Cross-Continent Auto Retailers Reports 4th Quarter and Fiscal Year Results
12 February 1998
Cross-Continent Auto Retailers Reports 4th Quarter and Fiscal Year Results
AMARILLO, Texas, Feb. 12 -- Cross-Continent Auto Retailers,
Inc. , the nation's first publicly traded franchise auto dealer
group, today announced results for the fourth quarter and fiscal year ended
December 31, 1997.
Fourth-Quarter Results
Revenues for the fourth quarter of 1997 were $112.9 million, an
8.8 percent increase from the $103.8 million recorded in the 1996 period.
Earnings were $90,000 or $0.01 per share, compared with $1.9 million, or
$0.14 per share, a year ago. The revenue increase for the quarter was
attributed to $52 million in revenue from acquired dealerships in Las Vegas
and Denver. This increase was partially off-set by the absence of $24 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 decrease in
same-store sales of $19 million.
An increase in new vehicle sales accounted for $14.7 million of the total
increase and parts and service revenue increased $2.2 million. Retail used
vehicle revenue decreased $2.4 million, wholesale used vehicle revenue
decreased $4.7 million, and commissions from arranging finance, insurance and
extended warranty sales decreased $1.0 million.
"The decline in same store sales was primarily attributable to a decrease
in unit sale volume at the company's Hickey Dodge dealership in Oklahoma City
and weak selling conditions in the Amarillo market. During the quarter we
took several steps to improve Hickey Dodge's performance in 1998, including
placing the dealership under new management, restructuring the vehicle
inventories and installing the company's standard computer system. Same store
sales in Amarillo decreased $7 million; however, this decline was in line with
the overall decrease in the demand for new vehicles in the Amarillo market and
we are pleased the company was able to maintain it's market share during the
quarter," said Bill Gilliland, Cross-Continent's chairman and chief executive
officer.
Gross profit increased $2.3 million, or 13.7%, to $18.8 million for the
quarter. The company's gross profit margin was 16.7% for the quarter,
compared to 16.0% a year ago.
Selling, general and administrative expenses totaled $16.1 million for the
fourth quarter of 1997 compared to $12.5 million in the fourth quarter of
1996.
"Acquisitions added approximately $8.0 million in SG&A expense which was
partially offset by the absence of $3.0 million in SG&A expense from the
Performance dealerships included in the comparable period last year. Same
store expenses declined $1.4 million reflecting the variable nature of our
expense structure," Gilliland said.
Fiscal Year Results
For the fiscal year ended December 31, 1997, revenues rose 46.8 percent,
to $472.1 million from $321.6 million for 1996. Net income increased
46.6 percent to $6.7 million, or $0.49 per share, including the one time
charge of $347,000, or $0.03 per share, related to the sale of the two
Performance dealerships, compared with earnings of $4.6 million a year ago.
"The increase in sales was directly attributable to acquisitions, partially
offset by the disposition of the Performance dealerships and a decline in same
store revenue," Gilliland said.
Looking Forward
"The company is in the slower selling season, which traditionally is the
fourth and first calendar quarters, and as a result we may lose some expense
leverage in the upcoming quarter. Additionally, the soft market conditions,
particularly in Amarillo and Oklahoma City, may translate into lower demand
and/or margins. In this environment we focus more on maintaining customers
and market share," Gilliland said.
"We are looking forward to the challenges ahead in the competitive new and
used vehicle sales and service business and feel we are well positioned in our
existing markets. We remain committed to our strategy of growth through
acquisitions and to rewarding, over the long term, our investors," Gilliland
said.
On January 6, 1998, Cross-Continent announced that it had completed the
acquisition of Chaisson Motor Cars and Chaisson BMW, a multiple franchise
dealership group operating in Las Vegas and Henderson, Nevada. The purchase
approximated $18 million and was accounted for as a purchase. Chaisson is the
sole dealership for new BMW, Volkswagen, Audi, Land Rover and other luxury
vehicles in the Las Vegas market. Bill Gilliland noted the acquisition was a
nice strategic fit for Cross-Continent since Chaisson's facilities are located
near the company's other operations in the Las Vegas market.
On January 7, 1998, Cross-Continent announced the pending sale-leaseback
agreement with Capital Automotive L.P. a real estate investment trust. The
company will sell and leaseback six dealership properties located in three
states, for total cash consideration approximating $35 million. The company
expects to use the proceeds, after the repayment of existing mortgages, taxes
and related expenses, for the continued acquisition of additional dealerships.
The six properties are located in Amarillo, Texas, Denver, Colorado and Las
Vegas, Nevada. The transaction is expected to be completed by May 1998.
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. There
are many factors which affect management's views about future events and
trends of the company's business. These factors involve risk and
uncertainties that could cause actual results or trends to differ materially
from management's view, 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 Twelve months ended
December 31, December 31,
1997 1996 1997 1996
New vehicle revenue $53,657 $38,960 $217,206 $137,712
Used vehicle
retail revenue 35,909 38,345 156,611 104,842
Used vehicle W/S
revenue 9,066 13,784 39,858 41,423
Other operating
revenue 14,294 12,670 58,443 37,606
Total revenue 112,926 103,759 472,118 321,583
Cost of sales 94,101 87,201 390,856 271,650
Gross Profit 18,825 16,558 81,262 49,933
SGA 16,083 12,480 61,512 36,490
Depreciation &
amortization 845 386 2,658 1,207
Loss on sale of
dealerships, net 0 0 347 0
Employee stock
compensation 0 0 0 1,099
Operating Income 1,897 3,692 16,745 11,137
Interest expense (net) 1,753 598 5,819 3,193
Income before
income taxes 144 3,094 10,926 7,944
Income taxes 54 1,177 4,211 3,362
Net Income $90 $1,917 $6,715 $4,582
Weighted average shares
outstanding 13,446 13,800 13,683 (a)
Basic and diluted EPS 0.01 0.14 0.49 (a)
Unit Sales
New 2,329 1,764 9,722 6,408
Used - Retail 2,992 3,123 13,120 8,145
Wholesale 1,771 2,194 8,274 7,423
Average Selling Price:
New 23,039 22,086 22,342 21,491
Used - Retail 12,002 12,278 11,937 12,872
Wholesale 5,119 6,283 4,817 5,580
(a) Historical EPS in not presented for the year ended December 31, 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)
December 31, December 31,
1997 1996
Cash and cash equivalents $15,173 $36,946
Accounts receivable 16,884 18,629
Inventory 55,807 48,168
Total current assets 87,864 103,743
Total assets $197,273 $142,446
Floorplan notes payable $53,368 $46,282
Total current liabilities 86,568 71,050
Long-term debt 44,263 10,568
Total liabilities 134,011 83,928
Stockholders' equity 63,262 58,518
Total liabilities
and stockholders' equity $197,273 $142,446
SOURCE Cross-Continental Auto Retailers, Inc.