Group 1 Posts Record Revenues, Earnings for 2000 Q4 and Full
Year
Company's Revenues Top $3.5 Billion; Existing Guidance for 2001 Confirmed
HOUSTON, Feb. 15 Group 1 Automotive, Inc. , a
leading operator in the automotive retailing industry, today reported record
revenues and earnings for the fourth quarter of 2000 and the full year.
Revenue growth in all segments and an increase in gross margin contributed to
the record-setting performance.
Highlights:
- Revenues up 22% for Q4; operating income rises 25%
- Q4 diluted EPS $0.41, a 17% increase
- Full-year revenues increase 43% to over $3.5 billion; diluted EPS up
21% to $1.88
- Cash flow per share $0.61 for Q4, $2.62 for full year
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Revenues $841.1 $691.8 $3,586.1 $2,508.3
Gross profit $127.4 $101.4 $527.4 $376.4
Income from operations $27.4 $21.9 $117.7 $86.0
Net income $ 8.3 $ 7.7 $40.8 $33.5
Diluted earnings per share $0.41 $0.35 $1.88 $1.55
Growth in Higher-Margin Revenues Accelerates
For the fourth quarter ended December 31, 2000, revenues grew 22 percent
to $841.1 million from $691.8 million for the same period last year. New
vehicle revenues grew 22 percent and unit sales were up 17 percent. Used
vehicle revenues expanded 17 percent and unit sales were up 16 percent. Parts
and service and other dealership revenues increased significantly, growing
33 percent and 28 percent, respectively.
Gross margin for the quarter was 15.1 percent compared with 14.7 percent
during the year-ago period as the pace of new vehicle sales slowed, positively
impacting gross margin, while the higher-margin parts and service and other
dealership revenues expanded more rapidly. Income from operations rose to
$27.4 million from $21.9 million, a 25 percent increase. Operating margin
increased to 3.3 percent from 3.2 percent in the year-ago period.
Net income increased 8 percent to $8.3 million from $7.7 million, while
diluted earnings per share grew 17 percent to $0.41 from $0.35 a year ago.
Diluted cash flow per share, defined as net income plus depreciation and
amortization, increased 25 percent to $0.61 from $0.49 in the 1999 period.
Per share amounts were positively impacted by the company's continued
repurchase of its common stock.
Business Model Meets the Challenge
"I am pleased to announce a record fourth-quarter performance, achieved
despite the challenges presented by the sudden slowdown in new vehicle sales
and some very difficult weather conditions in several of our key markets.
This quarter's results are further evidence of the strength of our operating
model, brands and people," said B.B. Hollingsworth Jr., Group 1's chairman,
president and chief executive officer. "Our co-workers did a great job
handling this quarter's challenges. Our parts and service business is
benefiting from recent service department expansions and the large number of
vehicles sold over the past couple of years. I am especially proud of our
growth in other dealership revenue, which expanded to $810 per unit from
$739 per unit last year, as we earned several year-end sales incentives on our
finance and insurance products.
"We ended the year with new vehicle inventory slightly higher than we
would like, as the rate of new vehicle sales dropped off late in the fourth
quarter," Hollingsworth added. "This caused much of the increase in floorplan
financing interest expense in the fourth-quarter comparables. We are working
to get our new vehicle inventory in line and expect it, as well as interest
expense, to be back in a normal range by the end of the first quarter 2001.
Our used vehicle and parts inventories are in good shape."
Record Performance for Full Year
For the year, revenues reached $3.6 billion, a 43 percent increase from
$2.5 billion in 1999. New vehicle revenues grew 48 percent and unit sales
were up 44 percent. Used vehicle revenues expanded 34 percent and unit sales
were up 30 percent. Parts and service and other dealership revenues grew
44 percent and 40 percent, respectively. Net income increased 22 percent to
$40.8 million, or $1.88 per diluted share, compared with $33.5 million, or
$1.55 per diluted share. Diluted cash flow per share was $2.62 compared with
$2.05 last year, a 28 percent increase.
Gross margin for 2000 was 14.7 percent compared with 15.0 percent in 1999.
Income from operations rose 37 percent to $117.7 million from $86.0 million,
and the operating margin was 3.3 percent compared with 3.4 percent. Margins
for 2000 were impacted as new vehicle sales, which carry the lowest margins,
reached record percentages of revenue compared with last year. This shift in
merchandising mix was present during the first three quarters, but began to
return to more normal levels once new vehicle sales slowed in the fourth
quarter.
Stock Repurchase
During the year, the company repurchased over 2.5 million shares of its
common stock. "Our capital, liquidity and cash flow continue to be strong,
and our long-term-debt-to-capitalization ratio stood at a favorable 36 percent
at year end," stated Hollingsworth.
2001 Outlook
Hollingsworth confirmed that Group 1 is confident in its outlook for the
full year. In December 2000, the company said it expected 2001 revenues and
diluted earnings per share to approximate 2000's performance. Operating
margin is expected to remain consistent to slightly improved compared with the
3.3 percent achieved in 2000.
"We expect our first- and second-quarter results this year to be slightly
lower than in 2000," Hollingsworth said. "Both of those periods last year
experienced record-setting new vehicle sales, which gives us a tough
comparison. Right now, we are seeing a softer new vehicle market and
declining consumer confidence. However, we expect to make up ground in the
second half of the year as the recent Federal Reserve actions lowering
interest rates begin to positively impact the new vehicle market and our
interest expense. Furthermore, we expect interest expense to decline as new
vehicle inventory is adjusted to a level in line with our sales expectations.
Finally, we expect to invest our operating cash flow to repurchase common
stock, complete strategic tuck-in acquisitions, reduce debt and expand and
upgrade our facilities."
Group 1 said it will seek strategic tuck-in acquisitions in markets
currently served, targeting to add dealerships with aggregate revenues of
between $200 million and $300 million, and may, subject to market conditions,
use up to $12 million of operating cash flow to continue to repurchase its
common stock in both private and market transactions.
Group 1 Automotive, Inc.
Statements of Operations
(Unaudited)
(In thousands of dollars, except share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
REVENUES:
New vehicles $506,390 $414,988 $2,165,954 $1,465,759
Used vehicles 228,820 196,409 1,003,759 750,807
Parts & service 79,308 59,510 306,089 212,970
Other dealership
revenues, net 26,623 20,877 110,344 78,788
Total revenues 841,141 691,784 3,586,146 2,508,324
COST OF SALES:
New vehicles 465,865 380,891 1,996,264 1,344,120
Used vehicles 212,087 182,644 923,819 691,499
Parts & service 35,784 26,837 138,626 96,348
Total cost of
sales 713,736 590,372 3,058,709 2,131,967
Gross Profit 127,405 101,412 527,437 376,357
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 95,871 76,334 393,679 279,791
DEPRECIATION EXPENSE 1,916 1,456 7,587 4,853
AMORTIZATION EXPENSE 2,229 1,735 8,451 5,763
Income from operations 27,389 21,887 117,720 85,950
OTHER INCOME (EXPENSE):
Floorplan interest
expense (10,279) (6,772) (37,536) (20,395)
Other interest expense,
net (3,909) (2,347) (15,500) (10,052)
Other income (expense),
net 115 (23) 1,142 186
INCOME BEFORE INCOME
TAXES 13,316 12,745 65,826 55,689
PROVISION FOR INCOME
TAXES 5,060 5,082 25,014 22,174
NET INCOME $8,256 $7,663 $40,812 $33,515
Basic earnings per
share $0.41 $0.36 $1.91 $1.62
Diluted earnings per
share $0.41 $0.35 $1.88 $1.55
Diluted cash flow per
share $0.61 $0.49 $2.62 $2.05
Weighted average
shares outstanding:
Basic 19,926,654 21,574,440 21,377,902 20,683,308
Diluted 20,182,088 22,150,246 21,709,833 21,558,920
Other Data:
Gross margin 15.1% 14.7% 14.7% 15.0%
Operating margin 3.3% 3.2% 3.3% 3.4%
Pretax income margin 1.6% 1.8% 1.8% 2.2%
EBITDA $31,649 $25,055 $134,900 $96,752
Retail new vehicles
sold 19,535 16,755 86,729 60,384
Retail used vehicles
sold 13,327 11,504 59,144 45,630
Total retail sales 32,862 28,259 145,873 106,014
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2000 1999
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $140,878 $118,824
Inventories, net 527,101 386,255
Other assets, net 52,560 48,344
Total current assets 720,539 553,423
Property and equipment, net 70,901 46,711
Goodwill, net 285,892 235,312
Other assets 22,221 7,464
Total assets $1,099,553 $842,910
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floorplan notes payable $536,707 $363,489
Other interest-bearing liabilities 1,506 1,076
Accounts payable and accrued expenses 127,557 108,730
Total current liabilities 665,770 473,295
Debt 140,393 113,174
Other liabilities 45,974 24,412
Stockholders' equity:
Common stock 213 218
Additional paid-in capital 170,684 181,398
Retained earnings 92,516 51,705
Treasury stock (15,997) (1,292)
Total stockholders' equity 247,416 232,029
Total liabilities and
stockholders' equity $1,099,553 $842,910
OTHER DATA:
Working capital $54,769 $80,128
Current ratio 1.08 1.17
Long-term debt to capitalization 36% 33%
