The Morgan Group Reports 1999 Q4 and Full-Year Financial Results
14 February 2000
The Morgan Group, Inc., Reports 1999 Fourth-Quarter and Full-Year Financial Results
RYE, N.Y.--Feb. 14, 2000--The Morgan Group, Inc. (AMEX:MG), today reported its financial results for the fourth quarter and year ended December 31, 1999.Operating revenues for the fourth quarter decreased nine percent to $32.7 million from $35.8 million for the year-ago quarter, as anticipated and primarily reflecting the decline in industry-wide manufactured housing shipments. EBITDA for the 1999 final quarter was negative $122,000 versus EBITDA of $767,000 for the comparable period a year ago. The net loss for the quarter was $302,000, or $0.12 per share, compared with net income of $196,000, or $0.08 per share, for 1998's fourth quarter.
For the 1999 full year, total operating revenues declined three percent to $145.6 million from the $150.5 million reported for 1998, a result of the industry slowdown mentioned previously partially offset by higher operating revenues in the Specialized Outsourcing Services business segment. EBITDA for the year was $1.8 million versus $3.2 million last year. Net income for 1999 was $19,000, or $0.01 per share, compared with $903,000, or $0.35 per share, for 1998.
Morgan Group Chairman Charles C. Baum stated, "While the effects of lower than normal manufactured housing shipments continued to restrain our performance through year-end, we look at the new year with cautious optimism. We are encouraged by the signs of a turnaround in our Specialized Outsourcing Services segment, which benefited from increased efficiencies, selective pricing adjustments and new accounts added during 1999's closing months. We are pleased by the progress achieved thus far by the Specialized Outsourcing Services management team, and expect to see continuing positive contributions from this segment as the new year progresses. Furthermore, Morgan continues to generate positive cash flow, has minimal debt and no working capital loans outstanding at year end."
Mr. Anthony T. Castor, III, Morgan Group's recently appointed president and chief executive officer, added, "Although signals of lingering softness in manufacturing housing shipments into 2000's first half indicate continuation of a lower level of operating revenue from this segment, we are taking concrete steps to improve our internal situation. As an industry, manufactured housing while cyclical, has demonstrated its resiliency over the decades. All Morgan Drive Away businesses are being evaluated for their financial and strategic fit within Morgan Group. Our key objective is to reshape the Company in order to take full advantage of new opportunities that are conducive to our already established infrastructure. In time, the full impact of these strategies will accelerate the Company's profitability improvement."
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 approximately 1,320 independent owner-operators and 1,470 other drivers dispatched from 103 offices in 33 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.
(Comparative Financial Statements Attached)
The Morgan Group, Inc., and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
Dec. 31, Dec. 31,
1999 1998
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ASSETS
Current assets:
Cash and cash equivalents $ 3,847 $ 1,490
Trade accounts receivable,
less allowance for doubtful
accounts of $313 in 1999 and
$208 in 1998 10,130 12,188
Accounts receivable, other 313 1,214
Prepaid expenses and other current assets 1,960 2,467
Deferred income taxes 1,475 1,230
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Total current assets 17,725 18,589
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Property and equipment, net 4,309 4,117
Intangible assets, net 7,361 8,030
Deferred income taxes 2,172 1,997
Other assets 697 654
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Total assets $ 32,264 $ 33,387
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 3,907 $ 4,304
Accrued liabilities 4,852 3,566
Income taxes payable 278 878
Accrued claims payable 3,071 3,553
Refundable deposits 1,752 1,830
Current portion of long-term debt 676 652
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Total current liabilities 14,536 14,783
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Long-term debt, less current portion 289 828
Long-term accrued claims payable 5,347 4,555
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 12,459
Retained earnings 2,775 2,898
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Total capital and retained earnings 15,275 15,398
Less - treasury stock at cost
(358,646 and 253,218 Class A shares) (3,183) (2,177)
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Total shareholders' equity 12,092 13,221
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Total liabilities and shareholders' equity $ 32,264 $ 33,387
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The Morgan Group, Inc., and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
(Unaudited)
1999 1998 1999 1998
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Operating revenues $ 32,722 $ 35,825 $145,629 $150,454
Costs and expenses:
Operating costs 30,569 32,625 133,774 136,963
Selling, general
and administration 2,275 2,433 10,090 10,254
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Earnings (loss) before
interest, taxes,
depreciation,
and amortization (EBITDA) (122) 767 1,765 3,237
Depreciation and amortization 297 351 1,215 1,230
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Operating income (loss) (419) 416 550 2,007
Interest expense, net 56 85 338 545
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Income (loss) before
income taxes (475) 331 212 1,462
Income tax expense (benefit) (173) 135 193 559
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Net income (loss) $ (302) $ 196 $ 19 $ 903
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Net income (loss) per basic
and diluted share $ (0.12) $ 0.08 $ 0.01 $ 0.35
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