UnitedAuto Reports Record Second Quarter; Revenues Increase 18.7%; Income from Continuing Operations Per Share Increases 7.5%
BLOOMFIELD HILLS, Mich.--July 30, 2003--| Same Store Retail Revenues Increase 11.0% and Related Gross Profit Increases 10.9% |
United Auto Group, Inc. , a FORTUNE 500 automotive specialty retailer, announced today that revenues for the second quarter increased 18.7% to a record $2.2 billion. The increase in revenue includes an 11.0% increase in same-store retail revenues, with each of the Company's product offerings experiencing same store growth. The same store growth consists of increases in new retail vehicle sales, used retail vehicle sales, service and parts sales, and finance and insurance revenues of 9.0%, 16.9%, 9.3% and 18.6%, respectively. Income from continuing operations was $23.3 million and related earnings per share was $0.57, an increase of 7.5%. Net income was $23.9 million and earnings per share increased 3.6% to $0.58.
For the six months ended June 30, 2003, revenues increased 22.0% to $4.2 billion. Income from continuing operations was $40.1 million and related earnings per share was $0.98, an increase of 6.5%. Net income was $37.6 million and related earnings per share was $0.92. Net income for the six months includes a $3.1 million, or $0.07 per share, charge as a result of the cumulative effect of a change in accounting principle recorded in the first quarter in connection with the adoption of EITF 02-16.
Chairman Roger Penske commented, "We believe that our robust same store growth is the direct result of our brand mix, our focus on increasing units in operation and our capital investment strategy, which we believe will continue to generate future growth in all aspects of our business. I am particularly pleased with the 9.3% same-store increase in our higher margin service and parts business, which, coupled with a 70 basis point expansion in our overall service and parts margin to 47.9%, is indicative that our investment in service capacity continues to yield results. We reiterate our annual earnings projection of $1.96 - $2.06 per share (excluding the cumulative effect of the change in accounting principle), with a third quarter estimate of $0.58 - $0.62 per share."
Sam DiFeo, Jr., President, added "Our strategies and business model are being validated by our strong same store performance. During the second quarter, our U.S. businesses experienced 5.4% same store new retail unit volume growth, which compares to an overall U.S. market decline of 0.6%. In addition, the 16.9% increase in same store used retail revenues was significantly stronger than the overall used vehicle market. As we enter the third quarter and continue through the primary vehicle sales season in many of our markets, we are confident that our improving days supply of inventories will allow us to maximize profitability. As of June 30, 2003, our new and used vehicle inventory supplies were 56 days and 31 days, respectively, on a thirty day trailing basis."
This quarter's outstanding results were achieved despite a $1.9 million, or $0.05 per share, reduction of income as the result of an adjustment to reverse $3.1 million of revenue that was falsely recorded during the 23-month period preceding March 31, 2003. The $3.1 million revenue overstatement was discovered during a routine internal audit of the books and records of the Company's Arkansas dealerships. The Company, with the concurrence of the Audit Committee of its Board of Directors, has determined that the overstatement was immaterial to the Company's financial statements.
UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 137 franchises in the United States and 74 franchises internationally, primarily in the United Kingdom. UnitedAuto dealerships sell new and used vehicles, and market a complete line of aftermarket automotive products and services.
UnitedAuto will host a conference call discussing financial results relating to second quarter 2003 on Wednesday, July 30, 2003 at 9A.M. Eastern time. Advance registration is not required. Participants must call (888) 428-4471 (International, please call (612) 332-0107). Calls need to be made shortly before the call is to commence. The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.
Statements in this press release may involve forward-looking statements, including forward-looking statements regarding UnitedAuto's future sales and earnings growth potential. Actual results may vary materially because of risks and uncertainties, including external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control. These forward-looking statements should be evaluated together with additional information about UnitedAuto's business, markets, conditions and other uncertainties which could affect UnitedAuto's future performance, which are contained in UnitedAuto's Form 10-K for the year ended December 31, 2002 and its other filings with the Securities and Exchange Commission and which are incorporated into this press release by reference. This press release speaks only as of its date and UnitedAuto disclaims any duty to update the information herein.
UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)
Second Quarter
-----------------------
2003 2002
----------- -----------
New Vehicles $1,309,351 $1,114,200
Used Vehicles 487,460 388,206
Finance and Insurance 54,056 44,498
Service and Parts 229,801 192,588
Fleet 39,168 28,595
Wholesale 127,719 125,818
----------- -----------
Total Revenues 2,247,555 1,893,905
Cost of Sales 1,927,976 1,624,991
----------- -----------
Gross Profit 319,579 268,914
SG&A Expenses 249,620 205,677
Depreciation and Amortization 7,754 5,839
----------- -----------
Operating Income 62,205 57,398
Floor Plan Interest Expense (11,657) (8,538)
Other Interest Expense (10,908) (9,976)
----------- -----------
Income from Continuing Operations Before
Minority Interests and Income Tax
Provision 39,640 38,884
Minority Interests (658) (509)
Income Tax Provision (15,660) (15,750)
----------- -----------
Income from Continuing Operations 23,322 22,625
Income from Discontinued Operations, Net of Tax 542 1,264
----------- -----------
Net Income $23,864 $23,889
=========== ===========
Income from Continuing Operations Per Diluted
Share $0.57 $0.53
=========== ===========
Diluted EPS $0.58 $0.56
=========== ===========
Diluted Weighted Average Shares Outstanding 41,176 42,841
=========== ===========
UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)
Six Months
-----------------------
2003 2002
----------- -----------
New Vehicles $2,411,981 $2,044,863
Used Vehicles 925,590 678,800
Finance and Insurance 101,988 80,818
Service and Parts 441,959 352,572
Fleet 67,179 59,919
Wholesale 247,709 221,817
----------- -----------
Total Revenues 4,196,406 3,438,789
Cost of Sales 3,594,198 2,947,323
----------- -----------
Gross Profit 602,208 491,466
SG&A Expenses 477,297 381,920
Depreciation and Amortization 15,037 10,172
----------- -----------
Operating Income 109,874 99,374
Floor Plan Interest Expense (20,659) (16,747)
Other Interest Expense (21,258) (17,844)
----------- -----------
Income from Continuing Operations Before
Minority Interests and Income Tax
Provision 67,957 64,783
Minority Interests (1,051) (925)
Income Tax Provision (26,845) (26,008)
----------- -----------
Income from Continuing Operations 40,061 37,850
Income from Discontinued Operations, Net of Tax 594 1,750
----------- -----------
Income Before Cumulative Effect of
Accounting Change 40,655 39,600
Cumulative Effect of Accounting Change (a) (3,058) --
----------- -----------
Net Income $37,597 $39,600
=========== ===========
Income from Continuing Operations Per Diluted
Share $0.98 $0.92
=========== ===========
Diluted EPS before Cumulative Effect of
Accounting Change $0.99 $0.96
=========== ===========
Cumulative Effect of Accounting Change on
Diluted EPS ($0.07) $--
=========== ===========
Diluted EPS $0.92 $0.96
=========== ===========
Diluted Weighted Average Shares Outstanding 40,994 41,076
=========== ===========
(a) Represents a cumulative accounting change resulting from the
adoption of EITF 02-16, "Accounting by a Customer (including a
Reseller) for Certain Consideration Received from a Vendor."
UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
6/30/03 12/31/02
----------- -----------
Assets (unaudited)
Cash and Cash Equivalents $15,473 $8,909
Accounts Receivable, Net 358,194 313,503
Inventories 1,095,073 954,834
Other Current Assets 42,195 27,797
----------- -----------
Total Current Assets 1,510,935 1,305,043
Property and Equipment, Net 381,937 310,647
Intangibles 1,048,406 977,556
Assets of Discontinued Operations 10,813 30,396
Other Assets 70,475 66,672
----------- -----------
Total Assets $3,022,566 $2,690,314
=========== ===========
Liabilities and Stockholders' Equity
Floor Plan Notes Payable $1,027,446 892,866
Accounts Payable and Accrued Expenses 335,877 273,756
Current Portion Long-Term Debt 4,853 14,979
----------- -----------
Total Current Liabilities 1,368,176 1,181,601
Long-Term Debt (a) 753,134 651,176
Other Long-Term Liabilities 152,907 135,141
Liabilities of Discontinued Operations 7,595 17,954
----------- -----------
Total Liabilities 2,281,812 1,985,872
Stockholders' Equity 740,754 704,442
----------- -----------
Total Liabilities and Stockholders'
Equity $3,022,566 $2,690,314
=========== ===========
(a) Undrawn capacity under the Company's credit facilities amounted to
approximately $311 million as of June 30, 2003.
UNITED AUTO GROUP, INC.
Selected Data
Second Quarter Six Months
----------------------- -----------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Units
New Retail Units 44,993 40,116 83,357 74,107
Used Retail Units 23,803 19,447 45,097 36,064
----------- ----------- ----------- -----------
Total Retail
Units 68,796 59,563 128,454 110,171
=========== =========== =========== ===========
Same Store Retail
Revenue
New Vehicles $1,192,077 $1,093,769 $1,930,713 $1,815,794
Used Vehicles 443,889 379,610 580,323 529,612
Finance and
Insurance 44,876 37,840 74,536 64,890
Service and Parts 205,918 188,387 327,322 306,615
----------- ----------- ----------- -----------
Total Same
Store Retail
Revenue $1,886,760 $1,699,606 $2,912,894 $2,716,911
=========== =========== =========== ===========
Same Store Retail
Revenue Growth
New Vehicles 9.0% 3.3% 6.3% 5.4%
Used Vehicles 16.9% (1.1%) 9.6% 0.1%
Finance and
Insurance 18.6% 6.9% 14.9% 9.9%
Service and Parts 9.3% 5.8% 6.8% 6.2%
Revenue Mix
New Vehicles 58.3% 58.8% 57.5% 59.5%
Used Vehicles 21.7% 20.5% 22.1% 19.7%
Finance and
Insurance 2.4% 2.4% 2.4% 2.4%
Service and Parts 10.2% 10.2% 10.5% 10.3%
Fleet 1.7% 1.5% 1.6% 1.7%
Wholesale 5.7% 6.6% 5.9% 6.4%
Retail Gross Margin -
by Product
New Vehicles 8.4% 8.6% 8.4% 8.6%
Used Vehicles 9.3% 9.8% 9.3% 10.3%
Finance and
Insurance 100.0% 100.0% 100.0% 100.0%
Service and Parts 47.9% 47.2% 47.9% 46.7%
Gross Profit per
Transaction
New Vehicles $2,445 $2,380 $2,431 $2,367
Used Vehicles 1,894 1,959 1,904 1,940
Finance and
Insurance 786 747 794 734
Brand Mix:
Toyota/Lexus 22% 24% 22% 25%
BMW 13% 11% 13% 9%
Honda/Acura 11% 11% 11% 11%
General Motors 11% 12% 11% 13%
Mercedes 9% 9% 9% 8%
Chrysler 8% 10% 8% 10%
Nissan/Infiniti 5% 6% 5% 6%
Ford 4% 5% 4% 5%
Other 17% 12% 17% 13%
Debt to Total Capital Ratio 51% 47% 51% 47%
Adjusted EBITDA (a) $58,302 $54,699 $104,252 $92,799
(a) Adjusted EBITDA is defined as income from continuing operations
before minority interests, income tax provision, other interest
expense, depreciation and amortization. While Adjusted EBITDA
should not be construed as a substitute for income from continuing
operations or as a better measure of liquidity than cash flows
from operating activities, which are determined in accordance with
U.S. GAAP, it is included in this press release to provide
additional information regarding the amount of cash our business
is generating. This measure may not be comparable to similarly
titled measures reported by other companies. Following is a
reconciliation of income from continuing operations before
minority interests and income tax provision and Adjusted EBITDA:
Second Quarter Six Months
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Income from continuing operations
before minority interests and
income tax
provision $39.6 $38.9 $68.0 $ 64.8
Other interest expense 10.9 10.0 21.3 17.8
Depreciation and amortization 7.8 5.8 15.0 10.2
-------- -------- -------- --------
Adjusted EBITDA $58.3 $54.7 $104.3 $92.8
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