Earl Scheib Announces Seventh Consecutive Quarter of Improved Operating Results for Third Quarter Fiscal 2005
SHERMAN OAKS, Calif.--March 14, 2005--Earl Scheib, Inc. (AMEX:ESH) reported its results for the third quarter and nine months ended January 31, 2005 of the fiscal year ending April 30, 2005. Historically, the third quarter has been the most difficult quarter of the Company's industry because of adverse winter weather and the holiday season.Net sales for the third quarter of fiscal 2005 were $9,732,000, an increase of 8.1% from the third quarter of fiscal 2004 net sales of $9,001,000 despite the Company operating six fewer retail paint and body shops at January 31, 2005 versus January 31, 2004. The Company did have one more sales day in the third quarter of fiscal 2005 versus fiscal 2004. However, the primary reason for the sales increase is because on a same-day basis, same-shop sales increased 7.9%; and the combined sales in the fleet and truck center and commercial coatings operations increased by $199,000 in the third quarter of fiscal 2005 from the third quarter of fiscal 2004.
Net sales for the nine months ended January 31, 2005 were $34,871,000, as compared to $35,115,000 for the nine months ended January 31, 2004, a decrease of less than one percent with one less sales day and a weighted-average eight fewer shops from the prior fiscal year. However, on a same-day basis, same-shop sales increased by 2.6%; and the combined sales in the fleet and truck center and commercial coatings operations increased by $399,000 in the first nine months of fiscal 2005 from the first nine months of fiscal 2004.
The operating loss for the third quarter of fiscal 2005 was $1,092,000, a significant improvement of $619,000, or 36.2%, over the third quarter of fiscal 2004 loss of $1,711,000. The better operating results in the third quarter of the current fiscal year were primarily due to the same-shop sales increase, greater efficiency in the retail paint and body shops, which resulted in an improved gross margin; and a $100,000 improvement in the combined results of the fleet and truck center and commercial coatings operations.
The operating loss for the nine months ended January 31, 2005 of $89,000 compares very favorably and represents a significant turnaround from the $1,719,000 operating loss in the nine months ended January 31, 2004. The turnaround in the first nine months of fiscal 2005 from fiscal 2004 was primarily due to the increased same-shop, same-day sales, greater efficiency in the retail paint and body shops (primarily as a result of reduced insurance costs), which resulted in an improved gross margin; and an over $200,000 improvement in the combined results of the fleet and truck center and commercial coatings operations.
Overall, the net loss for the third quarter of fiscal 2005 was $1,303,000, or $0.30 per diluted share; compared to a net loss of $1,951,000, or $0.45 per diluted share, for the third quarter of fiscal 2004. For the nine months ended January 31, 2005, the net loss was $688,000, or $0.16 per diluted share; compared to a net loss of $2,257,000, or $0.52 per diluted share, for the nine months ended January 31, 2004.
Chris Bement, Chief Executive Officer and President, stated that, "We are pleased to be consistently improving in our comparable-period operating results; and that the positive business trends developed last fiscal year, specifically increases in same-shop, same-day sales in our retail shops, continue into the current fiscal year. We attained such sales increases in 20 out of the past 22 months and for seven straight quarters. Furthermore, we continue to improve operating efficiency and currently have a small profit in our combined fleet and truck center and commercial coatings businesses.
This past fiscal quarter we commenced the process to implement an integrated computerized business system and terminated our retention of Ryan Beck & Co., investment bankers, as our exclusive financial advisor. These actions strongly signal that we are dedicated to operating and enhancing our business and are no longer soliciting any opportunities to sell the Company or to enter into a business combination with another company.
While we have improved our financial results and position over the past two fiscal years, we are burdened with increasing costs inherent to not only us, but public companies in general. We believe these costs, particularly in light of the Sarbanes-Oxley Act of 2002, will only continue to increase. In addition, the Company lacks an active trading market for its capital stock and does not expect to access public capital markets in the foreseeable future. As a result of these and other factors previously communicated, the Board of Directors believes that delisting the Company's securities from the American Stock Exchange and deregistering with the SEC will save significant administrative costs, permit management to focus more completely on operational matters and enable the redeployment of those resources to create value for the stockholders. In February, the Company submitted its intent to withdraw from listing with the American Stock Exchange and filed an application for voluntary delisting with the SEC. The process should ultimately result in the filing of a Form 15 with the SEC; whereby the Company's obligation to file current and periodic reports, such as Forms 10-K, 10-Q and 8-K, will cease immediately. However, we do intend to continue to, among other things, report quarterly and annual financial results in news releases, engage an independent accounting firm to perform an annual audit of our financial statements and maintain many of the corporate governance improvements we have made in recent years.
On a personal note, I regret to inform you that Al Buch, a member of the Board of Directors, recently passed away. We will miss Al and his contributions to the Company."
Earl Scheib, Inc., founded in 1937, is a nationwide operator of 107 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 Nine Months
Ended January 31, Ended January 31,
---------------- ----------------
2005 2004 2005 2004
---- ---- ---- ----
Net Sales $9,732,000 $9,001,000 $34,871,000 $35,115,000
Operating Loss (1,092,000) (1,711,000) (89,000) (1,719,000)
Gain on Sales of
Real Property -- -- 15,000 --
Interest
Expense, net (191,000) (205,000) (544,000) (486,000)
Loss Before Tax (1,283,000) (1,916,000) (618,000) (2,205,000)
Tax Provision 20,000 35,000 70,000 52,000
Net Loss $(1,303,000)$(1,951,000) $(688,000) $(2,257,000)
Basic Loss Per Share $(0.30) $(0.45) $(0.16) $(0.52)
Diluted Loss Per Share $(0.30) $(0.45) $(0.16) $(0.52)
Weighted Average
Shares Outstanding
- Basic 4,388,000 4,380,000 4,382,000 4,380,000
Weighted Average
Shares Outstanding
- Diluted 4,388,000 4,380,000 4,382,000 4,380,000