Group 1 Automotive Posts Record Revenues and Earnings
HOUSTON, Feb. 14 Group 1 Automotive, Inc. a leading operator in the automotive retailing industry, today reported record revenues and earnings for the fourth quarter of 2001 and the full year. Growth in all revenue categories and lower interest expense drove the record-setting performance for the quarter and for the year.
Highlights:
* Fourth quarter revenues up 24 percent; full year revenues
increased 11 percent
* Operating income rose 23 percent in fourth quarter
* Net Income up 96 percent in fourth quarter
* Fourth quarter diluted EPS $0.68, a 66 percent increase; full year
diluted EPS up 38 percent to $2.59
* Cash flow per share $0.88 for fourth quarter; $3.40 for full year
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
Revenues $1,039.9 $841.1 $3,996.4 $3,586.1
Gross profit $153.0 $127.4 $607.3 $527.4
Income from operations $33.8 $27.4 $131.3 $117.7
Net income $16.2 $8.3 $55.4 $40.8
Diluted earnings
per share $0.68 $0.41 $2.59 $1.88
Growth in Revenues Accelerated from Fourth Quarter 2000
For the fourth quarter ended December 31, 2001, revenues grew 24 percent to $1.0 billion, from $841.1 million for the same period last year. New vehicle revenues rose 24 percent and unit sales increased 21 percent. Used vehicle revenues also expanded 24 percent with unit sales 29 percent higher. Parts and service and other dealership revenues increased significantly, growing 15 percent and 30 percent, respectively.
Gross margin for the fourth quarter was 14.7 percent compared with 15.1 percent during the year-ago period. Income from operations rose 23 percent to $33.8 million from $27.4 million. Operating margin was 3.3 percent for both periods. Interest expense declined in the quarter to $7.6 million compared with $14.2 million in the same quarter in 2000.
Net income increased 96 percent to $16.2 million from $8.3 million, while diluted earnings per share grew 66 percent to $0.68 from $0.41 a year ago. Diluted cash flow per share, defined as net income plus depreciation and amortization, increased 44 percent to $0.88 from $0.61 in the 2000 period. Weighted average shares outstanding increased 17 percent from the year ago period due primarily to the successful completion of a common stock offering of 3.3 million shares in October 2001 that raised approximately $100 million.
Business Model Meets the Challenge
``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. ``I am especially proud of our 21 percent same store sales growth, which exceeds the industry average. With the events of September 11th, our outlook was cautious. But with certain manufacturers providing aggressive incentives combined with successful execution at our stores, we were able to realize significant revenue growth in new vehicle sales and also on our non-incentive driven used vehicle business.''
Record Performance for Full Year
For the year 2001, revenues reached $4.0 billion, an 11 percent increase from $3.6 billion in 2000. New vehicle revenues grew 9 percent and unit sales increased 4 percent. Used vehicle revenues expanded 13 percent and unit sales rose 15 percent. Parts and service and other dealership revenues grew 18 percent and 25 percent, respectively, compared with 2000.
Gross margin for 2001 was 15.2 percent compared with 14.7 percent in 2000. Income from operations rose 12 percent to $131.3 million from $117.7 million, and the operating margin remained stable at 3.3 percent. Interest expense declined to $41.8 million from $53.0 million last year. Net income in 2001 increased 36 percent to $55.4 million, or $2.59 per diluted share, compared with $40.8 million, or $1.88 per diluted share in 2000. Diluted cash flow per share grew 30 percent to $3.40 compared with $2.62 last year.
Capital Position
``Having recently completed an offering of 3.3 million shares of common stock together with continuing strong cash flow generated from operations, our capital and liquidity is in outstanding shape. Our balance sheet is positioned to allow for significant growth in the future,'' stated Hollingsworth.
2002 Acquisitions
Group 1 was granted a new Dodge franchise by DaimlerChrysler in the Dallas market area. The new Rockwall Dodge store opened in January 2002 and is contiguous with our Rockwall Ford operation. In February 2002, Group 1 acquired a second Ford dealership in the New Orleans market, increasing the Bohn Group platform to six franchises. These tuck-in acquisitions are expected to generate approximately $80 million in aggregate revenues in 2002.
Hollingsworth further commented, ``These tuck-in acquisitions are examples of our strategy of developing dominant platforms by adding key franchises to enhance economies-of-scale and expand market penetration. These are our first acquisitions in the new year, and are consistent with our previously stated target to increase our acquisition pace in 2002 to at least $500 million in aggregate revenues.''
2002 Outlook
``We are pleased with our continued progress and are encouraged with our future prospects. Low interest rates combined with manufacturers' incentives and rebates, shorter, more innovative product cycles and affordability of vehicles continue to drive customers into our dealerships. We expect these positive business trends will continue well into 2002, and excluding future acquisitions, we are comfortable with a diluted earnings per share estimate for 2002 of $2.60 to $2.70,'' commented Hollingsworth. Additionally, Hollingsworth pointed out that the earnings per share guidance for 2002 is after the $0.31 dilutive impact of the Company's fourth quarter equity offering and the expected $0.20 positive impact of the new accounting standard on goodwill amortization. As proceeds from the recent equity offering are deployed to complete future acquisitions, this earnings guidance may be revised.
Conference Call
Group 1 will hold a conference call to discuss fourth-quarter and year-end results and management's outlook for 2002 at 10:00 a.m. EST on Thursday, February 14, 2002. The call can be accessed live and will be available for replay over the Internet via http://www.vcall.com or http://www.ccbn.com. Links to these sites will also be available on Group 1's website, http://www.group1auto.com.
Group 1 owns 62 automotive dealerships comprised of 97 franchises, 28 different brands, and 24 collision service centers located in Texas, Oklahoma, Florida, New Mexico, Colorado, Georgia, Louisiana and Massachusetts. Through its dealerships and Internet sites, the Company sells new and used cars and light trucks, arranges related financing, vehicle service and insurance contracts, provides maintenance and repair services and sells replacement parts.
Group 1 Automotive, Inc. can be reached on the Internet at http://www.group1auto.com
This press release contains ``forward-looking statements'' within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements include statements regarding our plans, goals, beliefs or current expectations, including those plans, goals, beliefs and expectations of our officers and directors with respect to, among other things:
* earnings per share for the year ending 2002
* the completion of pending and future acquisitions
* business trends, including incentives, product cycles and interest
rates
* impact of new accounting standards
Any such forward-looking statements are not assurances of future performance and involve risks and uncertainties. Actual results may differ materially from anticipated results in the forward-looking statements for a number of reasons, including:
* the future economic environment, including consumer confidence,
interest rates, and manufacturer incentives, may affect the demand for
new and used vehicles and parts and service sales
* regulatory environment, adverse legislation, or unexpected litigation
* our principal automobile manufacturers, especially Ford and Toyota,
may not continue to produce or make available to us vehicles that are
in high demand by our customers
* requirements imposed on us by automobile manufacturers may affect our
acquisitions and capital expenditures related to our dealership
facilities
* our dealership operations may not perform at expected levels or
achieve expected improvements
* we may not achieve expected future cost savings and our future costs
could be higher than we expected
* our cost of financing could increase significantly
* new accounting standards could materially impact our reported earnings
per share
This information and additional factors that could affect our operating results and performance are described in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations -- Cautionary Statement About Forward-Looking Statements; -Impact of Acquisitions on Growth; -- Dependence on the Success of Our Manufacturers; -- Cyclicality and -- Seasonality in our Form 10-K for the year ended December 31, 2000.
All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement.
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,
2001 2000 2001 2000
REVENUES:
New vehicles $629,757 $506,390 $2,365,008 $2,165,954
Used vehicles 284,189 228,820 1,133,066 1,003,759
Parts & service 91,472 79,308 360,201 306,089
Other dealership
revenues, net 34,491 26,623 138,099 110,344
Total revenues 1,039,909 841,141 3,996,374 3,586,146
COST OF SALES:
New vehicles 582,195 465,865 2,185,939 1,996,264
Used vehicles 264,195 212,087 1,042,853 923,819
Parts & service 40,488 35,784 160,330 138,626
Total cost of sales 886,878 713,736 3,389,122 3,058,709
Gross Profit 153,031 127,405 607,252 527,437
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 114,667 95,871 458,546 393,679
Income from operations
before non-cash
charges 38,364 31,534 148,706 133,758
DEPRECIATION EXPENSE 2,237 1,916 8,216 7,587
AMORTIZATION EXPENSE 2,313 2,229 9,142 8,451
Income from operations 33,814 27,389 131,348 117,720
OTHER INCOME (EXPENSE):
Floorplan interest
expense (4,770) (10,279) (27,935) (37,536)
Other interest expense,
net (2,809) (3,909) (13,863) (15,500)
Other income (expense),
net (176) 115 (128) 1,142
INCOME BEFORE INCOME
TAXES 26,059 13,316 89,422 65,826
PROVISION FOR INCOME
TAXES 9,902 5,060 33,980 25,014
NET INCOME $16,157 $8,256 $55,442 $40,812
Basic earnings per
share $0.74 $0.41 $2.75 $1.91
Diluted earnings per
share $0.68 $0.41 $2.59 $1.88
Diluted cash flow per
share $0.88 $0.61 $3.40 $2.62
Weighted average
shares outstanding:
Basic 21,840,113 19,926,654 20,137,661 21,377,902
Diluted 23,636,958 20,182,088 21,415,154 21,709,833
Other Data:
Gross margin 14.7% 15.1% 15.2% 14.7%
Operating margin 3.3% 3.3% 3.3% 3.3%
Pretax income margin 2.5% 1.6% 2.2% 1.8%
EBITDA $38,188 $31,649 $148,578 $134,900
Retail new vehicles
sold 23,652 19,535 90,615 86,729
Retail used vehicles
sold 17,143 13,327 67,927 59,144
Total retail unit
sales 40,795 32,862 158,542 145,873
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2001 2000
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $147,212 $140,878
Inventories, net 454,961 527,101
Other assets, net 59,759 52,560
Total current assets 661,932 720,539
Property and equipment, net 83,011 70,901
Intangible assets, net 282,527 285,892
Other assets 26,955 22,221
Total assets $1,054,425 $1,099,553
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floorplan notes payable $364,954 $536,707
Other interest-bearing liabilities 1,687 1,506
Accounts payable and accrued expenses 140,578 127,557
Total current liabilities 507,219 665,770
Debt 95,499 140,393
Other liabilities 59,464 45,974
Stockholders' equity 392,243 247,416
Total liabilities and stockholders' equity $1,054,425 $1,099,553
OTHER DATA:
Working capital $154,713 $54,769
Current ratio 1.31 1.08
Long-term debt to capitalization 20% 36%
Last 12 months return on average equity 19.3% 16.6%