Hometown Auto Reports Fourth Quarter and Year End Financial Results
23 March 1999
Hometown Auto Reports Fourth Quarter and Year End Financial Results
WATERTOWN, Conn.--March 22, 1999--HOMETOWN AUTO RETAILERS, INC. (Nasdaq NM - HCAR) today announced that its pro forma revenues, net income and net income per share for the year ended December 31, 1998 were $240.6 million, $2.3 million and $0.39 compared to $254.2 million, $3.5 million and $0.60 per share in the prior year. For the three months ended December 31, 1998 pro forma revenues, net loss and net loss per share were $54.7 million, $127,000 and $0.02 compared to revenues of $61.3 million, net income of $269,000 and income per share of $0.05 in the same quarter of 1997. Pro forma financial results treat all acquisitions consummated in 1998 as if they had occurred on January 1, 1997 and are adjusted for compensation expense, management fees, rent expense and certain other private company expenses.The reduction in pro forma revenues and income in the year and quarter ended December 31, 1998 primarily reflect a decline in used vehicle sales and a related decline in parts and service sales from the loss of re-conditioning business on those used vehicles. Used vehicle sales declines reflect the Company's decision to keep a tight rein on used vehicle inventories until the closing of its $100 million credit facility with GE Capital in January 1999, the impact of price incentives offered by the Company's largest supplier of new cars which shifted potential used car business to new cars and, in the third quarter and the beginning of the fourth quarter, higher auction prices on certain models.
Joseph Shaker, President and Chief Operating Officer of Hometown Auto, said "1998 was a year of significant accomplishment in which we created a base for future growth in revenue and profits. On July 31, 1998 we completed our initial public offering providing the capital required to complete the combination of our six founding dealerships and the simultaneous acquisition of three additional dealerships. During 1998 we negotiated, and just after year-end we entered into, a $100 million credit facility with GE Capital which will provide both lower financing rates for our new and used car inventories as well as an additional $15 million for acquisitions.
Mr. Shaker continued, "Even before closing the GE Capital credit facility, we acquired an additional Lincoln Mercury dealership in the Boston metro west area and, just following year-end, one in Morristown, New Jersey. The integration of these 11 dealerships and the commencement of activities to implement our operating models and procedures absorbed significant management time and energy. While integration of acquisitions and obtaining adequate capital are key to future success, those activities in 1998 deferred more rapid implementation of our acquisition program. However, we have already strengthened our market position in two key areas, Boston Metro West and Northern New Jersey. With our now strengthened financial position and the steps that we have taken to implement our business models we expect to show improvements in results beginning in the second quarter of this year. Further, upon completion of the proposed acquisition of Newburgh Toyota in March 1999, the largest Toyota truck dealer in New York, our annual revenue run rate will be at $315 million a significant step toward our goal of a $500 million run rate by the end of 1999."
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 10 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 factory authorized service 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 Consolidated Statements of Operations
(in thousands, except per share information)
Fourth Quarter Ended Year Ended
December 31, December 31,
1998 1997 1998 1997
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Revenues:
New vehicle sales $ 32,614 $ 33,933 $ 140,203 $ 141,211
Used vehicle sales 15,828 20,045 73,404 84,395
Parts and service
sales 4,878 6,318 21,147 23,211
Other dealership
revenues, net 1,336 976 5,849 5,379
----------- ----------- ----------- -----------
Total revenues 54,656 61,272 240,603 254,196
Cost of sales
New vehicle sales 30,707 31,711 131,677 132,377
Used vehicle sales 14,514 18,397 66,868 76,694
Parts and service
sales 2,310 3,731 10,701 12,324
----------- ----------- ----------- -----------
Cost of sales 47,531 53,839 209,246 221,395
----------- ----------- ----------- -----------
Gross profit 7,125 7,433 31,357 32,801
Amortization of
excess of purchase
price over net
tangible assets
acquired 110 104 473 417
Selling, general
and administrative
expenses 6,894 6,580 26,047 25,946
----------- ----------- ----------- -----------
Income (loss) from
operations 121 749 4,837 6,438
Other income
(expense)
Interest expense,
net (287) (173) (931) (625)
Other income
(expense), net 43 (129) 39 15
----------- ----------- ----------- -----------
Income (loss)
before taxes (123) 447 3,945 5,828
Provision for
income taxes 4 178 1,692 2,331
----------- ----------- ----------- -----------
Net income
(loss) $ (127) $ 269 $ 2,253 $ 3,497
=========== =========== =========== ===========
Earnings per share,
basic and diluted $ (0.02) $ 0.05 $ 0.39 $ 0.60
Weighted average
shares 5,800,000 5,800,000 5,800,000 5,800,000