Earl Scheib Announces Significantly Improved Operating Results in Second Quarter Fiscal 2005
SHERMAN OAKS, Calif.--Dec. 1, 20043, 2004--Earl Scheib, Inc. reported its results for the second quarter and six months ended October 31, 2004 of the fiscal year ending April 30, 2005.Net sales for the second quarter of fiscal 2005 were $12,448,000, a decrease of 3.2% from the second quarter of fiscal 2004 net sales of $12,860,000. The decrease was due primarily to the Company operating eight fewer retail paint and body shops at October 31, 2004 versus October 31, 2003; and the fact that there was one less day in the second quarter of fiscal 2005 versus fiscal 2004. On a same-day basis, same-shop (shops still open one year or more) sales increased slightly; and the combined sales in the fleet and truck center and commercial coatings operations increased by $163,000 in the second quarter of fiscal 2005 from the second quarter of fiscal 2004.
Net sales for the six months ended October 31, 2004 were $25,139,000, as compared to $26,114,000 for the six months ended October 31, 2003, a decrease of 3.7%. With two less days from the prior fiscal year, same-shop retail paint sales decreased slightly in the first half of fiscal 2005 versus 2004. However, on a same-day basis, same-shop sales increased by 1.1%; and the combined sales in the fleet and truck center and commercial coatings operations increased by $200,000 in the first six months of fiscal 2005 from the first six months of fiscal 2004.
Operating income for the second quarter of fiscal 2005 was $231,000, an improvement of $513,000 over the second quarter of fiscal 2004 loss of $282,000. The better operating results in the second quarter of the current fiscal year were primarily due to greater efficiency in the retail paint and body shops and overall reduced costs (primarily insurance), which resulted in an increased gross profit margin; and an over $100,000 improvement in the combined results of the fleet and truck center and commercial coatings operations.
Operating income for the six months ended October 31, 2004 of $1,003,000 compares very favorably and represents a significant turnaround from the $8,000 operating loss in the six months ended October 31, 2003. The turnaround in fiscal 2005 from fiscal 2004 was primarily due to the increased gross profit margin (primarily as a result of reduced insurance costs) and the improved results of the combined fleet and truck center and commercial coatings operations.
Net interest expense increased by $72,000 in the first six months of fiscal 2005 from fiscal 2004 due primarily to financing costs of the Company's secured $10,000,000 credit facility, which was established in August 2003.
Overall, net income for the second quarter of fiscal 2005 was $21,000, or just under $0.01 per diluted share; compared to a net loss of $424,000, or $0.10 per diluted share, for the second quarter of fiscal 2004. For the six months ended October 31, 2004, net income was $615,000, or $0.14 per diluted share; compared to a net loss of $306,000, or $0.07 per diluted share, for the six months ended October 31, 2003.
Chris Bement, Chief Executive Officer and President, stated that, "The positive business trends developed last fiscal year continued in the first half of our current fiscal year, including increases in same-shop, same-day sales in our retail shops. Including the second quarter results, the Company has attained such sales increases in 19 out of the past 20 months. Furthermore, we continued to improve operating efficiency and, for the first time, showed a small profit in our combined fleet and truck center and commercial coatings businesses.
"While we have improved our financial results and position in the past year and a half, we are burdened with increasing costs inherent to not only us, but public companies in general. The Company will continue to evaluate strategic alternatives in light of these factors, but we believe we're up to the challenge and look forward to reporting the results of our efforts in the future."
Earl Scheib, Inc., founded in 1937, is a nationwide operator of 108 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
(Unaudited)
For The Quarter For The Six Months
Ended October 31, Ended October 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net Sales $12,448,000 $12,860,000 $25,139,000 $26,114,000
------------ ------------ ------------ ------------
Operating Income
(Loss) 231,000 (282,000) 1,003,000 (8,000)
------------ ------------ ------------ ------------
Gain on Sales of
Real Property -- -- 15,000 --
Interest Expense,
net (185,000) (198,000) (353,000) (281,000)
------------ ------------ ------------ ------------
Income (Loss)
Before Tax 46,000 (480,000) 665,000 (289,000)
Tax Provision
(Benefit) 25,000 (56,000) 50,000 17,000
------------ ------------ ------------ ------------
Net Income (Loss) $21,000 $(424,000) $615,000 $(306,000)
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Basic Earnings
(Loss)
Per Share $-- $(0.10) $0.14 $(0.07)
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Diluted Earnings
(Loss)
Per Share $-- $(0.10) $0.14 $(0.07)
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Weighted Average
Shares
Outstanding -
Basic 4,380,000 4,380,000 4,380,000 4,380,000
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Weighted Average
Shares
Outstanding -
Diluted 4,402,000 4,380,000 4,402,000 4,380,000
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