Morgan Group Reports First-Quarter 2001 Results; Company Improves All Income Measurements On Lower Revenues

    ELKHART, Ind.--May 15, 2001--The Morgan Group, Inc. (AMEX:MG), reported financial results for the first quarter ended March 31, 2001 that included lower revenues but improvement in all income measurements.
    Revenues for the first quarter decreased by $7.7 million or 27% to $20.7 million from $28.4 million in the first quarter of 2000. The revenue decrease was related primarily to a decline of $6.8 million, or 38%, in the first quarter for the Company's manufactured housing division.
    Shipments for the manufactured housing industry nationwide were down 42% in January and February of 2001 according to the Manufactured Housing Institute. (March shipment data was not available). The industry continues to experience a two-year cyclical slump created by consumer credit issues and excess inventory.
    Morgan Group's loss before interest, taxes, depreciation and amortization (EBITDA) was $248,000 for the quarter compared with a loss of $605,000 in 2000. The improvements, on lower volume, reflect the Company's cost-reduction efforts of the past 12 months. Pre-tax income for the quarter was a loss of $541,000 compared with a loss of $955,000 in 2000 -- also a significant improvement.
    Anthony T. Castor, III, President and Chief Executive Officer of The Morgan Group, said: "Compounding the continuing weakness in demand for our customers in the manufactured housing industry were the typical seasonal effects that usually serve to reduce our operating revenues in the first quarter. We are obviously unwilling to wait for the expected favorable housing industry recovery to improve our financial results. Accordingly, we have implemented a management profit-improvement program for Morgan that targets positive EBITDA and net income for 2001 operating at these significantly reduced revenue levels."
    Morgan Drive Away President Michael J. Archual reported that the Company's claims experience in the first quarter was favorable, with liability claim expense decreasing by 43% from the prior year and cargo claim expense decreasing by 64%. While partly due to lower revenue, improvement on a per-mile basis was registered also. Archual also noted that the Company has obtained several significant new customer contracts that are beginning to produce additional revenue. According to Archual: "We expect the positive trends set in place during the year's opening months to persist as we continue to benefit from our cost-reduction initiatives and contributions from new business secured during the quarter." Shipments of manufactured homes tend to decline in the winter months in areas where poor weather conditions inhibit transport. This usually reduces operating revenues in the first and fourth quarters of the year. The Company's operating revenues, therefore, tend to be stronger in the second and third quarters.

    The Morgan Group, Inc., through its subsidiaries Morgan Drive Away, Inc., and TDI, Inc. ("Morgan Drive Away"), is the nation's largest company managing the delivery of manufactured homes, commercial vehicles and specialized equipment in the United States. The Company has a national network of 975 independent owner-operators and 1,295 other drivers dispatched from 70 offices in 27 states. The Company also provides insurance and financial services through its wholly owned subsidiaries, Interstate Indemnity and Morgan Finance, Inc.

    This press release contains forward-looking statements, including initiatives relating to profitability. Such statements are subject to a number of material factors that could cause the statements or projections contained therein to be materially inaccurate. Such factors include, without limitation, successful implementation of profit initiatives, overall economic conditions, competition for customers and drivers, and risks associated with business operations, acquisitions, expansion into new business lines, and changes in the regulatory environment.

                The Morgan Group, Inc. and Subsidiaries
             (Dollars in thousands, except share amounts)
                              (Unaudited)

                                              Three Months Ended
Income Statement Data                   March 31, 2001  March 31, 2000
                                        --------------  --------------

Operating revenues                           $ 20,688        $ 28,386

EBITDA                                           (248)           (605)

Operating loss                                   (475)           (898)

Loss before income taxes                         (541)           (955)

Net loss                                         (541)           (616)

Net loss per basic and diluted share            (0.22)          (0.25)

Basic weighted average shares outstanding   2,448,157       2,453,260


                                     March 31, 2001  December 31, 2000
                                     --------------  -----------------
Balance Sheet Data

Current assets                            $ 11,345           $ 11,938

Total assets                                22,315             23,269

Current liabilities                         11,051             10,875

Shareholders' equity                         6,660              7,201