Crown Group, Inc. Reports FY2001 Third- Quarter Earnings; Net Income From Operations Increased 15% in First Nine Months of Fiscal Year
DALLAS--March 9, 2001--Crown Group, Inc. today announced its operating results for the third quarter and first nine months of FY2001.For the three months ended January 31, 2001, revenues increased 36% to $80.1 million, compared with $58.7 million in the third quarter of the previous fiscal year. Net income for the most recent quarter totaled $996,349, or $0.13 per diluted share, compared with $1,480,482, or $0.16 per diluted share, in the year-earlier period. The decline in net income is largely attributable to a higher credit loss provision at Smart Choice Automotive Group in order to maintain reserves that adequately reflect historical static pool performance. The exclusion of 50% of Precision IBC's earnings contribution, as a result of the sale of half of that company at the beginning of the third quarter of FY2001, also adversely affected earnings. These events were partially offset by a strong performance at America's Car-Mart.
Revenues for the third quarter of FY2001 (before intercompany eliminations) were derived as follows: Automotive Sales and Finance -- $77.2 million; and Other -- $3.2 million.
For the nine months ended January 31, 2001, revenues increased 65% to $252.1 million, compared with revenues of $152.8 million for the nine months ended January 31, 2000. Net income from operations rose 15% to $5.3 million, or $0.65 per diluted share, in the most recent nine-month period, versus $4.6 million, or $0.46 per diluted share, in the corresponding period of the previous fiscal year. Earnings from operations exclude a $7.1 million combined after-tax gain on the sale of Casino Magic Neuquen and Home Stay Lodges during the first nine months of FY2000.
"In general, we are encouraged by the results for the most recent quarter, given that the third quarter is historically the weakest of the fiscal year, on a seasonal basis," commented Edward R. McMurphy, President and Chief Executive Officer of Crown Group. "Car-Mart turned in another outstanding sales and earnings performance, and although our decision to boost reserves at Smart Choice resulted in lower overall profitability for the quarter, the Company still achieved a significant level of earnings in a weakening economic environment."
"The overall performance of the Company during the first nine months of fiscal 2001 suggests that this will be another record year in sales and earnings," continued McMurphy. "Car-Mart and Paaco Automotive Group are operating efficiently and have, in fact, exceeded management's expectations, while the turnaround at Smart Choice's Florida operations has proven more challenging, and is taking somewhat longer, than originally anticipated. Smart Choice management has recently taken steps to significantly reduce corporate overhead and is highly focused on improving the performance of the Florida portfolio of finance receivables. Our goal is to significantly improve profitability and reduce leverage at Smart Choice during the next twelve months, before any steps are taken to expand its used car dealership network. Meanwhile, Car-Mart has opened a number of new stores during Fiscal 2001 and continues to provide an outstanding return on investment to Crown shareholders. Further, we have initiated numerous cost-cutting measures at the corporate level as well, which should have a significant and ongoing positive impact on earnings."
"From a strategic perspective, we realize that Crown Group's ownership of equity positions in multiple companies is somewhat confusing to investors, and I believe this has played a role in the low price/earnings multiple accorded Crown shares in the marketplace," continued McMurphy. "One of our goals for the upcoming fiscal year is to simplify our corporate structure in order that investors can more effectively focus on our core operations and management's strategy for enhancing shareholder value."
Consistent with Crown Group's previously stated objectives regarding stock repurchases at prices below book value ($8.13 per share at 1/31/01), Crown continues to purchase its shares in the open market and in private transactions whenever management believes it is appropriate to do so. For the three months ended January 31, 2001, earnings per share were calculated using 7,768,330 average diluted shares outstanding, compared with 9,179,744 average diluted shares outstanding in the prior-year period. For the nine-month period ended January 31, 2001, earnings per share were calculated using 8,218,856 average diluted shares outstanding, versus 9,911,777 average diluted shares outstanding in the same period last year. On January 31, 2001, there were 7,332,867 shares of common stock issued and outstanding.
Crown Group, Inc. is primarily engaged in automotive retailing and specialty finance activities. Through its automotive subsidiaries, Crown Group currently owns and operates 69 dealerships in seven states and is the second-largest automotive retailer focused exclusively on the "Buy Here / Pay Here" used car market segment. The Company's America's Car-Mart subsidiary operates 46 dealerships primarily in small cities and rural locations throughout the Southwestern and Midwestern United States, and is considered one of the largest "Buy Here / Pay Here" franchises in the country. Smart Choice Automotive Group operates 10 dealerships under the First Choice brand name in Florida and 13 dealerships and three collision/repair centers under the Paaco name in Texas, most of which operate in large metropolitan areas. All of the Company's dealerships sell only used cars and light trucks to predominantly non-banked customers. Both Car-Mart and Smart Choice finance approximately 98% of the vehicles they sell and perform all underwriting, financing and servicing duties related to these retail installment contracts. The primary objective of both Car-Mart and Smart Choice is to provide quality vehicles, courteous service, flexible payment arrangements and a friendly atmosphere to their customers.
In addition to its automotive subsidiaries, the Company has historically made equity investments for long-term appreciation in companies spanning various industries through either controlling ownership or minority positions. The Company currently owns (i) 97% of America's Car-Mart, Inc. and 70% of Smart Choice Automotive Group, Inc. (OTCBB:SCHA), vertically integrated used car sales and finance companies; (ii) 80% of Concorde Acceptance Corporation, a sub-prime mortgage lender; (iii) 50% of Precision IBC, Inc., a firm specializing in the sale and rental of intermediate bulk containers; (iv) 90% of CG Incorporated S.A. de C.V., which owns and operates two casinos in El Salvador; (v) 8.8% of Mariah Vision3, Inc., a software developer specializing in 3-D graphic design; and (vi) 6.7% of Monarch Venture Partners Fund I, a venture capital fund focused on internet-related and emerging technology companies. Crown Group is headquartered in Dallas, Texas, and its common stock is traded on the Nasdaq National Market under the symbol "CNGR."
This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect," or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those relating to the development of the Company's businesses, risks associated with acquisitions, continued availability of lines of credit for the Company's businesses, changes in interest rates, changes in the Company's ability to monitor its underwriting and collection processes, changes in estimates and assumptions in, and ongoing adequacy of, the Company's allowance for credit losses, the inability of the Company to reduce operating expenses, changes in the industries in which the Company operates, competition, adverse economic conditions, dependence on existing management, and other risks which are discussed in the Company's periodic filings with the Securities and Exchange Commission. All forward-looking statements in this release are based upon information available as of the date of this release. Such information may change or become invalid after the date of this release, and by making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
CROWN GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended January 31,
2001 2000
-----------------------------
Total revenues $ 80,114,520 $ 58,720,887
Costs and expenses (78,696,776) (55,533,211)
Gain on sale of securities, net 4,726 123,268
Equity in earnings of
unconsolidated subsidiaries 79,609 (312,534)
---------- ----------
Income before taxes
& minority interests 1,502,079 2,998,410
Provision for income taxes (649,750) (1,256,205)
Minority interests 144,020 (261,723)
---------- ----------
Net income $ 996,349 $ 1,480,482
========== ==========
Earnings per share
Basic $ 0.13 $ 0.17
========== ==========
Diluted $ 0.13 $ 0.16
========== ==========
Weighted average number of
shares outstanding:
Basic 7,474,780 8,790,490
Diluted 7,768,330 9,179,744
CROWN GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
Nine Months Ended January 31,
2001 2000
----------------------------
Total revenues $ 252,129,876 $152,806,804
Costs and expenses (241,892,299) (145,273,149)
Gain on sale of securities, net 4,726 10,861,100
Equity in earnings of
unconsolidated subsidiaries 79,609 630,309
----------- ----------
Income before taxes
& minority interests 10,321,912 19,025,064
Provision for income taxes (4,325,793) (7,266,343)
Minority interests (682,642) 93,354
----------- ----------
Net income $ 5,313,477 $ 11,665,367
=========== ==========
Earnings per share
Basic $ 0.68 $ 1.23
=========== ==========
Diluted $ 0.65 $ 1.18
=========== ==========
Weighted average number of
shares outstanding:
Basic 7,856,297 9,508,064
Diluted 8,218,856 9,911,777
CROWN GROUP, INC. AND SUBSIDIARIES
(Unaudited)
Quarter Ended January 31,
------------------------
REVENUE CONTRIBUTION ($000) 2001 2000
---- ----
Automobile $ 77,158 $ 54,376
IBCs -- 1,867
Mortgage 2,378 1,561
Other 846 1,596
Eliminations (267) (679)
------ ------
Consolidated Revenues $ 80,115 $ 58,721
====== ======
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTERESTS ($000) 2001 2000
---- ----
Automobile $ 2,938 $ 4,002
IBCs -- 194
Mortgage (223) (216)
Other (1,213) (982)
------ ------
Income before taxes and
minority interests $ 1,502 $ 2,998
====== ======
Nine Months Ended January 31,
----------------------------
REVENUE CONTRIBUTION ($000) 2001 2000
---- ----
Automobile $ 239,567 $ 139,885
IBCs 3,509 5,138
Mortgage 7,091 5,012
Other 2,881 4,348
Eliminations (918) (1,576)
------- ------
Consolidated Revenues $ 252,130 $ 152,807
======= =======
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTERESTS ($000) 2001 2000
---- ----
Automobile $ 14,188 $ 10,950
IBCs 457 482
Mortgage (54) (143)
Other (4,269) 7,736
------- -------
Income before taxes and
minority interests $ 10,322 $ 19,025
======= =======
CROWN GROUP, INC. AND SUBSIDIARIES
(Unaudited)
BALANCE SHEET DATA -- January 31, 2001 (unaudited)
Cash $ 1,780,980
Total assets $296,059,364
Stockholders' equity $ 59,622,126
Shares outstanding 7,332,867
Book value per share $ 8.13