Hometown Auto Records Profit for First Quarter 2001
WATERTOWN, Conn.--May 15, 2001--Hometown Auto Retailers Inc. (OTC BB: HCAR) Tuesday announced financial results for the quarter ended March 31, 2001.Hometown realized its first profit since the first quarter of 2000, with net income for the quarter increasing to $127,000 from $38,000 for the same period in 2000. The earnings per diluted share increased to $0.02 for the first quarter of 2001 from $0.01 for the same period in 2000.
"After making the necessary changes over the past nine months to move Hometown forward, the company is excited to announce a profit for the first quarter of 2001," said Corey Shaker, president and chief executive officer of Hometown.
"We have worked hard to eliminate the unnecessary distractions that drove shareholder value down in 2000, and as of the first of the year, the company is showing a profit, selling cars and increasing shareholder value. We anticipate this to be the first of several upcoming profitable quarters."
Revenues for the three months ended March 31, 2001, decreased by $13.1 million or 18 percent to $60.9 million from $74.0 million in 2000; a revenue decrease that was due (at least partially) to the sale of Hometown's Morristown Lincoln Mercury dealership in January 2001. Gross profit for the period decreased by $558,000, or 6 percent, to $8.7 million compared to $9.2 million for the prior year.
Revenues from new car sales decreased to $34.9 million in the first quarter 2001 compared to $46.2 million for the same period 2000. Sales of new vehicles for the quarter decreased by 389 units, excluding the effect of the sale of Morristown, during the three-month period ended March 31, 2001.
Revenues from used car sales decreased to $18.3 million in the first quarter 2001 from $20.4 million in the first quarter 2000. Sales of used cars for the quarter decreased by 165 units, excluding the effect of the sale of Morristown.
The company experienced a 4 percent growth rate in parts and service sales during the quarter, with sales increasing to $5.9 million, up from $5.7 million for the same period in 2000.
"We are encouraged by the results of the first quarter, and although revenues were down, gross profit was down in a much smaller proportion, and we still made a profit due in large part to the more than $1 million in SG&A savings and cost cutting," Shaker added.
"We have not foreseen anything in the first part of the second quarter that should deter the company from continuing on its course towards a profitable 2001. In our annual earnings conference call in March, I mentioned several factors that are contributing to Hometown's turnaround.
"Those include, our new Ford Motor Credit floor plan financing, lower inventory levels that are more in line with the company's sales capabilities and needs, the significant turnaround of Westwood Lincoln Mercury and the sell-off of Morristown Lincoln Mercury, which was draining financial resources. We anticipate to see benefits from these factors throughout the year."
The number of outstanding weighted average shares at the end of the first quarter 2001 and 2000 were 8,032,305 and 6,022,194, respectively.
Hometown Auto Retailers Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
March 31, Dec. 31,
Assets 2001 2000
(Note 2) (Note 2)
--------- ---------
Current Assets
Cash and cash equivalents $ 3,129 $ 586
Restricted cash 4,612 --
Accounts receivable, net 7,112 6,149
Inventories 35,295 40,964
Prepaid expenses and other
current assets 948 826
Deferred income taxes and
taxes receivable 636 750
Total current assets 51,732 49,275
Property and equipment, net 7,507 7,594
Investment in CarDay.com 3,258 3,258
Goodwill, net 24,234 24,793
Other assets 814 879
Total Assets $87,545 $85,799
Liabilities and Stockholders' Equity
Current Liabilities
Floor plan notes payable $36,823 $40,123
Accounts payable and accrued
expenses 5,985 5,579
Due to manufacturer 4,612 --
Current maturities of long-term
debt 431 431
Total current liabilities 47,851 46,133
Long-term debt 8,673 8,785
Long-term deferred income taxes 436 399
Other long-term liabilities 433 457
Total liabilities 57,393 55,774
Stockholders' Equity
Preferred stock, $.001 par value,
2,000,000 shares authorized, no
shares issued and outstanding -- --
Common stock, Class A, $.001 par
value, 12,000,000 and 24,000,000
shares authorized, respectively,
2,301,109 shares issued and
outstanding; 2 2
Common stock, Class B, $.001 par
value, 3,760,000 shares authorized,
3,699,000 shares issued and
outstanding 4 4
Additional paid-in capital 28,786 28,786
Retained earnings 1,360 1,233
Total stockholders' equity 30,152 30,025
Total liabilities and stockholders'
equity $87,545 $85,799
Hometown Auto Retailers Inc.
Unaudited Consolidated Statements of Operations
(in thousands, except share and per share data)
For the Three Months
Ended March 31,
2001 2000
----------- ----------
Revenues
New vehicle sales $ 34,906 $ 46,150
Used vehicle sales 18,317 20,358
Parts and service sales 5,948 5,702
Other dealership revenues, net 1,719 1,816
Total revenues 60,890 74,026
Cost of sales
New vehicle sales 33,012 43,746
Used vehicle sales 16,372 18,604
Parts and service sales 2,851 2,463
Total cost of sales 52,235 64,813
Gross profit 8,655 9,213
Amortization of goodwill 178 163
Selling, general and administrative
expenses 7,678 8,535
Income from operations 799 515
Other expense
Interest expense, net (753) (475)
Other income (expense), net 253 28
Income before taxes 299 68
Provision for income taxes 172 30
Net income $ 127 $ 38
Earnings per share, basic (Note 3) $ 0.02 $ 0.01
Earnings per share, diluted (Note 3) $ 0.02 $ 0.01
Weighted average shares outstanding,
basic (Note 3) 6,000,109 5,988,861
Weighted average shares outstanding,
diluted (Note 3) 8,032,305 6,022,194