Earl Scheib Announces Improved Results
SHERMAN OAKS, Calif.--July 16, 2004--Earl Scheib, Inc. (AMEX:ESH) reported its results for the fourth quarter and fiscal year ended April 30, 2004.Sales for the fourth quarter of fiscal 2004 were $12,724,000, an increase of 5% over the comparable quarter of fiscal 2003, despite the Company operating 11 fewer retail paint and body shops since April 30, 2003. During the fourth quarter of fiscal 2004, which had two more sales days than fiscal 2003, same-shop retail paint sales increased by 13%. For the year ended April 30, 2004, sales were $47,839,000, an increase of 1.3% from the prior year.
The operating losses for the fourth quarter of fiscal 2004 and 2003 were $143,000 and $627,000, respectively, an improvement of over 75%. The improved operating results in the fourth quarter were primarily attributable to increased same-shop sales and to an overall reduction in operating expenses; however $316,000 of exit and disposal costs, including an asset impairment write-down, offset this improvement. In the fourth quarter of fiscal 2003, similar costs totaled $204,000. The operating loss for the year ended April 30, 2004 of $1,862,000 represented an improvement of over $1,500,000 from the prior year operating loss of $3,451,000. This improvement was in spite of exit and disposal costs and asset impairment write-down totaling $410,000 more than the prior fiscal year.
During the fourth quarter of fiscal 2004, the Company settled its dispute with the Internal Revenue Service regarding the disallowance, and related interest thereon, of a net operating loss carryback refund received by the Company in fiscal 1997. The settlement resulted in the reversal of $1,272,000 of previously accrued interest expense.
During the third quarter of fiscal 2003, before the IRS settlement discussed above, the Company recorded a reversal of $425,000 of previously accrued interest expense over that required in February 2003. In addition, during the third quarter of fiscal 2003, the Company recorded interest income of $164,000 on refunds of Federal income taxes paid in fiscal years 1999 and 1998.
During the first nine months of fiscal 2003, the Company sold four parcels of real estate for a pretax net gain of $1,479,000. There were no sales of real estate in fiscal 2004.
Overall, net income for the fourth quarter of fiscal 2004 was $921,000, or $0.21 per diluted share, compared to a net loss of $746,000, or $0.17 per diluted share, for the fourth quarter of fiscal 2003. For the year ended April 30, 2004 and 2003, the net loss was $1,336,000 and $1,929,000, or $0.31 and $0.44 per diluted share, respectively. The Company did not recognize any Federal or state income tax benefit for the pretax losses in the fiscal years presented.
Chris Bement, Chief Executive Officer and President, stated that, "The positive business trends in the first nine months of fiscal 2004 accelerated into the fourth quarter. Same-shop, same-day retail paint sales increased each month in the fourth quarter, making it 13 consecutive months of such increases; and year-to-date sales increased in total over fiscal 2003, despite the Company operating fewer shops. In addition, the overall operating efficiency of the Company has improved from last year and we also once again showed a small profit in our commercial coatings business. However, we remain disappointed that we have not been able to achieve profitability in our fleet and truck center.
"The process, including due diligence and the execution of a definitive agreement, of the proposed acquisition of the Company by Elden Holding Group, LLC continues and we will report its status to you within the next 30 days."
Earl Scheib, Inc., founded in 1937, is a nationwide operator of 113 auto paint and body shops located in approximately 100 cities throughout the United States. In addition, through a wholly-owned subsidiary, Earl Scheib, Inc. manufactures paint coating systems that are used not only by its paint and body shops, but are also sold to original equipment manufacturers. For more information, visit Earl Scheib on the web at www.earlscheib.com.
EARL SCHEIB, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For The Quarter For The Year
Ended April 30, Ended April 30,
2004 2003 2004 2003
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Net Sales $12,724,000 $12,120,000 $47,839,000 $47,235,000
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Operating Loss (143,000) (627,000) (1,862,000) (3,451,000)
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Gain on Sales of Real
Property -- -- -- 1,479,000
Interest Income
(Expense), net 1,096,000 (76,000) 610,000 148,000
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Income (Loss) Before
Tax 953,000 (703,000) (1,252,000) (1,824,000)
Tax Provision 32,000 43,000 84,000 105,000
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Net Income (Loss) $921,000 $(746,000)$(1,336,000)$(1,929,000)
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Basic Income (Loss)
Per Share $ 0.21 $ (0.17) $ (0.31) $ (0.44)
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Diluted Income (Loss)
Per Share $ 0.21 $ (0.17) $ (0.31) $ (0.44)
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Weighted Average
Shares
Outstanding -
Basic 4,380,000 4,380,000 4,380,000 4,375,000
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Weighted Average
Shares
Outstanding -
Diluted 4,391,000 4,380,000 4,380,000 4,375,000
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