Recreation USA Reports Revenue Nearly Doubles in Third Quarter
15 September 2000
Recreation USA Reports Revenue Nearly Doubles in Third Quarter
Acquisitions, Same-Store Growth Boost RV Dealer's Results
ORLANDO, Fla., Sept. 14 Holiday RV Superstores, Inc.
today reported results for the third quarter of fiscal 2000,
marked by a 96 percent increase in revenue from sales and service.
The nation's largest publicly traded recreational vehicle and marine
dealership chain, doing business under the tradename Recreation USA, reported
net sales and service revenue of $38.6 million for the third quarter ended
July 31, 2000, up from $19.7 million during the same period a year ago.
Double-digit same-store growth combined with revenue from new acquisitions
continued to fuel the Company's strong sales growth.
Recreation USA posted a net loss of $469,034, or $0.06 per diluted share,
for the third quarter of 2000, compared with net income of $497,451, or $0.07
per diluted share, during the third quarter of 1999. The Company said that
higher interest expense coupled with increased corporate expenses associated
with its aggressive industry consolidation efforts contributed to the net
loss.
"Our expected net loss in the quarter, while disappointing, reflects our
investments in infrastructure and personnel to position the Company for future
growth and profitability," said Ronald G. Huneycutt, president and CEO of
Recreation USA. "We are pleased with our continued growth in sales and
service, despite softness in the retail market for RVs. This success of our
consolidation strategy is already being affirmed by our same-store sales
growth and improved gross margins.
"Still, these sales gains were offset by higher operating expenses
associated with our accelerated merger and acquisition activity. As
Recreation USA continues to add dealerships, we expect that these expenses
will have a diminishing impact on our bottom line."
For the just-completed quarter, Recreation USA posted an 11 percent
increase in same-store sales during a time when higher interest rates and
fluctuating gas prices have slowed retail RV sales industry-wide. The Company
has responded to these market conditions by offering aggressive promotions,
improving its product mix and improving its service and maintenance
operations. On a pro forma basis, integrating all of Recreation USA's
acquisitions, sales and service increased 2.5 percent during the quarter over
the prior year.
As a percentage of revenue, Recreation USA reported that gross margin
increased to 18.3 percent in the third quarter of fiscal 2000, compared with
17.9 percent in the same period in fiscal 1999. The Company attributed the
improvement to increased revenue from its service and parts operations, which
offer higher gross margins.
"Poor service remains one of the chief complaints among RV owners -- and
an excellent opportunity for Recreation USA to capture additional high-margin
revenues," Huneycutt said. "As we continue to craft a national brand,
providing full-service and maintenance facilities from coast-to-coast is yet
another way we can distinguish ourselves from the competition."
Recreation USA reported higher selling, general and administrative
expenses during the third quarter of fiscal 2000. The Company attributed the
increase to higher corporate expenses related to its consolidation activity,
including adding new dealerships and building the infrastructure to support
those dealerships.
Recreation USA also saw interest expense increase during the just-
completed quarter. The Company attributed the increases to higher interest
rates associated with its floor plan financing, noting that interest rates
rose 175 basis points over the past 12 months, and the effect from Recreation
USA's acquisitions. The Company has added eight dealerships during the past
eight months, not including Hall Enterprises, Inc. in Kentucky, which it
agreed to purchase during the third quarter of fiscal 2000.
For the nine months ended July 31, 2000, Recreation USA posted sales and
service revenues of $122.5 million, up 91 percent over the same nine-month
period in fiscal 1999. The Company reported a net loss of $508,955, or $0.07
per diluted share, for the first nine months of fiscal 2000, compared with net
income of $1.8 million, or $0.24 per diluted share, for the year-ago period.
Recreation USA reported a 7.5 percent improvement in same-store sales and
service revenues during the first nine months of fiscal 2000, compared to the
year-ago period. The Company held its gross margin steady at 16.9 percent
during the first nine months of fiscal 2000, reflecting its efforts to
integrate acquired dealerships.
"We are feeling the effects of a softer RV retail market that no one in
the industry anticipated at the beginning of the year," said Michael Riley,
chairman of Recreation USA. "Slower sales coupled with higher interest rates
and gas prices have combined to make this a challenging year for RV dealers
and manufacturers.
"The growth of our sales and service revenues indicates we are outpacing
the market and, as the industry improves over the coming months, we expect to
fully benefit. In the quarters ahead, we will continue to build our top-line
revenue growth through a timetable of aggressive acquisitions while focusing
on returning to profitability."
HOLIDAY RV SUPERSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
07/31/00 07/31/99 07/31/00 07/31/99
Sales and Service
Revenue $38,565,943 $19,696,900 $122,454,344 $64,137,964
Cost of Sales and
Service 31,509,100 16,162,894 101,777,358 53,285,431
Gross Profit 7,056,843 3,534,006 20,676,986 10,852,533
Selling, General and
Administrative
Expenses 6,348,376 2,610,363 18,044,471 7,800,928
Income from
operations 708,467 923,643 2,632,515 3,051,605
Interest Income 47,318 150,069 183,186 400,801
Interest Expense (1,477,019) (258,261) (3,519,656) (847,573)
Gain on the Sale
of Assets --- --- --- 316,747
Income (loss) before
income tax
(benefit) (721,234) 815,451 (703,955) 2,921,580
Income Taxes
(Benefit) (252,200) 318,000 (195,000) 1,139,400
Net (Loss) Income ($469,034) $497,451 ($508,955) $1,782,180
Basic (Loss) Earnings
per Common Share ($0.06) $0.07 ($0.07) $0.25
Diluted (Loss) Earnings
per Common Share ($0.06) $0.07 ($0.07) $0.24
Weighted Average Number
of Shares-Basic 7,339,300 7,186,500 7,274,000 7,181,900
Weighted Average Number
of Shares-Diluted 7,339,300 7,354,700 7,274,000 7,300,400