NowAuto Group, Inc. Announces Fiscal First Quarter 2009 Results
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Business Remains Stable in Turbulent Credit Environment
TEMPE, Ariz., Nov. 14 -- NowAuto Group, Inc. (OTC Bulletin Board: NAUG; Other OTC: NWAU) today announced results for its fiscal 2008 first quarter ended September 30, 2008. The Company reported revenue of $1.1 million and a net loss of $0.06 per diluted share versus revenue of approximately $1.0 million and a net loss of $0.05 per diluted share in the prior year. During the quarter ended September 30, 2008 gross margin declined as a result of losses incurred in disposing of lower quality inventory at the beginning of the quarter. Gross margin improved significantly in August and September, returning to normal levels. The disposal of certain inventory was also the reason for the higher loss incurred in the quarter.
In spite of general economic conditions and the significant impact on auto purchasing, charge-offs and defaults improved significantly over the prior quarter and prior year as a result of increased credit criteria, improved contract management and system upgrades. Bad debt expense for the quarter ended September 30, 2008 improved 22% from the prior quarter and 5% year-over- year. Net Contract Receivables and deferred revenue from leases increased 1% over the prior quarter. Administrative, financing and selling expenses dropped by approximately 25% in spite of significantly higher interest expense.
"The present condition of the sub-prime and below sub-prime auto market has continued to impact our industry and our company," said CEO Scott Miller. "While our emphasis is always on collections, our challenge in the current environment is to aggressively work with our customers to maintain active contracts. New finance programs and changes in marketing and advertising have begun to yield positive results early in the December 31 quarter. Nevertheless, we expect a difficult environment for the foreseeable future. Our commitment to customers and shareholders alike remains; NowAuto will do whatever it can to maintain productive contracts without placing imprudent demands on our customers," Miller said.
"We have made significant changes to many areas of our company in the past six months," said Chief Financial Officer Faith Forbis. "Although some of these changes are not complete yet, we are confident that when finished, they will move us closer to profitability. It takes time for their impact to be felt."
"Concurrent to working with existing customers, we have increased advertising and initiated new customer incentive programs to increase sales during this slower period," said Chief Operating Officer Tino Valenzuela. "We experienced significant sales increase in October and will continue to introduce innovative strategies to increase sales," Valenzuela said.