Ugly Duckling Announces Record Second Quarter and Six Month Results
Second Quarter Highlights:
-- Net earnings totaled $4.3 million, or $0.31 per diluted share,
compared with earnings of $1.5 million, or $0.10 per share in
the corresponding quarter of the prior year
-- Total revenues from continuing operations increased 31%
to $152.0 million from $115.9 million in year-ago quarter
-- E-Commerce provided $6.5 million in revenue and 763 cars sold
during the second quarter of 2000 compared with $4.7 million
in revenue and 561 cars sold during the first quarter of 2000
-- On-balance sheet loan portfolio principal balance reached
$472.3 million, representing a 13% sequential increase over the
first quarter of 2000 and an 84% rise over year-ago quarter
-- New loan originations reached $118.8 million, a 24% increase
over the year-ago quarter
-- Acquired over 2.3 million shares of Company common stock
since March 31, 2000
Financial Highlights
(In 000s, except for per share numbers)
Three Months Ended Six Months Ended
6/30/00 6/30/99 6/30/00 6/30/99
Total revenues $151,984 $115,927 $311,108 $235,642
Operating income 9,923 3,669 19,815 4,568
Earnings - continuing
operations 4,348 1,792 8,831 2,411
Diluted earnings per
share - continuing
operations $ 0.31 $ 0.12 $ 0.60 $ 0.16
PHOENIX--July 26, 2000--Ugly Duckling Corporation (Nasdaq: UGLY),
the largest used car sales company focused exclusively on the
sub-prime market, today reported record second quarter and six month
2000 financial results.
Strong Quarter over Quarter Results
For the three months ended June 30, 2000, Ugly Duckling achieved
earnings from continuing operations of $4,348,000, or $0.31 per
diluted share, compared with earnings from continuing operations of
$1,792,000, or $0.12 per share, for the year-ago quarter.
The Company sold 14,369 cars in the second quarter of 2000, an
increase of 26% over the 11,416 cars sold in the year-ago quarter. The
increased number of cars sold, together with growth in interest
income, resulted in total revenues of $151,984,000 for the second
quarter of 2000, an increase of over 31% from total revenues of
$115,927,000 in the second quarter of 1999.
Interest income for the second quarter of 2000 increased
sequentially to $29,871,000 from $25,531,000 in the first quarter of
2000, a gain of 17%, and from $15,756,000 in the year-ago period, an
increase of approximately 90%. The increase in both periods is
primarily attributable to rapid growth of the Company's on-balance
sheet portfolio, resulting from Ugly Duckling's change to on-balance
sheet financing transactions in late 1998.
As expected due to seasonality and consistent with prior years,
new loan originations for the second quarter of 2000 reached
$118,778,000, representing a 7% sequential decrease from the
$128,123,000 reported in the first quarter of 2000, and a 24% increase
over the $96,098,000 reported in the second quarter of 1999. The
quarter over quarter increase is primarily the result of an increased
number of Ugly Duckling dealerships. The Company's dealerships
increased in number to 77 in the second quarter of 2000 from 59 in the
year-ago second quarter.
Operating expenses for the second quarter of 2000 were
$35,435,000, or 23% of total revenues, compared with operating
expenses of $27,708,000, or 24% of total revenues, for the year-ago
quarter. The stability in operating expense is primarily the result of
improved efficiencies from the Company's new computer system and
dealership growth offset by additional costs associated with the
continued deployment of collection staff to Company dealerships.
"We are very pleased with our second straight quarter of record
earnings. Obviously the key factor has been the continued growth in
our portfolio and corresponding interest income. We also achieved
reasonably good sales volumes and margins this quarter and kept
expenses in line while continuing the roll-out of early stage
collectors to the dealerships," said Greg Sullivan, President and
Chief Executive Officer of Ugly Duckling Corporation.
Loan Servicing
As expected due to seasonality and consistent with prior years,
during the second quarter of 2000, 31+ day delinquencies rose to 7.2%
from 5.3% at the end of 1Q00 and compares to 7.3% reported at the end
of 2Q99.
Sullivan commented, "The increase in delinquencies is expected
this time of year. Our collections staffing levels are excellent and
we are enthused by the results from our new in-dealership collectors.
The regions that have had the benefit of in-dealership collectors have
been the best performing. We expect to have completed the roll-out of
collectors to all of our dealerships by the end of November, and we
expect this to benefit us as we move forward."
Substantial Increases in First Six Months of 2000
For the six months ended June 30, 2000, the Company reported
earnings from continuing operations of $8,831,000, or $0.60 per
diluted share, compared with earnings from continuing operations of
$2,411,000, or $0.16 per diluted share, for the six months ended June
30, 1999.
Used car sales totaled $254,313,000 in the first six months of
2000, an increase of 24% over sales of $204,319,000 in the comparable
year-ago period. The Company sold 30,171 cars for the first six months
of 2000, an increase of 25% over the 24,170 sold in the comparable
1999 period. The increased number of cars sold, together with an
increase in interest income, resulted in total revenues of
$311,108,000 for the first six months, an increase of 32% from total
revenues of $235,642,000 in the comparable year-ago period. New loan
originations for the first six months of 2000 reached $246,900,000,
representing a 24% gain over the $198,831,000 originated in the
comparable year-ago period.
Interest income for the first six months of 2000 increased 112% to
$55,402,000 from $26,129,000 in 1999, resulting from rapid growth of
Ugly Duckling's on-balance sheet portfolio from a change in
securitization structure. Operating expenses for the first six months
of 2000 reached $72,123,000, or 23% of total revenues, compared with
operating expenses of $56,677,000, or 24% of total revenues, for the
prior year.
Uglyduckling.com Continues to Demonstrate Substantial Growth
Ugly Duckling's website, located at uglyduckling.com,
is continuing to generate a growing stream of new leads and sales. The
site provides potential customers with instant credit applications as
well as maps to the Company's dealerships nationwide. From customers
initially applying for credit through its website, 9,327 applications
were received in the second quarter of 2000 generating $6.5 million in
revenue with 763 used car sales. In the first quarter of 2000, the
Company's Internet activity generated revenues of over $4.7 million
with 561 cars being sold.
Company Accelerates Stock Buyback Program
As previously announced, during the second quarter, the Company
purchased 1,085,415 shares of its stock via an Exchange Offer. In
addition, since the end of the second quarter, the Company has
acquired with cash, an additional 1,273,100 shares of its stock as
part of its previously announced stock buyback program. The Company
currently has authority to repurchase an additional 250,000 shares of
stock, which it expects to use should the stock continue to trade at
levels that the Company considers appropriate for repurchase.
"We believe that based on the value accorded our stock on the
market, our stock is a better investment for our capital than new
stores and, as a result, we have accelerated our stock buyback program
and have acquired over 1.3 million shares since the end of the second
quarter. We continue to focus on lowering loan losses and operating
costs to maximize our bottom line and preserve capital as well. As
additional capital is secured, we will consider whether to resume or
possibly accelerate our expansion plans or to continue repurchasing
our stock. Further, we will consider any acquisition that would
require little or no capital to complete. Nonetheless, even with a
more conservative capital policy, we still expect to achieve
outstanding returns, particularly relative to our current stock price.
It is important to note that even as we slow the number of new
dealerships, growth in the portfolio and interest income will occur
from dealerships whose portfolios will continue to grow," concluded
Sullivan.
Ugly Duckling will be holding an investor conference call to
discuss the Company's financial and operational results at 11:30 am
eastern (8:30 am Phoenix) on July 26, 2000. Investors will have the
opportunity to listen to the conference call over the Internet through
Vcall at vcall.com. To listen to the live call, go to the
web site at least 15 minutes early to register, download, and install
any necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available shortly after the call at
vcall.com and on the Company's website at
uglyduckling.com. |
