Hometown Auto Reports Third Quarter and Nine Months 1999 Results
16 November 1999
Hometown Auto Reports Third Quarter and Nine Months 1999 Results
WATERTOWN, Conn.--Nov. 15, 1999--HOMETOWN AUTO RETAILERS, INC. (Nasdaq NM: HCAR) today announced financial results for the third quarter and nine months ended September 30, 1999.
Revenue for the third quarter increased 35.7% to $80.2 million compared to $59.1 million in the third quarter of 1998, resulting in large part from the acquisition of the Morristown and Newburgh dealerships. Same store sales for the quarter increased by 5.6% or $3.3 million and have been growing sequentially for the past three quarters. Gross profit dollars for the period increased by $2.4 million or 30.8% to $10.2 million and were 12.7% of sales compared to 13.2% of sales for the same period in 1998. Same store total gross profit dollars increased by 5% in the third quarter due to increased vehicle revenue and tighter control on the parts and service costs. Net income was $507,000 or $0.08 per diluted share versus $515,000 or $0.09 per diluted share for the third quarter of 1998.
Revenue for the nine months ended September 30, 1999 was $215.9 million compared to $185.9 million for the same period of 1998. In the first nine months of 1999, gross profit rose 16% to $28 million from $24.2 million in the first nine months of 1998. Net income was $1.3 million or $0.23 per diluted share versus $2.4 million or $0.41 per diluted share in the prior year period.
Joseph Shaker, President and Chief Operating Officer of Hometown Auto commented, "We experienced revenue growth in all sectors of our business during the quarter. Although acquisitions were a major contributor to the revenue increase, same-store sales for both new and used cars also grew. In addition to overall new car revenue growth of 35%, same-store sales of new vehicles increased 5% during the quarter. We also saw substantial growth in overall used car retail sales which increased 48% from the prior year, with same-store sales in this sector increasing by 16%. A greater number of unit sales combined with higher average revenue per vehicle were major contributors to the favorable results in the used car sector. In addition, Cyberlot, our intranet application, has enabled our dealerships to expand their offerings of used vehicles by way of cross utilization of our inventory and this also contributed to the increase in sales."
Mr. Shaker added, "While the two major acquisitions and other factors had a positive effect on Hometown's top line growth, our bottom line results for the quarter remained relatively unchanged. We experienced an increase in selling, general and administrative expenses and interest expense which was due primarily to the acquisition of new dealerships. The results also include $139,000 of pre-tax loss from start-up and development expenses for Hometown's new e-commerce subsidiary, CarDay.com, that was announced on November 12, 1999. Excluding start-up and development expenses of our Internet operation, Hometown would have earned $0.10 per diluted share for the quarter, an increase of 11% compared to last year's third quarter."
Mr. Shaker continued, "We experienced weakness in demand for Lincoln Town Cars being sold to Livery operators versus the comparable period last year. This is because Livery operators typically replace their fleets in the year of a model change, which in this case, was 1998 and this tends to cause a reduction of sales in the succeeding year. To address the decrease in demand, we lowered our prices on these vehicles. We have broadened our product mix over the last few quarters to minimize the effect of any weakness in demand for a particular car model. During the third quarter of 1999 we incorporated our first Daewoo franchise into the Westwood dealership and on November 4th we completed the acquisition of our first Mazda franchise which was tucked into our Lincoln/Mercury franchise in Framingham, Massachusetts."
Mr. Shaker concluded, "In addition to our pursuit of accretive acquisitions, cost-saving initiatives and diversification of our product line, we look forward to sharing the results of our newest Internet endeavor with followers of Hometown Auto. The concept, which was announced last week, will enable investors to buy and sell cars over the Internet in a more effective and efficient way and will offer car owners an array of financing, insurance warranty and other related products and services. We will keep investors up-to-date on developments as they unfold."
Hometown Auto Retailers sells new and used cars and light trucks, provides maintenance and repair services, sells replacement parts and provides related financing, insurance and service contracts through 11 franchised dealerships located in New Jersey, New York, Connecticut, Massachusetts and Vermont. The Company's dealerships offer 13 American and Asian automotive brands, including Chevrolet, Chrysler, Daewoo, Dodge, Ford, Isuzu, Jeep, Lincoln, Mazda, Mercury, Oldsmobile, Plymouth and Toyota. The Company 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 Statements of Operations
(in thousands, except per share information)
Third Quarter Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
-------- --------- ------- -------
(Pro Forma) (Pro Forma)
Revenues:
New vehicle sales $ 48,184 $ 35,773 $ 129,485 $ 107,589
Used vehicle sales 23,828 16,867 64,134 57,576
Parts and service
sales 6,267 4,986 17,301 16,269
Other dealership
revenues, net 1,875 1,445 5,024 4,513
------ -------- -------- -------
Total revenues 80,154 59,071 215,944 185,947
Cost of sales 69,980 51,262 187,940 161,715
------ -------- -------- -------
Gross profit 10,174 7,809 28,004 24,232
Amortization of
goodwill 150 157 436 363
Selling, general and
administrative
expenses 8,562 6,575 23,830 19,153
------- -------- -------- -------
Income (loss) from
operations 1,462 1,077 3,738 4,716
Other income (expense)
Interest expense, net (574) (147) (1,349) (644)
Other income (expense),
net (5) 29 (48) (4)
-------- -------- --------- -------
Income (loss) before
taxes 883 959 2,341 4,068
Provision for income taxes 376 444 995 1,688
-------- -------- --------- -------
Net income (loss) $ 507 $ 515 $ 1,346 $ 2,380
======== ======== ========= =======
Earnings per share basic $ 0.09 $ 0.09 $ 0.23 $ 0.41
Earnings per share diluted $ 0.08 $ 0.09 $ 0.23 $ 0.41
Weighted average shares
basic 5,900,000 5,800,000 5,867,033 5,800,000
Weighted average shares
diluted 6,062,718 5,800,000 5,972,464 5,800,000