Attention Business/Financial Editors:
AADCO Reduces First Quarter Loss
AADCO Automotive Inc. (AA: TSX - Venture Exchange)
BRAMPTON, ON, Nov. 29 /CNW/ - AAadco Automotive Inc. ("Aadco" or the "Company"), a supplier of quality used automotive parts, today announced its financial results for the quarter ended September 30, 2006. The restructuring and cost reductions that were implemented in the previous fiscal year are visible in the results of the first quarter of fiscal 2007.
The Company reduced its operating loss before interest and amortization to $149,952 in the first quarter of the current year from $282,954 for the same period last year. This 47% reduction in the loss was achieved despite a lower volume of sales because of improvements in gross margin (up to 42% from 34%) and reductions in operating expenses (25% reduction). As part of its future strategy Aadco has decided to build future sales through improvements to quality, delivery and service while reducing the use of price discounts. The reduction in sales is seen as a temporary shift away from customers that are searching for lower prices to customers that will be longer-term partners. As the Company builds its base of tier one customers the sales volumes are expected to increase along with margins. The net loss for the quarter was also lower at $296,597 compared to $390,980 in the prior period.
As Charles Hodgkinson, CEO of Aadco, explained, "When we undertook to improve the strategy, finances, and operations of the Company we wanted each quarter's results to build upon the last. These results clearly demonstrate the impact of the improvements we have made in the past year to eighteen months. The stronger results also set the stage for the rollout of our acquisition strategy."
Aadco has previously announced the acquisition of Jorama Holdings (c.o.b. as Dominion Auto Recyclers), to be closed in December, as its first acquisition.
The company also announces its annual meeting to be held on December 4, 2006 at 38 Hansen Rd South in Brampton at 1:00 PM.
| Consolidated statement of income For the first quarters ended September 30(unaudited) | ||
| 2006 | 2005 | |
| Sales | $880,673 | $1,196,901 |
| Cost of sales | 509,301 | 787,486 |
| Gross margin | 371,372 | 409,415 |
| Operating expenses | ||
| Selling, general and administrative | 248,914 | 376,003 |
| Warehouse overhead | 272,410 | 316,366 |
| Interest | 113,021 | 128,386 |
| Amortization | 33,618 | 50,180 |
| 667,969 | 870,935 | |
| Loss before discontinued operations | (296,597) | (461,520) |
| Income from discontinued operations | -- | 70,540 |
| Loss for the year | $(296,597) | $(390,980) |
About AADCO
AADCO Automotive Inc. is a rapidly growing, Canadian public company committed to providing quality LKQ (used) and Aftermarket parts to the automotive repair industry with the goal of becoming the national provider of these parts through acquisition and organic growth.
The TSX - Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
This press release includes forward-looking statements, including statements relating to the Company's marketing strategy, future sales growth, profitability, competitive position, and release of new products. The words "plan", "expect", "believe", "intend", "anticipate", "forecast", "target", "estimate" and similar expressions identify forward-looking statements. Forward-looking statements are based on assumptions made by and information currently available to the Company. Investors are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. The Company does not undertake to review or update these forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT: AADCO Automotive Inc., (905) 789-9313, Charles Hodgkinson, CEO, chodgkinson@aadco.ca
