Earl Scheib Painting A Rosy Picture.
SHERMAN OAKS, Calif.--March 11, 2002--Earl Scheib, Inc. (AMEX:ESH) reported its results for the third quarter and nine months of the fiscal year ending April 30, 2002. Historically, the third quarter has been the most difficult quarter of the Company's industry because of adverse winter weather and the holiday season.Net sales for the third quarter of fiscal 2002 were $10,202,000, a decrease of 1.5% from the third quarter of fiscal 2001 net sales of $10,359,000. This resulted primarily from the Company operating 26 less retail paint and body shops at January 31, 2002, as compared to January 31, 2001, but was substantially offset by a same shop sales increase of 7.7% during the third quarter of fiscal 2002 from the third quarter of fiscal 2001. For the nine months ended January 31, 2002, net sales were $38,752,000, as compared to $40,683,000 during the same period in the prior fiscal year, a decrease of 4.8%, with same shop sales slightly increasing.
The operating loss for the third quarter of fiscal 2002 was $1,571,000, as compared to an operating loss of $2,231,000 in the third quarter of fiscal 2001. The improved operating results were primarily attributable to the same shop sales increase and reduced administrative costs, partially offset by increased insurance costs and operating losses at the Company's two fleet and truck centers. The operating loss for the nine months ended January 31, 2002 and 2001 was $2,089,000 and $1,873,000, respectively. Insurance costs for the nine months ended January 31, 2002 increased by $909,000 from the same period in the prior fiscal year.
During the first nine months of fiscal 2002, the Company, pursuant to the planned restructuring of the retail paint and body business, sold 12 parcels of real estate and its corporate office building for a pretax gain of $3,626,000. During the first nine months of fiscal 2001, the Company sold five parcels of real estate for a pretax gain of $233,000.
The net loss for the third quarter of fiscal 2002 was $778,000, or $0.18 loss per diluted share, as compared to a net loss of $2,316,000 during the third quarter of fiscal 2001, or $0.53 loss per diluted share. For the nine months ended January 31, 2002, net income was $734,000, or earnings of $0.17 per diluted share, as compared to a net loss of $2,027,000, or $0.47 per diluted share, for the nine months ended January 31, 2001. The Company did not recognize any federal or state income tax benefit for the operating losses in fiscal year 2001.
Chris Bement, Chief Executive Officer and President, stated that, "The improved operating results for the third quarter, though far from satisfactory, do demonstrate the soundness behind the restructuring of our retail paint and body business. We have seen same shop sales increase in three out of the last four months and, other than the industry-wide problem of higher insurance costs, have reduced administrative expenses. Our restructuring plan, which primarily addresses the closing of retail shops in single-shop areas and markets where seasonal weather adversely impacts operating results, should continue to show improvement in the retail paint and body business through a leaner infrastructure and greater focus in those geographic areas, primarily the Southwest, where we have historically been profitable. As of January 31, 2002, we have closed 24 shops during the current fiscal year and expect to close at least seven more by the end of the next fiscal year.
"The commercial coatings business has been growing slowly, but not significantly, and while we have not yet attained profitability at the fleet and trucks centers, we are working hard to improve these results and have engaged an outside consulting firm to assist us in determining the right business model."
Earl Scheib, Inc., founded in 1937, is a nationwide operator of 135 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
Certain written and oral statements made by the Company may be "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995, including statements made in this news release and in filings with the Securities and Exchange Commission. Generally, the words "believe", "expect", "hope", "intend", "estimate", "anticipate", "plan", "will", "project", and similar expressions identify forward-looking statements which generally are not historic in nature. All statements that address operating performance, events, developments or strategies that the Company expects or anticipates in the future are forward-looking statements.
Forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the Company's past experience or current expectations. The following are some of the risks and uncertainties that may impact the forward-looking statements: the impact of the Company's retail paint and body shop closures and operational restructuring, the effect of weather, the effect of economic conditions, the impact of competitive products, services, 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 of its fleet services division, new product rollout and Quality Fleet and Truck Centers, commercial coatings business, the potential adverse effects of certain litigation, financing or lending constraints and the impact of various tax positions taken by the Company.
EARL SCHEIB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For The Quarter For The Nine Months
Ended January 31, Ended January 31,
2002 2001 2002 2001
Net Sales $10,202,000 $10,359,000 $ 38,752,000 $ 40,683,000
Operating Income
(Loss) (1,571,000) (2,231,000) (2,089,000) (1,873,000)
Gain On Sales
of Real
Property 486,000 2,000 3,626,000 233,000
Other Income
(Expense) (168,000) (87,000) (353,000) (375,000)
Income (Loss)
Before Tax (1,253,000) (2,316,000) 1,184,000 (2,015,000)
Tax Provision
(Benefit) (475,000) -- 450,000 12,000
Net Income
(Loss) $ (778,000) $(2,316,000) $ 734,000 $ (2,027,000)
Basic Earnings
(Loss) Per
Share $ (0.18) $ (0.53) $ 0.17 $ (0.47)
Diluted Earnings
(Loss) Per
Share $ (0.18) $ (0.53) $ 0.17 $ (0.47)
Weighted Average
Shares
Outstanding
- Basic 4,366,000 4,359,000 4,361,000 4,359,000
Weighted Average
Shares
Outstanding
- Diluted 4,366,000 4,359,000 4,363,000 4,359,000