Company sees significant drop in bad debt charges in a challenging economic
environment
TEMPE, Ariz., Feb. 14 /PRNewswire-FirstCall/ -- NowAuto Group, Inc.
(OTC Bulletin Board: NAUG and Pink Sheets: NWAU) today announced results for
its fiscal 2008 second quarter ended December 31, 2007. The Company reported
revenue of approximately $1.1 million and a net loss of $0.03 per diluted
share versus revenue of approximately $2.1 million and a net loss of $0.06 per
diluted share in the prior year. During the quarter ended December 31, 2007
gross margin increased to 50% reflecting increased finance income and higher
margin sales. Bad debt charges saw a year over year decline from approximately
$580,000 to $237,000. As previously reported, the switch from sales to leases
and stricter underwriting standards have resulted in lower revenues, but
improved gross margins and significantly declining bad debt costs. In
addition,
the Company experienced lower volume during the quarter due to significantly
lower contract purchases, caused by lower credit quality and sales volume.
Charge-offs and defaults improved significantly over the prior quarter and
year in spite of challenging economic conditions. Net Contract Receivables
increase 8% over the prior year. Fixed costs were further reduced from the
prior quarter. Excluding bad debt charges, the Company's loss for the second
quarter was less than $0.01 per share.
"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 our emphasis is always on collections, our challenge in the current
environment is to aggressively work with our customers to maintain active
contracts. Efforts began in the September quarter to maintain contracts have
resulted in significantly improved bad debt charges over the prior quarter and
year. 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.
"Extraordinary efforts have been made over the past several months to
improve our bottom line. Now we are beginning to see the results and are
looking forward to stronger results in the future," said Faith Forbis, CFO.
"Critical in this environment is conditioning and maintaining our
vehicles,
both before as well as after the sale," said Tino Valenzuela, Chief Operating
Officer. "That is why we have invested in a new vehicle conditioning center
that opened December 1, 2007. While this will serve our customers by providing
lower cost vehicle maintenance and repair, we expect this part of our business
to be a profit center by the end of fiscal 2008," stated Valenzuela.
"As previously announced, we have taken significant strides in identifying
an acquirer," stated Miller. "While, we hope to be in a position to make a
public announcement in coming weeks, it is more important that the best
candidate be chosen and completion of due diligence be done before any
announcement is made. Consummation of a transaction, if there indeed is one,
will not likely occur until later in 2008. Our goal is to find the candidate
that offers to our shareholders the best prospects for the future," Miller
added.
About NowAuto Group, Inc.
NowAuto Group, Inc. operates three 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. Through its subsidiary,
NavicomGPS,
Inc. the company markets GPS tracking devices, primarily to 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-QSBs 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.
Randy Humphrey, NowAuto Group, Inc., +1-480-990-0007, ir@nowauto.com
