Smart Choice Automotive Group Reports Net Income
11 July 2000
$3.1 Million In Fiscal Year 2000 Versus Net Loss in Fiscal Year 1999 And Announces 1-For-20 Reverse Stock Split
TITUSVILLE, Fla. - Smart Choice Automotive Group, Inc., which sells and
finances used cars in Florida and Texas, today announced an impressive earnings
turnaround for the quarter and fiscal year ended April 30, 2000. The Company
also announced that its Board of Directors today authorized a 1-for-20 reverse
split of the Company's common stock. Unless otherwise noted, all share and per-
share amounts in this release have been adjusted to give effect to the 1-for-20
reverse stock split.
For the fiscal year ended April 30, 2000, sales of used cars increased
76.9% to $108.6 million, when compared with $61.4 million in the fiscal year
ended April 30, 1999, while interest income increased 139.1% to $21.2 million,
from $8.9 million. Net income improved to $3.1 million, or $0.76 per diluted
share, compared with a net loss of ($1.4 million), or ($197.11) per share, in
the previous fiscal year. Earnings per share were calculated on 4,099,032
weighted average diluted shares outstanding for the fiscal year ended
April 30, 2000, versus 7,163 basic and diluted shares outstanding in the
fiscal year ended April 30, 1999. The increase in diluted shares outstanding
reflects the Company's restructuring and its reverse merger with PAACO
Automotive Group, Inc. Prior to December 1, 1999, PAACO was a majority-owned
subsidiary of Crown Group, Inc. and, as a result of the reverse
merger, Crown Group, Inc. currently owns 70% of Smart Choice Automotive Group,
Inc. The Company's consolidated operating results for the fiscal year ended
April 30, 2000 include the results of its Texas operations (PAACO) for the
entire period and the results of its Florida operations (Smart Choice) since
December 1, 1999.
For the quarter ended April 30, 2000, sales of used cars increased 144.6%
to $45.0 million, compared with $18.4 million in the quarter ended April 30,
1999, while interest income increased 222.2% to $8.7 million, compared with
$2.7 million in the quarter ended April 30, 1999. The Company reported net
income of $1.9 million, or $0.19 per diluted share, in the fourth quarter of
the fiscal year ended April 30, 2000, compared with a net loss of ($380,000),
or ($52.71) per share, in the fourth quarter of the fiscal year ended April
30, 1999. Diluted earnings per share were calculated on 9,824,649 weighted
average diluted shares outstanding for the quarter ended April 30, 2000,
versus 7,163 basic and diluted shares outstanding in the year-earlier quarter.
The increase in diluted shares outstanding reflects the abovementioned
restructuring and merger.
The Company's gross profit margin improved to 37.7% for the fiscal year
ended April 30, 2000, compared with 31.8% in the previous fiscal year.
Provision for credit losses approximated 19.7% of sales in the fiscal year
ended April 30, 2000, versus 16.2% in the fiscal year ended April 30, 1999.
Meanwhile, the Company's SG&A expense ratio continued to improve,
approximating 19.5% of revenue for the fiscal year ended April 30, 2000,
compared with 22.6% in the prior year.
The Company's gross profit margin reached 39.8% in the fourth quarter of
the fiscal year ended April 30, 2000, compared with 30.4% in the prior-year
period. Provision for credit losses approximated 22.8% of sales in the
quarter ended April 30, 2000, versus 14.8% in the year-earlier period.
Meanwhile, the SG&A expense ratio improved to 17.2% of revenue in the final
quarter of the fiscal year ended April 30, 2000, compared with 22.1% in the
prior-year quarter.
"Management was very pleased to report net income of $3.1 million and
$1.9 million, respectively, for the fiscal year and quarter ended April 30,
2000," stated Ed Ernst, Chief Executive Officer of Smart Choice Automotive
Group, Inc. "Fourth quarter net income increased 129.2% from third quarter
levels, reflecting seasonal sales trends, improved operating efficiencies,
substantial cost reductions following the reverse merger with PAACO, and the
financial and operating restructuring of the Company in December 1999.
"Looking forward, we are optimistic that further gains in sales and
earnings are in store for the current fiscal year," continued Ernst. "PAACO
recently opened a new centralized reconditioning center in the Dallas-Ft.
Worth area, which will allow the Company to recondition a greater number of
vehicles on a much more efficient basis. The implementation of consistent
credit and collection procedures has also allowed us to reduce the rate of
vehicle repossessions in recent months, while improving cash flows. While
expansion in the number of dealerships in Florida and Texas will be modest
during the fiscal year ending April 30, 2001, we expect to maintain consistent
sales and gross profit levels, with continuing improvement of collection
experience in both Florida and Texas."
Smart Choice also announced today that its Board of Directors has
authorized the implementation of a 1-for-20 reverse split of the shares of the
Company's common stock. The effective date of the reverse split will be
July 26, 2000. As of the opening of trading on that date, the Company's
common stock will be priced to reflect the reverse stock split.
"The reverse stock split is consistent with our long-term goal of becoming
re-listed on The Nasdaq Stock Market, and we believe the reduction in the
number of shares outstanding will allow the Company to attract greater
interest within the investment community," noted Ernst.
Smart Choice Automotive Group, Inc. sells and finances used cars in the
States of Florida and Texas. The Company, which is headquartered in
Titusville, Florida, currently operates twelve used car dealerships in Florida
under the name First Choice and twelve dealerships in Texas under the name
PAACO Automotive Group, Inc. Its common stock trades on the OTC Bulletin
Board under the symbol "SMCH".
SMART CHOICE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
Twelve Months Ended
April 30, April 30,
2000 1999
Sales of used cars $108,583,828 $61,387,909
Less: Cost of used cars sold 67,594,118 41,858,247
Provision for credit losses 21,369,553 9,926,127
19,620,157 9,603,535
Other Income
Interest income 21,233,097 8,879,904
Portfolio interest expense 9,404,130 4,878,680
Net interest income 11,828,967 4,001,224
Other income (expense) (206,282) 460,252
11,622,685 4,461,476
Income before operating expenses 31,242,842 14,065,011
Operating Expenses
Selling, general and administrative 25,274,156 15,860,074
Depreciation and amortization 819,199 391,880
26,093,355 16,251,954
Earnings before income taxes 5,149,487 (2,186,943)
Income tax expense (benefit) 2,038,669 (775,022)
Net Earnings (Loss) $3,110,818 $(1,411,921)
Net Earnings (Loss) per Common share
adjusted to give effect to
1 for 20 Reverse Split
Basic $3.04 $(197.11)
Diluted $0.76 $(197.11)
Weighted Average Shares adjusted to
give effect to 1 for 20 Reverse Split
Basic 1,022,676 7,163
Diluted 4,099,032 7,163
SMART CHOICE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
Three Months Ended
April 30, April 30,
2000 1999
Sales of used cars $44,974,233 $18,412,670
Less: Cost of used cars sold 26,527,953 12,806,729
Provision for credit losses 10,270,810 2,720,793
8,175,470 2,885,148
Other Income
Interest income 8,702,100 2,730,584
Portfolio interest expense 3,624,105 1,340,753
Net interest income 5,077,995 1,389,831
Other (expense) (596,110) (39,551)
4,481,885 1,350,280
Income before operating expenses 12,657,355 4,235,428
Operating Expenses
Selling, general and administrative 9,223,176 4,672,488
Depreciation and amortization 328,448 153,214
9,551,624 4,825,702
Earnings before income taxes 3,105,731 (590,274)
Income tax expense (benefit) 1,246,353 (212,706)
Net Earnings (Loss) $1,859,378 $(377,568)
Net Earnings (Loss) per Common share
adjusted to give effect to
1 for 20 Reverse Split
Basic $0.76 $(52.71)
Diluted $0.19 $(52.71)
Weighted Average Shares adjusted to give
effect to 1 for 20 Reverse Split
Basic 2,444,394 7,163
Diluted 9,824,649 7,163
SMART CHOICE AUTOMOTIVE GROUP, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
CONSOLIDATED BALANCE SHEET DATA
April 30, April 30,
2000 1999
Cash and cash equivalents $1,882,716 $62,832
Finance receivables, net $132,854,563 $47,757,350
Total assets $177,155,176 $60,374,032
Total Liabilities $160,527,444 $3,676,652
Total Shareholders' Equity $16,095,180 $6,697,380