Morgan Group Announces Improved Unaudited Financial Results for 2001 Versus 2000; Morgan Group Achieves Improved Financial Results Despite Revenue Declines
ELKHART, Ind.--March 1, 2002--The Morgan Group, Inc. (AMEX:MG), the nation's largest company managing the delivery of manufactured homes, recreational vehicles and specialized equipment, today reported unaudited financial results for the fourth quarter and twelve months ended December 31, 2001.Twelve-Month Results
The Morgan Group, Inc. posted a 7.8% improvement in its operating loss despite a 21.2% decline in operating revenue for the twelve months ended December 31, 2001. The Company is reporting an operating loss of $1.88 million with $101.2 million in operating revenue compared to a prior year operating loss of $2.04 million on $128.4 million in operating revenue. These improvements were achieved despite continued weakness in the manufactured housing sector, and key adverse events in the industry during 2001 including substantial insurance premium increases and a higher than expected drop in fourth quarter revenues due to the events in September.
Management believes these improvements were the result of its on-going commitment and intensified efforts to improve the efficiency of its operations. The Company has been successful in implementing cost-reduction programs across all of its operating segments designed to match expenses with reduced revenue levels. As a result, despite an overall decrease of 21.2% in total revenue, the EBITDA loss (earnings before interest, taxes, depreciation and amortization) of $994,000 was relatively constant compared to the prior year of $971,000. Overall, unaudited net loss for the twelve-month period decreased substantially to $1.99 million or $0.68 per share compared to a year ago $4.80 million or $1.96 per share.
Fourth Quarter Results
For fourth-quarter 2001, revenues were down 26% to $19.5 million versus the $26.2 million reported in the year-ago quarter. The Company reported revenue improvements of 57% in the towaway division and 13% in the pickup division. These increases were offset by a 44% decline in revenue from the manufactured housing division.
Fourth-quarter 2001 EBITDA loss was slightly higher than prior year at $1.4 million compared with $1.2 million for the year-ago period. The EBITDA result was achieved despite lower volume during the period, reflecting Management's commitment to match expenses with revenues. The Morgan Group, Inc. reported an operating loss of $1.6 million for fourth-quarter 2001 compared with an operating loss of $1.4 million for 2000's year-ago period. Overall, unaudited net loss for the three-month period decreased substantially to $1.81 million or $0.53 per share compared to a year ago $4.28 million or $1.75 per share.
Anthony T. Castor, III, President and Chief Executive Officer of The Morgan Group, Inc., said, "We are encouraged with the 2001 operating results despite significant negative events including substantial insurance premium increases and a continued recession in the manufactured housing industry. We are confident that the Company's Management team will continue its efforts in streamlining operations, and will be poised to take advantage of opportunities resulting from the imminent turnaround of the manufactured housing and RV sectors.
Additionally, the effects of the regional-based sales force assembled in 2001 will impact our results on a full year basis. The sales groups' objective is to attain broader and deeper market penetration with more frequent high quality customer contact and service, which ultimately will result in increased market share and expansion of our leadership position."
The Company is experiencing seasonally weak demand because winter weather conditions inhibit transport. Reduced revenues have reduced the Company's borrowing capacity, adversely affecting liquidity. The Company has obtained temporary incremental borrowing capacity from its lender and has received a reduction in collateral requirements and a rebate of a portion of prepaid premium related to its insurance arrangements. The Company has also announced a price reduction of the Class A warrants to $2.25 per share with a view to inducing warrant holders to exercise, potentially improving liquidity. The uncertainty of the Company meeting its financial obligation will continue throughout the remainder of the slow season. The Company filed a report on Form 8-K with the SEC on February 26, 2002, summarizing the current status of its capital resources and financial condition, including the price reduction on its Class A warrants.
The Morgan Group, Inc., through its subsidiaries Morgan Drive Away, Inc., and TDI, Inc. is the nation's largest company managing the delivery of manufactured homes, recreational vehicles and specialized equipment. The Company also provides insurance and financial services through its subsidiaries, Interstate Indemnity and Morgan Finance, Inc.
This press release contains forward-looking statements, including descriptions of initiatives relating to profitability. Such statements are subject to a number of 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.
FINANCIAL HIGHLIGHTS
(In 000s, except per-share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
Unaudited Unaudited Unaudited Audited
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2001 2000 2001 2000
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Operating revenues(a) $ 19,458 $ 26,210 $ 101,168 $ 128,367
Operating loss (1,636) (1,431) (1,882) (2,038)
Net loss (1,813) (4,275) (1,988) (4,799)
EBITDA (1,435) (1,182) (994) (971)
Weighted avg shares
outstanding 3,448 2,448 2,922 2,448
Net loss per share ($ 0.53) ($ 1.75) ($ 0.68) ($ 1.96)
(a) Gross operating revenues and operating expenses were reclassified
for 2001 and prior years. The Company reclassified escort and
insurance billings to operating revenue that were previously
netted against the related expenses in the operating expense
section. The reclassification increased operating revenues and
operating expenses proportionately. There was no impact on
operating loss, net loss or EBITDA from this reclassification.
EBITDA should not be construed as an alternative to operating income or net cash flow from operating activities and should not be construed as an indication of operating performance or as a measure of liquidity.