The Morgan Group Reports 1998 Q3 and Nine-Month Results
23 October 1998
The Morgan Group Reports 1998 Third-Quarter and Nine-Month Financial Results
BALTIMORE, Md.--Oct. 23, 1998--The Morgan Group, Inc. (AMEX:MG) announced that revenues for the third quarter ended September 30, 1998, were the highest for any third quarter and nine-month period in the Company's history. Revenues for the third quarter increased to $39.1 million from $38.3 million for 1997's third quarter. EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) was $1.0 million for the quarter, compared with $1.6 million for the corresponding period last year. Net income was $321,000, or $0.13 per diluted share of Class A common stock, compared with $705,000, or $0.26 per diluted share of Class A common stock, for the year-ago quarter.For the first nine months of 1998, revenues rose to a Company record $114.6 million from $111.1 million for the same period last year. EBITDA for the first nine months was $2.5 million compared with $3.9 million in the corresponding period in 1997. Net income was $707,000, or $0.28 per diluted share of Class A common stock, compared with $1.7 million, or $0.64 per diluted share of Class A common stock, for 1997's first nine months.
"We continue to see net growth in our Company's revenues, which is encouraging particularly in light of the fact that last year's nine-month's revenues included $3.3 million from our discontinued truckaway operation," commented Charles C. Baum, Chairman and CEO. "Additionally, in the third quarter, we negotiated contracts with major customers of our manufactured housing and driver outsourcing transportation services that will benefit the Company going forward."
"However we will not be satisfied until our margins improve," Mr. Baum continued. "Currently we are pursuing a variety of initiatives to address our profitability, including restructuring our insurance policies to fit our unique businesses, improving our claims experience and updating our information systems. We are confident that these efforts will help to improve margins in the future and consequently overall profitability beginning as early as the fourth quarter of this year."
The Morgan Group, Inc. is the nation's leader in providing services to the manufactured housing industry and arranges as well for the movement of commercial vehicles, office trailers, buses, and a variety of other vehicles and freight. The Company has a national network of approximately 1,520 independent owner-operators and 1,390 other drivers dispatched from 106 offices in 32 states. The Company also provides insurance and financial services through its wholly-owned subsidiaries, Interstate Indemnity and Morgan Finance, Inc.
This release contains forward-looking statements, including initiatives relating to profitability. Such statements are subject to a number of material factors which could cause the statements or projections contained therein to be materially inaccurate. Such factors include, without limitation, successful implementation of profit initiatives, overall economic and industry conditions, competition for customers and drivers, and risks associated with business operations, acquisitions, expansion into new business lines, and changes in the regulatory environment.
(Comparative Financial Statements Attached)
The Morgan Group, Inc. and Subsidiaries
Condensed Statements of Operations
(Dollars in thousands, except share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
____ ____ ____ ____
Operating revenues:
Manufactured housing $ 24,775 $ 25,447 $ 72,072 $ 70,721
Driver outsourcing 5,571 5,116 17,049 15,177
Specialized transport 5,621 4,048 15,643 14,904
Other service revenues 3,168 3,679 9,865 10,335
________ ________ ________ ________
Total operating revenues 39,135 38,290 114,629 111,137
Costs and expenses:
Operating costs 35,560 34,490 104,338 100,768
Selling, general and
administration 2,580 2,240 7,821 6,493
________ ________ ________ ________
Earnings before
interest, taxes,
depreciation,
and amortization (EBITDA) 995 1,560 2,470 3,876
Depreciation
and amortization 296 309 879 906
________ ________ ________ ________
Operating income 699 1,251 1,591 2,970
Interest expense, net 127 149 460 448
________ ________ ________ ________
Income before income taxes 572 1,102 1,131 2,522
Income tax expense 251 397 424 850
________ ________ ________ ________
Net income $ 321 $ 705 $ 707 $ 1,672
________ ________ ________ ________
________ ________ ________ ________
Net income attributable
to Class A common share:
Basic $ 0.13 $ 0.27 $ 0.28 $ 0.64
________ ________ ________ ________
________ ________ ________ ________
Diluted $ 0.13 $ 0.26 $ 0.28 $ 0.64
________ ________ ________ ________
________ ________ ________ ________
The Morgan Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
September 30, December 31,
1998 1997
(unaudited)
____________ ____________
ASSETS
Current assets:
Cash and cash equivalents $ 126 $ 380
Trade accounts receivable,
less allowance for doubtful
accounts of $268 in
1998 and $183 in 1997 15,732 13,362
Accounts receivable, other 363 126
Refundable taxes -- 263
Prepaid expenses and other
current assets 1,959 2,523
Deferred income taxes 1,122 1,095
________ _______
Total current assets 19,302 17,749
________ _______
Property and equipment, net 4,661 4,315
Intangible assets, net 8,168 8,451
Deferred income taxes 1,094 767
Other assets 865 1,464
________ _______
Total assets $ 34,090 $ 32,746
________ _______
________ _______
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ ----- $ 2,250
Trade accounts payable 5,281 3,410
Accrued liabilities 6,457 4,966
Income taxes payable 47 -----
Accrued claims payable 2,166 2,175
Refundable deposits 1,882 1,666
Current portion of
long-term debt 694 1,153
________ _______
Total current liabilities 16,527 15,620
________ _______
Long-term debt, less current portion 859 1,360
Long-term accrued claims payable 3,617 3,042
Commitments and contingencies ----- -----
Shareholders' equity:
Common stock, $.015 par value
Class A: Authorized
shares - 7,500,000
Issued shares - 1,605,553 23 23
Class B: Authorized
shares - 2,500,000
Issued and outstanding
shares - 1,200,000 18 18
Additional paid-in capital 12,459 12,453
Retained earnings 2,745 2,160
________ _______
Total capital and retained
earnings 15,245 14,654
Less - treasury stock at cost
250,518 and 167,643
Class A shares (2,158) (1,426)
Loan to officer for
stock purchase ----- (504)
________ _______
Total shareholders' equity 13,087 12,724
________ _______
Total liabilities and
shareholders' equity $ 34,090 $ 32,746
________ _______
________ _______