Earl Scheib Announces Fourth Quarter and Fiscal Year 2001 Results
BEVERLY HILLS, Calif.--July 12, 2001--Earl Scheib, Inc. (AMEX: ESH) reported its results for the fourth quarter and fiscal year ended April 30, 2001.Net sales for the fourth quarter of fiscal year 2001 were $14,378,000, a slight decrease from the fourth quarter of fiscal year 2000 net sales of $14,471,000, with same shop sales essentially flat from the prior year. For the fiscal year ended April 30, 2001, net sales were $55,061,000, a decrease of 2.3% compared to $56,374,000 for the comparable period in the prior fiscal year, with same shop sales decreasing 2.0%.
The operating loss for the fourth quarter and fiscal year 2001 was $2,649,000 and $4,522,000, as compared to an operating loss of $907,000 and $1,618,000, respectively, for the same periods of fiscal year 2000. The fiscal year 2001 operating results include restructuring charges of $645,000 for the closure of 25 shops in fiscal year 2002 pursuant to a planned reorganization of the company's retail paint and body business and a provision of $1,242,000 to write down the carrying value of fixed assets in 13 other shops to their estimated net recoverable value.
The impact of decreased same shop sales (including increased unit costs at the company's paint manufacturing facility due to lower volume) and higher operating costs (including those pertaining to the company's initial fleet and truck center and the commercial coatings operations) also adversely affected the fiscal year 2001 operating results, offset somewhat by a reduction in costs from current year shop closures when compared to the prior fiscal year.
During the fiscal year ended April 30, 2001, the company closed 12 retail paint shops, which included the sales of six parcels of real estate for a net gain of $310,000, and opened one new shop.
The net loss for the fourth quarter and fiscal year 2001 was $2,747,000 and $4,774,000, or $0.63 and $1.10 loss per diluted share, respectively, compared to a net loss of $931,000 and $2,079,000, or $0.21 and $0.48 loss per diluted share, for the fourth quarter and fiscal year 2000, respectively. The company did not recognize any federal income tax benefit for operating losses in any of these periods.
Chris Bement, chief executive officer and president, stated, "During the fourth quarter, the board of directors approved a plan to restructure and reorganize the retail paint and body business. We expect that this plan will be implemented over the next three years as lease obligations expire and result in the closing of 41 shops located primarily in single-shop areas and in markets where seasonal weather adversely impacts operating results. It is also expected that administrative costs will be reduced, a portion of which should be realized later in fiscal year 2002 with the closing of 25 shops. Further reductions in administrative costs should be realized with the closing of an additional eight shops in each of the fiscal years 2003 and 2004. This restructuring should result in a leaner infrastructure and ultimately allow the company to concentrate its efforts and growth in those geographic areas, primarily the Southwest, where it has historically been profitable."
Bement further stated, "The company's two new business opportunities, the marketing of its commercial coatings and related products to industrial users and the painting of fleet and oversized vehicles, are experiencing a longer start-up period than was originally anticipated. For the fiscal year ended April 30, 2001, their combined results of operations accounted for over 19 percent of the total operating loss of the company. However, despite these disappointing results, we believe that these two businesses can be successful and should enhance the long-term enterprise value of the company. To that end, we will continue to review and strive to improve their operations and infrastructure."
Earl Scheib, Inc., founded in 1937, is a nationwide operator of 155 auto paint and body shops located in more than 100 cities throughout the United States.
"Safe-Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: The statements that are not historical facts contained in this news release are forward-looking statements that involve risks and uncertainties, including but not limited to, the effect of weather, the effect of economic conditions, the impact of competitive products, services and pricing, capacity and supply constraints or difficulties, changes in laws and regulations applicable to the company, the impact of advertising and promotional activities, the impact of the company's expansion or closing of shops, new product roll-out, fleet operations and commercial coatings business, the potential adverse effects of certain litigation, and the impact of various tax positions taken by the company.
EARL SCHEIB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter For the Fiscal Year
Ended April 30, Ended April 30,
2001 2000 2001 2000
Net Sales $14,378,000 $14,471,000 $55,061,000 $56,374,000
Operating Loss(a) (2,649,000) (907,000) (4,522,000) (1,618,000)
Loss Before Tax(a) (2,696,000) (909,000) (4,711,000) (2,035,000)
Tax Provision 51,000 22,000 63,000 44,000
Net Loss(a) $(2,747,000) $ (931,000) $(4,774,000) $(2,079,000)
Basic Loss
Per Share $ (0.63) $ (0.21) $ (1.10) $ (0.48)
Diluted Loss
Per Share $ (0.63) $ (0.21) $ (1.10) $ (0.48)
Weighted Average
Shares Outstanding
- Basic 4,359,000 4,359,000 4,359,000 4,359,000
Weighted Average
Shares Outstanding
- Diluted 4,359,000 4,359,000 4,359,000 4,359,000
(a) Fourth quarter and fiscal year 2001 include restructuring charges
of $645,000 and a provision for fixed assets impairment of $1,242,000.