Coach Industries Group - CIGI - Reports Second Quarter 2006 Financial Results

Business Wire, August 15, 2006

COOPER CITY, Fla. -- Coach Industries Group, Inc. (OTCBB:CIGI):

--First Quarter Revenues Increase 32% to $85 Million

--Guidance of $75 to $78 million in revenue for the Second Quarter of 2006 Exceeded by 10%

--Six Month Revenue Increase of 35% to $160 Million

--Independent Contractor Base of Clients grows from 5800 to over 7800

Coach Industries Group, Inc. ("Coach") (OTCBB:CIGI), which offers an array of financial services to commercial fleet operators, including vehicle financing and specialty insurance products, today reported financial results for the second quarter ended June 30, 2006.

Revenues for the second quarter of 2006 reached $85 million versus $63 million for the same period in 2005, an increase of 32%. Net loss for the quarter ended June 30, 2006 was $(1.2 million) or $(0.04) per share fully diluted compared to $225,000 net income or $0.01 per share basic and $0.02 per share fully diluted for the same period of 2005. Earnings (loss) before interest, taxes, depreciation and amortization EBITDA for the three months ended June 30, 2006 and 2005 was $(859,000) and $611,000.

Revenues for the six months ended June 30, 2006 reached $160 million versus $121 million for the same period in 2005, an increase of 35%. Net loss for the six months ended June 30, 2006 was $(1.6 million) or $(0.05) per share fully diluted compared to $(52,000) or $(0.00) per share fully diluted for the same period of 2005. EBITDA for the six months ended June 30, 2006 and 2005 was $(872,000) and $699,000.

Operations at Corporate Development Services continue to lead increases in the number of Independent Contractors supported from 5,800 drivers at June 30, 2005 to over 7,800 drivers at June 30, 2006, resulting in Net Income for the segment of $293,000 and $552,000 for the three and six months ended June 30, 2006 compared to $168,000 and $336,000 for the same periods of 2005. "We are thrilled with the growth in our driver base and the opportunity to support that driver base with our risk sharing agreement that we entered into with Dallas National Insurance and HighPoint effective May 1, 2006 to support our drivers through providing them accident and occupational insurance. As of August 2006, our driver base has increased to 8,300 drivers increasing our market share," stated CDS President Robert Lefebvre.

The manufacturing segment reported a Net Loss of $(38,000) and $(102,000) for the three and six months ended June 30, 2006 compared to net income of $377,000 and $574,000 for the same periods in 2005. The Manufacturing segment reported a Net Loss of $1.2 million for the full year, ending December 31, 2005. The second quarter is typically the strongest quarter for limousine sales. "The manufacturing segment is poised for profitability. Today the plant has 22 deposits with an average deposit of approximately 10% of the purchase price compared to 10 at June 30, 2006. The marketplace has embraced the Springfield brand as reliable and dependable stretch limousines. During the second half of 2005 and early 2006, the facility spent a lot of time and strengthened the quality of our product and we are seeing those results today. Our warranty charges have reduced by seventy percent of what they were prior year; the marketplace has renewed confidence in the brand. We have stepped up our marketing efforts and focused on direct sales channels as well. We have also reduced overhead per vehicle for the three month period from $9,000 in 2005 to $4,700 in 2006," stated Chief Operating Officer, Mark Khandjian.

The financial services segment reported a net loss of $76,000 and $137,000 for the three and six months ended June 30, 2006 compared to net income of $26,000 and $68,000 for the same periods in 2005. Overhead costs associated with the Daily Rental business for 2006 were $73,000 and $166,000 for the three and six months ended June 30, 2006. Effective June 1st, those expenses were eliminated. Lease production for the three and six months ended June 30, 2006 were $1.9 million and $2.5 compared to $.5 million and $3.0 million for the same periods in 2005. The financial services segment is directly impacted by operations of the manufacturing and independent contractor segments.

Operating expenses at the parent increased for the three and six months ended June 30, 2006 $1.4 million and $1.9 million compared to $186,000 and $1.0 million for the same periods in 2005. Expenses for the three months ended June 30, 2006 increased by $133,000 for legal expenses, $180,000 for investor relations expenses and $108,000 for amortization of consulting expenses. The net change in the warrant liability valuation resulted in an expense of $45,000 for the three months ended June 30. In addition, the Company recorded an expense associated with the registration of the Company's stock and warrants of $80,000. Similar increases were recorded for the six month period in 2006.

"Over the course of 2005 Coach established itself as the premier financial service provider for the commercial fleet industry," stated Steven H. Rothman, Chairman and Interim Chief Executive Officer of Coach. "Our financial services business units have been the primary focus of our business model and we intend to continue to build our lease and insurance portfolios as we simplify the lives of our Commercial Fleet Operators. All segments are beginning to demonstrate the consistent performance necessary to demonstrate overall profitability."