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Share Data
Symbol: (AMEX:MVE)
52-Week Price Range: $0.48 - 4.10
Shares Outstanding: 11 million
Market Cap: $8.1 million
Balance Sheet Data
(as of Sept. 30, 2007)
Total Assets: $20.5 million
Long-Term Debt: $5.26 million
Shareholders’ Equity: $11.1 million
Book Value per Share: $1.01
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Company
Smart Move, Inc.
5990 Greenwood Plaza Blvd.
Building 2, Suite 390
Greenwood Village, CO 80111
Telephone Numbers:
Customers: 1(800) 963-0204
Business Office: (720) 488-0204
Fax: (720) 488-0199
www.gosmartmove.com
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Smart Move, Inc., (AMEX:MVE) is a Denver-based asset-
logistics company that delivers
a unique, high security,
state of the art solution to
shipping household and commercial
goods. Headquartered in Greenwood Village,
Colo., the company has operations
in the largest 61 metropolitan areas in
the nation, offering residential and commercial
moving and storage solutions.
The key to SmartMove’s innovative moving
and storage solutions is the Smart-
Vault, a conveniently sized, weather-resistant
container
that can be packed
easily and protects
assets from shifting
and damage
during moving.
Created by and for
the company,
Smart Move invested
around $2
million to acquire
exclusive ownership
of the mould
and related IP
used to manufacture
the Smart-
Vault, which is the
only shipping container
of its kind
in the industry.
Smart Move
completed its first
move in June 2005 and after completing
over 4,000 moves to date, the company
has yet to lose a single item. The traditional
method of moving is not quite as
efficient. Other shippers are sometimes
forced to move a customer’s goods in a
trailer that shares the same space with
another shipper’s goods, and many times
this results in lost, mis-shipped, or
stolen items. If the move involves temporary
storage, the customers’ goods are
touched several times in and out of a
truck, and in and out of storage. In a
typical Smart Move-managed move, the
customer’s goods are touched once at
loading and once at the ultimate destination.
According to CEO Chris Sapyta,
“That is one of the big differences between
our model and other movers, we
virtually eliminate loss, which is the single
largest reason a customer files a claim.
Smart Move delivers an additional benefit
for its customers through eliminating
double handling, which also reduces the
chance for damage caused by the packing,
unpacking, and repacking processes
of a move going in and out of storage.”
The end results indicate
that the
Smart Move
model simply provides
a better
move experience.
While the industry
averages a reported
claims rate
of 20-25%, Smart
Move’s claim rate
is under 8%.
“The robust
design of the
Smart Vault, coupled
with the GPS
and logistics software
that Smart
Move employs on
every job, ensures
our customers of
the most secure
move in the marketplace today,” says
Sapyta. “With our success and proven results,
Smart Move is able to offer an industry-
leading insurance policy that gives
our customers full replacement insurance
up to $10,000 per vault or $10 per pound,
matching or exceeding the best corporate
relocation insurance product in the
marketplace. The fact that Smart Move’s
claim rates are 300% lower than the industry
average is not lost on the major insurance
underwriters who offer the Smart
Move policy.”
“Operationally, the more Smart
Move increases its sales and the higher
its volume of asset moves, the more it is
able to capture efficiencies allowing the
company to cut costs and increase profit
margins on each and every move,” says
Sapyta. “As Smart Move’s sales grow
with van-line partnerships, third-party
relocation companies, and our own
booked sales, the company’s gross margin
will increase.” Sapyta adds. “When
we first started in 2005, we might have
barely been able to cover all of our
transportation costs. Freight expense is
our single largest component of COGS.
Freight used to be as high as 85% of the
total revenue line, today it is averaging
55%. The improved freight efficiencies
that can be obtained by the company as
a result of our increased asset turns and
shipments, is the key to the success of
the company, and as Smart Move gets
closer to reaching a critical mass of assets/
Smart Vaults in play, the company
expects be able to maintain those high
margins and increase cash flow.”
Sapyta created Smart Move from a
business model that he has been working
with since 1996. His professional
success began in the brewing industry,
where he perfected the art of asset management
with the founding of MicroStar
Keg Management. Sapyta’s mobile asset
business model is designed to consolidate
assets with competitors. The moving
industry caught Saptya’s attention
because it hadn’t changed significantly in
75 to 100 years. Nothing until Smart
Move, that is.
Sapyta explains, “What we spent the
first two years in business doing was convincing
the industry that the vaults, our
containerized moving assets, would work
well and would work for their customers.
So in 2007, a majority of our revenue
came from people coming to our website,
asking for a quote, and with Smart Move
then booking that COD move customer.
As we move into ’08 and ’09, we believe
that potentially 50%of our revenue could
be generated from the industry itself, as
major national van lines are increasingly
seeing the value in using our vaults to
move their own customers more efficiently.”
On Feb. 1, 2008, Smart Move announced
it had acquired the managed
move and relocation program business
assets of the Star Relocation Network Alliance
Inc. (“Star Alliance”). SmartMove’s
business activities associated with use of
the Star Alliance platform will be supported
by a national call center offering
personalized move counseling and customized
relocation services. Sapyta said
of the acquisition, “We are very pleased
that we have successfully completed the
acquisition of the Star Alliance, this platform
will assist SmartMove in generating
additional sales opportunities in the relocation
industry.”
Investors should note that by the
summer of 2008, the company does not
expect to be burning any cash from operations.
Last year, Smart Move saw a
significant decline in its stock value, as
the lower-than-expected run rate in 2007
and the company’s cash position contributed
to the fall of the stock price of
MVE in 2007. Today, Smart Move’s
market capitalization is essentially the
company’s book value. The company
has a balance sheet with tangible, revenue
producing assets, and a fleet of
containers that can produce in excess
of $18 million a year in revenue. Each
SmartVault has an eight- to 10-year life;
so even five years from now the fleet of
vaults will still have the ability to produce
significant revenues in sales. Smart
Move’s net book value is something that
the investor may want to consider, bearing
in mind that both Smart Move’s
business model and product is changing
the industry. The company expects that
2008 will be a much higher grossing year
than 2007. The company is not, however,
in a position to give guidance until
additional partnership contracts have
been signed and the 2008 moving season
gets into full swing. For GAAP cost of
good sold, Smart Move must include
the expenses and the associated depreciation
of all of its revenue generation
equipment. Other costs such as freight,
GPS, software, repositioning, moving
pads, and storage costs are included in
the cost of goods sold.
According to the American Movers
Association of van lines, given the
downturn in the housing market, 2007
has been the worst year in 20 years.
Sapyta says that, in 2007, the company
built its fleet of moving containers, and
with approximately 5000 units on the
ground today at an asset book value of
$2,200 each, including the GPS system,
Smart Move is in position to deliver on
sales commitments that our many
channel partners are predicting.
RISKS: No analysts’ estimates have been given.
The company’s decision to create its SmartVault
fleet has exceeded market demand; the mis-targeting
of capital toward inventory has triggered
an additional round of financing and has resulted
in an over 400% stumble in share price. Pending
contracts with third-party movers have not
been completed.
— By Aimie Gresham
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