Stonepath Group Reports Q2 2006 Results
August 14 2006 - 5:08PM
PR Newswire (US)
SEATTLE, Aug. 14 /PRNewswire-FirstCall/ -- Stonepath Group
(AMEX:STG), a global logistics services organization, today
reported financial results for the three and six months ended June
30, 2006. Second Quarter Results For the second quarter of 2006,
Stonepath reported revenue of $90.9 million, a decrease of 9.1%
compared to the prior year period. International segment revenues
increased 0.6% to $70.9 million, while the Company's Domestic
segment revenues declined 32.2% to $20.0 million for the quarter.
The decline in Domestic segment revenue was due primarily to
reduced volume from two major, national retail accounts. The
Domestic Services segment has taken action to align its operating
expenses with these reduced revenue levels. These actions include
the reducing of personnel levels, facility costs and other
administrative expenses. The International segment experienced a
decline in revenue from its U.S. and China-based businesses, which
were offset by growth in its other Asia operations. Net revenues
were $17.2 million, a $4.9 million decrease, or 22.4%, compared to
the prior year period. The Domestic Services segment delivered $6.8
million of net revenue in the second quarter of 2006, a decline of
$4.4 million or 39.4% over the same prior year period. The
International Services segment delivered $10.4 million of net
revenue in the second quarter of 2006, a period over period decline
of $0.5 million or 5.2%. The Company reported net income of $0.4
million, or $0.01 per basic share and a $(0.04) loss per diluted
share. This compares to a net loss of $0.4 million, or $(0.1) per
basic and diluted share for the same prior year period. Included in
the Company's net income for the second quarter is a $3.6 million
non-cash credit relating to the accounting for derivatives
contained in certain of our financing agreements and a $0.8 million
credit relating to a sublease of a previously closed facility.
First Half Results For the first half of 2006, Stonepath reported
revenues of $183.1 million, a decrease of $6.9 million, or 3.6%.
Net revenue decreased over the prior-year period by $5.9 million,
or 13.8%, to $36.7 million. The Company reported a net loss of $3.0
million in the first half of 2006 or $(0.7) per basic and $(0.8)
diluted share. This compares to a net loss of $7.9 million or
$(0.18) per diluted share for the same prior-year period. Effective
July 19, 2006, Stonepath entered into of a letter of intent for our
U.S-based International Services ("SLIS") and Germany units. The
consideration for the transaction is $18.0 million, and will yield
net proceeds of $17.1 million after the deduction for $0.9 million
of potential contingent earn-out payments associated with a prior
acquisition by SLIS. The proceeds will further be adjusted, upwards
or downwards depending on the level of working capital of these
entities as of closing. The sale is contingent upon the successful
completion of negotiations between Stonepath and the buyers and
satisfaction of customary conditions to closing, including third-
party approvals. Stonepath expects to close on the transaction
during the third quarter. "Our operating results have been less
than satisfactory and our borrowings are higher than advisable,"
said Bob Arovas, Stonepath's Interim CEO. "To reduce our debt
levels, we have initiated the sale of our US-based international
business. We are also making further changes in the structure and
operations of our remaining businesses both in the US and overseas.
Among other actions, we are increasing our focus on China-based
retail customer services in an effort to reduce reliance on a
traditional wholesale business, which has been providing lower than
acceptable margins." Arovas continued, "There is much to do to
improve the performance of the Company, and it will take some time
to achieve our objectives. We appreciate the patience and
continuing support of our customers, employees, vendors and
shareholders as we execute our plan to improve our financial
performance." 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.
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 of Stonepath Group, +1-212-254-8280 Web site:
http://www.stonepath.com/
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