Auto Dealer-Group 1 Posts 66 Percent Increase In Net Income
HOUSTON, April 23 Group 1 Automotive, Inc. a Fortune 500 specialty retailer, today reported a 66 percent increase in net income for the first quarter ended March 31, 2002. This is the 18th consecutive quarter of double-digit earnings per share growth on a year-over-year basis.
- Highlights:
- Net income up 66 percent to $15.5 million
- Diluted EPS increased 36 percent to $0.64
- Margins expanded in new vehicles, used vehicles and parts and service
- Gross margin improved to a record 16.0 percent
- Operating margin rose to 3.4 percent
Summary Results of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended
March 31,
2002 2001
Revenues $946.1 $928.9
Gross Profit $151.5 $141.9
Income from Operations $ 31.8 $ 28.5
Net Income $ 15.5 $ 9.3
Diluted Earnings per Share $ 0.64 $ 0.47
Weighted Average Diluted Shares Outstanding 24.1 20.0
Growth in Higher-Margin Revenues and Margins Expanded
First quarter revenues grew 2 percent to $946.1 million from $928.9 million for the same period last year. Same store revenues were stable. New vehicle revenues increased 3 percent on flat unit sales, and used vehicle revenues declined 3 percent on a 2 percent decline in units. Parts and service revenues increased 8 percent, and finance and insurance revenues increased 14 percent.
Gross margin for the quarter was a record 16.0 percent compared with 15.3 percent during the year-ago period, as the Company's new and used vehicle margins expanded and the other higher-margin businesses increased more rapidly than vehicle sales. Income from operations rose 12 percent to $31.8 million from $28.5 million. Operating margin increased to 3.4 percent from 3.1 percent in the year-ago period.
Net income for the first quarter increased 66 percent to $15.5 million from $9.3 million, while diluted earnings per share grew 36 percent to $0.64 from $0.47 a year ago. Diluted shares outstanding increased 21 percent to 24.1 million from 20.0 million in the year-ago period, as the Company completed a 3.3 million-share common stock offering in the fourth quarter of 2001.
Record First Quarter
``Our unique position in the automotive industry as a specialty retailer and service company has produced these record first quarter results,'' said B.B. Hollingsworth Jr., Group 1's chairman, president and chief executive officer. ``The continuing achievement of our objectives is once again evidence of the strength and flexibility of our business model,'' Hollingsworth added.
2002 Outlook
``We are pleased with our continued progress and are encouraged with our future prospects. Favorable interest rates combined with manufacturers' incentives and rebates, and more innovative products with shorter cycles, as well as the affordability of vehicles continue to attract customers to our dealerships. In addition, record sales levels the last few years have produced more automobiles and light trucks in operation, driving business to our higher-margin parts and service departments. We expect these positive business trends will continue, and including the acquisitions announced today, we are increasing our diluted earnings per share guidance for 2002 to a range of $2.70 to $2.85,'' 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 common stock offering and the $0.20 positive impact of the new accounting standard on goodwill amortization, and assumes that the announced acquisitions close by the end of the third quarter.
``We continue to focus on our operations while seeking to acquire new dealerships that meet our high standards,'' said Hollingsworth. Group 1 will seek additional platform and strategic tuck-in acquisitions in 2002, targeting to add dealerships with total aggregate revenues of at least $800 million. Year-to-date, the Company has acquired dealerships with $80 million of revenues and disposed of one dealership with $22 million of revenues. The Company has announced today that it has agreed to acquire dealerships with approximately $530 million in annual revenues.
First-Quarter Conference Call
Group 1 will hold a conference call to discuss first-quarter results and management's outlook for 2002 at 10:00 a.m. EDT on Tuesday, April 23, 2002. The call can be accessed live and will be available for replay over the Internet via http://www.vcall.com, or through Group 1's website, http://www.group1auto.com.
Upon completion of the announced acquisitions, Group 1 will own 69 automotive dealerships comprised of 106 franchises, 28 different brands, and 25 collision service centers located in Texas, Oklahoma, Florida, Georgia, New Mexico, Colorado, Louisiana, Massachusetts and California. 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 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, Toyota and GM,
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
* pending acquisitions may not be completed due to failure to satisfy
closing conditions
* we may not reach agreement with additional acquisition candidates
Group 1 Automotive, Inc.
Statements of Operations
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
2002 2001
REVENUES:
New vehicles $550,672 $537,442
Used vehicles 267,259 274,658
Parts & service 91,691 84,771
Finance & insurance, net 36,452 31,993
Total revenues 946,074 928,864
COST OF SALES:
New vehicles 509,951 498,072
Used vehicles 243,834 250,835
Parts & service 40,780 38,029
Total cost of sales 794,565 786,936
Gross profit 151,509 141,928
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 116,877 109,195
Income from operations before non-cash charges 34,632 32,733
DEPRECIATION AND AMORTIZATION EXPENSE 2,836 4,231
Income from operations 31,796 28,502
OTHER INCOME (EXPENSE):
Floorplan interest expense (4,390) (9,307)
Other interest expense, net (2,739) (4,200)
Other income (expense), net (75) 38
Income before income taxes 24,592 15,033
PROVISION FOR INCOME TAXES 9,099 5,712
NET INCOME $15,493 $9,321
Basic earnings per share $0.68 $0.47
Diluted earnings per share $0.64 $0.47
Weighted average shares outstanding:
Basic 22,909,209 19,691,449
Diluted 24,140,222 20,006,717
OTHER DATA:
Gross margin 16.0% 15.3%
Operating margin 3.4% 3.1%
Pretax income margin 2.6% 1.6%
EBITDA $34,557 $32,771
Retail new vehicles sold 20,769 20,726
Retail used vehicles sold 16,159 16,500
Total retail sales 36,928 37,226
Group 1 Automotive, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
March 31, December 31,
2002 2001
(unaudited) (audited)
ASSETS:
Current assets:
Cash and cash equivalents $155,263 $147,212
Inventories 490,158 454,961
Other assets 58,994 59,759
Total current assets 704,415 661,932
Property, plant and equipment 86,752 83,011
Intangible assets 283,700 282,527
Other assets 28,320 26,955
Total assets $1,103,187 $1,054,425
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Floorplan notes payable $393,553 $364,954
Other interest-bearing liabilities 1,701 1,687
Accounts payable and accrued expenses 137,811 140,578
Total current liabilities 533,065 507,219
Debt 93,854 95,499
Other liabilities 34,071 30,758
Total liabilities before
deferred revenues 660,990 633,476
Deferred revenues 29,022 28,706
Stockholders' equity 413,175 392,243
Total liabilities and
stockholders' equity $1,103,187 $1,054,425
OTHER DATA:
Working capital $171,350 $154,713
Current ratio 1.32 1.31
Long-term debt to capitalization 19% 20%
Last 12 months return on average equity 19.3% 19.3%