Have they turned the corner?
Ugly Duckling Corp. Announces 1997 Fourth-Quarter and Year-End Results
PHOENIX, Ariz.--(BUSINESS WIRE)--Feb. 6, 1998--Ugly Duckling Corp. (Nasdaq/NM:UGLY) Friday announced revenues and net income for the fourth quarter and year ended Dec. 31, 1997.
For the quarter, net income advanced to $3.7 million, or 20 cents per diluted share, up from $1.8 million, or 14 cents per diluted share, for the fourth quarter of 1996. Total revenues for the period increased almost three-fold to $70.9 million, compared with $17.9 million for the corresponding quarter last year.
The weighted average number of common and common equivalent shares outstanding was 18,913,000 and 12,045,000 (including dilutive common stock equivalents) for the quarters ended Dec. 31, 1997 and 1996, respectively.
For the year, net income rose to $9.4 million, or 52 cents per diluted share, compared with $5.9 million, or 60 cents per diluted share, for 1996. Revenues for 1997 surged 150 percent to $191.1 million vs. $75.6 million for the same period last year.
The weighted average number of common and common equivalent shares outstanding was 18,234,000 and 8,317,000 (including dilutive common stock equivalents) for the years ended Dec. 31, 1997 and 1996, respectively.
Ernest C. Garcia II, chairman and chief executive officer of Ugly Duckling, stated: "We are extremely pleased with the company's dramatic growth over the past year and particularly the progress of our dealership and Cygnet Finance operations. While at the end of 1996 we operated eight dealerships, all in Arizona, at year-end 1997 we had increased our network to 41 dealerships in 10 metropolitan Sun Belt markets in seven states.
"In our Cygnet Finance group, we took this program from initial launch to providing lines of credit to more than 40 dealers by the end of 1997. Looking ahead, we intend to continue to expand our dealership operations, primarily in markets where we currently enjoy a presence. This will be our chief priority in 1998 and will enable us to leverage the infrastructure we already have in place."
The company also announced that in connection with the strategic evaluation of its third-party dealer operations begun late last year, its board of directors has approved a recommendation to close the company's network of Champion Financial Services branch offices, which totaled 83 at Dec. 31, 1997.
The company will exit this line of business to focus on its Cygnet Dealer program and the bulk purchase and or servicing of large contract portfolios.
As a result of the restructuring, the company expects to record an after-tax charge of $4.0 million to $6.0 million, or approximately 21 cents to 30 cents per share, in 1998. The restructuring should be completed by the end of the first quarter of 1998 and includes the termination of approximately 400 employees employed at the company's branches.
On a pre-tax basis, approximately $1.0 million of the restructuring charge is for termination benefits, $2.5 million for write-off of pre-opening and start-up costs and the remainder for lease payments on idle facilities, write-downs of leasehold improvements, data processing and other property and equipment. The company is continuing to evaluate strategic alternatives for its remaining non-dealership operations.
Garcia commented: "Because of our disappointment with the return on investment from our branch network, we believe it is in the best interests of our stockholders to exit that business. This decision will allow us to focus on our core strengths: building our dealership chain and providing lines of credit to dealers through Cygnet Finance."
In connection with the decision, the company announced the appointment of Robert (Bob) Sicina as chairman and chief executive officer of the Cygnet Group, the family of wholly owned subsidiaries that will operate all of the company's non-dealership activities.
Sicina comes to Ugly Duckling with extensive experience in consumer financial services, including funding, operations, risk management and marketing. Prior to joining the company, he served as president of American Express Bank as well as president of American Express Travel Related Services' Latin American and Caribbean Division.
He has also held the position of chief financial officer of Citibank, N.A.'s domestic credit card operations. Most recently, Sicina worked at National IPF, which provides consumer financing for insurance premiums in the sub-prime sector.
"By adding someone of Bob's stature to our management group, we reinforce our commitment to establishing Ugly Duckling as a leader in the sub-prime auto industry," said Garcia. "Bob played an instrumental role in helping us evaluate our non-dealership operations, and we look forward to his contributions as we continue to consider options for these businesses."
With headquarters in Phoenix, Ugly Duckling is a used car sales and finance company that operates the nation's largest chain of used car dealerships focused exclusively on the sub-prime market. The company underwrites, finances and services sub-prime contracts generated at its current 43 Ugly Duckling dealerships and by third-party used car dealers. -0- |
