ORANGE, Calif. -- United Fuel & Energy Corp., a distributor of gasoline, diesel, propane and lubricant products to customers in the southwestern and southcentral United States, has announced its financial and operational results for the three months ended Sept. 30, 2008. Total revenue for third-quarter 2008 increased 137% to $231 million, compared to total revenue of $97.4 million for third-quarter 2007. Net income was $75,000 for third-quarter 2008, versus a net loss of $1.8 million for the same period in 2007.
"We showed solid improvement in the third quarter as we [image-nocss] began to see the financial impact of our programs to reduce costs, manage cash and improve operating profitability," said Frank Greinke, United Fuel & Energy's chairman and CEO. "We were pleased to have achieved the substantially higher margin on sales during the third quarter. As fuel prices have declined, we have been able to make attractive product purchases. Lower product prices also provided better flexibility to manage our vendor credit facilities. Also, our revolving line of credit with our lender was increased to $85 million in the July 2008."
He added, "We continued to focus on reducing low-margin sales, selling nonproducing assets and closely monitoring customer credit," added Greinke. "We have completed the relocation of our headquarters, realigned our business units, shifted the way we classify our expenses to better manage costs, as well as worked to instill and support a culture of operating excellence. With these new initiatives in place, our results for the month of September were very solid and we are encouraged that this trend can continue. We believe that we now have a much more efficient platform from which to continue to improve profitability and shareholder value."
Total revenue for third-quarter 2008 increased 137% to $23 million compared to total revenue of $97.4 million for the third quarter of 2007. The $133.6 million increase in revenue was primarily due to a 66% increase in sales volumes to 62.5 million gallons, and a 41.9% increase in selling prices for fuel and lubricant products. The acquisition of Cardlock Fuels System Inc. (CFS), effective Oct. 5, 2007, accounted for a significant part of the increase in sales volumes.
Sequentially, total revenue in third-quarter 2008, declined 4% due to a 3% lower selling price for fuel and a smaller reduction in volumes compared to second-quarter 2008.
Cost of sales in third-quarter 2008 increased $124.3 million to $211.8 million, as compared to $87.6 million for the same period in 2007. This increase was primarily due to the large increase in sales volumes and the increase in product prices, and thus the cost of the product purchases as a result of the CFS acquisition. Product prices averaged $3.39 per gallon for the 2008 period as compared to $2.33 per gallon for the comparative 2007 period. Average sales prices per gallon were down sequentially in third-quarter 2008 at $3.66 per gallon versus average sales prices in second-quarter 2008 of $3.76 per gallon. Gross profit increased 96% to $19.2 million in third-quarter 2008 compared to $9.8 million in third-quarter 2007 and increased 26% compared to $15.3 million in second-quarter 2008.
Total expenses increased to $16.2 million in third-quarter 2008 compared to total expenses of $11.4 million in the prior year's third quarter. Total expenses per gallon sold decreased to 24 cents for third-quarter 2008 from 28 cents for the corresponding period in 2007 primarily due to the increase in volumes sold of approximately 25 million gallons, which allowed for better efficiency. The increase in third quarter total expenses is primarily attributable to added costs of personnel, fleet, facilities costs and travel associated with the operations that were acquired in 2007. Sequentially, total expenses declined from $19.2 million to $16.2 million, or 16%, from second-quarter 2008 that included $4 million in special items.
Operating income was $3 million in third-quarter 2008 as compared to a loss of $1.6 million in the 2007 comparable quarter, a $4.6 million increase. Income before taxes of $800,000, or 1 cent per gallon, in third-quarter 2008 as compared to a loss before taxes of $2.9 million, or 3 cents per gallon loss, for the same period of 2007.
Net income was $75,000 for third-quarter 2008, versus a net loss of $1.8 million for the same period in 2007. Net loss available to common stockholders, net of a $253,000 preferred stock dividend, was $178,000 for third-quarter 2008, versus a net loss available to common stockholders, net of a $252,000 preferred stock dividend, was $2.1 million for the same period in 2007. Basic and diluted loss per share in third-quarter 2008 was 0 on weighted average diluted shares outstanding of 40.3 million, compared to net loss of 14 cents per diluted share loss for third-quarter 2007 on weighted average diluted shares outstanding of 14.8 million.
EBITDA (earnings before interest, income taxes, depreciation, and amortization and certain other non-cash items) for third-quarter 2008 was $3.8 million, compared to EBITDA loss of $900,000 in third-quarter 2007.
Orange, Calif.-based United Fuel & Energy is engaged in the business of distributing gasoline, diesel, propane and lubricant products primarily in certain markets of Texas, California, New Mexico, Arizona and Oklahoma. It represents the consolidation of numerous companies, the most significant of which are the Eddins-Walcher Co. and Cardlock Fuels System. As a part of its long- range plan, United Fuel intends to continue to expand its business through strategic acquisitions and organic growth initiatives such as cardlock operation, wholesale fuels and lubricants and propane distribution to commercial and residential users. United Fuel conducts its operations through more than 18 branch locations and approximately 100 cardlock fuel sites.
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