Crown Group, Inc. to Become America's Car-Mart
IRVING, Texas--Nov. 13, 2001--Crown Group, Inc. ("Crown" or the "Company") today announced that it plans to change its name to "America's Car-Mart, Inc." and will sell all of its subsidiaries and investments other than its 95%-owned America's Car-Mart, Inc. ("Car-Mart") subsidiary."Our strategic decision to focus exclusively on Car-Mart represents a 'watershed' event that we believe will unlock the substantial value of this subsidiary," stated Edward R. McMurphy, President and Chief Executive Officer of Crown Group, Inc. "We believe that the value of Car-Mart alone is far greater than Crown's current equity market capitalization. Accordingly, we believe that the expected future increase in earnings, reduction in debt and specific focus provided by this strategy should result in a higher stock price, thereby providing a substantial benefit to our shareholders."
"Car-Mart is an outstanding company that has compiled a 20-year record of profitability, with significant growth in revenues and earnings throughout its history," added McMurphy. "Car-Mart's management team has developed a highly successful business model that has been consistently replicated in new geographic markets. Historically, the accomplishments of Car-Mart have been masked in the consolidated results of Crown Group, where its profitability has been diluted by losses at Smart Choice Automotive, and its conservative balance sheet has been consolidated with the highly leveraged balance sheets of Smart Choice and Paaco Automotive. The sale of these and Crown's other non-core businesses will reduce the Company's debt-to-equity ratio from 3.6 to 1 on July 31, 2001, to less than 1.0 to 1 going forward."
"In the fiscal year ended April 30, 2001, our Car-Mart subsidiary alone earned $16.4 million pretax on revenues of $106 million," continued McMurphy. "On a pro-forma basis, taking into account the removal of all other businesses except Car-Mart and the planned downsizing of our corporate overhead, Crown Group would have earned approximately $1.16 per diluted share in FY2001, compared with actual reported earnings of $0.74 per diluted share.
"In the past, Crown's ownership of businesses in a variety of different industries seemed to create confusion within the investment community, apparently making it difficult for investors to analyze and properly value the Company's common stock. For the past several fiscal years, the Company's stock has traded at a significant discount to book value and to the intrinsic value of its underlying businesses. The change in corporate name clearly demonstrates management's decision to focus exclusively upon Car-Mart's tremendous potential as a leader in the used car sales and finance industry. We believe investors will find it easier to properly value the Company following its transformation into America's Car-Mart, Inc."
The schedule below summarizes certain financial and operating data pertaining to Car-Mart for the past six fiscal years. Since its inception in 1981, Car-Mart has grown from a single location in Rogers, Arkansas, to 52 locations in seven states. All of Car-Mart's growth has been internally generated, and it does not anticipate growth by acquisition. Management believes that abundant expansion opportunities exist in the used car sales and finance business, and Car-Mart plans to continue its controlled growth for the foreseeable future. Over the past six years, Car-Mart has grown revenues and earnings at compound annual growth rates of 19.4% and 21.7%, respectively. Car-Mart believes its success is attributable to a proven operating model, low cost structure, conservative business practices and the pride and work ethic of its management and associates.
Subsidiaries and investments to be sold as a part of this transition include the Company's (i) 70% ownership interest in Smart Choice Automotive Group, Inc. ("Smart Choice") which sells and finances used cars and trucks; (ii) 80% ownership interest in Concorde Acceptance Corporation ("Concorde"), a prime and sub-prime mortgage lender; (iii) 50% ownership interest in Precision IBC, Inc. ("Precision"), a firm specializing in the sale and rental of intermediate bulk containers; and (iv) minority investments in Mariah Vision 3, Inc. ("Mariah") and Monarch Venture Partners' Fund I, L.P. ("Monarch").
In connection with this transition, the Company is streamlining its corporate structure and plans to relocate its headquarters from Irving, Texas, to Rogers, Arkansas, where Car-Mart is based. The name change is subject to shareholder approval, which the Company will seek at its annual shareholders meeting in January 2002.
Crown Group is headquartered in Irving, 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," "anticipate" 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 business, availability of lines of credit for the Company's business, changes in interest rates, the Company's ability to effectively underwrite and collect its loans, changes in estimates and assumptions in determining the adequacy of the Company's allowance for credit losses, 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.
America's Car-Mart, Inc.
Financial and Operating Data
(in thousands, except operating data)
Crown
and Prior
Prior Ownership Ownership(a) Crown Ownership
--------------- ---------- ---------------
(unaudited)
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
5-31-96 5-31-97 5-31-98 4-30-99 4-30-00 4-30-01
------- ------- ------- ------- ------- -------
Operating data (unaudited):
Retail units
sold 10,267 11,604 11,657 12,501 13,852 15,659
Average number
of lots in
operation 28.2 28.9 27.2 30.3 37.9 41.2
Avg monthly
retail units
sold per lot 30.4 33.4 35.8 34.4 30.4 31.7
Gross profit % 43.4% 43.2% 45.2% 44.3% 45.3% 45.4%
Credit loss
as a % of
sales 20.1% 20.2% 19.5% 19.2% 17.0% 17.6%
SG & A as a
% of revenue 14.8% 16.9% 15.2% 14.8% 14.5% 14.1%
Operating results:
Revenues:
Sales $40,942 $54,032 $60,968 $71,043 $82,916 $97,848
Interest
income 2,616 4,059 4,723 5,416 6,466 7,858
------ ------ ------ ------ ------ ------
Total 43,558 58,091 65,691 76,459 89,382 105,706
Costs and expenses:
Cost of
sales 23,173 30,698 33,435 39,599 45,383 53,413
Selling,
general and
admin 6,430 9,834 9,999 11,350 12,960 14,950
Provision for
credit
losses 8,217 10,909 11,915 13,632 14,104 17,215
Interest
expense - 59 10 922 3,239 3,613
Depreciation
and amort 70 89 111 147 134 141
------ ------ ------ ------ ------ ------
Total 37,890 51,589 55,470 65,650 75,820 89,332
Pretax
income 5,668 6,502 10,221 10,809 13,562 16,374
Provision for
income taxes 1,935 2,771 3,898 4,106 5,333 6,400
------ ------ ------ ------ ------ ------
Net income $ 3,733 $ 3,731 $ 6,323 $ 6,703 $ 8,229 $ 9,974
====== ====== ====== ====== ====== ======
Balance sheet data:
Assets:
Finance
receiv-
ables $32,336 $39,312 $44,423 $50,626 $62,093 $76,037
Allowance
for credit
losses (5,982) (7,273) (8,218) (9,458) (11,493)(14,067)
Inventory 1,340 1,027 953 2,173 2,343 3,013
Other assets 1,082 1,293 1,910 6,221 6,033 7,907
------ ------ ------ ------ ------ ------
Total
assets $28,776 $34,359 $39,068 $49,562 $58,976 $72,890
====== ====== ====== ====== ====== ======
Liabilities:
Other
liabil-
ities $ 2,243 $ 3,143 $ 3,320 $ 6,174 $ 5,075 $ 9,412
Revolving
credit
facility 25,177 27,503 29,768
Note payable
to affiliate 3,365 4,317 2,525 7,646 7,500 4,500
------ ------ ------ ------ ------ ------
Total
liabil-
ities 5,608 7,460 5,845 38,997 40,078 43,680
------ ------ ------ ------ ------ ------
Equity 23,168 26,899 33,223 10,565 18,898 29,210
------ ------ ------ ------ ------ ------
Total
liabilities
and
equity $28,776 $34,359 $39,068 $49,562 $58,976 $72,890
====== ====== ====== ====== ====== ======
(a) On January 15, 1999, Crown acquired America's Car-Mart. In
connection with the acquisition, Car-Mart was recapitalized and its
fiscal year-end was changed to April 30 to conform to Crown's
year-end. Thus, the year ended April 30, 1999 includes 8.5 months
under the prior owner and 3.5 months under Crown's ownership.