Cross-Continent Auto Retailers Reports 3rd-Qtr., and Nine Month Results
20 October 1997
Cross-Continent Auto Retailers Reports 3rd-Qtr., and Nine Month Results
AMARILLO, Texas, Oct. 20 -- Cross-Continent Auto Retailers,
Inc. , the nation's first publicly traded franchise auto dealer
group, today announced results for the third quarter and nine-months ended
September 30, 1997.
Third-Quarter Results
Revenues for the third quarter of 1997 were $134.8 million, a 76.0 percent
increase from the $76.6 million recorded in the 1996 period. Earnings were
$2.6 million, or $0.19 per share, compared with $1.6 million for the year ago
period.
"The revenue increase for the quarter was attributed to $77 million in
revenue from the acquisition of dealerships in Las Vegas, Denver and Oklahoma
City. This increase was off-set by the absence of $18 million in revenue from
the two Performance dealerships which were sold in the second quarter but
included in the comparable period last year and a slight decrease in same-
store sales," said Bill Gilliland, Cross-Continent's chairman and chief
executive officer.
"New vehicle sales accounted for $32.7 million of the increase, retail
used vehicle sales increased $17.8 million, parts and service revenue
increased $4.1 million and commissions received from the sale of finance,
insurance and extended warranties increased $1.9 million," Gilliland
continued.
Gross profit of $23.7 million for the third quarter of 1997 was nearly
double the gross profit of $12.1 million reported last year.
"Acquisitions added approximately $15 million in gross profit which was
partially offset by the absence of $2.7 million in gross profit from the
Performance dealerships included in the comparable period last year and a
$700,000 reduction in same store gross profit," Gilliland said.
Selling, general and administrative expenses totaled $16.8 million for the
third quarter of 1997 compared to $8.3 million in the third quarter of 1996.
"Acquisitions added approximately $11.1 million in SG&A expense which was
partially offset by the absence of $2.7 million in SG&A expense from the
Performance dealerships included in the comparable period last year,"
Gilliland said.
Gilliland further mentioned the company's cost reduction efforts during
quarter included the further reduction of staff at one of company's recently
acquired dealerships and the elimination of certain non-essential contracts
and leases. The company also made use of its stock option plan to further
align the interest of management with the shareholder.
"We see continued pressure on escalating expenses as the company continues
to grow, and we are taking the initiative to manage our expenses and employ
economies of scale," Gilliland said.
During the current quarter the company completed the acquisition of Sahara
Nissan, Inc. in Las Vegas, Nevada, for approximately $12.5 million. The
results of Sahara Nissan, Inc. are included in the financial results of the
company beginning July 1, 1997.
Nine Month Results
For the nine-month period ended September 30, 1997, revenues rose 64.9
percent, to $359.2 million from $217.8 million for the 1996 period. Net
earnings more than doubled to $6.6 million, or $0.48 per share, including the
one time charge of $347,000, or $0.03 per share, on the sale of the two
Performance dealerships, compared with earnings of $2.7 million for the year
ago period.
"Acquisitions added approximately $163 million in revenue which was
partially offset by a $17.7 million differential in revenue from the
Performance dealerships included in the comparable period last year and a $3.9
reduction in same store revenue," Gilliland said.
Looking Forward
"The company is entering the slower selling season, which traditionally is
the fourth and first calendar quarters, as a result we may lose some expense
leverage. Additionally, the soft market conditions, particularly in Amarillo
and Oklahoma City, may translate into lower demand and margins as we seek to
maintain our market share," Gilliland said.
On October 20, 1997, the company announced the pending acquisition of
Chaisson Motor Cars and Chaisson BMW, a multi-franchised dealership group
operating three retail locations in Las Vegas and Henderson, Nevada. The
company expects to complete the transaction, which is subject to manufacturer
approval, by the end of the fourth quarter. The total transaction is valued
at approximately $18 million. Gilliland said, "the addition of the Chaisson
dealerships helps to keep us on track of accomplishing our objective of
growing to 40 dealerships, with a revenue 'run-rate' of $2.5 billion within
the next three to five years."
Cross-Continent Auto Retailers, Inc. owns and operates a group of
franchised automobile retail dealerships in Texas, Oklahoma, Nevada and
Colorado. Through these dealership, the company sells new and used cars and
light trucks, arranges related financing and insurance, sells replacement
parts and provides vehicle maintenance and repair services. Cross-Continent
Auto Retailers, Inc. is listed on the New York Stock Exchange under the symbol
XC.
Cross-Continent Auto Retailers, Inc. believes its shareholders benefit
from the views of management about the future of the company's business.
Included herein are forward-looking statements, including statements with
respect to anticipated revenue growth, acquisitions and profitability. These
statements involve risks and uncertainties that could cause actual results to
differ materially, including without limitation economic conditions, risks
associated with acquisitions and the risk factors set forth from time to time
in the company's filings with the Securities and Exchange Commission.
CROSS-CONTINENT AUTO RETAILERS, INC.
($ 000 except per share and unit data)
Unaudited
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
New vehicle revenue $65,260 $32,610 $163,550 $98,752
Used vehicle retail
revenue 42,257 24,433 120,702 66,497
Used vehicle W/S revenue 10,561 9,944 30,791 27,639
Other operating revenue 16,706 9,595 44,150 24,936
Total revenue 134,784 76,582 359,193 217,824
Cost of sales 111,061 64,528 296,756 184,449
Gross Profit 23,723 12,054 62,437 33,375
SGA 16,786 8,315 45,429 24,010
Depreciation &
amortization 815 272 1,814 821
Loss on sale of
dealerships, net 0 0 347 0
Employee stock compensation 0 0 0 1,099
Operating Income 6,122 3,467 14,847 7,445
Interest expense (net) 1,953 871 4,066 2,594
Income before
Income taxes 4,169 2,596 10,781 4,851
Income taxes 1,557 961 4,157 2,186
Net Income $2,612 $1,635 $6,624 $2,665
Weighted average shares
outstanding 13,446 (A) 13,803 (A)
EPS $ 0.19 (A) $ 0.48 (A)
Unit Sales
New 2,891 1,514 7,393 4,644
Used - Retail 3,552 1,781 10,128 5,022
Wholesale 2,139 1,739 6,503 5,229
Average Selling Price:
New 22,574 21,539 22,122 21,264
Used - Retail 11,897 13,719 11,918 13,241
Wholesale 4,937 5,718 4,735 5,288
Note(A) Historical EPS is 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.
SELECTED BALANCE SHEET DATA
($ 000)
(Unaudited)
September 30, December 31,
1997 1996
Cash and cash equivalents $ 2,152 $ 36,946
Accounts receivable 19,626 18,629
Inventory 56,718 48,168
Total current assets 80,026 103,743
Total assets $180,188 $142,446
Floorplan notes payable $53,135 $46,282
Total current liabilities 74,625 71,050
Long-term debt 38,945 10,568
Total liabilities 117,072 83,928
Stockholders' equity 63,116 58,518
Total liabilities and
stockholders' equity $180,188 $142,446
SOURCE Cross-Continent Auto Retailers, Inc.