Exhibit 99.1
ACR Group, Inc. Reports Income More Than Doubles in the Nine Months Ended
November 30, 2003; Third Quarter Solidly Profitable
Sales in Key Air-Conditioning States Boost Profits; New Branches Open
HOUSTON, Jan. 7 /PRNewswire-FirstCall/ -- ACR Group, Inc.
(OTC Bulletin Board: ACRG), a leading wholesale distributor of air-
conditioning, heating, and refrigeration equipment and supplies, today
reported record operating results and sales for the nine months and quarter
ended November 30, 2003, the third quarter of fiscal 2004.
Net income for the nine-month period ended November 30, 2003 rose 116% to
$2,202,000, or $0.21 per share, from $1,020,000, or $0.10 per share, for the
nine-month period ended November 30, 2002. An accounting change and
differences in the effective applicable tax rate, as described below, affected
the comparability of results of operations between fiscal 2004 and fiscal
2003. Income before taxes and cumulative effect of an accounting change was
$3,568,000 in the nine-month period ended November 30, 2003, compared to
$2,013,000 for the nine-month period ended November 30, 2002, an increase of
77%. The increase in income from fiscal 2003 to fiscal 2004 was attributable
both to lower interest costs and to improved sales and gross margins in Texas,
California and Florida, the three states that utilize the most air-
conditioning in the country.
In the first quarter of fiscal 2003, the Company adopted a new accounting
standard for determining the amount of goodwill to be carried on the Company's
balance sheet. Utilizing the prescribed criteria, the Company determined that
it was appropriate to write off the entire unamortized amount of goodwill
associated with its filter manufacturing operation. Net of taxes, such
writeoff amounted to $483,000, or $0.04 per share, and is reported in the
Company's fiscal 2003 income statement as a cumulative effect of accounting
change. In fiscal 2004, the Company has estimated a federal income tax rate
of 34% to systematically amortize through fiscal 2004 the deferred tax asset
related to its net operating loss carryforward and to provide for taxes
payable. In fiscal 2003, the Company estimated a tax rate of 21% to amortize
its deferred tax asset, and the current provision for income taxes consisted
principally of federal alternative minimum taxes and state income taxes.
For the nine-month period ended November 30, 2003, the Company reported
sales of $136.0 million, an increase of 6% from sales of $128.6 million for
the nine-month period ended November 30, 2002. Same-store sales in the
first eleven months of calendar 2003 also increased 6% over 2002, compared to
a 1% increase in industry-wide product shipments during the same period based
on data compiled by a leading industry trade association.
Net income for the quarter ended November 30, 2003 increased to
$286,000, or $0.03 per share, from a net loss of $108,000, or $(0.01) per
share, for the quarter ended November 30, 2002. Pre-tax income increased even
more significantly, to $478,000 in 2003 from a pre-tax loss of $157,000 in
2002. Consolidated sales increased 11%, to $42.2 million in 2003 from
$37.9 million in 2002, and same-store sales increased 13%. Almost one-half of
the increase in third quarter sales in fiscal 2004 was attributable to a
contract with a new customer. This contract is presently expected to continue
through calendar 2004.
The Company also opened new branches in Fort Myers and Orlando, FL in the
third quarter. A branch in Sun Valley, CA, in the eastern San Fernando
Valley, opened at the beginning of January 2004, and a branch in Sarasota, FL
is expected to open around the end of fiscal 2004.
Commenting on the Company's third quarter results, Alex Trevino, Jr.,
President and Chief Executive Officer of ACR Group, stated, "Continued strong
business in the primary air-conditioning states helped us to our first
profitable fiscal third quarter in four years. We are expanding our footprint
in those states as quickly as opportunities arise. By shedding our filter
manufacturing business at the end of the second quarter, we are now able to
focus solely on our core distribution businesses. Our newest business units
in Florida and California have attained critical mass and are still growing at
a much more rapid rate than the HVACR industry. These factors collectively
have enabled the Company for the second straight quarter to reach record
levels of year-to-date sales and pre-tax income."
About ACR Group, Inc.
ACR Group, Inc. is a wholesale distributor of air-conditioning, heating,
and refrigeration ("HVACR") equipment and supplies. The Company owns and
operates 6 companies with 48 locations in 9 states.
Statements in this news release that relate to management's expectations
or beliefs concerning future plans, expectations, events, and performance are
"forward-looking" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Actual results or events could differ materially from those
anticipated in the forward-looking statements due to a variety of factors,
including, without limitation, weather conditions, the effects of competitive
pricing, general economic conditions, and availability of capital.
(financial data to follow)
ACR GROUP, INC.
CONSOLIDATED RESULTS OF OPERATIONS
(in thousands of dollars, except per share amounts)
(Unaudited)
Quarter Ended Nine Months Ended
November 30, November 30,
2003 2002 2003 2002
Sales $ 42,187 $ 37,902 $ 136,047 $ 128,581
Cost of sales 33,057 29,536 106,264 100,635
Gross profit 9,130 8,366 29,783 27,946
Selling, general and
administrative expenses 8,194 7,937 24,709 24,049
Depreciation and amortization 231 297 744 895
Operating income 705 132 4,330 3,002
Interest expense 366 423 1,127 1,339
Other non-operating (income) (139) (134) (365) (350)
Income (loss) before taxes
and cumulative effect
of accounting change 478 (157) 3,568 2,013
Provision (benefit) for
income taxes:
Current 103 (13) 699 97
Deferred 89 (36) 667 413
Income (loss) before
cumulative effect of
accounting change 286 (108) 2,202 1,503
Cumulative effect of
accounting change,
net of taxes --- --- --- (483)
Net income (loss) $ 286 $ (108) $ 2,202 $ 1,020
Basic and diluted
earnings (loss) per share:
Before cumulative
effect of change in
accounting principle $ .03 $ (.01) $ .21 $ .14
Cumulative effect of
accounting change --- --- --- (.04)
$ .03 $ (.01) $ .21 $ .10
Average outstanding shares,
basic and diluted 10,681 10,681 10,681 10,681
SOURCE ACR Group, Inc.
-0- 01/07/2004
/CONTACT: Alex Trevino, Jr., President and CEO, or Tony Maresca, Sr. Vice
President & CFO, both of ACR Group, Inc., +1-713-780-8532/
(ACRG)
CO: ACR Group, Inc.
ST: Texas
IN: CST OTC
SU: ERN