Smart Choice Automotive Group Reports Record Results for 1998
10 February 1999
Smart Choice Automotive Group Reports Record Results for 1998; Plans to Sell Its New Car Dealership and Corvette Parts Subsidiaries
TITUSVILLE, Fla.--Feb. 10, 1999--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 1998. The company also announced that it intends to divest two of its four business segments, new car operations and Eckler Industries, in order to focus on its core used automobile sales and financing businesses.Due to the proposed sale of the two segments, the reported financial results reflect the continuing operations of the used automobile sales and financing businesses. New car operations and Eckler Industries have been reclassified as discontinued operations.
For the year ended December 31, 1998, the company's revenues from continuing operations increased 126 percent to $103,364,009, from revenues of $45,666,787 in the prior year. Net income from continuing operations for the year totaled $7,409,128, or $1.10 per share, compared to a loss of $18,137,536, or $4.09 per share, for the prior year. Net income for the year, including a loss of $1,741,166 from discontinued operations, was $4,611,523, or 68 cents per diluted share, compared to a loss of $18,648,605 or $4.21 per share in the prior year.
Net income per share has been calculated using post-reverse split shares. A 1-for-2 reverse stock split was effective on August 24, 1998. Net income for the fourth quarter and year should not be taxed because of tax loss carry-forward benefits available to the company.
Revenues from continuing operations for the quarter ended December 31, 1998 were $26,478,978 compared with $17,308,635 for the comparable quarter of 1997, reflecting a 53 percent increase. Net income from continuing operations for the most recent quarter totaled $1,505,740, or 22 cents per share, compared to a loss of $10,705,748, or $2.42 per share, for the same 1997 period. Results for the quarter and year included a charge of $1,056,439 for a cancelled, follow-on stock offering. Net loss for the quarter, including a loss from discontinued operations of $1,746,777 or 26 cents per share, was 19 cents per share.
"This has been a year of tremendous growth and success for Smart Choice," said Gary Smith, president and chief executive officer of Smart Choice Automotive Group. "As expected, this latest quarter shows that we can be profitable for a full year. We have decided to focus only on our core subprime automobile retailing and financing operations, and we expect to sell Eckler's and the new car dealerships this year. This reallocation of resources will enable the company to grow more rapidly in a capital-constrained environment. We sold 1,702 used cars during the quarter and 8,329 cars for the year as a whole, which represented gains of 27 percent and 144 percent, respectively."
"Our customer receivables portfolio, which now totals $116 million, is performing as expected," noted Joseph Mohr, chief financial officer. "Losses on our newer portfolio pools continue trending below losses on our more seasoned portfolios."
Smart Choice Automotive Group, Inc., operates a network of 28 used and new car dealerships in Florida. The company underwrites, finances and services retail installment contracts generated from the sale of used cars by its stores. Its discontinued operations include Eckler's, one of the world's largest after-market suppliers of Corvette parts and accessories, and two new car operations.
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)
Three Months Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1998 1997
Vehicle and
Related Revenues:
Sales of Used Vehicles 20,675,854 12,549,161 84,584,457 35,279,228
Income on Finance
Receivables 5,685,435 4,585,174 17,600,022 9,209,656
Income from Insurance
Services 117,689 174,300 1,179,530 1,177,903
26,478,978 17,308,635 103,364,009 45,666,787
Cost of Vehicle &
Vehicle Related Revenues:
Cost of Used Vehicles
Sold 13,414,147 11,939,400 55,059,264 27,950,703
Cost of Insurance
& Training 11,556 28,179 87,909 85,098
Provision for
Credit Losses 3,154,150 2,530,802 11,355,559 4,941,983
16,579,853 14,498,381 66,502,732 32,977,784
Net Revenues from
Vehicle Sales
and Vehicle Related
Activities 9,899,125 2,810,254 36,861,277 12,689,003
Expenses:
Operating expenses 6,101,037 6,987,852 22,700,322 17,810,178
Restructuring charges 2,117,906 2,117,906
Compensation Expense
Related to Employee ----- 1,405,087 ----- 4,649,702
Stock Options
6,101,037 10,510,845 22,700,322 24,577,786
Income (Loss)
From Operations 3,798,088 (7,700,591) 14,160,955 (11,888,783)
Other Expenses (Income):
Interest Expense 2,261,265 2,994,906 7,839,975 6,416,675
Other Expense (Income) 31,083 10,251 (1,088,148) (167,922)
----- -----
Net Income (Loss) from
Continuing Operations 1,505,740 (10,705,748) 7,409,128 (18,137,536)
Expenses related to
cancelled stock
offering (1,056,439) ----- (1,056,439) -----
-----
Income (Loss) from
Discontinued Operations
Income (Loss) from
segment operations (67,445) (811,415) (61,834) (511,069)
Gain (Loss) on disposal
of segments (1,679,332) ----- (1,679,332) -----
(1,746,777) (811,415) (1,741,166) (511,069)
Net Income (Loss) $(1,297,476)$(11,517,163) $4,611,523 $(18,648,605)
Basic Earnings Per Share:
Income (Loss) from
Continuing Operations $0.22 $(2.42) $1.10 $(4.09)
Income (Loss) from
Discontinued Operations $(0.26) $(.18) $(0.26) $(.12)
Net Income (Loss) $(0.19) $(2.60) $0.69 $(4.21)
Diluted Earnings
Per Share:
Income (Loss) from
Continuing Operations $0.21 $----- $1.06 $-----
Income (Loss) from
Discontinued Operations $----- $----- $----- $-----
Net Income (Loss) $----- $----- $0.68 $-----
Average No. of
Basic Shares
Outstanding 6,729,968 4,430,367 6,729,968 4,430,367
Average No. of Diluted
Shares Outstanding 7,046,157 5,002,106 7,398,025 5,002,106
Note: Per share figures and shares outstanding have been adjusted for a 1-for-2 reverse stock split effective August 24, 1998