Smart Choice Automotive Group Reports 1997 Operating Results
11 February 1998
Smart Choice Automotive Group Reports 1997 Operating Results
TITUSVILLE, Fla., Feb. 11 -- Smart Choice Automotive Group,
Inc. , a leading consolidator of the 'dealer-financed' used car
retailing industry in the Southeastern United States, today announced its 1997
operating results.
For the twelve months ended December 31, 1997, revenues approximated $68.2
million and the Company reported a net loss of approximately $17.7 million, or
$1.99 per share. Included in the 1997 loss were non-cash charges totaling
$10.5 million which management considers "non-operating or non-recurring" in
nature. These charges included a year-end charge of approximately $6.5
million for expenses involving severance, other costs related to employment
contracts, stock option amortization, and certain interest charges, along with
approximately $3.2 million in non-cash compensation expense related to
employee stock options. Excluding these non-recurring charges, Smart Choice
Automotive would have posted a loss of approximately $7.8 million in 1997.
The Company experienced considerable expense in its first year due to the
costs associated with the merger with Eckler Industries and the acquisition of
finance companies and new and used car sales companies.
"We have positioned Smart Choice for growth during 1998 when we expect
revenues to exceed $130 million," commented Gary Smith, president and chief
executive officer. "During the past ninety days we have reduced annualized
overhead expenses by over $2 million and are now realizing the efficiencies
from our consolidation of operations. Sales by our used car dealerships
totaled 653 cars in January, compared with 273 cars sold in February 1997, our
first complete month of operations. We have expanded considerably through
acquisitions during the past twelve months, but this level of sales exceeds
our previous record by approximately 150 cars. February sales at our 23 used
car stores are exceeding January's pace and we expect to set new records in
the coming months. We expect that the changes we have made will have a
favorable impact on our 1998 results."
"Today's $60.5 million gross portfolio of finance receivables is in
excellent shape," observed Joseph Mohr, chief financial officer of the
Company. "A recent static pool analysis revealed that actual losses within
the portfolio continue at levels substantially less than the reserves we have
established for such losses. We also do not utilize 'gain on sale'
accounting, but instead record interest income from finance receivables on the
'accrual' basis. We believe these conservative accounting procedures should
enhance the quality of earnings in 1998 and future years and benefit the
valuation of our common stock as the validity of Smart Choice's consolidation
strategy is borne out in bottom-line results."
Smart Choice Automotive Group, Inc. operates a network of 25 new and used
car dealerships in the Southeastern United States. The Company underwrites,
finances and services retail installment contracts generated from the sale of
used cars by its dealerships. Its Eckler's subsidiary is one of the world's
largest aftermarket suppliers of Corvette parts and accessories. The Company
also provides training and insurance services to automobile dealerships
throughout the United States. Its common stock trades on Nasdaq under the
symbol "SMCH."
Any forward-looking statements in this release are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that actual results may differ substantially
from such forward-looking statements. Forward-looking statements involve
risks and uncertainties including, but not limited to, continued acceptance of
the Company's products and services in the marketplace, competitive factors,
receivables portfolio risks, dependence upon third-party vendors, and other
risks detailed in the Company's periodic filings with the Securities and
Exchange Commission.
For further information, please contact:
Joseph Mohr, Chief Financial Officer (407) 269-0834
or
R. Jerry Falkner, CFA, Investor Relations Counsel at (800) 377-9893.
SMART CHOICE AUTOMOTIVE GROUP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
Twelve Months Ended
December 31
1997
Vehicle and Related Revenues:
Sales of New Vehicles $8,318,403
Sales of Used Vehicles 36,013,558
Income on Finance Receivables 6,792,710
Income from Insurance & Training 1,177,903
Income from Parts & Accessories 15,901,886
68,204,460
Cost of Vehicle & Vehicle Related Revenues:
Cost of New Vehicles Sold 7,319,363
Cost of Used Vehicles Sold 25,153,891
Cost of Insurance & Training 85,099
Cost of Parts & Accessories Sold 10,186,623
Provision for Credit Losses 4,834,665
47,579,641
Net Revenues from Vehicle Sales and
Vehicle Related Activities 20,624,819
Expenses:
Operating Expenses 23,440,347
23,440,347
Loss from Operations (2,815,528)
Other Expense (Income):
Interest Expense 5,097,598
Other Income (416,600)
Miscellaneous Expense 312,905
Restructuring Expense 5,413,875
Compensation Expense Related to
Employee Stock Options 4,434,062
14,841,840
Net Loss $(17,657,368)
Net Income (Loss) Per Share $(1.99)
Weighted Average Number Primary
Shares Outstanding 8,860,733
SOURCE Smart Choice Automotive Group, Inc.