Warrantech Corporation Announces Third Quarter Results
28 January 1999
Warrantech Corporation Announces Third Quarter Results
STAMFORD, Conn.--Jan. 27, 1999--Company Doubles EPS as Compared to Same Period Last Year
Warrantech Corporation today announced results for the fiscal 1999 third quarter ended December 31, 1998.
Revenues for the fiscal third quarter 1999 increased 11.8 percent to $58.8 million, from revenues of $52.6 million for the fiscal third quarter of 1998. The Company reported net income for the fiscal third quarter of 1999 of $1.8 million, compared to net income of $1.0 million for the same period of fiscal 1998. Earnings per share this quarter doubled to $0.12 per fully diluted share, from $0.06 per fully diluted share, for the same period in fiscal 1998.
For the nine months ended December 31, 1998, revenues were $169.1 million up 8.9 percent as compared to $155.3 million for the same period in fiscal 1998. The Company reported a net profit of $1.2 million, or $0.08 per fully diluted share, for the nine months ended December 31, 1998, compared to net income of $3.9 million, or $0.25 per fully diluted share, for the same period in fiscal 1998.
The Company indicated that as a result of the re-engineering of Warrantech's call center processes and other cost cutting initiatives which began in the second quarter, SG&A during the third quarter was $13.8 million as compared to $13.2 million for the second quarter of fiscal year 1999 and $14.2 million for the first quarter of fiscal year 1999. Sales rose 11.8 percent compared to the third quarter of 1998, while SG&A did not increase. As a percentage of gross revenues, SG&A improved to 23.1 percent for the third quarter, versus 25.7 percent for the third quarter of 1998 and 28.2 percent for the first quarter of 1999.
Gross profit as a percentage of revenues increased to 31.3 percent for the quarter, compared to 31.2 percent last year.
Warrantech Chairman and Chief Executive Officer, Joel San Antonio, stated, "Warrantech is again pleased to announce that it continues to be profitable. During the third fiscal quarter the Company demonstrated its ability to grow revenues and that its cost reduction initiatives have been effective in improving Warrantech's financials.
"During the quarter, Warrantech established itself as the leading company in the home warranty industry. By entering into agreements with utility companies and organizations such as Sempra Energy , the 2,000 public power systems that comprise Hometown Connections, Northern Virginia Electric Cooperative and United Illuminating Company, Warrantech now has exclusive access to provide home service contracts to more than 16 million customers nationwide. The results during the third fiscal quarter demonstrate that this is only the beginning of what is certain to be a very lucrative business for Warrantech."
Mr. San Antonio added, "As previously indicated last quarter, Warrantech's Help Desk subsidiary received the service contact business of Computer City, which CompUSA had acquired. We are pleased to announce that during the third quarter, the Company began to realize revenues resulting from this business.
"Warrantech remains confident that it will continue its financial disciplines while expanding and growing its markets both domestically and internationally."
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.
This release is available on the KCSA Worldwide website at www.kcsa.com.
Warrantech Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(Thousands of Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
1998 1997 1998 1997
Gross Revenues $ 59,578 $ 53,225 $170,984 $156,744
Deferred Revenues (786) (629) (1,928) (1,440)
Net Revenues 58,792 52,596 169,056 155,304
Costs and Expenses:
Direct Costs 40,921 36,596 122,926 111,363
Service, Selling and General
and Administrative 13,756 13,673 41,169 35,806
Depreciation and
Amortization 1,337 935 3,748 2,436
Total Costs and Expenses 56,014 51,204 167,843 149,605
Income from Operations 2,778 1,392 1,213 5,699
Other Income/Expense, Net 311 254 828 650
Income Before Taxes 3,089 1,646 2,041 6,349
Provision for Income Taxes 1,272 634 858 2,440
Net Income $ 1,817 $ 1,012 $ 1,183 $ 3,909
Net Income (Loss) per Share
Basic $ 0.12 $ 0.08 $ 0.08 $ 0.30
Fully Diluted $ 0.12 $ 0.06 $ 0.08 $ 0.25
Weighted Average
Shares Outstanding
Basic 15,520,411 13,284,760 14,981,328 13,228,056
Fully Diluted 15,531,938 15,786,572 15,401,092 15,785,414
Warrantech Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
December 31,
1998 1997
Total Current Assets $64,373 $57,653
Property & equipment, net 15,621 12,546
Other Assets 12,256 11,667
Total Assets $92,250 $81,866
Current Liabilities $49,981 $42,450
Deferred revenues 8,851 6,304
Long term debt & rent obligations 2,565 3,013
Total Shareholders' Equity 30,853 30,099
Total Liabilities &
Shareholders' Equity $92,250 $81,866