Hometown Auto Retailers Announces Second Quarter 2003 Results
WATERTOWN, Conn.--Aug. 1, 20034, 2003--Hometown Auto Retailers, Inc. (OTC BB: HCAR) today announced its financial results for the quarter and six-month period ended June 30, 2003.Hometown reported revenues of $78.1 million in the second quarter of 2003 versus revenues of $73.0 million for the same period in 2002, an increase of $5.1 million or 7.0 percent. For the first half of 2003, Hometown reported revenues of $138.4 million versus revenues of $138.1 million, an increase of approximately $328,000 or 0.2 percent.
Hometown's gross profit for the second quarter of 2003 increased approximately $598,000 or 5.9 percent to $10.7 million versus gross profit of $10.1 million in same period in 2002. Gross profit for the first half of the year remained essentially unchanged at $19.7 million versus the same period in 2002.
Hometown's net income for the second quarter of 2003 increased approximately $774,000 to $1.1 million generating basic and diluted earnings per share of $0.15 versus net income of $309,000 and basic and diluted earnings per share of $0.04 for the same period in 2002.
Net income for the first half of 2003 increased $24.2 million to $1.0 million generating basic and diluted earnings per share of $0.13 versus a restated net loss of $(23.2) million and a restated basic and diluted loss per share of $(3.23) for the same period in 2002.
Results for the second quarter and first half of 2003 includes earnings of $0.08 per share from a gain on the sale of a Chrysler/Jeep Sales and Service Franchise in June 2003.
As previously announced by the company, Hometown has adopted SFAS 142 effective January 1, 2002, an accounting rule issued by the Financial Accounting Standards Board, which among other things eliminates the need to amortize goodwill and requires companies to use a fair-value approach to determine whether there is an impairment of existing and future goodwill.
Since adopting SFAS 142, Hometown has ceased recording goodwill amortization. During the third quarter of 2002, Hometown completed its goodwill impairment testing, which resulted in a one-time, non-cash charge of approximately $23.7 million recorded by the company to write-off the carrying value of its goodwill. This charge is non-operational in nature and is reflected as a cumulative effect of the accounting change and as a restatement of results in the accompanying statement of operations for the six months ended June 30, 2002.
Before the cumulative effect of the accounting change, Hometown reported net income of $544,000 and basic and diluted income per share of $0.07 for the first half of 2002.
"We are obviously pleased with the performance of our Hometown stores," said Corey Shaker, Hometown president and chief executive officer. "We believe that we have the right management team in place for continued improvement in our operations and remain cautiously optimistic for the future. We also continue to focus on building equity for our shareholders and providing a steady improvement in working capital to further solidify our position in the marketplace."
Hometown sold 3,866 vehicles during the second quarter of 2003, 212 more than it sold in the same period in 2002 and 950 more vehicles than the company sold during the first quarter of 2003 (ended March 31). Hometown sold 6,782 vehicles during the six months ended June 30, 2003, 97 less than it sold in the same period in 2002. Total vehicles sold (by category) are shown in the table below.
For the For the
three months six months
ended June 30, ended June 30,
2003 2002 2003 2002
New vehicle 2,098 1,828 3,466 3,256
Used vehicle - retail 1,000 1,099 1,936 2,199
Used vehicle - wholesale 768 727 1,380 1,424
Total units sold 3,866 3,654 6,782 6,879
Sales of new vehicles increased $6.1 million or 13.6 percent to $51.0 million for the second quarter of 2003 versus $44.9 million in the same period in 2002. Used vehicle sales decreased $1.2 million or 6.0 percent to $18.7 million for the second quarter of 2003 versus $19.9 million in the same period in 2002. Parts and service revenues for the second quarter of 2003 increased 4.9 percent or $291,000 to $6.2 million versus $5.9 million for the same period in 2002. Other revenues (net) stayed constant at $2.2 million in both the 2003 and 2002 periods.
Sales of new vehicles increased $5.3 million or 6.5 percent to $86.9 million for the first half of 2003 versus $81.6 million in the same period in 2002. Used vehicle sales decreased $4.9 million or 12.3 percent to $35.1 million for the first half of 2003 versus $40.0 million in the same period in 2002. Parts and service revenues for the first half of 2003 increased 3.4 percent or $405,000 to $12.4 million versus $12.0 million the same period in 2002. Other revenues (net) decreased 10.7 percent or $480,000 to $4.0 million versus $4.5 million for the same period in 2002.
About Hometown
Hometown Auto Retailers (www.htauto.com) sells new and used cars and light trucks, provides maintenance and repair services, sells replacement parts and provides related financing, insurance and service contracts through nine franchised dealerships located in New Jersey, New York, Connecticut, Massachusetts and Vermont. The company's dealerships offer 10 American and Asian automotive brands, including Chevrolet, Chrysler, Dodge, Ford, Jeep, Lincoln, Mazda, Mercury, Oldsmobile, and Toyota. Hometown is also active in two "niche" segments of the automotive market: the sale of Lincoln Town Cars and limousines to livery car and livery fleet operators and the maintenance and repair of cars and trucks at a Ford and Lincoln Mercury factory authorized free-standing service center.
This release contains "forward-looking statements" based on current expectations but involving known and unknown risks and uncertainties. Actual results or achievements may be materially different from those expressed or implied. The company's plans and objectives are based on assumptions involving judgments with respect to future economic, competitive and market conditions, its ability to consummate, and the timing of acquisitions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the company. Therefore, there can be no assurance that any forward-looking statement will prove to be accurate.
HOMETOWN AUTO RETAILERS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
(Restated)
Revenues
New vehicle sales $50,952 $44,920 $86,882 $81,575
Used vehicle sales 18,739 19,923 35,133 40,037
Parts and service sales 6,219 5,928 12,435 12,030
Other, net 2,193 2,231 3,973 4,453
Total revenues 78,103 73,002 138,423 138,095
Cost of sales
New vehicle 47,748 42,122 81,368 76,555
Used vehicle 16,945 18,170 31,763 36,431
Parts and service 2,711 2,609 5,633 5,401
Total cost of sales 67,404 62,901 118,764 118,387
Gross profit 10,699 10,101 19,659 19,708
Selling, general and
administrative expenses 9,029 8,823 17,415 17,236
Income from operations 1,670 1,278 2,244 2,472
Interest income 7 4 14 21
Interest (expense) (799) (790) (1,577) (1,600)
Other income 938 18 951 24
Other (expense) - (1) (3) (3)
Income before taxes
and cumulative effect
of accounting change 1,816 509 1,629 914
Provision for income
taxes 733 200 667 370
Income before
cumulative effect of
accounting change 1,083 309 962 544
Cumulative effect of
accounting change - - - (23,708)
Net income (loss) $1,083 $309 $962 $(23,164)
Earnings (loss) per share,
basic
Before cumulative effect
of accounting change $0.15 $0.04 $0.13 $0.07
Cumulative effect of
accounting change - - - (3.30)
Earnings (loss) per share,
basic $0.15 $0.04 $0.13 $(3.23)
Earnings (loss) per share,
diluted
Before cumulative effect
of accounting change $0.15 $0.04 $0.13 $0.07
Cumulative effect of
accounting change - - - (3.30)
Earnings (loss) per share,
diluted $0.15 $0.04 $0.13 $(3.23)
Weighted average shares
outstanding, basic 7,175,105 7,175,105 7,175,105 7,175,105
Weighted average shares
outstanding, diluted 7,175,105 7,175,105 7,175,105 7,175,105
HOMETOWN AUTO RETAILERS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June 30, December 31,
ASSETS 2003 2002
(Unaudited)
Current Assets:
Cash and cash equivalents $4,928 $3,624
Accounts receivable, net 7,044 4,883
Inventories, net 37,978 39,169
Prepaid expenses and other current assets 555 510
Deferred income taxes and taxes receivable 1,229 1,245
Total current assets 51,734 49,431
Property and equipment, net 12,777 12,882
Other assets 1,092 1,503
Total assets $65,603 $63,816
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable $38,516 $38,522
Accounts payable and accrued expenses 6,376 5,072
Current maturities of long-term debt and
capital lease obligations 1,031 1,164
Deferred revenue 799 588
Total current liabilities 46,722 45,346
Long-term debt and capital lease obligations 12,546 13,059
Long-term deferred income taxes 97 118
Long-term deferred revenue 726 743
Total liabilities 60,091 59,266
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 shares authorized, 3,564,605
and 3,563,605 shares issued and outstanding 3 3
Common stock, Class B, $.001 par value,
3,760,000 shares authorized, 3,610,500 and
3,611,500 shares issued and outstanding 4 4
Additional paid-in capital 29,760 29,760
Accumulated deficit (24,255) (25,217)
Total stockholders' equity 5,512 4,550
Total liabilities and stockholders'
equity $65,603 $63,816