Hometown Auto Retailers, Inc. Reports First Quarter 1999 Results
18 May 1999
Hometown Auto Retailers, Inc. Reports First Quarter 1999 Results
WATERTOWN, Conn.--May 17, 1999--HOMETOWN AUTO RETAILERS, INC. (Nasdaq NM - HCAR) today announced its results for the first quarter ended March 31, 1999. Total revenue for the quarter was $58.6 million compared to $62.8 million for the same period last year. Net income was $151,000 or $0.03 per share on a basic and diluted basis as compared to $866,000 or $0.15 per share on a basic and diluted basis for the first quarter of 1998. Gross profit decreased as a percent of sales for the first quarter of 1999 to 13% from 13.3% for the same period last year. Results for first quarter 1999 are actual results while the results for first quarter 1998 are pro forma as if all acquisitions through March 31, 1999 had taken place on January 1, 1998. In addition, certain private company expenses were adjusted.A number of factors affected Hometown's results for the quarter. Reductions in new car pricing by certain manufacturers created a stronger demand for lower margin new cars than for higher margin used cars. Lincoln Mercury new car unit sales were up 6.7% due to the increase in Mercury model car sales. The average retail price of Lincoln Mercury cars, however, was reduced by $2,808 per unit compared to prices last year. Hometown's Lincoln Mercury business comprised 48% of unit sales for new cars and 53% of dollar sales. Finance and insurance revenue declined $163,000, or 11% primarily due to the decline in sales of new livery units and used vehicles. The maintenance and repair business experienced slightly improved gross profit.
Commenting on the quarter, Joe Shaker stated, "We are confident that the results from initiatives implemented to diversify our product lines, acquire quality dealerships and broaden our reach from a marketing standpoint will become evident, going forward. We have the infrastructure at Hometown to support future growth of the company with diversification of brands through acquisition programs. When we reach a run rate of $600 million, our synergies will overtake the growth in corporate overhead."
Mr. Shaker continued, "Subsequent to closing on the $100 million GE Capital credit facility in January, we closed on the Newburgh Toyota truck dealership on April 1st . Newburgh is the largest truck retailer in New York State and a winner of many quality awards. The purchase price was financed with $2,900,000 in cash and 100,000 shares of stock. Newburgh should add $50 million to Hometown's revenue bringing our annual revenue run rate to $315 million. We are in talks with other dealers and dealer groups and have not lost sight of our goal to achieve a revenue run rate of $500 million by year-end 1999. We will keep our investors informed as to any new developments in this area."
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 11 franchised dealerships located in New Jersey, Connecticut, Massachusetts and Vermont. The Company's dealerships offer 11 American and Asian automotive brands, including Chevrolet, Chrysler, Dodge, 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 Statements of Operations
(in thousands, except per share information)
First Quarter First Quarter
Ended March 31, Ended March 31,
1999 1998
-------------- --------------
Revenues:
New vehicle sales $35,599 $34,617
Used vehicle sales 16,776 20,716
Parts and service sales 4,908 5,912
Other dealership revenues, net 1,347 1,510
-------------- --------------
Total revenues 58,630 62,755
Cost of sales 51,024 54,415
-------------- --------------
Gross profit 7,606 8,340
Amoritzation of goodwill 136 108
Selling, general and
administrative expenses 6,925 6,492
-------------- --------------
Income (loss) from operations 545 1,740
Other income (expense)
Interest expense, net (293) (291)
Other income (expense), net (1) (6)
-------------- --------------
Income before taxes 251 1,443
Provision for income taxes 100 577
-------------- --------------
Net income (loss) $151 $866
============== ==============
Earnings per share, basic and diluted $0.03 $0.15
Weighted average shares 5,800,000 5,800,000