SMF Energy Corporation Reports Results for the Second Quarter Ended December 31,...

SMF Energy Corporation Reports Results for the Second Quarter Ended December 31, 2007

Conference Call Scheduled for February 19, 2008
FT. LAUDERDALE, Fla.--(Business Wire)--
SMF ENERGY CORPORATION, (NASDAQ: FUEL) (the "Company"), a leading
provider of petroleum product distribution services, transportation
logistics and emergency response services to the trucking,
construction, utility, energy, chemical, manufacturing,
telecommunication and government service industries, today announced
the results for the second quarter ended December 31, 2007.

In the second quarter of fiscal 2008, we had a net loss of $1.986
million as compared to $1.895 million in the same period in the prior
year. The fiscal 2008 results include $963,000 in non-cash charges,
such as depreciation and amortization of assets, debt costs, debt
discounts, and stock based compensation as compared to $1.2 million in
fiscal 2007. These results also include $686,000 and $435,000 of
stated interest expense associated with servicing our debt and of
legal and public company costs, respectively, as compared to $615,000
and $590,000 incurred in fiscal 2007.

The $91,000 increase in net loss is due to a $535,000 reduction in
gross profit offset by a decrease of $361,000 in selling, general and
administrative costs. The reduction in gross profit primarily resulted
from a 15.5% decrease in gallons sold during the second quarter of
fiscal 2008 when compared to prior year. We believe that the lower
volume is the result of contraction of the national economy,
particularly as it is impacting the industries we serve, and our
customers' efforts to reduce fuel consumption in light of
substantially higher fuel prices. A portion of the decrease in volume
and corresponding gross margin is due to our decision to reduce the
level of business with unacceptably low net margin contributions as
well as lower emergency response services in Fiscal 2008. While we are
experiencing decreased demand from our existing customers, the
decrease in their volumes has been partially offset through the
addition of new customers utilizing our services to reduce their
overall fuel costs. The $361,000 decrease in selling, general and
administrative costs primarily resulted from the efficiencies we
gained from the installation of our new Enterprise Resource Planning
("ERP") system and the completion of the integration of two
acquisitions made in 2005. The net margin per gallon for the second
quarter of fiscal year 2008 and 2007 was flat at 16.3 cents and 16.6
cents, respectively. We had a net loss of $5.0 million in the six
months ended December 31, 2007, as compared to $2.4 million in the
same period in the prior year. The $2.6 million increase in net loss
resulted primarily from a $1.6 million non-cash charge related to the
refinancing in August 2007 of our long-term debt with new senior
secured convertible subordinated notes and the factors affecting the
fiscal 2008 gross profit quarterly results described above.

Revenues were $59.0 million in the second quarter of fiscal 2008,
as compared to $54.8 million in the same period of the prior year, an
increase of $4.2 million, or 8%, as a result of the increases in the
commodity prices per gallon of petroleum products. The price per
gallon of diesel fuel increased an average of $0.77 per gallon when
comparing the second quarter of fiscal 2008 and that of fiscal 2007.
We believe that these historically high prices are impacting the
national economy, the demand for the services offered by our
customers, and the resulting demand for fuel being used by them. Price
variances resulted in an increase of $12.6 million in revenues
partially offset by an $8.4 million decrease in revenues due to the
reduction in gallons sold during the second quarter of fiscal 2008
when compared to prior year. Revenues were $114.5 million in the six
months ended December 31, 2007, as compared to $120.4 million in the
same period of the prior year, a decrease of $5.9 million, or 5%,
primarily as a result of a decrease of 18.0% in gallons sold. The
decrease in gallons in the six months period as with the quarterly
comparison resulted from the contraction of the economy, our seeking
higher margin revenues and reduced emergency response services.

Earnings before interest, taxes, depreciation and amortization,
and stock-based compensation ("EBITDA"), a non-GAAP measure, was a
loss of $387,000 in the second quarter of fiscal 2008, as compared to
a loss of $258,000 in the same period of the prior year, an increase
of $129,000. The increase in the EBITDA loss was primarily due to the
decrease in industry demand stemming from the contraction of the
national economy, the reduction in business with net margin
contributions below acceptable levels, and the decrease in the
emergency response revenue generated in second quarter of fiscal 2007.
EBITDA showed a loss of $191,000 in the six months ended December 31,
2007, as compared to positive EBITDA of $911,000 in the same period of
the prior year, a decrease of $1.1 million. The decrease in EBITDA was
primarily due to the same factors affecting the quarterly results.

On November 19, 2007, the Company obtained an aggregate of $2.0
million in short-term notes from a small group of individual and
institutional investors. The Company's obligations under the notes are
unsecured. Interest on the unpaid principal balance of these notes
will be paid monthly at an interest rate of 1.5% per month. The notes
have a six-month term which has been subsequently amended to mature on
July 18, 2008.

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

"We need to increase the Company's overall size as we continue to
diversify the services and products we offer to the industry in order
to execute our strategic business plan and utilize the infrastructure
and systems that we now have in place. Our performance during the
current quarter reflects the increasing burden of our public company
structure and the resulting need for us to reach the size and achieve
the efficiencies offered by our platform. The execution of our
acquisition strategy in our extremely fragmented industry sector can
provide us with that size and the resulting efficiencies."

Gathright continued: "Now that our infrastructure and these
systems are fully implemented, we believe that we have capabilities
that are unique in our industry. Besides improving our existing
operations, as evidenced by the $361,000, or 9%, reduction in selling,
general and administrative costs in the current quarter compared to
last year, these capabilities give us the ability to rapidly and
effectively integrate newly acquired operations and efficiently manage
our own organic growth. To this end, we are actively pursuing merger
and acquisition opportunities and are in discussions with key targets
that could help us meet our goals. While there can be no assurance, we
do believe that, notwithstanding the current conditions in the credit
markets, the capital and other resources necessary to effect these
transactions are available to us, along with the opportunity to raise
additional working capital in conjunction with these opportunities."

CONFERENCE CALL

Management will host a conference call on Tuesday, February 19,
2008, at 2:30 P.M. ET, to further discuss the results of the Company's
second quarter ended December 31, 2007. Interested parties can listen
to the call live on the Internet through the Company's Web site at
www.mobilefueling.com or by dialing 888-680-0894 (domestic) or
617-213-4860 (international), using Pass Code 58186920. 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
www.theconferencingservice.com/prereg/key.process?key=PLT3PLGM6.
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
February 18, 2008, at 4:30 p.m. ET until Midnight ET on February 25,
2008, by dialing 888-286-8010 (domestic) or 617-801-6888
(international), using Pass Code 85440324. A web archive will be
available for 30 days at www.mobilefueling.com.

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*T

SELECTED INCOME STATEMENT AND FINANCIAL DATA

(All amounts in thousands of dollars, except per share and per gallon
data)
(Unaudited)

Three Months Ended Six Months Ended
December 31, December 31,
------------------ -------------------
2007 2006 2007 2006
--------- -------- --------- ---------

Petroleum product sales and
service revenues $52,905 $48,276 $102,094 $106,920
Petroleum product taxes 6,089 6,522 12,397 13,506
--------- -------- --------- ---------
Total revenues 58,994 54,798 114,491 120,426
--------- -------- --------- ---------

Cost of petroleum product
sales and service 50,340 45,176 96,347 99,699
Petroleum product taxes 6,089 6,522 12,397 13,506
--------- -------- --------- ---------
Total cost of sales 56,429 51,698 108,744 113,205
--------- -------- --------- ---------

Gross profit 2,565 3,100 5,747 7,221

Selling, general and
administrative expenses 3,788 4,149 7,591 7,799
--------- -------- --------- ---------

Operating (loss) income (1,223) (1,049) (1,844) (578)

Interest expense (782) (835) (1,560) (1,785)
Interest and other income 19 (11) 40 6
Loss on extinguishment of
promissory notes - - (1,641) -
--------- -------- --------- ---------

Loss before income taxes (1,986) (1,895) (5,005) (2,357)

Income tax expense - - - -
--------- -------- --------- ---------
Net loss $(1,986) $(1,895) $ (5,005) $ (2,357)
========= ======== ========= =========

Basic and diluted net loss per
share $ (0.14) $ (0.18) $ (0.35) $ (0.22)
========= ======== ========= =========

Basic and diluted weighted
average common shares
outstanding 14,556 10,523 14,379 10,509

EBITDA (non-GAAP measure) $ (387) $ (258) $ (191) $ 911
========= ======== ========= =========

Gallons sold 18,050 21,385 36,745 44,814
========= ======== ========= =========

Net margin $ 2,945 $ 3,549 $ 6,515 $ 8,101
========= ======== ========= =========

Net margin per gallon (in
cents) (1) 16.3 16.6 17.7 18.0
========= ======== ========= =========

(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.
*T

EBITDA is a non-GAAP financial measure within the meaning of
Regulation G promulgated by the Securities and Exchange Commission.

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*T

Reconciliation of Net Loss to EBITDA (Unaudited non-GAAP measure):

(All amounts in thousands of dollars)

Three Months Ended Six Months Ended
December 31, December 31,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------

Net loss $(1,986) $(1,895) $(5,005) $(2,357)
Add back:
Interest expense 782 835 1,560 1,785
Stock-based compensation
expense 133 124 259 151
Depreciation and amortization
expense:
Cost of sales 380 449 768 880
Selling, general and
administrative expenses 304 229 586 452
Loss on extinguishment of debt - - 1,641 -
--------- -------- -------- --------
EBITDA $ (387) $ (258) $ (191) $ 911
========= ======== ======== ========
*T

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CONDENSED CONSOLIDATED BALANCE SHEET
(All amounts in thousands of dollars)

(Unaudited)
September 30, June 30,
2007 2007
------------- --------
ASSETS
Current assets $23,942 $29,183
Property, plant and equipment, net 10,266 10,017
Other assets, net 3,910 4,725
------------- --------
$38,118 $43,925
============= ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 26,481 29,015
Long-term debt, net and other liabilities 11,002 10,796
Stockholders' equity 635 4,114
------------- --------
$38,118 $43,925
============= ========
*T

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.
The Company's fleet of custom specialized tank wagons, tractor-trailer
transports, box trucks and customized flatbed vehicles delivers diesel
fuel and gasoline to customers' locations on a regularly scheduled or
as needed basis, refueling vehicles and equipment, re-supplying
fixed-site and temporary bulk storage tanks, and emergency power
generation systems; and distributes a wide variety of specialized
petroleum products, lubricants and chemicals to our customers. In
addition, the Company's fleet of special duty tractor-trailer units
provides heavy haul transportation services over short and long
distances to customers requiring the movement of over-sized or
over-weight equipment and manufactured products. More information on
the Company is available at www.mobilefueling.com.

FORWARD LOOKING STATEMENTS

This press release includes "forward-looking statements" within
the meaning of the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. For example, predictions or statements
of belief or expectation concerning the future performance of the
Company, the future acquisition plans of the Company and the potential
for further growth of the Company are all "forward looking statements"
which should not be relied upon. Such forward-looking statements are
based on the current beliefs of the Company and its management based
on information known to them at this time. Because these statements
depend on various assumptions as to future events, including but not
limited to those assumptions noted in the "Management's Discussion and
Analysis of Financial Condition and Results of Operation" section in
the Company's Form 10-Q for the quarter ended December 31, 2007, they
should not be relied on by shareholders or other persons in evaluating
the Company. Although management believes that the assumptions
reflected in such forward-looking statements are reasonable, actual
results could differ materially from those projected. In addition,
there are numerous risks and uncertainties which could cause actual
results to differ from those anticipated by the Company, including but
not limited to those cited in the "Risk Factors" section of the
Company's Form 10-K for the year ended June 30, 2007 and in the Form
10-Q for the quarter ended December 31, 2007.

SMF Energy Corporation, Fort Lauderdale
Robert W. Beard, 954-308-4200
Senior Vice President and Investor Relations Officer

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