Hometown Auto Reports Record Q2 Revenues Up 8% Sequentially
2 September 1998
Hometown Auto Reports Record Second Quarter Revenues Up 8 Percent Sequentially
WATERTOWN, Conn.--Sept. 1, 1998--HOMETOWN AUTO RETAILERS, INC. (Nasdaq NM:HCAR) today announced the following record pro forma financial results for the second quarter ended June 30, 1998.
Hometown Auto reported revenues of $62.9 million for the second quarter 1998, up 8% from the first quarter of 1998, and income before taxes of $1.5 million, up 7.2%. The Company's diluted income per share was $0.16 in the quarter, up approximately 7.0%. In the first six months of 1998, Hometown recorded revenues of $120.9 million, income before taxes of $3.0 million and diluted income per share of $0.31. This pro forma information gives effect as of January 1, 1997 to the combination of the six founding auto dealerships and the acquisition of three other dealerships completed on or about July 31, 1998. Pro forma information is not available for 1997.
Joseph Shaker, President and Chief Operating Officer of Hometown Auto, said, "We are very pleased with these results which were achieved prior to the combinations and the implementation of our operating strategy. We expect to fully realize significant consolidation efficiencies by the end of the fourth quarter of 1998, as we integrate all our dealerships into the Hometown model. We will see substantial savings and margin improvement from the implementation of our "Best in Class" practices, cross utilization of inventories, and coordinated auction buying, as well as a reduction in the costs of inventory financing (floor plan), garage liability, health and workmen's compensation insurance and other overhead expenses."
"We are especially proud of our return on sales of 2.5% in the second quarter up from an average of 2.3% last year. We believe that our consolidation strategy, along with our superior service model, will allow us to deliver increasingly higher returns on sales."
Mr. Shaker continued, "At this time we are in various stages of discussions with three additional companies representing seven dealerships, any of which would be an excellent addition to Hometown Auto. We are looking forward to attaining our stated goal of being the dominant dealership in the Northeast as we continue to pursue acquisitions and execute our business plan."
Hometown Auto Retailers, Inc. is engaged in the business of selling new and used cars and light trucks, providing maintenance and repair services, selling replacement parts and providing related financing, insurance and service contracts through eight franchised dealerships located in New Jersey, Connecticut, Massachusetts and Vermont. The Company's dealerships offer 12 American and Asian automotive brands, including Chevrolet, Chrysler, Dodge, Eagle, Ford, Isuzu, Jeep, Lincoln, Mercury, Oldsmobile, Plymouth and Toyota. The Company also operates a free-standing neighborhood collision repair center and is active in two "niche" segments of the automotive market: the sale of Lincoln Town Cars and limousines to livery car and livery fleet operators and the maintenance and repair of cars and trucks at a Ford and Lincoln Mercury factory authorized free-standing service center.
This release contains "forward-looking statements" based on current expectations but involving known and unknown risks and uncertainties. Actual results or achievements may be materially different from those expressed or implied. The Company's plans and objectives are based on assumptions involving judgments with respect to future economic, competitive and market conditions, its ability to consummate, and the timing of, acquisitions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Therefore, there can be no assurance than any forward-looking statement will prove to be accurate.
HOMETOWN AUTO RETAILERS, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
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New vehicle sales $ 36,574 $ 68,004
Used vehicle sales 19,583 39,444
Parts and service sales 5,182 10,444
Other dealership revenues 1,551 3,051
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Total revenues 62,890 120,943
Cost of sales 54,891 105,166
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Gross profit 7,999 15,777
Goodwill 99 199
SG&A expenses 6,214 12,202
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Income from operations 1,686 3,376
Other expense 143 394
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Income before taxes 1,543 2,982
Provision for income taxes 617 1,193
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Net income $ 926 $ 1,789
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Fully Diluted earnings
per share $ 0.16 $ 0.31
Fully Diluted shares
outstanding (millions) 5.80 5.80