Crown Group, Inc. Reports 237% Increase in First Quarter Net Income
16 September 1999
Crown Group, Inc. Reports 237% Increase in First Quarter Net Income and Diluted E.P.S. of $0.25 vs. $0.07
DALLAS--Sept. 15, 1999--$21.1 Million in Prior-year Quarter
Crown Group, Inc. today announced significant increases in revenues and earnings for the first quarter of fiscal year 2000.
For the three months ended July 31, 1999, revenues increased 130% to $48.6 million, compared with $21.1million in the first quarter of the previous fiscal year. Net income for the most recent quarter totaled $2,578,407, or $0.25 per diluted share, which represented a 237% increase when compared with net income of $765,617, or $0.07 per diluted share, in the year-earlier period. Revenues for the first quarter of FY2000 were derived as follows (before intercompany eliminations): Automotive Sales and Finance -- $44.6 million; Precision IBC -- $1.5 million; Concorde Acceptance Corporation -- $1.8 million; and Other -- $1.1 million.
"We were very pleased with Crown's financial performance during the first quarter of our 2000 fiscal year," stated Edward R. McMurphy, president and chief executive officer of Crown Group, Inc. "Profits for the quarter exceeded the Company's earnings for the entire fiscal year ended April 30, 1999, if gains from the sale of securities are excluded from last year's results. Higher earnings from our automotive and Argentine casino operations were the primary contributors to the 237% increase in first quarter net income, along with greater profits at Concorde Acceptance Corporation. Home Stay Lodges recorded a modest loss for the quarter, while a breakeven performance was achieved by our recently-opened casino operations in El Salvador."
"All of our majority- and minority-owned subsidiaries are effectively executing their growth strategies," continued McMurphy. "Car-Mart opened a number used of car dealerships in the first quarter, including satellite lots to larger dealerships in nearby cities. Paaco returned to profitability in the most recent quarter, and its two new dealerships in Houston are exceeding sales expectations. We are very pleased with our two new casinos in El Salvador, which achieved profitability less than two months after opening. Current trends suggest that we should expect a return on our investment from the El Salvador casinos which exceeds the impressive returns we have realized from our investment in Casino Magic Neuquen in Argentina."
"While it is too early in the year to make specific projections, we currently anticipate that FY2000 should be an outstanding year for Crown, with earnings substantially exceeding last year's results (excluding securities gains). We believe that our strategy of investing in small-cap and mid-sized companies will prove highly rewarding to Crown shareholders in coming years, and the proposed merger of our 85%-owned Paaco Automotive Group subsidiary into Smart Choice Automotive Group is consistent with this strategy," concluded McMurphy.
As of July 31, 1999, Crown Group's shareholders' equity totaled $54.0 million, which was equivalent to approximately $5.53 for each share of common stock outstanding.
Under a previously-authorized stock repurchase program, Crown purchased 18,000 shares of its common stock during the most recent quarter. The Company has repurchased over 2.8 million shares of its common stock since March 1996. On August 4, 1999, the Company announced approval by its Board of Directors for the repurchase of up to an additional one million shares of common stock in the open market, or in private transactions, whenever management considers such repurchases to be in the best interests of shareholders.
On August 27, 1999, Crown Group, Inc. and Smart Choice Automotive Group announced a Letter of Intent for the merger of Paaco Automotive Group into Smart Choice in a transaction which would result in Crown owning a majority interest in Smart Choice, which operates 15 used car dealerships in the State of Florida.
Crown Group, Inc. seeks to enhance shareholder value through the acquisition, development and operation of small-cap companies with significant growth potential. Crown Group currently owns (i) 100% of America's Car-Mart, Inc. and 85% of Paaco Automotive Group, Inc., vertically integrated used car sales and finance companies; (ii) 100% of Precision IBC, a firm specializing in the sale and rental of intermediate bulk containers; (iii) 80% of Concorde Acceptance Corporation, a sub-prime mortgage lender; (iv) 49% of Casino Magic Neuquen, a casino operator in the Province of Neuquen, Argentina; (v) 50.1% of CG Incorporated S.A. de C.V., which operates two casinos in El Salvador; (vi) 80% of Home Stay Lodges, a partnership which is involved in the development and operation of extended-stay lodging facilities; and (vii) 45% of Atlantic Castings, Inc, an investment castings manufacturer of turbine engine components.
Crown Group, Inc. is headquartered in Dallas and its common stock is traded on the Nasdaq National Market under the symbol "CNGR".
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 could cause or contribute to such differences include, but are not limited to, those relating to the development of the Company's businesses, continued availability of lines of credit for the Company's businesses, changes in interest rates, changes in the industries in which the Company operates, competition, dependence on existing management, the stability of Argentina's and El Salvador's governments, currency exchange rate fluctuations, the repatriation of funds from Argentina and El Salvador, domestic or global economic conditions (particularly in the states of Texas and Arkansas), changes in foreign or domestic tax laws or the administration of such laws and changes in gaming or lending laws or regulations. 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.
CROWN GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
-----------------------------
(Unaudited)
Three Months Ended
July 31, July 31,
1999 1998
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(Restated)/a
Total revenues $ 48,555,936 $ 21,069,790
Costs and expenses 45,478,837 20,453,499
Equity in earnings of
unconsolidated subsidiaries 740,802 568,621
Loss on sale of securities -- (74,403)
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Income before taxes
& minority interests 3,817,901 1,110,509
Provision for income taxes 1,213,037 261,010
Minority interests 26,457 83,882
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Net income $ 2,578,407 $ 765,617
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Earnings per share:
Basic $ 0.26 $ 0.08
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Diluted
$ 0.25 $ 0.07
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Weighed average number of shares
outstanding:
Basic 10,068,220 10,207,065
Diluted 10,512,850 10,454,696
/a Note: Restated to reflect certain accounting adjustments at Paaco
Automotive Group. For further information, refer to Company news
releases dated July 23, 1999 and July 28, 1999.
CROWN GROUP, INC. AND SUBSIDIARIES
(Unaudited)
First Quarter
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REVENUE CONTRIBUTION ($000) FY2000 FY1999
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Automobile $ 44,570 $ 17,671
IBCs 1,487 1,282
Mortgage 1,841 1,549
Other 1,111 683
Eliminations (453) (115)
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Consolidated Revenues $ 48,556 $ 21,070
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTERESTS ($000) FY2000 FY1999
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Automobile $ 3,753 $ 412
IBCs 205 269
Mortgage 123 73
Other (263) 356
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Income before taxes and
minority interests $ 3,818 $ 1,110
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BALANCE SHEET DATA - July 31, 1999 (Unaudited)
Cash $ 2,212,676
Total assets 169,640,064
Stockholders' equity 54,035,177
Shares outstanding 9,765,796
Book value per share $5.53