August 22, 2008 // Franchising.com // Overland Park, Kan., – Brooke Capital Corporation (AMEX: BCP) today reported its second quarter financial results for the quarter ended June 30, 2008.
"As expected it was a challenging quarter for Brooke Capital Corporation," said Kyle Garst, President of Brooke Capital Corporation. "Our New Era and operating initiatives previously announced have been implemented and management's actions have resulted in Brooke Capital becoming a leaner and more efficient organization. We expect to return to profitability in the third quarter." Garst stated, "Losses were incurred in the second quarter primarily as the result of shrinking the number of Brooke franchise locations by closing, relocating or liquidating poorer performing locations. Difficult credit markets have had a significant adverse affect on the sale of new franchise locations by the Company. Without revenues from the sale of new locations, the Company has been forced to reduce expenses significantly. The resulting expense reductions include personnel layoffs, facility closings and write offs of producer development investments."
Chairman Orr stated, "Kyle Garst and Dane Devlin did a good job of transitioning our company in the second quarter to the limited growth business model required to wait out the current credit markets. To assist in returning Brooke Capital to profitability in the third quarter, I have taken a more active role in the company. Although I remain chairman and Kyle remains president of Brooke Capital, I have assumed the responsibilities of chief executive officer so Kyle can focus on the sale of troubled locations."
Chairman Orr also stated, "While Kyle and Dane were going through a difficult downsizing at Brooke Capital during the second quarter, I had focused my efforts on Aleritas Capital, another company in which both Brooke Corporation and I have significant ownership interests. Now that Aleritas Capital has returned to profitability, I have redirected much of my attention to Brooke Capital with expectations of returning it to profitability in the third quarter."
Chairman Orr also stated, "the value of Brooke Capital Corporation is its insurance distribution system which generates about $1 billion per year in premiums. Until credit markets improve Brooke Capital Corporation is focused on improving the quality of its agency force and distribution channels."
Because capital is not readily available, the Company's expansion plans for selling life insurance and auto insurance policies issued through wholly owned insurance company subsidiaries have been discontinued. The Company believes that its distribution system and recruiting process represents a tremendous asset to insurance companies and the Company will instead pursue a partnership with one or more insurance companies.
The following includes net earnings and revenue information as reported for the three- month period ended June 30, 2008.