Stonepath Group Reports Record Revenue of $410.3 Million for Full Year 2005
March 31 2006 - 7:11PM
PR Newswire (US)
Strength in China Helps International Division Post 32% Top Line
Gain SEATTLE, March 31 /PRNewswire-FirstCall/ -- Stonepath Group
(AMEX:STG), a global logistics services organization, today
reported financial results for the three months and year ended
December 31, 2005. Fourth Quarter Results For the three months
ended December 31, 2005, Stonepath reported revenue of $108.9
million, a decline of 1.6% compared to the prior year period.
Domestic revenues declined 33.0% to $26.5 million for the quarter
while international revenues increased 15.8% to $82.5 million.
Domestic revenues were negatively impacted by lower automotive
related business caused by the difficult economic conditions of
U.S. automobile manufacturers and reduced volume from a major
national retail customer. The latter decline was due to our
customer's sale of part of their business as well as their internal
restructuring. International revenue growth was driven from
offshore operations and led by our China business. Net revenues
were $20.6 million, a $3.3 million decrease or 13.6% compared to
the prior year period. The decrease was due to domestic volume
reductions, noted above, that were partially offset by margin
improvements. Domestic margins improved to 34.7% of revenues in
2005 compared to 31.2% in 2004, principally due to higher added
value services. International margins decreased to 13.8% of
revenues compared to 16.2% of revenues. Lower international margins
are due to growth in the Company's China operations, which
historically carry lower margin percentages. The Company continues
to see progress from its restructuring efforts as operating costs
before restructuring charges declined by $2.3 million or 9.4%,
principally due to reduced labor and facilities expenses, net of
higher legal and accounting related costs. The Company reported a
net loss of $0.8 million, or $(0.2) per basic share and $(0.5) per
diluted share. This compares to a net loss of $6.0 million, or
$(0.15) per basic and diluted share for the same prior year period.
Included in Company's net loss for the quarter is a $2.8 million
gain relating to accounting for derivatives contained in certain of
our financing agreements. Restructuring items included in our net
loss were a credit of $0.2 million in 2005 and a charge of $4.4
million in 2004. Full Year Results For the year ended December 31,
2005, Stonepath reported revenue of $410.3 million, net revenue of
$86.5 million and a net loss of $9.8 million, or $(0.22) per basis
share and $(0.23) per diluted share. This compares to revenue of
$367.1 million, net revenue of $84.7 million and a net loss of
$13.0 million in 2004, or $(0.33) per basic and diluted share. The
net loss in 2005 includes restructuring charges of $3.3 million or
$(0.08) per basic share, while the net loss in 2004 reflects a
restructuring charge of $4.4 million or $(0.11) per basic share,
and a provision for excess earn-out payments of $3.1 million or
$(0.08) per basic share. The Company was also adversely impacted in
2005 by approximately $0.9 million relating to the third quarter
refinancing of the Company's principal U.S. credit facility. The
International Services segment continued to deliver top line gains
with $292.2 million in total revenue in 2005, a period over period
improvement of $70.3 million or 31.7% with same store revenues
increasing by 8.8%. Revenues from operations which were acquired in
2004 contributed additional revenues of $57.7 million, highlighted
by our Shaanxi, China-based, subsidiary, which increased by $55.3
million. Net revenues improved by $1.7 million, or 2.0%, on an
11.8% revenue gain. This was due to the higher concentration of our
wholesale air business from China as a percentage of total
transportation revenues. Exclusive of restructuring charges of $3.3
million and $4.4 million in 2005 and 2004 respectively, our loss
from operations decreased by $0.6 million in spite of significant
Sarbanes-Oxley compliance and legal defense costs in connection
with various actions. Cash flow from operations improved by $6.6
million to $5.0 million principally as a result of improved working
capital management. Operational Plans in Place to Deliver Improved
Financial Performance "Stonepath has made important progress as an
evolving global integrated logistics provider," said Dennis Pelino,
Stonepath's Chairman. "The opportunity going forward, for our
business and for investors, is far greater than ever before. We are
uniquely positioned to take advantage of opportunities like the
explosive economic growth fueling China's wholesale logistics
market. Now, it's time to better leverage our strengths to
capitalize on the enormous opportunity in the retail market."
Pelino continued, "Stonepath is back on track. Our focus remains on
delivering sustainable organic growth as a global integrated
logistics provider and steadily improving profitability by driving
incremental business and delivering margin improvement." Jason
Totah, Chief Executive Officer, continued, "Although we had a
weaker than expected fourth quarter, we are optimistic about 2006.
We cut a great deal of cost from the operation in 2005, primarily
in North America, and the management team instituted a number of
positive changes across the business that have re-accelerated
Stonepath. Our operations have stabilized and, in many respects,
have regained their momentum and we are pleased with the
incremental business being added to the domestic and international
platforms as we move through the early part of the year." About
Stonepath Group (AMEX:STG) Stonepath (http://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 strategic acquisitions 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. Although 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
2005), other public documents and recent press releases, which can
be found on our corporate web site, http://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. DATASOURCE: Stonepath Group
CONTACT: John Brine, +1-212-254-8280, for Stonepath Group Web site:
http://www.stonepath.com/
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