Cross-Continent Auto Retailers Reports 2nd-Qtr., First-Half Results
30 July 1997
Cross-Continent Auto Retailers Reports 2nd-Qtr., First-Half Results
AMARILLO, Texas, July 30 -- Cross-Continent Auto Retailers,
Inc. , the nation's first publicly traded franchise auto dealer
group, today announced results for the second quarter and six-months ended
June 30, 1997.
Second-Quarter Results
Revenues for the second quarter of 1997 were $135.4 million, a
93.4 percent increase from the $70.0 million recorded in the 1996 period.
Earnings, excluding a provision for the loss on the divestiture of the
company's Performance Dodge and Performance Nissan dealerships, were
$2,213,000, or $0.16 per share, compared with a net loss of $570,000 for the
year ago period. Earnings included operating losses of $753,000, or $0.05 per
share, incurred at these dealerships.
Cross-Continent recorded a provision for the loss on the sale of the
Performance dealerships in the amount of $347,000, or $0.03 per share, which
primarily reflects the anticipated costs, fees and expenses of the
transaction, net of applicable taxes. Including this provision, earnings for
the second quarter of 1997 were $1,866,000, or $0.13 per share.
"During the quarter, revenue benefited from the inclusion of the Las Vegas
and Denver Toyota dealerships, acquired in April 1997, Hickey Dodge, acquired
in October 1996, and a slight increase in same-store sales," said Bill
Gilliland, Cross-Continent's chairman and chief executive officer.
"The increase in revenue was led by a $31.9 million rise in new vehicle
revenue, a $23.9 million gain in retail used vehicle revenue, a $3.7 million
increase in parts and service revenue and $2.9 million growth in the
commissions received from the sale of finance, insurance and extended
warranties," Gilliland continued.
Gross profit of $23.5 million for the second quarter of 1997 was more than
double the gross profit of $10.0 million reported last year. As a percentage
of total revenue, gross profit for the 1997 second quarter was 17.4 percent
compared with 14.3 percent for the same period last year.
"The increase in gross profit margin was primarily attributable to the
addition of the Las Vegas and Denver Toyota dealerships, which have
historically carried a higher gross profit margin than our other dealerships.
Additionally, the gross profit margin recorded in the 1996 second quarter was
impacted by the General Motors strike, which adversely affected the supply of
new vehicles to the company's Chevrolet dealerships in the Amarillo market,"
Gilliland said.
Selling, general and administrative expenses totaled $17.7 million for the
second quarter of 1997. As a percentage of total revenue, selling, general
and administrative expenses were 13.1 percent compared to 11.7 percent in the
second quarter of 1996.
Gilliland attributed the increase in SG&A as a percentage of total revenue
to several factors. "The Las Vegas and Denver Toyota dealerships have had
higher percentages on an historical basis than our other dealerships,"
Gilliland explained. He also cited the loss of expense leverage at Hickey
Dodge due to slower new vehicle sales caused by the Chrysler strike, which was
resolved late in the second quarter and higher expenses at the Performance
Dodge and Nissan dealerships as contributors to the increased SG&A percentage.
First Half Results
For the six-month period ended June 30, 1997, revenues rose 58.9 percent,
to $224.4 million from $141.2 million for the 1996 period. Net earnings were
$4,012,000, or $0.29 per share, including the operating results from and loss
provision for the Performance dealerships, compared with $1,029,000 for the
year ago period. Excluding these items, earnings were $4,936,000, or
$0.35 per share.
The gross profit margin for the first six months of 1997 was 17.3 percent
compared with 15.1 percent for the year ago period. Cross-Continent's gross
margin continues to exceed the industry average.
SG&A as a percentage of sales rose from 11.1 percent last year to
12.8 percent in the current period primarily due to the factors that impacted
the second quarter, Cross-Continent said.
Looking Forward
"Market conditions so far this quarter have weakened in the areas where we
have operations. Currently, we see no trends developing to reverse the
softening of vehicle sales. As a result, we also expect margins per vehicle
to decline in the near term," Gilliland said. "However, over the long term we
remain optimistic."
On July 1, 1997, Cross-Continent completed the acquisition of Sahara
Nissan, Inc. in Las Vegas, Nev., for $12.5 million. The company expects to
close its acquisition of Chaisson Motor Cars, a multi-franchise luxury car
dealership in the Las Vegas area, by the fourth quarter of 1997. Together,
these additions generated $133.4 million in annual revenues in 1996.
Cross-Continent Auto Retailers, Inc. owns and operates a group of
franchised automobile retail dealerships in Texas, Oklahoma, Nevada and
Colorado. Through these dealerships, the company sells new and used
cars and light trucks, arranges related financing and insurance, sells
replacement parts and provides vehicle maintenance and repair services.
Cross-Continent Auto Retailers, Inc. is listed on the New York
Stock Exchange under the symbol XC.
Cross-Continent Auto Retailers, Inc. believes its shareholders benefit
from the views of management about the future of the company's business.
Included herein are forward-looking statements, including statements with
respect to anticipated revenue growth, acquisitions and profitability. These
statements involve risks and uncertainties that could cause actual results to
differ materially, including without limitation economic conditions, risks
associated with acquisitions and the risk factors set forth from time to time
in the company's filings with the Securities and Exchange Commission.
To receive additional information on Cross-Continent Auto Retailers, Inc.
free of charge via fax, dial 1-800-PRO-INFO and enter "XC."
CROSS-CONTINENT AUTO RETAILERS, INC.
($ 000 except per share and unit data)
Unaudited
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
New vehicle revenue $63,412 $31,493 $98,290 $66,142
Used vehicle retail revenue 44,770 20,884 78,445 42,065
Used vehicle W/S revenue 11,230 9,514 20,231 17,694
Other operating revenue 15,976 8,121 27,444 15,340
Total revenue 135,388 70,012 224,410 141,241
Cost of sales 111,857 60,025 185,696 119,921
Gross Profit 23,531 9,987 38,714 21,320
SGA 17,742 8,158 28,643 15,695
Depreciation & amortization 617 279 998 549
Loss on sale of dealerships,
net 347 0 347 0
Employee stock compensation 0 1,099 0 1,099
Operating Income 4,825 451 8,726 3,977
Interest expense (net) 1,639 749 2,114 1,724
Income before income taxes 3,186 (298) 6,612 2,253
Income taxes 1,320 272 2,600 1,224
Net Income $1,866 ($570) $4,012 $1,029
Weighted average shares
outstanding 14,049 (1) 13,925 (1)
EPS 0.13 (1) 0.29 (1)
Unit Sales
New 2,903 1,479 4,502 3,130
Used - Retail 3,779 1,558 6,576 3,241
Wholesale 2,523 1,776 4,364 3,490
Average Selling Price:
New 21,844 21,293 21,833 21,132
Used - Retail 11,847 13,404 11,929 12,979
Wholesale 4,451 5,357 4,636 5,070
Note (1) Historical EPS in not presented for periods to September 1996, as
the historical capital structure prior to the reorganization and Initial
Public Offering is not comparable to the capital structure after such
transactions
CROSS-CONTINENT AUTO RETAILERS, INC.
($ 000)
Unaudited
June 30, December 31,
1997 1996
Cash and cash equivalents $6,671 $36,946
Accounts receivable 20,962 18,629
Inventory 72,708 48,168
Total current assets 102,458 103,743
Total assets $188,071 $142,446
Floorplan notes payable $69,311 $46,282
Total current liabilities 97,789 71,050
Long-term debt 21,816 10,568
Total liabilities 120,828 83,928
Stockholders' equity 67,243 58,518
Total liabilities and
stockholders' equity $188,071 $142,446
SOURCE Cross-Continent Auto Retailers, Inc.