Tarpon Industries, Inc. (AMEX:TPO), a manufacturer and distributor
of structural and mechanical steel tubing and engineered steel
storage rack systems, today announced that for the second quarter
ended June 30, 2006, revenue increased 42% to $21.4 million,
compared to $15.0 million for the quarter ended June 30, 2005. The
company reported a net loss of $5.68 million, after a one time
impairment charge of $4,326,177, or $1.22 per fully diluted share,
compared to a loss of $1.46 million or $.0.32 per fully diluted
share in the comparable 2005 quarter. Gross profit for the second
quarter ended June 30, 2006 was $1.80 million, compared to the
$894,000 in the second quarter of 2005. EBITDA for the 2006 second
quarter, before impairment charges, was $86,325, the first positive
EBITDA quarter since the company's February 2005 IPO, compared to
($1,308,279) reported in the first quarter ended March 31, 2006.
Revenue for the six month period ended June 30, 2006 was $38.4
million an increase of 31.9 % compared to the $29.1 million
reported in the six months ended June 30, 2005 (which included the
operations of Steelbank only from mid-February 2005). The net loss
for the 2006 six month period was $8.54 million, or $.1.84 per
fully diluted share, compared to the $3.07 million, or $0.82 per
fully diluted share reported in the comparable 2005 period. Gross
profit increased to $3.3 million for the six months ended June 2006
compared to $1.6 million in the six months ended June 30, 2005. The
loss for both the quarter and the six month period reflects
impairment of Steelbank goodwill and intangibles of $3,576, 000 and
impairment of the Haines Road real estate of $750,000. Interest
expense for the third quarter and six month periods ending June 30,
2006 was $1,246,588 and $2,611,811 respectively. "We made solid
progress in growing our revenue as we increased our customer base
in the mechanical tube business while growing market share in the
material handling industry markets," said James W. Bradshaw,
chairman and CEO. "In addition, we reduced our SG&A expense
from the first quarter, and implemented cost reductions and more
cost-effective procedures that are beginning to take hold. There is
more to be done, but as the company continues to grow the top line,
we are already implementing many processes and programs that can
build greater efficiency and lower costs." "EBITDA for the quarter
improved dramatically," noted J. Stanley Baumgartner, chief
financial officer of Tarpon since June, 2006. "Jim and I have
forged a solid working relationship with a primary objective of
substantially improving gross margins. We are encouraged by our
progress, and remain focused on producing solid and measurable
improvements to Tarpon's top and bottom line in the quarters
ahead." "In regard to those improvements, we remain focused on and
fully anticipate that the company will maintain a consistent level
of sales momentum and growth," concluded Mr. Bradshaw. "In
addition, we will to reduce SG&A by a half million dollars, and
plan to attain 13-15% gross margins by the end of fiscal 2006. By
doing so, we fully expect that the company will again reach
positive EBITDA levels in the third quarter, and will attain
positive net income and earnings per share in the fourth quarter of
2006." Tarpon Industries, Inc. will hold a conference call at 11:00
AM. ET on Wednesday, August 23, 2006. Interested parties are
invited to listen to the call live or over the Internet at
http://viavid.net/dce.aspx?sid=00003450. The call will also be
available by dialing 888-694-4702, or for international callers,
973-582-2741. If you are unable to participate, an audio digital
replay of the call will be available from August 23, 2006 at 1:00
PM until 11:59 PM on August 26, 2006 by dialing 1-877-519-4471
(domestic) or 1-973-341-3080 (international) using replay pin
number 7749882. Tarpon Industries, Inc. Tarpon Industries, Inc.,
through its wholly owned subsidiaries within the United States and
Canada, manufactures and sells structural and mechanical steel
tubing and engineered steel storage rack systems. The company's
mission is to become a larger and more significant manufacturer and
distributor of structural and mechanical steel tubing, engineered
steel storage rack systems and related products. For more
information, please visit Tarpon's website at
http://www.tarponind.com. Forward-Looking Statements Certain
statements made by Tarpon in this presentation and other periodic
oral and written statements, including filings with the Securities
and Exchange Commission, are "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements, as well as statements which
address operating performance, events or developments that we
believe or expect to occur in the future, including those that
discuss strategies, goals, outlook or other non-historical matters,
or which relate to future sales or earnings expectations, cost
savings, awarded sales, volume growth, earnings or a general belief
in our expectations of future operating results, are
forward-looking statements. The forward-looking statements are made
on the basis of management's assumptions and estimations. As a
result, there can be no guarantee or assurance that these
assumptions and expectations will in fact occur. The
forward-looking statements are subject to risks and uncertainties
that may cause actual results to materially differ from those
contained in the statements. Some, but not all of the risks,
include our ability to obtain future sales, our ability to
successfully integrate acquisitions, changes in worldwide economic
and political conditions, including adverse effects from terrorism
or related hostilities including increased costs, reduced
production or other factors, costs related to legal and
administrative matters, our ability to realize cost savings
expected, inefficiencies related to production that are greater
than anticipated, changes in technology and technological risks,
foreign currency fluctuations, increased fuel costs, increased
steel costs as it relates to our selling price, work stoppages and
strikes at our facilities and those of our customers, the presence
of downturns in customer markets where the company's goods and
services are sold, financial and business downturns of our
customers or vendors, and other factors, uncertainties, challenges,
and risks detailed in Tarpon's public filings with the Securities
and Exchange Commission. Tarpon does not intend or undertake any
obligation to update any forward-looking statements. -0- *T
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months
Ended June 30, Six Months Ended June 30,
--------------------------- ------------------------- 2006 2005
2006 2005 ------------- ------------- ------------ ------------
REVENUES: Sales, net of customer discounts $ 21,484,931 $
15,086,908 $ 38,492,095 $ 29,105,264 Cost of goods sold 20,022,119
14,192,483 35,515,282 27,426,915 ------------- -------------
------------ ------------ Gross Profit 1,462,812 894,425 2,976,813
1,678,349 OPERATING EXPENSES: Selling, general and administrative
expenses 2,419,911 2,121,866 5,331,931 4,480,482 Impairment
4,326,177 - 4,326,177 - ------------- ------------- ------------
------------ Total operating expense 6,746,088 2,121,866 9,658,108
4,480,482 OPERATING LOSS (5,283,276) (1,227,441) (6,681,295)
(2,802,133) OTHER (INCOME) EXPENSE: Miscellaneous (income) expense
(4,729) 27,989 (48,737) 41,352 Financing costs 21,911 14,776 43,549
29,691 Gain on derivatives (794,000) - (693,000) - Foreign exchange
(gain) loss (64,837) 71,114 (51,464) (53,346) -------------
------------- ------------ ------------ Total other (income)
expense (841,655) 113,879 (749,652) 17,697 -------------
------------- ------------ ------------ INTEREST EXPENSE, NET:
Interest 1,255,697 186,818 2,646,916 458,148 Interest income
(9,109) (44) (35,035) (4,849) ------------- -------------
------------ ------------ Total interest expense, net 1,246,588
186,774 2,611,881 453,299 ------------- ------------- ------------
------------ LOSS BEFORE INCOME TAXES (5,688,209) (1,528,094)
(8,543,524) (3,273,129) INCOME TAX PROVISION (BENEFIT) - (60,295) -
(195,621) ------------- ------------- ------------ ------------ NET
LOSS $ (5,688,209) $ (1,467,799) $(8,543,524) $(3,077,508)
============= ============= ============ ============ NET LOSS PER
COMMON SHARE - BASIC AND DILUTED $ (1.22) $ (0.32) $ (1.84) $
(0.82) ============= ============= ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,671,384
4,640,130 4,655,843 3,740,386 ============= =============
============ ============ CONSOLIDATED BALANCE SHEETS June 30
December 31, 2006 2005 ------------ ------------ ASSETS:
(unaudited) CURRENT ASSETS: Cash and cash equivalents $408,799
$7,317,364 ------------ ------------ Total current assets
19,599,157 22,334,712 ------------ ------------ TOTAL ASSETS
$31,587,801 $39,005,921 ============ ============ LIABILITIES AND
SHAREHOLDERS' EQUITY: CURRENT LIABILITIES: $10,530,454 33,417,628
Long-term debt less current maturities 6,522 10,242 Other long-term
liabilities 219,000 382,667 ------------ ------------ TOTAL
LIABILITIES 34,349,282 33,810,537 ------------ ------------ TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $31,587,801 $39,005,921
============ ============ *T
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