Sep. 28, 2009 (PR Newswire) -- FT. LAUDERDALE, Fla., Sept. 28 /PRNewswire-FirstCall/ -- SMF ENERGY CORPORATION, (Nasdaq: FUEL) (the "Company"), a leading energy logistics company providing efficient, just in time distribution of petroleum products and chemicals, today announced its results for the fiscal year and fourth quarter ended June 30, 2009.

SELECTED FINANCIAL DATA:
In Thousands (except for debt/equity ratio data)

Fiscal       Fiscal
2009         2008    Variance      %

Shareholders'  equity             $6,529       $3,052     $3,477     114%
Total debt                       $13,645      $28,583   $(14,938)    -52%
Debt/equity ratio                    2.1          9.4       (7.3)    -78%
Operating income (loss)           $1,685      $(1,969)    $3,654      NA
Net loss                         $(2,339)     $(6,769)    $4,430      65%
ADJUSTED NET LOSS (1, 2)           $(688)     $(6,769)    $6,081      90%
EBITDA (1)                        $4,530       $1,240     $3,290     265%

(1) A non-GAAP measure.
(2) Before the $1.7 million non-cash FAS 84 "conversion inducement"
accounting charge for the common stock issued related to the
extinguishment of convertible debt in the June 2009 Recapitalization.

Richard E. Gathright, Chairman, Chief Executive Officer and President, commented:

"The fiscal year 2009 presented extraordinary challenges which we met decisively. As a result, we recorded our best financial performance in the Company's history during the depth of the worst recession since the Great Depression. We posted a record EBITDA of more than $4.5 million which was a $3.3 million or 265% improvement over the prior fiscal year. We also posted our highest operating income ever of $1.7 million which was a dramatic turnaround of $3.7 million over last year's operating loss of $2.0 million. Excluding the $1.7 million FAS 84 accounting charge incurred in connection with our $40 million Recapitalization, our adjusted net loss was $688,000, a reduction of $6 million or 90% from fiscal 2008."

"Fiscal 2009 concluded with the complex $40 million Recapitalization of all of our debt and equity securities. This event tremendously strengthened our balance sheet and financial position by immediately lowering our total debt by $4.5 million and reducing our total debt between fiscal 2008 and 2009 by $15 million or 52%; increasing shareholders' equity by $4.1 million and reducing our debt to equity ratio from approximately 9 to 1 to 2 to 1 over the prior year. The Recapitalization extinguished all of our maturing debt while providing us with a new 5 year term loan and a minimum 3 year bank line of credit, both of which carry highly competitive lower interest rates. We estimate that the Recapitalization will reduce our annual cash interest and dividends cash usage by over $1.0 million."

"As we look ahead into the first quarter of fiscal 2010, we can confirm the continuation of the financial improvement trend achieved during the 5 prior quarters. This performance is on the backdrop of an intensified marketing program, which is showing strong results in the current recession, and a weakened competitive environment. We believe that our efforts continue to solidify SMF as the supplier of choice throughout our expanding distribution network. Our new ERP system continues to provide exceptional opportunities for efficiency improvements in our field and back office operations, while enhanced management reporting is providing greater insight into customer needs, logistics and profitability."

"Beginning this coming Thursday, October 1, 2009, our stock will trade on a split basis of 1 for 4.5 shares. The purpose of this action is to preserve our Nasdaq listing. We are confident that, after the reverse split, our stock will trade above the Nasdaq minimum bid price for the required 10 day trading period, which will end on October 15, 2009, as our strong fundamentals should support a much higher valuation of our stock. Currently, the market capitalization is less than 3 times fiscal 2009's EBITDA of $4.5 million. While we are hopeful that 2010 brings a recovering economy, the more than $1.0 million in interest savings and non-recurring non-cash accounting charges associated with the Recapitalization should yield an increase of $4.4 million in income attributable to common shareholders. Minimally, if investors evaluate SMF at 5 times this past fiscal year's EBITDA, our market capitalization would almost double from its present level. Our $4.5 million of EBITDA for fiscal 2009 was $1.8 million, or 64% higher than our fixed charges of $2.7 million for servicing debt and equity securities plus capital expenditures. We believe that this cash contribution will increase to a level that will be almost 100% higher than our fixed charges in fiscal 2010 due to the Recapitalization cash interest and dividend savings."

"We expect to build fiscal 2010 on the record performance achieved in 2009 which was accomplished in spite of the current recession and on the financial strength gained by our Recapitalization. We intend to capture the opportunities before us, including continued efficiency improvements, solid organic growth and selective acquisitions."

Highlights of Fiscal Year 2009 vs. Fiscal Year 2008

During fiscal 2009 and fiscal 2008, we reported the following operating income, bottom line and EBITDA results (in thousands):

Fiscal   Fiscal              %
2009     2008   Change   Change

Operating income (loss)           $1 ,685  $(1,969) $3,654     N/A

Net loss                          $(2,339) $(6,769) $4,430      65%
Less:  Non-cash FAS 84 Inducement
on Extinguishment                  1,651        -   1,651     N/A
Adjusted net loss before non-cash
FAS 84 inducement                  $(688) $(6,769) $6,081      90%

EBITDA - Non GAAP Measure
(reconciliation below)            $4,530   $1,240  $3,290     265%

Operating income was $1.7 million in fiscal 2009 compared to operating loss of $2.0 million in fiscal 2008, a $3.7 million improvement year over year. Net loss was $2.3 million in fiscal 2009, compared to $6.8 million in fiscal 2008, an improvement of $4.4 million or 65%. The net loss in fiscal 2009 includes a $1.7 million non-cash FAS 84 inducement on extinguishment of convertible Notes as a result of the June 29, 2009 Recapitalization. Excluding this charge, the adjusted net loss before non-cash FAS 84 inducement, a non-GAAP measure, was $688,000, a $6.1 million improvement or 90% over prior year.

Our reported basic and diluted loss per share attributable to common shareholders was a $0.31 loss per share compared to $0.49 loss per share in the prior year. Excluding the effect of the Recapitalization, which included the $1.7 million non-cash FAS 84 inducement charge mentioned above and a $1.7 million deemed dividend which does not affect the Consolidated Statements of Operations but is included in the calculation of net loss attributable to common shareholders, an adjusted basic and diluted loss per share attributable to common shareholders, a non-GAAP measure, would have been a $0.08 loss per share this year.

These non-GAAP calculations are meaningful to the investor as they exclude the non-cash FAS 84 inducement charge and deemed dividends which are strictly related to the Recapitalization and not to the ongoing performance of the operations. EBITDA, also a non-GAAP measure, was $4.5 million in fiscal 2009 compared to $1.2 million in fiscal 2008, an increase of $3.3 million or approximately 265% improvement. Net margin per gallon increased to 25.8 cents for the fiscal year 2009 compared to 19.4 cents in the prior year's period.

While we believe that the application of FAS 84 does not reflect the economic substance of the value exchanged in this portion of the Recapitalization transaction, we have reported the required non-cash charge for the difference between the number of common shares issued compared to the common shares that would have been issued under the original terms of the convertible debt instrument times the market price.

The fiscal year 2009 and 2008 are compared as follows:

    --  Revenues were $199.2 million in fiscal 2009 compared to $260.7 million
in fiscal 2008, a decrease of $61.5 million, or 24%, primarily as a
result of price variances, which resulted in a decrease in revenues of
$43.9 million due to lower market prices of petroleum products during
fiscal 2009, as compared to fiscal 2008.  Overall, during fiscal 2009,
market fuel prices were approximately 28% lower compared to the same
period a year ago. (Fuel price decreases are as disclosed by the Energy
Information Administration for spot prices for low-sulfur No. 2 Diesel
Fuel in the U.S. Gulf Coast.)  As the result of the rapid contraction of
the economy during the first half of fiscal 2009, we saw a dramatic and
significant overall decrease in volume demand from our existing
customers beginning in November 2008.  Accordingly, notwithstanding our
addition of new customers during the year, the overall reduction in
gallons sold was 6.0 million gallons, or 8%, during fiscal 2009 compared
to the previous fiscal year.  Towards the end of fiscal 2009, we began
to see some stabilization in the demand for our services from existing
customers with our volumes remaining at similar levels during the last
three quarters.

    --  The net loss was $2.3 million in fiscal 2009, compared to $6.8 million
in fiscal 2008, a reduction of 65%.  The net loss in fiscal 2009
includes a $1.7 million non-cash FAS 84 inducement on extinguishment
charge as discussed above.  Excluding this charge, the $6.1 million, or
90% improvement over prior year was primarily due to an increase of $3.5
million in gross profit, which stemmed from an overall higher net margin
per gallon, including higher margin contributions from emergency
response services performed during the first quarter of the fiscal year,
efficiencies derived from our ERP system, and a variety of cost cutting
measures implemented this fiscal year in response to decreases in
customer demand.  Additionally, interest expense was $577,000 lower this
year due to a combination of lower debt balances and lower interest
rates.  The net loss in fiscal 2008 included a loss on extinguishment of
debt of $1.7 million arising from the August 2007 refinancing of various
outstanding promissory notes with new senior secured convertible
subordinated notes and the conversion of debt into preferred stock.

    --  EBITDA (a non-GAAP measure) was $4.5 million in fiscal 2009 compared to
$1.2 million in fiscal 2008, an increase of $3.3 million or
approximately 265% improvement.  The increase in EBITDA was due to the
increase in gross profit of $3.5 million due to higher net margin per
gallon for the period, including the incremental margin contribution
from the emergency response services.

    --  Net margin per gallon increased to 25.8 cents in the fiscal 2009 from
19.4 cents in the prior year as a result of emphasis on higher margin
business, improved efficiencies related to route structure consolidation
and productivity, and from the emergency response services provided for
hurricanes Gustav and Ike during the first quarter this fiscal year.

    --  In addition to the $1.7 million FAS 84 non-cash charge, the net loss for
fiscal 2009 reflects other non-cash charges of $3.4 million, such as
depreciation and amortization of assets, debt costs, debt discounts,
stock-based compensation, and provision for doubtful accounts.