PHOENIX, Ariz., Feb. 22, 2011 /PRNewswire/ -- NowAuto Group, Inc.
(OTC Bulletin Board: NAUG and NWAU) today announced results for its
fiscal 2011 second quarter ended December
31, 2010. The Company reported revenue of $1,039,677 million and a net loss of $0.07 per diluted share versus revenue of
approximately $2,141,645 million and
a net loss of $0.06 per diluted share
in the prior year. During the quarter ended December 31, 2010 revenue declined over the prior
quarter. The Company has a new line of business made up of contract
purchases and third party point-of-sale transactions. This is
projected to produce $391,000 in
earnings and interest revenue. In accordance with GAAP, this is
reflected as Investment in Purchased Contracts on the Balance Sheet
and the profits will be recognized over the life of the contracts
as the revenue is earned. However, when combined with the reported
revenue in the current quarter, it represents a year-over-year
increase in business.
The cost of charge-offs and defaults improved by 34% over the
same quarter of the prior year as a result of increased credit
criteria, improved contract management and system upgrades.
Nevertheless, management has chosen to increase the bad debt
accrual as a hedge against future potential losses. Operating
income, defined as income before charge-offs and interest expense,
declined 23% year-over-year and is a reflection of the increase in
bad debt accrual.
"The present condition of the sub-prime and below sub-prime auto
market has continued to impact our industry and our company," said
CEO Scott Miller. "While we managed
to increase contract purchases and third party point-of-sale
transactions in the quarter, our challenge has been, and will
continue to be on, maintaining accounts and collections. Our
challenge in the current environment is to aggressively work with
our customers to maintain active contracts. Nevertheless, we expect
a difficult environment for the foreseeable future. Our commitment
to customers and shareholders alike remains; NowAuto will do
whatever it can to maintain productive contracts without placing
imprudent demands on our customers," Miller said.
"We have improved our system of tracking and monitoring troubled
accounts and this has aided in reducing the cost of charge-offs and
increasing our customer base," said Chief Financial Officer
Faith Forbis. "We continue to seek
other ways to improve in these areas."
About NowAuto Group, Inc.
NowAuto Group, Inc. operates two buy-here-pay-here used vehicle
dealerships in Arizona. The
Company manages all of its installment finance contracts and
purchases installment finance contracts from a select number of
other independent used vehicle dealerships.
Note to Investors
This press release contains forward-looking information within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934, and is subject to the
safe harbor created by those sections. The forward-looking
information is based upon current information and expectations
regarding NowAuto Group, Inc. These estimates and statements speak
only as of the date on which they are made, are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual
outcomes and results could materially differ from what is
expressed, implied or forecasted in such forward-looking
statements.
NowAuto Group, Inc. assumes no obligation to update the
information contained in this press release. NowAuto Group, Inc.'s
forward-looking statements in this press release and future results
may be materially impacted by any number of factors, any or all of
which could have a negative impact on sales, operating results,
financial and budgetary constraints. NowAuto Group, Inc.'s future
results may also be impacted by other risk factors listed from time
to time in its SEC filings, including, but not limited to, the
Company's Form-Qs and its Annual Report on Form 10-K. The
statements made herein are independent statements of NowAuto Group,
Inc. The inclusion, if any, of any third parties does not represent
an endorsement of any NowAuto Group, Inc. products or services by
any such third party.
For further information contact NowAuto Group, Inc. or visit the
Company's Web site at www.nowauto.com.
SOURCE NowAuto Group, Inc.