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SMF Energy Corporation Reports Improved Results for the Nine Months and Quarter Ended March 31, 2009
(Logo: http://www.newscom.com/cgi-bin/prnh/20090513/SMFENERGYCORPLOGO)
The Company reported a net loss of
"Throughout the first nine months of fiscal 2009 we have delivered improved financial results. We began the fiscal year with a strong first quarter achieving improvements in several of our key financial categories when compared to the fourth quarter of our 2008 fiscal year. We realized increases in gross profit of 36%, a
"We started the second quarter of fiscal 2009 with optimism in light of our steadily improving bottom-line performance, but we were materially impacted during that quarter by the severe contraction of the national economy, which affected most of our 4,600 customers across virtually all U.S. manufacturing and service sectors. In the second quarter, this economic downturn caused a reduction in gallons sold of 11%, net of any additions attributable to new business, and a lowering of quarterly gross profit by 43%, a
"As a result of these tactical measures, we are now back on track toward the financial performance that we had previously anticipated coming out of the first quarter of fiscal 2009. During the third quarter we delivered material improvements in all the key financial categories, including an increase in gross profit of 15%, a reduction in net loss of 63%, and an EBITDA increase of 41% when compared to the second quarter. We also increased our net margin per gallon to
"We continue to better align our services with the needs and demands of our customers and their industries, while improving the efficiencies of our operations and increasing productivity. We believe that we offer a higher value solution when compared to other providers in our sector, based on greater reliability, higher service quality and better reporting metrics. As such and through these difficult economic times, we have stabilized our business and positioned ourselves for future growth."
Highlights of Third Quarter Fiscal Year 2009 vs. Third Quarter Fiscal Year 2008
- Revenues were
$35.0 million in the third quarter of fiscal 2009, a decrease of$29.2 million , or a 46% decrease from$64.2 million in the same period in fiscal 2008. The decrease consists primarily of a$24.7 million decrease due to price variances as market fuel prices have decreased approximately 54% in the third quarter of fiscal 2009 compared to the prior year. Additionally, revenues decreased$4.5 million due to an 11% reduction in gallons sold compared to the same period in the prior year. The decrease in gallons is the result of the severe contraction of the economy that started inNovember 2008 affecting the volume demand from our existing customers. During the third quarter of fiscal 2009, we have seen some stabilization in the demand for our services from existing customers and a strong increase in new customer business as companies seek to reduce their costs of operation. (Fuel price decreases are as disclosed by the Energy Information Administration for spot prices for low-sulfur No. 2 Diesel Fuel in the U.S. Gulf Coast.)
- The net loss of
$243,000 in the third quarter of fiscal 2009 was an improvement of$1.2 million from the$1.4 million loss incurred in the prior year period. The 83% improvement was primarily attributable to the higher gross profit of$915,000 resulting from the7.3 cents improvement in net margin per gallon and the lower interest expense of$301,000 offset by a$96,000 deferral fee related to our long-term debt.
- EBITDA (a non-GAAP measure) was
$974,000 in the third quarter of fiscal 2009, a$697,000 or 252% improvement from$277,000 generated in the prior year period.
- Net margin per gallon increased to
25.1 cents in the third quarter of fiscal 2009 from l7.8 cents in the prior year, an increase of7.3 cents , primarily as a result of higher margin business and improvements in operating efficiencies as we have consolidated routes and reduced costs.
Highlights of Third Quarter Fiscal Year 2009 vs. Second quarter Fiscal Year 2009
- Revenues were
$35.0 million in the third quarter of fiscal 2009, a 22% decrease from$45.1 million in the second quarter of fiscal 2009 primarily due to a 28% decrease in fuel market prices. The decrease was also partially due to a 3% reduction in gallons sold to 16.0 million in the third quarter of fiscal 2009 from 16.6 million in the second quarter of fiscal 2009, some of which is due to lower number of working days in the third quarter.
- The net loss of
$243,000 in the third quarter of fiscal 2009 was an improvement of$417,000 from a net loss of$660,000 in the second quarter of fiscal 2009 primarily due to an increase in gross profit of$498,000 .
- EBITDA (a non-GAAP measure) was
$974,000 in the third quarter of fiscal 2009, an increase of 41% from$690,000 in the second quarter of fiscal 2009.
- Net margin per gallon increased to
25.1 cents in the third quarter of fiscal 2009 from21.3 cents in the prior quarter primarily as a result of improvements in operating efficiencies and productivity as we cut costs throughout the Company and consolidated routes.
Highlights of First Nine months of Fiscal Year 2009 vs. First Nine months of Fiscal Year 2008
- Revenues were
$159.4 million in the nine months endedMarch 31, 2009 , compared to$178.7 million in the prior year. The decrease of$19.3 million consists of a$11.4 million decrease primarily due to lower volume and a$ 7.9 million decrease due to price variances as market fuel prices have decreased 14% compared to the same period a year ago. (Fuel price decreases are as reported by the Energy Information Administration for spot prices for low-sulfur No. 2 Diesel Fuel in the U.S. Gulf Coast.) As the result of the rapid contraction of the economy during the first half of fiscal 2009, we saw a dramatic and significant overall decrease in volume demand from our existing customers beginning inNovember 2008 . Accordingly, notwithstanding our addition of new customers during the period, the overall reduction in gallons sold was 3.7 million gallons, or 6.7% during the nine months endedMarch 31, 2009 versus the previous year. On the other hand, during the third quarter of fiscal 2009, we have begun to see some stabilization in the demand for our services from existing customers.
- The net loss was
$391,000 in the nine months endedMarch 31, 2009 compared to a loss of$6.4 million in the prior year period. The$6.0 million , or 94%, improvement was primarily due to an increase of$4.3 million in gross profit, which stemmed from an overall higher net margin per gallon, including higher margin contributions from emergency response services performed during the first quarter of the year, efficiencies derived from our ERP system, and a variety of cost cutting measures implemented this year in response to decreases in customer demand. The loss on extinguishment of debt of$1.7 million recorded in the nine months endedMarch 31, 2008 , from the refinancing of our promissory notes with new senior secured convertible subordinated notes, also contributed to the reduced net loss for the period. Additionally, interest expense was$402,000 lower this year due to a combination of lower line of credit balances, and lower interest rates. These decreases were partially offset by the increase of$318,000 in selling, general and administrative expenses.
- EBITDA (a non-GAAP measure) was
$3.7 million in the first nine months endedMarch 31, 2009 compared to$86,000 in the prior year, an improvement of$3.6 million . The increase in EBITDA was due to increased gross profit of$4.3 million due to higher net margin per gallon for the period, including the incremental margin contribution from the emergency response services, partially offset by an increase of$318,000 in selling, general, and administrative expenses.
- Net margin per gallon increased to
26.8 cents in the first nine months of fiscal 2009 from17.8 cents in the prior year as a result of emphasis on higher margin business, improved efficiencies related to route structure consolidation and productivity and from the emergency response services provided for Hurricanes Gustav and Ike during the first quarter this fiscal year.
Highlights of Results for Quarterly Periods ending
The following table portrays the financial trends for the Company's seven most recent quarters:
All amounts in thousands of dollars, except net margin per gallon
For the three months ended
Sept. 30, Dec. 31, March 31, June 30,
2007 2007 2008 2008
Revenues $55,497 $58,994 $64,162 $82,036
Gross profit $3,182 $2,565 $2,875 $4,290
Selling, general and
administrative $3,803 $3,788 $3,445 $3,845
Operating income (loss) $(621) $(1,223) $(570) $445
Interest expense and
other income, net $(757) $(763) $(720) $(811)
Loss on extinguishment
of promissory notes $(1,641) $ - $(108) $ -
Net income (loss) $(3,019) $(1,986) $(1,398) $(366)
EBITDA(1) $196 $(387) $277 $1,154
Net margin $3,569 $2,945 $3,228 $4,611
Net margin per gallon(2) $0.19 $0.16 $0.18 $0.24
Gallons sold 18,695 18,050 18,102 19,024
For the three months ended
Sept. 30, Dec. 31, March 31,
2008 2008 2009
Revenues $79,271 $45,112 $34,982
Gross profit $5,819 $3,292 $3,790
Selling, general and
administrative $4,632 $3,267 $3,455
Operating income (loss) $1,187 $25 $335
Interest expense and
other income, net $(667) $(677) $(570)
Loss on extinguishment
of promissory notes $ - $ - $ -
Net income (loss) $512 $(660) $(243)
EBITDA(1) $1,990 $690 $974
Net margin $6,161 $3,534 $4,027
Net margin per gallon(2) $0.33 $0.21 $0.25
Gallons sold 18,550 16,602 16,041
1) EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To the extent that loss on extinguishment of promissory notes constitutes the recognition of previously deferred interest, it is considered interest expense for the calculation of certain interest expense amounts. We believe that EBITDA provides useful information to investors because it excludes transactions not related to the core cash operating business activities.
2) Net margin per gallon is calculated by adding gross profit to the cost of sales depreciation and amortization and dividing that sum by the number of gallons sold.
The following table reconciles EBITDA (a non-GAAP measure) to the net income (loss) for each of the seven quarterly periods presented above:
All amounts in thousands of dollars
For the three months ended
Sept. 30, Dec. 31, March 31, June 30,
2007 2007 2008 2008
Net income (loss) $(3,019) $(1,986) $(1,398) $(366)
Add back:
Interest expense 778 782 780 720
Income tax expense - - - -
Depreciation and
amortization expense:
Cost of sales 388 380 353 321
Selling, general and
administrative expenses 282 304 311 357
Stock-based compensation
amortization expense 126 133 123 122
Loss on extinguishment
of promissory notes 1,641 - 108 -
EBITDA(1) $196 $(387) $277 $1,154
For the three months ended
Sept. 30, Dec. 31, March 31,
2008 2008 2009
Net income (loss) $512 $(660) $(243)
Add back:
Interest expense 683 680 575
Income tax expense 8 8 8
Depreciation and
amortization expense:
Cost of sales 342 242 239
Selling, general and
administrative expenses 341 342 334
Stock-based compensation
amortization expense 104 78 61
Loss on extinguishment
of promissory notes - - -
EBITDA(1) $1,990 $690 $974
1) EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To the extent that loss on extinguishment of promissory notes constitutes the recognition of previously deferred interest, it is considered interest expense for the calculation of certain interest expense amounts. We believe that EBITDA provides useful information to investors because it excludes transactions not related to the core cash operating business activities.
The following tables present comparative financial data for the periods noted:
SELECTED INCOME STATEMENT AND FINANCIAL DATA
All amounts in thousands of dollars, except per share, and net margin per gallon
Three Months Ended Nine Months Ended
March 31, March 31,
2009 2008 2009 2008
Petroleum product sales
and service revenues $29,746 $57,744 $142,584 $159,838
Petroleum product taxes 5,236 6,418 16,781 18,815
Total revenues 34,982 64,162 159,365 178,653
Cost of petroleum
product sales and
service 25,956 54,869 129,683 151,216
Petroleum product
taxes 5,236 6,418 16,781 18,815
Total cost of sales 31,192 61,287 146,464 170,031
Gross profit 3,790 2,875 12,901 8,622
Selling, general and
administrative
expenses 3,455 3,445 11,354 11,036
Operating income (loss) 335 (570) 1,547 (2,414)
Interest expense (575) (780) (1,938) (2,340)
Interest and other income 5 60 24 100
Loss on extinguishment of
promissory notes - (108) - (1,749)
Loss before income taxes (235) (1,398) (367) (6,403)
Income tax expense (8) - (24) -
Net loss $(243) $(1,398) $(391) $(6,403)
Basic and diluted net
loss per share
computation:
Net loss $(243) $(1,398) $(391) $(6,403)
Less: Preferred stock
dividends (124) (56) (452) (56)
Net loss attributable
to common
shareholders $(367) $(1,454) $(843) $(6,459)
Basic and diluted net
loss per share
attributable to common
shareholders $(0.02) $(0.10) $(0.06) $(0.45)
Basic and diluted weighted
average common
shares outstanding 15,136 14,556 14,905 14,438
EBITDA
(non-GAAP measure)(1) $974 $277 $3,654 $86
Gallons sold 16,041 18,102 51,193 54,847
Net margin $4,027 $3,228 $13,722 $9,743
Net margin per
gallon(2) $0.25 $0.18 $0.27 $0.18
1) EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To the extent that loss on extinguishment of promissory notes constitutes the recognition of previously deferred interest, it is considered interest expense for the calculation of certain interest expense amounts. We believe that EBITDA provides useful information to investors because it excludes transactions not related to the core cash operating business activities.
2) Net margin per gallon is calculated by adding gross profit to the cost of sales depreciation and amortization and dividing that sum by the number of gallons sold.
RECONCILIATION OF NET LOSS TO EBITDA (Non-GAAP Measure)
All amounts in thousands of dollars
Nine Months Ended
March 31,
2009 2008
Net loss $(391) $(6,403)
Add back:
Interest expense 1,938 2,340
Income tax expense 24 -
Depreciation and amortization
expense:
Cost of sales 823 1,121
Selling, general and
administrative expenses 1,017 897
Stock-based compensation
amortization expense 243 382
Loss on extinguishment of debt - 1,749
EBITDA (1) $3,654 $86
1) EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To the extent that loss on extinguishment of promissory notes constitutes the recognition of previously deferred interest, it is considered interest expense for the calculation of certain interest expense amounts. We believe that EBITDA provides useful information to investors because it excludes transactions not related to the core cash operating business activities.
CONDENSED CONSOLIDATED BALANCE SHEET
All amounts in thousands of dollars
(Unaudited)
March 31, June 30,
2009 2008
ASSETS
Current assets $16,029 $33,607
Property, plant and equipment,
net 8,953 10,276
Other assets, net 2,619 3,101
$27,601 $46,984
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities $23,861 $34,648
Long-term debt, net and other
liabilities 1,129 9,284
Stockholders' equity 2,611 3,052
$27,601 $46,984
ABOUT SMF ENERGY CORPORATION ( FUEL)
The Company is a leading provider of petroleum product distribution services, transportation logistics and emergency response services to the trucking, manufacturing, construction, shipping, utility, energy, chemical, telecommunication and government services industries. The Company provides its services and products through 31 locations in the 11 states of
FORWARD LOOKING STATEMENTS
This press release includes "forward-looking statements" within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. For example, predictions or statements of belief or expectation concerning the future performance of the Company, the future acquisition plans of the Company and the potential for further growth of the Company are all "forward looking statements" which should not be relied upon. Such forward-looking statements are based on the current beliefs of the Company and its management based on information known to them at this time. Because these statements depend on various assumptions as to future events, including but not limited to those assumptions noted in the "Management's Discussion and Analysis of Financial Condition and Results of Operation" section in the Company's Form 10-Q for the quarter ended
SOURCE SMF Energy Corporation