FT. LAUDERDALE, Fla.--(BUSINESS WIRE)--SMF ENERGY CORPORATION, (NASDAQ: FUEL) (the “Company”), a leading provider of specialized transportation and distribution services for petroleum products and chemicals, today announced the results for the third quarter ended March 31, 2008.

Highlights for the fiscal 2008 third quarter vs. the comparable fiscal 2007 quarter:

• Revenues were $64.2 million, a 24% increase from $51.8 million
• Net loss decreased $1.2 million to $1.4 million from $2.6 million or 47%
• Non-cash charges were $971,000, down from $1.4 million
• Net margin per gallon increased to 17.8 cents from 14.3 cents
• EBITDA, a non-GAAP measure, increased by $1.1 million to a positive $277,000 from a loss of $787,000

Highlights for the fiscal 2008 third quarter vs. the fiscal 2008 second quarter:

• Revenues were $64.1 million up by 9%
• Selling, General and Administrative expenses were lower by $343,000 or 9%
• Net loss decreased by $588,000 to $1.4 million from $2.0 million or 30%
• EBITDA improved by $664,000 from a negative $387,000 to positive a $277,000.
• Improved balance sheet, lowering debt obligations by $3.8 million via the exchange of notes for preferred stock.

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

“We are pleased with the improvements in our operating results for the third quarter. We have reduced our net loss by $1.2 million from a year ago and $588,000 from our last quarter while generating a $1.1 million turnaround in the EBITDA stream over the same period last year and $664,000 since the second quarter of this year. We expect this positive performance trend to continue in our fourth quarter.

“We are now seeing the positive results from the ERP system and infrastructure investments we have made over the last two years. Although these investments negatively impacted our financial performance during that time, they are now allowing us to reduce our operating costs while providing our customers with enhanced services, including the timeliest billing and the most detailed reporting in the industry. As a result, in the third quarter of 2008 we improved the service we provided to our customers while our SG&A declined $632,000 from last year.

“We know that our over 4,000 fuel, lubricant and chemical customers are implementing every strategy available to them to deal with escalating operating costs as fuel prices have increased on average an estimated 59% during the last twelve months. Notwithstanding the impact of these higher fuel prices, which flow through to our refueling customers, more and more, new and old customers are recognizing the benefits of the logistics systems and services that we offer as an outsourced cost reduction solutions benefit. This recognition, and the investments in our ERP system and infrastructure, have enabled us to target and develop new business with higher overall net margins per gallon, contributing to our $397,000 gross profit increase during this quarter over last year.”

The following table portrays the positive trend and progress the Company has achieved in the sequential quarters:
			For the three months ended
			March 31,				June 30,				September 30,				December 31,				March 31,
			2007				2007				2007				2007				2008
Net loss			$	(2,618	)		$	(1,614	)		$	(3,019	)		$	(1,986	)		$	(1,398	)
EBITDA (1)			$	(787	)		$	127			$	196			$	(387	)		$	277
Selling, general and administrative expenses			$	4,077			$	3,950			$	3,803			$	3,788			$	3,445
Net margin per gallon (2)			$	0.14			$	0.17			$	0.19			$	0.16			$	0.18
Gallons sold				20,407				19,678				18,695				18,050				18,102

(1) We define EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense and loss on extinguishment of debt, a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. EBITDA is commonly defined as earnings or loss before interest, taxes, depreciation and amortization. We believe that EBITDA, as we define it, provides useful information to investors because it excludes transactions not related to the core cash operating business activities. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations. All companies do not calculate EBITDA in the same manner, so EBITDA as presented by us may not be comparable to EBITDA presented by other companies.

The following table reconciles EBITDA to the net loss for each of the five quarterly periods presented above:
			For the three months ended
			March 31,				June 30,				September 30,				December 31,				March 31,
			2007				2007				2007				2007				2008
Net loss			$	(2,618	)		$	(1,614	)		$	(3,019	)		$	(1,986	)		$	(1,398	)
Add back:
Interest expense, net of interest income				1,023				919				778				782				780
Depreciation and amortization expense:
Cost of sales				436				386				388				380				353
Selling, general and administrative expenses				219				249				282				304				311
Stock-based compensation amortization expense				153				187				126				133				123
Loss on extinguishment of debt				-				-				1,641				-				108
EBITDA			$	(787	)		$	127			$	196			$	(387	)		$	277

(2) Net margin per gallon is calculated by adding gross profit to the cost of sales depreciation and amortization and dividing that sum by the number of gallons sold.

The following tables present comparative financial data for the periods noted: SELECTED INCOME STATEMENT AND FINANCIAL DATA (Unaudited) (All amounts in thousands of dollars, except per share, and net margin per gallon)
		Three Months Ended March 31,									Nine Months Ended March 31,
		2008				2007					2008				2007
Total revenues		$	64,162			$	51,817				$	178,653			$	172,243
Total cost of sales			61,287				49,339					170,031				162,533
Gross profit			2,875				2,478					8,622				9,710
Selling, general and administrative expenses			3,445				4,077					11,036				11,886
Operating loss			(570	)			(1,599	)				(2,414	)			(2,176	)
Interest expense			(780	)			(1,023	)				(2,340	)			(2,808	)
Other income			60				4					100				9
Loss on extinguishment of promissory notes			(108	)			-					(1,749	)			-
Net loss		$	(1,398	)		$	(2,618	)			$	(6,403	)		$	(4,975	)
Basic and diluted net loss per share computation:
Net loss		$	(1,398	)		$	(2,618	)			$	(6,403	)		$	(4,975	)
Less: Preferred stock dividends			(56	)			-					(56	)			-
Net loss attributable to common stockholders		$	(1,454	)		$	(2,618	)			$	(6,459	)		$	(4,975	)
Basic and diluted net loss per share attributable to common stockholders		$	(0.10	)		$	(0.23	)			$	(0.45	)		$	(0.46	)
Basic and diluted weighted average common shares outstanding			14,556				11,600					14,438				10,867
EBITDA (non-GAAP measure)		$	277			$	(787	)			$	86			$	125
Gallons sold			18,102				20,407					54,847				65,204
Net margin		$	3,229			$	2,915				$	9,743			$	11,026
Net margin per gallon		$	0.18			$	0.14				$	0.18			$	0.17

(1) Net margin per gallon is calculated by adding gross profit to the cost of sales depreciation and amortization and dividing that sum by the number of gallons sold.

RECONCILIATION OF NET LOSS TO EBITDA for the nine month comparative periods ending on March 31, 2008 and 2007 (Unaudited, non-GAAP measure) (All amounts in thousands of dollars)
			Nine Months Ended
			March 31,
			2008					2007
Net loss			$	(6,403	)			$	(4,975	)
Add back:
Interest expense				2,340					2,808
Depreciation and amortization expense:
Cost of sales				1,121					1,316
Selling, general and administrative expenses				897					672
Stock-based compensation amortization expense				382					304
Loss on extinguishment of debt				1,749					-
EBITDA			$	86				$	125

CONDENSED CONSOLIDATED BALANCE SHEET (All amounts in thousands of dollars)
			(Unaudited)
			March 31,				June 30,
			2008				2007
ASSETS
Current assets			$	27,079			$	29,183
Property, plant and equipment, net				10,478				10,017
Other assets, net				3,337				4,725
			$	40,894			$	43,925
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities				28,056				29,015
Long-term debt, net and other liabilities				9,250				10,796
Stockholders’ equity				3,588				4,114
			$	40,894			$	43,925

On March 14, 2008, the Company announced that it signed a non-binding letter of intent to combine with Lazarus Energy, LLC, the owner of a petroleum refinery in Nixon, Texas, and that a definitive agreement for the transaction was expected to be finalized on or before May 31, 2008. By its terms, the letter of intent will terminate if the definitive agreement is not signed by that date. The Company does not expect to enter into a definitive agreement with Lazarus or its parent by the deadline or to extend the letter of intent beyond that date.

CONFERENCE CALL

Management will host a conference call on Friday, May 16, 2008, at 2:00 P.M. ET, to further discuss the results of the Company’s third quarter ended March 31, 2008. Interested parties can listen to the call live on the Internet through the Company’s Web site at www.mobilefueling.com or by dialing 888-713-4216 (domestic) or 617-213-4868 (international), using Pass Code 41143968. Listeners should dial in to the call at least 5-10 minutes prior to the start of the call or should go to the Web site at least 15 minutes prior to the call to download and install any necessary audio software. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/ key.process?key=PWM4QB6W8. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection. In addition, the Web cast is also available through Thomson’s investor portals. Individual investors can listen to the call at www.earnings.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com). A telephone replay of the conference call will be available from May 16, 2008, at 4:00 p.m. ET until midnight ET on May 23, 2008, by dialing 888-286-8010 (domestic) or 617-801-6888 (international), using Pass Code 67604621. A web archive will be available for 30 days at www.mobilefueling.com.

About SMF ENERGY CORPORATION (NASDAQ: FUEL)

The Company is a leading provider of petroleum product distribution services, transportation logistics and emergency response services to the trucking, manufacturing, construction, shipping, utility, energy, chemical, telecommunication and government services industries. The Company provides its services and products through 26 locations in the ten states of Alabama, California, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas. The broad range of services the Company offers its customers includes commercial mobile and bulk fueling; the packaging, distribution and sale of lubricants; integrated out-sourced fuel management; transportation logistics and emergency response services.