Cross-Continent Reports Third Quarter Results
30 October 1998
Cross-Continent Reports Third Quarter Results
AMARILLO, Texas, Oct. 30 -- Cross-Continent Auto Retailers,
Inc. , the nation's first publicly traded franchise auto dealer
group, today announced results for the third fiscal quarter ended September
30, 1998.
Third Quarter Results
Revenue for the third quarter of 1998 increased 30.4 percent to
$175.8 million from $134.8 million recorded in the 1997 period. Earnings for
the third quarter of 1998 were $2.6 million, or $0.19 per share, before a
charge for merger related expenses incurred during the quarter. Earnings net
of the merger related expense charge were $1.8 million, or $0.13 per share on
a basic and fully diluted basis. Earnings in the corresponding 1997 period
were $2.6 million, or $0.19 per share.
New vehicle revenue increased 37.0 percent, retail used vehicle revenue
increased 20.6 percent, wholesale used vehicle revenue increased 15.9 percent
and all other revenue increased 38.7 percent.
The revenue increase for the quarter was positively impacted by
$27.2 million in revenue from acquired dealerships in the Las Vegas, Nevada
market and a $13.8 million increase in same store revenue.
Same store sales increased 10.2 percent during the quarter. The increase
was primarily attributable to a 31.6 percent increase in same store revenue at
the company's Nevada and Colorado dealerships, partially offset by a
8.4 percent decrease in same store revenue in the Amarillo, Texas market.
"Same store sales softened in the Amarillo market primarily due to the
General Motors strike which effected new vehicle inventories and product
availability," said Bill Gilliland, Cross-Continent's chairman and chief
executive officer.
Gross profit increased 35.1 percent, to $32.0 million for the quarter.
Gross profit margin in the third quarter was 18.2 percent compared to
17.6 percent a year ago.
"Cross-Continent's group of dealerships continue to have gross profit
margins that generally are higher than the industry average," Gilliland said.
Selling, general and administrative expense totaled $24.8 million for the
third quarter of 1998, compared to $16.8 million in the third quarter of 1997.
The increase is primarily attributable to the company's acquisition activity,
which added $3.4 million in selling, general and administrative expense.
Selling, general and administrative expense was also impacted by the inclusion
of rent expense attributable to the sale and leaseback transaction, which was
completed in the second quarter of 1998.
Year to Date Results
Revenue for the first nine months of 1998 increased 37.1 percent to
$492.5 million, compared to $359.2 million in the comparable period last year,
primarily as a result of the company's acquisition activity.
Earnings for the nine month period of 1998 were $5.5 million, or $0.40 per
share, compared to $6.6 million, or $0.48 per share, last year. Adjusted for
one time charges recorded in both periods, earnings were $0.50 per share in
1998 compared to $0.51 last year.
Merger
On September 3, 1998, the company entered into a merger agreement with
Republic Industries, Inc. . Upon consummation of the proposed
merger, the company will become a wholly owned subsidiary of Republic, and the
company's stockholders will be entitled to receive $10.70 per share in cash.
The transaction is subject to customary closing conditions including
government and manufacturer approval, and the approval of Cross-Continent
stockholders. The transaction is also subject to compliance with framework
agreements between Republic and certain manufacturers. The transaction is
expected to close in the first quarter or 1999.
Commenting on the merger, Gilliland said, "Our objective has always been
to build an increasingly strong portfolio of dealerships that would achieve
brand, geographic and economic diversity. By joining with Republic, the
leading automotive retailer in America, we are able to achieve that objective
while at the same time aligning ourselves with a company whose values and
strategies we respect. For its part, Cross-Continent brings to Republic an
outstanding group of dealerships with some of the most profitable and best-
situated dealerships in the country."
The Company incurred and recorded merger related expenses of approximately
$750,000 during the period ended September 30, 1998. The Company expects to
record all additional merger related expenses as incurred until the proposed
merger is consummated.
Cross-Continent Auto Retailers, Inc. owns and operates a group of
franchised automobile retail dealerships in Texas, Oklahoma, Nevada, Colorado
and California. Through these dealerships, the company sells new and used
cars and light trucks, arranges related financing and insurance, sells
replacement parts and provides vehicle maintenance and repair services.
Cross-Continent Auto Retailers, Inc. is listed on the New York Stock
Exchange under the symbol XC.
Cross-Continent Auto Retailers, Inc. believes its shareholders benefit
from the views of management about the future of the company's business.
Included herein are forward-looking statements, including statements with
respect to anticipated revenue growth, acquisitions and profitability. There
are many factors which affect management's views about future events and
trends of the company's business. These factors involve risk and
uncertainties that could cause actual results or trends to differ materially
from management's view, including without limitation, economic conditions,
risks associated with acquisitions and the risk factors set forth from time to
time in the company's filings with the Securities and Exchange Commission.
CROSS-CONTINENT AUTO RETAILERS, INC.
($ 000 except per share and unit data)
Unaudited
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
New vehicle revenue $89,399 $65,260 $241,690 $163,550
Used vehicle retail revenue 50,965 42,257 148,589 120,702
Used vehicle W/S revenue 12,243 10,561 38,682 30,791
Other operating revenue 23,176 16,706 63,575 44,150
Total revenue 175,783 134,784 492,536 359,193
Cost of sales 143,743 111,061 405,145 296,756
Gross Profit 32,040 23,723 87,391 62,437
Selling, general and
administrative 24,806 16,786 67,187 45,429
Depreciation & amortization 1,029 815 2,868 1,814
Employee severance charge 0 0 815 0
Merger related expense 750 0 750 0
Loss on sale of dealerships, net 0 0 0 347
Operating Income 5,455 6,122 15,771 14,847
Interest expense (net) 2,184 1,953 6,660 4,066
Income before income taxes 3,271 4,169 9,111 10,781
Income taxes 1,467 1,557 3,649 4,157
Net Income $1,804 $2,612 $5,462 $6,624
Weighted average
shares outstanding 13,574 13,446 13,569 13,764
EPS (basic and diluted) 0.13 0.19 0.40 0.48
Unit Sales
New 3,719 2,891 9,946 7,393
Used - Retail 4,121 3,552 11,976 10,128
Wholesale 2,323 2,139 6,838 6,503
Average Selling Price:
New 24,038 22,574 24,300 22,122
Used - Retail 12,367 11,897 12,407 11,918
Wholesale 5,270 4,937 5,657 4,735
CROSS-CONTINENT AUTO RETAILERS, INC.
($ 000 )
Unaudited
September 30, December 31,
1998 1997
Cash and cash equivalents $7,141 $15,173
Accounts receivable 24,778 16,884
Inventory 60,347 55,807
Total current assets 93,809 89,656
Goodwill, net 83,604 67,988
Total assets 192,997 197,273
Floorplan notes payable 51,239 53,368
Total current liabilities 76,366 86,568
Long term debt 41,529 44,263
Total liabilities 122,273 134,011
Stockholders' equity 70,724 63,262
Total liabilities and stockholders' equity 192,997 197,273