Earl Scheib Announces Significant Improvements
14 July 1998
Earl Scheib Announces Significant Improvements in Operating Income for Fiscal 1998, Growth Effort Accelerating
BEVERLY HILLS, Calif.--July 14, 1998--Earl Scheib Inc. (AMEX:ESH) Tuesday announced financial results for the year ended April 30, 1998 ("Fiscal 1998").
Operating income for Fiscal 1998 increased $924,000 from an operating income of $97,000 in the year ended April 30, 1997 ("Fiscal 1997") to an operating income of $1,021,000 for Fiscal 1998. Operating income excludes interest income, gains and losses from the sale of real estate and fixed assets, and income taxes.
Net income was $1,064,000, or 22 cents per share, for Fiscal 1998, compared with net income of $1,102,000, or 23 cents per share, for Fiscal 1997. Taxes were nominal in Fiscal 1998 due to the use of the company's remaining net operating loss. Fiscal 1998 had gains from the sale of real estate of only $33,000, compared with $893,000 in Fiscal 1997.
Comparable shop sales (shops opened more than 12 months) increased by 6 percent for the fiscal year. Management believes the increase resulted from numerous factors, including the introduction of the new Earl Scheib-manufactured, state-of-the-art paint called EuroPaint(R); improvements in shop operations; the quality of the company's service; and business from the company's new corporate fleet business.
This increase in sales was obtained even though expenditures for advertising were down $819,000, compared with Fiscal 1997.
Dan Seigel, the chief executive officer and president of Earl Scheib, said: "We are pleased to report this dramatic improvement in operating income. This improvement was obtained despite difficult weather towards the end of the fiscal year.
"Earnings could have been even greater except for the expenses associated with the acceleration of our growth efforts during the last half of the year. These expenses were incurred for new shops, an expanded real estate department and start-up costs associated with our fleet sales department.
"All of these programs are investments in the future growth and profitability of the company and will continue into the foreseeable future even though they will negatively impact our operating earnings during a period of time. Our financial position remains strong with effectively no debt and significant cash reserves.
"About 50 percent of our shops are owned on a free-and-clear basis (the remainder are leased) and we are generating sufficient internal cash flow to fund our expansion program. We remain committed to profitable growth by providing superior value and quality at the best possible price for our customers."
Earl Scheib, founded in 1937, is a nationwide operator of 163 auto paint and body shops located in 140 cities throughout the United States.
The statements that are not historical facts contained in this news release are forward-looking statements that involve risks and uncertainties, including, but not limited to, the effect of weather; the effect of economic conditions; the impact of competitive products, services and pricing; capacity and supply constraints or difficulties; changes in laws and regulations applicable to the company; the impact of Year-2000 hardship; the impact of the company's new EuroPaint(R); the impact of advertising and promotional activities; the impact of the company's expansion and fleet sales; and the potential adverse effects of certain litigation.