ACRG 1.75...$.20 per sh clean on nice rise in rev:
(PR NEWSWIRE) ACR Group, Inc. Reports Net Income More Than Triples in Fiscal Ye
r Ended February 29, 2004
ACR Group, Inc. Reports Net Income More Than Triples in Fiscal Year Ended Februa
y 29, 2004
Fourth Quarter Loss Significantly Less Than Previous Year
HOUSTON, May 18 /PRNewswire-FirstCall/ -- ACR Group, Inc.
(OTC Bulletin Board: ACRG), a leading wholesale distributor of air-
conditioning, heating, and refrigeration equipment and supplies, today
reported record operating results and sales for the fiscal year and fourth
fiscal quarter ended February 29, 2004.
Net income for the fiscal year ended February 29, 2004 rose 252% to
$2,180,000, or $0.20 per share, compared to $620,000, or $0.06 per share, for
the fiscal year ended February 28, 2003. An accounting change and differences
in the effective applicable tax rate affected the comparability of results of
operations between fiscal 2004 and fiscal 2003. Income before taxes and
cumulative effect of an accounting change was $3,433,000 in the year ended
February 29, 2004, compared to $1,433,000 for the year ended
February 28, 2003, an increase of 140%. The increase in income from fiscal
2003 to fiscal 2004 was attributable principally to improved operating results
at several business units, particularly in Texas, California and Florida, the
three states that utilize the most air-conditioning in the country.
Sales for fiscal 2004 were $174.4 million, compared with sales of
$161.8 million in fiscal 2003, an increase of 8%. Same-store sales increased
9% in fiscal 2004 from fiscal 2003, as the Company sold the operations of two
underperforming business units and opened three branch operations during
fiscal 2004. For calendar 2003, the Company recorded an 8% increase in same-
store sales, compared to a flat year in industry-wide product shipments based
on data compiled by a leading industry trade association. Gross margin
percentage on sales increased to 22.1% in fiscal 2004 from 22.0% in fiscal
2003 as improved pricing disciplines throughout the Company more than offset
an increase in low-margin sales to certain large volume customers. Interest
expense declined by 13% in fiscal 2004, compared to fiscal 2003, because of a
decrease in average outstanding indebtedness.
In the first quarter of fiscal 2003, the Company adopted a new accounting
standard for determining the amount of goodwill to be carried on the Company's
balance sheet. Utilizing the prescribed criteria, the Company determined that
it was appropriate to write off the entire unamortized amount of goodwill
associated with its filter manufacturing operation. Net of taxes, such
writeoff amounted to $483,000, or $0.04 per share, and is reported in the
Company's fiscal 2003 income statement as a cumulative effect of accounting
change. In fiscal 2004, the Company has estimated a federal income tax rate
of 34% to systematically amortize through fiscal 2004 the deferred tax asset
related to its net operating loss carryforward and to provide for taxes
payable. In fiscal 2003, the Company estimated a tax rate of 21% to amortize
its deferred tax asset, and the current provision for income taxes consisted
principally of federal alternative minimum taxes and state income taxes.
In the fourth fiscal quarter ended February 29, 2004, net loss declined to
$22,000, or $(0.00) per share, from $399,000, or $(0.04) per share, in the
prior year fourth quarter. The Company has historically incurred losses in
its fourth fiscal quarter each year, because weather conditions at that time
of the year result in relatively low business activity. The fiscal 2004 loss
was the smallest fourth quarter loss in the Company's history. Sales for the
fourth quarter of fiscal 2004 increased 15% to $38.3 million, from
$33.2 million in the fourth quarter of fiscal 2003. Same-store sales also
increased 15% in the fourth quarter of fiscal 2004 compared to fiscal 2003.
Commenting on the company's year-end and fourth quarter results, Alex
Trevino, Jr., President and Chief Executive Officer of ACR Group, stated,
"Fiscal 2004 was an outstanding year for the Company. Pre-tax income, which
we believe is the best measurement of our comparative financial performance
because of the benefits we recognized in earlier years from tax loss
carryforwards, was almost 40% greater than our best previous year. In
particular, fiscal 2004 was a breakthrough year for our Florida and California
operations, our two youngest business units. After several years of growing
and nurturing these operations, both were solidly profitable and sustained
very impressive sales growth rates in fiscal 2004, giving us confidence that
they will now consistently be significant contributors to our bottom line.
This is very important because, together with Texas, they are the largest air-
conditioning markets in the U.S. and should continue to be excellent growth
areas for us for the next several years. After selling two small,
unprofitable business units in fiscal 2004 that were outside our core
competency, we were able to focus exclusively on accelerating the growth rate
of our HVAC distribution business in the last six months of the fiscal year.
Our same-store sales growth rate, which far exceeded that of the industry, is
a testament to our success. We fully expect that, with normal summer weather
patterns, we will experience significant sales growth well into fiscal 2005.
Although we obviously can not expect that net income will increase at the same
percentage rate in fiscal 2005 as in fiscal 2004, our potential sales growth,
combined with our ability to control costs, gives us reason to be very
optimistic about the prospect for exciting financial performance in fiscal
2005."
About ACR Group, Inc.
ACR Group, Inc. is a wholesale distributor of air-conditioning, heating,
and refrigeration ("HVACR") equipment and supplies. The Company owns and
operates 7 companies with 45 locations in 9 states.
Statements in this news release that relate to management's expectations
or beliefs concerning future plans, expectations, events, and performance are
"forward-looking" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Actual results or events could differ materially from those
anticipated in the forward-looking statements due to a variety of factors,
including, without limitation, weather conditions, the effects of competitive
pricing, general economic conditions, and availability of capital.
(financial data to follow)
ACR GROUP, INC.
CONSOLIDATED RESULTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
2004 2003 2004 2003
Sales $38,307 $33,241 $174,353 $161,822
Cost of sales 29,531 25,980 135,795 126,149
Gross profit 8,776 7,261 38,558 35,673
Selling, general and
administrative expenses 8,413 7,296 33,121 31,810
Depreciation and amortization 241 277 985 1,173
Operating income 122 (312) 4,452 2,690
Interest expense 383 393 1,510 1,731
Other non-operating (income) (126) (126) (491) (474)
Income (loss) before taxes and
cumulative effect
of accounting change (135) (579) 3,433 1,433
Provision (benefit) for income
taxes:
Current 44 (18) 743 79
Deferred (157) (162) 510 251
Income (loss) before cumulative
effect of accounting change (22) (399) 2,180 1,103
Cumulative effect of accounting
change, net of taxes --- --- --- (483)
Net income (loss) $(22) $(399) $2,180 $620
Basic and diluted earnings
(loss) per share:
Before cumulative effect of
change in accounting
principle $(.00) $(.03) $.20 $.10
Cumulative effect of
accounting change --- --- --- (.04)
$(.00) $(.03) $.20 $.06
Average outstanding shares,
basic and diluted 10,681 10,681 10,681 10,681
SOURCE ACR Group, Inc.
-0- 05/18/2004
/CONTACT: Alex Trevino, Jr., President and CEO, or Tony Maresca, Sr. Vice
President & CFO, both of ACR Group, Inc., +1-713-780-8532/
(ACRG)
CO: ACR Group, Inc.
ST: Texas
IN: CST OTC
SU: ERN
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