UnitedAuto Reports Record Third Quarter; Revenues Increase 18.3%; Net Income and Earnings Per Share Increase 15%; Most Profitable Quarter in Company History
BLOOMFIELD HILLS, Mich.--Nov. 4, 2003--| Same-Store Retail Revenues Increase 9.9% and Related Gross Profit Increases 9.8% |
United Auto Group, Inc. , a FORTUNE 500 automotive specialty retailer, announced today that revenues for the third quarter increased 18.3% to a record $2.4 billion, driven by a 9.9% increase in same-store retail revenues. Importantly, the Company announced that same-store growth increased dramatically in each of its product lines, with new retail vehicle sales, used retail vehicle sales, service and parts sales, and finance and insurance revenues up 8.8%, 12.3%, 10.6% and 16.2%, respectively. Record income from continuing operations was $25.2 million, up 14.2%, and related earnings per share grew 15.1% to $0.61.
For the nine months ended September 30, 2003, revenues increased 20.9% to $6.5 billion. Income from continuing operations was $65.6 million and related earnings per share was $1.59, an increase of 10.4%. Net income was $62.9 million and earnings per share was $1.52. Net income for the nine 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 "Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor."
Chairman Roger Penske commented, "Once again, UnitedAuto delivered a quarter of record results. We believe our strong same-store revenue growth is the direct result of our brand mix and our capital investment strategy. I am particularly pleased with the 10.6% same-store revenue increase in our 48% margin service and parts business, and the 60-basis point growth in our overall service and parts margin during the quarter. Our investment in service capacity continues to yield results. For the fourth quarter, we estimate earnings in the range of $0.45 - $0.49 per share, bringing our full-year earnings projection to $2.04 - 2.08 per share (excluding the cumulative effect of the change in accounting principle)."
During 2003, UnitedAuto has completed acquisitions totaling approximately $650 million in annualized revenue, representing approximately $300 million in the United States and another $350 million in the United Kingdom. These acquisitions are within the Company's targeted acquisition range for 2003.
UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 134 franchises in the United States and 79 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 third quarter 2003 on Tuesday, November 4, 2003 at 2 P.M. Eastern time. Participants must call (888) 428-4478 (International, please call (651) 291-5254). 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 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)
Third Quarter
-----------------------
2003 2002
---------- ----------
New Vehicles $1,400,635 $1,191,511
Used Vehicles 494,250 396,244
Finance and Insurance 58,075 48,003
Service and Parts 242,829 202,598
Fleet 27,290 31,604
Wholesale 140,016 127,754
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Total Revenues 2,363,095 1,997,714
Cost of Sales 2,027,100 1,719,264
---------- ----------
Gross Profit 335,995 278,450
SG&A Expenses 262,746 216,506
Depreciation and Amortization 8,202 5,256
---------- ----------
Operating Income 65,047 56,688
Floor Plan Interest Expense (11,172) (8,873)
Other Interest Expense (11,117) (9,927)
---------- ----------
Income from Continuing Operations
Before Minority Interests and
Income Tax Provision 42,758 37,888
Minority Interests (655) (458)
Income Tax Provision (16,889) (15,344)
---------- ----------
Income from Continuing Operations 25,214 22,086
Income (Loss) from Discontinued Operations, Net
of Tax 41 (97)
---------- ----------
Net Income $ 25,255 $ 21,989
========== ==========
Income from Continuing Operations Per Diluted
Share $ 0.61 $ 0.53
========== ==========
Diluted EPS $ 0.61 $ 0.53
========== ==========
Diluted Weighted Average Shares Outstanding 41,637 41,733
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UNITED AUTO GROUP, INC.
Consolidated Statements of Income (Unaudited)
(Amounts In Thousands, Except Per Share Data)
Nine Months
----------------------
2003 2002
---------- ----------
New Vehicles $3,786,798 $3,207,432
Used Vehicles 1,405,545 1,062,042
Finance and Insurance 158,971 127,875
Service and Parts 680,236 551,526
Fleet 93,219 90,704
Wholesale 384,497 343,781
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Total Revenues 6,509,266 5,383,360
Cost of Sales 5,577,325 4,619,773
---------- ----------
Gross Profit 931,941 763,587
SG&A Expenses 733,876 593,535
Depreciation and Amortization 22,963 15,210
---------- ----------
Operating Income 175,102 154,842
Floor Plan Interest Expense (31,611) (25,451)
Other Interest Expense (32,215) (27,682)
---------- ----------
Income from Continuing Operations
Before Minority Interests and
Income Tax Provision 111,276 101,709
Minority Interests (1,706) (1,383)
Income Tax Provision (43,956) (40,963)
---------- ----------
Income from Continuing Operations 65,614 59,363
Income from Discontinued Operations, Net of Tax 296 2,226
---------- ----------
Income Before Cumulative Effect of
Accounting Change 65,910 61,589
Cumulative Effect of Accounting Change (a) (3,058) --
---------- ----------
Net Income $ 62,852 $ 61,589
========== ==========
Income from Continuing Operations Per Diluted
Share $ 1.59 $ 1.44
========== ==========
Diluted EPS before Cumulative Effect of
Accounting Change $ 1.60 $ 1.50
========== ==========
Cumulative Effect of Accounting Change on
Diluted EPS ($0.07)$ --
========== ==========
Diluted EPS $ 1.52 $ 1.50
========== ==========
Diluted Weighted Average Shares Outstanding 41,258 41,168
========== ==========
(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)
9/30/03 12/31/02
---------- ----------
Assets (unaudited)
Cash and Cash Equivalents $ 10,803 $ 10,641
Accounts Receivable, Net 346,142 310,378
Inventories 1,001,107 942,732
Other Current Assets 41,047 27,230
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Total Current Assets 1,399,099 1,290,981
Property and Equipment, Net 429,406 306,234
Intangibles 1,060,907 973,342
Assets of Discontinued Operations -- 53,085
Other Assets 76,512 66,672
---------- ----------
Total Assets $2,965,924 $2,690,314
========== ==========
Liabilities and Stockholders' Equity
Floor Plan Notes Payable 879,589 882,100
Accounts Payable and Accrued Expenses 376,842 271,036
Current Portion Long-Term Debt 4,452 14,979
---------- ----------
Total Current Liabilities 1,260,883 1,168,115
Long-Term Debt (a) 782,845 651,176
Other Long-Term Liabilities 139,499 135,036
Liabilities of Discontinued Operations -- 31,545
---------- ----------
Total Liabilities 2,183,227 1,985,872
Stockholders' Equity 782,697 704,442
---------- ----------
Total Liabilities and Stockholders'
Equity $2,965,924 $2,690,314
========== ==========
(a) Undrawn capacity under the Company's credit facilities amounted to approximately $300 million as of September 30, 2003.
UNITED AUTO GROUP, INC.
Selected Data
Third Quarter Nine Months
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2003 2002 2003 2002
---------- ---------- ---------- ----------
Units
New Retail Units 47,934 43,026 130,328 116,032
Used Retail Units 23,474 19,886 67,894 55,306
---------- ---------- ---------- ----------
Total Retail Units 71,408 62,912 198,222 171,338
========== ========== ========== ==========
Same-Store Retail Revenue
New Vehicles $1,259,181 $1,157,219 $2,961,380 $2,780,762
Used Vehicles 429,382 382,444 871,899 793,683
Finance and Insurance 47,523 40,898 115,182 100,257
Service and Parts 217,317 196,461 498,981 463,892
---------- ---------- ---------- ----------
Total Same-Store
Retail Revenue $1,953,403 $1,777,022 $4,447,442 $4,138,594
========== ========== ========== ==========
Same-Store Retail Revenue
Growth
New Vehicles 8.8% 9.2% 6.5% 7.0%
Used Vehicles 12.3% 2.9% 9.9% 1.1%
Finance and Insurance 16.2% 10.2% 14.9% 10.2%
Service and Parts 10.6% 6.0% 7.6% 5.8%
Revenue Mix
New Vehicles 59.3% 59.7% 58.2% 59.5%
Used Vehicles 20.9% 19.8% 21.6% 19.7%
Finance and Insurance 2.4% 2.4% 2.4% 2.4%
Service and Parts 10.3% 10.1% 10.5% 10.3%
Fleet 1.2% 1.6% 1.4% 1.7%
Wholesale 5.9% 6.4% 5.9% 6.4%
Retail Gross Margin - by
Product
New Vehicles 8.1% 8.2% 8.3% 8.4%
Used Vehicles 9.3% 9.5% 9.3% 10.0%
Finance and Insurance 100.0% 100.0% 100.0% 100.0%
Service and Parts 48.0% 47.4% 48.0% 46.9%
Gross Profit per
Transaction
New Vehicles $ 2,377 $ 2,272 $ 2,413 $ 2,334
Used Vehicles 1,955 1,898 1,924 1,922
Finance and Insurance 813 763 802 746
UNITED AUTO GROUP, INC.
Selected Data (Continued)
Third Quarter Nine Months
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2003 2002 2003 2002
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Brand Mix:
Toyota/Lexus 23% 23% 22% 24%
BMW 14% 11% 13% 10%
Honda/Acura 11% 12% 12% 12%
General Motors 10% 12% 11% 13%
Mercedes 10% 8% 10% 8%
Ford Premier Group 8% 7% 8% 6%
Chrysler 7% 10% 7% 10%
Nissan/Infiniti 5% 5% 5% 5%
Ford 4% 5% 4% 5%
Other 8% 7% 8% 7%
Debt to Total Capital Ratio 50% 49% 50% 49%
Adjusted EBITDA (a) $62,077 $53,071 $166,454 $144,601
Rent Expense 21,673 17,024 62,132 45,262
(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, each of which is 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:
Third Quarter Nine Months
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2003 2002 2003 2002
----- ----- ------ ------
Income from continuing operations
before minority interests and income tax
provision $42.8 $37.9 $111.3 $101.7
Other interest expense 11.1 9.9 32.2 27.7
Depreciation and amortization 8.2 5.3 23.0 15.2
----- ----- ------ ------
Adjusted EBITDA $62.1 $53.1 $166.5 $144.6
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