Hometown Auto Retailers Announces Third Quarter 2003 Results
WATERTOWN, Conn.--Nov. 1, 20033, 2003--Hometown Auto Retailers Inc. (OTCBB: HCAR) today announced its financial results for the quarter and nine-month period ended Sept. 30, 2003.Hometown reported revenues of $78.2 million in the third quarter of 2003 versus revenues of $74.3 million for the same period in 2002, an increase of $3.9 million or 5.2 percent. For the first nine months of 2003, Hometown reported revenues of $216.6 million versus revenues of $212.4 million, an increase of approximately $4.2 million or 2.0 percent.
Hometown's gross profit for the third quarter of 2003 increased approximately $373,000 or 3.6 percent to $10.8 million versus gross profit of $10.5 million in the same period in 2002. Gross profit for the first nine months of the year increased approximately $324,000 or 1.1 percent to $30.5 million versus gross profit of $30.2 million in same period in 2002.
Hometown's net income for the third quarter of 2003 increased approximately $274,000 to $832,000 generating basic and diluted earnings per share of $0.12 versus net income of $558,000 and basic and diluted earnings per share of $0.07 for the same period in 2002.
Net income for the first nine months of 2003 increased $24.4 million to $1.8 million generating basic and diluted earnings per share of $0.25 versus a net loss of $(22.6) million and a basic and diluted loss per share of $(3.15) for the same period in 2002.
Results for the third quarter and first nine months of 2003 reflect a reduction in an income tax valuation allowance which had the effect of increasing net income by approximately $196,000 and generating basic and diluted earnings per share of $0.03. Results for the first nine months of 2003 also reflect 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 Jan. 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 was non-operational in nature and is reflected as a cumulative effect of the accounting change in the accompanying statement of operations for the nine months ended Sept. 30, 2002.
Before the cumulative effect of the accounting change, Hometown reported net income of $1.1 million and basic and diluted income per share of $0.15 for the first nine months of 2002.
"As I stated in our last press release, we feel we have the right management team in place, and we are continuing to capitalize on this," said Corey Shaker, Hometown president and chief executive officer. "It's hard to express a feeling in a press release, but when I walk into our stores, the aura is clear that all the managers are pulling for Hometown and I am very proud to be associated with them. There are still opportunities to build parts and service revenues and increase used car and F&I margins even more, and we will continue to focus on these higher margin areas of our business."
Hometown sold 3,873 vehicles during the third quarter of 2003, 213 more than it sold in the same period in 2002. Hometown sold 10,655 vehicles during the nine months ended Sept. 30, 2003, 116 more 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 ended nine months ended
Sept. 30, Sept. 30,
2003 2002 2003 2002
------------------- ------------------
New vehicle 1,990 1,841 5,456 5,097
Used vehicle - retail 947 1,038 2,883 3,237
Used vehicle - wholesale 936 781 2,316 2,205
------------------- ------------------
Total units sold 3,873 3,660 10,655 10,539
=================== ==================
Hometown sold a Chrysler/Jeep new car franchise on June 3, 2003. On a same store basis (excluding the Chrysler/Jeep new car franchise for all periods) Hometown sold 3,873 vehicles during the third quarter of 2003, 301 more than it sold in the same period in 2002. Hometown sold 10,562 vehicles during the nine months ended Sept. 30, 2003, 263 more than it sold on a same store basis in the same period in 2002. Total vehicles sold (by category) on a same store basis are shown in the table below.
For the For the
three months ended nine months ended
Sept. 30, Sept. 30,
2003 2002 2003 2002
------------------- ------------------
New vehicle 1,990 1,753 5,363 4,857
Used vehicle - retail 947 1,038 2,883 3,237
Used vehicle - wholesale 936 781 2,316 2,205
------------------ ------------------
Total units sold (same store
basis) 3,873 3,572 10,562 10,299
================== ==================
Sales of new vehicles increased $5.2 million or 10.9 percent to $52.8 million for the third quarter of 2003 versus $47.6 million in the same period in 2002. On a same store basis, sales of new vehicles increased $7.4 million or 16.3 percent to $52.8 million for the third quarter of 2003 versus $45.4 million in the same period in 2002. Used vehicle sales decreased $1.1 million or 6.1 percent to $16.9 million for the third quarter of 2003 versus $18.0 million in the same period in 2002. Parts and service revenues for the third quarter of 2003 decreased 2.1 percent or $134,000 to $6.2 million versus $6.4 million for the same period in 2002. As a result of the previously mentioned sale of a Chrysler/Jeep new car franchise, parts and service business of that franchise was closed. On a same store basis, parts and service revenue increased $111,000 or 1.8 percent to $6.2 million for the third quarter of 2003 versus $6.1 million in the same period in 2002. Other revenues (net) decreased $72,000 or 3.0 percent to $2.3 million for the third quarter of 2003 versus $2.4 million in the same period in 2002.
Sales of new vehicles increased $10.5 million or 8.1 percent to $139.7 million for the first nine months of 2003 versus $129.2 million in the same period in 2002. On a same store basis, sales of new vehicles increased $14.2 million or 11.5 percent to $137.2 million for the first nine months of 2003 versus $123.0 million in the same period in 2002. Used vehicle sales decreased $6.1 million or 10.5 percent to $52.0 million for the first nine months of 2003 versus $58.1 million in the same period in 2002. Parts and service revenues for the first nine months of 2003 increased 1.5 percent or $271,000 to $18.7 million versus $18.4 million the same period in 2002. On a same store basis, parts and service revenues for the first nine months of 2003 increased 3.1 percent or $557,000 to $18.2 million versus $17.7 million the same period in 2002. Other revenues (net) decreased 8.1 percent or $552,000 to $6.3 million for the first nine months of 2003 versus $6.8 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 Nine Months
Ended Sept. 30, Ended Sept. 30,
-------------------- ---------------------------
2003 2002 2003 2002
-------------------- ---------------------------
Revenues
New vehicle sales $52,786 $47,597 $139,668 $129,172
Used vehicle sales 16,888 18,039 52,021 58,076
Parts and service
sales 6,220 6,354 18,655 18,384
Other, net 2,286 2,358 6,259 6,811
-------------------- ---------------------
Total revenues 78,180 74,348 216,603 212,443
Cost of sales
New vehicle 49,272 44,740 130,640 121,295
Used vehicle 15,243 16,285 47,006 52,716
Parts and service 2,830 2,861 8,463 8,262
-------------------- ---------------------
Total cost of
sales 67,345 63,886 186,109 182,273
-------------------- ---------------------
Gross profit 10,835 10,462 30,494 30,170
Selling, general and
administrative
expenses 9,094 8,794 26,509 26,030
-------------------- ---------------------
Income from
operations 1,741 1,668 3,985 4,140
Interest income 22 12 36 33
Interest (expense) (715) (812) (2,292) (2,412)
Other income 5 11 956 35
Other (expense) - - (3) (3)
-------------------- ---------------------
Income before
taxes and
cumulative
effect of
accounting
change 1,053 879 2,682 1,793
Provision for
income taxes 221 321 888 691
-------------------- ---------------------
Income before
cumulative
effect of
accounting
change 832 558 1,794 1,102
Cumulative
effect of
accounting
change - - - (23,708)
-------------------- ---------------------
Net income (loss) $832 $558 $1,794 $(22,606)
==================== =====================
Earnings (loss) per
share, basic
Before cumulative
effect of
accounting
change $0.12 $0.07 $0.25 $0.15
Cumulative effect
of accounting
change - - - (3.30)
-------------------- ---------------------
Earnings (loss) per
share, basic $0.12 $0.07 $0.25 $(3.15)
==================== =====================
Earnings (loss) per
share, diluted
Before cumulative
effect of
accounting
change $0.12 $0.07 $0.25 $0.15
Cumulative effect
of accounting
change - - - (3.30)
-------------------- ---------------------
Earnings (loss) per
share, diluted $0.12 $0.07 $0.25 $(3.15)
==================== =====================
Weighted average
shares outstanding,
basic 7,175,105 7,175,105 7,175,105 7,175,105
Weighted average
shares outstanding,
diluted 7,212,067 7,175,105 7,187,426 7,175,105
HOMETOWN AUTO RETAILERS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
Sept. 30, Dec. 31,
ASSETS 2003 2002
(Unaudited)
-------------------
Current Assets:
Cash and cash equivalents $5,741 $3,624
Accounts receivable, net 7,026 4,883
Inventories, net 34,181 39,169
Prepaid expenses and other current assets 557 510
Deferred income taxes and taxes receivable 1,061 1,245
------------------
Total current assets 48,566 49,431
Property and equipment, net 12,689 12,882
Other assets 1,075 1,503
-------------------
Total assets $62,330 $63,816
===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable $34,265 $38,522
Accounts payable and accrued expenses 6,812 5,072
Current maturities of long-term debt and capital
lease obligations 998 1,164
Deferred revenue 697 588
------------------
Total current liabilities 42,772 45,346
Long-term debt and capital lease obligations 12,370 13,059
Long-term deferred income taxes 90 118
Long-term deferred revenue 754 743
------------------
Total liabilities 55,986 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, 3,597,105 and
3,563,605 shares issued and outstanding 4 3
Common stock, Class B, $.001 par value,
3,760,000 shares authorized, 3,578,000 and
3,611,500 shares issued and outstanding 3 4
Additional paid-in capital 29,760 29,760
Accumulated deficit (23,423)(25,217)
------------------
Total stockholders' equity 6,344 4,550
-------------------
Total liabilities and stockholders' equity $62,330 $63,816
===================