WashTec Group reported that its service, chemical and operations business was stable in the third quarter, but total revenue during the first three quarters declined 12.2 percent year over year to 186.4 million euros (approximately $279 million). The decline was attributed primarily to lower equipment sales, which fell 20.5 percent.
Germany-based WashTec is the parent company of Mark VII Equipment Inc. North American revenue for the first three quarters actually increased 12.2 percent year over year to 18.4 million euros ($27.5 million).
Despite lower total revenues, the company’s net operating cash flow totaled 12.9 million euros ($19.3 million), about 3.4 million euros ($5 million) below last year’s figure.
“WashTec continues to expand the operations business, where sites are being operated on behalf of and for the account of our customers,” company officials said in a press release.
The company opened additional carwash sites during the quarter and also successfully tested ShineTecs, a polishing wax designed to protect car paint while improving shine, at various sites, the release said.
The company was somewhat positive about carwash volume, reporting that “car wash counts per site (year-to-date) show that the economic environment so far had no major impact on car washing behavior.” Similar to domestic conditions, however, officials said a tight lending market continues to hamper new development and renovations by carwash operators.
“The car wash business continues to be profitable at most sites. The financial and economic downturn has led, however, to difficulties in financing equipment among various customer groups and in certain sub-markets,” WashTec officials said. “In addition, investments are being delayed due to the uncertain economic outlook.”
As a result, the company issued caution for the fourth quarter, expecting revenue declines to fall between 10 percent and 11 percent for the year, with an adjusted EBIT (earnings before interest and taxes) margin between 5 percent and 6 percent.
Officials predicted the lending climate will likely continue to limit operator spending into 2010, thus restricting carwash segment growth and revenue potential though at least mid-year.
“As a result, we do not expect a significant increase in revenues in 2010,” company officials said. “The measures taken to increase efficiency and reduce costs, however, should lead to an increase in the overall results next year.
“In the mid-term it is planned to return to the margin targets of prior years. The exact timing will also depend on the recovery of the overall economy.”
Related Articles: