The Morgan Group, Inc., Reports 2000 First-Quarter Financial Results
28 April 2000
The Morgan Group, Inc., Reports 2000 First-Quarter Financial Results
RYE, N.Y.--April 28, 2000--The Morgan Group, Inc. (AMEX:MG), today announced its financial results for the first quarter of 2000, ended March 31, 2000.Operating revenues decreased 21 percent to $27.9 million from 1999's first-quarter record of $35.3 million. This decrease is primarily the result of a sharp industry-wide decline in shipments of manufactured homes. The manufactured housing industry continues to be hampered by tighter credit and high customer inventory levels, which directly impact production and sales volume for the Company's customers. Similarly, operating revenues decreased in the specialized outsourcing business segment primarily due to decreased volume in the delivery of large trailers.
The loss before interest, taxes, depreciation and amortization (EBITDA) was $605,000 for the quarter compared with a positive EBITDA of $634,000 for the corresponding period last year. The net loss for the quarter was $616,000, or $0.25 per share, compared with a net profit of $118,000, or $0.05 per share for the first quarter of 1999.
Anthony T. Castor, III, President and CEO of The Morgan Group, said, "As we previously projected, the softness in the manufactured housing industry persisted in the first quarter. While we are optimistic about the long-term prospects for the industry, near-term the inventory oversupply in the pipeline is still being worked out; shipments will rebound when this excess inventory is brought in line with demand."
He continued, "We have adjusted our overhead and cost structure during the quarter in response to the industry's slowdown. The staff reductions and other cost-cutting initiatives recently instituted are expected to yield approximately $1.8 million in savings, net of severance costs, in the year 2000. We are analyzing additional cost-containment actions as well as incremental sales initiatives to shore up our bottom line. We have been through these cycles before in our over 60 years of business, and we will be positioned to increase profitability when our customers' businesses improve," Castor concluded.
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 98 offices in 32 states. The Company also provides insurance and financial services through its wholly owned subsidiaries, Interstate Indemnity and Morgan Finance, Inc.
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.
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
Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
March 31 December 31
2000 1999
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ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 2,163 $ 3,847
Trade accounts receivable,
less allowances of $333
in 2000 and $313 in 1999 10,612 10,130
Accounts receivable, other 108 313
Prepaid expenses and other
current assets 2,054 1,960
Deferred income taxes 1,475 1,475
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Total current assets 16,412 17,725
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Property and equipment, net 4,248 4,309
Intangible assets, net 7,184 7,361
Deferred income taxes 2,172 2,172
Other assets 579 697
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Total assets $30,595 $32,264
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 4,095 $ 3,907
Accrued liabilities 4,555 4,852
Income taxes payable (303) 278
Accrued claims payable 3,004 3,071
Refundable deposits 1,411 1,752
Current portion of long-term
debt and capital lease obligations 639 676
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Total current liabilities 13,401 14,536
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Long-term debt and capital lease
obligations, less current portion 239 289
Long-term accrued claims payable 5,516 5,347
Commitments and contingencies -- --
Shareholders' equity:
Common stock, $.015 par value
Class A: Authorized shares - 7,500,000
Issued shares - 1,607,303 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 2,122 2,775
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Total capital and retained earnings 14,622 15,275
Less - treasury stock at cost
(359,146 Class A shares) (3,183) (3,183)
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Total shareholders' equity 11,439 12,092
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Total liabilities and shareholders'
equity $30,595 $32,264
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The Morgan Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except share amounts)
(Unaudited)
Three Months Ended
March 31,
2000 1999
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Operating revenues $ 27,867 $ 35,325
Costs and expenses:
Operating costs 26,113 32,003
Selling, general and
administration 2,359 2,688
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Earnings, (loss) before interest,
taxes, depreciation and
amortization (EBITDA) (605) 634
Depreciation and amortization 293 309
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Operating income (loss) (898) 325
Interest expense, net 57 88
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Income (loss) before income taxes (955) 237
Income tax expense (benefit) (339) 119
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Net income (loss) $ (616) $ 118
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Net income (loss) per basic
and diluted share $ (0.25) $ 0.05
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