Crown Group, Inc. Reports Significant Increases in Revenues and Operating Earnings for Second Quarter and First Half of FY2001
12 December 2000
Crown Group, Inc. Reports Significant Increases in Revenues and Operating Earnings for Second Quarter and First Half of FY2001
Second-Quarter Diluted EPS From Ongoing Operations Increase 317%Over Prior-Year Period
Crown Group, Inc. today announced substantially higher revenues and earnings from operations for the second quarter and first half of FY2001.
For the three months ended October 31, 2000, revenues increased 97% to $89.6 million, compared with $45.5 million in the second quarter of the previous fiscal year. Net income from ongoing operations for the most recent quarter increased 230% to $2,069,986, compared with $626,887 in the year-earlier period. Diluted earnings per share from ongoing operations increased 317% to $0.25 in the quarter ended October 31, 2000, versus $0.06 in the quarter ended October 31, 1999.
Including a one-time after-tax write-down of $520,000 associated with the Company's El Salvador gaming operations, which management expects to sell in the near future, earnings from operations for the second quarter of FY2001 totaled $1,549,986, or $0.19 per diluted share. Earnings per share were calculated using approximately 8.3 million average diluted shares outstanding in the most recent quarter, compared with approximately 10.0 million average diluted shares outstanding in the prior-year period. The decrease in average shares outstanding was attributable to the Company's repurchase of shares in the open market and in private transactions throughout the past year.
Revenues for the second quarter of FY2001 were derived as follows (before intercompany eliminations): Automotive Sales and Finance -- $84.9 million; Precision IBC -- $1.8 million; Concorde Acceptance -- $2.3 million; and Other -- $0.9 million.
"We were very pleased with the overall performance of our subsidiaries for the second fiscal quarter," commented Edward R. McMurphy, President and Chief Executive Officer of Crown Group. "Our automotive subsidiaries turned in strong performances this quarter, as we maintained our focus on providing customers with dependable used cars at affordable prices.
"Precision IBC performed in line with management expectations, while Concorde Acceptance came in slightly below projections due largely to timing differences associated with revenue recognition. As we stated in the Fiscal 2000 annual report, we expect to sell our El Salvador gaming operations before fiscal year-end and, therefore, elected to write down this investment in the second quarter."
Revenues increased 83% to $172.0 million in the six months ended October 31, 2000, compared with revenues of $94.1 million in the six months ended October 31, 1999. Net income from ongoing operations rose 51% to $4,837,128 in the most recent six-month period, versus $3,205,000 in the corresponding period of the previous fiscal year. Diluted earnings per share from ongoing operations increased 84%, to $0.57 in the first half of FY2001, compared with $0.31 in the six months ended October 31, 1999.
Earnings from ongoing operations exclude a $7.0 million after-tax gain on the sale of Casino Magic Neuquen during the first half of FY2000, and a $520,000 after-tax charge in connection with the write-down of El Salvador assets in the first half of FY2001. Earnings per share were calculated using 8,440,688 average diluted shares outstanding in the first half of FY2001, compared with 10,277,549 average diluted shares outstanding in the prior-year period. The decrease in average shares outstanding was attributable to the Company's repurchase of shares in the open market and in private transactions.
"We are optimistic regarding the second half of our fiscal year, despite predictions of a slowdown in the economy," continued McMurphy. "Unlike the new car retail industry, the used car industry is inherently counter-cyclical and typically performs well under weak economic conditions. Over the remainder of the fiscal year, we will remain highly focused upon improving the performance of the loan portfolios at our automotive subsidiaries while continuing to expand into new markets. During the first half of Fiscal 2001, Car-Mart opened four new dealerships, including two in Kentucky, marking its initial entry into that market. Paaco also added another dealership in Houston this year, where it has experienced considerable success in selling quality used cars to a growing Latino population segment."
Crown Group, Inc. is primarily engaged in automotive retailing and specialty finance. Through its automotive subsidiaries, Crown Group, Inc. currently owns and operates 71 dealerships in 7 states and is the second largest automotive retailer focused exclusively on the "Buy Here - Pay Here" used car market. The Company's America's Car-Mart subsidiary operates 46 dealerships in primarily rural areas throughout the Southwestern and Midwestern United States, and is considered one of the largest Buy Here - Pay Here franchises in the country.
Smart Choice Automotive Group operates 12 dealerships under the First Choice brand name in Florida and 13 dealerships and 3 collision and repair centers under the Paaco name in Texas, all of which operate in large metropolitan areas. All of the Company's dealerships sell only used cars and light trucks to predominantly non-banked customers. Both Car-Mart and Smart Choice finance approximately 98% of the vehicles they sell and perform all underwriting, financing and servicing duties related to these retail installment contracts. The primary objective of both Car-Mart and Smart Choice is to provide quality vehicles, courteous service, flexible payment arrangements and a friendly atmosphere to their customers.
In addition to its automotive subsidiaries, the Company has historically made equity investments for long-term appreciation in companies spanning various industries through either controlling ownership of high-growth companies or, in some cases, minority positions. The Company currently owns (i) 97% of America's Car-Mart, Inc. and 70% of Smart Choice Automotive Group, Inc. (OTCBB:SCHA), vertically integrated used car sales and finance companies; (ii) 80% of Concorde Acceptance Corporation, a sub-prime mortgage lender; (iii) 50% of Precision IBC, Inc., a firm specializing in the sale and rental of intermediate bulk containers; (iv) 90% of CG Incorporated S.A. de C.V., which owns and operates two casinos in El Salvador; (v) 8.8% of Mariah Vision3, Inc., a software developer specializing in 3-D graphic design; and (vi) 6.7% of Monarch Venture Partners Fund I, a venture capital fund focused on Internet-related and emerging technology companies. Crown Group is headquartered in Dallas, Texas, 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, risks associated with acquisitions, 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, and other risks which are discussed in the Company's periodic filings with the Securities and Exchange Commission. All forward-looking statements in this release are based upon information available as of the date of this release. Such information may change or become invalid after the date of this release, and 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.
For additional information, please contact Edward R. McMurphy, CEO, or Harlan Foster, VP Corporate Development at 972/717-3423 or RJ Falkner & Company, Investor Relations Counsel at 800/377-9893 or via e-mail at info@rjfalkner.com.
CROWN GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended October 31,
---------------------------------
2000 1999
---------------------------------
Total revenues $ 89,564,427 $ 45,529,981
Costs and expenses (85,455,378) (44,261,101)
One-time charge (800,000) ---
(write-down of Crown El Salvador)
Gain on sale of securities, net --- 10,737,832
Equity in earnings of
unconsolidated subsidiaries --- 202,041
---------- ----------
Income before taxes
& minority interests 3,309,049 12,208,753
Provision for income taxes (1,427,607) (4,797,101)
Minority interests (331,456) 194,826
---------- ----------
Net income $ 1,549,986 $ 7,606,478
========== ===========
Earnings per share (excluding one-time
charge):
Basic $ 0.26 $ 0.79
========== ===========
Diluted $ 0.25 $ 0.76
========== ===========
Earnings per share (including one-time
charge):
Basic $ 0.20 $ 0.79
========== ===========
Diluted $ 0.19 $ 0.76
========== ===========
Weighted average number of shares
outstanding:
Basic 7,914,719 9,665,483
Diluted 8,299,369 10,038,033
CROWN GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
Six Months Ended October 31,
---------------------------------
2000 1999
---------------------------------
Total revenues $172,015,356 $ 94,085,917
Costs and expenses (162,395,523) (89,739,938)
One-time charge (800,000) ---
(write-down of Crown El Salvador)
Gain on sale of securities, net --- 10,737,832
Equity in earnings of
unconsolidated subsidiaries --- 942,843
---------- -----------
Income before taxes
& minority interests 8,819,833 16,026,654
Provision for income taxes (3,676,043) (6,010,138)
Minority interests (826,662) 168,369
---------- -----------
Net income $ 4,317,128 $ 10,184,885
========== ===========
Earnings per share (excluding one-time
charge):
Basic $ 0.60 $ 1.03
========== ===========
Diluted $ 0.57 $ 0.99
========== ===========
Earnings per share (including one-time
charge):
Basic $ 0.54 $ 1.03
========== ===========
Diluted $ 0.51 $ 0.99
========== ===========
Weighted average number of shares
outstanding:
Basic 8,047,055 9,866,852
Diluted 8,440,688 10,277,549
CROWN GROUP, INC. AND SUBSIDIARIES
(Unaudited)
Quarter Ended October 31,
-----------------------------
REVENUE CONTRIBUTION ($000) 2000 1999
----------- -----------
Automobile $ 84,888 $ 40,939
IBCs 1,779 1,784
Mortgage 2,311 1,610
Other 880 1,641
Eliminations (294) (444)
Consolidated Revenues $ 89,564 $ 45,530
========== ===========
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTERESTS ($000) 2000 1999
----------- -----------
Automobile $ 5,140 $ 3,195
IBCs 202 83
Mortgage ( 32) ( 50)
Other (1,201) 8,981
One-time charge (800) ---
---------- -----------
Income before taxes and minority
interests $ 3,309 $ 12,209
========== ===========
Six Months Ended October 31,
-----------------------------
REVENUE CONTRIBUTION ($000) 2000 1999
----------- -----------
Automobile $162,409 $ 85,509
IBCs 3,509 3,271
Mortgage 4,713 3,451
Other 2,035 2,752
Eliminations (651) (897)
Consolidated Revenues $172,015 $ 94,086
========== ===========
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTERESTS ($000) 2000 1999
----------- -----------
Automobile $ 11,250 $ 6,948
IBCs 457 288
Mortgage 169 73
Other (2,256) 8,718
One-time charge (800) ---
---------- -----------
Income before taxes and minority
interests $ 8,820 $ 16,027
========== ===========
CROWN GROUP, INC. AND SUBSIDIARIES
(Unaudited)
BALANCE SHEET DATA -- October 31, 2000 (unaudited)
Cash $2,375,314
Total assets $306,540,900
Stockholders' equity $60,894,480
Shares outstanding 7,816,478
Book value per share $7.79