Earl Scheib Announces Improved Fourth Quarter and Fiscal 2002 Results
SHERMAN OAKS, Calif.--July 18, 2002--Earl Scheib, Inc. (AMEX:ESH) reported its results for the fourth quarter and fiscal year ended April 30, 2002.Net sales for the fourth quarter of fiscal 2002 were $13,374,000, a decrease of 7.0% from the fourth quarter of fiscal 2001 net sales of $14,378,000. This resulted from the Company operating 27 fewer retail paint and body shops at April 30, 2002 (pursuant to its planned restructuring of the retail paint and body business announced in the fourth quarter of fiscal year 2001), as compared to April 30, 2001; but was partially offset by a same-shop (shops still open one year or more) sales increase of 3.1% during the fourth quarter of fiscal 2002 from the fourth quarter of fiscal 2001. For the year ended April 30, 2002, net sales were $52,126,000, as compared to $55,061,000 during the prior fiscal year, a decrease of 5.3%, with same-shop sales in the retail paint and body business increasing by one percent. Additionally, net sales from the fleet and truck centers and the commercial coatings business increased $351,000 and $1,174,000 during the fourth quarter and fiscal year 2002, respectively, from the comparable periods in the prior year.
The operating loss for the fourth quarter of fiscal 2002 was $884,000, as compared to an operating loss of $2,649,000 in the fourth quarter of fiscal 2001. The improved operating results were primarily attributable to the same-shop sales increase and reduced administrative costs, partially offset by higher legal expenses and increased operating losses at the Company's two fleet and truck centers. In addition, the fourth quarter of fiscal 2001 also included restructuring charges of $645,000 and a provision of $1,242,000 for the write-down of the carrying value of the fixed assets in 13 shops to estimated net realizable value. In fiscal 2002, this provision totaled $183,000 for three shops. The operating loss for the year ended April 30, 2002 and 2001 was $2,973,000 and $4,522,000, respectively. Insurance and legal expenses for the year ended April 30, 2002 increased by $855,000 and $497,000, respectively, and the operating losses incurred for the fleet and truck centers were greater by $533,000 from the prior fiscal year.
During fiscal 2002, the Company sold 14 parcels of real estate and its corporate office building for a pretax gain of $4,153,000. During fiscal 2001, the Company sold six parcels of real estate for a pretax gain of $310,000.
The net loss for the fourth quarter of fiscal 2002 was $284,000, or $0.07 loss per diluted share, as compared to a net loss of $2,747,000 during the fourth quarter of fiscal 2001, or $0.63 loss per diluted share. For the year ended April 30, 2002, net income was $450,000, or earnings of $0.10 per diluted share, as compared to a net loss of $4,774,000, or $1.10 loss per diluted share, for the year ended April 30, 2001. The Company did not recognize any Federal income tax benefit for the operating losses in fiscal year 2001. Additionally, due to income allocation and state income tax laws, only part of the Company's state income taxes in fiscal 2001 were offset by the operating losses.
Chris Bement, Chief Executive Officer and President, stated that, "The improved operating results for the fourth quarter and fiscal year continues to demonstrate the soundness behind the restructuring of our retail paint and body business. We closed 27 shops during the current fiscal year and expect to close 10 more by the end of the next fiscal year. However, despite the success of the shop closings, same-shop sales increases during the year and administrative expense reductions, the adverse impact of increased legal and insurance costs significantly affected our progress.
"The commercial coatings business continues to grow slowly; however, we did attain a small operating profit in the fourth quarter of fiscal 2002. With the assistance of an outside consulting firm, we are implementing a new marketing strategy for our fleet and trucks centers at the Gardena location. This required us to significantly curtail the operations of the Los Angeles facility while we focus our efforts to adopt the new strategy in Gardena, but we believe that the end result will be a viable business model for the future expansion of our fleet and truck centers."
Earl Scheib, Inc., founded in 1937, is a nationwide operator of 129 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, insuring or lending constraints and the impact of various tax positions taken by the Company.
EARL SCHEIB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For The Quarter For The Year
Ended April 30, Ended April 30,
2002 2001 2002 2001
Net Sales $13,374,000 $14,378,000 $52,126,000 $55,061,000
Operating Loss (884,000) (2,649,000) (2,973,000) (4,522,000)
Gain On Sales of
Real Property 527,000 77,000 4,153,000 310,000
Other Expense (102,000) (124,000) (455,000) (499,000)
Income (Loss)
Before Tax (459,000) (2,696,000) 725,000 (4,711,000)
Tax Provision
(Benefit) (175,000) 51,000 275,000 63,000
Net Income (Loss) $ (284,000) $(2,747,000) $ 450,000 $(4,774,000)
Basic Earnings
(Loss) Per Share $ (0.07) $ (0.63) $ 0.10 $ (1.10)
Diluted Earnings
(Loss) Per Share $ (0.07) $ (0.63) $ 0.10 $ (1.10)
Weighted Average
Shares
Outstanding --
Basic 4,368,000 4,359,000 4,363,000 4,359,000
Weighted Average
Shares
Outstanding --
Diluted 4,368,000 4,359,000 4,365,000 4,359,000