Speedemissions, Inc. Reports Third Quarter 2013 Financial Results
Company Continues to Focus on Strategic Expansion With Opening of Second Vehicle Emission Repair and Light Automotive Services Facility
ATLANTA, GA - (Marketwired - Nov 14, 2013) - Speedemissions, Inc. (OTCQB: SPMI), a leading vehicle emissions testing and safety inspections company operating 43 stores in the Atlanta, Houston, St. Louis and Salt Lake City markets and developer of CARbonga and CARbonga-SRI, the revolutionary automobile diagnostic iPhone apps, announced its financial results for their third quarter ended September 30, 2013.
"We continue to see improvement in the overall operation of our business. Two of our retail stores, whose leases were not renewed, generated an estimated $330,000 in revenue and contributed approximately $148,000 to net income through the same time frame last year. Coupled with the financial impact that a change in the Utah safety law had on our revenue, it is easy to see the challenges the company has faced in 2013. However, we are still diligently managing expenses at all levels as shown by the $154,000 reduction in general and administrative expense for the year, as well as the savings realized of approximately $75,000 in same-store operations. We believe this demonstrates the strategies implemented are moving us in a positive direction. We expect the market pressures to continue as it relates to pricing, but on a positive note, we do not anticipate that discount pricing will be at the abnormal levels we saw in 2012 and early 2013," stated Richard A. Parlontieri, President and Chief Executive Officer of Speedemissions, Inc.
"As a means to add revenue growth and increase market share in Atlanta, we recently acquired seven additional vehicle emissions testing stores from a long-time competitor. The acquisition of these stores will allow us to grow within a marketplace where previously we had no presence. In addition, we have seen our expanded emission repair pilot store in Atlanta exceed its revenue forecast for the year. Based on that success, we have recently opened a second emission repair and light duty automotive services facility in Atlanta. Along with those two stores, we have begun emission repair work at a store in Houston as well. We are very optimistic that this business segment will continue to provide for increases in revenue and income for our company."
"We're also evaluating additional new products or services that we might provide through our stores with the goal of driving revenue growth at little or no incremental cost to the company, including utilizing CARbonga SRI (safety & recall information) within these stores to provide customers with detailed information with respect to Technical Services Bulletins and Recall Notices associated with their particular vehicle. The service would be provided on a per-test basis at the time a vehicle comes in for a safety and emissions test. We anticipate launching this new service early 2014, as well. Lastly, we'll be expanding the select automotive products, such as windshield wipers, light bulbs, cabin air filters, etc., that we currently sell in all stores except Atlanta," added Parlontieri.
Third Quarter 2013 Financial Highlights
- Revenue decreased $240,386 to $1,807,072 in the third quarter of 2013 compared to $2,047,458 in the third quarter of 2012. The decrease was primarily due to the closure of a total of six unprofitable stores in Texas from December 2012 to September 2013. Along with the closing of these stores was the loss of three stores due to non-renewal of leases in January, March and April of 2013. Coupled with the loss of store revenue, was the continued impact of the safety inspection law revision in Utah which has adversely affected nearly 25% of the company's safety business in Salt Lake City. A decrease in same store sales of 1.6% is mainly attributable to increased competition and discounting at our Georgia, Texas and Utah locations. The drop in revenue was somewhat mitigated by the acquisition of five stores in Georgia in December 2012.
- Store operating expenses decreased $68,680 or 5.2% in the third quarter of 2013 compared to the third quarter of 2012. The decrease in store operating expenses was partially due to the closure of the unprofitable stores.
- General and administrative expenses decreased $113,606 or 31.1% in the third quarter of 2013 compared to the third quarter of 2012.
- A reduction in the Company's net loss of 16.3% from ($88,974) in the third quarter 2012 to ($74,488) in the third quarter of 2013.
Year-to-Date 2013 Financial Summary
- Revenue decreased $488,532 to $5,466,793 in the nine months ended September 30, 2013 compared to $5,955,326 in the same period of 2012. The decrease in revenue over the comparable period was primarily due to the closure of six unprofitable stores in Texas since December 1, 2012, which resulted in lower revenue during the period. There's also the slight decrease in same store sales. The same store sales decline was only 0.9% and is directly related to both increased competition and discounting at all of our locations. The lost revenue was partially offset by an approximate $433,000 increase in revenue as a result of the acquisition of five stores in Georgia in December 2012.
- Store operating expenses decreased approximately $75,000 in the nine months ended September 30, 2013 compared the same period of 2012. The decrease in store operating expenses was primarily due to the closure of the stores in Texas since December, 2012 and a decrease in same store operating expenses in the nine months ended September 30, 2013 compared to the same period of 2012.
- General and administrative expenses decreased approximately $154,000 or 15.5%, during the nine months ended September 30, 2013 compared to the same period of 2012.
- The Company incurred a net loss of $456,751 in the nine months ended September 30, 2013 compared to net loss of $281,723 for the same period 2012.
A full analysis of results for the period ended September 30th, 2013 is available in the Company's Form 10-Q, which is available on the Speedemissions website at www.speedemissions.com or through the Securities and Exchange Commission's Edgar database at www.sec.gov.
Automotive Aftermarket and Emissions Testing Industry
Currently, there are approximately 250 million light duty vehicles on the road and over 85% of these vehicles are outside the manufacturer's warranty. According to the recent study released by BB&T Capital Markets, the nation's leading automotive aftermarket investment banking and research firm, the automobile aftermarket is an estimated $307 billion industry, comprised of the $231 billion light vehicle aftermarket and the $76 billion medium and heavy duty aftermarket. The research also showed that, historically, vehicles in operation have exhibited consistent growth despite wide fluctuation in new vehicle sales and economic conditions. In addition, the research found a clear trend toward an aging vehicle fleet that has accelerated as a result of fewer new vehicle sales and consumers maintaining their vehicles. As of 2012, the average age of cars and light trucks reached 11.3 years, which compares favorably to the aftermarket "sweet spot" for repair of 8+ years. A significant and growing sector of the vehicle aftermarket is the emissions testing industry. Americans currently spend over $2.5 billion in emissions testing in the 32 states (and District of Columbia) that are required by the U.S. Environmental Protection Agency to have vehicle emissions testing. In 24 of these states, testing can be conducted by independently-owned businesses such as Speedemissions, Inc., a leading vehicle testing and safety inspections company now operating 43 stores across the country.
About Speedemissions, Inc.
Speedemissions, Inc., based in Atlanta, Georgia, is a national brand offering our customers quick and efficient emission testing and/or safety inspection as required by law. The company is in the Atlanta, GA. Houston, TX, Salt Lake City, UT and St. Louis, MO. markets. The company has expanded its business model through its newly introduced SpeedEmissions Car Care Stores and SpeedEmissions Car Care franchise unit. Speedemissions hopes to be among the first companies to offer its customers quick and efficient vehicle emissions testing and repair services. For more information, visit: www.speedemissions.com
Speedemissions, Inc. owns and developed the CARbonga line of apps for smart phone users. CARbonga is the first app which allows the average person to detect automotive car problems for their own vehicle or when buying a used vehicle. The CarBonga-SRI app provides a quick and easy way for consumers to stay on top of the safety of their vehicle by providing the most current safety-related recalls and service bulletins for their vehicles. For more information, visit www.carbonga.com and for CarBonga news updates follow @CarbongaApp on Twitter.
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Certain statements contained in this news release regarding matters that are not historical facts may be forward-looking statements. Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, uncertainties pertaining to market acceptance for Speedemissions' products and services, its ability to succeed in increasing revenues in the near term to attain profitable operations and generate sufficient cash flow from operations, the effect of new competitors in its markets, its integration of acquired businesses, and other risk factors identified from time to time in its filings with the Securities and Exchange Commission, including Speedemissions' Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K which are available at the SEC's website www.sec.gov. Other factors not currently anticipated may also materially and adversely affect Speedemissions' results of operations, financial position, and cash flows. There can be no assurance that future results will meet expectations. While Speedemissions believes that the forward-looking statements in this news release are reasonable, the reader should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. Speedemissions does not undertake, and expressly disclaims any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
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