Stonepath Group Reports Record Revenue of $111.3 Million and EBITDA of $2.3 Million for Q3 2005
November 09 2005 - 12:28AM
Business Wire
Stonepath Group (AMEX: STG), a global logistics services
organization, today announced improved financial performance for
the third quarter ended September 30, 2005. Third Quarter Results
For the third quarter of 2005, Stonepath reported EBITDA of $2.3
million, compared to $2.2 million for the third quarter of 2004.
EBITDA results for the quarter were adversely impacted by charges
of approximately $900,000 relating to the refinancing of the
Company's principal U.S. credit facility, plus a reduction in net
revenues reported by China of approximately $750,000 as a direct
result of a labor strike during a portion of third quarter at the
primary air carrier serving that country. Absent these charges, the
Company's EBITDA for the quarter would have been $4.0 million. A
reconciliation of our EBITDA to the most directly comparable GAAP
measure appears at the end of this release. Revenue for the quarter
was a record at $111.3 million, an increase of $1.6 million over
the prior year period. Revenue was adversely impacted by the strike
in Asia, and by jettisoning of low-margin business in the Company's
domestic division in the second and third quarters of 2005.
Domestic revenues declined 21.7% to $29.7 million, while
international revenues improved to $81.6 million or 13.7%, despite
the effects of the strike. Net revenues were $23.3 million, a $1.7
million decrease over the prior year period. The decrease was due
to domestic volume reductions that were partially offset by margin
improvements. Domestic margin percentage improved 18.2%.
International net revenues were essentially unchanged after giving
effect to the strike referred to above. The entire decrease in net
revenues was more than offset by reduced operating costs, such that
income from operations improved by 30.7% to $2.4 million. The
Company reported a net loss of $180,000 in the third quarter, or
$0.00 per basic and diluted share. This loss was totally the result
of costs associated with the refinancing and the effect of the Asia
airline strike. This compares to net income of $55,000 or $0.00 per
diluted share for the same prior year period. Nine Month Results
For the first nine months of 2005, Stonepath reported revenues of
$301.3 million, an increase of $44.9 million, or 17.5 percent,
including the results of the Shaanxi acquisition concluded in March
2004. Net revenue increased over the prior-year period by $5.0
million, or 8.2 percent, to $65.9 million. The Company reported a
net loss of $8.1 million in the first nine months of 2005 or $0.19
per basic and diluted share. This compares to a net loss of $7.0
million or $0.17 per basic and diluted share for the same
prior-year period. The net loss in 2005 includes restructuring
charges of $3.4 million or $0.08 per share while the net loss in
2004 reflects a provision for excess earn-out payments of $3.1
million or $0.08 per share. Operational Progress Continues to Drive
Financial Improvement "Stonepath continues to gain momentum, and we
are well positioned for 2006," said Dennis Pelino, Stonepath's
Chairman. "While our revenue growth was modest in the quarter, our
focus has been on performance. The domestic group delivered solid
margin growth as a result of eliminating additional unprofitable
business, continuing to reduce fixed costs, and realized benefits
from new pricing with key automotive and retail clients." Pelino
continued, "Our focus remains on delivering sustainable organic
growth as a global integrated logistics provider and steadily
improving profitability." Productivity Trends Expected to Continue
into 2006 and Beyond Jason Totah, Stonepath Group's Chief Executive
Officer, noted, "Management continues its efforts to increase
productivity, drive incremental business and deliver profitability
while remaining focused on delivering exemplary service and
value-added logistics solutions to our loyal customers." Totah
added, "Our global operations, which are now better centralized,
integrated and aligned to capitalize on core strengths, continue to
fuel targeted sales initiatives like our Global Projects and
Non-Merchandising Retail solutions, complex, highly tailored
services that command higher margins and establish important
competitive advantages." Supplemental Pro Forma Information We
believe that supplemental disclosure of our EBITDA, or earnings
before interest, taxes, depreciation and amortization is a useful
measure for investors because it eliminates the effect of certain
non-cash costs and provides an important metric for our business. A
reconciliation of EBITDA amounts to the most directly comparable
GAAP measures for the three months ended September 30, 2005 and
2004 is shown below: -0- *T Third Quarter
----------------------------- 2005 2004 --------------
-------------- Net income (loss), as reported $ (179,550) $ 55,767
Income tax expense 481,016 964,061 Interest expense 871,469 174,924
Depreciation and amortization 1,163,778 1,039,742 -------------
------------- EBITDA $ 2,336,713 $ 2,234,494 =============
============= *T This supplemental pro forma financial information
is presented for informational purposes only and is not a
substitute for the historical financial information presented in
accordance with accounting principles generally accepted in the
United States. Investor Conference Call Stonepath will host a
conference call for shareholders and the investing community on
Wednesday, November 9, 2005 at 1:00 p.m. Eastern Time (10 a.m.
Pacific). The call can be accessed by dialing (800) 344-0961 (US)
or (706) 634-0981 (International) and is expected to last
approximately 30 minutes. Callers are requested to dial in at least
five minutes before the start of the call. An audio replay will be
available until November 16, 2005 at (800) 642-1687 or (706)
645-9291(International), access code: 2130889. About Stonepath
Group (AMEX:STG) Stonepath (www.stonepath.com) is a global,
third-party logistics organization providing a full range of
transportation and distribution solutions to multinational and
local businesses including a diverse client mix of retail leaders,
automotive and technology concerns, government agencies, and
defense contractors. Through an aggressive acquisition strategy and
strong organic growth, the Company has expanded rapidly,
establishing a network of owned operations throughout the U.S., the
Asia-Pacific region and Latin America. For more information about
the Company, please contact John Brine at (212) 254-8280. This
Press Release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
regarding future results, levels of activity, events, trends or
plans. We have based these forward-looking statements on our
current expectations and projections about such future results,
levels of activity, events, trends or plans. These forward-looking
statements are not guarantees and are subject to known and unknown
risks, uncertainties and assumptions about us that may cause our
actual results, levels of activity, events, trends or plans to be
materially different from any future results, levels of activity,
events, trends or plans expressed or implied by such
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "guidance,"
"may," "will," "should," "could," "would," "expect," "plan,"
"anticipate," "believe," "estimate," "continue" or the negative of
such terms or other similar expressions. While it is impossible to
identify all of the factors that may cause our actual results,
levels of activity, events, trends or plans to differ materially
from those set forth in such forward-looking statements, such
factors include the inherent risks associated with: (i) our ability
to sustain an annual growth rate in revenue consistent with recent
results, (ii) our ability to achieve our targeted operating
margins, (iii) our ability to compute our restructuring efforts
within the costs we now expect, (iv) our ability to realize the
planned benefits from our restructuring efforts, (v) our dependence
on certain large customers, (vi) our dependence upon certain key
personnel, (vii) an unexpected adverse result in any legal
proceeding, (viii) competition in the freight forwarding, logistics
and supply chain management industry, (ix) the impact of current
and future laws affecting the Company's operations, (x) adverse
changes in general economic conditions as well as economic
conditions affecting the specific industries and customers we
serve, and (xi) regional disruptions in transportation. Other
factors that might cause or contribute to such a discrepancy
between expected and actual results include, but are not limited
to, those factors identified in our Securities and Exchange
Commission filings (including our Annual Report on Form 10-K for
2004), other public documents and recent press releases, which can
be found on our corporate web site, www.stonepath.com. Readers are
cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date made. We undertake no
obligation to publicly release the result of any revision of these
forward-looking statements to reflect events or circumstances after
the date they are made or to reflect the occurrence of
unanticipated events.
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