Coach Industries Group – CIGI - Reports Third Quarter 2006 Financial Results
COOPER CITY, Fla.--Coach Industries Group, Inc. (OTCBB:CIGI):
- Third Quarter Revenues Increase 34% to $87.5 Million
- CDS revenue for the Third Quarter of 2006 grows by 36%
- Limo Manufacturing increases production by 65%
- Independent Contractor Base of Clients for SCI grows from 6200 to over 8300
- CDS provides services for over 270 Courier Companies Nationally
- Increase in Lines of Credit to $25 Million from DaimlerChrysler
- Loss of $.06 this Quarter as compared to a Loss of $.07 in the prior year
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 third quarter ended September 30, 2006.
Revenues for the third quarter of 2006 reached $87.5 million versus $65.4 million for the same period in 2005, an increase of 34%. Net loss for the quarter ended September 30th, 2006 was $(0.06) per share basic and fully diluted compared to ($0.07) per share for the same period of 2005.
Revenues for the nine months ended September 30, 2006 reached $247 million versus $186 million for the same period in 2005, an increase of 33%. Net loss for the nine months ended September 30, 2006 was $(0.11) per share fully diluted compared to $(0.08) per share fully diluted for the same period of 2005.
Revenues and profitability at Corporate Development Services is directly related to the growth in the number of Independent Contractors supported by the Company. The drivers supported by the CDS grew from 6,200 drivers at September 30, 2005 to over 8,300 drivers at September 30, 2006, resulting in Net Income for the segment of $317,208 and $868,944 for the three and nine months ended September 30, 2006 compared to $236,969 and $573,281 for the same periods of 2005. Robert Lefebvre, SCI President, states, “Independent Contractors have been the backbone of the expedited, less than 24 hour delivery services since the days of the Pony Express. The U.S. Postal service contracts with over 17,000 independent contract couriers, as reported by the association represented by these drivers. We are providing CDS’ hard working independent contractor drivers with insurance and benefit programs to protect their families. In addition, we have begun providing them with a competitive lease program for various Chrysler vehicles. We see the needs of these hardworking individuals and are filling the void.”
“We are more than pleased with the strength, growth, and stability that the SCI group has delivered for Coach Industries. They have established themselves as the blueprint for a 3rd party administration business. We have reported nine consecutive profitable quarters for this segment of our business model. We challenge any of our competitors in this arena to match that achievement, and are proud of the employees at SCI who have continued to do an outstanding job of protecting and servicing these over 8300 drivers and 270 Courier Companies,” comments Steven H. Rothman, Chairman and Interim CEO.
The manufacturing segment delivered improvement in revenues, gross margin, and the reduction in operating expenses, net of write-downs for the three months ended September 30, 2006 compared to the same period in 2005. “We have been in a turnaround mode for the past 3 quarters with steady improvement. The sales team has been beefed up and we began to market under the Springfield name again. We are poised for continued strength,” commented Mark Khandjian, Chief Operating Officer of Coach Industries and President of Springfield Coach Industries Inc. Stated Mark Khandjian, "The manufacturing plant recently received an increased in its operating line of credit that will allow it to expand production and gear up for the new model year and 2007 selling season. In addition, implementation of the Company’s daily rental business has been delayed; however the Company has secured the financing for these leases from DaimlerChrysler and is working on securing orders for delivery in late December 2006 or first quarter 2007,” Khandjian continued.
“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. In 2006, the Company has accelerated Growth in its revenue through providing Financial Services and will now also focus on the growth of its Manufacturing, Leasing, and Daily Rental Segment.”
“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 continuing a restructuring of the Company in an attempt to lower our consulting, legal and other expenses that have prevented the Company from showing an EBITDA profit,” added Steven H. Rothman, Chairman and Interim Chief Executive 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.
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COACH INDUSTRIES GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS |
||||
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|
September 30, 2006 (Unaudited) |
December 31, 2005 |
||
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $ | 3,059,373 | $ | 3,046,069 |
| Restricted cash | 211,054 | 247,196 | ||
| Collateral account – accident and occupational insurance program | 834,374 | - | ||
| Accounts receivable, net | 1,838,038 | 1,582,335 | ||
| Supply inventory | 1,251,987 | 1,363,694 | ||
| Lease receivable – current | 1,409,352 | 1,559,635 | ||
| Due from affiliates | 86,815 | - | ||
| Accounts receivable – other | - | 190,681 | ||
| Prepaid expenses and other current assets | 447,552 | 445,915 | ||
| Total current assets | 9,138,545 | 8,435,525 | ||
| PROPERTY AND EQUIPMENT, net | 2,011,359 | 2,231,347 | ||
| INTANGIBLE – CUSTOMER LIST, net | 2,200,000 | 2,290,000 | ||
| LEASE RECEIVABLES, net | 3,507,255 | 3,443,793 | ||
| DEFERRED LOAN COSTS, net | 249,775 | 379,313 | ||
| GOODWILL | 6,300,959 | 6,304,182 | ||
| $ | 23,407,893 | $ | 23,084,160 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Accounts payable and accrued expenses | $ | 3,145,007 | $ | 1,215,170 |
| Advance payment contract settlement | 2,800,381 | 1,868,000 | ||
| Insurance loss reserve | 913,169 | - | ||
| Accrued interest payable | 186,389 | 109,854 | ||
| Warrant liability | 295,349 | 574,998 | ||
| Registration Rights Liability | 200,000 | - | ||
| Related party payable | 25,000 | 376,246 | ||
| Current portion lease finance obligation | 1,191,404 | 1,354,167 | ||
| Current portion of long-term debt | 1,953,492 | 1,465,119 | ||
| Warranty reserve | 130,270 | 116,392 | ||
| Customer deposits | 41,700 | 41,000 | ||
| Accrued wages | 116,822 | 61,019 | ||
| Note payable – related parties | 425,000 | 650,000 | ||
| Lines of credit | 977,267 | 894,418 | ||
| Total current liabilities | 12,401,250 | 8,726,383 | ||
| OTHER LIABILITIES: | ||||
| Convertible notes payable- long term | - | 5,534,881 | ||
| Term Note | 4,883,717 | - | ||
| Lease financing obligation | 3,345,668 | 3,075,971 | ||
| Minority interest | (81,968) | - | ||
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COMMITMENTS AND CONTINGENCIES |
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| SHAREHOLDERS' EQUITY: | ||||
| Common stock $0.001 par value; 50,000,000 shares authorized; 28,888,835 and 29,038,214 shares issued and outstanding, respectively |
28,890 |
29,038 |
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| Additional paid-in capital | 19,617,481 | 19,915,720 | ||
| Restricted stock – unearned compensation | (282,425) | (938,680) | ||
| Accumulated deficit | (16,504,720) | (13,259,153) | ||
| Total shareholders' equity | 2,859,226 | 5,746,925 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
23,407,893 |
$ |
23,084,160 |
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COACH INDUSTRIES GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS |
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For the Three Months Ended September 30, (Unaudited) |
For the Nine Months Ended September 30, (Unaudited) |
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| 2006 | 2005 |
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2006 | 2005 | |||||||
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REVENUES |
$ |
87,551,816 |
$ |
65,430,041 |
$ |
246,854,691 |
$ |
186,258,552 |
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COST OF GOODS SOLD |
85,425,337 |
64,258,510 |
242,139,546 |
182,037,794 |
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GROSS PROFIT |
2,126,479 |
1,171,531 |
4,715,145 |
4,220,758 |
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OPERATING EXPENSES: |
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|
General and Administrative |
2,550,535 |
1,533,287 |
5,737,347 |
3,654,543 |
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|
Research and development |
- |
93,818 |
- |
199,868 |
|||||||
| Warrant liability mark to market | 59,842 |
- |
(279,649) |
- |
|||||||
| Registration Rights Expense |
120,000 |
- |
200,000 |
- |
|||||||
| Write-down of costs associated with unconsummated financing transactions |
116,946 |
- |
116,946 |
- |
|||||||
| Loss on liquidation of lease portfolio |
140,958 |
- |
140,958 |
- |
|||||||
|
Provision for lease losses and uncollectible accounts receivable |
244,328 |
1,516 |
314,182 |
18,415 |
|||||||
|
Amortization of deferred compensation |
77,700 |
63,873 |
304,533 |
180,286 |
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Sales and marketing |
132,687 |
245,090 |
535,302 |
750,290 |
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|
Rent |
72,808 |
87,699 |
238,065 |
241,894 |
|||||||
| Gain on settlement related to the relocation of CTMC facility |
- |
- |
- |
(434,000) |
|||||||
| Interest Expense Associate with convertible note conversion |
- |
- |
- |
188,000 |
|||||||
|
Interest expense |
273,659 |
370,739 |
759,497 |
698,605 |
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Total operating expenses |
3,789,463 |
2,396,022 |
8,067,181 |
5,497,901 |
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Loss before provision for income taxes and minority interest |
(1,662,984) |
(1,224,491) |
(3,352,036) |
(1,277,143) |
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| Minority interest portion of joint venture loss |
(5,199) |
- |
(106,468) |
|
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| Loss before income taxes |
(1,657,785) |
(1,224,491) |
(3,245,568) |
(1,277,143) |
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|
Income taxes |
- |
- |
- |
- |
|||||||
|
NET LOSS |
$ |
(1,657,785) |
$ |
(1,224,491) |
$ |
(3,245,568) |
$ |
(1,277,143) |
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Basic and fully diluted net loss per share: Net loss per share |
|||||||||||
| $ | (0.06) | $ | (0.07) | $ | (0.11) | $ | (0.08) | ||||
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Basic and fully diluted weighted average common shares outstanding |
29,038,000 |
18,342,150 |
29,038,000 |
15,812,550 |
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