GreenMan Reports Second Quarter Results

GreenMan Technologies, Inc. today announced results for the three and six months ended March 31, 2005. Bob Davis, GreenMan's president and CEO, stated, "Our second quarter performance was negatively impacted by several issues which we are working to eliminate or mitigate. First, we have experienced a negative impact on our production capacity resulting from a change in the specifications of our alternative energy customers as their demand for tire derived fuel has significantly increased due to rising fuel prices. The change from a two-inch fuel chip to a one inch or smaller fuel chip has driven production costs higher and out-paced the corresponding price we have historically charged our customers. The solution to this problem is to either raise prices or reduce costs through the installation of additional equipment; we will be doing both. Second, while we continue to realize increasing inbound scrap tire volumes, the cost of collection continues to increase and in some areas has outpaced our ability to recover these increases. As a result, we have recently completed a corporate-wide review of all tire collection accounts and will be evaluating which can be serviced in a profitable manner on a go forward basis. The third issue is the continuing negative performance of our Tennessee operations. We are currently evaluating several alternatives to shredding our Tennessee tires and anticipate a decision will be reached within the next 60 days."

Davis added, "For a significant period of time, our company has pursued a philosophy of deriving more revenue from more volume and value added initiatives. You can expect to see a strong philosophical change at GreenMan on a go forward basis from a 'more from more' business focus to a 'more from less' focus, whereby we will maximize returns based on our existing infrastructure investments and relationships."

Net sales for the three months ended March 31, 2005 increased $1,733,000 or 29 percent to $7,646,000 as compared to last year's net sales of $5,912,000.

The company processed about 7.5 million passenger tire equivalents during the three months, compared to about 6.2 million passenger tire equivalents during the same time last year.

The increase in revenue was attributable to a 19 percent increase in inbound scrap tires volume, a 4 percent increase in overall tipping fees per passenger tire and a 28 percent increase in overall product revenues. Included in the results for the quarter ended March 31, 2005 was approximately $745,000 of revenue and 788,000 passenger tire equivalents associated with an Iowa scrap tire cleanup project which was completed during the quarter.

Overall end product sales increased $447,000 to $2.041 million during the quarter, compared to $1.594 million the same time last year. The increase in end product sales is attributable to re-installation of the company’s Georgia waste wire processing equipment this past November, and stronger crumb rubber, steel and tire derived fuel sales during the quarter.

Gross profit for the quarter ended March 31, 2005 was $113,000 or 1 percent of net sales, compared to $348,000 or 6 percent of net sales for the quarter ended March 31, 2004. Our cost of sales increased approximately $1,969,000 or 35 percent primarily due to reduced processing capacity and equipment reliability issues at our Southeast and Western operations, increased collection costs, continued operating inefficiencies necessitated by processing a majority of our Tennessee-sourced tires at our Georgia facility as well as unforeseen decreases in inbound tire volumes during the quarter in the West due to severe weather conditions during the quarter. In addition, a change in the specifications of our alternative fuel customers requiring a smaller tire chip has contributed to our reduced processing capacity and higher operating costs. During March 2005, we installed equipment which has positively impacted the reduced processing capacity issues in the Southeast and have recently completed a corporate-wide review of all tire collection accounts and will be evaluating which accounts can be serviced in a profitable manner on a go forward basis.

Net sales for the six months increased $1.98 million, or 14 percent to $15.691 million, compared to last year's net sales of $13.711 million. The company processed more than 15 million passenger tire equivalents during the six months, compared to approximately 14.4 million passenger tire equivalents during the same time the previous year. The increase in revenue was attributable to a 4 percent increase in inbound scrap tires volume, a 4 percent increase in overall tipping fees per passenger tire and a 16 percent increase in overall product revenues. Included in the results for the six months ended March 31, 2005 was approximately $827,000 of revenue and 875,000 passenger tire equivalents associated with an Iowa scrap tire cleanup project which was completed during the period.