Coach Industries Group - CIGI - Reports Second Quarter 2006 Financial Results
COOPER CITY, Fla.--Aug. 15, 2006--Coach Industries Group, Inc. (OTCBB:CIGI):-- First Quarter Revenues Increase 32% to $85 Million
-- Guidance of $75 to $78 million in revenue for the Second Quarter of 2006 Exceeded by 10%
-- Six Month Revenue Increase of 35% to $160 Million
-- Independent Contractor Base of Clients grows from 5800 to over 7800
Coach Industries Group, Inc. ("Coach") (OTCBB:CIGI), which offers an array of financial services to commercial fleet operators, including vehicle financing and specialty insurance products, today reported financial results for the second quarter ended June 30, 2006.
Revenues for the second quarter of 2006 reached $85 million versus $63 million for the same period in 2005, an increase of 32%. Net loss for the quarter ended June 30, 2006 was $(1.2 million) or $(0.04) per share fully diluted compared to $225,000 net income or $0.01 per share basic and $0.02 per share fully diluted for the same period of 2005. Earnings (loss) before interest, taxes, depreciation and amortization EBITDA for the three months ended June 30, 2006 and 2005 was $(859,000) and $611,000.
Revenues for the six months ended June 30, 2006 reached $160 million versus $121 million for the same period in 2005, an increase of 35%. Net loss for the six months ended June 30, 2006 was $(1.6 million) or $(0.05) per share fully diluted compared to $(52,000) or $(0.00) per share fully diluted for the same period of 2005. EBITDA for the six months ended June 30, 2006 and 2005 was $(872,000) and $699,000.
Operations at Corporate Development Services continue to lead increases in the number of Independent Contractors supported from 5,800 drivers at June 30, 2005 to over 7,800 drivers at June 30, 2006, resulting in Net Income for the segment of $293,000 and $552,000 for the three and six months ended June 30, 2006 compared to $168,000 and $336,000 for the same periods of 2005. "We are thrilled with the growth in our driver base and the opportunity to support that driver base with our risk sharing agreement that we entered into with Dallas National Insurance and HighPoint effective May 1, 2006 to support our drivers through providing them accident and occupational insurance. As of August 2006, our driver base has increased to 8,300 drivers increasing our market share," stated CDS President Robert Lefebvre.
The manufacturing segment reported a Net Loss of $(38,000) and $(102,000) for the three and six months ended June 30, 2006 compared to net income of $377,000 and $574,000 for the same periods in 2005. The Manufacturing segment reported a Net Loss of $1.2 million for the full year, ending December 31, 2005. The second quarter is typically the strongest quarter for limousine sales. "The manufacturing segment is poised for profitability. Today the plant has 22 deposits with an average deposit of approximately 10% of the purchase price compared to 10 at June 30, 2006. The marketplace has embraced the Springfield brand as reliable and dependable stretch limousines. During the second half of 2005 and early 2006, the facility spent a lot of time and strengthened the quality of our product and we are seeing those results today. Our warranty charges have reduced by seventy percent of what they were prior year; the marketplace has renewed confidence in the brand. We have stepped up our marketing efforts and focused on direct sales channels as well. We have also reduced overhead per vehicle for the three month period from $9,000 in 2005 to $4,700 in 2006," stated Chief Operating Officer, Mark Khandjian.
The financial services segment reported a net loss of $76,000 and $137,000 for the three and six months ended June 30, 2006 compared to net income of $26,000 and $68,000 for the same periods in 2005. Overhead costs associated with the Daily Rental business for 2006 were $73,000 and $166,000 for the three and six months ended June 30, 2006. Effective June 1st, those expenses were eliminated. Lease production for the three and six months ended June 30, 2006 were $1.9 million and $2.5 compared to $.5 million and $3.0 million for the same periods in 2005. The financial services segment is directly impacted by operations of the manufacturing and independent contractor segments.
Operating expenses at the parent increased for the three and six months ended June 30, 2006 $1.4 million and $1.9 million compared to $186,000 and $1.0 million for the same periods in 2005. Expenses for the three months ended June 30, 2006 increased by $133,000 for legal expenses, $180,000 for investor relations expenses and $108,000 for amortization of consulting expenses. The net change in the warrant liability valuation resulted in an expense of $45,000 for the three months ended June 30. In addition, the Company recorded an expense associated with the registration of the Company's stock and warrants of $80,000. Similar increases were recorded for the six month period in 2006.
"Over the course of 2005 Coach established itself as the premier financial service provider for the commercial fleet industry," stated Steven H. Rothman, Chairman and Interim Chief Executive Officer of Coach. "Our financial services business units have been the primary focus of our business model and we intend to continue to build our lease and insurance portfolios as we simplify the lives of our Commercial Fleet Operators. All segments are beginning to demonstrate the consistent performance necessary to demonstrate overall profitability."
"The Coach Executive Management team will continue to take costs out of operations and increase utilization of its personnel in all areas of the organization. We are reorganizing the Company in an attempt to lower our consulting, legal and other expenses that have prevented the Company from showing an EBITDA profit," added Susan Weisman, Chief Financial Officer.
About Coach Industries Group, Inc.
Coach Industries Group, Inc. (OTCBB:CIGI) ("Coach") is a holding company focused on providing financial services to Commercial Fleet Operators.
Safe Harbor Statement
The statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include Coach Industries Group, Inc. entry into new commercial businesses, the risk of obtaining financing, recruiting and retaining qualified personnel, and other risks described in Coach Industries Group, Inc.'s Securities and Exchange Commission filings. The forward looking statements in this press release speak only as of the date hereof and disclaims any Coach Industries Group, Inc.'s obligation to provide updates, revisions or amendments to any forward looking statement to reflect changes in Coach Industries Group, Inc.'s expectations or future events.
COACH INDUSTRIES GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31,
2006 2005
(Unaudited)
-------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,549,671 $ 3,046,069
Restricted cash 247,265 247,196
Collateral account - accident and
occupational insurance program 219,958 -
Accounts receivable, net 3,100,307 1,582,335
Supply inventory 1,240,025 1,363,694
Lease receivable - current 1,503,029 1,559,635
Due from affiliates 245,215 -
Accounts receivable - other 172,681 190,681
Prepaid expenses and other current assets 683,793 445,915
------------ ------------
Total current assets 8,961,944 8,435,525
------------ ------------
PROPERTY AND EQUIPMENT, net 2,093,935 2,231,347
INTANGIBLE - CUSTOMER LIST, net 2,230,000 2,290,000
LEASE RECEIVABLES, net 4,903,546 3,443,793
DEFERRED LOAN COSTS, net 384,937 379,313
GOODWILL 6,290,959 6,304,182
------------ ------------
$ 24,865,321 $ 23,084,160
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,623,787 $ 1,215,170
Advance payment contract settlement 2,657,374 1,868,000
Insurance loss reserve 405,173
Accrued interest payable 118,155 109,854
Warrant liability 235,507 574,998
Related party payable 25,100 376,246
Current portion lease finance obligation 1,415,881 1,354,167
Current portion of long-term debt 1,799,266 1,465,119
Warranty reserve 120,694 116,392
Customer deposits 44,000 41,000
Accrued wages 108,986 61,019
Note payable - related parties 425,000 650,000
Lines of credit 950,659 894,418
------------ ------------
Total current liabilities 10,929,582 8,726,383
------------ ------------
OTHER LIABILITIES:
Convertible notes payable - long term 5,037,943 5,534,881
Lease financing obligation 4,444,832 3,075,971
Minority interest (76,769) -
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock $0.001 par value; 50,000,000
shares authorized; 29,133,375 and
29,038,214 shares issued and outstanding,
respectively 29,134 29,038
Additional paid-in capital 20,002,966 19,915,720
Restricted stock - unearned compensation (735,431) (938,680)
Accumulated deficit (14,766,936) (13,259,153)
------------ ------------
Total shareholders' equity 4,529,733 5,746,925
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 24,865,321 $ 23,084,160
============ ============
COACH INDUSTRIES GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three Months For the Six Months
Ended Ended
June 30, (Unaudited) June 30, (Unaudited)
----------------------- -------------------------
2006 2005 2006 2005
----------- ----------- ------------ ------------
REVENUES $84,838,101 $62,749,676 $159,915,666 $120,828,511
COST OF GOODS SOLD 83,362,154 61,516,521 157,161,318 117,779,284
----------- ----------- ------------ ------------
GROSS PROFIT 1,475,947 1,233,155 2,754,348 3,049,227
----------- ----------- ------------ ------------
OPERATING EXPENSES:
General and
Administrative 1,773,467 620,588 3,333,037 2,121,256
Research and
development - 106,050 - 106,050
Warrant liability
mark to market 45,549 - (339,491) -
Registration Rights
Expense 80,000 - 80,000 -
Provision (recovery)
for lease losses
and uncollectible
accounts receivable 82,340 (14,169) 69,854 16,899
Amortization of
deferred
compensation 166,585 58,963 246,288 116,413
Sales and marketing 236,779 316,139 402,616 505,200
Rent 77,849 81,965 165,257 154,195
Gain on settlement
related to the
relocation of CTMC
facility - (434,000) - (434,000)
Interest Expense
Associate
with convertible
Note Conversion - 188,000 - 188,000
Interest expense 230,196 83,966 485,839 327,866
----------- ----------- ------------ ------------
Total operating
expenses 2,692,765 1,007,502 4,443,400 3,101,879
----------- ----------- ------------ ------------
Income (loss) before
provision for
income taxes and
minority interest (1,216,818) 225,653 (1,689,052) (52,652)
----------- ----------- ------------ ------------
Minority interest
portion of joint
venture loss (14,086) - (101,269) -
----------- ----------- ------------ ------------
Income (loss) before
income taxes (1,202,732) 225,653 (1,587,783) (52,652)
----------- ----------- ------------ ------------
Income taxes - - - -
----------- ----------- ------------ ------------
NET INCOME (LOSS) $(1,202,732) $ 225,653 $(1,587,783) $ (52,652)
=========== =========== ============ ============
Basic net
Earnings(loss) per
share :
Net loss per share $ (0.04) $ 0.01 $ (0.05) $ (0.00)
=========== =========== ============ ============
Fully diluted net
earnings (loss) per
shares $ (0.04) $ 0.02 $ (0.05) $ (0.00)
=========== =========== ============ ============
Basic weighted
average common
shares outstanding 29,133,000 17,555,354 29,038,000 17, 990,589
=========== =========== ============ ============
Fully diluted
weighted average
shares of common
shares outstanding 29,133,000 22,791,093 29,038,000 17,990,589
=========== =========== ============ ============