Smart Choice Automotive Group Reports Q3 and Nine Month Earnings
26 October 1998
Smart Choice Automotive Group Reports Record Third Quarter and Nine Month Revenues and Earnings and Announces Cancellation Of Stock Offering
Diluted E.P.S. Reach $0.90 in Nine-Month Period,
As Revenues Rise 158% to $111.8 Million
TITUSVILLE, Fla., Oct. 26 -- Smart Choice Automotive Group,
Inc. , a leading consolidator in the "dealer-financed" used car
retailing industry in Florida, today announced record revenues and earnings
for the third quarter and first nine months of 1998.
The Company also announced that it has canceled its planned follow-on
common stock offering, citing unfavorable market conditions as the primary
factor in its decision.
For the quarter ended September 30, 1998, the Company's revenues increased
91% to a record $39.1 million, compared with revenues of $20.5 million in the
third quarter of the previous year. Net income for the most recent quarter
totaled $1,801,237, or $0.26 per diluted share, versus net income of $134,681,
or $0.03 per share, in the prior-year period.
Revenues for the nine-month period ended September 30, 1998 reached a
record $111.8 million, which represented a 158% increase when compared with
$43.4 million in revenues during the first nine months of 1997. Net income of
$5,908,999, or $0.90 per diluted share, during the nine months ended
September 30, 1998, compared with a net loss of $7,131,442, or ($1.64) per
share, during the first nine months of last year.
The per-share figures have been adjusted for a 1-for-2 reverse stock split
which was effective on August 24, 1998. Net income for the third quarter and
first nine months of 1998 will not be taxed because of tax loss carryforward
benefits available to the Company.
"We sold 2,192 used cars during the most recent quarter and 6,570 vehicles
during the first nine months of 1998, which represented increases of 162% and
211%, respectively, when compared with prior-year periods," commented Gary
Smith, President and Chief Executive Officer of Smart Choice Automotive Group,
Inc. "Earnings were the highest for any third quarter in the Company's
history, margins remained strong, and our business continues to perform as
expected."
"We increased the size of our retail used car network to 26 locations in
the State of Florida during the third quarter," continued Smith. "Our retail
business is growing at a healthy pace, supported by the customer financing
provided by our Florida Finance Group subsidiary. Approximately 98% of our
customers during the third quarter financed their purchases through Florida
Finance Group."
"Our customer receivables portfolio, which now totals $107 million,
continues to perform as expected," noted Joseph Mohr, Chief Financial Officer
of the Company. "Losses on our newer portfolio pools continue trending below
losses on our more seasoned portfolios. Although we are disappointed that we
have decided to cancel the follow-on stock offering, we expect our existing
capital resources to allow Smart Choice to continue expanding its operations."
Smart Choice Automotive Group, Inc. operates a network of 26 used and
2 new car stores in Florida. The Company underwrites, finances and services
retail installment contracts generated from the sale of used cars by its
stores. 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.
Smart Choice Automotive Group, Inc. is headquartered in Titusville,
Florida and its common stock trades on Nasdaq under the symbol "SMCH".
This press release includes statements that may constitute
"forward-looking" statements, usually containing the words "believe",
"estimate", "project", "expect" or similar expressions. These statements are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements inherently involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or contribute
to such differences include, but are not limited to, continued acceptance of
the Company's products in the marketplace, competitive factors, receivables
portfolio risks, dependence upon third-party vendors, and other risks detailed
in the Company's Registration Statement on Form S-1 (file no. 333-59375) and
periodic report filings with the Securities and Exchange Commission. By
making these forward-looking statements, the Company undertakes no obligation
to update these statements for revisions or changes after the date of this
release.
SMART CHOICE AUTOMOTIVE GROUP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
Three Months Ended
Sept. 30, Sept. 30,
1998 1997
Vehicle and Revenues:
Sales of Used Vehicles $23,306,072 $10,941,288
Sales of New Vehicles 6,231,898 2,624,884
Income on Finance Receivables 4,677,250 2,173,807
Corvette Parts & Accessories
Sales 4,284,726 4,419,463
Income from Insurance
& Training 635,809 352,347
39,135,755 20,511,789
Cost of Vehicle & Vehicle Related Revenues:
Cost of Used Vehicles Sold 15,268,886 7,316,758
Cost of New Vehicles Sold 5,509,917 2,303,936
Provision for Credit Losses 3,342,525 862,370
Cost of Parts &
Accessories Sold 2,842,530 2,935,303
Cost of Insurance & Training 16,758 20,205
Net Revenues from Vehicle Sales
and Vehicle Related Activities 12,155,139 7,073,217
Expenses:
Operating Expenses 8,534,944 5,332,674
Compensation Expense Related to
Employee Stock Options -- 29,848
8,534,944 5,362,522
Income from Operations 3,620,195 1,710,695
Other Expense (Income):
Interest Expense 2,183,927 1,710,656
Other Income (364,969) (135,689)
Miscellaneous Expense -- 1,047
Net Income $ 1,801,237 $ 134,681
Earnings Per Share:
Basic $ 0.27 $ 0.03
Diluted $ 0.26 N/A
Average Number of Basic
Shares Outstanding 6,578,698 4,626,226
Average Number Of Diluted
Shares Outstanding 7,430,665 N/A
Note: Per-share figures and shares outstanding have been adjusted
for a 1-for-2 reverse stock split effective August 24, 1998.
SMART CHOICE AUTOMOTIVE GROUP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
Nine Months Ended
Sept. 30, Sept. 30,
1998 1997
Vehicle and Revenues:
Sales of Used Vehicles $63,908,603 $22,730,067
Sales of New Vehicles 20,581,091 2,624,884
Income on Finance Receivables 11,619,389 4,624,482
Corvette Parts & Accessories
Sales 14,696,267 12,391,699
Income from Insurance
& Training 1,061,841 1,003,603
111,867,191 43,374,699
Cost of Vehicle & Vehicle Related Revenues:
Cost of Used Vehicles Sold 41,645,117 16,011,303
Cost of New Vehicles Sold 18,097,006 2,303,936
Provision for Credit Losses 7,761,409 2,411,181
Cost of Parts & Accessories
Sold 9,519,318 7,844,569
Cost of Insurance & Training 76,353 56,918
Net Revenues from Vehicle Sales
and Vehicle Related Activities 34,767,988 14,746,791
Expenses:
Operating Expenses 23,617,208 15,352,522
Compensation Expense Related
to Employee Stock Options 0 3,244,615
Income (Loss) from Operations 11,150,780 ( 3,850,346)
Other Expense (Income):
Interest Expense 6,216,210 3,459,269
Other Income ( 988,812) (249,438)
Miscellaneous Expense 14,383 71,265
Net Income (Loss) $ 5,908,999 $ ( 7,131,442)
Earnings (Loss) Per Share:
Basic $ 0.98 $ ( 1.64)
Diluted $ 0.90 N/A
Average Number of Basic
Shares Outstanding 6,056,234 4,346,235
Average Number Of Diluted
Shares Outstanding 7,033,419 N/A
Note: Per-share figures and shares outstanding have been adjusted
for a 1-for-2 reverse stock split effective August 24, 1998.