DEVC Devcon Intl Corp (MM)

Company Announces Investor Conference Call for Tuesday, May 29, 2007 BOCA RATON, Fla., May 22 /PRNewswire-FirstCall/ -- Devcon International Corp. (NASDAQ:DEVC) today reported a net loss from continuing operations for its first quarter ended March 31, 2007 of $(8.8) million or $(1.42) per fully diluted share, compared to a net loss from continuing operations of $(9.6) million, or ($1.61) per fully diluted share for the three months ended March 31, 2006. Revenue from continuing operations (security revenue) for the first quarter 2007 increased $3.6 million to $14.2 million, compared to revenue of $10.6 million for the first quarter 2006, a 34% increase. Included in the 2007 first quarter revenues is approximately $4.4 million related to three months of Guardian revenues, compared to one month of activity in 2006. For the first quarter, the Company reported an operating loss from continuing operations of $(3.2) million after taking effect for amortization and depreciation expenses of $4.5 million, compared to an operating loss of $(3.7) million for the first quarter of 2006. Selling, general and administrative expense, including severance and retirement expense, from continuing operations increased by $0.8 million in the first quarter of 2007 compared to the first quarter of 2006. As a percentage of revenue this was a decrease of 8.6%, quarter over quarter. Selling, general and administrative expenses in the quarter were impacted by certain non-recurring or short-term factors, including severance charges related to the departure of senior executives, legal expense related to SEC filings and various litigation, and accounting expenses related to the change in audit firms and various SEC filings. Additionally, during the first quarter of 2007, the Company recorded a non-cash charge of $2.4 million related to derivative financial instrument expense compared to $1.5 million during the first quarter of 2006. Interest expense in the first quarter of 2007 was $4.0 million compared to $3.9 million in the first quarter of 2006. As part of Devcon's continued focus on and expansion into the electronic security services industry, on September 30, 2005, March 2, 2006 and May 2, 2006, the Company disposed of its non-core operations of its Materials Division in the U.S. Virgin Islands, Antigua and Puerto Rico, respectively. On March 21, 2007, the Company sold the majority of the assets, inventory and customer lists of the construction division. As a result, the financial results of these operations and the remaining Materials and Utilities operations held for sale are reported separately as discontinued operations for all periods presented. The Company reported a loss from discontinued operations of $742,000 for the three months ended March 31, 2007, compared to a gain from discontinued operations of $887,000 for the same period last year. Richard C. Rochon, the Company's Acting CEO, stated, "With the recent sale of our Construction Division we are enthusiastic about the future of Devcon as a leading provider of electronic security services." Conference Call The Company's first quarter 2007 conference call is scheduled for 10:00 a.m. ET, Tuesday, May 29, 2007. To participate in the call, dial 800-257-3401 for domestic callers and 303-262-2130 for international callers. The call may also be accessed through a live webcast link on the Company's Internet home page, http://www.devc.com/. The webcast will be archived for one month following the call. About Devcon Devcon International's wholly-owned subsidiary, Devcon Security (http://www.devcon-security.com/), is a leading provider of installation, monitoring and related electronic security services, currently serving more than 140,000 commercial and residential customers in Florida, New York City and Staten Island. Since February, 2005, Devcon has made 3 significant acquisitions of full-service electronic security services companies with significant concentrations throughout Florida and the New York Metropolitan region. Currently, Devcon Security Services Corp. is the second largest security monitoring and alarm company in Florida and the eleventh largest in the U.S. Forward-Looking Statements This press release may contain statements, which are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of Devcon's future results of operations, financial position or state other forward-looking information. In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. You should not rely on forward-looking statements because Devcon's actual results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. These factors include, but are not limited to: general economic and business conditions; our business strategy for expanding our presence in our industry; anticipated trends in our financial condition and results of operation; the impact of competition and technology change; existing and future regulations effecting our business, and other risks and uncertainties discussed under the heading "Item 1A - Risk Factors" in Devcon's Annual Report on Form 10-K for the period ended December 31, 2006 as filed with the Securities and Exchange Commission, and other reports Devcon files from time to time with the Securities and Exchange Commission. Devcon does not intend to and undertakes no duty to update the information contained in this press release. Devcon International Corp. Consolidated Statement of Operations (Amounts in thousands, except share and per share data) For The Three Months Ended March 31, 2007 March 31, 2006 Security revenue $14,185 $10,603 Cost of Sales (exclusive of amortization and depreciation shown below): 6,064 4,598 Gross profit 8,121 6,005 Operating expenses Selling, general and administrative 6,792 5,759 Amortization and depreciation 4,497 3,709 Severance and retirement - 229 Operating loss (3,168) (3,692) Other income (expense) Joint venture equity earnings - (35) Interest expense (3,998) (3,941) Interest income 127 76 Derivative financial instrument expense (2,393) (1,535) Loss from continuing operations before income taxes (9,432) (9,127) Income tax (benefit) expense (591) 531 Net loss from continuing operations (8,841) (9,658) Loss income from discontinued operations, net of income tax (benefit) expense of $ 0 and ($581) for the three months ended March 31, 2007 and 2006, respectively (512) (126) (Loss) gain on disposal of discontinued operations, net of income tax expense of $0 and $0 for the three months ended March 31, 2007 and 2006, respectively (230) 1,013 Net loss $(9,583) $(8,771) Basic (loss) income per share: Continuing operations $(1.42) $(1.61) Discontinued operations $(0.12) $0.15 Net loss $(1.55) $(1.46) Diluted (loss) income per share: Continuing operations $(1.42) $(1.61) Discontinued operations (0.12) 0.15 Net loss $(1.55) $(1.46) Weighted average number of shares outstanding: Basic 6,200,024 6,006,156 Diluted 6,200,024 6,006,156 Devcon International Corp. Condensed Balance Sheet (in thousands) March 31 December 31 2007 2006 Balance Sheet Data: Cash and cash equivalents $6,605 $5,015 Total assets $204,984 $212,897 Long-term debt, excluding current position $88,675 $89,202 Stockholders' equity $41,354 $36,126 DATASOURCE: Devcon International Corp. CONTACT: Stan Smith, +1-561-955-7300 or Web site: http://www.devc.com/

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