 included non-cash compensation expense of $43,000 and $241,000 respectively.

The company’s net loss applicable to common stockholders for the quarter ended July 1, 2012 was $1,200,000 or $0.37 per basic and diluted share, compared to a net loss of $1,002,000, or $0.37 per basic share and diluted share, for the same period last year. For the six-month period ended July 1, 2012, the net loss applicable to common stockholders was $3,599,000, or $1.10 per basic and diluted share, compared to a net loss of $2,891,000 or $1.06 per basic share and diluted share, for the same period last year.

Subsequent to the quarter ending July 1, 2012, the company converted its operating subsidiary, GW Services, organizational form from a corporation to a limited liability company (“GW Services, LLC”) and raised $10,000,000 in equity from a limited liability company whose members are existing company shareholders. This capital will fund our ongoing expansion of water vending and premium ice machine placements. GW Services, LLC issued $10,000,000 of preferred membership interests and 83,333 common membership interests. The preferred interests pay a dividend at an annual rate equal to the one-year treasury rate plus 6 percent, payable quarterly to the extent GW Services, LLC has adequate cash flow. The preferred interests may be redeemed at a premium amount by GW Services, LLC under certain conditions, including certain interest rate increases and/or liquidation.

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