Warrantech Corporation Announces Fiscal First Quarter Results
6 August 1998
Warrantech Corporation Announces Fiscal First Quarter Results
STAMFORD, Conn.--Aug. 5, 1998--Warrantech Corporation today announced results for the fiscal first quarter ended June 30, 1998.
Revenues for the fiscal first quarter were $50.3 million, compared to $53.3 million in the fiscal first quarter of 1998. The Company reported a net loss of $1.2 million, or ($0.09) per fully diluted share, compared to net income of $1.3 million or $0.08 per fully diluted share, for the same period in fiscal 1998.
The Company said that revenues for the fiscal first quarter were impacted by two factors: first, the termination of a high volume, low margin dealer agreement and second, the decline in unit prices in the PC industry. Gross profit as a percentage of revenues increased to 27.3 percent for the quarter, compared to 27.0 percent last year. The Company indicated that SG&A in the quarter was significantly increased on a temporary basis by its initiative to provide superior service by means of increased temporary staffing of technical support staff in its call centers.
Warrantech Chairman and Chief Executive Officer, Joel San Antonio, stated, "The reengineering of our call center processes is being implemented during the second quarter which will result in improved response time and decreased call processing time. Although the six month delay for system and process implementation affected the Company's financials in the short term, we made this strategic decision in order to achieve our long term objective of providing world class service to our customers. As a result, assuming trends in the Company's business activity continue, we expect that our reengineered processes and our cost reduction initiatives will return the Company to profitability in the fiscal second quarter."
Warrantech Corporation, through its subsidiaries, administers and markets service contracts and after-market warranties on automobiles, automotive components, recreational vehicles, appliances, consumer electronics, homes, computer and computer peripherals for retailers, distributors and manufacturers. The Company continues to expand its domestic and global penetration, and now provides its services in the United States, Canada, Mexico, the United Kingdom, Puerto Rico and Latin America.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the effectiveness of cost containment measures and the continuation of current levels of business activity, the impact of competitive products, product demand and market acceptance risks, reliance on key strategic alliances, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and exchange Commission. These risks could cause the Company's actual results for the current fiscal year and beyond to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company.
Warrantech Corporation and Subsidiaries
Condensed Consolidated Statements of Operations (Thousands of Dollars)
(Unaudited)
Three Months Ended
June 30,
1998 1997
Gross Revenues $50,264 $53,327
Revenues deferred to
future periods (781) (558)
Deferred revenues earned 291 149
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Net revenues 49,774 52,918
Costs and expenses:
Direct costs 36,535 38,945
Service, selling and general
and administrative 14,177 11,315
Depreciation and amortization 1,274 726
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Total costs and expenses 51,986 50,986
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Income (Loss) from Operations (2,212) 1,932
Other income, net 170 197
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Income (Loss) before Taxes (2,042) 2,129
Provision (benefit) for
income taxes (815) 802
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Net Income (Loss) $ (1,227) $ 1,327
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Net Income (Loss) Per Share
Basic ($0.09) $ 0.10
Fully Diluted ($0.09) $ 0.08
Weighted Average
Shares Outstanding
Basic 13,362,303 13,176,242
Fully Diluted 15,181,133 15,661,561
Warrantech Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands)
June 30,
1998 1997
Total Current Assets $52,658 $56,494
Property & equipment, net 13,794 10,752
Other Assets 11,846 9,437
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Total Assets $78,298 $76,683
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Current Liabilities $38,009 $41,339
Deferred revenues 7,422 5,397
Long term debt & rent obligations 2,467 3,170
Total Shareholders' Equity 30,400 26,777
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Total Liabilities & Shareholders'
Equity $78,298 $76,683
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