Precision Auto Care, Inc. Announces Third Quarter Results
19 May 1999
Precision Auto Care, Inc. Announces Third Quarter Results
LEESBURG, Va., May 18 -- Precision Auto Care, Inc.
today announced that the Company reported revenues of
$10.7 million and a net loss of $5.6 million, or $0.92 loss per share, for the
quarter ended March 31, 1999, compared to revenues of $11 million and net
income of $619,000, or $0.11 loss per share, for comparable period of the
prior year. Results for the nine months ended March 31, 1999 were revenues of
$33.0 million and a net loss of $10.9 million, or $1.79 per share, compared to
pro forma combined revenues of $34.3 million and net income of
$2.4 million, or $0.44 per share, for the comparable period of the prior year.
The results for the three months ended March 31, 1999 included special charges
totaling $2.7 million, or $0.45 loss per share. These charges included
$1.3 million related to abandoned acquisitions and lease terminations;
$700,000 for severance payments related to the elimination of senior
management positions; and $700,000 for changes in estimates of collectibility
of accounts and other miscellaneous expenses.
Charles L. Dunlap, President and Chief Executive Officer, stated that:
"While revenues remained flat from overall operations, operating costs are
down significantly from the prior quarter ending December 31, 1998, and
contributions from operations increased 48% versus the prior quarter. Overall
results were clearly impacted by charges related to abandonment of
acquisitions, severance, and receivables," said Dunlap. "Seasonality and cash
constraints also affected revenues in the quarter at our manufacturing and
distribution units. However, revenues snapped back in our distribution
business as a result of successfully completing a $5 million bridge loan in
January. The Company's revised strategy to focus sales of car wash and
building units to petroleum marketers and commercial retailers is progressing
and is expected to increase revenues in the current quarter."
The Company has executed an amendment to the Modified Loan Agreement which
provides for two real estate transactions totaling $1.85 million to be
completed by July 31, 1999. The Amendment also requires its line of credit to
be reduced to $4.6 million by June 1, 1999 and $4.15 million by July 31, 1999.
The Company has completed a major refinancing of its car wash properties for
$7.2 million, satisfying a key condition under its bank loan agreement. Five
million of the proceeds were applied to reduce term loan obligations to
$4.48 million balance and $1.5 million were applied to the $5 million bridge
loan due May 25, 1999.
The Company has been notified by the Nasdaq that it does not meet the net
tangible asset requirements for continued listing on the Nasdaq National
Market. The Company has recently made a presentation for listing on the
Nasdaq SmallCap Stock Market. A decision on the listing application will be
rendered in the next three to four weeks.
The Board of Directors also has authorized the Company to retain the
services of an investment banker to review strategic and recapitalization
opportunities.
Precision Auto Care, Inc. is the world's largest franchisor of auto care
centers, with 656 operating centers as of May 14, 1999. The Company
franchises and operates Precision Tune Auto Care, Precision Auto Wash, and
Precision Lube Express centers around the world, and offers a vertically
integrated organization with manufacturing and distribution subsidiaries.
Cautionary Statement: The statements in this press release constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements are subject to risks and uncertainties that could cause
Precision Auto Care Inc.'s actual results, performance or achievements to
differ materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, but are not limited to, (i) the risks and uncertainties
reflected and set forth in the text of this press release, (ii) the fact that
Precision Auto Care Inc. and the companies it acquired on and subsequent to
the date of its initial public offering have only recently conducted
operations as a combined company, (iii) the seasonal nature of portions of the
business, (iv) the highly competitive markets in which Precision Auto Care
Inc. operations, (v) difficulties in integrating all of the businesses
Precision Auto Care Inc. has acquired, (vi) risks associated with Precision
Auto Care Inc.'s ability to continue its strategy of growth through
acquisitions and (vii) risks associated with Company's ability to make or
effect acquisitions in the future and to successfully integrate newly-acquired
businesses into existing operations and the risks associated with such newly-
acquired businesses. For a discussion of such risks and uncertainties which
could cause actual results, performance or achievements to differ from those
contained in the forward-looking statements, se "Risk Factors" in the
Company's Annual Report on Form 10-K for the most recently ended fiscal year.