Barnhart Group Inc. Publishes Corporate and Industry Update

January 24th, 2025, 3:00 PM

Barnhart Group, Inc. (formerly SMG Industries, Inc.) Provides Corporate and Industry Update

 

[HOUSTON, TX,] January 24, 2025 – Barnhart Group, Inc. ("Barnhart Group" or the "Company"), a growth-oriented transportation services company specializing in the full-service logistics market, today provided a corporate industry update.

 

As previously publicly reported, the Company completed a significant strategic merger with the Barnhart Transportation family of companies on July 7, 2023. This transaction provided several key advantages for the combined company, including: a strengthened management team, expanded market diversification, substantially increased scale, reduced cyclicality, decreased customer concentration and a more favorable balance sheet.

 

While the strategic merits of the transaction have largely materialized as expected, the timing of the transaction turned out to be unfortunate by coinciding with the onset of one of the most severe and sustained downturns in U.S. transportation industry history. This challenging market environment largely persisted throughout 2024, with conditions reaching their lowest point in May 2024. Since the merger, the prolonged industry downturn coupled with significant debt undertaken for purposes of the merger consideration has created difficult operational and liquidity challenges and adversely impacted the Company's profitability through the end of 2024.

 

Barnhart Group has been proactive in addressing the challenges faced since the merger and has aggressively implemented strategic measures to enhance its financial position and reduce operational costs. These initiatives include, among others, workforce optimization, public company de-registration, and the wind-down and liquidation of certain underperforming assets and business units. These initiatives have helped stabilize profitability as well as significantly reduce the Company's debt outstanding.  Additionally, Barnhart Group strengthened its liquidity position by securing a new $16 million revolving credit facility with a more supportive lender to replace one of its original facilities. In the following paragraphs, we have provided additional details on recent strategic initiatives, milestones and highlights for stockholders.

 

Rebranding

 

The Company successfully completed its 2024 rebranding initiative to Barnhart Group, Inc. See a complete rebranding chart below:

 

CURRENT

NEW

SMG Industries, Inc.

Barnhart Group, Inc.

Barnhart Transportation, LLC

Barnhart Transportation, LLC

5J Transportation, LLC

Barnhart Specialized, LLC

5J Driveaway, LLC

Barnhart Driveaway, LLC

Lake Shore Logistics, LLC

Barnhart Logistics, LLC

Lake Shore Global Solutions, LLC

Barnhart Global, LLC

Barnhart Fleet Maintenance, LLC

Barnhart Fleet Maintenance, LLC

 

The rebranding efforts renamed all the business units under one common "Barnhart" name to simplify the Company's messaging and sales efforts in the market.

 

Cost Reductions

 

Due to challenging market conditions, management has aggressively reduced its Selling, General, and Administrative ("SG&A") operating expenses through targeted measures. These measures have reduced monthly SG&A from a high of approximately $1.5 million a month to a current monthly run-rate level of approximately $900 thousand. In addition, Barnhart Group de-listed as a public company by going dark to save on the significant regulatory and compliance costs required to remain public.  Barnhart Group currently expects it will maintain its non-public company status through 2025, leading to approximately $1.0 million in annual cost savings. In addition, remaining a non-reporting public Company will allow management to focus its full energy and efforts on sales and operations and improving profitability. 

 

5J Rig Move Liquidation

 

After significant analysis and strategic discussions, the Barnhart Group Board determined it was in the best interest of the Company's stockholders to liquidate the Company's rig moving operations.  In July 2024, the Company executed its planned wind-down of its rig moving operations, culminating in a complete liquidation of the associated business assets. This strategic decision emerged from an analysis of the profitability, cash flow, capex requirements, market outlook and existing net asset value of the business unit and determined the right course of action was to liquidate the assets of this underperforming business unit, use the proceeds to pay down debt, and focus the Company's capital towards its other current business units.

 

Anticipated Events in 2025

Barnhart Group is pleased to present its strategic vision and operational priorities for 2025 as the Company embarks on an ambitious growth trajectory. The organization stands at a pivotal moment, and management and the Board is committed to the initiatives that will drive its next phase of expansion.

Strategic Direction

The Company has adopted a unifying theme for 2025: "One Goal, One Team, One Vision." This framework will guide Barnhart Group's efforts as the organization builds upon its existing momentum to create sustainable long-term value for its stockholders. The Company's core value proposition continues to differentiate Barnhart Group in the marketplace through three key pillars:

  1. A.S. (Give A ****)
  2. Got It Covered
  3. Game On

 

These elements combine to deliver Barnhart Group's signature customer-centric, door-to-door worldwide service, characterized by unparalleled attention to detail and hands-on execution that distinguishes the Company in the logistics sector.

2025 Financial Objectives and Transparency

The Company has achieved operational and financial stability and management expects strong organic growth throughout 2025 in its asset-heavy divisions: Barnhart Transportation and Barnhart Specialized (formerly 5J Transportation). These divisions provide diverse services including dry bulk, flatbed, intermodal, non-hazardous liquids transport, and specialized over-dimensional and superheavy haul capabilities for transformers and large industrial components. Our asset-light operations, comprising Barnhart Logistics (formerly Lake Shore Logistics), Barnhart Global (formerly Lake Shore Global Solutions), and Barnhart Driveaway (formerly 5J Driveaway), also continue to demonstrate steady growth. Management anticipates that the Company's growth targets and cost cutting initiatives will lead to a significant improvement in profitability in 2025, which will enhance cash flow and reduce the Company's leverage ratio. 

To enhance transparency and accountability, the Company is deploying real-time performance metrics and leading indicators across its operational facilities via digital displays and the corporate intranet. These tracking mechanisms will provide immediate visibility into the progress made toward management's strategic objectives.

Operational Excellence and Communication

To achieve our ambitious cost reduction and revenue growth goals, Barnhart is strengthening its organizational foundation through two key initiatives:

  1. Enhanced Internal Communications: The Company is implementing a structured framework for open dialogue across all organizational levels, ensuring every team member has access to the resources and support necessary for success.
  2. Performance Incentive Program: management has introduced a new bonus structure aligned with corporate objectives, designed to reward collaborative achievement and reinforce the organization's commitment to becoming the industry's premier logistics service provider.

Looking Forward

As Barnhart Group progresses through 2025, the organization's focus remains steadfast on executing these strategic initiatives while maintaining operational excellence. The Board and management team are confident that this integrated approach, combined with the company's talented workforce, positions Barnhart Group well to achieve its objectives into 2025 and beyond.

Stockholder Liquidity

The Board and management's primary near-term focus is continuing to increase revenue and profitability and improving the Company's balance sheet, which are the first steps towards creating and realizing stockholder value.  Management believes the worst is behind us and 2025 will be a year of significant improvement.  As these improvements are realized, the Board will continually evaluate its options for stockholder liquidity, which will be discussed in future communications.  All possible options are currently on the table, including re-listing on a national exchange, going private and/or a buyout of stockholders' shares, recapitalization via private equity, or a merger or related activity with a strategic company. Rest assured, the Board and management are fully aligned with our stockholders and highly motivated to create value for all stockholders. 

 

 

 

About Barnhart Group, Inc.

Barnhart Group, Inc. is a growth-oriented transportation services company specializing in the full-service logistics market. As a family of transportation companies, Barnhart Group offers comprehensive logistics solutions, serving as a single service provider for shipments of all sizes, both domestically and internationally.  Read more about Barnhart Group and our operating companies at www.barnhartinc.com.

 

Contact:

 

info@barnhartinc.com                

 

Please note all future Company updates and press releases will be made available on the Company's website.

 

 

Forward-Looking Statements

 

The statements contained in this corporate update that are not historical fact are forward-looking statements.  Forward-looking statements may be identified by the use of forward-looking terminology such as "should," "could," "may," "will," "expect," "believe," "estimate," "anticipate," "intends," "continue," or similar terms or variations of those terms or the negative of those terms. All forward-looking statements are the Company's present expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These statements appear in a number of places in this corporate update and include statements regarding the intent, belief or current expectations of Barnhart Group, Inc. Forward-looking statements are merely management's current predictions of future events. Investors are cautioned that any such forward-looking statements are inherently uncertain, are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from the Company's predictions. There are a number of factors that could negatively affect the Company's business, including, but not limited to, changes in its plans, strategies and intentions; changes associated with the Company's cash flows, balance sheet and operating results; the impact of significant acquisitions, dispositions and other similar transactions; the Company's ability to attract and retain key employees; asset impairments; changes in interest rates; and changes in the full-service logistics market. Such factors could materially affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Although the Company's management has sought to identify the most significant risks to its business, it cannot predict whether, or to what extent, any of such risks may be realized, nor is there any assurance that it has identified all possible issues that it might face.  In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this corporate update might not occur. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this corporate update. The Company is not under any obligation, and it expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise except as may be required by applicable law. All subsequent forward-looking statements attributable to the Company or to any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

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