Stonepath (AMEX:STG)
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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.