Hometown Auto Retailers Announces 2003 Annual Results
WATERTOWN, Conn.--March 25, 2004--Hometown Auto Retailers Inc. (OTC BB: HCAR) today announced its audited financial results for the year ended Dec. 31, 2003.Hometown reported revenues of $279.8 million in 2003 versus revenues of $269.7 million in 2002, an increase of 3.7 percent. Gross profit was $39.7 million for 2003 versus $38.7 million in 2002, an increase of 2.6 percent.
Hometown's net income for 2003 increased approximately $25.3 million to $2.4 million generating basic and diluted earnings per share of $0.33 versus a net loss of $(22.9) million and basic and diluted loss per share of $(3.20) for the same period in 2002.
Results for 2003 reflect a reduction in an income tax valuation allowance plus other tax adjustments, which had the effect of increasing net income by approximately $633,000 and generating basic and diluted earnings per share of $0.09. Results for 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 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 year ended Dec. 3, 20031, 2002.
Before the cumulative effect of the accounting change, Hometown reported net income of $776,000 and basic and diluted income per share of $0.10 for 2002.
"We are pleased with the results of 2003," said Corey Shaker, Hometown president and chief executive officer. "Revenue was up $10.1 million or 3.7 percent for the year. And of course profits were up as well. We finished 2003 with $2.0 million in pre-tax profit without the benefit of our sale of a Chrysler/Jeep store. This compares with a pre-tax profit of $1.2 million in 2002, before the goodwill write-off, meaning that we generated a 67 percent increase in pre-tax profits in 2003 versus 2002.
"Here at Hometown we go to work every day with a simple belief system. Simply stated: We believe in the never-ending quest to be brilliant in the basics. We believe that slow and steady is winning the race. We believe in working hard to make our balance sheet stronger each year. We believe we get our best results with the customers we already have. We believe in constantly thinking out of the box to improve traffic into our showrooms without compromising integrity. We believe these concepts comprise the everyday 'blocking and tackling' basics of car and truck sales and service. We believe this strategy will reward our shareholders in the long term."
Hometown sold 13,737 vehicles during 2003, 320 more than it sold in the same period in 2002. Total vehicles sold (by category) are shown in the table below.
For the Year Ended Dec. 31,
2003 2002
------------- -------------
New vehicle 6,910 6,432
Used vehicle - retail 3,683 4,128
Used vehicle - wholesale 3,144 2,857
------------- -------------
Total units sold 13,737 13,417
============= =============
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 13,643 vehicles during 2003, 536 more than it sold in the same period in 2002. Total vehicles sold (by category) on a same store basis are shown in the table below.
For the Year Ended Dec. 31
2003 2002
------------- -------------
New vehicle 6,816 6,122
Used vehicle - retail 3,683 4,128
Used vehicle - wholesale 3,144 2,857
------------- -------------
Total units sold 13,643 13,107
============= =============
Sales of new vehicles increased $15.9 million or 9.7 percent to $180.6 million for 2003 versus $164.7 million in 2002. On a same store basis, sales of new vehicles increased $21.5 million or 13.7 percent to $178.1 million for 2003 versus $156.6 million in 2002. Used vehicle sales decreased $6.0 million or 8.3 percent to $66.5 million for 2003 versus $72.5 million in 2002. Parts and service revenues for 2003 increased 1.2 percent or $291,000 to $24.6 million versus $24.3 million in 2002. On a same store basis, parts and service revenues for 2003 increased 3.5 percent or $812,000 to $24.2 million versus $23.4 million in 2002. Other revenues (net) decreased 3.3 percent or $270,000 to $8.0 million for 2003 versus $8.3 million for the same period in 2002. On a same store basis, other revenues (net) decreased 2.5 percent or $205,000 to $8.0 million for 2003 versus $8.2 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.
Hometown Auto Retailers Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
For the Years Ended Dec. 31,
--------------------------------
2003 2002 2001
---------- ---------- ----------
Revenues
New vehicle sales $180,615 $164,659 $158,825
Used vehicle sales 66,543 72,482 83,903
Parts and service sales 24,621 24,330 25,402
Other, net 7,998 8,268 7,630
---------- ---------- ----------
Total revenues 279,777 269,739 275,760
---------- ---------- ----------
Cost of sales
New vehicle 168,579 154,225 148,271
Used vehicle 60,152 65,821 76,189
Parts and service 11,299 11,026 11,485
---------- ---------- ----------
Total cost of sales 240,030 231,072 235,945
---------- ---------- ----------
Gross profit 39,747 38,667 39,815
Amortization of goodwill - - 704
Selling, general and administrative
expenses 34,840 34,152 35,114
---------- ---------- ----------
Income from operations 4,907 4,515 3,997
---------- ---------- ----------
Interest income 82 43 90
Interest (expense) (3,037) (3,205) (4,225)
Other income 956 52 254
Other (expense) (3) (158) (8)
Valuation adjustment for CarDay.com - - (3,258)
---------- ---------- ----------
Income (loss) before taxes and
cumulative effect of accounting
change 2,905 1,247 (3,150)
Provision (benefit) for income
taxes 527 471 (1,014)
---------- ---------- ----------
Income (loss) before cumulative
effect of accounting change 2,378 776 (2,136)
Cumulative effect of accounting
change - (23,708) -
---------- ---------- ----------
Net income (loss) $2,378 $(22,932) $(2,136)
======= ======== =======
Earnings (loss) per share, basic
Before cumulative effect of
accounting change $0.33 $0.10 $(0.32)
Cumulative effect of accounting
change - (3.30) -
---------- ---------- ----------
Earnings (loss) per share, basic $0.33 $(3.20) $(0.32)
======= ======= =======
Earnings (loss) per share, diluted
Before cumulative effect of
accounting change $0.33 $0.10 $(0.32)
Cumulative effect of accounting
change - (3.30) -
---------- ---------- ----------
Earnings (loss) per share, diluted $0.33 $(3.20) $(0.32)
======= ======= =======
Weighted average shares outstanding,
basic 7,175,105 7,175,105 6,592,436
Weighted average shares outstanding,
diluted 7,215,492 7,175,105 6,592,436
Hometown Auto Retailers Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
Dec. 31,
----------------
Assets 2003 2002
Current Assets: ----------------
Cash and cash equivalents $5,639 $3,624
Accounts receivable, net 6,058 4,883
Inventories, net 37,774 39,169
Prepaid expenses and other current assets 625 510
Deferred income taxes and taxes receivable 1,349 1,245
----------------
Total current assets 51,445 49,431
Property and equipment, net 12,678 12,882
Other assets 1,141 1,503
----------------
Total assets $65,264 $63,816
======= =======
Liabilities and Stockholders' Equity
Current Liabilities:
Floor plan notes payable $38,003 $38,522
Accounts payable and accrued expenses 5,798 5,072
Current maturities of long-term debt and capital
lease obligations 996 1,164
Deferred revenue 609 588
----------------
Total current liabilities 45,406 45,346
Long-term debt and capital lease obligations 12,076 13,059
Long-term deferred income taxes 125 118
Other long-term liabilities and deferred revenue 729 743
----------------
Total liabilities 58,336 59,266
Commitments and Contingencies
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, 3,655,853 and
3,563,605 issued and outstanding, respectively 4 3
Common stock, Class B, $.001 par value,
3,760,000 shares authorized, 3,519,252 and
3,611,500 issued and outstanding, respectively 3 4
Additional paid-in capital 29,760 29,760
Accumulated deficit (22,839)(25,217)
----------------
Total stockholders' equity 6,928 4,550
----------------
Total liabilities and stockholders' equity $65,264 $63,816
======= =======