WALTHAM, Mass. — Mac-Gray Corporation reported last week that second-quarter revenue from continuing operations was $78.5 million, a decrease from the $80.8 million in the second quarter of 2009. However, income from continuing operations for the second quarter of 2010 was $1.2 million, up from the $1.0 million for the same period in 2009.
“Our financial results for the second quarter of 2010 reflect our efforts to carefully manage our cost structure,” says Stewart G. MacDonald, Mac-Gray’s chief executive officer. “We achieved higher gross margin and operating margins despite a decrease in year-over-year revenue. These operating results, in combination with sharply lower interest expense, enabled us to deliver an improved bottom-line performance."
Mac-Gray attributes the revenue losses to sustained, near-record-level apartment vacancy rates nationwide, coupled with continued high unemployment. Yet there are hints of improvement.
“The rate of decline in our same location revenue — the only reliable indicator we have for the specific occupancy of the properties we serve — slowed for the second consecutive quarter, which may indicate that the decline is approaching a bottom,” Macdonald says. “This is further supported by our geographic performance — all of our regions improved from the first quarter, with the biggest improvement being in the Southwest.
“The slight signs of stabilization in the multi-housing marketplace are encouraging, but we believe it may still be several quarters before we can determine if it has truly entered a recovery phase where overall growth is again possible,” MacDonald says. “Therefore, we intend to remain cautious about capital allocation. While we continue to add new accounts, we also will continue to avoid spending capital on low-return, multi-year contracts. We will continue applying our free cash to debt reduction in this environment. It is a formula that has served us well during these past two years.”